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Why is Hollywood on strike?

Hollywood is all over the place right now. When the Writer Guild of America went on strike in May this year, it was pens down for any movies, TV shows, late-night and variety shows in Hollywood.

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Hollywood is all over the place right now. When the Writer Guild of America went on strike in May this year, it was pens down for any movies, TV shows, late-night and variety shows in Hollywood. 

While the immediate impact was seen with talk shows like Jimmy Kimmel or Stephen Colbert immediately going off-air it didn’t throw the whole industry into crisis as shows that had already been written were able to go ahead. 

That all changed on July 14 when SAG-AFTRA, the union representing actors across America, announced that they had also failed to reach an agreement with the major studios, grouped as the Alliance of Motion Pictures and Television Producers (AMPTP), going on strike alongside the WGA. 

The announcement came in a cinematic fashion, with a press conference by SAG President and star of ‘The Nanny’, Fran Drescher, broadcasted alongside footage of the cast of blockbuster Oppenheimer walking out of the premier.

The crux of the strike is that the unions and studios cannot agree on a new contract that increases both upfront and residual pay, and on protections for both writers and actors as the industry continues to evolve.

The WGA has proposed a 5% increase in wages and 6% increase in base residuals (what writers receive when their work is viewed after initial release) over three years, which is estimated to cost the studios USD500 million extra a year. This pales in comparison to the USD2.1 billion in revenue made in 2022. 

Under the conditions of the strike, all 160,000 SAG members cannot work on new or ongoing projects and they cannot promote any of their work for the major studios. Instead, they’ve headed to the picket lines, with stars like Florence Pugh, Daniel Radcliffe, Kevin Bacon and many more have been spotted protesting, or have posted messages of support on social media.

 

Celebrities (Kevin Bacon pictured) on the picket lines of the SAG-AFTRA strike. Credit: Raymond Hall/Getty Images

 

They have joined the WGA for the first time in 63 years, which means that no new TV shows or movies will be going into production, with rare waivers being given to independent studios who agree to the union’s demands. Some of the big titles that have been affected so far include the upcoming final season of Stranger Things, the Yellowstone spin-off 1923, and countless movies.

One of the key issues in the debate is production turnover time. Given the changing nature of TV, with shorter seasons being commissioned and writing rooms typically wrapping up before shows even go into production, the amount of time that writers spend on one job had been reduced significantly. Whereas writers could once expect 42 weeks of work a year on a network show like ER or Law and Order, many writers rooms have now been cut to 6-8 weeks for the likes of Netflix miniseries. Writers now need to take on more jobs each year to make the same amount of money and are not given the same opportunities for career advancement through working on a network show for years at a time. Moreover, on top all of this is the waning of residual payments that keeps thousands of actors and writers financially afloat.

Residual pay is central in the debate. The residuals model was developed last time the WGA and SAG went on strike together in the 1960s, when the advent of television and re-runs meant that actors’ work was being continuously re-used without them receiving any further payment. The residual model meant the networks that aired the re-runs would pay a certain amount of money to the actors and writers who worked on the show. This provided income when they were in-between jobs or in the development phase of projects. 

However, the streaming model has changed how this works. Streaming services now dominate the entertainment marketplace, but, once they buy film rights, they are not required to meet the network residual model. Where a writer or actor could once expect residual cheques of tens of thousands of dollars, they are now getting less than $20 for the same amount of work. 

The strike and its surrounding discourse has painted a picture of Hollywood that, although is much harsher, is much more accurate than the magical world portrayed before. Whether its Mandy Moore’s residual cheque for $0.81 cents for the hit show This is Us or award winning writer of The Bear, Alex O’Keefe, having to rent a tuxedo to go to an award show, there’s a dark reality hiding under the glitz and glam. 

Drescher went on CNN in early August to talk about the financial state of what is often referred to as the "working class actors", not the big names that draw in multi-million dollar movie deals, but the actors who work regularly on TV shows or in smaller movie parts, and do commercial work to earn a steady income. According to Drescher, 86% of the SAG membership cannot even meet the $26,500 a year threshold to get medical benefits. 

These all paint a picture of the entertainment industry as far more challenging than many of us assume, and show that the idea of "making it" is temporary for most people. 

Inevitably, alongside the revelations about how much the actors and writer are struggling has been a shocking display of corporate greed. 

The major studios are constantly attempting to cry poor with claims that streaming has rendered their industry unprofitable and that the unions are greedy for demanding better pay. Sources have said that the AMPTP’s goal is to “drag on until the union members start to loose their apartments and houses”, hoping for members to become so financially pressured that they cave.  

But the reality is that streaming companies like Disney+ and HBOMax are recording billions in profits, and other corporate giants like Paramount and NBC Universal have broader business models that allow their income to continuously grow.

With these corporate profits comes eye-wateringly large salaries and bonuses for the executives at the helm. Bob Iger, Disney’s CEO earned US$45.9 million in 2021, and Netflix execs Reed Hastings and Ted Saranos made over US$50 million. 

How these companies can claim they don’t have the ability to ensure fair compensations for streaming while awarding themselves healthy annual bonuses is not clear, and the negotiators for the WGA and SAG-AFTRA are not having it. 

Drescher has repeatedly emphasised how far apart the unions and studios are when it comes to negotiations, and called this strike an inflection point for the future of entertainment contracts.

It could be months before any deals are reached, which means that any new TV shows and movies are likely to experience extreme delays in filming and production, and we as consumers will see a slow-down of content being released as the studios’ stockpiles begin to run out. 

While the future remains unclear, it seems that Hollywood will be forever changed by these strikes, and the actors’ and writers’ unions are making it clear that they are not backing down anytime soon. 

 

 
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