That’s the vexing question that entertainment industry insiders are wrestling with even as they cheer the end of the Writers Guild of America strike. Union leaders said it again and again all summer — that Hollywood’s system for collective bargaining was “broken.” Turns out they were right.
The economic pain spread across the entertainment industry and beyond by showbiz’s summer of labor strife has been devastating. The situation demands both urgent action and long-term study because the industry dynamics that spurred the WGA and SAG-AFTRA strikes are likely to persist in the near term. For the sake of avoiding more debilitating work stoppages, leaders from labor and management need to undertake a thoughtful and methodical review of decades-old contract terms and options for updating the underlying economic constructs of complicated compensation formulas. It’s a process that will also demand the most precious of resources in business — good faith, buy-in and trust — from stakeholders on all sides of the bargaining table.
None of this can be achieved in the pressure-cooker environment of negotiations conducted against a contract expiration deadline and strike threat. Labor and management need to create a forum for communicating regularly, airing grievances and, perhaps most important, evaluating what went so wrong in this contract-negotiations cycle.
IATSE’s current Basic Agreement expires July 31, 2024. The WGA’s hard-won three-year deal expires May 1, 2026. The time to start is now.
Kelsey Dake for Variety
On the other side of the bargaining table, the Alliance of Motion Picture and Television Producers has served as a unified collective-bargaining agent for Hollywood’s largest studios since 1982. It was formed through the consolidation of two existing bargaining units to impose order on what had been an unruly environment for studios and entertainment unions in the late 1970s. But as soon as SAG-AFTRA joined the WGA on strike in July, it became clear that the bargaining process that had largely kept peace in Hollywood (with exceptions for writers strikes in 1988 and 2007-08) was built for a bygone era.
The rise of global streaming platforms and the diminishment of theatrical films and long-established cable and broadcast networks have upended how Hollywood traditionally makes money from TV and film. Even the mighty Disney, with its arsenal of content brands and distribution muscle, is drowning in red ink as it tries to build up Disney+ and Hulu as its engines of future growth. The toxic combination of studios reeling from disruption and union members feeling shortchanged created the clinical conditions for a work stoppage.
The WGA strike, which ended Sept. 26 after 148 days, was prolonged by management’s resistance to accepting wholly new concepts introduced by the WGA, such as minimum staffing levels for TV writers’ rooms. One of the final compromises reached was on a bonus plan for successful streaming titles that is awarded if a show is watched by 20% or more of a streamer’s domestic subscribers in the first 90 days of release. Tying compensation terms to subscriber engagement levels is a new economic construct for a WGA contract, one that reflects the larger changes driven by streaming.
In fact, the 20% threshold for calculating a bonus payment was an idea presented to the WGA by the management side. It’s a concept that makes sense for the industry as it works now. It shouldn’t take another long strike to bring these and other streaming-era concepts into the contracts. The specific dollars and cents and percentage points can be fiercely negotiated through traditional contract talks. But a separate process designed to bring the stakeholders into agreement on some basic new frameworks for calculating pay, residuals and bonuses would surely help avoid more costly shutdowns in the coming years.
“All the stuff that we fought for and got was all around the fact that there’s now a new [business] model,” says David Goodman, former president of the WGA West, who was co-chair this year with Chris Keyser of the WGA’s negotiating committee. “I don’t think we need to throw the whole [new contract] out,” Goodman says. “It’s just a matter of making sure it’s facile and able to adapt.”
There’s already a model for bringing together a blue-ribbon commission to help solve an existential crisis. In the summer of 2020, as pandemic fallout chewed through the U.S. economy, a little-known entity with the ungainly name of the Industry-Wide Labor-Management Safety Committee Task Force was revived to work out a plan for resuming physical production in the face of the mortal danger presented by COVID-19. It took weeks of study, debate, consensus-building and horse-trading of priorities among business and union leaders as well as state and local health and safety regulators. The process yielded a white paper outlining the problems and solutions, and that in turn led to a historic agreement with the entertainment industry’s four most powerful unions: Directors Guild of America, IATSE, SAG-AFTRA and Writers Guild of America.
The Task Force has taken several forms over the years; at present, its work flows through the AMPTP’s administration. In September 2020, when the safety protocol agreement was unveiled, AMPTP president Carol Lombardini credited the work done over “four months of thoughtful dialogue and meaningful negotiations with the multi-union bargaining committee.” She cited the contributions of “hundreds of others who became involved in the return-to-work effort for their willingness to collaborate to resolve the difficult workplace issues presented by operating in a coronavirus world.”
In other words, industry leaders were able to pull off a level of cooperation that would have seemed impossible outside of a public health crisis. And it worked.
“In any successful negotiation, you have to understand the economic issues and the emotional issues that are at stake,” says a TV industry C-suite executive with union experience who was not involved in the 2023 negotiations. “These people don’t talk to each other enough to understand where the emotion is coming from. It’s emotion that drives [strikes], every time.”
The strikes have shown there is another malignancy in the system that threatens the long-term health of what has been an extremely prosperous business. The challenges ahead go well beyond arm-wrestling over a 5% or 10% gain in minimums. Rather than fighting every three years for new contract gains, it would benefit everyone whose livelihoods depend on TV and film production if the basic blueprint for negotiating was revised for the modern era.
Alisa Gao for Variety
“In the end we learned from this strike that the [AMPTP] should not be one entity,” says Billy Ray, a veteran screenwriter who was co-chair of the WGA’s negotiating committee in the 2017 contract negotiation. “It should be the legacy [studio] companies as one bargaining unit, and then the tech companies as another. They could make separate deals. They have separate needs.”
In the rosiest of visions, a stronger and more consistent effort to have a form of “bipartisan dialogue” — in the words of the senior TV executive — could also help counteract another disturbing trend that has been evident throughout Hollywood’s summer of strikes.
“The vilification of the other side has got to stop,” the executive says, placing blame on both sides for employing dangerous rhetoric at times. He points to the many caricatures of Disney’s Bob Iger, Warner Bros. Discovery’s David Zaslav and others that writers unleashed as memes and eye-catching picket signs and social media screeds. Meanwhile, the management side is too quick to dismiss the demands of writers as irrational. WGA and SAG-AFTRA picket lines were packed day after day with early and mid-career writers and actors who feel caught in the squeeze of the broader industry changes. The large cohort of young writers who joined the guild amid the Peak TV boom of the past decade aren’t getting as many of the same opportunities as previous generations to climb the ladder. And after months of comparing notes on picket lines, millennial and Gen Z members of the WGA know the score on how things used to work.
The executive adds, “There’s a lot of motivation to burn it down out there because they think there’s no ‘up’ for them. More dialogue could avoid the burning-it-down.”
More dialogue on how to address the pain points and unintended consequences of systemic industry changes can only help. In hindsight, the WGA was right to force the issue on contract demands that were big departures from past practices, such as minimum TV series staffing and related issues on work schedules for writers. The specifics of the WGA’s proposal stirred debate, even among guild members, but the need for the guild to protect its flank was never in dispute.
WGA leaders were alarmed by what they heard when they started meeting, pre-strike, with members to learn more about acute issues that needed to be addressed in the 2023 contract. The litany of issues is now familiar — the rise of mini rooms with lower wages and shorter durations of employment, as well as the paltry residual fees paid by streaming platforms.
“This was really a bottom-up strike,” says Lowell Peterson, outgoing executive director of the WGA East. “Our members told us what the problems were.”
The triennial timing of the 2023 WGA, DGA and SAG-AFTRA contract negotiations couldn’t have been much worse for the major studios and streamers. It came just as the biggest media giants were forced to reckon with the outsized exuberance demonstrated, mostly pre-pandemic, in the rush to invest billions to build up new streaming platforms. As Netflix’s steady growth seemed unstoppable, Disney, Warner Bros. Discovery, Comcast’s NBCUniversal and Paramount Global all took on acquisitions and debt (notably Disney ingesting 21st Century Fox in 2019), reorganized operations at high severance and write-off costs, and then revved up newly configured teams to create high-end original content.
This came in large part as a response to the impact of Netflix, Amazon and Apple injecting billions of dollars into the TV and film production ecosystem inside of a few years. John Landgraf, the respected chairman of FX and National Geographic, famously likened the competitive environment in 2017 to “being shot in the face with money every day.” Now, 2017 seems like the distant past given all that has transpired since.
Back then, though, all of the new capital that flowed into studios’ and producers’ coffers was deployed in ways that broke with most TV customs. Instead of hiring one writer to craft a pilot episode, showrunners were directed to gather small groups of three to four writers to work out three to four scripts. The streaming binge model hinges on all episodes of a season premiering at once, which means that all scripts have to be completed far in advance of filming. The streaming model also eschews the traditional 22-episode-per-season format of broadcast TV — a system that has been a pillar of WGA members’ earnings for decades. The guild’s Minimum Basic Agreement was designed for a 22-episode universe, not the streaming model that ranges from six to 10 episodes per season. Writers who were accustomed to getting paid by the episode suddenly found themselves hustling to line up multiple series per year to maintain their income levels.
“It’s always been show to show or feature to feature for writers,” says the WGA East’s Peterson. “But over the years, we developed mechanisms to make it a livable gig. And then as the model changed, we had to change the model, right? It’s not like people expect to work 12 months of the year, but they do expect to be able to get their pension and health benefits and pay the rent.”
At the same time, cost-conscious producers started to realize that writers for streaming series didn’t need to be kept on the payroll for as long as they are on most broadcast or cable shows, where episodes premiere on a weekly basis and the writing process typically goes on for months after the first episode airs. For writers at all levels, from showrunners to script supervisors, the ripple effects from these changes went on and on.
The speculative streaming bubble burst in the spring of 2022. Gravity caught up with Netflix as the streamer’s galloping rate of growth around the world finally took a downturn. When Netflix disclosed in its first-quarter 2022 earnings report that it was on track to lose as many as 2 million subscribers in the ensuing months, the reaction was swift. The fact that the industry-leading streamer had hit even a temporary ceiling on its ability to add paying customers after racking up about 230 million subscribers worldwide meant that the long-term growth projections for Disney+, HBO Max, Peacock, Paramount+, et al., had to get more realistic — virtually overnight. That readjustment naturally forced a reckoning on the amount of investment in content production, marketing and distribution support for streaming platforms. And that is when the ax fell fast in ways that shook up the creative community.
By the fall of 2022, Disney, Warner Bros. Discovery, Paramount Global and others began to impose steep cost cuts and layoffs. That meant swift cancellations of series, slashed production and marketing budgets, and the removal of vintage series from streaming platforms. As the WGA’s May 1 contract deadline approached, WGA members were dizzy from the industry drama and disturbed by what it meant for their profession.
The WGA talks were tense at the outset because the guild came in with a series of “interlocking” proposals to address the mini-room phenomenon that had become a flashpoint for WGA members. Guild negotiators also put management on notice that they would not cherry-pick among their priorities, as is typical in union contract talks.
“It was almost as if [Lombardini] thought we were playing with her. And we said, ‘No, really, seriously — we need to have something on everything,’” Peterson says. “It was certainly an unusual negotiation in that respect. We told them there was one theme, which is to adapt to the transformed business model, but not one issue.”
From labor’s vantage point, the long stalemate in the WGA contract negotiations that prolonged the strike was fueled by discord between showbiz’s new and old guards. Streamers (Netflix, Amazon and Apple) have different business priorities than the studio-based giants (Disney, Warner Bros. Discovery, NBCUniversal, Paramount Global and Sony Pictures Entertainment). The management side strenuously denies that differences of opinion among the AMPTP member companies were an impediment to reaching a deal. Nonetheless, the existence of a big divide between the new and old guards in entertainment is taken as gospel by the unions.
“What was clear in this work stoppage was that the problem was not between the writers and the [AMPTP] companies,” says Ray, who also hosts the “Strike Talk” podcast. “The problem was between the legacy companies and the tech companies. That was the problem. And that was the thing that was unfixable for a long time. And when they fixed it, the deal got made.”
The next looming deadline is the IATSE negotiation next summer. The below-the-line, craft and technical workers who populate that union have their own set of issues to address, and those workers feel similar pressures to writers and actors, stemming from changing formats and standards for TV and film productions. “There’s no room for error here,” Ray says about next year’s IATSE talks. He adds a warning for Hollywood’s executive leaders: “If you don’t show up like a responsible partner, you’re going to have another strike.”
Hollywood rallied around the cause of getting back to work when the stakes were life and death during the COVID crisis. Ray is among those who see the past five months as a trauma for the creative community that will have to be similarly processed, emotionally and economically.
“Right now,” Ray suggests, “there should be a panel with a couple of executives and a couple of writers on it to say, ‘What did we learn? How do we never do this again?’”
Variety co-editor-in-chief Cynthia Littleton is the author of “TV on Strike: Why Hollywood Went to War Over the Internet.”
From Variety US