Latest On WGA Strike: How Disney's $4 Million Per Day Streaming Losses Impact The Numbers
It's Day 10 of the Writers Guild of America strike, and we’re starting to get a better picture of why TV and film studios and streamers don’t want to make what they would consider an overly generous contract to screenwriters.
The Alliance of Motion Picture and Television Producers, the negotiating entity for studios and streamers, have said from the beginning of the WGA talks that its members have spent billions on new platforms and they consequently need to preserve a return on that investment. The Walt Disney Co., in its quarterly earnings report on Wednesday, illustrated that starkly:
- It said it had spent more than $10 billion launching its streaming platforms, notably Disney Plus.
- Meanwhile in its most recent three months, its streaming losses totaled $659 million — which works out to more than $4 million a day.
- That shortfall was actually better than Wall Street expected.
The WGA strike was launched after Disney’s fiscal quarter closed, so its potential impact on earnings is unclear.
“We haven't really quantified what that would be because we don't know how long it's going to last,” Christine McCarthy, Disney’s chief financial officer, told Wall Street analysts.
But in the week and a half after the strike was called, Disney’s Marvel Entertainment unit had to shut down pre-production on a Blade movie, and stopped production on the series Daredevil: Born Again.
Members of the WGA, which says average WGA pay has actually dropped 14% over the last five years, were not immediately moved by Disney’s finances. Thanks to its theme parks, Disney remains hugely profitable, and reported net quarterly income of $1.49 billion.
What AMPTP has said
Hollywood producers released a statement on May 4 that addressed specific points of the WGA's concerns. Among the issues addressed by the Alliance of Motion Picture and Television Producers were:
- "Gig economy" for writers: It says screenwriting has almost nothing in common with standard “gigs" jobs. Writers often have a guarantee of specific weeks or episodes, and writing jobs come with benefits such as employer-paid health care and pension plan contributions.
- Mandatory staffing and duration of employment: The AMPT sees this essentially as a hiring quota that's "incompatible with the creative nature of our industry", and says it's a one-size-fits-all solution to shows that are each unique.
- Overall Numbers: The AMTP disputes the WGA's claim that it's only offering $41 million a year in minimum wage increases. It says it's nearer $97 million per year, which doesn't take into account other wage and residual increases it's offered.
- Wage Increases: It's offering the highest first-year general wage increase in more than 25 years, while also offering to create "an entirely new category of rates that will establish a new and higher floor for mid-level writers’ compensation".
- Streaming Residuals: A 46% increase in residuals took effect in 2020, and many writers have yet to see these in their paychecks. For a one-hour episode of a Netflix or Amazon Prime series, a writer receives $72,000 in residuals over three years, growing to $114,000 over seven years.
- Artificial Intelligence: "AI raises hard, important creative and legal questions for everyone. For example, writers want to be able to use this technology as part of their creative process, without changing how credits are determined, which is complicated given AI material can't be copyrighted. So it's something that requires a lot more discussion, which we've committed to doing."
What the WGA has said
In a statement released the night before the strike, the WGA said:
"Over the course of the negotiation, we explained how the companies' business practices have slashed our compensation and residuals and undermined our working conditions. Our chief negotiator, as well as writers on the committee, made clear to the studios’ labor representatives that we are determined to achieve a new contract with fair pay that reflects the value of our contribution to company success and includes protections to ensure that writing survives as a sustainable profession."
What else you should know
- It is the first WGA strike in 15 years; the last work stoppage began in November 2007 and lasted 100 days.
- As of today, no new talks were scheduled.
Why it matters
The WGA says that most of its nearly 12,000 members are making less than they once did, and that after factoring for inflation, average WGA pay has actually dropped 14% over the last five years.
The union says about half of WGA members are earning scale — the bare minimum wages stipulated by the contract with the AMPTP. Ten years ago, it was only a third.
Executives at studios and streamers maintain that they are still recovering from pandemic losses and have spent billions of dollars creating and buying content for new streaming platforms, some of which are far from profitable.
For Hollywood executives, the stakes are high: if the AMPTP deal for writers increases pay and residual payments, their profit margins could shrink. Furthermore, other Hollywood unions would likely use any WGA gains as the template for their demands; contracts for the Screen Actors Guild and the Directors Guild of America both expire in the coming weeks.
How we're reporting on this
John Horn, who covers arts and entertainment, has been following negotiations closely. Josie Huang talked to picketers and local businesses affected by the strike. In addition, our AirTalk team has featured the strike in on-air discussions on LAist 89.3 and LAist coverage.
Our podcasts HTLA and Retake have also talked to writers and others affected by the strike.
This is a developing story. We fact check everything and rely only on information from credible sources (think fire, police, government officials and reporters on the ground). Sometimes, however, we make mistakes and/or initial reports turn out to be wrong. In all cases, we strive to bring you the most accurate information in real time and will update this story as new information becomes available.
What Questions We're Asking
- What are the main sticking points in the negotiations?
- How do the contracts of other Hollywood unions — some of which have no-strike clauses — affect this strike?
- What's next for your favorite shows.
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- From Gas Stations to Restaurants: How The WGA Strike Will Hit The LA Economy
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