Media conglomerates are experiencing robust profits despite ongoing strikes by Hollywood writers and actors.
While industry executives express their desire for a prompt return of their workers, they are currently benefitting from the work stoppages in the short term: no production equals no expenses.
Netflix set the tone for earnings season last month, revealing that projected free cash flow will exceed the original forecast by approximately $1.5 billion, thanks to the strikes. Warner Bros. Discovery saved $100 million on film and TV production costs in the second quarter, a sum that could potentially escalate to hundreds of millions if the strikes persist until the year’s end.
On Wednesday, Walt Disney Co. projected a $3 billion reduction in film and TV production costs this year due to the strikes.
These factors partially explain the sluggish progress towards a settlement. The studios possess vast libraries, including recently completed films and TV shows, which will generate billions of additional revenue before the longer-term damage from the strikes becomes noticeable. Additionally, many members of the striking Writers Guild of America and Screen Actors Guild have alternative jobs outside of Hollywood, reducing the pressure to compromise.
Paramount Global Chief Executive Officer Bob Bakish refrained from specifying the exact savings of CBS and Paramount Pictures, but assured investors that the company possesses enough content to maintain viewership and attendance at theaters in the upcoming months.
Bob Bakish, president and chief executive officer of Paramount Global, attends the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, US, on Tuesday, July 11, 2023. The summit is typically a hotbed for etching out mergers over handshakes, but could take on a much different tone this year against the backdrop of lackluster deal volume, inflation and higher interest rates.
“We’re in pretty good shape,” Bakish said.
The ongoing writers’ strike, which began in May, has surpassed the duration of the union’s previous work stoppage in 2007. New film and TV production, particularly scripted series, have nearly come to a halt. The actors joined the strike in July.
On Thursday, the Writers Guild disclosed that they received a new meeting request from the studios’ bargaining group and intend to meet on Friday. The union expects a response to their recent proposals.
Although there have been repercussions, such as networks revamping their fall schedules to include reality shows unaffected by the walkouts, and studios delaying some film releases due to actors being unable to promote them, executives downplay the impact during investor conference calls. Mike Cavanagh, president of Comcast and overseer of the NBCUniversal film and TV business, predicts an increase in free cash flow and a decrease in working capital this year as a result of production shutdown. These figures are expected to revert once the strikes conclude.
“It’s all manageable,” Cavanagh assured.
The writers and actors, though represented by separate unions, share similar demands in negotiations with the studios. They are requesting increases in base pay, as well as a share of revenue from streaming service programs. Furthermore, they seek guarantees that their jobs will not be substituted with artificial intelligence.
“We have studios really trying to squeeze us so they can get more profit, and enough is enough,” said Darsan Solomon, an actor and strike captain on a picket line in late July. “We need to be able to make a living at this again.”
Netflix co-CEO Ted Sarandos empathized with the toll strikes can take on families, mentioning that his father was a union electrician.
“There are a handful of complicated issues,” he noted. “We’re super committed to reaching an agreement as soon as possible.”
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