A Long Holiday Road

To say that reports of an imminent deal between actors and studios were greatly exaggerated is an understatement… would be an understatement. Talks that had reportedly been progressing nicely between the AMPTP and the Screen Actors Guild-
AFTRA over the last several days didn’t just fade away this week. They blew up as the AMPTP walked away from the table, with no clear path forward for additional discussions. At issue is what Netflix co-CEO Ted Sarandos this week called “a bridge too far,” essentially actors’ demand for a “levy” on subscribers that would total $800 million per year among the major studios represented by AMPTP. In essence, SAG-AFTRA has proposed a revenue-sharing system for streaming shows, and that hasn’t gone over well. To hear SAG-AFTRA tell it in a memo to its members, studios “refuse to share a tiny portion of the immense revenue YOUR work generates for them. We have made big, meaningful counters on our end, including completely transforming our revenue share proposal, which would cost the companies less than 57¢ per subscriber each year. They have rejected our proposals and refused to counter.” AMPTP, however, said the actors’ proposal would “create an untenable economic burden,” although the union insists their $800 million figure is inflated by some 60%.

After several months of contentious negotiations between the studios and two unions, it’s hard to know where the truth lies. The Writer’s Guild of America only this week ratified a tentative deal in which the studios eventually capitulated in several areas that they had initially deemed non-starters. However, it’s unclear whether the unprecedented concept of revenue sharing with artists is something the studios could ever accept. After all, no one needs psychic ability to predict that all the other unions would make a similar ask if actors received such a perk, meaning eventually writers, directors, and perhaps even crews represented by the IATSE union, whose current contract expires next summer. Many would argue that revenue-
sharing as a standard feature of Hollywood could stabilize the business, give everyone from executives to artists skin in the game, and create a more fair system for all. But big media companies, which are enduring perhaps the worst few quarters on Wall Street in their history because of massive disruption and persistent direct-to-consumer losses, are in no mood to create a new cost center. This is especially true in the wake of massive industry-wide layoffs that have hit both traditional studios and Silicon Valley streamers in recent months.

But it’s also fair to ask about the end game here. The studios have clearly drawn a line in the sand, at least for now. And with no counter proposal, the SAG-AFTRA strike will simply continue with no end in sight, considering the defiant tone of union leaders this week and apparent membership support despite the AMPTP publicly releasing some of its tasty offers. Those include a first-of-its-kind success-based residual for high-budget SVOD productions, the biggest percentage increase in minimums in 35 years amounting to $717 million in higher wages and $177 million in contributions to pension and health plans over three years, a 58% increase in salaries for major role (guest star) performers on high-budget programs, and a 76% increase in high-budget SVOD foreign residuals for the four largest streaming services, as well as other goodies. That may all sound great on paper, but actors appear unimpressed so far, which means one thing: Hollywood is largely dysfunctional at the moment, with tens of thousands of workers (including caterers, hairdressers, construction firms, and others) affected. At least WGA writers can now create scripts for whenever production starts again, but those words will simply languish on the page until the actors and studios reach an agreement.

Next? The holidays are approaching. Even if the studios got into the Christmas spirit early and gave in to the actors tomorrow, it would be extremely challenging to rev up most productions before early 2024, as Hollywood effectively shuts down between Thanksgiving and New Year’s Day. So many intersecting vacations from all sectors make it difficult to pull together the full crews needed for any production during this period. Perhaps it’s fitting that we’re only a couple weeks away from Halloween because all of this is getting scary, with tempers flaring, feelings hurt, and both sides digging in for the long haul. And it certainly looks like this week’s suspension of talks between AMPTP and SAG-AFTRA may last through year-end, with no indication either side will budge. Hope springs eternal, but these are dark days. Here’s hoping for a Christmas miracle.

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