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The Writer's Strike in Hollywood is a Big Deal (and entertainment investors don't seem to understand the implications of it)
One of the things that the 2020s are known for is labor strikes. Whether these strikes are supported by unions (ex. UAW and $GM) or inspired by workers frustrated with the work conditions (like $SBUX and $EA), workers are at their breaking point. The strikes we've seen during and after the pandemic are tiny compared to the strikes that Hollywood writers are embarking on. When you understand the background of the writer's strike, you'll question the sustainability of Hollywood as a whole.


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Hollywood producers and the Writer's Guild Association (WGA) have been negotiating pay and benefits for writers for a period of time. In these negotiation talks, any proposal that the WGA has given to the Hollywood producers was dismissed and never came with a counteroffer. This behavior shows that the producers see their writers as disposable. From a producer's perspective, they don't see any unique value in individual writers but see writers as commodities. If one writer demands more pay for their work, producers think that they can easily find another writer who can do the same work for less pay. There are many writers eager to break into Hollywood and Hollywood producers have seen that dynamic as a way to extract cheap creative labor. The relationship between writers and producers is and has always been "gigeconomy-like" despite the fact that there's a union protecting writers.

The WGA had two proposals and a cost estimate for Hollywood producers:

  1. a minimum of 6-12 person writing staff per show
  2. guaranteed minimum number of weeks of employment per season, ranging from 10 weeks to 52 weeks.
  3. WGA says changes will cost $429 million; studios are only willing to make changes if they cost $86 million or less

There are other negotiation points in the talks between WGA and Hollywood producers, but these three points I've given are the main negotiation points.

A Wage Gap That's Only Being Brought to the Limelight

While actors are able to get millions of dollars for doing acting work for two months during a movie production, the writers, who've been working on the storyline and writing the scripts that the actors read, get paid less than a living wage for their work. The WGA hopes to redistribute the profits in Hollywood to where writers can start getting their fair share of the profits but unfortunately, the producers would prefer to pay actors more.

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What astonishes me about the massive wage gap between actors and writers is that this wage gap has been going on for decades. Writers are the ones that give birth to our favorite shows and movies, not the actors. The actors only need to look pretty in the camera and follow the storylines and scripts that the writers have made. Without writers, we wouldn't have great entertainment. Without writers, where will we get our entertaining stories? How will directors direct a show or movie without a script or storyline to base their everyday decisions off of? How will an actor know how to create the impression of a character without knowing more about who the character is and what they do during a specific moment in time?

We are very fortunate to have writers continually endure terrible working conditions to craft the stories that we would watch and enjoy on the big screen in theaters, on our phones when riding public transportation to work, and on our TVs during our spare time. If all the writers chose to stop working overnight, it would lead to serious disruptions in content development for all the streaming services we subscribe to and all the movie franchises we're fans of.

"A storyteller (aka a writer) is the bare minimum for excellent quality television and film. If you want to have great stories you have to have great scripts. And how do you get those? You get them from great writers. So why don't we treat them like great writers? Why do we treat them like incredibly disposable individuals?" -Kriss Carr, The John Campea Show (source)

The Effect on Entertainment Companies

The main effect of this strike is that the production of shows and films grinds to a halt. This strike is to Hollywood what the Covid lockdowns of 2020 were to the airline and cruise industry. Not only does the new creation of new content grind to a halt but any existing content that's a work in process can't be completed because writers will refuse to perform revisions or punch-ups (definition: a process where a writer is brought in to revise or add jokes or comedic elements to a script). This will cause delays in production, postponing the release of new content, and potentially lead to a loss of revenue for studios, networks, and other entertainment companies.

In addition to delays in production, a writer's strike can also have long-term effects on the industry. For example, studios and networks may turn to reality TV or unscripted programming as a cheaper alternative to scripted content, leading to a decline in the quality of TV shows and movies as well as a loss of jobs for many industry professionals.

Don't forget that there are more unions out there than the WGA. There's also:

  • Directors Guild of America
  • Motion Picture Editors Guild
  • Screen Actors Guild
  • American Federation of Musicians
  • International Alliance of Theatrical Stage Employees
  • Affiliated Property Craftspersons
  • Animation Guild
  • Art Directors Guild
  • Costume Designers Guild
  • International Cinematographers Guild
  • Make-Up Artists & Hair Stylist Guild
  • Production Sound and Video Engineers Guild

And many more!

This writers' strike is creating unity among all the unions in Hollywood. Other unions are not only inspiring their members to stand in solidarity with the writers but may also capitalize on the opportunity and start demanding better wages for their workers. I say opportunity because this strike is crippling Hollywood. Until the producers realize how important their workers are, they will continue to take them for granted and that's not sustainable.

To conclude, I think entertainment stocks need to go lower because of this strike.

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Film Unions and Guilds: The Complete List | Wrapbook
Know your film unions? Let’s find out! Check out all the film and TV unions across the entertainment industry that you will likely encounter over your career.
Film Unions and Guilds: The Complete List | Wrapbook

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