Hollywood Strikes Finally End: Mixed Mood Prevails

It should be a rapturous time in Hollywood.

Writers have been back at their keyboards for a month, having negotiated a strike-ending deal so favorable that it seemed to leave even them a bit gobsmacked. On Wednesday, the actors’ union said it had negotiated a tentative contract of its own, all but ending its 118-day strike and clearing a path for the film and television business to roar back to life for the first time since May.

Champagne for everyone!

Instead, the mood in the entertainment capital is decidedly mixed, as celebratory feelings compete with resentment over the work stoppage and worries about the business era that is coming.

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“People are excited — thrilled — to be getting back to work,” said Jon Liebman, co-chief executive of Brillstein Entertainment Partners, a venerable Hollywood management firm. “But they are also mindful of some sobering challenges that lie ahead.”

Analysts estimate that higher labor expenses will add 10 percent to the cost of making a show, and studios are expected to compensate by cutting back on production.

According to analysts, higher labor expenses will add 10 percent to the cost of making a show, leading studios to consider cutting back on production.

Hulu, for instance, expects the number of new shows it makes in 2024 to fall by about a third from 2022.

The Directors Guild of America also has a new contract that guarantees raises. And two more union contracts, both covering crews, come due in the next few months. Studios will either have to pay up or risk another shutdown.

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“READY for our contract fight next year,” Lindsay Dougherty, lead organizer for Teamsters Local 399, recently said on Twitter. Her branch represents more than 6,000 Hollywood workers, including truck drivers, location managers, and casting directors.

Put another way, 599 adult scripted series were made last year. Some analysts predict that, by 2025, the annual number will be closer to 400, a roughly one-third decline. Even the most modest series employs hundreds of people, including agents, managers, publicists, and stylists, who in turn fuel the broader economy.

The profitability challenge for streaming services remains largely unsolved. While Netflix and Hulu make money, Disney+, Paramount+, Peacock, and others continue to lose money. Most analysts believe that there are too many streaming services and that the weaker ones will either close or merge with bigger competitors.

The entertainment industry's cable television and box office problems have also worsened during the five-month strike period. Fewer than 50 million homes in the United States are expected to pay for cable or satellite television by 2027, down from 64 million today and 100 million seven years ago. The decline in cable viewership has negatively affected cable networks like ESPN and Paramount Global's portfolio centered on Nickelodeon and MTV.

The film business is also facing uncertainty as movies now arrive in homes, either through digital stores or streaming, after as little as 17 days in theaters compared to the previous standard of about 90 days. Audiences have started to tire of Hollywood's reliance on endless sequels, resulting in lackluster performance for several blockbuster franchises.

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While theaters are not completely dead, with some recent movies drawing large audiences, ticket-buying data shows a worrisome trend of reduced movie attendance. Cinemas in North America have sold about £6.1 billion in tickets this year through October, which represents a 17 percent decline compared to the same period in 2019.

Amid the strikes and a volatile entertainment marketplace, businesses in Hollywood are trying to cut costs. Anonymous Content, a production, and management company, laid off 8 percent of its staff last month while other agencies, including United Talent Agency, also trimmed their headcount.

DreamWorks Animation and Starz are also reducing their workforce. Even Disney, considered the strongest among old-line entertainment companies, has been affected by stock price declines and is exploring options to cut costs and sell certain assets.

Disney's vulnerability has attracted activist investor Nelson Peltz, who intends to push for board seats. In response to market challenges, Disney has already reduced its content production and spending.