Pondering The Imponderable: How A Restructured Hollywood Would Deal With Striking Writers
While pre-Oscar limousines squeezed in and out of the Peninsula and a political crowd rallied at UTA, an industry power player (who will remain nameless), was fretting over lunch about another problem on Friday: Will the coming months bring a Hollywood writers strike? And, more precisely, which companies will be most exposed if labor peace breaks down?
It’s too early to worry in any serious way about a possible strike by the Writers Guild of America, East and West. Contract negotiations between the guilds and the Alliance of Motion Picture and Television Producers won’t begin until March 13, and the current contract with movie and television writers runs until May 1.
When it comes to union politics, three months is an eternity. Anything can happen.
But this particular power player, a top-tier executive, was mulling a point best considered early by all parties to the talks. Hollywood’s business structure, he noted, has changed radically since the 100-day writers strike that began in early November of 2007. If push comes to shove, the pressure points will be much different this time around — and how the new dynamic will work is far from clear.
The producers alliance, according to its website, negotiates contracts for about 350 companies, give or take. But the heaviest issues are decided by no more than a couple dozen large networks and studios, with sub rosa input from the major talent agencies who are not members, but inevitably become a conduit between companies and writer-clients. The last strike was settled in February of 2008, partly through a back-channel foray that involved the Endeavor agency’s Rick Rosen and one of his writer clients, Laeta Kalogridis.
In 2017, noted the mulling executive, the member companies have become far more divergent in their structure and strategic posture than they were even in 2007, when trends toward conglomeratization and digital transition were well underway.
Some corporations — Lionsgate, CBS, and perhaps Viacom — the executive theorized, are in a fairly conventional position when it comes to a possible strike: They are heavily invested in the production and distribution of entertainment, and hence, heavily exposed to any shutdown. Their reflexes, one guesses, would mirror the flight-or-flee responses of companies in past labor crises.
For others, by contrast, entertainment is an ever-smaller part of the overall corporate equation, perhaps making it easier for a parent to ride out a strike. If Time Warner and AT&T complete their merger, the Time Warner operations are expected to account for just 15 percent of what might approach $200 billion in combined revenue. At Warner, a couple of rungs down the corporate ladder, chief Kevin Tsujihara might not feel quite the same urgency his predecessor, Barry Meyer, brought to the 2007-8 negotiation.
At Universal, a huge company, General Electric, was already an owner in 2007; but this time, Comcast, a cable giant with different priorities, will be calling the final shots. At Fox, Peter Chernin, a force in settling the last strike, is long gone, and controlling shareholder Rupert Murdoch has increasingly left strategic issues to his sons — how they will respond to a labor crisis is anyone’s guess.
The foreign factor is also different. Sony Corp. already owned Columbia Pictures and associated units in 2007. But Sony’s current chief executive, Kazuo Hirai, is suddenly much deeper in the mix: He has said he will be spending time in Culver City every month, even as the strike deadline nears. And now, of course, Chinese owners and investors are a presence at Legendary and elsewhere.
Similarly, on-line distribution brings new owners and a new equation. Amazon, with some $136 billion in annual revenue, might not bat an eye if its Amazon Studios were forced to shut down for a while. Netflix, without the luxury of a large retail-oriented parent, would be more exposed, but might fill its maw by purchasing programs abroad, the executive said.
And what of those sub rosa brokers, the agencies? Now, the two biggest agencies, William Morris Entertainment and Creative Artists Agency, are deeply invested in sports — which, for them, should lessen the impact of a Hollywood strike. But they are also beholden to new investors, Silver Lake and TPG, respectively; and those new owners might not be happy with a jolt to their financial projections or disruption of any plans to sell public stock.
How this game plays out is still an imponderable. But it won’t be a replay of 2007.
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