Hollywood Writers' Strike May Lead to Cost-Cutting

​If the Hollywood writers' strike is lengthy, the entertainment industry might respond by cutting costs, including exiting talent contracts it no longer wants.

Money is a main factor motivating the strike, said Steven Katz, an attorney with Constangy, Brooks, Smith & Prophete in Los Angeles. "I think the biggest driver is the rise in streaming in entertainment," he said. "As streaming services have become more popular, they have begun to produce more original content, which has created new issues around compensation and residuals for writers."

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Deals with Some Writers May Be at Risk

If the strike is prolonged, studios may try to exit deals with some writers by exercising "force majeure" provisions in contracts, senior entertainment executives said. Those clauses excuse parties from their obligations because of extraordinary occurrences outside their control.

Such cost-cutting happened during the last writers' strike, in 2007 and 2008, which lasted about 100 days. "Everyone is looking to cut development costs. It would be surprising to me if there weren't conversations occurring around this," said Briana Hill, a lawyer at Pryor Cashman in Los Angeles.

(The Wall Street Journal)

Force Majeure Clauses

The force majeure clauses say that if a massive event such as an earthquake, civil unrest or a labor strike shuts down a business for at least six to eight weeks, depending on what duration was negotiated, the studio or streamer can terminate the overall deal. While many deals may be terminated, some might be renegotiated under the threat of termination.

(Vulture)

Studios Prepared for Strike

Studios quietly planned for the Writers Guild of America (WGA) strike for months, stockpiling unscripted programming and doling out early renewals.

Television series are much more affected than streaming, according to one veteran movie studio executive. "The one issue where you will see genuine concern immediately is if the directors and actors join in. … [And] if the strike extends beyond four months, then we really start to worry."

(The Hollywood Reporter)

Pay, AI Fears Led to the Strike

Writers have been hurt by the shifts in TV production away from 22 to 24 episodes per season over an eight- or nine-month time frame to being hired on a series for only six, eight or 10 episodes—a "short-order show." Writers are typically paid by episode. The fear is that streaming companies have decided they do not need to hire so many writers or make so many episodes to attract subscribers.

Writers also fear the studios will use artificial intelligence to replace them. The guild offered a proposal that would protect writers from encroachment by AI on their credits and compensation, but that was rejected. Others think AI won't replace writers but could be helpful to them in creating "para-literary material" like pitch decks.

(Variety)

Who Is Involved in the Strike?

Approximately 11,500 film and TV writers belong to the WGA. They are negotiating with the Alliance of Motion Picture and Television Producers (AMPTP).

The studios "have closed the door on their labor force and opened the door to writing as an entirely freelance profession," WGA leadership said in a statement. That has created a "gig economy inside a union workforce," it added.

The AMPTP said the primary hurdles to a deal were the guild's request for a minimum number of scribes per writer room. The AMPTP added that its offer "included generous increases in compensation for writers as well as improvements in streaming residuals."

(CBS News)