Existential hand squeezing has always been part of Hollywood personality. But the current crisis in the entertainment capital is different.
Instead of facing unwelcome disruptions, such as the VCR boom of the 1980s, for example, or a combination of disruptions (streaming, pandemic), the film and television business has been hit on many fronts at a dizzying pace. increase. And no one seems to have a solution.
On Friday, about 160,000 unionized actors went on strike for the first time in 43 years. He claimed he was fed up with exorbitant payouts for entertainment industry moguls and worried that the spoils of a streaming-dominated future would not be fairly distributed. They join 11,500 already on strike screenwriters who pulled out in May over similar concerns, including the threat of artificial intelligence. Not since 1960 have actors and writers gone on strike at the same time.
Fran Drescher, a former sitcom star and president of the Actors Guild, said in announcing the strike, “This industry we used to know — when I did ‘The Nanny’ — nobody. was on the gravy train.” “Right now it’s a walled vacuum.”
At the same time, Hollywood’s two traditional businesses, the box office and television channels, are both crumbling badly.
This year was the year when movie-going seemed to finally recover from the pandemic, which closed many theaters for months. Finally, cinema will regain its status as a cultural imperative.
But year-to-date ticket sales (about $4.9 billion) in the U.S. and Canada are down 21% from the same period in 2019, according to Comscore, which compiles box office data. Little hopes, such as the strong sales of Spider-Man: Across the Spider-Verse, were drowned out by the disappointing results of big-ticket movies like Indiana Jones and the Dial of Fate, Elemental, and The Flash. rice field. “Shazam! Wrath of the Gods, and to a lesser extent, The Little Mermaid and Fast X.
According to a recent report by accounting firm PwC, the number of movie tickets sold worldwide could reach 7.2 billion by 2027. The total number of visitors in 2019 reached 7.9 billion.
It’s a slow dying business, but at least it’s better than a fast dying business. According to PwC, fewer than 50 million households will pay for cable or satellite TV by 2027, down from 64 million today and 100 million seven years ago. When it comes to traditional TV, “the world has turned for the worse forever,” SVB MoffettNathanson analyst Michael Nathanson said in a note to clients Thursday.
Disney, NBCUniversal, Paramount Global, Warner Bros. For decades, Discovery has relied on television channels to grow its profits. The end of that era brought about a slump in stock prices. Disney stock is down 55% from its March 2021 high. Paramount Global, which owns channels such as MTV and CBS, fell 83% over the same period.
On Thursday, Disney Chief Executive Robert A. Iger put the sale of the company’s “non-core” channels such as ABC and FX on the table. He said the decline of traditional TV was “a reality we have to face.”
In other words, it’s over.
And then there’s streaming. For a time, Wall Street was lured by the potential to siphon off subscribers to services like Disney+, Max, Hulu, Paramount+ and Peacock, and Hollywood giants poured money into building online viewing platforms. Netflix was taking over the world. Amazon, like the super-rich Apple, decided to go to Hollywood. If the old entertainment company wanted to stay competitive, not to mention relevance, there was only one way to go.
Media veteran Barry Diller said in a phone call, “The entertainment industry is really in the hands of technology companies that have a kind of indifference and cluelessness. That’s not a derogatory term, it’s just a reality. ‘ he said by phone. Last week we mentioned Amazon and Apple.
“For each of these companies, the minor business, not the primary business, is entertainment,” he added. But their size and influence put their smaller interests first when making decisions about the future. “
A little over a year ago, Netflix reported its first drop in subscribers in a decade, sparking interest on Wall Street. Forget subscribers. Now we are profit oriented. Because traditional businesses (box office and channels) are in trouble, at least for established companies.
To make services like Disney+, Paramount+ and Max (formerly HBO Max) profitable, their parent companies have cut billions of dollars in costs and eliminated more than 10,000 jobs. Last year, studio executives put the brakes on ordering new TV series to keep costs down.
Warner Bros. Discovery said its streaming business, with Max at its core, will be profitable in 2023. Disney promised to be profitable by September 2024, but Paramount didn’t anticipate when, according to founder Rich Greenfield, except to say peak losses would be this year. of the research firm LightShed Partners.
Bowing to union demands, which pose new threats to streaming profitability, is not something companies can do without fighting.
“It’s going to hurt in the short term,” said Tara Cole, founding partner of entertainment law firm JSSK, whose clients include Emma Stone, Adam McKay and Halle Berry. “It hurts a lot.”
All signs point to a long and devastating conflict. Agents who have worked in show business for 40 years said the outrage across Hollywood was unlike anything they had seen before.
“Straight out of Les Miz,” one long-time executive said in a text to reporters, describing the uplifting, dramatic us-versus-them mood. Photos of last week’s Allen & Co. Sun Valley media conference, the annual “Millionaire’s Summer Camp” attended by Hollywood’s wealthy, have circulated online. provoked the situation.
Mr. Drescher attacked Mr. Iger on Friday at the Paramount Pictures picket line, but few people in Hollywood would dare to do so without feigning anonymity. She criticizes his salary structure (his performance-based contract allows up to $27 million a year, including stock compensation, which is middle ground for an entertainment chief executive), and other Hollywood moguls as “like medieval barons”. “
“It’s so obvious that he has no idea what’s really going on in the field,” she added. Iger told CNBC on Thursday that the unions’ demands were “completely unrealistic.”
In the coming weeks, studios will likely end lucrative long-term contracts with screenwriters (and some actors and producers), citing force majeure clauses in their contracts. The force majeure clause commences on the 60th or 90th day of the strike, depending on the circumstances of the strike. Agreement is structured. The force majeure clause stipulates that if the contract cannot be performed due to unforeseen circumstances, the studio can cancel the contract without penalty.
Ultimately, a deal was signed with SAG-AFTRA, also known as the Writers Guild and Actors Guild of America.
More serious business challenges remain.
Nicole Sperling Contributed to the report.