Hollywood studios will once again meet with striking writers this week as negotiations drag on, surpassing the 100-day mark. But the economic impact of the “double whammy” work stoppage, experts said, is only just beginning.
“We met this week and continued to exchange proposals,” the Writers Guild of America (WGA) wrote to members on Friday, adding, “The Guild will communicate when we think there is something of significance to report.”
SAG-AFTRA — the union that represents approximately 160,000 actors, announcers, recording artists, and other media professionals around the world — also remains firmly on the picket lines after joining striking writers in mid-July.
The bottom line: “We're inching towards compromise,” Scott Purdy, KPMG’s US national media leader, told Yahoo Finance.
The WGA is fighting for more protections surrounding the role of artificial intelligence in media and entertainment, in addition to higher streaming residuals as more movies and TV shows go direct to streaming. These demands are similar to those made by the actors' guild.
Purdy predicted the strikes could likely last “two to three times” the prior 2007-2008 strike, which lasted for 100 days. That means a work stoppage that can run well into 2024.
“The negotiating will happen when the pain on both sides gets to be too much,” Purdy said. How so? When writers and other content producers can't hold out any longer without a source of income — and the studios run out of new content.
He added: “I really think there's too much pain to miss an entire other season. Right now it's a lose-lose situation.”
Hollywood actors Susan Sarandon, second from left, Rosie Perez, third from right, Ezra Knight, second from right, and Julianna Margulies, chant slogans as they participate in a picket line outside Warner Bros., Discovery, and Netflix offices in Manhattan, Friday, Aug. 18, 2023. The WGA and SAG-AFTRA held a joint Latine Picket, presented by the WGAE Latine Writers Salon, the WGAW Latinx Writers Committee, and the SAG-AFTRA National Latino Committee. (AP Photo/Mary Altaffer)
The double strikes, meanwhile, will likely have serious economic implications, as the last writers' strike demonstrated.
According to estimates from the Los Angeles County Economic Development Corp., that work stoppage cost the Los Angeles County economy a whopping $2.5 billion.
Kevin Klowden, chief global strategist at the Milken Institute, estimated the current strikes could cost the national economy $4 billion-plus. He explained that the work stoppage will impact other businesses besides just production — restaurants, catering companies, trucking agencies, dry cleaning businesses, among many others.
“A strike like this, especially as it's expanded to not just the writers but this time with the actors, is a total stoppage to almost everything that's scripted,” he told Yahoo Finance Live. “And it's not just impacting these industries in California, but also [New York, Atlanta, Albuquerque, Pittsburgh] and all sorts of places where filming actually takes place.”
Klowden shared Purdy's view that both sides will eventually have to cave, “but it doesn't seem like either side is ready to” right now.
The strategist noted churn, or consumers cancelling their streaming plans due to a lack of content, will likely be a critical factor in determining a possible end date. Higher streaming prices have also caused further concerns.
Still, Klowden warned nobody is safe, especially coming out of the pandemic.
“Everybody's in a precarious position,” he said. “Nobody really wanted the strike. But at the same time, both sides see the current situation as not viable.”
