Personal Finance Defined

LOS ANGELES (Reuters) – Thousands of film and television writers will go on strike starting Tuesday, throwing Hollywood into turmoil as the entertainment business grapples with seismic changes triggered by the global streaming TV boom.

The Writers Guild of America (WGA) called its first work stoppage in 15 years after failing to reach an agreement for higher pay from studios such as Walt Disney (NYSE:) Co and Netflix Inc (NASDAQ:). The last strike lasted 100 days and cost the California economy more than $2 billion.

“The companies’ behavior has created a gig economy inside a union workforce, and their immovable stance in this negotiation has betrayed a commitment to further devaluing the profession of writing,” the WGA said in a statement on its website.

The Guild represents roughly 11,500 writers in New York, Los Angeles and elsewhere. Members were scheduled to start picketing outside of Hollywood studios starting Tuesday afternoon.

The Alliance of Motion Picture and Television Producers (AMPTP), which represents the studios, said late on Monday it had offered “generous increases in compensation” to writers but the two sides were unable to reach a deal.

Media companies are facing a tough economic backdrop. Conglomerates are under pressure from Wall Street to make their streaming services profitable after investing billions of dollars on programming to attract subscribers.

The rise of streaming has led to declining television ad revenue, as traditional TV audiences shrink and advertisers go elsewhere. On top of that, the threat of a recession in the world’s biggest economy also looms.

The last WGA strike, in 2007 and 2008, cost the California economy an estimated $2.1 billion as productions shut down and out-of-work writers, actors and producers cut back spending.

STICKING POINTS

Producers were prepared to increase their offers of higher pay and residuals, the AMPTP said, but were “unwilling to do so because of the magnitude of other proposals still on the table that the Guild continues to insist upon.”

The primary sticking points, the group said, were proposals that “would require a company to staff a show with a certain number of writers for a specified period of time, whether needed or not.”

The WGA countered that the studios’ responses to its proposals “have been wholly insufficient, given the existential crisis writers are facing.”

“The companies have broken this business. They have taken so much from the very people, the writers, who have made them wealthy,” the Guild added.

Writers say they have suffered financially during the streaming TV boom, in part due to shorter seasons and smaller residual payments. Half of TV series writers now work at minimum salary levels, compared with one-third in the 2013-14 season, according to Guild statistics. Median pay for scribes at the higher writer/producer level has fallen 4% over the last decade.

Artificial intelligence is another issue at the bargaining table. The WGA wants safeguards to prevent studios from using AI to generate new scripts from writers’ previous work. Writers also want to ensure they are not asked to rewrite draft scripts created by AI.

Until the conflicts are resolved, some TV programming will be disrupted.

Late-night shows such as “Jimmy Kimmel Live” and “The Tonight Show with Jimmy Fallon,” which use teams of writers to pen topical jokes, are expected to immediately stop production.

That means new episodes will not be available during their traditional TV time slots or on the streaming services that make them available the next day.

Further ahead, the strike could lead to a delay of the fall TV season. Writing for fall shows normally starts in May or June. If the work stoppage becomes protracted, the networks will increasingly fill their programming lineups with unscripted reality shows, news magazines and reruns.

Netflix may be insulated from any immediate impact because of its global focus and access to production facilities outside of the U.S.

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