[ The unions raised the need for antitrust enforcement, and the
Biden administration’s top antitrust cops paid attention. The
one-two punch of simultaneous WGA and SAG strikes, for the first time
in 60 years, has stalled out virtually all productions.]
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WHAT MIGHT FINALLY RESOLVE THE HOLLYWOOD STRIKES  
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David Dayen
August 22, 2023
The American Prospect
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_ The unions raised the need for antitrust enforcement, and the Biden
administration’s top antitrust cops paid attention. The one-two
punch of simultaneous WGA and SAG strikes, for the first time in 60
years, has stalled out virtually all productions. _

Members of SAG-AFTRA and supporters picket outside the offices of
Amazon and HBO in New York, August 14, 2023., Matthew Rodier/SIPA USA
// The American Prospect

 

Combination tropical storms and earthquakes aside, there is stronger
optimism in Los Angeles this week that the summer of agitation by
workers in this company town will bear fruit. The studios are engaged
in what by all accounts appear to be legitimate talks
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end the Writers Guild strike that is now in its fourth month. While
key issues like the preservation of writers’ rooms had previously
been off the table, they are now being discussed seriously. The
studios are also now offering real viewing data
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streaming as part of the talks, which is a way to quantify real
residuals, a key Guild demand.

There isn’t yet consensus on a resolution. But as a reminder, the
initial stance of the studios was to essentially starve out the
writers
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force them into agreement out of desperation. What changed this
posture?

Obviously, the one-two punch of simultaneous WGA and SAG strikes, for
the first time in 60 years, has stalled out virtually all productions.
If production was continuing, studios could have made programming for
perhaps a year or more without new scripts, but the actors’ strike
reduces their inventory to already completed productions still
undergoing editing. The consequent economic damage from the lack of
production, as the _L.A. Times_ has reported
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builds pressure for an agreement.

The difficulties studios are having
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launching movies since Barbenheimer weekend suggests that existing
inventory is in trouble as well. It’s now evident that actors are
critical to getting people to theaters, and with the strike
effectively ending all celebrity publicity, releases
like _Strays_ and _Blue Beetle_ have suffered. One box office
analyst said the lack of actor promotion translates to 10 to 15
percent of a film’s revenue. It’s no wonder, when the talent
provides that much value, that they want to be fairly compensated for
their work.

On the television side, networks can spin up plenty of reality and
game shows, and hope that the upcoming football season can restore a
measure of interest. But television accounted for less than half of
viewing time
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the first time ever in July, and the strike is only accelerating the
cable cord-cutting, the way the pandemic accelerated e-commerce. With
nothing scripted on broadcast TV, people will naturally move to
streaming libraries, and advertising will dry up, destroying studio
balance sheets.

As I noted last week
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the shift to streaming is intentional, because it affords the studios
cheaper labor costs. That’s what the whole strike is about, and
it’s a grim irony that the labor action is just heightening the
incentives to rush into streaming. But even the streamers need fresh
content to prevent viewers from hopping in and out of their platforms.

More important, the Writers Guild has connected this trend to how the
dominant players in the industry are breaking the law. In a report
released last week, “The New Gatekeepers: How Disney, Amazon, and
Netflix Will Take Over Media
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the WGA peers into the future of the entertainment business model and
finds just three companies likely to control “what content is made,
what consumers can watch, and how they can watch it.”

Over the past decade, anti-monopolization has gone into reverse, even
as distribution channels expanded.

The report was intended for the eyes of the Biden administration’s
antitrust enforcers. It recommends that Disney, Netflix, and Amazon be
prevented from any further consolidation, and investigated for
anti-competitive practices in streaming. It was a call from inside the
industry to break the industry up. And the administration got the
message. That may be the primary reason why the studios are
backtracking.

We have been here before, as the report points out. The government
used the Financial Interest and Syndication (fin-syn) rules to
separate production from distribution to the three major TV networks
in the 1970s. This bolstered independent production companies and
ensured prosperity in the industry, also enabling cable to eventually
expand the possibilities for entertainment. The Paramount decrees in
the 1940s similarly separated production and distribution in movie
theaters.

Over the past decade, this anti-monopolization has gone into reverse,
even as distribution channels expanded. Disney has used acquisitions
to centralize control, beginning with its purchase of ABC in the
1990s. More recently, Disney’s purchases of Marvel, Pixar, and
Lucasfilm, along with Fox assets, made it an unquestioned leader in
production, which it used for its own distribution through streamers
Disney+ and Hulu (where it is majority owner). “In the 2021-2022
season, every original scripted series made for Disney+ was
self-produced, along with the vast majority of series on Hulu,” the
report notes.

Time Warner, Paramount/Viacom, and NBCUniversal have followed
Disney’s lead in streaming, but Disney is the unquestioned leader.
By 2025, half of all streaming revenue in the U.S. is expected to flow
to Disney. The company has also led in spiking consumer prices
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streaming, even as actors and writers are paid less. Disney has forced
creators to forsake future licensing revenue for a chance to work with
them on projects; if you say no, a large chunk of the industry is
closed off.

Amazon uses streaming as a perk for its e-commerce business. Through
Amazon Studios and MGM, which it bought in 2022, it’s a producer,
and though Amazon Prime and Freevee, it’s a distributor. But
Amazon’s control of Fire TV, a streaming video device that’s tied
for the biggest in the U.S., is a bigger factor. Through Fire TV,
Amazon can control which streaming channels get to viewers. Much like
it does in e-commerce, Amazon strikes deals with smaller streamers in
exchange for a cut of the profits, which can be as high as 50 percent
of monthly revenues. By keeping HBO Max off Fire TV when it launched
in 2020, Amazon deliberately slowed its growth.

Netflix was initially a competitor to cable that offered good terms to
independent producers. But now, 61 percent of original scripted series
on Netflix in 2021-2022 were self-produced, and it never produces for
other distributors (neither does Amazon). Netflix has said explicitly
that they produce in-house to lower costs, but the result is control
of the market, which it is using to buy film production, animation,
and video game studios.

There are other streaming platforms, but the WGA reasonably predicts
that if Disney, Amazon, and Netflix are allowed to continue their
practices, those other platforms will wither away or be bought by one
of the Big Three, which Wall Street analysts have already begun to
demand.

The three walled gardens have essentially recreated the state of the
three major networks before the fin-syn era, the WGA explains. That
brings us back to the issues in the writers’ and actors’ strikes:
low starting salaries, little or no residuals, the inability to move a
production from one walled garden to another, no recourse when the Big
Three reduce investment, and rising fees for consumers, who are
essentially trapped for their entertainment dollar. “Unless
antitrust agencies and lawmakers prevent future merger activity by
dominant firms and step in to preserve and protect the competitive
environment for other streaming services, the future of content is in
peril,” the report concludes.

That’s why it’s so interesting that Federal Trade Commission chair
Lina Khan went on the podcast of The Ankler
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popular website that covers the entertainment industry. Khan
essentially affirmed the WGA’s concerns, saying that there appeared
to be a “broken” market structure, and that the fin-syn rules, and
the associated efforts to separate production and distribution in
movies, “created a healthier ecosystem than a situation where you
have a handful of gatekeepers.” Khan has also visited picket lines
during the strikes.

Ultimately, that’s the reason the studios are back at the table with
the WGA. As Matt Stoller points out
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it’s easy for top executives to think they can do whatever they
want, right up until the moment that the government tells them
they’re breaking the law. It’s not just that the WGA called for
the breakup of the industry’s biggest players, which got plenty of
attention
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It’s that the union actually has people in government who share
their concerns. Polls also make clear that the public overwhelmingly
supports the actors and writers
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this fight.

The revival of talks is only an initial step. Studio executives may be
concerned enough to come back to the bargaining table, but a fair
contract does not lead to a fair market structure. However, the
dissonance between the system that worked in the past and the system
that has everyone in the industry at each other’s throats today is
undeniable.

Perhaps the most important lesson here is the essential linkage, in
industry after industry, between market power and labor. That was a
lost connection for decades that is only now being revived, hopefully
in time to save Hollywood.

_[DAVID DAYEN is the Prospect’s executive editor. His work has
appeared in The Intercept, The New Republic, HuffPost, The Washington
Post, the Los Angeles Times, and more. His most recent book is
‘Monopolized: Life in the Age of Corporate Power
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_Read the original article at Prospect.org
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_Used with the permission. © The American Prospect
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All rights reserved.  _

_Support the American Prospect [[link removed]]._

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brand of independent impact journalism_

* Anti-trust
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* Labor Unions
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* Strikes
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* NETFLIX
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* Amazon
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* Disney
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* Federal Trade Commission
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* actors
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* Writers
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* SAG-AFTRA
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* Screen Actors guild
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* Hollywood Strikes
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* residuals
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* streaming
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* royalties
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* Cable
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* AI
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* artificial intelligence
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* Fran Drescher
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* Hollywood
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* Hollywood studios
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* Films
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* movies
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* television
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* Alliance of Motion Picture and Television ProducersAmerican
Federation of Musicians
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* AMPTP
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