What Attys Should Know As Hollywood Writers' Strike Looms

As the deadline for the Writers Guild of America to go on strike is end of business on Monday May 1st, many in Hollywood are working feverishly to get the new contracted completed, or face the consequences of a industry wide writing shutdown.

The following article by Braedon Campbell at Law 360, wrote a comprehensive overview, that should give you a sense of what is at stake.

Law360 (April 25, 2023, 8:44 PM EDT) -- More than 15 years after a 100-day strike that hampered the television and film

industry, the production studios and writers represented by the Writers Guild of America are hurtling toward another

possible work stoppage amid a standoff over pay and work dynamics in the changing industry.

WGA members picket in California as part of the 2007-08 writers' strike. The current three-year contract between the WGA and

AMPTP is set to expire in early May, and if the sides can't reach a new deal or extend the contract, writers may strike again. (David

McNew/Getty Images)

Earlier this month, the writers overwhelmingly voted to authorize their leaders to call a strike, with close to 98% of voters

giving the green light from a pool of just under 79% of the eligible membership. If the sides can't reach a new deal or

extend their current contract by its May 1 expiration date, the writers may put down their pens, which would hamper

production in the near term and could shut down Hollywood if the stoppage drags on.

Here, Law360 looks at what attorneys should know about the simmering conflict.

How did we get here?

With their current three-year deal set to expire in early May, representatives of the Writers Guild of America and Hollywood

production companies began meeting in March to hash out a new contract.

On one side is the WGA, which represents the more than 10,000 scribes who write scripted films and television and

streaming series. On the other is the Alliance of Motion Picture and Television Producers, or AMPTP, which represents

hundreds of movie studios, broadcasters and streamers in bargaining talks with unionized writers, actors, directors and

other industry employees.

The WGA is uniquely strong in the modern bargaining landscape, with a stranglehold on the work under its jurisdiction

and an engaged, united membership that has not been shy about flexing its muscles. The writers last struck in 2007,

seeking to carve out a greater share of the then-booming home video market and claim the writing work in the emerging

streaming segment. Members last authorized a strike in 2017, though the parties would ultimately reach a deal without a

work stoppage, and the union showed its strength again in 2019 when it convinced members to ditch their agents over a

fee dispute.

The latest round of talks comes as the continued rise of streaming services like Netflix and Amazon shakes up

established pay and production models in ways that the writers say cuts their share of industry profits. At the same time,

many on the studio side are enacting layoffs and tightening the purse strings due to growth slowing and a possible

recession looming.

Given the history, there was little suspense around the outcome of the strike vote, though the union set new high marks

for both participation and margin of authorization. With contract expiration days away, the parties continue to negotiate.

What are the issues?

As is often the case with contract talks, money is the main sticking point, though the film and TV industry's unique

compensation structure sets these negotiations apart from many others.

Past conflicts between the WGA and the studios have centered on so-called residuals, or the share of post-production

profits, such as syndication fees and home video sales, that go to writers. Residuals remain a piece of the talks, but

they've taken a back seat this time around in favor of up-front fees as the streamers' rise roils the industry, according to

entertainment lawyer and commentator Jonathan Handel.

"The contention from the Writers Guild is that writers' compensation, for a variety of reasons ... has gotten so diminished

in the last, let's call it six years or so, that the profession is becoming unsustainable for many people," Handel said.

Writers are feeling the pinch because streaming's rise has changed how they're paid, entertainment industry expert and

consultant Kathryn Arnold told Law360. Because content produced for streaming services typically resides on the

platform it's produced for, there are no residuals to be had. And an industrywide, streamer-led shift toward shows with

fewer episodes and longer production schedules has also limited writers' pay, Arnold said.

For years, the norm in TV production was to order shows in sets of 13 episodes at the minimum and 22 episodes for a

standard season, with production spanning six to 10 months and writers taking a fee for each episode, according to

Arnold.

"What's going on now is that ... the streamers are now only doing six episodes or 10 episodes, not as many episodes, and

the time frames for the writing periods are not as finite as they used to be," with the result that writers are getting paid

less for the same or similar amounts of work, she said.

Another key issue driving the focus on up-front pay is the rise of so-called mini rooms, which refers to the practice of

convening a small team of writers for a few weeks to churn out a handful of scripts, often at minimum or low rates.

What are the stakes?

A strike could stall film and series production, though studios can mitigate the hit to their project pipelines, at least in the

short term.

By this point, the studios will likely have undergone strike contingency planning, which involves surveying their ongoing

and upcoming projects to sketch out a release strategy, said Loeb & Loeb LLP entertainment labor practice chair Ivy

Kagan Bierman.

Kagan Bierman, who works with studios but is not involved in the negotiations, said this process begins with a look at

what projects they have in development and whether they should put them on hold. Next, they look at what they have

currently in production and whether this can continue during a strike, followed by an accounting of completed projects

they can release during the slowdown, Kagan Bierman said.

"We do start that process of strike contingency planning well in advance of the deadline for a potential strike," she said.

"It's very specific to each client I work with."

Studios may be able to tap writers during a strike, but this power is limited, Kagan Bierman added. They can try to entice

WGA members to break the strike, though this is a tough sell, because the union can assess fees and suspend or expel

writers from membership, preventing them from getting work in the future. Likewise, the union is liable to bar from future

membership any nonmembers who take work during the strike, discouraging them from joining projects as replacements,

Kagan Bierman said.

The financial costs of a strike are difficult to pin down. The highest estimates of the damage from the last strike, which

ran from early November 2007 to mid-February 2008, pegged the cost at more than $2 billion.

University of California, Los Angeles economist Jerry Nickelsburg said this figure massively overstates the costs of a

strike because both the writers and studios will have taken steps to mitigate their losses. Not only do studios have a

runway in the form of produced or in-production content, but they can make up for lost time on the other side of a strike

with a flurry of projects. And writers can take on other work or spend their downtime on scripts to sell once the strike

ends, Nickelsburg said.

"The real impact was on the people producing perishable goods and services," Nickelsburg said. "Drivers, caterers, the

local restaurants and taverns."

The 2007-08 strike likely cost in the range of a few hundred million dollars, but the precise damage is tough to calculate,

Nickelsburg added.

Can the parties avert a strike?

With the current contract just a few days from expiration, the parties appear dug in, though it's not a certainty that the

writers go on strike.

Handel, the attorney and commentator, said he sees a strike as likely given the WGA's view that the status quo is an

existential threat to members and the studios' resistance to its demands.

Complicating the talks is the fact that the AMPTP is made up of a varied constituency that includes streamers and legacy

studios of a range of sizes whose business models differ widely, Handel added. Netflix is a pure streamer, Disney has its

toes in multiple pools, Sony Pictures has no streaming platform, and so on down the line, he said.

"When the rubber meets the road, and it finally comes time for the studios to say, 'OK, we're going to accept these

compromises,' ... there needs to be a strong leader on the studio side," Handel said. On that note, the recent return of

influential leader Bob Iger to the top job at Disney could help push talks across the finish line, he added.

Arnold, the industry consultant, said it's tough to tell from the outside whether the studios' financial woes will hold up a

deal, but past rounds of negotiations show there tends to be more money in studios' coffers than they let on. And the

entertainment business remains lucrative, though the studios will need talent if they want to keep the money flowing, she

said.

"If they're going to get the quality and bigger numbers and subscribers, they're going to have to pay people so people can

survive, otherwise writers will go and do something else," Arnold said.

But the union, too, must be willing to compromise, Kagan Bierman added. The use of smaller writing rooms in certain

segments of the industry may reflect the costs in those areas, while more profitable segments will employ more writers.

On the other hand, new deals have historically brought with them more money for writers, she said.

"There is room for improvement, but I think the WGA needs to consider the AMPTP's proposals in the context of COVID,

industrywide layoffs and an anticipated recession in order to get to a place of compromise so that the deal can get done

and avert a strike," Kagan Bierman said.

--Editing by Abbie Sarfo and Nick Petruncio.