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https://finance.yahoo.com/video/writers-strike-could-impact-help-204755464.html
How a writers' strike could impact and help studios in 2023
Mon, April 17, 2023 at 3:47 PM CDT
Yahoo Finance entertainment reporter Allie Canal joins the Live show to discuss the impact of a potential writers' strike,
ALEXANDRA CANAL: Well, the environment today is much different than it was 15 years ago. And you see that demonstrated in the catalyst for this potential strike because one of the main reasons that these writers are fighting is because of the payout structure that writing is currently under right now. That hasn't been updated to account for the streaming boom that we've seen along with this recent refocus on profitability.
On the one hand, you have entertainment giants like Disney, like Warner Brothers Discovery slashing costs, announcing mass layoffs, shelving shows and movies, which means less work for writers. And then on top of that, streaming shows take a lot longer to produce. And they have less episodes. Remember, peak TV times, you had episodes of "Friends" that ran 20 to 25 episodes in one season. Now with something like a "Stranger Things" or a "Ted Lasso," you have 8 to 10 episodes at the most.
And in addition to that, the residuals for streaming shows are a lot less than traditional TV. So not only are you having less work for writers, but also less pay overall. Now, with this authorization vote passing, it is widely expected that we will see this strike happen in early May. If you remember the impact that that had back in 2007, we had seasons cut short, backlogs in content. The late night shows were shut down.
And all of that would happen again with really the only savior here in terms of content being reality TVs since that doesn't necessarily need writers. So a lot more "Love is Blind" season to come. But another thing to remember here is that these contracts are updated every three years. Three years ago, we were in the middle of the pandemic. So really, everyone was on the same page with just wanting to--
- Get back to work.
ALEXANDRA CANAL: --keep the peace, get back to work. But now we saw the same issues that we had three years ago in 2020.
- More reality is just what the doctor ordered right now. So there is some theory that this could actually help the studios. Why and how?
ALEXANDRA CANAL: Very interesting note here from Rich Greenfield from LightShed Partners. Now, he basically said a strike would be a net positive for a lot of these companies that struggle with profitability on their direct-to-consumer side. Again, since we're operating in this environment where streaming has become more a part of these company's bottom lines, but you want it to be profitable, this could be a way for them not to necessarily not bear the cost of all of these shows because if you're not bringing new content on the platform, you're then not paying for that content. So that helps with free cash flow. That helps with your operating margins.
Yes, you're going to have stale content. You're not going to have new content. That could potentially impact subscribers. It could lead to increased churn. But remember that investors, they don't really care that much about subscribers anymore. They want to see an improvement on that bottom line. And Greenfield basically arguing that companies like Paramount and Warner Brothers Discovery would benefit the most, considering their balance sheets. But it's this weird roundabout way of how this could potentially help given the environment that we're in now.
- Yeah. I see the investor angle. It's just a little bit ickey from a writers' side.
ALEXANDRA CANAL: Also, another thing to know is, internationally, these strikes and negotiations, it doesn't impact international writers. It doesn't impact international content. Who has been the most successful with international content? Netflix. So that could be a competitive advantage there as well. So very interesting note here.
- See. She cued us up to our next story. That's how Allie Canal does it. Thank you so much.
How a writers' strike could impact and help studios in 2023
Mon, April 17, 2023 at 3:47 PM CDT
Yahoo Finance entertainment reporter Allie Canal joins the Live show to discuss the impact of a potential writers' strike,
Video Transcript
- Welcome back to Yahoo Finance Live. Hollywood faces its first potential writer's strike in 15 years. The Writers Guild of America members voting to authorize a strike if a deal with the studios is not reached by May 1, with nearly 98% voting in favor. Yahoo Finance Senior Reporter Allie Canal joins us now. So Allie, how would a strike now be compared to the one in 2007-2008?ALEXANDRA CANAL: Well, the environment today is much different than it was 15 years ago. And you see that demonstrated in the catalyst for this potential strike because one of the main reasons that these writers are fighting is because of the payout structure that writing is currently under right now. That hasn't been updated to account for the streaming boom that we've seen along with this recent refocus on profitability.
On the one hand, you have entertainment giants like Disney, like Warner Brothers Discovery slashing costs, announcing mass layoffs, shelving shows and movies, which means less work for writers. And then on top of that, streaming shows take a lot longer to produce. And they have less episodes. Remember, peak TV times, you had episodes of "Friends" that ran 20 to 25 episodes in one season. Now with something like a "Stranger Things" or a "Ted Lasso," you have 8 to 10 episodes at the most.
And in addition to that, the residuals for streaming shows are a lot less than traditional TV. So not only are you having less work for writers, but also less pay overall. Now, with this authorization vote passing, it is widely expected that we will see this strike happen in early May. If you remember the impact that that had back in 2007, we had seasons cut short, backlogs in content. The late night shows were shut down.
And all of that would happen again with really the only savior here in terms of content being reality TVs since that doesn't necessarily need writers. So a lot more "Love is Blind" season to come. But another thing to remember here is that these contracts are updated every three years. Three years ago, we were in the middle of the pandemic. So really, everyone was on the same page with just wanting to--
- Get back to work.
ALEXANDRA CANAL: --keep the peace, get back to work. But now we saw the same issues that we had three years ago in 2020.
- More reality is just what the doctor ordered right now. So there is some theory that this could actually help the studios. Why and how?
ALEXANDRA CANAL: Very interesting note here from Rich Greenfield from LightShed Partners. Now, he basically said a strike would be a net positive for a lot of these companies that struggle with profitability on their direct-to-consumer side. Again, since we're operating in this environment where streaming has become more a part of these company's bottom lines, but you want it to be profitable, this could be a way for them not to necessarily not bear the cost of all of these shows because if you're not bringing new content on the platform, you're then not paying for that content. So that helps with free cash flow. That helps with your operating margins.
Yes, you're going to have stale content. You're not going to have new content. That could potentially impact subscribers. It could lead to increased churn. But remember that investors, they don't really care that much about subscribers anymore. They want to see an improvement on that bottom line. And Greenfield basically arguing that companies like Paramount and Warner Brothers Discovery would benefit the most, considering their balance sheets. But it's this weird roundabout way of how this could potentially help given the environment that we're in now.
- Yeah. I see the investor angle. It's just a little bit ickey from a writers' side.
ALEXANDRA CANAL: Also, another thing to know is, internationally, these strikes and negotiations, it doesn't impact international writers. It doesn't impact international content. Who has been the most successful with international content? Netflix. So that could be a competitive advantage there as well. So very interesting note here.
- See. She cued us up to our next story. That's how Allie Canal does it. Thank you so much.
