Profits at major media companies have been stronger than expected as a double strike by Hollywood writers and actors continues.
While executives who make and distribute movies and TV shows say they want their employees back as soon as possible, their businesses see a huge short-term benefit from the shutdown: No production means no spending.
Netflix kicked off its earnings season last month with a big announcement: Due to the strike, it expects free cash flow to rise by about $1.5 billion (nearly Rs 1,242 crore) this year from its initial forecast. Warner Bros. Discovery saved $100 million (nearly Rs. 830 crore) on film and television production costs in the second quarter. If the strike continues until the end of the year, that number will rise to hundreds of millions.
The Walt Disney Co said on Wednesday it expects to cut film and television production costs by $3 billion (nearly Rs 2,483 crore) this year.
All of this partly explains why progress in solving the problem has been so slow. The studios, with their vast libraries of newly completed movies and TV shows, will get billions in extra cash before the long-term damage from the strike becomes apparent. Likewise, many members of the high-profile Writers Guild and Screen Actors Guild have other jobs outside of Hollywood and have faced little pressure to compromise.
Paramount Worldwide CEO Bob Bakish didn’t disclose a specific figure for his company, parent of CBS and Paramount Pictures, to save. He told investors this week that the company has enough movies and shows to keep viewers watching and going to theaters in the coming months.
Paramount Worldwide President and CEO Bob Bakish attends the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, USA, Tuesday, July 11, 2023. The summit is usually a hotbed for handshake mergers but could take on a very different tone this year amid low deal volumes, inflation and rising interest rates.
“We’re in really good form,” Bakish said.
The writers’ strike, which began in May, has been longer than the union’s 2007 shutdown. Production of new films and television, especially scripted series, has all but ground to a halt. The cast exited in July.
On Thursday, the Writers Guild said it received new requests for meetings from studio negotiating teams, which will take place Friday. The union said it expected a response to its latest proposal.
There are already some effects: Networks are retooling their fall schedules to include reality shows unaffected by the strike. Studios have delayed the release of some films because actors were not allowed to promote them during the strike.
Still, executives kept the impact to a minimum on conference calls with investors. As Comcast’s president, Mike Cavanagh, who oversees NBCUniversal’s film and television business, expects free cash flow to increase this year and working capital to decrease as productions are put on hold. When the strike ends, the situation will reverse.
“It’s all manageable,” Kavanagh said.
Writers and actors, while represented by separate unions, have similar demands in negotiations with studios. They are looking to increase their base salaries, as well as their share of revenue from shows that run on streaming services. They also want reassurance that their jobs will not be replaced by AI.
“Our studios really want to squeeze us in order to make more money, and we’ve had enough,” actor and strike leader Darsan Solomon said on the picket line in late July. “We need to do this again.” earn a living.”
Netflix co-CEO Ted Sarandos told investors on an earnings call that his father was a union electrician and he understands the toll a strike can take on families.
“There are some complex issues,” he said. “We are very committed to reaching an agreement as soon as possible.”
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