The Journal. - The Actors Strike Is Over. Who Won?

Episode Date: November 15, 2023

The longest actors strike in Hollywood history finally came to an end last week. WSJ’s Joe Flint explains why it took so long, and how the industry might change as a result. Further Listening: -The Case of the Hollywood Shutdown  -2023: The Year of the Strike  -One Hollywood Writer on the Industry’s ‘Dire’ Situation  Further Reading: -The Actors Strike Is Over. Now Comes the Wait for New Films and Shows.  -The Sticking Point That’s Keeping Actors on Strike  -Hollywood Actors Reach Agreement With Studios, Streamers to End Strike  Learn more about your ad choices. Visit megaphone.fm/adchoices

For the last six months, Hollywood has been consumed by strikes. One day longer! One day stronger! One day longer! Writers and actors have been on the picket line, fighting with big studios. In September, writers reached a deal, but actors were still holding out. Our colleague Joe Flint, who covers Hollywood, was right in the thick of it. We'd been aware that they were inching closer to deal for the last several days.

So pretty much every day for the past week, I've been checking in with both sides. Where are we? What is the holdup? What's going on? Because every day we kept hearing, this could be the day. And I checked before I went to bed because the last few times these things have happened late at night. So I'm literally reaching out to people. Can I go to bed now?

That was sort of my level of being plugged in. Can I go to bed? You're just like living and breathing this thing. Exactly. Kind of living and breathing this thing. And then last week, the longest actor strike in Hollywood history finally came to an end.

Fran Drescher, their president of the Actors Union, made the announcement. We hold in our hands a record-breaking contract that has broken new ground and pattern again and again and again. And actors' reactions were Oscar-worthy. Did they f***ing do it? You guys did? I just did. I'm so happy that we came to an agreement, man. So, so happy. It's huge. Congrats, everybody. Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Wednesday, November 15th. Coming up on the show, the winners

and losers of the actor strike. Need a great reason to get up in the morning? Well, what about two? Right now, get a small, organic Fairtrade coffee and a tasty bacon and egger breakfast sandwich for only $5 at A&W's in Ontario. Hollywood's season of strikes began in May. Writers, or the Writers Guild of America, headed to the picket line first.

Outside Warner Brothers, Paramount, Sony, Netflix, and the other Hollywood studios, and on the streets of Manhattan, striking writers united behind a single message. And then the actors' union, known as SAG-AFTRA, joined them in July. This week, 160,000 actors joining Hollywood writers on the picket line. One of the biggest things motivating both writers and actors was Hollywood's shift to streaming. Unions said the push towards streaming hurt their members' paychecks, especially for non-celebrity actors and writers. Well, the forces leading up to the strikes were multiple, but primarily the idea that the residuals that come from streaming services, be it Netflix, primarily Netflix. I mean, in many ways, this was the strike that Netflix wrought. They're the first streamer. They're the game changer.

They've spent all this money on content. A lot of people went to do work with them. And lo and behold, they're not sharing in the success of these streamers. In the old days, actors and writers got paid residuals any time a show aired a rerun. And if it was successful,

they made even more money. But with streaming, royalties were initially much lower. And actors and writers might not make any more money, even if their show was widely streamed. These tensions have been building for some time. The unions negotiate their contracts every three years, and streaming came up as a major issue during talks in 2017 and again in 2020 during the pandemic.

But both times, strikes were averted. And then 2023 rolls around and lo and behold, the studios take a very hard line approach to the writers and to the actors. I don't think they expected the resiliency of both these guilds. I think they thought they could kind of steamroll over them. And the guilds had kind of had enough. They felt like they'd been jerked around for at least the last six years. And it was now or never to draw a line in the sand. So they drew that line and called for a strike.

And as a result, pretty much all of Hollywood and a big chunk of L.A.'s economy ground to a halt. So movies that were in production went into limbo, TV shows, same. Movies that were finished and ready to be released couldn't be because there were no stars to go out to promote them. Same with some television shows because they don't want to just throw this stuff out there without any stars. So there was a real shutdown of everything in production calendars, thrown into chaos. Writers reached a deal first in September. They secured significant increases in royalties, more job protection, and a guarantee that studios would be transparent about how they use AI. So the writer's strike gets done. A lot of people thought, okay, well, this will be easy now. We've got a template here for the actors. But the actors clearly wanted a lot more AI safeguards,

and were looking for more significant increases. Even some of their language was just like, hey, nothing against the writers, but we're the straw that stirs the drink. You can't make this stuff without us. Uh-huh. They don't come for the story, they come for me, doll. Right. We're the stars.

Exactly, exactly. So the actor's strike continued, and negotiations were tense. Here's Fran Drescher in a speech last week talking about the toll the talks took on her. For me, the whole thing, the weight of it all was extremely stressful. I, you know, many times had to stay home on Zoom and, you know, lead in my bathroom because it was just so stressful. But she was.

She was going on, in all honesty, talking about how stressful this was, that she felt like, you know, they tried to destabilize the union by jerking them around with the talks, with the walking away, with everything they were doing was meant to destabilize them. So it was ugly. One of the big sticking points, of course, was money. Actors introduced this idea of a revenue share as a solution to the streaming problem. They asked for 2% of all streaming revenue to be set aside into a bonus pool that could be used to pay actors if their shows or movies were

successful. Studios, many of which are still losing money on streaming, said there was no way they could afford to pay that. Actors then dropped the request down to just 1%. But again, studios said no way. So the actors pivoted. Instead of asking for a percentage of all streaming revenue, they started asking for 57 cents per subscriber. And they came up with this figure of like 57 cents a subscriber. That's nothing. 57 cents, that's a postage stamp. It's like, well, multiply that out by the number of subscribers. Not to mention, some services may cost $14 a month, where $0.57 doesn't seem like much, but another service might be $5.99 a month. So $0.57 does become a little bit.

And Ted Sarandos, co-CEO of Netflix, called this a levy on their subscribers. And it was also just going to be a non-starter. A levy on top of our revenue or per subscriber with no insight into the revenue per subscriber or anything. It just felt like a bridge too far to add this deep into the negotiation. In October, the two sides were so far apart that they stopped negotiations altogether. SAG-AFTRA wrote a letter to its members that month

attacking the studios. It said they were using, quote, bully tactics and refusing to share even a, quote, tiny portion of the studios. It said they were using, quote, bully tactics and refusing to share even a, quote, tiny portion of the revenue. Coming up, how SAG and the studios found their Hollywood ending. Summer is like a cocktail. It has to be mixed just right. Start with a handful of great friends. Now, add your favorite music. And then, finally, add Bacardi Rum.

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Studios had delayed major movies, like Dune Part 2 and Godzilla. Networks had to scrap their fall TV lineups. And some big-time actors were getting frustrated. And they started putting pressure on the union to reach a deal with the studios. George Clooney, Ben Affleck, Emma Stone, those types going in, you know, Clooney had an idea about maybe some ways, other ways SAG can get money and, you know, settle this thing. All that created a little bit of pressure.

Talks resumed in late October. And then, last week, finally, SAG-AFTRA announced they had a deal. They didn't get that share of streaming fees they wanted, but working actors did get a big pay raise. So, basically, a first- year wage increase of over 11%, which is the biggest increase I think that the studios have given actors in more than 40 years. They got streaming performance related bonuses that certainly are greater than the studios wanted to give. I think the studios are happy it's over. They gave up more than they wanted to.

And the union also says it secured big wins when it comes to artificial intelligence. What were the actors afraid of going into this negotiation when it comes to artificial intelligence? They were afraid of basically having their likeness used without being compensated for it. So I sign up to do a movie and then somehow or another I'm in a spinoff or a sequel, whatever, whatever, but I didn't approve it. I didn't sign off on it, but my likeness is there.

So what did the actors get? How did this issue get resolved? So performers are entitled to consent when a producer uses the performer's name and features to prompt a generative artificial intelligence system to create a synthetic or fake performer with a principal facial feature, eyes, ears, nose, mouth that is recognizable as that of the performer. So if you want to use AI to shoot for two days, like I shoot for five days and then you're going to use AI Joe for two more days.

Right. But you still have to pay real Joe for this. So that being the case, you need my consent and I have to pay real joe for this so that being the case you need my consent and i have to be compensated is it really worth it to use the ai you know you're gonna save that much even on top of having to pay me and get my authorization and everything else so that's where it becomes sort of you can see if you're the actors guild you, you'd be like, yeah, that's a good win. It kind of disincentivizes them from doing that. But not everyone is happy with what the union agreed to. Some actors say the use of AI shouldn't be allowed at all. Union leaders acknowledge that the deal is not, quote, perfect,

and that the union will keep fighting to get further protections in the future. So at a high level, who won and who lost? Well, it's tough to look at these companies like Netflix and Warner and these super mega companies as quote unquote losers, given the amount of money revenue they make from their streaming services and profits as well. But, I mean, if you had to say, I mean, of course, believe me, I can go out on the street and find you 10 actors and 10 writers who will probably tell you, no, no, no, our new contract blows, we lost. But I think most people in the Screen Actors Guild and the Writers Guild feel like they won or they would say, we didn't win.

We just got a fair deal representative of what we bring to the table. And the companies would probably, you know, I'm sure they're telling Wall Street, hey, it looks like we lost, but really we'll be fine here. But yeah, their costs are going to go up because of all these contracts, for sure. The studio said that the deal, quote, represents a new paradigm. Now that the writers are back to work and the actors have this deal, is everything back to normal in Hollywood, or is it going to take some time before the gears start turning again? It will take some time. Here's the challenge. Normally, yeah, everything is sort of works on a flexible schedule and certain things are happening while other things aren't. Let's pretend I'm an actor. I've got three projects lined up. Well, there's

periods of downtime between those projects. I can get this one done, then do that one. periods of downtime between those projects. I can get this one done, then do that one. Now, everything is at the starting line at the same time. So this is going to be the challenge for Hollywood now, because, you know, the schedules are still all going to be messed up. And there's going to be a huge demand on sound stages, on crews, all this stuff, because again, everything is starting at once. on cruise, all this stuff because again, everything is starting at once I was wondering, is there a perfect movie quote

to end this chapter of Hollywood? Well on the one hand, I would say for the studios, their movie quote was Ted Knight from Caddyshack their attitude was, you'll get nothing and like it I want a hot dog I I want a milkshake. I want potato chips.

You'll get nothing and like it. So that was kind of their attitude. For the actors, I'd say it was more like Michael Clayton and George Clooney telling Tilda Swinton, do I look like I'm negotiating? Do I look like I'm negotiating? In other words, it's just a demand. Yes.

It was a demand. Yeah, this is what we're doing. So, yeah. You can see why this took so long. That's all for today. Thank you.