Existential hand-wringing has always been a part of the Hollywood persona. But the crisis the entertainment capital is in now is different.
Rather than facing an unwanted disruption – for example, the VCR boom of the 1980s – or even overlapping (streaming, the pandemic), the film and television business is facing setbacks on several fronts. And no one seems to have any solution.
On Friday, nearly 160,000 unionized actors went on strike for the first time in 43 years, saying they were fed up with exorbitant salaries for entertainment moguls and worried about not getting their fair share of the spoils of a streaming-dominated future . They join 11,500 already striking screenwriters who walked out in May over similar concerns, including the threat of artificial intelligence. Actors and writers had not been on strike together since the 1960s.
Former sitcom star and actors’ union president Fran Drescher announced the walkout, saying, “The industry we once knew – when I did ‘The Nanny’ – everyone was part of the gravy train.” “Now it’s a walled-off vacuum.”
At the same time, two of Hollywood’s traditional businesses, the box office and television channels, are both badly broken.
This was the year when film production was finally expected to recover from the pandemic, which shut down many theaters for months. Eventually, cinemas would regain a status of cultural urgency.
But ticket sales in the United States and Canada so far this year (about $4.9 billion) are down 21 percent from the same period in 2019, according to comScore, which compiles box office data. Rays of hope, including strong sales for “Spider-Man: Across the Spider-Verse,” have been dimmed by disappointing results from costly films like “Indiana Jones and the Dial of Destiny,” “Elemental,” “The Flash.” “Shazam! Fury of the Gods” and, to a lesser extent, “The Little Mermaid” and “Fast X.”
According to a recent report by accounting firm PwC, the number of movie tickets sold globally could reach 7.2 billion in 2027. Attendance totaled 7.9 billion in 2019.
It’s a slow moving business, but at least it’s better than a fast moving one. According to PwC, fewer than 50 million households will pay for cable or satellite television by 2027, down from 64 million today and 100 million seven years ago. When it comes to traditional television, “the world has forever changed for the worse,” Michael Nathanson, an analyst at SVB MoffetNathanson, wrote in a note to clients on Thursday.
Disney, NBCUniversal, Paramount Global and WarnerBros. Discovery has been dependent on television channels for decades for huge profits. The end of that era resulted in a stock-price meltdown. Disney shares have fallen 55 percent from their high in March 2021. Paramount Global, which owns channels such as MTV and CBS, experienced an 83 percent decline over the same period.
On Thursday, Disney Chief Executive Robert A. Iger put the sale of the company’s “noncore” channels, including ABC and FX, on the table. He called the decline in traditional television “a reality we have to deal with.”
In other words, it’s over.
And then there’s streaming. For a time, Wall Street was enthralled by the customer-synphoning potential of services like Disney+, Max, Hulu, Paramount+ and Peacock, so big Hollywood companies poured money into building online viewing platforms. Netflix was taking over the world. Amazon arrived determined to make inroads in Hollywood, just as it did with ultra-deep-pocket Apple. If the old entertainment companies wanted to stay competitive – let alone be relevant – there was only one direction to run.
Media veteran Barry Diller said over the phone, “Now you really have tech companies in control that don’t care or have a clue about the entertainment business – it’s not outrageous, it’s just the reality.” Last week, referring to Amazon and Apple.
“For each of these companies,” he said, “their small business, not their core business, is entertainment. And yet, because of their size and influence, their small interests are paramount in making any decisions about the future.” Are.
About a year ago, Netflix reported its first subscriber loss in a decade, and Wall Street’s interest soared. Forget subscribers. Now we care about profits – at least when it comes to old line companies, because their traditional businesses (box office and channels) are in trouble.
To make services like Disney+, Paramount+ and Max (formerly HBO Max) profitable, their parent companies have cut billions of dollars in costs and eliminated more than 10,000 jobs. Studio executives also put a hold on new television series orders last year in order to rein in costs.
Warner Bros. Discovery has said its streaming business, powered by Max, will turn profitable in 2023. Disney has promised profitability by September 2024, according to founder Rich Greenfield, while Paramount didn’t predict a date, except to post peak losses this year. Lightshed Partners research firm K.
Giving in to union demands, which would threaten streaming profitability anew, isn’t something the companies will do without a fight.
“In the short term, there will be pain,” said Tara Cooley, founding partner of JSSK, an entertainment law firm that counts Emma Stone, Adam McKay and Halle Berry as clients. “A lot of trouble.”
Every sign points to a long and disastrous standoff. Agents who have worked in show business for 40 years say the anger in Hollywood is higher than anything ever.
“Straight out of ‘Les Miz'” was how one longtime executive described the high-drama, us-against-them mood in a text to a reporter. Photos are circulating online from last week’s Allen & Company Sun Valley media conference, the annual “billionaires’ summer camp” attended by Hollywood heavyweights, escalated the situation,
At the Paramount Pictures picket line on Friday, Ms. Drescher attacked Mr. Iger, something few people in Hollywood would dare to do without the cover of anonymity. They criticized his pay package (his performance-based contract allows for up to $27 million annually, including stock awards, which is the middle ground for entertainment CEOs) and compared him and other Hollywood moguls. From “Land Giants of Medieval Times”. ,
“It is so clear that they have no idea of what is actually happening on the ground,” he added. Mr. Iger told CNBC on Thursday that the demands of the two unions “are not realistic.”
In the coming weeks, studios will likely cancel lucrative long-term deals with writers (and some actor-producers) based on a force majeure provision in their contracts, which begins on the 60th or 90th day of the strike, depending on That’s how agreements are structured. The force majeure clause states that when unforeseen circumstances prevent someone from fulfilling a contract, the studio can cancel the deal without paying a penalty.
Eventually, the contract with the Writers Guild of America and SAG-AFTRA, as the Actors Union is known, would be terminated.
Deeper business challenges remain.
Nicole Sperling Contributed reporting.
