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AP Explains: What will a Hollywood writers' strike mean?

Associated Press logo Associated Press 5/2/2017 By LYNN ELBER, AP Television Writer

LOS ANGELES (AP) — Negotiations aimed at preventing a crippling strike by Hollywood movie and TV writers are down to the wire.

That the Writers Guild of America and the Alliance of Motion Picture and Television Producers talked over the weekend and continued on Monday was a hopeful sign. The current contract expires at midnight PDT Monday.

But with both sides observing a strict news blackout, there was no official indication of how close they are to a deal on key issues including compensation and health care.

The ongoing negotiations are encouraging but not a guarantee of an "acceptable deal," according to a Sunday memo to guild members on behalf of WGA negotiators.

Members were advised to remain ready to strike as they await what should be "something substantive" on progress by Tuesday morning, the memo said.

Producers reportedly have agreed to contribute more to the guild's health plan and increase earnings for writers working on series with fewer episodes.

The previous writers' strike lasted 100 days in 2007-08 and was costly to the businesses that serve Hollywood and to consumers expecting to be entertained.

Last month, WGA members voted overwhelmingly to authorize a strike.

A walkout's impact would come in waves and affect different parts of the industry differently. Here's a look at how it could play out if writers trade their laptops for picket signs.

THE ISSUE

The changing nature of how television is delivered to viewers is a major reason for the impasse.

More than 400 series were available on broadcast, cable and rapidly expanding streaming platforms this season, double that of six years ago. But shows have fewer episodes than the roughly two dozen per season once common on network TV, and short runs of as few as eight to 12 episodes mean less money for writers getting paid on a per-episode basis.

Contracts binding writers exclusively to a series have cut into their compensation as well.

According to the WGA, which has about 12,000 members, median earnings for writers dropped between the 2013-14 and 2015-16 seasons, and more scribes are finding it difficult to make a living under current deals.

The guild is seeking a wage increase and wants salary minimums to apply equally to streaming, cable and broadcast. Health care, an issue that echoes beyond Hollywood, also is on the table. The two sides are at odds over what concessions the guild would make in return for producers contributing more to the health plan.

TELEVISION

TV viewers won't be laughing much if writers take a hike, with the most immediate impact on late-night talk and comedy shows including "Saturday Night Live."

In the 2007 walkout, shows including NBC's "Tonight" and CBS' "The Late Show with David Letterman" went dark for two months. They returned during the strike either without writers or, in Letterman's case, with a separate guild deal through his production company. That won't be an option for CBS' current "Late Show" host Stephen Colbert because a CBS entity now produces it.

For prime-time TV, the strike would come as the fall-to-spring broadcast season winds down. But with year-round programming now commonplace, networks and cable channels likely will call on reality shows to help fill the void.

Reruns, sports and news — especially given ratings-grabbing Trump administration coverage — also would be key, said entertainment lawyer Jonathan Handel.

Streaming services such as Netflix and Amazon could be winners because their original series tend to be produced further in advance of release, Handel said.

THE BIG SCREEN

The slower pace of film production, where it takes up to three years or more for the biggest movies to be made, means a strike wouldn't cause as much immediate havoc in the movie business. But it would still greatly alter the well-ordered pipelines of Hollywood productions, big and small.

Most significant would be the impact on large franchises that might not have a script quite ready for shooting. That leaves studios with a choice of whether to press pause on a franchise or push ahead with an unfinished screenplay.

The 2007 strike affected the making of movies like "X-Men Origins: Wolverine," the James Bond film "Quantum of Solace" and "Transformers: Revenge of the Fallen." All of those films received poor reviews, and many of the filmmakers and stars involved later said the movies simply didn't have the screenplay or the writers that they needed.

Some films will be rushing to get scripts ready before any potential strike, but others will inevitably be left in limbo.

Screenwriter and WGA member David Atkins, who teaches film and TV at Quinnipiac University in Connecticut, said he's feeling the squeeze already.

He and a writing partner have a script ready to sell but "it's an extremely awkward time" with a possible strike looming, he said. "We've decided not to move forward at this point, to wait and see what happens."

DOLLARS AND CENTS

The 100-day writers' strike that started in late 2007 cost the California economy an estimated $2 billion, with the Los Angeles area the hardest hit. The entertainment industry at that time contributed $58 billion a year for the area's economy.

That has grown to $83 billion as of 2014, according to a report by Los Angeles County's Economic Development Corp.

"Assuming a strike similar in duration to the 2007-2008 one, it would likely be in the $2.5 billion range," Ross DeVol, chief research officer at the Milken Institute, said of the statewide impact.

The producers group on the other side of the bargaining table said the 2007-2008 strike meant $287 million in lost compensation for writers.

CBS said then that TV ad revenue fell 15 percent, hurt by the strike and other factors. But Walt Disney Co., which owns ABC, said international sales of shows offset ad-sales losses.

LASTING EFFECTS

While the financial impact of a strike that has not happened yet is difficult to measure, analysts said it could have a lasting impact. Without new content, people will turn to other things to watch (or perhaps even leave the couch).

During the last writers' strike, the amount of time people spent on alternatives to network TV grew, according to a recent research note from Barclays. The changes became permanent, with "cable being the main beneficiary in 1988 and non-traditional sources of content through peripheral devices, cable again, and online activities benefiting in 2007," according to the Barclays analysts.

During the 2007-2008 strike, Nielsen estimated that TV viewership was down 21 percent in the first week of the season and overall ratings were down during the entirety of the 100-day strike, according to the analysts. They noted that at that point, the first iPhone had just been released, and Netflix had just begun streaming online. Facebook had only been open to everyone for a year. Things are much different now, and viewers as well as advertisers are much more comfortable turning to digital platforms like YouTube, Facebook or Snapchat.

"Given the anemic growth rates for television advertising already, any uncertainty over the fall season is likely to force more advertisers to expand their allocations towards digital platforms," the analysts wrote. Big brands, they added, are allocating a lot of ad dollars to online video, much more than in previous years. A strike could only amplify this.

That said, the networks will recoup some of their losses by carrying reruns, which is much cheaper than paying for new shows.

"Therefore, the immediate economic impact may be less pronounced on bottom line," the analysts wrote. "However, given the long-term nature of the content business, especially in today's environment, investors are likely to pay a lot more attention to the strike today than has been the case in earlier cycles."

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This story corrects Writers Guild of America membership to 12,000 from 20,000.

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AP Film Writer Jake Coyle and AP Technology writers Barbara Ortutay and Tali Arbel in New York contributed to this report.

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Lynn Elber can be reached at lelber@ap.org and on Twitter at http://twitter.com/lynnelber.

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