After a grueling five-month period of disruption caused by a screenwriters’ strike, Hollywood studios are finally seeing a glimmer of hope as they reached a tentative agreement with the Writers Guild of America. This promising development has sparked optimism about the entertainment industry returning to normalcy. In the premarket trading session on Monday, shares of major studios, including Warner Bros Discovery, Paramount Global, Walt Disney, and Netflix, experienced an upswing, with gains ranging from 0.5 to 2.3 percent.
The preliminary agreement between the Writers Guild of America and the studios and streaming platforms was disclosed on Sunday. However, the specific terms of the deal remain undisclosed to the public. To bring an official end to the strike, the agreement will need approval from the WGA leadership and union members. Nevertheless, despite this breakthrough, the full resumption of productions will still face a delay due to the ongoing strike by the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA).
SAG-AFTRA, representing approximately 160,000 actors and media professionals, initiated their strike in July, primarily seeking higher wages and protection against the utilization of Artificial Intelligence (AI) in the industry. The tentative agreement with the writers has raised hopes that progress might now be made toward resolving the actors’ strike.
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, commented on the situation, saying, “Hopes are high that this tentative deal with the writers will also mean the studios and streaming services will now fully engage with the actors’ demands.”
Investors had grown increasingly concerned about the financial repercussions of the prolonged strike, initially boosting cash flow due to reduced expenditures, but witnessing diminishing gains over time. David Zaslav, CEO of Warner Bros Discovery, had previously warned of a potential $500 million drop in the company’s earnings due to various production delays.
Reports indicate that the agreement with the screenwriters encompasses provisions for increased royalties, mandatory staffing in television writing rooms, and measures aimed at mitigating the use of AI in content creation. Craig Huber, an analyst at Huber Research Partners, estimated that the new deal “will add modestly to” studios’ expenses. He also noted that “historically, payments to writers for TV shows and movies have been rather small, accounting for less than 5% of revenue.”
In summary, the resolution of the screenwriters’ strike against the Hollywood studios has injected much-needed optimism into the entertainment industry and has potentially paved the way for addressing the demands of the striking actors. The ultimate outcome of the film and TV industry in the coming months will hinge on whether these demands are met and how both sides proceed in the wake of this breakthrough agreement.
Source: Reuters
