$2.1 Billion Job Creation Subsidy In The Spotlight As Movie Studios Sack Crews

Movie studios have been accused of laying off film crews in the United Kingdom with little or no pay as a result of the ongoing Hollywood strikes despite receiving a record $2.1 billion (£1.7 billion) in government subsidies last year to drive employment in the screen sector.

Hollywood has been gripped by strikes since May. First, the Writers Guild of America (WGA) downed their tools and just over two months later they were followed by the Screen Actors Guild and the American Federation of Television and Radio Artists (SAG-AFTRA). It marked the first time that both parties had been on strike since 1960 and, unsurprisingly money was the driving force.

One of their common concerns was residuals – royalties paid to actors and writers for reruns of the films and television shows they work on as well as other airings after the initial release. The basic remuneration structure was developed in the aftermath of the 1960 strike and it has since been applied to successive forms of media.

Actors and writers are typically paid each time a show runs on network or cable television and they also receive residuals when someone buys a Blu-ray disc or DVD just as they did when VHS tapes were sold. However, the advent of streaming cast a dark spell on this structure as subscribers usually pay a monthly or annual fee and get access to a studio’s entire library, including any new content it releases during the subscription period.

Subscribers to streaming platforms do not pay per movie or show so the residuals have crashed. It set the stage for the strikes which are still paralyzing Hollywood.

A glimmer of hope came earlier this week when the WGA reached a deal with studio bosses. The union still needs to vote on the deal, and will do so in early October, but the rapprochement has enabled writers to return to work. Under their new terms, writers will get residuals based on the popularity of streaming shows, a structure that studios initially rejected.

In contrast, SAG-AFTRA proposed that its members should receive a cut of subscriber revenues generated when their performances are shown on streaming platforms. The Alliance of Motion Picture and Television Producers flatly rejected this which is why its 160,000 members are still on strike. They include actors, stunt performers, voice-over workers and even motion capture artists. So although writers are back at their desks, the doors to most movie sets in Hollywood are still tightly shut.

The effect of the strikes has even been felt across the Atlantic as most of the major studios film in the UK to take advantage of its subsidies which give them a cash reimbursement of up to 25% of the amount they spend in the country.

As we have reported, many of Disney’s Star Wars and Marvel movies have been filmed in the UK along with several of Universal’s Jurassic World films and even streaming shows such as Willow and The Witcher.

The SAG-AFTRA strike brought the curtain down on film shoots starring its members, regardless of where they were taking place. In turn, this led to crews in the UK being laid off and some studios used every trick in the book to do it.

“Many of our members have been laid off from productions under ‘force majeure’ clauses with little notice or pay,” says Philippa Childs, head of the Broadcasting, Entertainment, Communications and Theatre Union (BECTU).

Force majeure is a contractual term referring to unforeseeable circumstances that prevent someone from fulfilling a contract. It tends to refer to Acts of God such as earthquakes and hurricanes but, according to Charles Braithwaite, partner at law firm Collyer Bristow, “it is pretty common for a definition of force majeure to include anything beyond the reasonable control of the relevant party.” It is hard to see how the strikes could fit into that category as the studios had the ability to stop them.

“This is a fight with many of the same employers who frequently undervalue crew in the UK,” said Childs. It certainly isn’t for lack of funding.

In the year to March 2022, the UK government paid a total of $2.1 billion in subsidies to its creative industries. It was a 56.6% increase on the previous year and was mainly driven by a sharp rise in the amount paid to high-end television productions. They accounted for 50% of the total with payments for films coming to 31%. It was the first year that TV productions received more than films and it was driven by the boom in streaming subscriptions when viewers were stuck indoors during the pandemic.

The government subsidies are funded with UK taxpayers’ cash and are designed to generate economic impact and create employment opportunities. Accordingly, it is tough to see how studios could justify taking the subsidies and at the same time sacking workers, especially with little pay or notice.

BECTU did not respond to an enquiry about which studios have been doing this but Childs said in a statement that “there is no getting around the very real and devastating impact on UK workers.” BECTU shone a spotlight on this by surveying 4,000 freelance film and TV workers about the impact the strikes have had on their employment, finances and mental health.

A staggering 75% of respondents said they are currently out of work whilst 90% are worried about their financial security because of the strikes. It has led to 35% of respondents struggling to pay their household bills, rent or mortgages and nearly a quarter of respondents said they did not see themselves working in the movie industry in the next five years.

“Situations like this cause so much stress financially on top of the stress the industry can already have while you’re working. It’s so volatile and you do need tough skin and a plan. I know a lot of people living paycheck to paycheck. The industry was flooded with more work and more workers after lockdown and now there’s no work,” said one respondent.

Another added: “after being one of the forgotten many who fell through the cracks during the pandemic and received absolutely no financial support from the government, to now be in an even worse financial position is mind blowing and infuriating. I’ve spent so long surviving instead of thriving and I’m tired.” It hasn’t been lost on Childs.

“The number of freelancers questioning their future in the industry should sound alarm bells,” she says. “This is a workforce that has already faced incredible hardship throughout and following the pandemic, and has now been hit by a second crisis in just a few years.”

She adds that “the government is vocal about the huge cultural and economic value of the creative industries; it must put its money where its mouth is and look after those who work in the sector.” From January next year the government will increase the rate of film and TV relief from 25% to a new “expenditure credit” of 34%. It represents a 0.5% real-terms increase in the tax break which is a dream ticket for studios but it remains to be seen whether it will give the performers a happy ending.