Actors And Writers Strike Could Hit Linear Networks Hard

With the actors union SAG-AFTRA (Screen Actors Guild-American Federation of Television and Radio Artists) going on strike on top of the Writers Guild of America, which has been on strike since May 2, this is likely to accelerate the decline in the valuations of cable networks, already hit hard by cord-cutting. SAG-AFTRA has a whopping 160K members.

They were told that they are prohibited not just from all principal on-camera work, including acting, singing, dancing and stunts, but off-camera work such as narration and voice acting. They are also barred from negotiating for future services and doing interviews, podcasts and awards shows. There will be no walking on red carpets anytime soon.

This is unfortunate as the nominees for the 2023 Emmy Awards were only announced yesterday which typically creates a flurry of publicity about the nominees. The move is unprecedented in recent history—the actors union has not called for a strike in more than four decades.

The problem for linear networks is that, first, there will be no new content being created for broadcast and cable networks, which could cause more people to flee for streaming services. Of course, online video services like Netflix
NFLX
will suffer as well, although they have a bit of a buffer because a number of their hit shows are produced abroad.

But the strikes are likely to result in a large increase in programming costs, which will hurt the bottom line of all content distributors. According to the Alliance of Motion Picture and Television Producers on SAG negotiations (courtesy of Joe Flynt of the Wall Street Journal), SAG-AFTRA has chosen to forgo in favor of a strike:

● The highest percentage increase in minimums in 35 years

● 76% increase in High Budget SVOD foreign residuals

● Substantial increases in pension and health contribution caps

● Groundbreaking AI proposal which protects performers’ digital likenesses, including a requirement for performer’s consent for the creation and use of digital replicas or for digital alterations of a performance.

● 58% increase in salaries for major role (guest star) performers wages on High Budget SVOD Programs.

● Limitation of self-tape requests, including page, time and tech requirements. Options for virtual or in-person auditions.

● 11% pay increase in year 1 for background actors, stand-ins and photo doubles, an additional 17% increase for background actors required to do extensive self-styling, and an additional 62% increase for stand-ins required to deliver lines during a run-through and photo doubles required to memorize and deliver lines on camera.

● First-time-ever fixed residuals for Stunt Coordinators on television and High Budget SVOD programs.

● Shortened option periods for series regulars earning less than $65,000 per episode on a half-hour series or less than $70,000 per episode on a one-hour series.

● Dancers will now receive the on-camera rate for rehearsal days.

● Additional payments of 25% for dancers required to sing on camera during principal photography, as well as for singers required to dance on camera.

● First-of-its-kind provision establishing rates, terms and conditions for High Budget Programs made for AVOD.

● Hair and make-up consultation for performers of all complexions and hair textures.

● Limits on the amount of initial compensation that can be advanced or prepaid as residuals.

SAG-AFTRA President Fran Drescher said of the studios rejecting the contract offer, “We are the victims here. We are being victimized by a very greedy entity. I am shocked by the way the people we have been in business with are treating us. I cannot believe it, quite frankly, how far apart we are on so many things. How they plead poverty, that they’re losing money left and right, while giving millions to CEOs. It’s disgusting. Shame on them.”

The CEO of Walt Disney Corp., Bob Iger, was quoted on Wednesday by CNBC’s David Faber where he is attending the annual Allen & Company conference in Sun Valley Idaho that the linear model “is definitely broken and we have to call it like it is.”

At the same time, he noted that the linear networks “may not be core to Disney,” suggesting they may look to sell some of their cable networks and/or ABC as they also seek to find a strategic partner for ESPN.

Regarding the strikes, Iger noted that actors and writers aren’t being realistic with their expectations and the situation is “disturbing.” Given the upheaval of the linear broadcast and cable networks, he said, “This is the worst time in the world to add to that disruption.”