Last-ditch talks to avert a strike by film and TV writers ended without a deal, the group that represents Hollywood studios said, setting the stage for a potential walkout from Tuesday that could leave the entertainment industry in turmoil.
The Alliance of Motion Picture and Television Producers, which represents Walt Disney Co (DIS.N), Netflix Inc (NFLX.O) and others, said late on Monday it had offered “generous increases in compensation” in negotiations with the Writers Guild of America (WGA).
The 11,500 members of the WGA have given their union leaders the power to call a strike as early as Tuesday after their current contract expires. A WGA representative did not immediately respond to a request for comment.
The last WGA strike, in 2007 and 2008, lasted 100 days. The action cost the California economy an estimated $2.1 billion as productions shut down and out-of-work writers, actors and producers cut back spending.
The negotiations to avert a strike took place against a difficult economic backdrop for the industry. Entertainment conglomerates are under pressure from Wall Street to make their streaming services profitable after investing billions of dollars on content to attract subscribers.
They also are contending with declining television ad revenue, as traditional TV audiences shrink and advertisers go elsewhere. On top of all that, the threat of a recession in the world’s biggest economy also looms.
Writers say they have suffered financially during the streaming TV boom, in part due to shorter seasons and smaller residual payments. They are seeking pay increases and changes to industry practices they say force them to work more for less money.
Half of TV series writers now work at minimum salary levels, compared with one-third in the 2013-14 season, according to Guild statistics. Median pay for scribes at the higher writer/producer level has fallen 4% over the last decade.
“The way that it’s looking now is that there won’t be a middle class in Hollywood,” said Caroline Renard, a Guild liaison and writer whose credits include the Disney Channel’s “Secrets of Sulphur Springs.”
Artificial intelligence is another issue at the bargaining table. The WGA wants safeguards to prevent studios from using AI to generate new scripts from writers’ previous work. Writers also want to ensure they are not asked to rewrite draft scripts created by AI.
If a strike is called, late-night shows such as “The Tonight Show with Jimmy Fallon,” “Last Week Tonight with John Oliver” and “Saturday Night Live,” which use teams of writers to craft topical jokes, are expected to immediately stop production.
That means new episodes will not be available during their traditional TV time slots or on the streaming services that make them available the next day.
Soap operas and other daytime shows such as “The View” will likely be disrupted. News programs would not be interrupted because those writers are members of a different union.
Further ahead, the strike could lead to a delay of the fall TV season. Writing for fall shows normally starts in May or June. If the work stoppage becomes protracted, the networks will increasingly fill their programming lineups with unscripted reality shows, news magazines and reruns.
Netflix may be insulated from any immediate impact because of its global focus and access to production facilities outside of the U.S.
Studios do not want another disruption after the COVID-19 pandemic halted production worldwide for months. But budgets are tight, and a new era of fiscal austerity has dawned in Hollywood, with studios laying off thousands of employees and curtailing spending on content.
“The writers have legitimate issues here,” said one talent agent close to the bargaining process.
“But the studios and the producers have very legitimate issues also. Their stock prices are down. They’ve overspent on content. They need to show profits to their shareholders.”