Actors Go On Strike In New Blow To Struggling Hollywood Studios

For the first time in six decades, Hollywood writers and actors are on strike at the same time - a cataclysm for hundreds of thousands of film and TV workers already idled by the entertainment industry's growing labor strife.

The Screen Actors Guild, which represents some 160,000 performers, announced a walkout Thursday after failing to reach a new labor agreement with the Alliance of Motion Picture & Television Producers, which represents studios including Walt Disney Co. and Netflix Inc. The strike begins at midnight.

The Writers Guild of America, meanwhile has been on strike since May 2, shutting down late-night TV programs like The Tonight Show, halting many projects in progress and imperiling the traditional release of new broadcast TV shows starting in September.

In a statement after the strike announcement, the studio alliance said the union "has regrettably chosen a path that will lead to financial hardship for countless thousands of people who depend on the industry."

The studios say they offered double-digit percentage increases in salaries and higher pension and health benefits, as well as a boost in residuals - the money actors and others receive when shows and movies are rerun. They also offered protections against the use of actors' digital likenesses - addressing fears about artificial intelligence.

At their press conference, SAG officials suggested the sides remain far apart, with compensation from streaming a key issue as online video entertainment takes predominance over broadcast and cable TV. Regarding artificial intelligence, the union said the studios offered to pay background actors for just one day's work, and that their likenesses could then be replicated again and again in a film.

"I cannot believe how far apart we are in so many things," Fran Drescher, the union's president, said at the conference. "The entire business model has been changed by streaming. This is a moment of history. That is a moment of truth."

Work on dozens of popular programs has already been halted including ABC's Abbott Elementary and Netflix's Stranger Things. Fox on Tuesday unveiled a fall TV lineup that consists entirely of reality shows and animated programs already completed.

The impact of the simultaneous strikes, if they last more than a few days, is likely to be wider than the walkout by the writers alone. Programs already written could still be filmed without screenwriters, but not without actors.

Actors will also have to stop promoting upcoming projects, such as at film premieres, awards shows and events like San Diego Comi-Con International, scheduled for next week. Programs shot overseas could be impacted. And while other contracts may allow actors appearing in game shows or reality TV to continue working, they may get pressured to join the strike in sympathy with their colleagues.

Matt Damon and Emily Blunt had to leave the Thursday night UK premiere of Oppenheimer to "write their picket signs," director Christopher Nolan said from the stage.

Jane Fonda, Susan Sarandon, Rob Lowe and Mark Ruffalo are among the stars who've already walked picket lines supporting the writers. Other unions, including IATSE, which represents some 168,000 stagehands and other entertainment industry workers, have put out statements backing the actors as well.

"The longer it goes, it will just become a snowballing issue," said Bloomberg Intelligence's Kevin Near.

Labor Unrest

The great Hollywood walkout is part of a larger battle that has seen workers fighting for better pay and benefits from businesses as far flung as Starbucks Corp., Amazon.com Inc. and Delta Air Lines Inc. A union representing about 340,000 United Parcel Service Inc. workers is threatening a strike on Aug. 1 if the company doesn't meet wage-increase demands in talks to renew a five-year labor contract.

The entertainment industry is struggling to cope with two related problems: declining audiences for traditional TV networks and staggering losses from a new generation of streaming services like Disney+ and Warner Bros. Discovery Inc.'s Max.

Disney Chief Executive Officer Bob Iger on Thursday said the strike will have a "very, very damaging effect on the whole industry."

"This is the worst time in the world to add to that disruption," Iger said in a CNBC interview.

Every major entertainment company has fired staff in the last 18 months, and many of them have pulled programming from their streaming services to cut costs.

Tragic Ending

In a way, the dual strikes mark a sad finale to a boom in film and TV that started when Netflix jumped into original production with House of Cards in 2013 and spurred a decade of record production.

Both the actors and writers say they've been shortchanged by the transition to streaming - and want to be paid a share of companies' earnings from shows. They're also seeking protection against the use of artificial intelligence, which they see as a threat to their jobs.

The last time writers and actors walked out together was in 1960, when SAG was led by Ronald Reagan. Both were fighting for revenue from movies that aired on TV, according to the Los Angeles Times.

The last strike by writers, a 100-day walkout that began in 2007, cost the California economy an estimated $2.1 billion in lost output. The guild now projects the cost at $30 million a day, based on its members alone.

The stoppage has hit companies that work with the film and TV industry, including owners of studio space like Hudson Pacific Properties Inc. Talent agencies have imposed layoffs, furloughs and pay cuts.

Fewer Permits

In New York, home to TV productions like Law & Order and Blue Bloods, the number of permits to shoot films, TV shows and commercials fell 43% in June from their 2022 level. FilmLA, which administers permits for projects in Los Angeles, said its permit count was down 64% in the first week of July. No scripted TV series were filming that week.

In the short run, the strikes could boost profits for the media giants. With filming shut down, they won't have movie and TV production costs yet can continue to collect revenue from cable TV distributors, advertisers and program syndication sales, even if they're airing reruns or other shows.

"As long as they have content, they're going to continue to make money," said Chris Thornberg, founding partner at Beacon Economics, a research firm.

Still, the inability to commission and shoot new programming will begin to weigh on the industry in the months ahead. Media companies rely on fresh programming to attract and keep viewers or fill seats in movie theaters.

Streaming services have already spaced out new releases but face a major shortfall in 2024 if they can't get production up and running before the fall.

Although the Directors Guild of America reached a new contract last month that included a pay hike of 5% in the first year, the writers and actors have shown less willingness to deal.

"In general, labor is not in a mood to be conciliatory at this point in time given the tightness of labor markets," Beacon's Thornberg said.