The recent strike by Hollywood actors, coupled with the ongoing writer’s strike, has caused a significant disruption in the United States film and television industry. Experts predict that if these strikes continue, it could result in substantial financial losses for media firms, as stated by Neil Begley, senior vice president for Moody’s Investor Service.
Moody’s estimates indicate that the already approved Directors Guild of America agreement, combined with the potential new three-year contracts for the Writers Guild of America (WGA) and SAG-AFTRA, could cost the media firms it covers between $450 million and $600 million annually.
The timing of these strikes is particularly crucial as the entertainment sector is under pressure to offset the decline in linear TV and demonstrate profitability in streaming platforms. The halting of production in the US exacerbates this challenge. Movie theater firms like AMC Entertainment and Cineworld could face the highest risk if the strikes continue. Following closely behind are diversified media companies, such as Walt Disney, Paramount Global, and Warner Bros. Discovery, that are transitioning from linear TV to streaming.
Neil Begley emphasizes that the strikes highlight the difficulties on both sides of the bargaining table. The issues at stake go beyond revenue sharing and also encompass compensation structures in the rapidly evolving streaming ecosystem. Moreover, advancements like artificial intelligence (AI) and the use of artificially generated digital likenesses add to the complexity of negotiations.
On the other hand, global streaming giants like Netflix, Apple, and Amazon, which have minimal reliance on linear TV and a strong financial position, are less vulnerable to these strikes. Similarly, companies with global production capabilities, diversified businesses, and extensive content libraries like Sony Group, Comcast, and Fox are also at a lower risk.
It remains uncertain how long these strikes will persist and what agreements will eventually be reached. The impacts on media firms will be substantial, both financially and in terms of the industry’s ability to adapt to the changing landscape of entertainment.