ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / NEWS

Hollywood Strike Will Cost '$600 Million' Annually For Media Companies in New Deals

Media companies could face a hefty financial burden with the Directors Guild of America contract and anticipated contracts with actors and writers.
UPDATED AUG 24, 2023
Cover Image Source: Instagram/Writers Guild Of America West
Cover Image Source: Instagram/Writers Guild Of America West

Hollywood is currently facing a major upheaval as actors and writers go on strike; marking the first time since 1960 that both unions have simultaneously taken such action. The crux of the dispute lies in streaming compensation and the potential threats posed by technology, including artificial intelligence (AI). A recent report from Moody's sheds light on the financial impact of these strikes, estimating that media companies could incur an additional cost of $450 million to $600 million per year, reports Yahoo. This article will delve into the details of Moody's report, examining the sectors most exposed to a prolonged strike and identifying the companies that are best positioned to weather this storm.

Moody's report highlights the significant financial consequences of the ongoing strikes in Hollywood. With the current Directors Guild of America contract and anticipated contracts with actors and writers, media companies could face a hefty financial burden. The projected cost is estimated to range between $450 million and $600 million annually. This substantial increase in expenses will undoubtedly impact the profitability and financial stability of many studios.

Cover Image Source: Getty Images | 	Tristan Fewings
Cover Image Source: Getty Images | Tristan Fewings

Moody's report also identifies the sectors within the entertainment industry that are most vulnerable to a prolonged strike. Movie theater companies are particularly exposed due to their reliance on new content. With the strikes impeding the production of fresh movies and TV shows, theaters will suffer from a lack of compelling content to attract audiences. Additionally, diversified media companies in the process of transitioning from linear TV to streaming face risks associated with the decline in traditional television viewership. Studios like Paramount, which also operates CBS as a network, may struggle to survive an extended strike. Paramount's dependence on fresh content and potential loss of advertising revenue due to the absence of new shows would place it in a precarious position.

While many media companies are at risk, certain players in the industry are better positioned to withstand the impact of the strikes. Streaming-focused companies, especially those with minimal exposure to linear TV declines, have a distinct advantage. Platforms like Netflix, Comcast, Fox, Sony Group, Apple, and Amazon are among the companies Moody's identifies as being better equipped to weather the storm. Netflix, in particular, is viewed as a formidable player in the industry. The company's profitability and an extensive content library make it less vulnerable to the strike's long-lasting effects. 


 
 
 
 
 
View this post on Instagram
 
 
 
 
 
 
 
 
 
 
 

A post shared by Writers Guild Of America West (@writersguildwest)


 

The divide between tech companies and traditional studios adds a layer of complexity to the ongoing dispute. While studios like Paramount and Warner Media may be open to striking a deal, streaming giants such as Netflix, Apple, and Amazon could remain holdouts. These tech companies, boasting substantial financial resources and content libraries, can sustain a prolonged strike. However, the longer the strikes persist, the more challenges they will pose to the overall ecosystem.



 

Barry Diller, a prominent figure in the entertainment industry, recently made headlines with his suggestions for resolving the dispute. Diller proposed a deadline of September 1 for reaching an agreement, warning that failure to do so could result in the collapse of the industry. He also recommended that executives and top-paid actors take a 25% pay cut to address the compensation disparities. While such a proposition may help narrow the gap between high and low earners, it remains uncertain whether it will gain traction. The skepticism lies in the assumption that top-paid actors would willingly accept a significant reduction in their earnings.

MORE ON MARKET REALIST
The "Rolling Stones" singer said leaving a part of the inheritance might "do some good in the world."
23 minutes ago
Inititally, reports claimed that it sold for $1.8 million which changed as the the dust cleared up.
3 hours ago
The number was so large that it didn't even fit on a single line on the document.
4 hours ago
Her new properties were estimated to be worth around $50 million.
23 hours ago
He sued the lottery company for breach of contract, gross negligence and the infliction of emotional distress among other claims.
1 day ago
As of 2024, the iconic West Coast rapper is worth well over $160 million.
1 day ago
Taylor never knew he had won because the slot machine had malfunctioned.
1 day ago
"People were super welcoming and everyone wanted to have a coffee with me," she talked about the residents.
1 day ago
“It’s challenging, being an inventor,” Catherine Hettinger said.
1 day ago
The Facebook listing from is a contender for the weirdest rent agreement in history.
1 day ago
The "Bullet Train" actor made an unusual arrangement with the old widower.
2 days ago
He found the gold coin from the "world's most valuable shipwreck."
2 days ago
The man even promised that he would make them $96 billion in profits.
3 days ago
She has starred in classic films such as "Sixteen Candles", "The Lost Boys", and "Twister".
3 days ago
There are ways to claim dependents for certain people in your life, including your boyfriend. The IRS has four factor that must be met. We have all the details.
3 days ago
Following the incident, Brad Pitt's representative has issued a warning to all fans.
3 days ago
While five transactions were worth about $80 million, one payment order worth $20 million didn't clear.
4 days ago
Back in 1997, during a special episode of "Wheel of Fortune" 1997, Trebek took the stage to host the show.
4 days ago
What's Judy “Judge Judy” Sheindlin’s salary per episode? Here’s what we know about the TV judge and her new IMDb TV show, ‘Judy Justice.’
4 days ago
Vance claims that the Biden administration's policies have pushed grocery prices over the edge with eggs costing $4 a dozen.
4 days ago