Writers Guild of America (WGA) strike news 2 2

[drotto]

Sorry, SAG-AFTRA took it a step too far. It  is being reported they asked for 57 cents of every paid streaming subscription. Then, a trustee, not the studio, would determine how that money is doled out as residuals based on a formula pulling from viewership numbers. It is very hard for the studios to commit to a more or less hard percentage like this based on fees not profit, especially when all streamers (except Netflix) have not figured out how to turn a profit. The studios what basically the same deal the writer got, where they would report numbers and pay residuals based on performance. The union presented this approach as non negotiable. That is when the studios walked. 

 

Also, the Halloween rules just made them look silly and petty. 

 

https://www.forbes.com/sites/maryroeloffs/2023/10/17/actors-strike-drags-on-as-union-and-studio-feud-over-500-million-streaming-pay-ask/?sh=54fa79ce4858

[Microchip]

On 10/25/2023 at 2:00 PM, drotto said:

It is very hard for the studios to commit to a more or less hard percentage like this based on fees not profit, especially when all streamers (except Netflix) have not figured out how to turn a profit.

None of the tech based companies chase profit.    They pursue balance sheet value, through % of market share.   They are not focussed on the profit and loss performance, that is secondary.   The model is creating the biggest audience, that can be leveraged at a future time, with a long profit tail.   The initial growth period is not about individual years profit or loss.   Growth is metric they're chasing.    Don't look at these companies even in 5-10 year picture, they're looking well past that.   Albeit, they might have sold their shares  before then.

The film industry is notorious for front loading costs into whatever production is currently going.   The SAG-AFTR need to pursue a cut of the gross revenue, and nothing else.   Otherwise they're just asking accepting a royal shafting.

 

 

[Bosco685]

On 10/24/2023 at 11:23 PM, Microchip said:

None of the tech based companies chase profit.    They pursue balance sheet value, through % of market share.   They are not focussed on the profit and loss performance, that is secondary.   The model is creating the biggest audience, that can be leveraged at a future time, with a long profit tail.   The initial growth period is not about individual years profit or loss.   Growth is metric they're chasing.    Don't look at these companies even in 5-10 year picture, they're looking well past that.   Albeit, they might have sold their shares  before then.

The film industry is notorious for front loading costs into whatever production is currently going.   The SAG-AFTR need to pursue a cut of the gross revenue, and nothing else.   Otherwise they're just asking accepting a royal shafting.

I think we have to be careful assuming one industry norm/assumption applies to another. Especially Tech to Movie Studios

Tech stocks (or any publicly traded company) is valued based on the Price-to-Earnings (PE) Ratio. And you can't compare one industry to another, as the ratio expectations vary based on that industry's common averages.

Using the Price-to-Earnings (P/E) Ratio to Assess a Stock

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How to use the P/E ratio to evaluate stocks
When you start your analysis, take a look what type of company you're investigating. A good P/E ratio in one industry or asset class can be bad in another. If you're looking for a value stock, you want the P/E ratio to be low. The opposite is actually true of growth investments. If a company has high-flying earnings, it's likely a lot of investors will want to buy its stock.

Tech stocks always rank higher because they are valued differently (projections of future earnings based on developing markets over time).

Why are the P/E ratios of tech companies so large if earnings are down?

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P/E ratios of tech companies are based on the expectation of future earnings. I mean, that's true of all companies, but tech in particular expects huge future earnings.

A drop in current earnings doesn't necessarily move the price. It depends on whether people still expect the same future earnings. If they do, then the P/E goes up, because P stays the same and E goes down.

So it is based on projected earnings and not just % of market share. Which is why some companies trying to alter the story why their PE Ratio is higher than industry norms will all of a sudden declare "we're a tech company now because we use data to achieve stronger business value". They are trying to convince investors of focusing more on future profits - not current reduced profits.

For me, I wouldn't compare Studio balance sheets to Tech. Different business stories between them.

[Bosco685]

On 10/24/2023 at 11:00 PM, drotto said:

Sorry, SAG-AFTRA took it a step too far. It  is being reported they asked for 57 cents of every paid streaming subscription. Then, a trustee, not the studio, would determine how that money is doled out as residuals based on a formula pulling from viewership numbers. It is very hard for the studios to commit to a more or less hard percentage like this based on fees not profit, especially when all streamers (except Netflix) have not figured out how to turn a profit. The studios what basically the same deal the writer got, where they would report numbers and pay residuals based on performance. The union presented this approach as non negotiable. That is when the studios walked. 

 

Also, the Halloween rules just made them look silly and petty. 

 

https://www.forbes.com/sites/maryroeloffs/2023/10/17/actors-strike-drags-on-as-union-and-studio-feud-over-500-million-streaming-pay-ask/?sh=54fa79ce4858

It may also come down to who is telling (and reporting) the story.

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Sarandos closed his sentiments, reflecting on his own experience when his family went on strike. “We were very dependent on the generosity of others who Foodbanked for us and made sure that we had food to eat during this prolonged strike back when my dad was a union electrician. So, I understand the impact that this has on folks. It’s one of those things where the business is changing, it’s complicated for sure. But also, we have the ability to move forward with a modern agreement that can make sure that everyone’s taken care of.”

And the gap between them is based on studios wanting to limit what they consider new residuals ($20M vs. $500M).

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Until they can bridge the gap, SAG-AFTRA will remain on strike and the entertainment industry will remain shut down.

So how big is that gap?

 

About $480 million a year.

 

That’s the difference between what SAG-AFTRA wants in a new streaming residual formula — $500 million — and what the Alliance of Motion Picture and Television Producers is currently willing to pay — $20 million.

 

The two sides are at odds on other issues as well, including artificial intelligence and increases in minimum rates. But it was the vast gap on streaming residuals that prompted the breakdown in talks.

Though it is assumed studios are still struggling to determine how to value streaming, having them start on the low end for residuals isn't even-handed negotiation tactics.

Edited October 25, 2023 by Bosco685

[Bosco685]

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Dead before the strike, revenue sharing was dead still when the CEO Gang of Four and the Guild brass and negotiating committee officially sat down for the first time in over 80-days on Oct. 2. The fact that everything blew up on Oct 11 and the studios walked out shouldn’t have been a great surprise – such a move is a tried-and-true AMPTP tactic.

 

Now, the challenge for studios and the Guild in regard to SAG-AFTRA’s last proposal is as much philosophical as financial. Sarandos termed the subscriber payout proposal a “bridge too far,” whereas Crabtree-Ireland viewed the offer as a sign that the Guild was flexible and open to further negotiations.

 

Interestingly, both sides do agree the industry has dramatically changed, especially as a business. Close on many topics, it is the long tail of money, which turned Tinseltown jobs into middle class careers over previous decades, that separate the parties.

 

[fantastic_four]

On 10/24/2023 at 11:23 PM, Microchip said:

On 10/24/2023 at 11:00 PM, drotto said:

It is very hard for the studios to commit to a more or less hard percentage like this based on fees not profit, especially when all streamers (except Netflix) have not figured out how to turn a profit.

None of the tech based companies chase profit.    They pursue balance sheet value, through % of market share.   They are not focussed on the profit and loss performance, that is secondary.  

Sports unions split based upon revenue as well.  I only follow the NBA, and for decades they've had a roughly 50/50 split between the players and owners that varies from contract to contract.  I recall it being 48% / 52% at one point in the past, but it usually hovers around 50/50.

Not sure why it would be harder for studios to split based upon revenue than it would be for sports teams...  

[drotto]

On 10/25/2023 at 10:15 AM, fantastic_four said:

Sports unions split based upon revenue as well.  I only follow the NBA, and for decades they've had a roughly 50/50 split between the players and owners that varies from contract to contract.  I recall it being 48% / 52% at one point in the past, but it usually hovers around 50/50.

Not sure why it would be harder for studios to split based upon revenue than it would be for sports teams...  

The leagues that use this the players get a percentage based on the total profit.  With the NBA, NHL etc, if the league makes less money, or if they loses money, the amount to the players is adjusted accordingly. It is true profit sharing. What was proposed by SAG was a fixed amount based on subscription numbers not on a percentage of profit, so there is no risk to SAG, and they get money regardless if  the streamer is making money. The studios must take all the risk. Even if the studios are losing billions, they still must pay and this is potentially unsustainable.  If it was a percentage based on profit, this would be feasible, but that is not what was proposed. 

Edited October 25, 2023 by drotto

[Bosco685]

On 10/25/2023 at 10:46 AM, drotto said:

The leagues that use this the players get a percentage based on the total profit.  With the NBA, NHL etc, if the league makes less money, or if they loses money, the amount to the players is adjusted accordingly. It is true profit sharing. What was proposed by SAG was a fixed amount based on subscription numbers not on a percentage of profit, so there is no risk to SAG, and they get money regardless if  the streamer is making money. The studios must take all the risk. Even if the studios are losing billions, they still must pay and this is potentially unsustainable.  If it was a percentage based on profit, this would be feasible, but that is not what was proposed. 

Residuals for creators and actors have been around a long time. Streaming was just getting away with not matching common practices due to the excuse it was an emerging market.

What is a ‘residual,’ anyway? Here’s why Hollywood is on strike over streaming and A.I.

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Residuals are long-term payments to those who worked on films and television shows, negotiated by unions, for reruns and other airings after the initial release. The basic pay structure was developed in 1960, the last time writers and actors were on strike together.

 

Traditionally, actors and writers are paid for each time a show runs on broadcast or cable television, or when someone buys a DVD, a Blu-ray disc or (long ago) a VHS tape.

 

The payments, which decline over time, are pegged to several factors including the length of a movie or show, the size of a role, the budget of a production, and where the film or show is offered.

It is how you attract talent to help create a show. So making this about profits now would be disingenuous if it was not the norm previously.

Studios have whittled down what they pay in residuals it has turned into a bar room joke.

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Getting paid pennies is so common that there’s even a bar in Studio City that offers free drinks for actors and writers who show they received a check for less than a dollar.

To pay talent based on profitability, then they would have to also drive how content is marketed and released regionally to maximize results.

[drotto]

On 10/25/2023 at 11:03 AM, Bosco685 said:

Residuals for creators and actors have been around a long time. Streaming was just getting away with not matching common practices due to the excuse it was an emerging market.

What is a ‘residual,’ anyway? Here’s why Hollywood is on strike over streaming and A.I.

It is how you attract talent to help create a show. So making this about profits now would be disingenuous if it was not the norm previously.

Studios have whittled down what they pay in residuals it has turned into a bar room joke.

To pay talent based on profitability, then they would have to also drive how content is marketed and released regionally to maximize results.

But what they asked for was not a residual. It was outright we get a cut of every subscription fee.  Profit sharing would be much closer to traditional residuals where cratives get a cut of profits based on the performance of the show.  Asking outright for a piece, regardless of performance is much different.

 

I do agree studios have been hiding streaming numbers, but I think it is because the average shows numbers are terrible.  The studios are trying to hide that they would be in trouble from both sides.  Not paying the residuals they should, and answering to investors concerning what the heck they are paying for. I suspect, most of these shows are losing a lot of money, which would anger investors. Again, this is why the number of projects are being greatly reduced, period.

 

Even when this gets resolved, actors are going to find there is much less work available.  The days of everything being greenlit, are over.  Studios are going to be under much closer scrutiny when it comes to profitability, and that belt tightening is already trickling down. More shows are going to be bought and outsourced to countries not bound by SAG agreements to make things even more complicated. I have heard predictions that the number of shows being made could be cut in half. So again, the top tier talent will be fine, the people already struggling are going to get crushed, regardless of the contract. 

[fantastic_four]

On 10/25/2023 at 10:46 AM, drotto said:

The leagues that use this the players get a percentage based on the total profit. 

The NBA uses revenue, not profit:

https://en.wikipedia.org/wiki/NBA_Collective_Bargaining_Agreement

 

[fantastic_four]

I don't know how large organizations would ever share income based upon profit.  It assumes every business makes money every year--but that's not always the case.  Sometimes business is bad and companies lose money.  Employees don't work for free in those years.

Hollywood and the sports leagues HEMORRHAGED money during Covid.  Actors and athletes weren't working for free in 2020 and 2021.

Edited October 25, 2023 by fantastic_four

[Bosco685]

On 10/25/2023 at 11:49 AM, drotto said:

But what they asked for was not a residual. It was outright we get a cut of every subscription fee.  Profit sharing would be much closer to traditional residuals where cratives get a cut of profits based on the performance of the show.  Asking outright for a piece, regardless of performance is much different.

 

I do agree studios have been hiding streaming numbers, but I think it is because the average shows numbers are terrible.  The studios are trying to hide that they would be in trouble from both sides.  Not paying the residuals they should, and answering to investors concerning what the heck they are paying for. I suspect, most of these shows are losing a lot of money, which would anger investors. Again, this is why the number of projects are being greatly reduced, period.

 

Even when this gets resolved, actors are going to find there is much less work available.  The days of everything being greenlit, are over.  Studios are going to be under much closer scrutiny when it comes to profitability, and that belt tightening is already trickling down. More shows are going to be bought and outsourced to countries not bound by SAG agreements to make things even more complicated. I have heard predictions that the number of shows being made could be cut in half. So again, the top tier talent will be fine, the people already struggling are going to get crushed, regardless of the contract. 

And the studio tried to make it about a success bonus based on what you posted. Which is BS as if it is work-for-hire and terms are met for pay expectations, then tying back to if the studio marketed and released it in such a way it needs to be successful then the talent and creators are dependent on the good or bad rollout from said studios. They have no say in how this is done - yet additional payment balances on success based on that rollout.

Actors’ Strike Drags On As Union And Studio Feud Over $500 Million Streaming Pay Ask

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Studios, however, are offering a bonus-pay structure based on the success of projects, suggesting extra pay totaling about $20 to $30 million a year to those who worked on the most-watched shows, the Alliance of Motion Picture and Television Producers—a coalition of Hollywood studios—told Forbes.

EXAMPLE: The first Shazam movie was very well done, and was profitable due to a very low budget though it should have done higher numbers. WB Studios positioned the release between two massive competitive films (Avengers: Endgame and Captain Marvel). Was that the talent's fault or the studio that it underperformed, and therefore the studio executives planning the release should have taken a financial hit?

All the SAG-AFTRA team was doing is operating in the new venue (streaming) and saying of $6.99-$13.99/monthly per subscriber, set aside $.57 per subscriber per year toward residuals. NOT PER MONTH. No profits are even tallied into that proposal, which since it is an annual residual pool the studios are making the lion's share of the revenue.

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SAG-AFTRA leaders have proposed a plan that would see each streaming platform pay 57 cents per subscriber per year—$500 million annually across all platforms—to a jointly administered fund that would then dole out the money to actors whose projects appear on the platforms based on the popularity of each show or movie, Variety reported.

I think maybe you saw a large figure and didn't realize what the difference in the proposals were. No offense to you though.

Edited October 25, 2023 by Bosco685

[media_junkie]

On 10/25/2023 at 11:03 AM, Bosco685 said:

To pay talent based on profitability, then they would have to also drive how content is marketed and released regionally to maximize results.

I have no idea how an actor would make a living if they were paid on profitability, I mean based on Studio Math I'm pretty sure "Gone with the Wind" is still in the red (I know it isn't but you guys know what I mean about Studio Math).

[Bosco685]

On 10/25/2023 at 4:22 PM, media_junkie said:

I have no idea how an actor would make a living if they were paid on profitability, I mean based on Studio Math I'm pretty sure "Gone with the Wind" is still in the red (I know it isn't but you guys know what I mean about Studio Math).

[drotto]

On 10/25/2023 at 5:44 PM, Bosco685 said:

Nothing in any of these contracts will change the fact that 86% of their members make less than $26000 per year. This came out during the strike and the number of people who hit the cap to receive benifits. Heck with fewer shows being made, that will probably go up. There are just not enough parts, regardless of the overall industry revenue, for the vast bulk of members to make a sustainable living.

 

That is just reality.

[Bosco685]

On 10/25/2023 at 6:48 PM, drotto said:

Nothing in any of these contracts will change the fact that 86% of their members make less than $26000 per year. This came out during the strike and the number of people who hit the cap to receive benifits. Heck with fewer shows being made, that will probably go up. There are just not enough parts, regardless of the overall industry revenue, for the vast bulk of members to make a sustainable living.

 

That is just reality.

You've said a number of times.

Meanwhile, setting a more reasonable work standard is foundational. Growing it from there product-wise comes in time.

[CAHokie]

On 10/25/2023 at 7:02 PM, Bosco685 said:

You've said a number of times.

Meanwhile, setting a more reasonable work standard is foundational. Growing it from there product-wise comes in time.

As far as actors go unless you get an established role on a series, are a star, or in demand as a character actor, it is the best side job there is. There is no way to guarantee  a living wage for the amount of people that want to be actors full time. 
 

 

[drotto]

On 10/25/2023 at 7:02 PM, Bosco685 said:

You've said a number of times.

Meanwhile, setting a more reasonable work standard is foundational. Growing it from there product-wise comes in time.

But, what is a reasonable work standard? Under, the current contract scale for 1 day of work is $1082. Pay for a 1 hour drama for 1 full episode is 8 days of work and that is about $9522.  A 1/2 show is abound $5951 for that 1 episode.  I am sure these are going up in the new contract.  Obviously, experienced actors, and stars will get more than this.

 

So to make a reasonable salary an actor must be in 10 episodes per year (preferably a 1 hour show) and likely more given that taxes and agent cuts must come out of that.  So say to be a full time actor you must be in 15 epsidoes per year, which is working 120 days per year. That 15 would mean you net 89000 to 143000 per year. There is clearly not enough work for the vast majority. 

 

[Microchip]

On 10/25/2023 at 6:54 PM, Bosco685 said:

For me, I wouldn't compare Studio balance sheets to Tech. Different business stories between them.

So the question is a streaming service more aligned to a Tech company, or a movie studio?   I would lean towards tech, based on the growth strategy they are exhibiting.  

The same can be clearly said for music streamers as well, where contents providers are paid a pittance. 

It's a new model moved in on in the Movie business, hence why the writers are in the situation in the first place.   The rules of the game has already changed, and of course, employed wages are last to catch onto the fact.

[VintageComics]

On 10/26/2023 at 1:44 AM, Microchip said:

The rules of the game has already changed, and of course, employed wages are last to catch onto the fact.

The rules of the game changed as soon as AI went public. 

People who are in denial still don't realize what's happening.

People who realize what's happening have already adapted. 

The problem is the information shell game. Almost everyone is a bad actor these days and almost nobody moves forward with honorable intent anymore. 

You can see it in every aspect of society. I was skeptical growing up. Now I'm convinced that most of the world is corrupt.