Should creatives demand bigger paydays from stingy studios?
It was about this time 10 years ago that an angry buzz began to build. It was contract renegotiation time for writers and directors, a normally boring ritual, but the mood was suddenly different. While Hollywood’s majors were recording record profits, writers in both film and TV felt their piece of the pie was shrinking, not growing. Further, earnings from “new media” – the great white hope of the future — were abruptly taken off the table. Though cognizant of the noise, corporate CEOs dismissed complaints as empty rhetoric. Writers, after all, were always complaining.
They called it wrong: After months of negotiations and rallies, the WGA marched out on strike in November 2007 – a bitter clash that lasted 100 days, cost $2 billion in lost revenues and arguably hurt, rather than benefited, the cause of the writers. In fact, many feel it forever changed the landscape for creatives in Hollywood.
No one is even remotely thinking about strikes in today’s Trumpian climate, but some intriguing analogies could be drawn between the economic realities of today versus a decade ago. Again the corporate take is strong and some serious analysts point out that the “pie” is not being divided fairly – today more than ever. And unions and guilds are under siege as never before.
The Economist, a conservative publication, noted this week that U.S. corporations were harboring a “naughty little secret” – namely, that profits were at record levels and return on equity in the U.S. was 40% higher than abroad. It’s corporate bonanza time – that’s the secret. On the other hand, in this “age of hyper-profitability,” the winnings are not being invested in growth or lavished on employees but being parked overseas or carved up by top management and Wall Street.
The upshot is that economic inequality is worsening and consumer demand is stunted – a Bernie Sanders-type scenario from people (including myself) who don’t necessarily support “the Bern.” Yet even The Wall Street Journal last week echoed the news. “Consumer spending needs fuel,” WSJ stated, rising by a meager 0.1% if at all. Thus while unemployment is down and workers are working longer hours, pay is still frozen. So is demand. Given this climate, California’s current proposal to lift the minimum wage to $15 an hour is being regarded as financial apostasy.
With Hollywood guilds just now drawing up their strategy for their new contract negotiations, they do so amid an eerie silence. The WGA likely will opt to sit down with the majors only after the more potent DGA has presented its demands. Meanwhile, earnings of screenwriters have fallen five years in a row. While TV has held stable, writers in both areas complain that both the pay and the overall environment for creatives has grown ever more constrictive. Appropriately, perhaps, the only words of union solidarity have come from a man best known for comedy. Seth MacFarlane, in accepting an award from animation writers, reminded his audience that ”now that the studios have become ever more monolithic, I am a firm advocate of the power of unions.”
And the “monolithic majors” seem in no mood to send forth signals of generosity. While profits have been strong, the shares of media companies have been roughed up by investors reflecting a fear that the ground is shifting under the media business. Further, the majors still lack a leader of the stature of Lew Wasserman or Bob Daly who can martial fellow CEOs into a coherent relationship with the labor force or the community at large.
In its analysis, The Economist singled out “a corrosive lack of competition” as the biggest enemy of growth. One industry after another has succumbed to concentration – a phenomenon that most analysts predict is looming ever more ominously over Hollywood. MacFarlane isn’t alone, it seems, in worrying about “the monolith.”