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Hollywood writers begin strike as guild says studios 'closed the door' on labor force

Hollywood writers are on strike for the first time in 15 years, setting off a production shutdown across the industry.

After failing to reach an agreement with production studios ahead of Monday's midnight deadline, the Writers Guild of America (WGA) ‚ which represents thousands of television and movie writers, called for a strike to begin at midnight on Tuesday.

In a statement, the WGA said the committee "began this process intent on making a fair deal, but the studios' responses have been wholly insufficient given the existential crisis writers are facing."

"The companies' behavior has created a gig economy inside a union workforce, and their immovable stance in this negotiation has betrayed a commitment to further devaluing the profession of writing," the guild added.

"From their refusal to guarantee any level of weekly employment in episodic television, to the creation of a 'day rate' in comedy variety, to their stonewalling on free work for screenwriters and on AI for all writers, they have closed the door on their labor force and opened the door to writing as an entirely freelance profession. No such deal could ever be contemplated by this membership."

The WGA had been negotiating with the Alliance of Motion Picture and Television Producers (AMPTP), which bargains on behalf of studios including Netflix, Amazon, Apple, Disney, Warner Bros. Discovery NBCUniversal, Paramount, and Sony.

FILE - Writers Guild of America (WGA) writers and others strike against the Alliance of Motion Picture and Television Producers (AMPTP) in a rally at Fox Plaza in Los Angeles' Century City district on Nov. 9, 2007. Television and movie writers on Monday, May 1, 2023, declared that they will launch an industrywide strike for the first time since 2007, as Hollywood girded for a shutdown in a dispute over fair pay in the streaming era. (AP Photo/Reed Saxon, File)
Writers Guild of America (WGA) writers and others strike against the Alliance of Motion Picture and Television Producers (AMPTP) in a rally at Fox Plaza in Los Angeles' Century City district on Nov. 9, 2007. (AP Photo/Reed Saxon, File)

The 6-week talks centered on pay concerns brought on by the streaming boom, in addition to other fundamental changes within entertainment like the recent wave of cost-cutting that has prompted media giants from Disney (DIS) to Warner Bros. Discovery (WBD) to enact mass layoffs and shelve multiple projects.

"The AMPTP presented a comprehensive package proposal to the Guild last night which included generous increases in compensation for writers as well as improvements in streaming residuals," the AMPTP said in a statement. "The AMPTP also indicated to the WGA that it is prepared to improve that offer, but was unwilling to do so because of the magnitude of other proposals still on the table that the Guild continues to insist upon."

Yahoo Finance reached out for additional comment from the major Hollywood studios engaged in the talks but did not immediately hear back.

How we got here

The TV and movie industry today is being dramatically reshaped by the impact of streaming services.

Streaming shows often have fewer episodes and less residual income compared to traditional network television, which often means less money in the pockets of writers.

At the same time, the majority of studios are no longer just "pure play" production houses. Rather, they have their own streaming divisions, which have brought on a new set of challenges as direct-to-consumer losses mount.

"Whether this is a blip on the radar or a prolonged strike like in 2007 remains to be seen," Scott Purdy, US media industry leader at KPMG, told Yahoo Finance. "In the near term though, consumers should prepare for some of their favorite TV shows to be delayed and to potentially enter a period where there’s a limited amount of new content to watch. We’ll be watching to see how this impacts subscription decisions with inflation-pinched consumers who were already reassessing their spending habits."

Late night television shows will be the first to feel the impact.

Seth Meyers, who hosts NBC's "Late Night" show, said over the weekend said these changes don't "just affect the writers, [they affect] all the incredible non-writing staff on these shows. ... What the writers are asking for is not unreasonable."

LATE NIGHT WITH SETH MEYERS -- Episode 1421 -- Pictured: Host Seth Meyers during the monologue on May 1, 2023 -- (Photo by: Lloyd Bishop/NBC via Getty Images)
Host Seth Meyers during the monologue on May 1, 2023. (Photo by: Lloyd Bishop/NBC via Getty Images)

Studio executives have said they have enough scripted content banked to prevent disruptions to the content pipeline.

"We have a large base of upcoming shows and films from around the world, so we could probably serve our members better than most," Netflix (NFLX) co-CEO Ted Sarandos said during the company's quarterly earnings call last month.

Warner Bros. Discovery CEO David Zaslav echoed similar sentiments during the company's Max streaming launch presentation last month, telling reporters, "We've got ourselves ready. We've had a lot of content that's been produced and we are launching a product on May 23. So, we are ready to go guns blazing in terms of our product and our platforms around the world."

The box office should also be safe, according to industry executives: "For films coming out this year, the strike really doesn't have an impact," IMAX (IMAX) CEO Richard Gelfond told Yahoo Finance Live on Monday. "It's a question of how long it goes on for and what happens next year."

The writers' strike will likely have serious economic implications, as the last strike demonstrated.

According to estimates from the Los Angeles County Economic Development Corp., that strike, which lasted 100 days from November 2007 to February 2008, cost the Los Angeles County economy a whopping $2.5 billion.

"I don't think you want a writers' strike," Citi's Jason Bazinet previously told Yahoo Finance Live. "At the end of the day, the Street doesn't like uncertainty that comes with a strike."

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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