Hollywood Workers Go on Strike by Hugh Panero

Workers rarely see in advance the technology that could wipe them out or embrace the reality of how new technology will negatively impact their earning potential.

Today, entertainment workers represented by the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) and The Writers Guild of America (WGA) are on strike. They desperately want a bigger slice of streaming revenue, which now dominates the industry, and job protection from AI. 

Unions have become adversarial with the end of their expired agreements and for a good reason. According to union leaders, they are at an inflection point and have dug in.

It is hard to muster sympathy for Hollywood unions, which the public identifies with beautiful, famous, and wildly wealthy movie actors like Ryan Reynold & Tom Cruise, or the cast of popular TV shows like Friends or The Big Bang Theory, who can make $1M per episode. 

However, these top-tier actors only represent a small fraction of SAG-AFTRA’s 160,000 members. The WGA and SAG-AFTRA members are more like us, than those big stars, except they have much cooler jobs and are more creative.

So, when I think of SAG-AFTRA, my cousin Vince Eisenson, a talented young actor who has appeared in shows like New Amsterdam, Billions, and The Good Lord Bird, comes to mind. He is dedicated to his craft and augments his acting income with commercial and theater work. He is married with young children. His wife works in education. These SAG-AFTRA negotiations around future compensation are essential to his family, and going on strike is hard. 

I also think of my college friend Clyde Baldo. He had minor roles in numerous NYC-based TV crime shows. He was a defense lawyer on Law & Order, a homeless man who witnessed a murder on Gotham, and a sleazy pawn shop owner who got beat up by The Punisher, a Marvel anti-hero. He loved acting no matter the role, and I loved watching him even when his decapitated head appeared in an especially gruesome serial killer drama. Clyde augmented his acting income by working as an Acting Coach and part-time psychologist. He was paid the SAG-AFTRA rate for each TV gig and got residual checks when an episode he appeared in was rerun on cable TV and other venues. They were not large checks but vital income. Clyde died of Covid in 2020 on the streets of NYC. If he were here today, he’d be walking a picket line.

On the other side of the negotiating table are The Alliance of Motion Pictures and Television Producers (AMPTP), a coalition made up of Amazon/MGM, Apple, NBCUniversal, Disney/ABC/Fox, Netflix, Paramount/CBS, Sony, and Warner Bros. AMPTP leaders claim this is the wrong time for unions to make unreasonable compensation demands in light of the coalition’s significant business problems, including lower-than-projected summer blockbuster theatrical box office, cable cord-cutting, and their difficulty getting their streaming business model right after spending billions building the platform.

Media moguls and talent are usually chummy, mingling at celebrity Hollywood parties and posing on the red carpet for photo ops at moving premieres. However, all that ends when they have to negotiate a new union contract every few years, and the rhetoric turns nasty. 

Media moguls like Disney’s CEO Bob Iger, who make hundreds of millions in compensation, are cast as class warfare villains and labeled greedy and immoral, unwilling to share the wealth. Media PR reps quietly point out that many top movie stars make more than these CEOs and many times more than the lowest-paid person working on a movie set. Unions counter that most members are fighting to earn a middle-class wage, get an equitable share of the revenue they help generate and protect themselves from AI. 

Historically, media executives have used their dominant position to capture the most revenue at the expense of entertainment workers, especially with the emergence of new technology. Movie studios used to chain actors to exclusive contracts. TV networks did not pay residuals for reruns until the 1960s. William Shatner and the rest of the crew of the Star Ship Enterprise never got a dime in rerun residuals. When movies made for theaters started showing up on ABC, actors were also not paid residuals; if the exhibition was not covered in an existing contract – too bad.

Entertainment workers have always played catch-up when new technology like the TV, VCR, Cable TV, PPV, and Streaming shows up. New technology disrupts how media is consumed and the existing economic revenue sharing model. Life was simpler before streaming. Residuals were paid when a hit TV crime drama went into syndication. The actor was paid a percentage of their salary when a rerun appeared on a cable channel and other outlets; there was a long-term, predictable revenue stream. Streaming blew up the model with binge viewing, a shorter series length, and payments based on views rather than airings. 

A recent New Yorker article, “Orange is The New Black: Signaling The Rot Inside The Streaming Economy,” discussed the actors’ unfair compensation on the 10th anniversary of the hit Netflix show. Orange is the New Black, and House of Cards established Netflix as a serious HBO competitor. In the piece, Alysia Reiner, who played the corrupt warden Natalie (Fig) Figuera, reflecting on her experience, said, “The reward for Netflix does not seem in line with the reward for all of us who took a big risk. I can go anywhere in the world, and I’m recognized, and I’m so deeply grateful for the recognition. Many people say they’ve watched the series multiple times, and they quote my lines. But was I paid in a commensurate way? I don’t think so.”

Netflix’s market cap as of this writing is $210 Billion. 

Determining the proportional and fair value for everyone contributing to a creative endeavor like a movie or TV show is difficult. You have media companies that bankroll a project and take huge financial risks, the writers who give it life, the actors that provide it with soul, and the hundreds of people who make it happen behind the scenes. That is why there are negotiations…and strikes. 

If the strike goes beyond September, you will find your favorite content distributors with a pretty stale offering. The economic pain for both sides will eventually force the parties to hammer out a compromise. 

Hugh Panero, a tech & media entrepreneur was the founder & former CEO of XM Satellite Radio. He has worked with leading tech venture capital firms and was an adjunct media professor at George Washington University. He writes about Tech and Media for the Spy.