Why Hollywood Shouldn’t Count on Much Relief From $2 Trillion Federal Bailout

“The entertainment industry obviously has been hard hit by the current environment. But so too have a number of other industries,” a bankruptcy lawyer tells TheWrap

The Trump White House and Congress struck a deal early Wednesday for an unprecedented $2 trillion economic rescue package in response to the ongoing coronavirus pandemic — but Hollywood shouldn’t expect to be high up on the list to receive an industry-wide bailout, public policy experts told TheWrap.

“The entertainment industry obviously has been hard hit by the current environment. But so too have a number of other industries,” said Brian L. Davidoff, a lead bankruptcy, reorganization and capital recovery lawyer at Greenberg Glusker. “If Congress is going to parcel out money to particular industries, I think, under those circumstances, it’s possible, but it just doesn’t seem to me that Hollywood has a special place over and above other industries like the leisure industry, like the restaurant industry.”

According to the U.S. Bureau of Economic Analysis, arts, entertainment and recreation accounted for just 1.1% of the nation’s gross domestic product in 2018 — just over one third what the accommodation and food service sector contributed.

The stimulus package, which is expected to go to the Senate for a vote on Wednesday, includes a $367 billion loan program for small businesses impacted by the pandemic as well as $500 billion in loans for industries, states and cities. Individual American adults would also be eligible to receive a direct payment of $1,200.

Much of the debate between Democrat and Republican lawmakers has been over whether it’s best to support workers directly or through the businesses that employ them, Davidoff said. But Hollywood and its workers aren’t likely to have a leg up over comparable “leisure” industries when it comes to earmarked aid, Davidoff said, despite lobbying efforts from various guilds and Hollywood lobbying groups like the National Association of Theatre Owners, SAG-AFTRA, AFL-CIO, IATSE, Writers Guild of America, Directors Guild of America and the American Federation of Musicians.

But that doesn’t mean that entertainment industry businesses or workers would be left completely high and dry in Congress’ economic stabilization package.

Bob Hockett, a lawyer who regularly consults for the Federal Reserve Bank of New York and the International Monetary Fund, said workers in Hollywood’s gig economy who have been furloughed by the shutdown of film and TV productions, as well as the cancellations of concerts and theater performances, would most likely be supported through the universal basic income-style checks that lawmakers on both sides have been advocating for. Drafts of the Senate bill also include expanded federal unemployment insurance that would give the unemployed — including freelancers, gig workers and furloughed employees — $600 a week for four months. And on the state-level, employees in California whose jobs have been affected by the pandemic — regardless of industry — can also apply for unemployment through the state’s Employment Development Department.

Businesses that demonstrate need will also likely receive federal aid through industry-agnostic payroll or wage support, Hockett said. Hollywood’s small businesses like catering companies, postproduction facilities and independent cinemas — what Hockett called “smaller-fry entities” — could be eligible for government assistance to help cover the costs of their employees’ salaries or wages until they are able to reopen. But a mega cinema chain, however, might not be as likely to receive this kind of aid, Hockett said.

“Some of the movie house or cinema companies like AMC, or what have you, these are huge firms too,” Hockett said. “And it’s true that their business model is being especially hard hit right now because people are loath to go and sit in theaters and, in some cases, aren’t even permitted to do that. But it has to be remembered that those are not poor, hurting corporations. They’re huge.”

Still, as the economic rescue package is being finalized, there always remains the possibility that Hollywood’s bigger businesses could receive aid. But Hockett said he’d be “pretty skeptical” of anything being approved for the likes of a Disney-size business.

Since no one knows when the virus might be contained or how long it will take for the economy to get back on its feet, unemployment in Hollywood could continue to grow for the next few months. And because of that, public policy experts said that industry change is inevitable, even if the end of the pandemic — and the scope of the damage it will cause — seems unpredictable.

“The fallout is going to be very, very significant. And I don’t think that anybody has a sense yet of how far that’s going to be. In talking to my clients and other professionals who work in this industry, it still appears like most people are like deer in headlights,” Davidoff said. “Ultimately, the industry will survive and it will adapt. But it’s going to take some time to get back on its feet.”

Eric Schiffer, the CEO of the private equity firm The Patriarch Organization, said this means that Hollywood needs to be “creative right now” and its affected workers must look to “opportunities outside of the industry.”

For some, that has meant bringing together colleagues in the industry to do creative work outside of an official production or show. Caleb Martin, a TV producer and music composer, said that he and some other furloughed musicians — including members of the Jonas Brothers’ horn section and the composer of the “PAW Patrol” theme song — have been seeking sponsors to support a series of music videos that they’re creating as a replacement to the gigs they would normally rely upon, as well as to provide some levity for homebound viewers during the pandemic.

Others, like casting director and intimacy coordinator Marci Liroff, are contemplating how they can market their skill set given the current environment and are hesitantly considering online teaching. “It feels weird to me to be asking actors to pay for things when they’re all out of work,” Liroff told TheWrap last week. “I don’t have a weekly paycheck. I’m totally gigging in the gig economy, scratching a living as an independent contractor going job to job.”

If the economic downturn drags on, Hockett said the government could potentially look to the past for solutions. During the Great Depression, the government launched the Works Progress Administration to employ displaced workers across various industries, including the arts. The WPA employed actors, musicians, writers, artists and other entertainment-related workers to create public works of art, such as murals, sculptures and performances. (The WPA arts program also led to the creation of the National Foundation for the Arts and the National Endowment for the Humanities.)

“If you were able to do that in ways that were consistent with social distancing, so you don’t have a lot of people packed closely together, that would be a way of, in a sense, publicly aiding smaller-fry artists who aren’t already billionaire celebrities in a manner that basically enables them to kind of give back to the community,” Hockett said.

But even that may not be enough to support the thousands of furloughed or laid-off workers in the entertainment industry. And some have questioned why more of Hollywood’s giant corporations — beyond a select few — have not been willing to support their full- and part-time workers as the pandemic drags on.

“Most of the people that I know are definitely affected by it, but they come into the situation feeling very jaded about the studio even seeing it to be within their interest to care about the people that they contract,” Martin said. “I mean, you’re interviewing me and it’s occurred to me, ‘Huh, maybe these corporations can look at something other than the bottom line for once.’ That thought literally hadn’t occurred to me. That’s kind of how f—ed the mindset is.”

J. Clara Chan

J. Clara Chan

Media and politics reporter • jclara.chan@thewrap.com • Twitter: @jclarachan



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