The Writers Guild of America has pushed back against headlines bemoaning the struggles entertainment companies face on Wall Street, declaring in a new post on its contract negotiation website that Hollywood “remains highly profitable” and vowing to ensure that writers get their fair share of that profit in upcoming contract negotiations with studios.
“Gloomy stories about business model uncertainty, company layoffs and the industry’s impending downturn are both standard refrains during union contract negotiations and the predictable result of Wall Street’s narrow focus on stock price and short-term profits,” the WGA wrote. “Such coverage distracts from a fundamental truth: the content created for this industry has tremendous value, and the companies have demonstrated time and time again that they can and will capture that value.”
The WGA’s new “State of the Industry” report argued the guild’s case, pointing to the combined annual operating profits of Netflix, Paramount, Warner Bros., Comcast, Fox and Disney. Those combined profits reached between $28-30 billion each year between 2017 and 2021.
The Writers Guild acknowledged that profits took a considerable downturn in 2022 for a variety of factors, such as the Warner Bros. Discovery merger that led to billions in content write-downs and which the Writers Guild condemned, as it has in the past, as “ill-advised.” But the Guild also pointed to still rising streaming subscription numbers and prices, as well as the pivot towards advertising on streaming services, as proof that “the fundamentals of the business—demand for valuable content—remain strong.”
“Faced with this picture, analysts and the mainstream press continue their nervous coverage of the entertainment business, reflecting the reality that even when industry profits are high, Wall Street demands that those profits continually grow. The unexpected boom in pandemic-fueled subscriber sign-ups fostered Wall Street’s expectations, and several companies’ stock prices benefited. Once the pandemic surge in subscriptions plateaued, Wall Street enthusiasm cooled,” the Guild wrote.
“Our employers have responded with layoffs and content write-downs in an effort to boost their stock prices, while spending billions on stock buybacks for the same purpose,” it continued. “These reactions, and the attendant stock market noise, do not fully grasp the strong fundamentals of the business.”
The WGA released the post on its contract negotiation website, which was designed to provide members with information about the upcoming labor talks with the Alliance of Motion Picture and Television Producers (AMPTP) that begin on March 20. The talks are being closely watched throughout Hollywood as they could significantly change how talent is compensated for films and TV shows made for streaming services. And while both sides are aggressively combating the notion that a strike is likely or even desired, insiders at studios and entertainment law firms have told TheWrap that contingency plans are being made in case of a work stoppage.
The WGA also teased a follow-up post coming out next week that will outline how its members’ wages have “fallen behind” the profits that studios receive.
“While Wall Street criticizes the media companies for failing quickly enough to generate short term profits from a still-nascent streaming market, the fundamental truth remains: the content writers create has tremendous value,” the Guild concluded. “The companies have demonstrated time and time again that they can and will capture that value, but writers and the WGA must work to ensure that success is shared.”