Report: Hollywood Strikes Cost California Economy $5B

Facts

• After four months, the joint Writers Guild of America (WGA)-Screen Actors Guild and American Federation of Television and Radio Artists (SAG-AFTRA) strike has reportedly cost the California economy an estimated $5B, exceeding initial estimates made by experts.¹
• Kevin Klowden, chief global strategist at the Milken Institute, which conducted the research, says the industries taking the hardest hit include the support services of Hollywood from around the globe – including restaurants, caterers, construction and transportation services, dry cleaners, and rental companies.²
• In May and July, around 11.5K writers represented by the WGA and 160K actors represented by the SAG-AFTRA went on strike as negotiations with the Alliance of Motion Picture and Television Producers (AMPTP), the representation for Hollywood studios and production companies, stalled. As a result, all TV and movie production has stopped with no clear date to resume.³
• The dispute is centered around the lack of income received from streaming services and the use of artificial intelligence (AI) in the industry.¹
• In early August, experts analyzed data from the previous WGA strike, which occurred in 2007, and estimated that after 100 days, the damage to the economy would amount to $3B. In addition to $2.1B in monetary losses, the last strike also led to 37.7K jobs lost.⁴
• Amid the strike, companies like Warner Bros. Discovery have adjusted their project earnings for 2023. Initially, the company projected earnings before deductions to amount to between $11B-$11.5B but has since downgraded this projection by roughly $1B.⁵
• Meanwhile, Fiona Ma, California Treasurer, has attempted to get negotiations back on track by writing letters to the major companies represented by the AMPTP to inform them of how the strike is damaging the economy and impacting workers’ lives.⁶

Sources: ¹Business Insider, ²FT, ³Vox, ⁴CNBC, ⁵Associated Press, and ⁶Boston Herald.

Narratives

• Narrative A, as provided by Los Angeles Times. The time has come for studios and streaming companies to meet workers’ needs in terms of compensation and address their concerns about AI. These companies are attempting to severely cut writers’ ability to live while it’s the union members who create the content and then promote it. This strike is having a terrible impact beyond the writers’ and actors’ lives, and the studios should do what they can to end it.
• Narrative B, as provided by Breitbart. While there’s no one worth backing in this battle between the elites on both sides, the actors and writers are acting particularly privileged in this disagreement. Rather than holding the entertainment industry hostage over AI, they should use the technology to supplement and improve their work. It's time to get back to work before even more local economies are decimated.