Peak TV Is Over. A Different Hollywood Is Coming.

From The Wall Street Journal:

Fewer new shows in production. A higher bar to get shows renewed. Rich paydays going only to an elite few.

The labor pact writers struck with studios and streamers this week, ending a five-month strike,  will likely accelerate the retrenchment that was already under way in Hollywood for more than a year. It represented a formal end to “peak TV,” a decade that included an explosion of programming for viewers—and job opportunities for talent in Tinseltown.

Writers won major concessions in the deal, including new bonus payouts and higher royalties. Those hard-won victories are especially important given the hard financial realities of the entertainment business. 

A combination of debt-laden mergers, mounting losses in streaming, and the fast-shrinking cable TV bundle, has led to a push on Wall Street for entertainment companies to rein in spending. 

The streamers will have to find a way to pay increased talent costs—from the writers’ settlement, along with an earlier deal with directors and whatever is finalized with actors—without adding to their overall production costs.

That will likely mean that companies will make fewer new shows and cancel even more that are on the bubble. In effect, while many people in Hollywood will get better pay as a result of the deal, the contraction in spending means there will be less work to go around.

“The gusher of spending—I don’t see that marketplace coming back,” said Kevin Reilly, who held top programming positions at Fox, NBC and the streaming service HBO Max, championing shows like “The Office” and “The Shield” along the way. “Everyone will get a better piece of what they’ve created. But if anyone is thinking, ‘Let the good times roll!’—that won’t happen.”

One veteran TV producer predicted the number of scripted shows Hollywood produces could fall by one-third in the next three years. “The contraction in investment in content will by definition restrict the amount of work that’s needed,” the executive said.

For most of a decade, streaming companies were antiestablishment insurgents. Now, streamers, from Netflix to Max to Disney+ to Amazon Prime Video, are the new establishment, and the negotiations with writers reflected that. 

Mike Royce, a writer-producer whose credits include “Everybody Loves Raymond” and the Netflix reboot of “One Day at a Time,” said pushing for better terms was a no-brainer, regardless of whatever programming cuts might be coming, because the old system wasn’t working.

“There is no, ‘You’ll cut off your nose to spite your face,’ ” he said. “Our faces had already been eaten. The world we were in, we had lost so much.”

Writers were upset that streaming didn’t offer the same rewards for success as traditional TV. Under the new deal, they secured bonuses when their streaming shows perform well. They were concerned about a movement toward smaller writing rooms—a cost-cutting measure as streamers continued to bleed money—and won a provision that imposes minimum staffing requirements. 

The studios held the line on key issues. Streamers won’t publicly release viewing data, despite the writers’ demands for transparency, but instead will give data on how shows fared to the Guild confidentially to share with its members in aggregate form. 

Link to the rest at The Wall Street Journal

7 thoughts on “Peak TV Is Over. A Different Hollywood Is Coming.”

  1. A good article, although even on the “plus” side, the devil will be in the details, and reminds me very much of the Kindle option where a “pot” of money was set aside, and depending on how many books were bought / later read / later pages read, the author would share in that portion of the pool. But over time the pool got smaller and the revenue stream dried up.

    There is no “extra” money coming into the Tinseltown pie from any of these deals, and in fact, many of the groups who fund them are showing steady declines in their own revenue the way cable has over the last 20y. For hits now, their ratings would have got them cancelled early 20y ago.

    Cheers and Must See Thursday TV ain’t coming back. But the streamers are hemorrhaging cash other ways too, mergers, early cancels, “Netflix cancels everything!” laments, etc. If you can’t grow the pie, the only thing left is how the shares are split, and all this did was guarantee that the individual writers would get more, not that all writers would benefit.

    The “minimum” number of writers in the writing room appears ridiculous given shows that have ranged from the creator only all the way up to writing rooms of 20. I’m sure the big leads like Burrows or Berlanti are going to be having a “minimum” number of writers in a writing room on shows that are brought to them or they inherit, but if they create the show? And write the first season? There are going to be dozens of ways around the minimum requirement, including simply freelancing the scripts as “spec”. Or structuring the production into companies not bound by the agreement. I mean, it’s not like there’s any precedent in the publishing industry of large companies figuring out ways around mandatory royalty/licensing fees…

    For me, the biggest element was the stats. They are going to share their internal data on watchers with the Guild, on a confidential basis, so that the Guild can help verify which “tier” a show is in. Yet if you wants some fun, check out the feed for TV Grim Reaper who has for years looked at #s for all scripted shows on cable and predicted renew/cancel. He just went through S1 shows for the last year on streamers as to which category they would appear to fall into, and thus how much that show would pay the writers. Not all would pass into the higher tiers, in fact many barely make the lowest thresholds.

    For me, the best quote is the one about having their faces eaten. Yep, there was munching going on, and they’ve stopped that. But it doesn’t mean everyone survives the apocalypse.

    • The thing most of the studios failed to factor in that Netflix truly understands is that in streaming subscribers come for the hot new release but stay for the backlist. Also that it is better to csncel an ip a year too early than a year too late.

      Disney is exhibit 1.
      (Never mind the “noise” Iger wants to quiet, different mess.)
      Disney built their strategy on short, blockbuster-budgetted shows from their big name franchises which sure enough, brought in subscribers from a specific franchise-following demographic, but when they went looking for more content, what they found was targetted at a different audience.
      This invited churn, the bane of subscription services: sign up, watch the nde felrases, quit and return in 3 months. It didn’t help that the screen writing for most of the new releases was handed off to novices with agendas other than honoring the franchise and it showed.
      (And those that came for the other shows were not amused by the high profile new releases, which amplified by the noise drove many away.)
      By contrast, HULU, the redheaded stepchild of Disney is low on blockbuster new releases but with its day-after TV plus deep back catalog does fine. Smaller subscriber list but the ones they have *stay*.

      The other services suffer from different issues: Paramount is cash starved and hasn’t even deployed fully, Apple has no back cstalog (not that they care, Apple+ is a side bet at best), WBD is saddled with debt from the mergers and Peacock was fashionably late to the party and missed out on the gold rush of subscribers. All the majors but Paramount do have a road forward: PRIME has its PBS and british licensed shows plus MGM, MAX has HBO and the massive WB libraries so they can tread water while it whittles down its debt and PEACOCK is waiting to fish in troubled waters from the failures to come. (Their first choice is WBD but that might not be politically tenable just yet but Paramount would be a decent consolation prize–STAR TREK and YELLOWSTONE.)

      Note that most of the guild’s “big wins” are conditional and scaling. And don’t align with the short, focused creator driven shows that do best on streaming.
      Odds are, disappointment lies ahead.

  2. Rupert Murdock, owner of Wall Street Journal, sold Fox tv to Disney probably at peak. Disney is now trying to figure out how to recover from this mistake. Eisner should look for the solution to his troubles from CHAT GPT. Lol

    • Uh, Eisner was ditched 20 years ago.

      He was pushed out in favor of Bob Iger, who went on a shopping spree for Marvel (2009 for $4.24B), Lucasfilm (2012 for $4.05B), and FOX (2020 for $71.3B) and dumped the whole bungle on his boy Bob Chapek immediately.

      Iger installed the corporate culture that led to the “noise” he decries now, after he forced his boy out after two years. Pretty much every disaster in the last two years stems from things Iger put in place.

      For quite a while mouse fans keep hoping Apple will buy disney but that’s unlikely since they are allergic to spending big money and were too cheap to buy MGM for $9B or Lionsgate for even less.

      Instead, Iger is looking to unwind the Eisner era purchase of Capital Cities (ABC, ESPN, etc) by selling off those businesses. He’d like to sell off LUCASFILM too but nobody wants it after the recent movies (not at a price that might help reduce Disney’s debt load from the Fox deal or finance the buyout of Comcast’s share of Hulu they are contractually obligated to buy).

      The Fox buyout was all about ego, keeping Comcast from buying it.
      The bidding war overpay got too rich for Comcast but the rumor is they’ll get WBD once *they* reduce their debt load enough. A way better deal.

      Soap operas don’t get this convoluted.

  3. The studios held the line on key issues.

    Really? What universe is the OP in? (Checks for a moment… oh. That one.)

    I should note that each of the purported “key issues” on which the studios purportedly “held the line” was characterized by WGA representatives during the run-up to the strike as some variety of an in-the-best-of-all-possible-worlds hope, not a strike issue or objective. That as resolved they’re in the MBA doesn’t mean that the studios held the line — rather the opposite. For example, that any information had to be released to anyone regarding streaming statistics is a major antifraud bulwark (in commercial publishing, it would be the equivalent of requiring publishers to release actual sales data “confidentially” to a third-party verifying agency that will grant “best-seller” status, similar to but perhaps somewhat different from “gold” and “platinum” record certifications). The fact that these figures have to be released to anyone means that overt, umm, “misrepresentations” (again, similar to bestseller status… or, more to the point, including a “bestselling author” slugline on a cover) will be much more subject to later examination. And the WGA never actually demanded, in the negotiations, that individual-work figures be made releasable to the individual writers — only that there was a sufficient release to enable evaluation of potential need for an audit, which is an entirely different question.

    And that’s just one example of the problems with the OP’s take on “holding the line.” Further shall not be noted in public.

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