Entertainment Works Best When It’s Professional

Content Insider Special – Just Business

By Andy Marken – andy@markencom.com

A person in a suit holding a pool cue

“Cause he’s got everything workin’ for ‘im: timing, touch. It’s a great feeling, boy, it’s a real great feeling when you’re right and you KNOW you’re right.” – Fast Eddie, The Hustler, Rossen Films, 1961

We really thought 2023 was going to be the new normal.

You know folks going back to work in new ways – some remote, some at the office, things being done in new, different even interesting ways and stuff getting done.

The economy in the U.S. and most industrialized countries had stabilized and even improved (slightly, 2.9 percent) even though not as good as 2022 (3.3 percent) and signs are it will slow again next year because of high inflation and tighter money policies.

But ordinary folks didn’t care about that because they were still trying to dig out of the pandemic years which put them even further behind.

People in the U.S.  entertainment industry has been slightly bothered by that and this was the year they said BS we need to get paid equitably for our creative work – all of it.

In addition, they were/are more than a little concerned about the ominous creature hiding in the shadows called AI.

Depending on who spins the story it could be the most helpful tool invented since the can opener or the most harmful tool since Oppenheimer’s nuclear bomb.

It’s probably somewhere in between.

Most of those issues were resolved so both sides can say they emerged victorious. 

The industry folks can go back to doing what they do best and love while studio executives can tell Wall Street and shareholders they delivered on their behalf.

The industry has been changing rapidly in recent years – theater to pay TV to streaming – and fair pay for fair work was the first concern.

While they were at the table, they needed to have a heart to heart about establishing about some AI guiderails.  

Unions here and abroad have experienced a resurgence since the pandemic making inroads into nonunion companies like Starbucks and Amazon while gaining increased support with the public at large.

For folks who aren’t the one percenters in industry and in the U.S. take home pay, healthcare and pensions were the primary concern.

2023 could go down as the most labor active year in more than 40 years according to many industrial relations officials.

Across the country more than 400,000 workers have gone on strike – healthcare workers, railroad/airline employees, teachers, delivery workers, factory workers, service employees, auto workers and yes WGA/SAG-AFTRA professionals. 

The dissatisfaction isn’t just confined to the US because people across the globe have been putting down their tools and picking up strike signs in Germany, New Zealand, UK, France, Israel, Ireland, South Korea, China and well just about everywhere.

A group of people fighting over a car

Source – Cleveland Press Collection

Tough Strikes – Back in the early years of the organized labor movement things were far from civil as workers physically voiced their frustrations.  Fortunately, we’ve learned that talking and listening works better…most of the time. 

The good thing is they aren’t as violent as during the last century and a lot more professional.

Shawn Fain UAW president positioned their strike as “a battle of the working class against the rich, the haves versus the have-nots, the billionaire class against everybody else.”

Fran Drescher, head of the 160,000 film/TV actors’ union (SAG-AFTRA) was nicer noting, “They plead poverty, that they’re losing money left and right when giving hundreds of millions of dollars to their CEOs. It is disgusting. Shame on them. They stand on the wrong side of history.”

A graph of a number of companies

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Source – LA Times

Steady Growth – Thanks to “compensation consultants”, entertainment executives have enjoyed steady increases in their earnings and probably more so as the industry and firms work to find their way in the rapidly changing industry.

Yeah, but you really can’t blame the CEOs, studio heads for making so much because they don’t really set their own salary.

Even the shareholders don’t.

Ok so one time they said “H*** no,” but that’s a rarity.

The organization’s board hires an “independent” compensation consultant to recommend the CEO pay plus bonuses, plus equity, and plus other compensation.

In other words, it’s complicated.

Of course, if they didn’t like the offer, we guess they could go for a more lucrative job like…politics.  

Sorry…we just couldn’t resist.

The pandemic only reinforced what respected management consultants have said for years…every employee – not just the CEO – contributes to the firm’s profits.  

In fact, their job is to help them, not get in their way.

In the case of the video story industry, it has been painfully obvious that without the women, men writing, shooting, handling lighting/backdrops/sound, fixing costumes, doing make-up, performing, animating, video/sound editing, doing CGI/VFX and the myriad of “little” things bosses don’t have much to folks. 

A graph of the average ceo

Source – Washington Post

Boss Compensation – US CEOs have enjoyed significant compensation increases since the 1970s and the chasm between their and average employee earnings have continued to widen causing many to question the “bosses” real value.  

Not to defend entertainment bosses’ paychecks against yours, but the truth is CEO paychecks dwarf those of the workforce around the globe. 

Workers everywhere are demanding higher pay and better conditions.  

Over the last 10 years, US CEO paychecks have risen an average of $5M to an average CEO compensation of $16.7M this past year.  

While stock option compensation has shrunk, industry head’s pay is still vastly ahead of that of the creative industries largely freelance workforce. 

To quell the concerns of Wall Street and shareholders, studio/streamer bosses like WBD’s David Zaslav said on an earnings call that the company had $4.5 – $5B free cash flow.

Disney reported they had about $1.5B, while Netflix had a little over $1.3B in free cash flow.

Comcast, which owns NBCUniversal, and Peacock generated $3.4B.

While much of that money was the result of not investing in new movies/shows for theaters and their services but Wall Street and shareholders were “optimistic.” 

A person in a suit and tie

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Source – Columbia Pictures

Staff Realignments – Hiring new people is rather fun but no boss likes the job of paring his/her employee count or as Charlie Blanchard said in Fun With Dick and Jane, “I’ve got blood on my hands.”

To take advantage of the lull, WBD continued reducing staffing in almost every area including – Discovery, TCM, MAX, CNN – marketing and ad sales.

The latter two the company felt AI could handle the tasks more efficiently, more effectively and yes…more cheaply.

As part of a reorganization, Disney eliminated about 7,000 jobs while Netflix reduced their head count by a modest 300 and like the rest of the studios/streamers invested in AI tools.  

When it came to the entertainment industry strikes bosses didn’t do what the heads of the auto industry be involved at the outset and passed the discussions off to their AMPTP hired guns figuring they’d just…wait.

Worked with directors because DGA demands were pretty simple…money (ok other little things but…).

For writers here and abroad, the DGA agreement was the starting point…not the goal.

After five months of getting nearly nowhere, studio/streamer heads decided open, personal “discussions” were in order because they knew which way their organizations were going and could negotiate best on how an agreement would affect their visions of tomorrow.

A graph of a graph showing the number of years

Source Semafor

New Norm – Ticket sales have leveled off at a new normal, but box office grosses keep theaters open and modestly profitable.  

Writers had a pretty good idea of where they wanted to go because movies in theaters had just about plateaued even with tentpoles and superheroes.

Pay TV airings weren’t a promising option but feeding their global streaming services offered an…opportunity.  

Netflix showed the newbies that instead of the typical 22 episodic season they could be more flexible with eight to 10 weeks and add/remove shows based on subscription addition/retention.

The five months had cost LA, California, the US and the studios/streamers an estimated $5B so the bosses laid out their best and final offer.

Then they sat down with the writers to talk details regarding recurring and emerging streaming issues including mini-room sizes, performance compensation (including greater transparency on audience data) and residuals as well as “minor issues” like healthcare contributions.

A person in a garment

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Source – Brooksfilms

Heavy Reading – With a tentative agreement that covers 100+ pages most folks won’t read it completely, just the parts that get them back to work and help ;them in their job.  Some things just got lost in the shuffle.  

Of course, the “understood” and legal discussions surrounding AI guardrails took the longest time to hammer out because…well because.

But it’s an agreement that studio/streamer heads and WGA folks will be able to say to their shareholders and members it was…fair.

Even though international writers, actors, production teams benefited from the shutdown – a lot of “new” movies/shows were shown/aired. 

That breather proved that audiences were very receptive to good content regardless of the nationalities of the creative team. 

You can be certain they’ll review the agreements can help improve conditions for them and avoid the blind acceptance of AI in their workflow.   

The SAG/AFTA discussions should go a little faster because AMPTP negotiators probably gained a greater insight into the new guiderails they need to deliver agreements that their bosses and the creative community can live/grow with.

A person playing pool in a room

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Source – Rossen Films

More importantly, the cold-as-ice approach that AMPTP and middle studio executives were convinced was their best approach failed in the new entertainment industry.

Today’s creatives know that the industry isn’t all glitz and glamour.   

In fact, it’s downright brutal and you’re only as “valuable” as your next project. 

They’re tested, hardened and know who makes the content people want to watch and bosses need to offer.

The difference today is that the industry is made up of professionals on both sides of the table and as Fast Eddie said, “The pool game is over when Fats says it’s over… I came after him and I’m gonna get him. I’m going with him all the way.”

Now the bosses can return to their offices and develop new plans/strategies to return their organizations to growth and profitability.

Soon – we hope – the creative teams will get back to writing, creating, shooting, acting, editing, producing and doing what they do best…deliver stuff that puts seats in seats no matter which screen they’re watching. 

That way…everyone wins!Andy Markenandy@markencom.com – is an author of more than 800 articles on management, marketing, communications, industry trends in media & entertainment, consumer electronics, software, and applications. An internationally recognized marketing/communications consultant with a broad range of technical and industry expertise especially in storage, storage management and film/video production fields; he has an extended range of relationships with business, industry trade press, online media, and industry analysts/consultants.

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