When I first graduated from college and was trying to earn enough money to move to Los Angeles I wound up putting my business school degree to use and worked for Philip Morris International in their New York City headquarters. Probably best known as a cigarette manufacturer, they actually owned a lot of brands at the time including General Foods. Every week it was my job to print out dozens of full color sales charts, put them into brand new three ring binders and carry them up to the C-suite offices on the 26th floor where I would turn them over to a secretary. The internet and email would come along later and replace such tasks.
It took me four weeks of ripping the shrink wrap off new three ring binders before I turned to my boss and asked why I didn’t just go and request one of the previous weeks’ binders, rather than keep wasting money purchasing new ones. My boss looked at me for along time before finally asking, “How much does Mike Miles, our CEO, make each year?”
“A lot?” I answered with a hesitant question.
My boss paused once more and said, “His base salary is USD $1.9 million. That’s not counting stock and bonuses. How much is that per hour? If you were to walk into his office and ask him to find a binder from a few weeks ago and he spends five minutes looking for it… how much money would that cost the company?”
The conversation was over. The questions were rhetorical. I never thought about operational costs and man-hours the same way again. My frugal collegiate budget mindset evaporated in the amount of time it took my boss to look back to the printout of his Excel spreadsheet.
I couldn’t help but think of that memory over the past two weeks when I heard that at least four media company CEOs had shown up to help the Alliance of Motion Picture & Television Producers negotiate a new contract with the Writers Guild of America; Disney’ Bob Iger, NBCUniversal’s Donna Langley, Netflix’s Ted Sarandos and Warner Bros. Discovery’s David Zaslav. By 20 September the WGA and AMPTP hadn’t met in a month and both sides were arguing over whose turn it was to counter the other.
This hands on approach to the negotiations which brought an end to the 148 day strike was something the CEOs should have done months earlier, or at the very least, after force majeure was triggered in July. This is because AMPTP President Carol Lombardini is the media companies’ chief negotiator and her only job is to say “no” to any and all contract requests being made by the guilds. That’s not really a negotiation. Still, Lombardini did her job very well this time around; the only problem was the WGA wasn’t taking no for an answer and neither is SAG-AFTRA, the union that represents the actors, also currently on strike. Her staunch refusal to bend on any deal point became such an impediment that a parody X (formerly Twitter) account in her name became a must read because it felt more accurate than humorous.
After five months of picketing, once the CEOs got involved, a tentative WGA contract was hammered out in under five days. Our original prediction that the strikes would end in early October is still technically accurate. The writers will have until 12 October to ratify the contract. During that time, the AMPTP will finally meet with SAG-AFTRA to negotiate a new contract for the actors. They haven’t talked or met at all since the actors went on strike (though there have been back channel conversations).
The good news is both sides can now use some of clauses in the WGA contract as a starting point for discussions. Put another way, SAG-AFTRA can take some of the wins that the WGA earned and try to adapt them. Certain aspects of the SAG-AFTRA contract are much trickier for various reasons, so I wouldn’t be surprised if it takes a week or longer to reach an agreement.
With the WGA contract now public, I could do a deep dive and analyze it here, though there are plenty of others who are doing that publicly. Instead, I will highlight what I’ve heard over the past week from industry professionals from Los Angeles to Asia, whether the work in production, distribution or exhibition. They all want to know, in a five month fight which started with the AMPTP offering a deal of USD $86 million per year and the WGA asking for USD $429 million per year, was the USD $233 million that the writers wound up with worth causing economists estimates to be USD $5 billion in damage to the economy? How would all those crew members, suppliers, retailers, etc. who wondered how they were going to pay expenses for at least the past three months answer that question?
How will movie theatre owners answer that question next summer when studios don’t have any films to release? Because believe me, while the WGA strike was mostly focused on television writers, cinemas will begin feeling the effect of these strikes by next April, if they haven’t already. Will it all have been worth it? Ultimately, when future WGA contracts are negotiated writers will be able to build on the gains of the deal they just got. Other unions can reference the WGA agreement in their own upcoming contract negotiations, possibly averting future strikes. In those regards, perhaps the answer should be a resounding yes.
Those four CEOs might not exactly think so. Of course, today’s media moguls make multiples more than the USD $1.9 million Miles did as a CEO back in the early 1990s (which seems laughably low now). I doubt though that they’ll add the expense of their participation in negotiating the new WGA contract into what the strike cost each of their companies during their next shareholder meetings. Though according to my old boss at Philip Morris, they absolutely should. But I think I can speak for an entire industry, and possibly even my old boss, in saying that this time around, it was money well spent.
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