Strike leaves winners and losers
2008-02-12 17:32
Los Angeles - Hollywood writers scored a historic victory in their three-month long strike but the dispute came at a devastating cost for small businesses caught in the cross-fire, analysts said Monday.
Determined to avoid the mistakes of a 1988 deal relating to home videos, writers successfully negotiated a contract that gives them a slice of profits from new media and internet sales, where previously they received nothing.
The new deal - which is set to be approved by Writers Guild of America members later this month - was described as a "groundbreaking" achievement by University of Southern California film industry expert Jason Squire.
"Establishing the principle that the WGA has jurisdiction over Internet and new media is a groundbreaking step forward," said Squire, a lecturer at USC's School of Cinematic Arts and editor of "The Movie Business."
New reality
Industry analysts predict that traditional DVD and home video sales and rentals will eventually be rendered obsolete as technology allowing for content bought online to be viewed on television becomes more widespread.
"People are going to be their own programmers, picking and choosing what they want to watch and when they want to watch it. This deal anticipates that new reality," Squire said.
However, while writers were right to stick to their guns during the strike, Squire said, the impact of the dispute upon businesses who indirectly rely on the entertainment industry had been devastating.
"There have been very significant losses for companies that rely on seasonal work. They have lost 14 weeks worth of business," Squire said. "That is a dreadful and damaging impact for smaller companies."
The Los Angeles Economic Development Corporation (LAEDC) estimates that the strike's total cost may be in the region of $2bn - most of it coming from service sector industries.
Estimated $1.3bn lost
According to LAEDC figures, the strike cost an estimated $733m in lost film and television production spending.
But LAEDC said an estimated $1.3bn was lost by companies such as caterers, hoteliers and limousine rental firms that rely heavily on the entertainment industry for business.
Alan Shanedling, president of the Greater California Livery Association, a collective of limousine rental companies, said his firm had lost around $200 000 in January as the strike hit Hollywood award shows.
Total industry losses arising from the cancellation of the Golden Globes alone would run into several hundred thousand dollars, Shanedling told AFP.
"If you look at the Golden Globes there would have been 800 to 1 000 cars rented for eight to 10-hours minimum each, at $50 to $100 an hour. That is a very significant amount of money however you look at it," Shanedling said.
Diversify base
Mark Deo, director of the Small Business Advisory Network, told the Hollywood Reporter that businesses hit by the strike would in the future seek to diversify their base instead of relying on a handful of television productions.
Deo cited the example of a husband-and-wife catering firm that closed during the strike with the intention of re-opening once the dispute was over.
"No one is saying, 'I'm outta here for good,' but when they do come back they'll be operating differently."
Studios are also expected to alter past procedures in the post-strike climate, with analysts predicting that writers will increasingly be hired on a job-by-job basis rather than be given lucrative long-term contracts.
Several studios had already fired writers on such contracts during the strike under force majeure clauses, allowing them to make savings of millions of dollars in salaries.