Iger & Optimism in Hollywood’s Labor War

Photo: Getty
Jonathan Handel
December 1, 2022

Hollywood is increasingly abuzz about the possibility of a Writers Guild strike this spring. A large chunk of the community is convinced a walkout is all but certain. Making definitive predictions on this is about as advisable as filming a three-hour movie, but there is tea to spill. In particular, two recent developments, both largely underappreciated, have actually reduced the likelihood of a strike.

Several weeks ago, Matt Belloni wrote that predictions regarding a May 2 strike are “a bit silly and premature; the Directors Guild hasn’t even started negotiating, as is expected soon, and those talks typically set the tone for SAG-AFTRA and the WGA” That’s still true, but here’s what’s new: a recent DGA statement, and the return of Bob Iger to Disney. 

Both these developments matter. “If necessary, we are prepared for a fight,” reads the DGA’s fiery Nov. 17 message to members regarding negotiations that are likely to start soon. “We are doubling down on our commitment to fight hard, fight smart and win an exceptionally strong contract in 2023… With the collective strength and firepower of the DGA membership beside us, we will tackle whatever challenges come our way. Together, we know we can win.”

Fight, firepower, win? Those are astonishing words from a union that seldom speaks above a whisper. The DGA is usually technocratic, touting its data-driven approach to negotiations when it speaks openly about such things at all, in contrast to the slightly smaller but much more restive WGA. The directors union has only struck once in its 86-year history, and even that was a tepid affair that lasted just 3 hours and five minutes in the East—about the length of one of today’s bloated features—and only five minutes in the West, about the length of end credits.

The Economic Hurricane

That technocratic approach, like almost everything in Guild-land, is controversial. While the DGA is said to consider itself the adult in the room, able to achieve significant contract gains without the multibillion-dollar pain of a strike, some activists in the writers’ and actors’ unions sneer that the Directors Guild is too accommodating to management. That’s why the unusually assertive, and unusually public, message from the DGA startled the insiders I talk to. 

It’s significant for the WGA, too: what the directors achieve in residuals and basic wage increases will likely foretell what the writers and actors achieve in those areas. That’s because, as has generally been the case over the past five negotiating cycles, the DGA is expected to negotiate first, well in advance of its June 30 contract expiration, and its residuals deal sets an almost unbreakable pattern for what the other two unions are able to achieve, too. (The unions declined to comment.)

The situation regarding wage increases is slightly more complex, as so-called pattern bargaining with regard to scale wages has eroded somewhat over the past few three-year cycles. Nonetheless, if the DGA achieves strong gains, that will make it easier for the writers and actors to do so, and less likely that either of them would strike. In effect, the DGA is negotiating not just for itself, but also for its sister guilds, since a strike by writers (or actors, whose contract expires June 30) would likely idle directors too, as it did during the 100-day work stoppage in 2007-08. 

And the negotiations this year will be especially fraught. For one thing, the WGA has significant writer-specific issues beyond wages and residuals. Those demands won’t evaporate—the studios will likely need to make some difficult concessions—but strong compensation gains coupled with employer compromises would make the pain of a strike harder to justify.

Then there are economic conditions. “Our industry and the entire country are challenged by inflation, economic headwinds and a possible recession, and the Employers are focused on their bottom lines,” as the DGA put it. “This will not be an ordinary negotiation.” Nearly double-digit inflation, in particular, will drive guild demands for wage increases well above the typical 3 percent of recent cycles, notwithstanding some slowing indicators. (A smart compromise might index the annual increases to CPI-U, the most common U.S. measure of inflation.) And when it comes to residuals, the DGA says it will seek gains “based on real-world, global value.” Indeed, that may be table stakes for heading off a writers’ strike.

Wait, there are streaming residuals? Absolutely. Note to all: Unlike backend compensation, residuals haven’t disappeared in the streaming era, but they are calculated differently for streaming. It’s complicated, but the key difference is that success metrics are an implicit component of most traditional residuals but not in residuals for streaming product. Instead, streaming residuals are once-a-year payments that depend primarily on the domestic platform size (Netflix, with 73.4 million U.S. subscribers, would pay more than Peacock, with 15 million subs), episode length, and number of years since the episode was released. Viewership numbers, subscriber attraction and retention, and other performance measures don’t factor into it.

The complexity of these formulas only further complicate matters, especially with the studios and streamers under enormous pressure from Wall Street to cut costs and grow profits. The studios have always cried poverty, even as their top executives rake in millions in bonuses and their shareholders prosper. But this time, with market caps cratering, the boy who cried wolf really does see one at the door.

Enter Iger

Also confounding negotiations, of course, are the divergent strategies of the various companies that make up the studio bargaining unit, the Alliance of Motion Picture and Television Producers, led by Carol Lombardini. Once upon a time, the AMPTP companies constituted six major studios plus CBS and, for historical reasons, MGM. The six majors were fairly similar to each other in their business posture and footprints.

But no more. Now, Disney is a multi-label, multi-pronged behemoth fighting a war for scale against Netflix, a fellow AMPTP member that somehow manages to negotiate separately on its own behalf and jointly with the other companies. Meanwhile, Warner Bros. Discovery has seemingly opted out of the D.T.C. scale game in pursuit of cash to manage its huge debt, Universal’s Peacock seems intended to suit the needs of its parent company, and Paramount is struggling to build on a narrow foundation of franchisable I.P. Then there’s Sony, which doesn’t have a streaming service of its own; Fox, which has been absorbed into Disney; Amazon, which seeks retail sales more than video subscriptions; and Apple, whose offering is a slow-growth value-add for its hardware business. Getting these diverse agendas in line will be harder than ever. (The AMPTP declined to comment.)

Not that it was ever easy. But in the past one studio executive served as first among equals and was able to herd the cats. Lew Wasserman, Barry Diller, Peter Chernin, and yes, Robert Iger, all took their turn at the helm. Universal’s Wasserman was first; he presided over the studio response to concurrent SAG and WGA strikes in 1959-1960—strikes that yielded enormous gains for labor (residuals for theatrical features re-used on television, plus the establishment of union pension and health plans)—and was the studio-side leader for decades after.

Most recently, CBS’s Les Moonves and Warner Bros.’ Kevin Tsujihara were seen as knowledgeable and confident in union dealings; Tsujihara even quietly flew to New Zealand in 2010 to suppress a local unionization effort on The Hobbit that involved SAG and actors unions worldwide. Both are now departed, disgraced by sex scandals. Until last week, the industry offered no one with the skill, experience and stature to corral the mewling studio felines.

Just run the names: Disney’s now-deposed leader, Bob Chapek, a parks and consumer products exec, had little experience in talent relations (ask Scarlett Johansson), let alone guild matters. Meanwhile, Warner Bros. Discovery is led by David Zaslav, an expert in tight budgets and often nonunion unscripted shows. Netflix may be a member of the AMPTP, but its co-C.E.O. Ted Sarandos is seen by the studios as a rival and as a disruptor, the guy that built this mess by dragging everyone into the profit-challenged D.T.C. world in the first place. Universal ultimately answers to cable bros out of Philadelphia, and Paramount and Sony are too small to command the majors. Nor would the large studios follow the lead of Apple or Amazon, tech giants with lesser content footprints.

Thus, (re)enter Iger. His return as C.E.O. may not only steer Disney away from the mousetraps that ensnared Chapek, but he may also help save the entire industry from a strike. This is not to say that any studio chief loves or is loved by labor, but Iger at least has the stature to lead his side of the table, and he understands the guilds—to the extent that any centimillionaire does. Along with Chernin, he held months of meetings in 2007-2008 with the DGA, as well as at least one meeting with WGA leadership, helping guide his studio peers to deals with both unions that ended the strike.

And, of course, as C.E.O. of the largest creator of unionized scripted content, Iger would slip naturally into the role of primus inter pares. That could be the key to a DGA deal and strike-less spring. With formal negotiations likely to begin soon between the AMPTP and a newly assertive DGA, Iger’s return may turn out to be as well-timed as any Marvel character’s. Welcome to the Guild Cinematic Universe.

Jonathan Handel is a Los Angeles entertainment and technology attorney, labor expert, writer and adjunct professor. He’s represented SAG-AFTRA, long-ago worked for the WGA, and represents producers in their dealings with Hollywood unions.