Hello and welcome back to What I’m Hearing. Was this email forwarded to you by your smarter friend or colleague? She’s not actually that smart, she’s just got a Puck membership, which you can have too by clicking here.

Let’s begin, so we can all get back to watching today’s Jan. 6 hearing highlights…

Studios vs. SCOTUS: Either tomorrow or Monday is impact day for the Supreme Court’s abortion bombshell, and the Hollywood studios seem ready for the repeal of Roe vs. Wade. Reps for Netflix, Comcast, Warner Bros. Discovery, Sony, and Paramount Global, all told me they are joining Amazon in offering to reimburse travel expenses for employees in states that ban abortion who wish to end a pregnancy. Netflix, for instance, says its U.S. health plan now covers travel for “cancer treatment, transplants, gender-affirming care, or abortion,” with a $10,000 benefit per employee or dependent per service. All eyes will be on Disney, of course, given its volume of Florida employees and its new status as playtoy of right-wing politicians. The company wouldn’t comment when I asked about its policy, but I’m told by a good source that its employees—including the thousands in Florida—almost certainly will be reimbursed for abortion travel. Wonder what Ron DeSantis will think of that.

As for the rest of Hollywood, it’ll be interesting to see how many stars and companies will join the Writers Guild in calling for studios to yank filming from states that ban abortion, if that indeed becomes an option. Red states like Georgia, Texas, and, yes, Florida, all host significant studio productions. This could get ugly very quickly.

Elvis has left the box office: The fact that we’re debating whether Warner Bros.’ big summer movie will or won’t open to $30 million domestic this weekend is not great for the studio. True, Covid pushed DC’s Black Adam to fall, but the beauty of having recently exited the Toby Emmerich regime is that if Elvis fails, it will officially be nobody’s fault.

Agencies ghosting M.P.T.F.: Here’s a pretty shocking stat: None of the major talent agencies contributed to the Motion Picture & Television Fund’s big 100th anniversary event last week, I’m told. Zero. Agencies have never been the biggest backers of the M.P.T.F, which operates the retirement community filled with former clients of these same agencies. But they do typically participate in fundraisers like the annual Night Before and Evening Before, and most of the major studios (minus Sony and Amazon) lined up to support the 100th anniversary. Speakers at the event, which did raise about $2 million even without the agencies, included Jodie Foster (CAA), Adam Scott (UTA), filmmaker Billy Ray (CAA), and… you get the point. (Reps for the M.P.T.F. and the Big 3 agencies declined to comment.)

There’s Always Rush Hour 4: As the Academy rolls out the results of the board of governors election, let’s pour one out for Brett Ratner, who ran in the directors branch and didn’t quite make the cut.

I’m guessing that you, like me, are generally bored by the triennial back-and-forths between the various guilds and studios that, at least since 2008, inevitably lead to an 11th-hour deal with modest gains for the talent. But there is every reason to believe this upcoming battle—the writers’ contract expires May 1, 2023, followed by the Directors Guild and SAG-AFTRA on June 30, although the DGA likes to negotiate first, probably this fall—will be especially brutal. The writers last re-negotiated in 2020, when the prospect of a strike at the height of a pandemic shutdown seemed absurd. So Hollywood’s most cantankerous union hasn’t really gone to war since 2017, and think about where the entertainment industry was back then: Netflix had less than 100 million subscribers, Disney+ was but a twinkle in Bob Iger’s eye, Time Warner and 21st Century Fox both thrived as standalone companies, and HBO was considered a TV channel.

That seems quaint these days. Peak TV may have given the screenwriting community 560 scripted series, but consolidation and the Netflix-style streaming model has eaten the entire business, shifting seasons from 22 or 13 episodes to 10 or 8 or even 6 episodes, all but eliminating backends, and curbing opportunities for even fully-employed writers to make a good living and advance. The list of union grievances is long and detailed. That’s partly because of the power that these vertically-integrated companies wield today, and also because W.G.A. executive director David Young has been obsessed with other, arguably less important crusades, like waging war against its members’ own agents over packaging fees and content ownership. Often the guilds settle for increased minimums and royalty payments, rather than targeting the fundamental shifts in how professionally-produced content generates money. The result: For writers, it’s truly the best and the worst of times.

So while the union fights are only part of a larger streaming war, they are certainly playing a unique and possibly substantive role. In conversations I’ve had with agents and lawyers in the past few weeks, it feels like momentum is growing at the guild level to take aggressive positions. With high inflation and a looming recession, people feel the balance of power tipping even further toward the studios, and 2023 might be the last chance for writers and the others to step on the see-saw before it becomes permanently out of reach. (The W.G.A. declined to comment.)

If you missed it, he basically said at a public conference what many of us have been discussing for awhile now: That the distributors have used “streaming” as an excuse to pay a little more up front temporarily in exchange for permanently and fundamentally altering the value chain and sucking billions of dollars away from creators:

“Is it remotely equitable that the producer gets bought out in perpetuity only because these streamers/studios have tacitly colluded to prevent you from enjoying the backend? Did the Producers Guild or Directors Guild or Writers Guild or SAG-AFTRA ever negotiate with these media behemoths to end the more than 50 years of backend ownership?”

Sagansky called on Congress and the Justice Department to step in to “level the playing field,” but he knows that’s never going to happen. The best hope for change are the only groups with actual power over the studios: the talent guilds that can shut the whole town down. That’s why he invoked them. What if, for example, instead of asking for increased wage minimums for the lower-tier members, the W.G.A. or D.G.A. put the entire cost-plus model for all of its members on the table? That’s probably extreme, and arguably outside the scope of guild purview, but so was agency packaging. And there are tons of other “innovations” in the TV business over the past decade that have worked to limit what talents are paid. Now is probably the time for the unions to pay attention and to think big.

This is all pretty abstract, so let’s get into specifics. In the past few years, many streamers and studios have switched to weekly writer fees, rather than episodic fees that were based on the old 22-episode seasons. In theory, that’s better for writers because so many shows now require tons of work for not that many episodes. But outlets like Disney+ and Netflix are often limiting the weeks of work, and taking writers off projects before they proceed to production, which saves money but limits fees and the producing experience that many writers covet.

The so-called “mini-room” has been a target of W.G.A. anger for a while now. In fact, the incognito writers group said in the same email I received that it is “attempting to find potential solutions to the out-of-control industry practice of ‘pre-writing’ mini-rooms that undercuts writers quotes at all levels and the WGA’s own rules…” Mini-rooms started as a creative approach when a network wasn’t sure it wanted to greenlight a show. Writers were paid scale for a few weeks—not their quotes—to figure out what the show will be, perhaps even breaking the season’s storyline or even writing a couple scripts. Then, upon greenlight, the real room would take over, often with the same people.

Fine, right? But now the mini-rooms often supplant the traditional rooms. Here’s how it works: Say you’re doing a 10-episode series for Marvel or Amazon. If you paid 10 writers to make them on an episodic basis, at, say, an average of $25,000 per episode per writer, that’s $2.5 million in writers fees for the season. But if you take eight of those writers, give them $10,000 a week for a 10 week mini-room, then cut them off and hire a couple more experienced writer-producers to actually make the show at, say, $40,000 an episode, that’s $1 million for writers and $800,000 for the writer-producers, or $1.8 million on fees for the same series. That’s $700,000 in savings for Disney+ or Amazon, which is pretty significant at scale, given the volume of shows we’re talking about.

This kind of stuff has exploded over the past five years. I’m told Amazon has even done 20-week pre-greenlight rooms for the second seasons of shows. In addition to the pay issue, writers hate that they don’t get actual producing experience. Some of them are able to negotiate for title bumps, but they essentially bounce from mini-room to mini-room; they aren’t moving up the totem pole. And the result is that only a select few people know how to actually run a show these days.

That means the residual system isn’t really designed for movies that drop on Disney+ the same day as theaters. At the same time, what is the definition of an outlet like, say, HBO? The Directors Guild, for instance, has negotiated for fantastic fixed residuals from “pay TV” outlets. But is that what HBO is today? The linear channel is, sure, but all the HBO content is also on HBO Max, which is a streaming service. Streamers use an entirely separate (and less favorable) residual scheme based not on how many people consume the content but on the number of subscribers. For that reason, Warner Bros. Discovery would very much like to reclassify HBO as a streamer. That will be a big point of contention for the directors, as will a document called “Side Letter 15,” which dates back a decade and a half and relates to how digital revenue is accounted for, and which the directors would like to revisit.

All of this is complicated, but the takeaway is that the talent community in general, and the Writers Guild in particular, are pretty pissed about the way the streaming ecosystem is treating them. The entertainment business is changing under everyone’s feet. Everyone is nervous about how it will impact them. And it will likely take some of the top-earning people getting involved to influence who benefits long term from these new compensation systems, which the streaming companies would very much like to become permanent. It may be too late to change the fundamentals at this point, but at least the writers seem like they are girding for a fight.

Got a question, comment, complaint, or ideas for which global calamity Sean Penn should visit next? Email me at Matt@puck.news or call/text me at 310-804-3198.