- Share this article on Facebook
- Share this article on Twitter
- Share this article on Flipboard
- Share this article on Email
- Show additional share options
- Share this article on Linkedin
- Share this article on Pinit
- Share this article on Reddit
- Share this article on Tumblr
- Share this article on Whatsapp
- Share this article on Print
- Share this article on Comment
One week after contract talks between SAG-AFTRA and the Alliance of Motion Picture and Television Producers broke down, Netflix leadership gave an update to Wall Street on the status of the talks to resolve a strike that is nearing 100 days and brought most of Hollywood’s production to a halt.
“We want nothing more than to resolve this and get everyone back to work. That’s true for Netflix, that’s true for every member of the AMPTP. It’s why our member CEOs have prioritized these negotiations above everything else we’re doing,” said Netflix co-CEO Ted Sarandos on an Oct. 18 earnings call. “We spent hours and hours with SAG-AFTRA over the last few weeks and we were actually very optimistic that we were making progress. But then at the very end of our last session together, the guild presented this new demand that, kind of on top of everything, for a per subscriber levy unrelated to viewing or success and this really broke our momentum unfortunately.”
Related Stories
On Oct. 11, the studio coalition, the AMPTP, said it was breaking off talks after a five-day negotiating spree as “conversations are no longer moving us in a productive direction,” while the 160,000-plus member performers union replied that studios were engaging in “bully tactics” and were overestimating the cost of the actors’ contract proposal. The actors countered that the levy “would cost the companies less than 57¢ per subscriber each year.” But that proposal was a no-go for the studios.
The union’s chief negotiator, Duncan Crabtree-Ireland, told The Hollywood Reporter that the proposal was an attempt at compromise with the major studios that make up the AMPTP, which include Disney, Warner Bros., NBCUniversal, Paramount, Sony, Netflix, Amazon and Apple. “We made a huge, huge concession on streaming revenue share, changing that proposal away from a revenue percentage into just a viewership proposal — massive move in their direction,” Crabtree-Ireland said.
In its latest earnings disclosure, the streaming giant cited about $1 billion in “lower-than-planned cash content spend” amid the dual Writers Guild of America and SAG-AFTRA strikes. And Netflix said it is upping its free cash flow estimate to $6.5 billion-plus for the full year. At the same time, the streaming platform noted a new $10 billion share buyback program for its common stock.
The free cash flow update — a metric Wall Street uses to evaluate funds left over once financial obligations are met — is a glimpse at how major media companies steered through the work stoppages.
Netflix was expected to spend around $17 billion on programming content this year, but that was impacted by the dual strikes. For 2024, “we hope to get cash content spend back up to at or near that $17 billion level, the biggest swing factor is going to be when the SAG-AFTRA strike resolves,” CFO Spencer Neumann said during the Wednesday earnings call.
In its third quarter, the streaming giant added 8.76 million subscribers for a total global paid membership base of 247.15 million, ahead of rivals like Disney+ (105.7 million core subscribers), Max/Discovery+ (95.8 million) or Paramount+ (61 million). Over 70 percent of Netflix subscribers are now outside of the United States.
While the actors are at an impasse with studios, the Writers Guild of America membership ratified its deal with studios on Oct. 9, touting gains on the use of artificial intelligence in scripts, viewership data transparency and minimum staffing in television writers rooms. The guidelines for the use of AI, a streaming-revenue-sharing proposal and residuals remain issues on the table for the actors whenever bargaining resumes.
The summer of dual strikes resulted in a 41 percent drop in production shoot days in Los Angeles from July to September, permitting group FilmLA reported on Tuesday. And the U.S. Bureau of Labor Statistics noted in its latest jobs report this month that “employment in motion picture and sound recording industries continued to trend down (-7,000) and has declined by 45,000 since May, reflecting the impact of labor disputes.”
THR Newsletters
Sign up for THR news straight to your inbox every day