We’ve Avoided One Strike...and Did Paramount’s Big Sale Change Anything?
The Most Important Story of the Week for 16-July-2024
(Welcome to the “Most Important Story of the Week”, my bi-weekly strategy column analyzing the most important (but often not buzziest) news story of the last two weeks. I’m the Entertainment Strategy Guy, a former streaming executive who now analyzes business strategy in the entertainment industry. Please subscribe.)
Two weeks ago, I snuck off with my family for a long-coming week-long Fourth of July vacation.
No news broke, did it?
Well, of course it did.
Some news came right before my vacation (below-the-line workers/IATSE approving a deal with the studios/AMPTP), then during it (Paramount Global officially sold to Skydance/Redbird Capital).
These stories present yours truly an interesting contrast. In the case of the first story, as I noted on social media, no one seemed to care; it barely got noticed in the trades. Seriously, here are some headlines from the next day…
I get it that “life continues as normal” isn’t a news story, but that was a monumental decision to not strike! Especially in this climate, the “why they didn’t strike” story needed explaining, though I saw very little reflection on that in the Hollywood press. Sometimes discussing the road not taken really does matter, especially if that road has a giant rhetorical tree blocking it.
On the other hand, I can’t figure out whether or not the Paramount Global deal actually changes…anything? Yet it was covered everywhere since it contained genuine news.1
So let’s discuss both plus some fun theme park news. I’m giving the most important story crown to IATSE’s deal, because it’s genuinely a positive development.
Most Important Story of the Week - IATSE Decides Not To Strike
I get it. The fact that IATSE made a deal with the AMPTP is almost (though not quite) like saying “Neighborhood dog doesn’t bite man.” The potential strike didn’t happen. Hence, no story.
But that’s not quite right. The union had a decision to make and ultimately decided not to strike. That’s unalloyed good news for Hollywood.
The caveat, that some folks mentioned on social media (follow me here, here or here) is that a strike may still loom in Hollywood’s very near future. While IATSE—a guild that represents most below-the-line workers but not all—came to a deal, the Teamsters—a union that represents truck drivers, location scouts, animal handlers, and so on—has not. And the Teamster’s local boss in the past has sounded much more willing to strike. (She called “for the ‘evil empire’ AMPTMP to be “f***ing extinct.”) This point—that we’re not out of the Hollywood strike woods yet—is fair.
Unfortunately, the other reaction I saw was folks telling me that IATSE was never going to strike. And that kind of certainty always bugs me. It’s tempting, once a decision is made or an event happens, to assume it would always have happened that way. The most obvious analogy is to elections, and how, after 2016, all histories written about the election explained why Trump would always have been elected. But that election was really close! It’s not crazy to imagine a few better decisions and 50 to 100K people voting the opposite way and then Hillary Clinton would have won the election and history plays out entirely differently.2
The same sort of thing happens when unions decide to strike. Once the WGA and SAG-AFTRA went on strike last summer, then every article mostly covered the “why they went on strike” decision from the perspective that they’d always have gone on strike.
But that’s not the case! Indeed, I still hear rumors that as close as a few days before the SAG-AFTRA deal expired it seemed like they’d sign an agreement, and the letter from some prominent actors encouraging a strike changed some people’s minds. (Again, small decisions can move things at the margin.)
We have to be careful “back-fitting” our explanations of the past when some decisions were actually closer to not happening than many people realize.
That all said, it was always less likely that IATSE was going to strike right now. The reasons why they chose not to strike say a lot about our current climate. Essentially, if you boil down the reasons why they wouldn’t strike, it’s because…
They kind of already went on strike last year. Once SAG-AFTRA went on strike, everyone in town had to stop working, including IATSE, but without the opportunity to bargain for concessions.
Production still hasn’t rebounded in Los Angeles to pre-strike levels.
Studios may be hesitant to produce in Los Angeles and New York until all future strikes are off the table, providing an incentive to make a deal.
Lastly, the negotiations seemed to go well over the last few weeks.
Arguably, we could debate whether the fourth point was driven by the first three points or by a willingness on both sides to get a deal done or a change in negotiating tactics all around, but talks seemed to go well.
In other words, then, yes, IATSE was less likely to strike since the climate for a strike just isn’t great. But would have put the odds of a strike at zero? No, that’s way too confident. Even something like 10% or less feels way too unlikely. Why? Because of the main reason a strike could have happened:
The issues confronting lower-level workers in Hollywood are as alive and well as ever.
From long hours to low pay, below-the-line workers still face a number of challenges, and a union exists to address those issues. This deal addressed some of those issues, for sure, but definitely not all. Arguably, below-the-line workers face much more economic hardship and uncertainty than the big three guilds, yet they had the least amount of strength to mount a strike right now. In retrospect, in 2021, IATSE should have negotiated a two-year deal to preempt the big three above-the-line guilds in negotiating order.
As for the Teamsters, they still could go on strike and, as I wrote above, their leadership does seem to possibly be laying the groundwork for that. Now, I’d argue the forces pushing a strike versus mitigating one are about identical to IATSE, but in this case, the personalities involved could negate all that.
Still, I’d focus on the good news here, as that’s the story. Hollywood didn’t shut down and came to a deal with the union that represents the most different types of workers in town.
Almost Most Important Story of the Week - David Ellison/Skydance/Oracle Money Buys Paramount Global
Imagine the owner of an NBA franchise. (Or the NFL or MLB or any professional sports league of your choice.) After owning a pro team for some time, they decide to cash out and sell the franchise.
Is that a monumental shift in the strategic landscape of the NBA?
Not really. One owner is like any other owner. Some will be better than others, some will be luckier than others, but most continue fielding a squad that tries to win games.3
That’s sort of how I feel about Paramount Global finally selling itself to David Ellison/Skydance/Oracle money/Redbird Capital. So let’s start there…