Los Angeles Lex Letter: Pay Inflation Goes to Hollywood

Dear readers,

Greetings from Beverly Hills where the vibe is sunny and not just from the predictably pleasant Southern California weather. Netflix reported an excellent third quarter on Tuesday adding more than 4 million subscribers thanks to the dystopian South Korean blockbuster Squid game. The news came against the backdrop of a tighter job market in Hollywood and the United States.

Even better news for Netflix, which has over 200 million subscribers, is the prospect of a working harmony that keeps its hit machine on the song. Days earlier, a strike of tens of thousands of behind-the-scenes workers in Hollywood and elsewhere was averted. The International Alliance of Theatrical Employees (IATSE) has entered into a three-year interim agreement with the trade association that represents Disney, Warner Bros and Netflix.

The film crews union is keeping a close watch on Netflix, whose market capitalization approaches $ 300 billion, continues to make a fortune for its shareholders. The workers’ organization claimed that basic workplace protections were lacking. A wave of labor disputes has erupted in recent years across Tinseltown as the industry reorients itself around a few behemoths with growing market power.

Film actress Scarlett Johansson can feel a certain solidarity with those who hold microphones and apply her makeup. Earlier this year, she sued Disney, alleging that it had reneged on a deal regarding how its star vehicle Black Widow would be released and how his share of the profits would accrue. Disney fought back, accusing it of being greedy in the event of a pandemic. It was an accusation she could easily fend off – the terrific House of Mouse streaming service has over 100 million subscribers.

In the end, the parties settled without disclosing the terms. But the unusually public brawl made it clear that studio costumes aren’t afraid to flex their muscles.

Hollywood writers raised objections with powerful talent agencies two years ago. They used to be independent stores. Increasingly, they are part of entertainment conglomerates backed by Silver Lake and TPG.

The scribes feared that their portrayal might conflict. Companies like Endeavor and Creative Artists Agency were making shows and movies and therefore had reason to restrict talent income. This fight was finally settled when the Writers Guild struck deals with the major agencies.

As for the crews behind the scenes, the IATSE was able to secure weekends off, pay increases and other concessions that they saw as basic protections.

Netflix made it clear in its results that a strike and a production halt was not in its best interests as momentum picked up. The company had said its good results over the past three months came from a “stronger slate” after the pandemic suspended new production last year. In addition, it predicted that its release schedule in the fourth quarter would be even more intense and that 2022 would have “a more standardized content list”. Netflix’s profits remain modest even as it spends billions to find the next sensation.

CEO Reed Hastings went to great lengths to portray Netflix as a socially responsible company, making large charitable donations and praising diversity. The group is currently rocked by controversy over a television show by comedian Dave Chappelle. A strike by support workers at a company whose prospects are only getting better was a thunderstorm it just didn’t need.

American labor has a time, from Los Angeles to factories in the Midwest manufacturing tractors and processed foods. Business leaders and shareholders are lining their pockets in the current economic boom. Workers no longer want to be left behind. The IATSE president said the last-minute compromise represented a “Hollywood end”. For now, peace is assured. But expect working-class Americans to script a sequel.

Enjoy the rest of your week,

Sujeet Indap
American Lex Editor