The UCLA Anderson School of Management released an economic report detailing the impact of the Writers Guild of America strike on the city of Los Angeles last Monday.
The report projects a much less severe economic impact on Los Angeles, a positive revelation considering the lack of a resolution between the WGA and the Alliance of Motion Picture and Television Producers after a month of picketing.
The two sides resumed negotiations last week but talks were put on hold until Tuesday after the AMPTP put forth a new economic partnership proposal. The proposal, entitled the New Economic Partnership, was the first since the strike began Nov. 5.
The 12,000 film and television writers of the WGA are picketing for increased residuals from DVD sales and receiving residuals from internet reruns, such as pay downloads on iTunes and free advertising-supported views from Web sites like abc.com.
According to the UCLA School of Theater, Film and Television visiting professor and alumnus Jonathan Kuntz, the WGA dates back to the 1930s along with the Directors Guild of America and the Screen Actors Guild.
These various creative entities collectively organized when studios suffering through the Great Depression cut salaries for these employees by 50 percent.
“It wasn’t until around 1940 that management (the studios) finally yielded and the WGA got their first major contract after about six or seven years of battling,” said Kuntz, who teaches a course titled, “The History of American Motion Picture.”
“The writers are the most frustrated people in Hollywood,” he said.
The strike has had the most immediate effect on the television side of Hollywood, halting production on live shows such as “Late Show with David Letterman,” which have been in reruns since the strike began, and scripted shows both daytime and prime time.
Jerry Nickelsburg of the UCLA Anderson Forecast, an organization within the management school specializing in both California and nationwide economics, wrote the economic impact report.
“One of the things that we do at the Forecast is a regional forecast for Los Angeles and the strike has a potential impact on the growth of the Los Angeles economy and the interest is in what impact might that be,” Nickelsburg said.
While many in the media had estimated the economic damage of the current strike on Los Angeles as high as $1 billion, the Forecast was able to analyze production and personal incomes of those in the industry to see the real, much lesser effect of the picketing.
“The overall impact is fairly minimal,” said Nickelsburg.
A lot of the Forecast’s report focused on comparing the current strike to both the last and longest WGA strike back in 1988 as well as the averted strike in 2001.
The Forecast uses databases that incorporate employment and income by industry to look precisely at the entertainment industry.
The Forecast focused on three main forces affecting the impact of the strike: inventory stockpiling within the industry in preparation for the strike, substitution to other media outlets and product changes.
Inventory stockpiling, which is what has kept so many scripted shows in new episodes weeks after the beginning of the strike is one practice employed in both of the most recent WGA strikes as well as in other labor disputes across the country.
“People act in their own self-interest to protect against adverse economic effects and they always do that in strikes. (It’s a) natural part of the strike,” Nickelsburg said.
In the Forecast, Nickelsburg reported that a surge in production as well as the hiring of 8,000 new employees within the industry this past September allowed those working on scripted programming to make some extra money to put away once the strike began and the paychecks stopped coming in.
“The producers want to produce those ahead of time and the (writers, directors and actors) want to work ahead of time to save money,” he said.
“Together they produced those shows and both are reasonably well-positioned.”
Unfortunately, service personnel and staff members of more current programming such as late night shows were unable to stockpile and many of those employees have been hit the hardest.
Carson Daly became the first late night host to return to work, reportedly to save his staff and crew members’ jobs.
Meanwhile fellow late night hosts Jay Leno and Conan O’Brien have even begun to pay their non-writing staff members out of their own pockets after NBC let them go last Friday. NBC spokeswoman Rebecca Marks said that O’Brien is paying his show’s staff completely on his own.
The increasing popularity of reality shows in the past few years will also decrease the industry’s financial burdens, as they require no scripts and can continue to be produced at the same pace as before the strike. Unscripted shows currently account for 46 percent of television production in Los Angeles.
While stockpiling and reality shows are two ways the industry has avoided bigger financial troubles, once these shows eventually run out of new episodes and if the strike still continues, Nickelsburg said he fears for the possibility of substitution.
“I think that’s actually a real danger if you’re not providing the entertainment that people are used to. The risk is the longer the strike goes on the more likely people will decide not to come back and go to other media. … (It is an) incentive for both sides to come back quickly,” Nickelsburg said.
One increasingly noteworthy form of alternative media is the Internet, with the rise of “webisodes” and Web sites such as Youtube.
“As consumers demand the new technologies, they will help create an industry which will be a growing industry and an alternative to scripted television shows,” Nickelsburg said.
As part of the report, the Forecast assumed that 10 percent of mass media consumers would eventually switch to alternative forms of entertainment and never return, the same percent that switched during the 1988 strike.
Ultimately, the Forecast predicts an economic impact of $380 million, with an even smaller impact if the strike ends before March.
To put things in perspective, the Forecast pointed out that every year the entertainment industry produces $20 billion of income in comparison with an overall $380 billion across industries the entire city of Los Angeles brings in every year.
Nickelsburg warned that nothing is certain because of the unpredictably of the strike itself.
“Do we know what’s going to happen? No, because no one knows how it’s going to play out,” he said.
With reports from Bruin wire services.