Showstopper! Strikes Plunge Hollywood Into Chaos With Pricey Movie Delays, Pay Battles and AI Anxiety

It was a typical day on the set of “Gladiator 2” in Malta. British director Ridley Scott was orchestrating a complex sequence featuring the film’s star, Paul Mescal, and several hundred extras, all of it unfolding inside a replica of the Colosseum. They were more than halfway through the arduous three-month production of the film that marked the long-awaited sequel to Scott’s 2000 Oscar best picture winner, when, on July 13, at high noon, Scott called “Cut!” Quickly, word began to spread that half a world away, talks between SAG-AFTRA and the major studios and streaming services had collapsed.

Given that the cast and crew of the action epic had been living in a bubble, the prospect of a strike had seemed remote. But it didn’t take long for the grim reality to sink in. Within hours, Scott and his producers had sent a note to the crew saying that production was shutting down.

“There was just this sadness,” one source says. “We were completely out of the politics and just invested in the work. Now, a lot of people are going to lose their livelihoods, won’t be able to keep up home payments, school payments.”

Most of the cast, including Denzel Washington and Pedro Pascal, began booking flights out of Malta, presumably toward home, leaving behind a big-budget production that had employed more than 400 people.

The cast and crew of “Gladiator 2” weren’t alone that day. Other major studio productions such as Disney’s “Deadpool 3” and Warner Bros.’ “Beetlejuice 2” abruptly stopped. For many, it seemed like a flashback to March 2020, when Hollywood came to a screeching halt at the start of the COVID lockdown.

Now, another era of uncertainty has dawned for the film and TV industry, which is already reeling from a screenwriters strike that has limited its ability to produce new shows and films.

“It comes down to commerce versus art,” says Michael Greene, who runs a boutique talent agency whose clients include Frances Fisher, a member of SAG-AFTRA’s negotiating committee. “What’s happening right now is the commerce doesn’t really understand how the artist thinks. They think they can do this without the artist, or they can do it with AI. They’re thinking in numbers. Commerce wants to win out for their bottom line, and they’ll never fully win without the artist. It’s David versus Goliath.”

If the battle echoes the Book of Samuel for some, Fran Drescher, the sitcom star turned actors union leader, preferred to evoke the French Revolution, likening SAG-AFTRA’s struggle to the proletariat’s rebellion against an out-of-touch monarchy. “Eventually the people break down the gates of Versailles,” the “Nanny” star said during a press conference officially announcing the strike.

As if on cue, Disney CEO Bob Iger countered with his own let-them-eat-cake sound bite, telling CNBC’s David Faber a few hours earlier that when it came to negotiating with striking writers and actors, “there’s a level of expectation that they have that is just not realistic.” The mogul, who stands to earn as much as $27 million in total compensation this year, delivered his blunt assessment from Sun Valley, Idaho, a bucolic ski resort that hosts Allen & Co.’s annual media conference — an event that some call “summer camp for billionaires.”

Fittingly, actors joined Writers Guild of America members on the picket lines on July 14 — Bastille Day. Ron Perlman, the “Sons of Anarchy” star, adopted a Robespierre-like tone in a viral video message posted to Instagram: “The motherfucker who said we’re going to keep this thing going until people start losing their houses and their apartments … we know who said that and where he fucking lives,” he said, referencing a Deadline report that quoted an anonymous studio executive about dragging out WGA talks to the point where its members face financial ruin. “You wish that families starve while you’re making 27 fucking million dollars a year for creating nothing? Be careful, motherfucker. Be really careful.” (Perlman has since deleted the video, though it continues to circulate widely on Twitter.)

Outside Paramount Pictures that day, with temperatures approaching 90 degrees, Drescher’s voice crackled with indignation when she was asked about Iger’s comments.

“I found them terribly repugnant and out of touch,” she said. “Positively tone-deaf. I don’t think it served him well. If I were that company, I would lock him behind doors and never let him talk to anybody about this because it’s so obvious that he has no clue as to what is really happening on the ground with hardworking people.”

“They don’t care,” she added firmly. “They’re like land barons of a medieval time.”

The gloves are clearly off in this epic clash between the actors and writers, who comprise two of the industry’s largest unions, and the studio owners who sign their increasingly small checks. But how long will the guilds and their members be able to maintain a united front?

Cracks may start to form in the actors alliance. There is a wide discrepancy between A-list stars who can earn $20 million a year and the jobbing performers who are lucky to make $30,000. That income gap means that their goals for a new contract will be vastly different. At the same time, there’s concern that there’s no industry titan who is viewed as an honest broker by both sides. Some initially believed Iger could have filled that role given his long history in the business, but his provocative CNBC interview and his company’s problems have left him on his back foot.

Behind the scenes, both sides of the battle are noting the opponent’s gaffes in the days leading up to the SAG-AFTRA strike. Studio executives deride the optics of Drescher posing with Kim Kardashian in Italy as negotiations were unraveling, while union insiders say the studios failed to show up for many of the meetings between the opposing camps after their negotiations were extended for nearly two weeks. Sources in the studios deny that they skipped sit-downs.

Drescher has come to suspect that the studios had a very specific reason for prolonging talks, and it wasn’t to hammer out a better deal. “They just wanted to get more time to promote their summer movies, and they had no intention of using that extension for anything else,” she claims.

Already, the collateral damage from the work stoppage is intense and unyielding. For big-budget projects like “Gladiator 2” and “Deadpool 3,” the cost of holding on to soundstages packed with sets and costumes runs about $600,000 per week, one media CEO estimated. How long can studios keep shelling out money if the strike grinds on indefinitely? That’s to say nothing of the economic devastation reverberating around the business. Not only are actors and writers out of work, but cinematographers and makeup artists, grips and production assistants, costume designers and carpenters have been left without steady paychecks. It’s a situation that seems unlikely to be resolved soon, because a yawning chasm separates the labor leaders and moguls, who need to find common ground if cameras are going to start rolling again.

“I’m in the pessimist camp,” says Matthew Harrigan, an analyst with Benchmark. “I think this will be at least several months. Both sides seem dug in. It all comes down to who has the financial wherewithal to hold out the longest.”

Without actors to promote movies and shows, studios are considering pushing back release dates. The fall traditionally hosts more adult-oriented movies meant to resonate with Oscar voters, but that usually requires the stars of these films to do an endless parade of screenings and interviews to raise awareness. With actors forced to forgo any promotional activities, it might not make sense to move forward with these premieres. That could have a spillover effect on upcoming film festivals in Toronto, Telluride and Venice, which were expected to serve as launching pads for awards contenders like “Challengers,” a romantic drama with Zendaya, or “Maestro,” a biopic about Leonard Bernstein directed by and starring Bradley Cooper.

And then there are the awards shows themselves. Discussions are taking place about postponing the Emmys, which are set to air on Sept. 18, so the acting nominees can attend. The show may instead take place in November or even January, if an agreement takes longer to reach.

Many actors and writers say they have no choice but to fight for a better deal. They believe they’ve been left behind by changing technology and corporate greed. As the industry moved from releasing movies in theaters and producing shows for cable and broadcast networks to a streaming model, the old ways of making money frayed and the new ways weren’t as lucrative. And other changes have exacerbated the situation. In a bid to lure subscribers, companies like Netflix and Max are making more shows than ever, but those shows have dramatically shorter and fewer seasons.

“They’re training viewers to get used to short seasons — six, eight, 10 episodes,” Drescher says. “I did 28 episodes of ‘The Nanny.’ If it’s a big hit, it’s a limited series of four seasons. Usually more common is three. There’s no tail of revenue.”

Compounding issues is a lack of transparency. No box office results are tied to movies made for streaming, and no ratings are released for a show that appears on one of these services. That has left actors and writers in the dark about how many people are actually watching their work. They’re hoping to convince studios to share more data, but that ask appears to have been a significant contributor to the breakdown in negotiations between the actors and the producers. Insiders with direct knowledge of the talks say that The Walt Disney Co. and Netflix are the most resistant to sharing additional viewership data for their streaming content. They fear that performers will use that information to justify bigger checks and to get a bigger piece of the revenues. An insider at Netflix, however, pushed back at suggestions that it was not forthcoming about the popularity of its programming, noting that it publishes a weekly top 10 list of most-watched shows and films.

For writers, who have been on strike since May, and for the actors who just joined them, all this disruption of the past decade has made it harder to make a living. The residuals or royalties they earn when a movie they appear in or a show they write pops up on Netflix or Prime Video are a fraction of what they made when their work was licensed by a cable channel or went into syndication. Many actors say they have received residual checks so paltry they don’t even cover the cost of postage.

Take Chad Doreck, a veteran actor who was picketing outside the Amazon Studios complex in Culver City on July 14. He says the launch of streaming networks like Max and Paramount+ mean that more roles are being cast — the problem is that these gigs aren’t all that profitable.

“I have participated in several shows that were the biggest shows on their streaming services at any given time, and I receive almost no residuals,” Doreck says. “I booked a lot of jobs last year and barely qualified for my medical insurance. Had this been 10 years ago and I had booked the same number of jobs, I would have money in my savings account that I don’t have right now. I’m living paycheck to paycheck in the most extreme way.”

That’s an experience that’s all too familiar to Kerry O’Neill, who worked in the writers’ room on “Jury Duty” and appeared on the series as Officer Christine Sugalski. The show was a breakout hit when it aired on Amazon’s streaming service Freevee, scoring four Emmy nominations. But that attention and acclaim didn’t translate into a big check for O’Neill.

“It’s kind of insane that you can be nominated for an Emmy and be on unemployment and food stamps like I am,” she says while picketing outside Netflix. “You don’t make enough money to make a living as a creator — and I acted and wrote on ‘Jury Duty.’ So I made double money. And I still can’t afford my rent or groceries.”

But the entertainment companies that took the plunge into streaming insist that they are struggling too. The box office hasn’t recaptured its pre-pandemic stride, with ticket sales down more than 20% from where they were in 2019. In a telling bellwether, “Mission: Impossible — Dead Reckoning Part One” opened to $80 million in its first five days, falling short of projections. That follows summer movie debacles like “The Flash” ($263 million worldwide) and “Indiana Jones and the Dial of Destiny” ($264 million worldwide).

The stakes are so high on summer films like “Dead Reckoning Part One,” “Barbie” and “Oppenheimer” that Tom Cruise asked SAG-AFTRA to allow movie stars to continue promoting their new films, given the challenging theatrical landscape, sources say. The union countered by asking Cruise to join the picket lines, noting that having one of the world’s biggest movie stars visibly in its corner would send a strong message to the studios. Cruise was noncommittal, but offered to assist in other ways. Instead of granting any waivers, the union ultimately banned all of its members from doing promotional press on studio films.

But even as ticket sales are still down, costs are rising. COVID delays and soaring inflation added tens of millions of dollars to the budgets of many films, meaning that movies like the $291 million “Mission: Impossible” will struggle to break even, while “The Flash,” with its $190 million budget, and “Indiana Jones and the Dial of Destiny,” with its $295 million price tag, will result in write-downs. At the same time, the ad market is in freefall, consumers are cutting the cable cord at a dizzying rate and launching streaming services has been enormously costly, forcing these companies to pack on billions of dollars in debt.

Studios believe that, despite the myriad issues they face, their offer to actors is a good one, and they remain mystified that it was rebuffed. When it comes to the issue of the minimum amount that actors can get paid for their work, the studios offered a 5% increase in the first year of a three-year contract, followed by increases of 4% and 3.5%. But SAG-AFTRA maintains those increases fail to properly account for inflation, with the union demanding that minimum pay rates increase by 11%, and then 4% in each of the remaining years of the contract.

“I’ve been in the business for years and have been through several SAG negotiations,” says one studio chief. “This is the best offer I have ever seen. I’m strongly for this proposal, which we put forward.” He adds, “With that offer on the table, was it necessary to burn Rome? And in their letter [rejecting the deal], it actually says, ‘This is not a moment to meet in the middle.’ I don’t know a successful negotiation of any kind that didn’t involve compromise.”

But the actors and writers don’t feel like compromising. Instead, they believe that the studios and streaming services have failed to acknowledge their contributions, and many feel personally offended that they aren’t being offered more concessions. “These companies won’t exist without the work that we do,” says Shawn Ryan, creator of “The Shield.” “Their entire streaming businesses that they’re basing their entire future on are not possible without the work that we do. And that mere fact deserves a level of respect that they haven’t shown us yet.”

Ryan’s words may not resonate with some of the companies sitting on the other side of the negotiating table. While streaming was rewriting the way movies and TV were made and distributed, a slew of new players arrived in Hollywood, many of them with very different ideas about how the business should run. Apple and Amazon have launched streaming services in the past decade and invested billions of dollars to produce original programming. These companies have market caps of $3 trillion and $1.3 trillion, respectively, exceeding those of Disney ($156 billion) or Comcast ($175 billion), making them better equipped to withstand a long shutdown.

Kate Fortmueller, professor of entertainment and media studies at the University of Georgia, argues that Silicon Valley companies are hostile to organized labor and have brought that culture to Hollywood. “It’s a really big culture break,” she says. “They don’t operate in the same way Hollywood does. This is not just about technology. It’s also about culture.”

Around Hollywood, the ramifications of a dual strike, the first in 63 years, are beginning to sink in. “It will be a lot of pain for everybody, for all sides,” HBO and Max chief Casey Bloys says. “It’s not a lot of fun to contemplate having to figure this out as an industry.”

For her part, Drescher says that the union’s leadership agonized over going on strike. “Most of the membership is working class,” she says. “So it did weigh heavy on me and the negotiating committee that a strike would have a profound impact.”

Actors, many of whom were struggling to pay their bills before production stopped, are rushing to pick up temporary gigs. Josh Hooks, a SAG-AFTRA member, was set to appear in a new Starz show from Ava DuVernay when he got the call from his agent that the production wasn’t moving forward until the strike was resolved. That’s left him cleaning friends’ apartments for $100 a pop while applying for bartending jobs or work as a nanny. Hooks plans to take on a roommate so he can cut the rent on his Los Angeles apartment in half.

“I’m hustling to find some temporary survival money,” he says. “It’s not like I have a lot of savings. The financial part of being an actor is really hard. People see you on TV and they think that’s glamorous and that’s cool. But they don’t see what my bank account looks like.”

Heading into the negotiations, studio heads expected residuals to be a major obstacle to hammering out a deal. They knew that actors and writers were feeling the financial pinch. But they were surprised that artificial intelligence has become a contentious issue during talks. Writers worry that they will be replaced or rewritten by chatbots like ChatGPT, while actors fear that their likenesses will be scanned and reused without their permission. Duncan Crabtree-Ireland, SAG-AFTRA’s chief negotiator, claims that studios are trying to exploit actors with nonspeaking roles. “They proposed that our background performers should be able to be scanned, get paid for one day’s pay, and their company should own that scan — their image, their likeness — and should be able to use it for the rest of eternity in any project they want, with no consent and no compensation,” he says. The studios countered that narrative in a memo that said their AI proposal “protects performers’ digital likenesses, including a requirement for performer’s consent for the creation and use of digital replicas or for digital alterations of a performance.” But on the picket lines, it’s clear that the SAG-AFTRA chief negotiator’s words are resonating strongly.

Janine Kane protested outside the Walt Disney lot in Burbank on July 14. Wearing white linen pants and a long-sleeved pink top in the sweltering heat, she took shelter in the shade of a single tree and waved a paper fan with the phrase “Hands off my daughter’s face” written across it. That daughter is Adelaide Kane, a regular on “Grey’s Anatomy” this season. “I’m out here supporting her,” Kane says. “No one has the right to own anyone’s image or face. Especially in perpetuity, when you don’t know when or how they’ll use it.”

Beyond issues involving emerging forms of technology, some veteran Hollywood players worry that the whole way that artists are paid may need to be reworked. They note that the rising costs of producing shows and movies have put many of these companies in a bind, and that they may no longer be interested in producing as much programming. Jeremy Zimmer, CEO of United Talent Agency, thinks the issues that the writers and actors are fighting for are “valid.” However, he believes that streaming services and studios should rework deals so that major stars and talent are incentivized by the overall success of a project, which could involve making less up front. “My biggest concern is that the health of the industry continues to be challenged, that the cost structure of what people are willing to pay for premium content will go down, and that will adversely affect everyone,” Zimmer says.

While the economic carnage of the shutdown will be enormous, the psychological cost could be as severe. Larry Shaw, a Beverly Hills psychotherapist whose patients include executive producers, screenwriters and showrunners, has seen an uptick in referrals since the writers went on strike. He says the idleness that many people feel can take a toll.

“You’re just sitting, and that’s not healthy at all,” says Shaw. “As long as we’re moving forward, as long as we’ve got hopes and dreams and we can take action, then that tells our body that in a sense we are still hunter-gatherers. With no daily routine, you’re going to start to doubt yourself and your purpose and your life’s meaning and your dream itself. And then everything just folds in on itself. This really is an existential crisis for so many.”

That sense of lost purpose is shattering a town filled with adrenaline junkies. As the strike has become a reality, offices across Los Angeles are settling into an eerie lull. For Greene, a former actor and SAG member who had to quit the union when he transitioned to agenting, the slow ticking of the clock has become unbearable. “We’ve all known it was probably going to happen. But then when it actually happened, we were like, ‘What are we going to do all day?’ he says. “We’re such workaholics and we’re sitting at desks. The phones aren’t ringing at all. Everybody’s canceling all kinds of projects. We’re all leaving by 2 o’clock. It’s surreal.”

Angelique Jackson, Cynthia Littleton, Gene Maddaus, Stephen Rodrick, Michael Schneider, Adam B. Vary and Elizabeth Wagmeister contributed to this report.

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