Why Hollywood Is Striking Out

In a landscape dominated by political power struggles, Hollywood’s blend of influence and affluence also demands attention. Its current dysfunction reflects the divisive and turbulent nature of American politics today

This week’s WhoWhatWhy podcast features an insider’s perspective from Richard Rushfield, editor and publisher of The Ankler, Hollywood’s influential newsletter that unflinchingly delves into the industry’s quagmires.

Rushfield guides us through Hollywood’s current crisis — a combustible mix of labor strikes and business upheaval, against a backdrop of seismic changes in how we consume entertainment.

With the advent of streaming platforms like Netflix, which disrupted traditional revenue models with a flood of Wall Street cheap capital, the industry’s old guard finds itself navigating uncharted waters.

However, as other studios have sought to emulate Netflix’s success, the results of the “streaming wars” have been calamitous. The streaming revolution has a darker side, especially as less bountiful global economic conditions take hold. 

Rushfield delves into the predictable cascade of events that led to the recent wave of strikes, which come at the worst possible moment for an industry grappling with existential challenges.

Beyond that, Rushfield examines Hollywood’s crisis of leadership, where a culture of solipsism has eroded any collective vision for the future. He challenges the increasingly prominent narrative that artificial intelligence poses a fundamental threat to the industry, arguing that this is a distraction from more pressing issues. 

And when it comes to enduring the pain inflicted by these multiple strikes, Rushfield offers the grim perspective that it has become a competition to see who can withstand the most pain.

This is a discerning look at the convoluted dynamics shaping modern Hollywood.

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Full Text Transcript: (As a service to our readers, we provide transcripts with our podcasts. We try to ensure that these transcripts do not include errors. However, due to a constraint of resources, we are not always able to proofread them as closely as we would like and hope that you will excuse any errors that slipped through.)

Jeff Schectman: Welcome to the WhoWhatWhy Podcast. I’m your host, Jeff Schechtman. For decades we’ve heard that Hollywood is dying. The reasons are always different: The business model doesn’t work; the studio system is over; television is killing movies; cable and home video will destroy the business; foreign buyers will destroy the studios; bean counters will destroy creativity. The doom loop of Hollywood is the stuff of legends. And today, it’s about the ongoing writers’ and actors’ strike, the rhetoric getting uglier by the day, the so-called streaming wars, and, of course, the hangover of the pandemic and what it did to the theatrical business — all are part of today’s doom loop.

History would tell us that there will be a way out, there always has been. But this time it feels different. The multiple crises are unprecedented, the speed with which events are moving is dizzying, and the lack of grown-up leadership in Hollywood is glaring. To try to bring some clarity to the scope of the problem, I’m joined by one of the men who has not only seen a lot but often sees around Hollywood corners and tells it like it is. He is Richard Rushfield, the founder and executive editor of perhaps the most important newsletter in Hollywood, The Ankler.

Richard has covered Hollywood and American culture as a reporter, editor, and critic for over 20 years. He’s a native of Los Angeles and had a first career as a grassroots political organizer. He began covering LA as a reporter for Los Angeles Magazine and later worked as an editor at Vanity Fair, where he was the author of the long-running Intelligence Report column. He was an editor and columnist for the Los Angeles Times, the Daily Beast, Gawker, BuzzFeed, and Yahoo, and is also the author of three books. It is my pleasure to welcome Richard Rushfield here to the WhoWhatWhy Podcast. Richard, thanks so much for joining us.

Richard Rushfield: Thanks so much for having me. Great to be here.

Jeff: It’s great to have you here. The fact that you worked for Gawker and BuzzFeed is a scary combination.

Richard: What sort of medal do I get for that?

Jeff: Yes, really. It’s some kind of special award.

Richard: I think there’s four of us that are dual alumni of Gawker and BuzzFeed.

Jeff: Wow. Getting back to the more immediate issue, I was thinking a lot about the writers’ strike in anticipation of our conversation. It does seem to be that they have this ability to strike at the worst economic times. You go back to 2007, 2008, going into the worst recession that we’ve had in most of our lifetime, they had a strike. And now we’re looking at recession, we’re looking at economic crises, potentially, and the writers are striking once again.

Richard: Yes, the timing is good. When you have three-year contracts, you can only pick your moments so well. A year ago would have been a good time to strike, or a year from now you might think would be better, but this is when the contract is up, so you have to deal with it when it comes.

Jeff: The one thing about the strike is that it was no surprise, really, that this strike was going to happen.

Richard: So, the writers have had some major, major problems. Not just the Writers’ Guild has problems, but writing as a profession has really come unglued in the last few years during the great streaming wars. They’ve been at the leading edge of how the streaming wars have broken down the continuity of television as we knew it — from a relatively small but predictable and steady pool of shows to a much larger but much more erratic bunch of shows that change frequently, with seasons that are shorter, and with pay that has not increased for anyone other than the people at the very top.

So, it’s become a very difficult profession to maintain a lifestyle, and this has led to great tensions. And during all this, the studios, in particular the streamers, have not shown any inclination to address these problems and step up and find solutions to them. So, the writers have just been flailing in the wind for a few years here, waiting for something to happen. And finally, this is the moment when we’ll see if they can change the tide at all.

Jeff: Interestingly, while the pay certainly hasn’t been increased, there has arguably been more product, more writers actually working?

Richard: Yes. You’ve had this huge explosion of shows in the last 10 years, and particularly in the last three or four years; the number of shows has tripled or quadrupled in that time from what it was before. But now with the downturn, we’re seeing a bursting of that bubble, and there’s a retrenchment, and there’s suddenly fewer shows than there were a year ago, and probably going to be fewer next year.

So, there are a lot of young people in particular who got pulled into the system and given their first breaks by all these shows that were coming on in the last few years. But now the pool is getting smaller and the number of seats at the table is getting smaller. And that has left some people frozen out and has left everyone else feeling unstable and nervous.

Being a TV writer was never an easy profession to get into. There were always many more people who wanted to do it than had a realistic chance to do it. And the vast majority of people who tried to do it have always failed at it. It’s a very competitive place. It’s very tough to get established. But there was a sense that if you got beyond those first barriers, you could have a stable, predictable lifestyle. Even that was always tenuous, but there’s very little of that for anyone except the people at the very top right now.

Jeff: One of the things that’s also happened is that the line has gotten blurred in the streaming wars, the line between what’s television and what’s film.

Richard: Yes. And film was usually a very lucrative place to work. And they have very big budgets and they paid a lot for scripts. And there’s now a much smaller number of these giant tentpole films that make movies in that way. And a lot of that has gone over to the streaming world, and Netflix does something like 90 movies a year, and they’re on the same rules as television. So, much of that is in the same bucket of instability as everything else is.

Jeff: The timing of this strike, as we were talking about earlier, is not good with respect to the companies that are streaming, the companies that have been spending a whole lot of money on this product. Suddenly, they’re consolidating, they’re retrenching, they’re finding out that their business model doesn’t work.

Richard: Yes, and that’s the backdrop to all this. The business is a mess. And you had Netflix create this great, basically, stock miracle of the Wall Street success story of the decade. There was this huge thing and everyone went chasing after that, even though it wasn’t even clear that Netflix could make money off it. And there certainly wasn’t enough room for eight studios to make money off it right now, which is what the major streamers are. So, everybody went chasing after that.

They really cut back and de-emphasized their theatrical divisions, and their cable and the things that were profitable, and focused everything towards that. And then, lo and behold, this financial model that never really existed, it turns out doesn’t work out. And everyone’s trying to pull back from that and it’s kind of a mad scramble, and they’re trying to deal with this at a time when no one really knows what the business model is or how you do it or how this all works out. So, it’s truly a mess right now. You can say it’s been a mess before, but I don’t know if it’s ever been this much of a mess.

Jeff: Given what a mess it is, given the financial mess that is going on, does that make it much more difficult to even imagine how this strike, how these bargaining agreements, get settled? Because the streamers are looking at a situation that is deeply unclear at the moment in terms of their own survival.

Richard: Yes. I think on its own, the amounts that they’re talking about are not going to kill any of the studios. I think I saw one estimate that the cost of all these things is $300 million, divided by eight studios. So, for each of the studios, the price is half the price of a marketing campaign for Guardians of the Galaxy. So, it’s not going to break them. It’s a matter of do they want to do this. The streamers — Netflix, and then Amazon, and Apple — are not sympathetic to organized labor and making grand concessions to organized labor, to say the least.

And it’s thought that they see the strike as an opportunity to really hurt the organized labor movements in Hollywood, which is the first place they’ve really been forced to deal with on this scale. Hollywood is a very heavily organized industry. So, that is part of the question here. You can say it’s not that much money, but it’s got to make business sense. And in a time when nothing makes business sense, it’s hard to get to that.

Jeff: The other part of this is that are the studios benefiting right now from this strike because they have some inventory and they’re not putting money out for more programming right now.

Richard: In the short term, that’s the widespread feeling, that the strike gives them a little breathing room on their costs and cuts things back. There’s so much in the system anyway that they can handle it. I’ve heard estimates from Netflix that they could go two years before they would feel the pinch from this. Netflix in particular makes so many shows as it is. But in the end, they need to be making shows if they’re going to succeed.

They’re in a very competitive environment, and you can’t just step out of that. And they need to keep growing their subscription base. If they get to the point where they have fewer new shows and fewer new offerings on and their subscriber numbers start to fall as a result of that, then that’s very bad for them. So, we’ll see who gets to that point first.

Jeff: Given that the scariest thing for all the streamers, the thing they most fear, is churn, this could lead to more of that.

Richard: Absolutely. And there’s another part of it, that certainly everyone that covers Hollywood focuses on the streamers all the time, but the broadcast networks still exist, and they’re still amazingly there. And there still is an ABC, and for Disney, good old-fashioned broadcast and cable networks still count for 35 percent of earnings. It’s the biggest sector of the Disney company, so far bigger than the streaming is.

And those sectors are still very susceptible to having grown at the upfronts — which is in the spring every network announces their fall lineup to advertisers to try to sell ads for the fall to them. ABC announced a fall lineup heavy on reruns of Abbott Elementary and other shows. And that’s not good to just say, our network is just going to be showing you reruns. So, at some point, that’s going to change.

Jeff: Because of broadcast, because of streaming, because of the movie side of it as well, is the business more fractured, more fragmented today than it has been at other times, particularly at other times where there’s been contentious labor negotiations?

Richard: Yes. Nobody has a business model, but everybody’s involved in very different things. With Disney, you have theme parks, you have films, you have cruise ships, you have traditional cable networks, you have broadcast networks. And on the other end of the spectrum you have Netflix, which is just subscription numbers and nothing else. It’s just pure— They have no parks. They have a little bit of advertising now, but not very much.

But it’s pretty much just getting people subscribed. And then you have Apple, which no one quite understands why they’re in the business, whether it’s just a marketing thing for them or they’re really trying to build a new studio there. So, given that they have very different priorities and they’re all over the place, it’s very difficult for them to come to agreement on how they should be looking at this.

Jeff: You wrote recently that the writers seem to be winning the narrative battle, at least for now. Talk about why.

Richard: Well, so the Writer’s Guild, you have basically 11,000 spokespeople who are all on the streets every day parading back and forth by the studios, talking to any reporter who comes by. And you have a lot of young people, writers, they’re extremely active on social media, to start with. They have an outsized social media presence on the side, given that many of them spend much of their days tweeting as it is. So, they’re able to really flood the zone with a lot of boosterism for their sides. And studios, they’re big button-up corporations that don’t just go trash-talking and don’t ignite the same sympathy in response.

In the last few years, there’s been a real backlash to the tech world and the disruption it’s brought, and the writer’s demands certainly are very complementary to that. And they come out of the same sorts of complaints and are feeding into that. So, that is there. The question is, does it matter? Does it move any needle for solving the strike? And I’m not sure that it does.

Jeff: What about leadership on the studio side? There seems to be a distinct lack of, if not leadership, adult supervision as far as the studios are concerned.

Richard: Yes. You have a group of people at the helms of the studios now who are in very heads-down and defensive crouches, very few showing much vision for their own company, and none really looking beyond their own companies to a vision for a larger studio. And Hollywood has always felt like a communal effort in that, while the heads of different companies were all very extremely competitive about their own companies, there was very much a sense that this was the entertainment community and a lot of concerns for the health of it in general and for what it stood for. And those have always been in the forefront. And that’s all kind of shattered now, and you just don’t have anyone, really, that steps forward with that community sense at this point.

Jeff: Is there anyone out there that you see that might?

Richard: Well, David Zaslav, the head of Warner’s Discovery, who led the merger of those two companies recently, has the ambition and has the concern with Hollywood history and the love of its legacy that he potentially could — he has the personality and the ability. Right now, he’s still bringing together a fairly newly merged company. So, I think it’s hard for him to go beyond those demands at this point. But of the CEOs, he’s someone I look to to step forward here. The others have shown no interest in that role.

Jeff: The last strike lasted, what, three or four months? Could this one go longer?

Richard: There’s no saying at this point. I think matching that timeline is a given. It’s a question of will it linger. It’s at some point, the pain gets too much for one side or the other and they demand peace and it’s— we’ll see who can bear that.

Jeff: In a lot of the rhetoric, there’s talk from the writers about concern with respect to AI. What do you sense that that’s practically speaking about, given where AI is at this point and probably where it will be for the next three years?

Richard: I’m a skeptic about how big a problem that AI is. I think AI would help people create some mediocre scripts that would largely be unfilmable without a writer redoing most to all of it. People point out right now that, oh, but they can come up with a chase scene and give you ideas of where you can turn down which roads or whatever. And they’re all very specific things that like, okay, so Google could probably help you with that too. Maybe AI does it a little quicker. But I feel like the fear of AI taking away writers’ jobs is, at the moment, just sort of a panic. People say, but it could develop more and it could start to— Yes, it could.

So, if it does that, maybe that would be something to worry about. But I tend to feel it’s more hype. And also there’s big reasons for studios not to use it, right? First of all, every show and every movie has to have a credited writer, who has to get paid for it. So, essentially, this would be a tool that a credited and paid writer uses.

And also there’s big rights issues about if the people on Marvel use AI to come up with a solution to a scene or write dialogue or something like that, it’s not clear who owns that. And these bots have left it very open and murky on the rights questions. So, they leave themselves open to ChatGPT people who could show up and say, “Hey, guess what? We own Thor now because we did this piece of a theme of a scene.” And these studios are very, very sensitive to rights questions. That’s probably the thing they’re most sensitive to.

So, from all I’ve heard, they’ve told people not to use these things because of that. So, could in the future that get sorted out and AI develop so they can do all sorts of things? I suppose so. I feel like there will be time to panic when they get there.

Jeff: You talked earlier about the general crisis in the business. Right now, the other overlay to this is potential consolidation that could go on even within the next several months or certainly within the next year.

Richard: Yes, and I think that’s very likely. And with this failed model and with these studios in trouble, I think that you’re likely to see one or two or three of the studios fold into each other. And that will change the complexion of things very much also. So, we’re looking to see who that is. It’s a constant parlor game of Netflix will buy Sony, and Apple will buy Disney, and Warner will buy Universal, which is a fun game to play. But it feels very much in the air that some of that stuff is going to happen in the next couple of years.

Jeff: And finally, talk about how all of this movement and crisis period and everything we’ve been talking about, how does it impact what you do? How does it impact the way The Ankler and you are covering Hollywood today?

Richard: It’s great for me. Because I’m an analyst of the business. And to have a time of such uncertainty and disruption and confusion means that more people are looking for answers and more people are looking for insights and questions. So, it’s good to be in the insight business at the moment. I started doing this about five and a half years ago, and there has not been a boring week since then, a boring slow news week since I started. So, for me, it’s great.

Ultimately, I write for people who work in the industry, industry professionals. So, if there’s not an industry or a healthy one, there’s not people around to want to read and subscribe to my newsletter. So, I have to root for the survival of Hollywood because if it goes down, I probably go down with it.

Jeff: Do you think that it’s going to get healthy again? Are you optimistic at all?

Richard: I’m not a person given to optimism. And when we say, there’ve been all these panics before and everything, well, they mostly came true in the past. The radio isn’t the dominant medium anymore. And people aren’t gathered around listening to radio dramas every day. And that was a huge industry, a huge piece of the entertainment industry that crashed. And there was a time when most Americans went to see a movie in the theaters every single week, then where we are now is an apocalypse compared to that.

But I think the need for entertainment is perpetual and I don’t think it’s going away for film entertainment. I think high production value, professionally done entertainment still is what the world prefers to see, rather than TikTok videos of people showing you how to do dance steps. And the English language is still the dominant language on the planet. So, those are some great advantages that I think someone from Hollywood will harness and hope that would continue to be dominant.

And what the shape of the corporations is, and who wins out and who is doing that, and whether new people appear here to do that, it’s hard to say. But I think those are some immense structural advantages that I just don’t see changing anywhere on the horizon.

Jeff: Richard Rushfield, I thank you so much for spending time with us here on The WhoWhatWhy Podcast.

Richard: Thanks for having me. A pleasure.

Jeff: Thank you. And thank you for listening and joining us here on The WhoWhatWhy Podcast. I hope you join us next week for another Radio WhoWhatWhy Podcast. I’m Jeff Schechtman.

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