The Hollywood Strikes: Contract Law

Photo by Eden, Janine and Jim from New York City, CC BY 2.0 , via Wikimedia Commons

I wish both sides could lose the current WGA/SAG writing/acting Hollywood strike. Since that technically cannot happen, it stands to reason I have opinions on where everything stands.

Such is that it is, I think the studio heads, as scummy and evil as they can be and probably are here, have the stronger hand. Why would you say this? Because there are less of them. And they’re much richer in median terms than the median writer or actor in the WGA/SAG. And, much like writers and actors, are contracted, even if they make $27 million a year. Bob Iger, who makes that, just signed a multi-year contract.

Why did you italicize contracted and contract?

From about sixth grade through my junior year of college, I wanted to be a lawyer, specifically Intellectual Property law. That’s the law of copyrights, trademarks, and patents. I was a creative kid, and I’m a creative adult. Just made sense. Because of this, I had an interest in the law from a young age. Studied it in my spare time. I was and continue to be a nerd. I took every law course I could at my university and even was an assistant teacher (that’s the undergrad equivalent of the graduate-level teaching assistant, important difference) for the law professor I most liked for a semester. Got top marks in all the law classes I took.

What does this have to do with the title? Right! Contract law is the most basic field of law in America. Almost everything goes through it, especially business. The law classes were in the business college of my university. Law 101 as it were was separate from Business Law and wasn’t a pre-requisite for that latter course. Thank God I got the same professor for all these classes. My favorite professor from college overall.

Contracts! Contracts are the lifeblood of commerce in America. All transactions are essentially contracts if goods and/or services are exchanged for something else, usually money or a facsimile thereof. Facsimile? Credit cards, debit cards, favors, eggs, a single thumb tack, drugs, sex, rock and roll… The point being that contract law seeks to determine grievances and damages if either party to the contract believes the terms of it were violated by the other party.

Now, contracts that are written down and signed by both parties and notarized by a notary public are gilded, bulletproof, other business terms that mean guaranteed and unimpeachable. As long as both parties (there can be more than two) signed the contract without duress or various other exclusions depending on the city, county, state, and/or country (etc.) the contract was signed in (and where the two parties live as well because lawyers are a necessary evil,) the two parties must adhere to the terms of the contract.

Huh? Yes, this is rather complicated. To make a long story short (too late!), the actors and writers are under contract (through their unions) with the studios they work for, but this is per job. In practice, this means actors and writers typically have short-term contracts per job, such as one movie, one season, or one episode (and sometimes more.) WGA/SAG mandatory salary minimums are a thing, which are honestly quite lucrative to the average American. Because these mandatory salary minimums are high, the studios have been squeezing the writers and actors at the low end of the scale. Robert Kirkman and Ryan Reynolds will be fine. They easily make more than the minimum. Adam Conover and Sam Richardson will not.

Being a WGA/SAG member is a double-edged sword. You get guarantees, but only if you get work. Ask a waiter or barista in LA sometime. Writing and acting are not like being on an assembly line. Specific writers and actors are sought out for particular projects. Let’s diverge into choice theory real quick.

Choice theory is the strange idea that choices in a capitalistic economy should be limited because there are just too many, paralyzing “most people” (in quotes for a reason) with the fear of making a bad choice. While that is insane, the marketing concepts of evoked set and consideration set are the consumer behavior version of the sociological idea that is choice theory. And what are those?!? As I’ve described this in brief previously, I’ll go into slightly more detail here. The evoked set (or awareness set) is all brands and products a consumer is aware of, even tangentially. Every company in the world wants to make sure they’re in that set for the most consumers they can be for the particular product (and/or service) segment said companies are in. They want to make sure their product is evoked in the minds of as many consumers as possible when those consumers think of the product segment with which the company’s brand belongs to. While that is relatively easy, the harder lift is the consideration set. As a subset of the evoked set, the consideration set is only the brands within a product category that a consumer would ever actually considering purchasing at all at any one time. It can change over time due to new products or bad experiences with the product the consumer did end up buying.

Why on God’s green earth does this matter at all?!? When a studio is deciding to hire a writer or writers for a new project (that wasn’t directly brought to them by the executive producers paying for the production) and wants to set about casting it with actors, there is almost surely a shortlist of writers and actors the studio and the producers want. That would be the consideration set. The ones they badly want. Now, if the studio cannot get any in the consideration set but the studio still wants to make the product now instead of waiting until some of those writers and/or actors can be made available to do said project, they will work with casting directors and such to fill out the cast and crew.

This is where a writer or actor’s agent comes into play. Getting into the evoked set becomes the hard part for a random writer and actor who hasn’t become an A-lister. Ryan Reynolds is such. He’s a brand name actor. Sam Richardson, while a very gifted comedic actor, is not pulling in tens of millions per movie or millions per episode of television. This is why a lot of small-time actors cut their teeth in television pilot Hell and indie movies. Easier to get cast there because those productions don’t have the necessary budgets to attract and hire A-list talent unless the top talent agrees to a steep pay cut from what they’re used to (chasing that Oscar or Emmy gold is usually the reason.)

This matters. The average SAG actor in Hollywood likely makes at to around double the SAG mandatory minimum. As do most WGA writers with the WGA mandatory minimum. Because of this, the studios want to squeeze as much out of them as possible in as few days as possible. These mandatory minimums are day and week rates, not per project rates, for the most part. This is because a movie could take months if not years of production and reshoots to complete. The studios especially want to stop having to pay the writers for months and years if they don’t have to. That’s potentially hundreds of thousands of dollars they would be wasting for just minor script rewrites and such per writer if the writers are just hanging around on set, not actively writing new scripts.

The studio heads are also contracted and are not doing this per job, but annually. They work doing this stuff every single week of the year (outside of any lavish vacations they get to take on their yachts.) The studios can’t just decide out of the blue to lower the studio executives’ pay, which likely should be lowered in my opinion, until their next contract is up. Bob Iger just signed one. He’s not taking a pay cut for at least a few years. Because, truly, not fair to him. He signed a contract, and Disney is bound by the terms of said contract to pay him what they both agreed to. If Disney decided to knock a few zeroes off his salary, he would immediately sue and win in no time. Contract law violations are usually very easy to win in court if they can be proven. Less than agreed to pay is incredibly easy to prove. There probably is a codicil in his contract where he can be fired for certain things, but he’d likely also get a multi-million-dollar golden parachute if Disney did that. And another millionaire business executive would just take over his job and make at or a little below what he’s currently making, if not more. There needs to be a studio head. There do not need to be 10,000 writers employed at Disney or WB or Amazon at any one time.

In the end, the strike will almost surely lead to less work for WGA writers and SAG actors. If the streaming wars losing the studios billions of dollars a year at this point wasn’t already making the studios limit productions, the strike certainly will. The minimums may stay the same, but maybe a writer will have to be contracted for at least a week or two instead of the “on a daily basis” thing the studios have been doing as of late. If the minimums go up, the studios will try to make due with less writers and less actors on a declining number of projects. Less extras and crowd shots, especially.

Less jobs is not a good outcome for the union and would be the second major writers strike in a row that made the WGA union representatives look like fools. And the economy was in a much better state in 2007 (a year or so before the housing bubble burst) than it is now. Movie theaters are down 25-30% what they were before the pandemic hit. Enough of a difference to make a movie go from turning a tidy profit to flat-out bombing. Consumers demanded convenience but then didn’t show up. The studios are in a money crunch to the tune of tens of billions of dollars. Raising prices for movie theater tickets and monthly streaming subscriptions can’t solely fix this problem. WB is about $50 billion in debt. Disney is looking at selling off parts of itself, such as their television channels ABC and FOX, among others. Where will the extra money come from? New revenue streams and/or saving on production costs (which are ridiculous these days, in fairness.) In the end, less total work which means less total cast and crew needed annually in Hollywood.

I just do not see this ending well for the writers and actors. Good luck; you’re going to need it