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Exclusive: WGA Warns Calif. Teacher Pension Fund on 'Risk' of Studio Stocks
'We urge you to... express concern regarding the impact of the strike on your investments,' said Yahlin Chang ('Handmaid's Tale')
Now we’re playing with fire. In a rousing new speech today to membership, Writers Guild of America negotiating committee co-chair and Party of Five’s Chris Keyser amped up the writers — now on Day 86 of the strike — and indicated that the guild is urging union pension funds to pressure Hollywood’s studios back to the negotiating table.
But that wasn’t all.
Separately, in video exclusively obtained by The Ankler, One Day at a Time co-showrunner Mike Royce and WGA negotiating committee member and The Handmaid’s Tale co-showrunner Yahlin Chang spoke to the California State Teachers’ Retirement System (CalSTRS) today to tell its board that “the strike exposes your investments to financial risk” and that the AMPTP has been absent from the negotiating table because it wants “to keep their labor costs at rock bottom, while their CEOs hold a race to see who can build the biggest yacht.”
Their comments (in the videos below) echo Keyser’s sentiment, as relayed in his 17-minute speech, posted now on the WGA website.
“Wall Street isn’t the only one listening. We’ve been talking to union pension funds too about the risk the companies are taking,” says Keyser in the video. “We talked to CalPERS [California Public Employees’ Retirement System], the largest public pension plan in the country, talked about the loss of programming and the cost to the industry, and we heard strong support from its board for our struggle — and the promise that the companies will be hearing from them, from CalPERS, and demanding answers on behalf of its two million members.”
CalPERS assets total $462.8 billion, while CalSTRS assets total $315.6 billion as of June 2023. CalSTRS’ Netflix holdings, for instance, are valued at $158.8 million, while its Disney holdings are valued at $302.4 million as of June of last year. (According to CalSTRS, it is the “largest teachers’ retirement system and second largest public pension fund in the nation.”)
The point of the impassioned plea to the CalPERS and CalSTRS boards is to pressure the studios — Netflix, Disney, Warner Bros. Discovery and the lot of them — back to the negotiating table. But the implied threat is that if the guild is able to illustrate that Hollywood stocks are bad investments, then major institutional investors such as pension funds may be inclined to reconsider their stakes in publicly held entertainment companies. (The AMPTP declined to comment.)
So far, the strikes have not posed an immediate hit to studio stocks. Netflix, the first to report quarterly earnings, saw its share price pull back on missed revenue expectations but actually reported a $1.5 billion expected increase to its annual free cash flow as a result of the production stoppages from the dual WGA and SAG-AFTRA strikes. But just as the Covid-era production halt offered a temporary cash bump, any short-term increase to cash flow from the strikes is just that: short term. As my colleague, Claire Atkinson, reported at The Ankler this week, Wall Street analysts are fed up with entertainment stocks and would like to see resolution.
But the implied threat is that if the guild is able to illustrate that Hollywood stocks are bad investments, then major institutional investors such as pension funds may be inclined to reconsider their stakes in publicly held entertainment companies.
The WGA has backing from its 160,000 colleagues in SAG-AFTRA, where union president Fran Drescher indicated on Day One of the actors strike that the performers union is ready to strike until 2024 if necessary. Such a move would deal an enormous financial blow — minus production and a red-carpet publicity cycle, movie release dates are already being delayed by months, and the film industry is still recovering from the pandemic. Plus, streamers that are looking to ramp up subscriber growth — even if not as immediately impacted as linear broadcast networks with fall schedules to consider — will eventually be faced with major kinks in their content pipelines should a strike (or two) drag on.
Said Chang in part of her remarks:
The companies’ failure to negotiate a fair deal and end the strike exposes your investments to financial risk. […] The longer this goes on, the worse the financial impact will be, but the studios still refuse to come back to the table to talk to us. In fact, anonymous industry executives have said that the companies won’t talk to us until October, because they want to “break the WGA,” saying their “endgame is to allow things to drag on until union members start losing their apartments and losing their houses.” That would mean the industry would be shut down for six to eight months with the goal of making writers homeless.
Last week, CalPERS committed to discuss the strike with the major media companies they invest in. We urge you to do the same — to express concern regarding the impact of the strike on your investments and to urge our employers to come back to the table to ensure stability for all of us.
(The AMPTP previously disavowed the unnamed exec who told Deadline the studios’ goal was to cause union members to lose their homes, and said in a statement to the press: “These anonymous people are not speaking on behalf of the AMPTP or member companies, who are committed to reaching a deal and getting our industry back to work.”)
And here are Royce’s remarks:
Here’s an excerpt from his comments (which quotes from Claire’s Ankler story):
The basic deal is, [our employers] are refusing to negotiate with us. You’ll have to ask them why, but I think it has something to do with them wanting to keep their labor costs at rock bottom, while their CEOs hold a race to see who can build the biggest yacht.
Meanwhile the economy of our entire region is suffering.
This should be a concern for any shareholders including CalSTRS, which has billions of dollars invested.
But don’t take it from me, take it from Wall Street. Last week, Michael Pachter, managing director at Wedbush Securities weighed in on how the media companies are handling the strike, and he said, and I’m quoting: “The market thinks all the corporate bosses are idiots — and generally sides with the unions.”
[…] We just want to get back to work. Now my mom lives off a teacher’s pension, so I want your teachers pension fund to grow and to thrive, and so I urge the board to urge the companies to get back to the table and negotiate with us.
Elsewhere on The Ankler
An anonymous business affairs exec, who first wrote about BA’s role in collective bargaining for The Ankler, has returned to further explore some of the major issues surrounding the preservation of the writers’ room as one of the WGA’s core collective bargaining goals. They also dive into why the AMPTP is particularly resistant to the WGA’s proposals on the issue, and how to reframe the debate to align the parties’ interests and set them down the path toward a deal.
The writers made a classic negotiating error: they made the argument that was most persuasive to themselves, rather than to the people they actually needed to persuade. The battle cry to “Save the writers’ room!” may have played a vital role in galvanizing the WGA membership around a potentially protracted strike, but it just doesn’t resonate for most other audiences.
That’s not to say the studios are intentionally trying to do away with the institution of the full writers’ room, as some writers contend. Rather, they’re essentially neutral to the concept — great if the showrunner demands it, you can afford it, it seems helpful to creative success, and the network approves it; otherwise expendable. Plenty of great shows were born and thrived in the creative crucible of the writers’ room. Plenty of others did just fine without it.
In fact, the studios and writers value writers’ rooms so differently, at least two studio executives have — to my shock and confusion — expressed to me their conviction that the WGA’s proposed staffing requirements are a disposable red herring, meant only to provide the union with leverage to extract additional economic gains, which the studios would be perfectly happy to offer once the writers get off their high horses about all that nonsense.
Paid Ankler subscribers can click here to read more, including the exec’s suggestions for few creative dealmaking tools that could help the warring sides reach an agreement on the issue of writers’ room.
Today in Strike News
All writers and actors are feeling the impact of the strike, but disabled workers, whose cost of living is higher and whose ability to receive health insurance is critical, are at unique risk. “On a typical year, you need to meet certain work requirements to get your health insurance through the guild,” writer Monica Cecilia Lucas says. (Los Angeles Times)
With the short-term gains felt due to the lack of ongoing productions, studios are being left with the option to either hoard the excess cash, pay back shareholders, or even pursue some M&A. “In the short term, every media company will benefit from preserving cash and right-sizing talent deals,” MoffettNathanson’s Luke Landis wrote in a May 3 report. “Longer term the strike could cement the pendulum swing away from Peak TV to its antithesis: An age defined by a dearth of English-language-scripted content rather than a glut.” (The Hollywood Reporter)
At the WGA’s Sports Solidarity Day in New York today, MLB, NFL and NHL union leaders spoke on the picket line, with NFL Players Association executive director Lloyd Howell even connecting the current dispute over running back salaries to the WGA’s fight. “We’re behind you; it’s very important to our union that we show a unified front,” Howell said. “We’ve got representatives for former NFL players that are also members of WGA, also in SAG. We will continue to work with you on all your efforts and what you’re trying to get done because, in many ways, we’re trying to get the same things done in our union.” (Front Office Sports)
Yesterday in New York, a WGA picket also served as a rallying cry for east coast animation writers, who hope to unionize their workforce. “This has been a long, horrible battle trying to get animation writing covered,” WGA East animation caucus co-chair Susan Kim said. “We are not giving up. I’m really just here to say that when the strike is over, when we have won the contract we deserve, we are circling back to animation.” (The Hollywood Reporter)
Despite the show’s heavy emphasis on viral videos, the WGA West is trying to assist the “creative consultants” of MTV’s Ridiculousness in unionizing after their previous attempt was denied. (The Hollywood Reporter)
Picket Sign (But Really, Picket Dog) of the Day
This is Gus, the 11-year-old companion of pre-WGA member Sarah Choi. She says Gus has been on the picket lines outside Amazon Studios every day since the writers strike began, minus the six weeks when he was on bedrest for a herniated disc he sustained while jumping off the couch. That’s commitment.
Additional reporting by Matthew Frank.