Barrons News.- On Tuesday, media stocks saw a decline due to the commencement of the Writers Guild of America strike, the first in 15 years. The Hollywood writers’ strike is predicted to impact television programming initially, with streaming-based companies such as Netflix possibly having an advantage.
Stocks for Comcast, which owns NBCUniversal, were down by 2%, while Paramount Global’s stock saw a 2.3% decrease, Walt Disney’s shares were down 1.5%, and Netflix’s stock was down 1.4%. Additionally, Warner Bros. Discovery shares saw a decline of 3.6%, and the S&P 500 index was down 1.2%.
According to Wedbush analyst Michael Pachter, the strike is anticipated to have a significant effect on late-night shows and soap operas, followed by network channels with strict prime-time show release cadences in September. Pachter suggested that streaming platforms would be less affected since they have no regular release schedule and have an abundance of content from outside the United States.
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Pachter stated that Netflix is well-positioned due to its vast catalog and success with non-US content, such as the 2021 South Korean series, Squid Game. He further added that he believes the networks will settle quickly since they cannot produce even shows like 60 Minutes after a few weeks.
Rosenblatt Securities analyst Barton Crockett noted in a Tuesday note that the strike mainly impacts television and that films will only be marginally affected, for now. Crockett stated that the most visible disruption will be late-night shows such as Kimmel, Colbert, and Fallon, which will stop producing new episodes and switch to reruns. Daytime soap operas that depend on a steady flow of writing could also be impacted quickly.
The Writers Guild of America called the strike, which was effective at 12.01 a.m. Pacific time, after six weeks of negotiations with the Alliance of Motion Picture and Television Producers did not yield a contract. The AMPTP negotiated on behalf of Netflix, Amazon, Apple, Disney, Discovery-Warner, NBCUniversal, Paramount, and Sony.
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According to the WGA, the AMPTP refused to guarantee any level of weekly employment in episodic television and created a “day rate” in comedy variety. The WGA also accused the AMPTP of stonewalling on free work for screenwriters and AI for all writers. The AMPTP stated that the primary sticking points are mandatory staffing and duration of employment, which are guild proposals that would require a company to staff a show with a certain number of writers for a specified period of time, whether needed or not.
Crockett expects late-night reruns to lose some audience and ad dollars but doesn’t believe that it will be overly significant. If the strike continues for months, it could be a headwind for entertainment stocks during that period. The last WGA strike started in 2007 and lasted for 100 days.