Shares of Netflix (NFLX) and Walt Disney (DIS) were on the rise Wednesday as the Hollywood writers’ strike came to a close. The Writers Guild of America reached a tentative deal with representatives from the movie-and-TV industry, leading to an increase in stock prices for both companies.
Deal Details and Implications
The Writers Guild of America (WGA) announced the agreement with the Alliance of Motion Picture and Television Producers on Sunday, bringing an end to the strike that had started on May 2. The deal includes several key provisions:
- Minimum pay rate increases for writers.
- New residual structure for streaming services, based on viewership.
- Regulations on the use of artificial intelligence.
- Data sharing by streaming firms, providing information on the total number of hours streamed for “self-produced high budget streaming programs” like Netflix originals.
While this deal is expected to unlock the production process for numerous halted or delayed movies and TV series, it may also have financial implications for the companies involved.
Potential Financial Impact
Initially seeking a deal valued at $429 million per year, the WGA estimated the three-year agreement to be worth $233 million annually. Furthermore, Moody’s Investors Service predicts that new contracts with labor representatives for writers, actors, and directors could ultimately cost media firms between $450 million and $600 million per year.
Writers Return to Work, Actors Still on Strike
With the writers’ strike now resolved, writers are allowed to resume work during the ratification process. However, the Screen Actors Guild remains on strike, although it is anticipated that negotiations will become easier with the writers’ return to work weakening their position.
The strike’s end signifies a positive turning point for the industry and provides relief to all parties involved. The WGA membership retains the right to make a final decision on approving the deal.