Rising labor tensions in Hollywood: Why directors predict tough negotiations with studios

Throughout its 87-year history, the Directors Guild of America has staged a strike only once — a walkout in 1987 that lasted 5 minutes (or 12 minutes by some accounts).

In contrast to the Writers Guild of America and SAG-AFTRA, the DGA has traditionally avoided showdowns with the studios, bargained early and remained tight-lipped about its goals.

But this year may be different.

In a recent message to its 19,000 members, DGA leaders signaled that negotiations would be tough and that the union is in no rush to begin negotiating a new contract to replace one that expires June 3. They also indicated that they may let the Writers Guild of America and SAG-AFTRA go first, a notable departure from practice in recent years in which the DGA has preferred to take the lead and establish a bargaining template for other unions, whose contracts also expire in June.

Such a decision could give more bargaining leverage to the more strident WGA — which many believed is poised to strike for the first time since the 100-day walkout in 2007-08 — and underscores the level of discontent between Hollywood unions and their employers.

“This year promises to be an extremely challenging negotiating environment — one of the most difficult and complex we have faced in many years — with studios continuing to consolidate and become increasingly vertically integrated, and with extraordinary economic headwinds facing our industry and our nation,” said DGA negotiations committee chairman Jon Avnet and National Executive Director Russell Hollander in a joint statement Monday.

So what’s behind the growing unrest?

In their message, the leaders addressed sweeping changes in the industry that have occurred during the pandemic and amid a surge in streaming, which has created new job opportunities but also deepened anxieties about how directors, writers and actors are compensated across multiple new platforms as fewer people watch movies on the big screen.

“This year’s negotiations are about more than bargaining a strong contract for the next three years — they’re about setting the course for the future of our industry and ensuring the sustainability of hundreds of thousands of good, union jobs,” Avnet and Hollander added, echoing a similar message they delivered in November.

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The contracts for writers and actors also expire next year, setting the stage for a turbulent year of bargaining in Hollywood amid rapid shifts in entertainment.

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The DGA’s top goals include fighting for higher wages, which have been eroded by inflation; securing more funding for its health and pension plans, which have been buffeted by steep stock market losses; and a better deal on streaming residuals — the fees directors and others fetch after the initial airings of shows.

With each of the studios now owning their own streaming services, one of the challenges for the DGA members, as well as other creators in Hollywood, is a lack of transparency over how residuals are calculated.

Historically, studios would have to pay members every time their show or film was screened, now it is harder for creators to know how many times their content has been viewed and the size of the audience.

Adding to friction is the shortening of TV seasons and the fact that residuals payments are often in the form of lump sums, rather than a stream of income that can support creators throughout their careers.

Whether the DGA and other unions can deliver on promises of better pay and working conditions remains to be seen.

Major media companies that own the studios are facing their own pressures. They have been slashing jobs amid fears of a recession, lackluster box office returns and questions about the viability of the streaming business as subscriptions have slowed.

“It’s going to be hard and they want to manage expectations because there are economic headwinds right now about consolidation within our industry and that we are almost in a recession,” said Dimitry Krol, senior counsel at law firm Loeb & Loeb.

Steve Ross, a professor of history at USC, also predicts a tough fight.

“I have a sense that studios and TV entities are going to dig in,” Ross said. “They saw a big spike in revenue during COVID, with everybody turning to streaming and now we know that streaming service subscriptions have fallen off. So they are going to look for ways to keep profits high.”

A representative for the Alliance of Motion Picture and Television Producers, which represents the major studios, declined to comment.

To be sure, the industry was on edge that 2020 would be the year that Hollywood would see its first strike since 2007. But the pandemic removed any leverage unions had to walk out.

And some industry veterans say its too early to predict whether a strike will occur this year.

The DGA has not yet set any dates for negotiations for studios. And the WGA has also told its members that reports it would strike are premature, according to a post on its website.

There has been friction in the past between the unions, with WGA leaders rejecting the idea that they must follow any bargaining pattern established by another guild — or negotiate early.

The WGA prefers to wait until closer to the expiration of its contract to agree to any deal. “Deadlines make deals,” said one WGA source who was not authorized to speak publicly.

The writers wanted all three of the unions to team up and negotiate with the studios jointly, as the studios do, but this has not been possible, the person said.

Absent that, the WGA would prefer to have the other unions hold off bargaining so that it can negotiate first.

The writers aren’t likely to begin talks with the studios until March, the source said.

“We will only begin bargaining when we believe we have the most leverage to win the best possible deal for DGA Directors and their teams,” Avnet and Hollander said in their statement to members.

Some observers think the other unions might this year let the WGA lead the negotiations, as they did in 2007.

“In the past that WGA has been the most radical of the three and they’ve been the most likely to go on strike,” Ross said. “I think they’re going to fight the battle right up front. I think the DGA wants to see what kind of deal the WGA can forge.”