Moody’s Sees Eventual Guild Deals Costing Media Companies A Collective $450-$600 Million A Year; Movie Theaters First At Risk From Strikes

deadline.com:

Moody’s Investors Service, which rates corporate creditworthiness, said it expects agreements with three Hollywood guilds will collectively cost big media companies it follows $450 million to $600 million more per year.

That includes the recently ratified DGA deal and eventual settlements with the WGA and SAG-AFTRA. Moody’s covers most of the entertainment industry, although some smaller, independent players aren’t captured in the number.

The “greater leverage of two unions vying for new agreements will result in higher costs for studios [and] will likely be credit negative,” the firm said in a note today titled “Actors join writers’ strike: Golden age of TV spending causes dark age for studio profits.” “Production in the US has halted at a time when the sector is under pressure to mitigate the secular decline in linear TV and show it can operate streaming platforms at a profit to mitigate linear decay,” it said. “Two unions on strike highlights the stresses on both sides of the bargaining table.

It is not just the revenue share at stake, but how compensation has evolved in the streaming ecosystem.” Also at stake — technological advancements of AI and compensation surrounding the use of artificially generated digital likenesses.