Hollywood writers’ strike may disrupt TV schedules, but it’s unlikely to deter advertisers

It's a move that could have far-reaching implications for media planning and buying on both broadcast TV and streaming platforms.

The Board of Directors of the @WGAwest and the Council of the @WGAeast, acting upon the authority granted to them by their memberships, have voted unanimously to call a strike, effective 12:01 AM, Tuesday, May 2.

— Writers Guild of America West (@WGAWest) May 2, 2023

The decision came after six weeks of ongoing negotiations between WGA and the Alliance of Motion Picture and Television Producers (AMPTP), an industry body representing most of Hollywood’s top studios and streaming platforms, including NBCUniversal, Netflix, Amazon, Paramount Plus, Sony, Disney, Apple and others.

The union has been demanding better residuals – which are comparable to royalty payments for screenwriters – from streaming services. As it stands, writers tend to earn far greater residuals for broadcast than they do from streaming, because broadcast residuals operate on a tiered ‘reward-for-success’ type model, whereas streaming providers pay out a flat fee. And the disjunction is becoming increasingly apparent to screenwriters as streaming grows; in 2022, streaming overtook broadcast TV in terms of viewership in the US for the first time.

Negotiations with AMPTP, according to WGA, had not gone to plan: “Though our Negotiating Committee began this process intent on making a fair deal, the studios’ responses have been wholly insufficient given the existential crisis writers are facing,” the union said in a tweet yesterday.

It’s the first time that Hollywood’s writers have striked in 15 years. The last strike, which spanned 100 days over the course of 2007 to 2008, created major disruptions in TV filming and production.

It's a reality that could be repeated in the coming weeks if WGA and AMPTP do not come to a consensus. And it's one that could send shockwaves through the world of media planning and buying.

Mapping the potential content shakeup

If the current WGA strike continues unresolved, production schedules for both broadcast and streaming could soon be again upended. Such a disruption could have ripple effects on networks’ and streaming platforms’ advertising revenues, as brands that have already committed budgets to forthcoming programming could get cold feet if they fear that programming could be pulled and replaced with different content.

Furthermore, news of the strike comes at the beginning of the TV industry’s upfronts and the Interactive Advertising Bureau’s NewFronts – a series of events in which major television networks and streaming platforms auction off much of their ad inventory in advance for the coming year. The events kicked off yesterday and are slated to run through the middle of May.

Though there are still many unknowns, experts anticipate that late-night programming like Jimmy Kimmel Live and The Tonight Show with Jimmy Fallon – and its advertisers – could be among the earliest affected if WGA and AMPTP don’t reach a deal. Such was the case with the 2007-2008 writers strike.

“In terms of upcoming programming, summer is very reliant on reality programming, so there would be less of an impact, but late-night will be impacted immediately,” says Stacey Stewart, US chief marketplace officer at Universal McCann, IPG’s global media agency.

She notes that “it’s still early and everyone is hopeful the strike will be short,” but says Universal McCann is “watching it closely and working with media partners to understand their contingency plans.”

However, an ongoing strike could potentially disrupt more than just late-night TV; if it goes on, it may delay autumn production schedules and force networks and streaming platforms to fill in the gaps with programming that requires little to no writing.

“[An ongoing] strike would ultimately result in a viewership genre shift away from scripted TV content towards non-scripted programming such as sports and reality TV,” says Tony Marlow, global chief marketing officer at LG Ads.

This kind of change would require advertisers to recalibrate their strategies. “As audiences adjust their preferences, advertisers will follow the eyeballs as they always do and adjust their ad mix accordingly,” says Marlow. “This TV genre shift could also lead to a reshuffling of ad placements into existing scripted content in addition to the increased investments against non-scripted genres.”

Ad spent goes where eyballs go

Even in the case of widespread programming disruptions, “advertisers will continue to prioritize connecting with their target audiences even if a strike changes where they find them in TV environments,” Marlow says.

It‘s worth underscoring that Marlow does not suggest that such a change would result in lost eyeballs – simply that eyeballs would move to new places.

It’s a theory echoed by other experts. “In the short- to mid-term, a strike should have little to no effect on viewership as consumers will continue to shift to streaming at the same rate and pace,” says one industry executive, who agreed to speak with The Drum on the condition of anonymity. “If there is a prolonged strike, where the lack of original and scripted programming is fully felt, there might be a small dip in linear ratings, but again that’s happening organically because of the migration to streaming platforms.”

The source also points out that the 2007-2008 writers strike barely impacted viewership. Although late-night programming was affected, the “overall impact was negligible,” they say.

Smaller streamers in a pickle?

Even if the impact is limited, some media sellers will be more prepared to handle the pressure than others. Not all networks and streaming platforms have the same capabilities. “In an era where subscribers are paying high prices to belong to several streaming services, if a long-term strike comes, then the smaller streamers will suffer,” says Hunter Terry, vice-president of solutions consulting and connected TV commercial lead, at adtech firm Lotame.

Netflix, for example, “traditionally stockpiles content months or even years in advance,” which will enable them to weather the storm with ease, he says. Not everyone is so well-equipped. “Most others who do not have such large-scale content production set up – especially those lacking international production – will be hard-pressed to generate new and unique content. New and unique content is what is turning consumers' heads in the current market. If a streamer can't grab the attention of the consumers, then [those consumers] will happily and readily flock to other services that do.”

A safe harbor in the storm for some such streamers could be live sports, Terry suggests. Just as major networks may fill primetime slots with sports programming in the absence of their screenwriters, so too might streaming platforms lacking a repository of original content. Sports is increasingly shifting to streaming video – YouTube in late 2022 snagged streaming rights for NFL’s Sunday programming in the US, while Amazon secured a ten-year streaming deal with MLS in 2020.

And platforms’ share of the market is only growing. Streaming platforms’ spending on sports rights globally is expected to reach $8.5bn this year, representing a 64% lift from 2022, according to recent research by London-based Ampere Analysis.

Advertisers will stick to their guns

Despite the potential risks of programming disruption, experts are generally confident that both broadcast and streaming TV will maintain its hold on current ad investment projections.

Though advertisers who have already committed dollars to forthcoming programming may have commitments “of varying degrees of flexibility” – where a network or platform may be willing to adapt investments in light of changes to programming – it’s likely that most buyers will not back away from TV and streaming, says the trade group leader.

“Since the impact on audience sizes is expected to be minimal, advertisers will continue to rely on the scale and immediacy of television to move their product,” the source says. “There are few, if any, other options that can replace what TV contributes to their marketing plans.”

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