The major U.S. studios have been reducing headcount since May 2020, when the full effects of the COVID-19 pandemic became evident. Warner-Media announced a 20 percent reduction in payroll. NBCUniversal and Discovery are now planning or implementing similar cuts. Lionsgate announced a 15 percent reduction in force. Partially to reduce headcount, Sony is combining several divisions, and Fox may well be closing some divisions. Disney’s production team is also announcing layoffs, separate and apart from its theme park layoffs. In late November, AMC Networks laid off 10 percent of its workforce. Over the course of the year, ViacomCBS laid off over 550 people, too. Across the industry, an estimated 30,211 jobs were cut in 2020, according to international job placement company Challenger, Gray & Christmas.
This number is only one percent less than the total layoffs in 2008 during the financial crisis. But we need to add 10,000 job losses in 2019 and 15,474 job cuts in 2018 to that.
The landscape looks grim for those who want to make their film and TV business dreams come true, especially in the center of the industry, Los Angeles, California.
The layoffs are in response to lower revenue caused by the COVID pandemic. But since demand is always present, and content will be delivered through new and imaginative methods, the industry will refocus and rebuild. Those who create content are compelled to do so and they usually can’t simply go off and become dental hygienists. Distribution of that content will shift, but more of it will be available, and the industry will regroup, retrench, and then grow again.
Displaced executives may end up back at their old companies, when production and distribution pick up. Until that happens, however, their skills can be adapted readily to new industries — OTT companies still need financial expertise, content knowledge, production skills, sales and marketing expertise, public relations staff, and the like. The executives who handled that at the companies discussed above, before the pandemic claimed their jobs, will likely transfer those skills to new companies. It would not be surprising, however, if many of these executives realize they will be subject to layoffs, downsizing, and reductions in force wherever they may apply for a job. As a result, many will start their own shops, alone or with colleagues, putting a different spin on the work they do, with different, potentially more demanding bosses — themselves.
While there are job cuts, there are many new pipes delivering content to the home, bypassing movie theaters. Aside from the “old timers” (Netflix, Amazon Prime Video, and Hulu), newcomers are flooding the market. Disney Plus, Peacock, and HBO Max are new streaming entrants. Paramount Plus (formerly CBS All Access) is beefing up its profile. Plans for new streamers abound. Each of them will have exclusive content.
Based on these new proprietary pipelines for delivering content, studios and networks have determined that since they have an abundance of content on hand, they can stream that content, on their own networks, cost to the consumer be damned. Those networks will all need new and additional compelling content to satisfy the demand. But even that demand will be tempered by the limits faced by consumers. After all, how many streaming services can a home afford to have?
Those big, fat pipes permitting on-demand viewing of all kinds of content need to be filled with content. That content will be created differently in 2021 than it was in 2019. (We don’t even need to talk about 2020.) Perhaps some crew roles will be automated. Maybe a non-union boom operator can be replaced by a device. Technological advances will serve to reduce the costs of production, freeing up more dollars for more productions, which will fill the streaming pipes. But at the same time, some of those jobs, which were filled by individuals, will be automated, and thus eliminated. The unions will eventually lose that battle.
For the near term, a government remedy may work. There is legislation pending in Congress, by Representative Carolyn Maloney (D-NY), that will allow insurers to rely on the federal government with regard to claims generated due to COVID-19. If a production that follows industry protocols must shut down because a key staffer is infected, insurers currently won’t cover that loss, either on a general liability policy or on a completion bond. If the federal government is in place as the intended “backstop,” the insurer will suffer some loss, but the federal government will protect the insurer from significant loss and will provide the capital to cover the loss, thereby allowing for the production to resume.
Significantly, this backstop will allow the production to move forward in the first place, which alone will assist in the creation of jobs in the independent sector. Without a completion bond, or general liability insurance, independent films (especially those financed with debt, where the loan must be repaid on delivery) cannot proceed. As of this writing, studios and other well-capitalized companies are shooting films, and “taking the risk” that COVID-19 causes a shutdown. That financial risk is predictable and can be borne by deep-pocketed companies. With the independent sector creating more and more content, the need for this insurance grows. Rep. Maloney’s legislation would be a boon to the film and TV industries.
As the vaccine is distributed, and more people are protected from COVID-19, the number of productions will increase. But it may well take the entire year before productions return to normal volume, without the extensive and expensive COVID protections mandated by the guilds. Until then, however, the industry will adapt, as it always has, from threats that have included television, cable television, videotapes, DVDs, and now COVID-19.
by Marc Jacobson
New York City-based entertainment lawyer
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