How does the SAG/WGA strikes influence the nature (volatility) of

media companies’ stocks?

ECO3078 Financial Economics

Team members:

Lim Ekson, Ethan Tan, Chen Kangyi, Nodirbek

Team leader:

Nodirbek
 Contents Page
1. Economic Strategies in the Wake of Entertainment Industry
Strikes: A Comprehensive Analysis
- Introduction
- Analysis of Causes
- Risk Management Strategies
- Conclusion
2. Short-term Impacts of the Strike
- Impact on Future Profitability and Stock Price Volatility
- Increased Expenses for Studios and Impact on Profitability:
- Impact on competitiveness
- Conclusion
3. Long-term Impacts of the Strike
- Efficient Market Hypothesis (EMH)
- Investor Behaviour
- Risk and Return (CAPM & Cost of Equity)
- Cumulative Abnormal Returns - CAR
- Conclusion
4. Possible future projections of the Strike
- Impact on AMPTP, Studios and Union members
- Possible Future Projections
- End of WGA Strike
- End of SAG Strike
- Conclusion
 Economic Strategies in the Wake of Entertainment Industry Strikes: A
Comprehensive Analysis

1、Introduction

The recent strikes led by the Writers Guild of America (WGA) and the Screen Actors Guild –

American Federation of Television and Radio Artists (SAG-AFTRA) have triggered noteworthy

repercussions in the entertainment sector, particularly in the realm of stock prices. This

exploration aims to provide a broad overview of the impact of these strikes on the financial

landscape of major media companies within the industry.

The strikes have created a ripple effect, inducing fluctuations and volatility in the stock prices of

key players. As the entertainment landscape grapples with production interruptions and shifts in

market dynamics, the financial markets have responded with varying degrees of sensitivity. This

industry-wide phenomenon prompts an examination of the broader economic implications and

underscores the intricate interplay between labor disputes and the financial performance of

entertainment entities.

In the subsequent sections, we will delve into the nuanced aspects of these stock price

fluctuations, analyzing the underlying factors and broader challenges faced by the

entertainment industry. This exploration aims to provide a comprehensive understanding of

how strikes influence the financial dynamics of the entertainment sector, setting the stage for a

deeper examination of the economic landscape shaped by these labor disruptions.

2、Analysis of Causes:

1、Stock Market Risk: The stock market is an environment filled with uncertainty, where

investors may be influenced by various factors, including market volatility, company

performance, macroeconomic conditions, and more.

The impact of the strike on stock prices is a significant manifestation of economic fluctuations in

the entertainment industry, with different major media companies playing crucial roles in this

process. Taking Disney and Paramount as examples vividly illustrates the direct impact of the

strike on stock prices, emphasizing the economic consequences of the strike on the

entertainment industry.

1）Disney's Stock Decline: A Microcosm of Industry Impact

Firstly, Disney, being one of the world's largest entertainment companies, saw its stock price

decline as a microcosm of the overall impact of the strike on the industry. During the strike,

concerns among investors about interrupted production and market uncertainty led to a sharp

decline in Disney's stock price. For instance, Disney's stock plummeted from $102.97 at the

beginning of the strike to $79.32, representing a nearly 23% drop. This tangible figure

underscores the direct adverse effect of the strike on the leading company in the entertainment

industry.

2）Paramount's Severe Stock Decline: Unraveling Future Business Prospects

Simultaneously, Paramount, another significant entertainment company, experienced an even

more severe decline in its stock price. The strike triggered market concerns about Paramount's
future business prospects, resulting in a staggering 50% drop in its stock price. This steep

decline not only highlights the direct blow the strike dealt to the company but also underscores

the profound impact of internal issues within the entertainment industry on stock performance.

3）Investor Concerns and Short-Term Economic Impact

These stock price declines reflect investor concerns about the strike's implications, including

production interruptions, reduced income, and heightened uncertainty. During the strike,

companies were unable to operate normally, and stagnant production harmed their profitability

and market capitalization. This direct economic impact inflicted significant short-term damage

on stock prices, presenting additional challenges for the recovery of the entertainment industry.

2、Challenges in the Entertainment Industry:In recent years, the entertainment industry has

encountered a myriad of challenges, including the rise of streaming services, persistent issues

related to digital piracy, the transformative impact of artificial intelligence and digital

innovation, ongoing labor disputes, shifting market demands, and the unprecedented

disruptions caused by the global COVID-19 pandemic.These challenges demand continuous

innovation and adaptation from the entertainment industry to navigate the dynamic landscape

of the market.

1） Residuals from Streaming Media: Both WGA and SAG-AFTRA express concerns about the fair

distribution of residuals from streaming services. They argue that the AMPTP's share of these

residuals has significantly reduced their members' average incomes compared to the past

decade.
2） Use of Artificial Intelligence: The unions are advocating for restrictions on the use of

artificial intelligence in the entertainment industry. They want AI to be used as a tool for

research and script facilitation, rather than as a replacement for human writers and actors.

3）Changes in the Entertainment Industry:The strikes are partly a response to the profound

changes in the entertainment industry, including the impact of streaming platforms, AI, and

digital recreation on their work.

3、Risk Management Strategies

1、Stock Risk Management

Effective stock risk management strategies encompass portfolio diversification and strategic

asset allocation. The decline in stock prices of Disney and Paramount reflects intrinsic risks

within the industry. However, through robust portfolio management, investors can mitigate

these risks.

1） Portfolio Diversification: To reduce the risk associated with specific companies or

sub-industries, investors can achieve diversification by broadly spreading their portfolio. The

fluctuation in stock prices of Disney and Paramount may be influenced by various internal and

external factors, and diversifying investments across different industries and asset classes can

mitigate the impact of a single event on the overall portfolio.

2）Strategic Asset Allocation: Investors can manage stock risk through strategic asset allocation.

This involves determining the weights of different asset categories to optimize the overall

portfolio's risk and return. In the entertainment industry, investors can adjust asset allocation
based on industry trends and risk expectations in sectors such as content production, digital

technology, and streaming services, effectively responding to uncertainties.

2、Capital Market Line and Risk-Return Tradeoff

1）Application of the Capital Market Line: The Capital Market Line is a theoretical tool used to

balance the risk and return of a portfolio. In the entertainment industry, especially amid

increased uncertainty, investors can optimize their portfolio to lie on the Capital Market Line,

maximizing expected returns for a given level of risk.

2）Balancing Risk and Return: The Capital Market Line emphasizes the tradeoff between risk

and return. In an industry facing heightened uncertainty and volatility, investors need to

carefully consider the risk level of their portfolio, ensuring that the expected returns align with

the assumed risk. This theory guides investors in how to balance the risks and expected returns

of different assets in their portfolio, achieving an optimal equilibrium in risk management and

investment returns.

Through effective stock risk management strategies and the application of the Capital Market

Line, investors gain a better understanding of and resilience against uncertainties within and

outside the entertainment industry. This approach aims to shield portfolios from external

shocks while maximizing returns.

4、Conclusion

In conclusion, the recent strikes led by the Writers Guild of America (WGA) and the Screen

Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) have

significantly shaped the financial landscape of major media companies in the entertainment
sector. The resulting stock price fluctuations, exemplified by Disney and Paramount, underscore

the complex interplay between labor disputes and financial performance.

Disney's nearly 23% stock price drop and Paramount's staggering 50% decline during the strikes

highlight the immediate effects of production interruptions and market uncertainty. These

challenges, compounded by industry-wide issues like streaming concerns and the rise of

artificial intelligence, emphasize the need for continuous adaptation in the entertainment

sector.

Furthermore, the application of the Capital Market Line provides a theoretical framework to

balance risk and return. Optimizing portfolios to align with the Capital Market Line allows

investors to maximize expected returns for a given level of risk. This strategic approach guides

investors in achieving an optimal equilibrium in risk management and investment returns.

In essence, as the entertainment industry grapples with the aftermath of labor strikes and

ongoing challenges, the adoption of prudent risk management strategies becomes paramount.

Through a resilient approach to portfolio management and a keen understanding of the

risk-return tradeoff, investors can position themselves to weather uncertainties and contribute

to the industry's long-term sustainability and growth.

 1. Short-term Impact on Future Profitability and Stock Price Volatility:

When production halts due to strikes, it raises doubts among investors about a studio's future
ability to generate revenue. This uncertainty results in heightened volatility in stock prices as
investors react by lowering expectations or selling shares in a panic. This phenomenon aligns
with the efficient market hypothesis, where stock prices reflect all available information. The
strike-induced uncertainty disrupts this efficiency, leading to volatile price movements.

In the context of strikes halting production in the entertainment sector, the efficient market
hypothesis serves as a theoretical backdrop, asserting that stock prices reflect all available
information. However, Strikes can create information asymmetry by disrupting communication
channels between labour and management, leading to misunderstandings. Limited or biased
information may be available to different stakeholders, resulting in conflicting narratives and
divergent public perceptions. Uncertainty about the resolution of the strike further contributes
to the information gap,, disrupting market efficiency and triggering heightened volatility. The
problem of asymmetric information is that the inability of a party that possesses material
information to transmit that information credibly to a second party can prevent what would
otherwise be a mutually beneficial exchange. In the case of the strikes, the time lag
acknowledges that markets may take time to fully incorporate and adapt to new information,
particularly in the face of uncertainties surrounding the duration and impact of strikes on
studios' future earnings. Behavioural finance theories emphasize the role of cognitive biases
and emotions, with uncertainty from strikes potentially inducing fear and panic among
investors, leading to irrational selling behaviours. Volatility clustering, a phenomenon where
periods of high volatility cluster together, is observable during strikes, reflecting investors'
reactions to unexpected events. The risk-return relationship underscores how strikes introduce
risk for studios, prompting investors to seek higher potential returns, thereby increasing selling
pressure and contributing to volatility. Collectively, these factors offer a nuanced understanding
of how strikes impact investor behaviours and stock market efficiency in the short term.
An example of this would be something similar, which is the 2007-2008 Writers Guild of America
strike serves as a pertinent example. The graph below illustrates how the stock prices of major
entertainment companies, such as Paramount Global (PARA), experienced significant
fluctuations during the strike period, which occurred between November 2007 till February
2008
 2. Increased Expenses for Studios and Impact on Profitability:

In the financial realm, the increased expenses incurred by studios during strikes have profound
short-term impacts. Strikes necessitate studios to allocate resources towards legal proceedings,
negotiation costs, and potential settlement pay-outs. These augmented costs directly translate
into a reduction in profitability, a concern that reverberates within the investor community and
precipitates a decline in the studio's stock price.

One can draw parallels between this scenario and the economic concept of cost-push inflation.
In the context of strikes, the heightened expenses act as a cost-push factor, akin to external
forces increasing production costs. This results in a squeeze on profit margins, mirroring the
inflationary pressure witnessed in broader economic contexts. For instance, during the 1988
Writers Guild of America strike, major studios faced considerable legal expenses, negotiated
with guilds, and potentially settled claims. This confluence of increased costs significantly
impacted their short-term profitability, echoing the concept of cost-push inflation.

Furthermore, the impact on profitability due to increased expenses during strikes is not
confined to isolated incidents. It intertwines with the concept of supply and demand. The
interruption in production disrupts the supply of content, potentially leading to a subsequent
decrease in demand. This shift in the supply-demand equilibrium exacerbates the financial
strain on studios, creating a ripple effect on their short-term stability. The 2007-2008 Writers
Guild of America strike serves as a pertinent example, where the supply disruption of fresh
content resulted in reduced demand for advertising slots, further squeezing studios' revenue
streams.

In examining these short-term impacts, the implications on investor sentiment has also to be
accounted for. The increased expenses during strikes not only reduce profitability but also signal
financial distress to investors. The uncertainty surrounding the duration and financial toll of
strikes amplifies the perceived risk for investors, triggering a potential sell-off of studio stocks.
This phenomenon is known as risk aversion, where investors, faced with uncertainty, tend to
retreat from riskier assets.

In conclusion, the increased expenses borne by studios during strikes create a complex web of
financial impacts, encompassing cost-push inflation, disruptions in supply and demand
dynamics, and the influence of investor sentiment.
 3. Impact on competitiveness:

The impact of strikes on the competitiveness of entertainment studios introduces a

multifaceted dynamic. Competitiveness, in this context, encompasses a studio's ability to
maintain market share, attract audiences, and secure crucial revenue streams during and after a
strike.

The disruption caused by strikes can lead to market share erosion as production delays and
content interruptions prompt audiences to explore alternative options. This was evident in the
1988 Writers Guild of America strike, where viewership declined due to reruns. The strain on
relationships with talent, exemplified by the 2000-2001 Screen Actors Guild strike, and the
potential long-term damage to brand perception further contribute to the complexity. In an
industry marked by dynamic market conditions, strikes disrupt studios' adaptability to evolving
consumer preferences and trends, influencing their competitiveness.

The impact of strikes on the competitiveness of media companies significantly influences the
nature, particularly the volatility, of their stocks. As strikes disrupt regular content production,
leading to market share erosion, advertising revenue loss, and potential reputational damage,
investors respond with heightened uncertainty about the companies' short-term financial
outlook. This uncertainty translates into increased volatility in the stocks of media companies.
The potential loss of market share and advertising revenue during strikes raises concerns about
the companies' ability to navigate industry challenges and maintain competitiveness. Strikes
can significantly impact a company's revenue diversification by disrupting production, leading to
delays and dissatisfied customers, resulting in potential customer loss and market share decline.
Supply chain interruptions and increased operational costs further strain revenue streams from
various product lines. Prolonged strikes can even damage a company's brand reputation,
influencing consumer preferences and loyalty, while negative market perception may affect
investor confidence and hinder long-term strategic initiatives.

Investors, reacting to the perceived risks and uncertainties, may engage in more frequent
buying and selling of stocks, contributing to greater fluctuations in stock prices. The dynamic
and competitive nature of the media industry amplifies these effects, as shifts in consumer
preferences and industry trends add an additional layer of unpredictability, further fuelling stock
volatility. In essence, the impact on competitiveness serves as a catalyst for heightened stock
market volatility as investors grapple with the uncertainties introduced by strikes in the media
sector
Conclusion of the short-term impacts

To conclude, the impact of competitiveness and increased expenses for studios during labour
strikes has notable short-term ramifications on the stock market. The disruptions caused by
strikes, affecting market share, advertising revenue, and overall competitiveness, contribute to
heightened volatility in the stocks of media companies. Investors, reacting to the uncertainties
surrounding the studios' ability to navigate these challenges, engage in more reactive buying
and selling, leading to fluctuations in stock prices. However, as we delve into the broader
economic perspective, it becomes evident that these short-term effects are only part of the
picture. The next crucial aspect to consider is the long-term effects on media companies' stocks,
examining how strategic decisions made during labour disputes can shape the companies'
trajectory and investor confidence over an extended period. This transition allows us to explore
the enduring impact of strikes on financial performance, market positioning, and investor
sentiment beyond the immediate challenges presented in the short term.
Long-term Impacts on Future Profitability and Stock Price Volatility:

A major disruption to the entertainment business occurred in 2023 because of labor strikes
called by the Writers Guild of America (WGA) and the Screen Actors Guild – American
Federation of Television and Radio Artists (SAG-AFTRA). The entertainment sector is a
cornerstone of worldwide culture and commerce. This section seeks to offer a thorough
examination of the long-term financial effects of these strikes on the main streaming and media
firms in Hollywood, with particular attention to efficient market hypothesis (EMH), investor
behaviour, risk and return, and event study analysis.

Efficient Market Hypothesis (EMH)

Semi-Strong Form Efficiency

A cornerstone of financial theory, the Efficient Market Hypothesis (EMH) posits that stock prices
reflect all available information. Historical data highlights the times when big Hollywood studios
quickly changed their stock values in reaction to noteworthy developments. Significantly,
semi-strong form efficiency was demonstrated during the 2023 WGA/SAG strikes when big
studios like Disney and Paramount Global quickly announced postponements of big-budget
movies, which resulted in instant stock price changes, as seen in Figure 1. The price of
Paramount stocks dropped from USD$22.89/share to USD$11.77/share, which is a sharp
decrease of almost 50% in stock prices.
 Fig 1. Declining Stock Price of Paramount Global

Weak Form Efficiency

Leading up to the strikes, signs of impending labour disputes within Hollywood studios may
have influenced stock prices to some extent. Weak form efficiency implies that historical price
movements and publicly available information might have hinted at the possibility of
labour-related challenges.

This theory implies that previous price movements and publicly available information may affect stock
prices prior to an event being widely recognized in the environment of weak form efficiency. It's possible
that there were hints of potential labour problems in the entertainment sector prior to the formal
announcement of the SAG/WGA strikes. These pre-strike indicators might include the breakdown of
discussions, declarations made in public by union officials, or shifts in the discourse surrounding
important business concerns.

Media sources and industry experts frequently make predictions about possible disruptions prior to
strikes, and these predictions can influence stock prices. Articles and reports raising the prospect of
strikes may have swayed investor opinions and moved the price of stocks. It's not uncommon for
investors to react to news and rumours, especially in an industry as dynamic as entertainment.

Investor Behaviour
Herd Behaviour

Behavioural biases play a pivotal role in shaping market dynamics. Investors frequently engage
in herd behaviour during sector-wide events such as strikes, selling shares in large quantities
when unfavourable sentiment grows. By examining past data, it is possible to identify times
when writers' strikes caused major networks to declare delays in content development, which in
turn caused a spike in sales activity in the entertainment industry. Shedding light on the
prevalence of herd behaviour during these periods is possible by quantifying the relationship
between trade volumes and stock price changes.

Regret Aversion

Throughout the strikes, investor decisions may have been impacted by regret aversion, a
behavioural bias motivated by the dread of possible future losses. Stock prices dropped sharply
even while a network's fundamentals held firm. An analysis of past financial data, especially
from networks experiencing similar labour disruptions, enables a statistical investigation of the
influence of regret aversion on investor decision-making.

Risk and Return (CAPM & Cost of Equity)

CAPM and Systematic Risk

A framework for comprehending how risk affects stock prices is provided by the Capital Asset
Pricing Model (CAPM). Major entertainment businesses face systemic risk due to greater
uncertainty during writers' strikes. Historical beta coefficients provide information on systematic
risk by gauging a stock's volatility relative to the overall market. An industry's overall systemic
risk rises in times of disruption, like the SAG/WGA strikes, creating more uncertainty. Systematic
risk shifts unique to the entertainment industry may be quantified by examining historical beta
coefficients after previous shocks. This relationship is expressed by the Capital Asset Pricing
Model (CAPM), which uses the formula anticipated Return = Risk-Free Rate + (Beta × Market
Risk Premium) to relate anticipated return to systematic risk, as seen in Figure 2.
 Fig 2. Formula of CAPM

The return on an investment with no risk is represented by the risk-free rate, and the additional
return that investors desire for taking on market risk is reflected in the market risk premium.
Higher volatility in entertainment equities is indicated by a rise in beta during sector
disruptions, which is consistent with the CAPM's forecast of a higher anticipated return.
Demanding more rewards for taking on more risk, investors raise the needed rate of return,
which lowers the present value of future cash flows and lowers stock prices. Simply put, CAPM
offers a useful framework for comprehending market dynamics by illuminating how shifts in
systematic risk affect stock prices during sector disruptions like the SAG/WGA strikes.

Cost of Equity

During writers' strikes, a network that depends mostly on scripted material may see a rise in
beta coefficient, which would affect equity costs. It is possible to track changes in the cost of
equity by using historical beta data collected during times of industry upheaval. An analysis of
the differences in equity costs before to, during, and following writers' strikes can shed light on
the long-term effects on network valuations.
Cumulative Abnormal Returns - CAR

CAR During Strikes

An effective technique in financial research is event study analysis, which makes it possible to
quantify how particular occurrences affect stock values. Cumulative Abnormal Returns (CAR)
can be computed using historical stock price data from previous writers' strikes. To comprehend
the durability of the market's response to the strikes, researchers might concentrate on a
network's stock during the strike time and in the days that follow. The network's stock price may
be significantly impacted beyond what would be predicted in a typical market if the CAR during
and after the strike period has a notable negative trend.

Statistical Significance

It is essential to use statistical tests, such t-tests, to assess the significance of reported decreases
during strikes. Through the application of these tests to past stock price data, scholars may
evaluate the statistical significance of the observed influence. For example, the t-test suggests
that the observed fall in stock prices is likely related to the strike event rather than random
chance if it shows a p-value below a specific level. Our comprehension of the extent and
statistical stability of the market's reaction to labour interruptions in the entertainment sector is
improved by this quantitative method.

Conclusion on the Long-Term Effects

In conclusion, the 2023 SAG/WGA strikes have had a lasting impact on significant Hollywood
streaming and media companies that goes beyond short-term changes in stock price. Market
dynamics during the strikes were significantly shaped by investor behaviour, which was
impacted by biases such as regret aversion and herd behaviour.

Using capital asset pricing model (CAPM) and cost of equity analysis, risk and return measures
show how systematic risk and beta shifts during strikes affect needed rates of return and, in
turn, stock prices. Event study analysis is a powerful technique for estimating the effect of
strikes on stock prices and establishing the statistical validity of observed trends. It focuses on
Cumulative Abnormal Returns and statistical significance.

Going forward, industry participants, investors, and stakeholders need to take note of the
insights gained from this investigation. Those who can successfully negotiate the difficulties of
labour relations, market dynamics, and investor behaviour will find themselves in a dynamic and
transforming entertainment scene. A thorough awareness of the history helps us to navigate the
present and influence the future of this important industry in the dynamic field of
entertainment economics.
Possible future projections
A potential strike by SAG (Screen Actors Guild) and WGA (Writers Guild of America) have
significant financial implications for both the entertainment industry and the AMPTP (Alliance of
Motion Picture and Television Producers). Here's a breakdown of the impacts and possible
future projections:

Impact on AMPTP, Studios and Union members:

Production Delays and Costs: Strikes leaded to significant delays in film and television
production. This resulted in increased costs due to extended production schedules, location
expenses, and equipment rentals.

Lost Revenue: Delayed or halted productions mean lost revenue for studios and production
companies. This have a direct impact on their financial performance for the year.

Contractual Penalties: Many contracts include penalties for delays caused by strikes. These
penalties will further increase costs for the studios.

Stock Market Response: The strike affected publicly traded companies within the AMPTP that
leaded to fluctuations in their stock prices. Investors may react to news of production delays
and potential revenue losses.

Reputation and Investor Confidence: Prolonged strikes negatively impacted the reputation of
studios and production companies. This leaded to decreased investor confidence, which
affected stock prices and long-term financial stability.

Lost Income: Members of SAG and WGA who participate in the strike lost income during the
strike period, which impacted their financial stability.

Healthcare and Benefits: Some union members rely on consistent work for access to healthcare
and other benefits. A strike disrupted these benefits.
Possible Future Projections:

Negotiation Outcomes: The outcome of the strike significantly impacted future negotiations. It
set new standards for wages, working conditions, and other industry-specific agreements.

Market Response: Investors and financial analysts closely monitor the situation, and the market
still react to news and developments related to the strike.

Loss of Revenue and Profits: The longer the strikes persist, the greater the financial losses for
the industry. Studios faced significant revenue reductions, impacting their profitability for the
affected period.

Job Losses and Economic Impact: Strikes leaded to temporary or even permanent job losses for
industry workers, including actors, writers, crew members, and related personnel. This, in turn,
have a broader economic impact on the communities where the industry operates. The strike,
combined with the Writers Guild strike that ended in September 2023, resulted in the loss of a
massive 45,000 jobs, according to reports. The U.S. Bureau of Labor Statistics released its
September jobs report on Friday and, while it was a strong report for the country (the U.S.
added 336,000 jobs overall, with the unemployment rate remaining steady), it also showed the
continued impact of the strikes.
According to the BLS report, the film and TV sector lost another 7,000 jobs in Sept., after
reporting 17,000 job losses in August. Employment in the sector “has declined by 45,000 since
May, reflecting the impact of labor disputes.”

Shifts in Consumer Behavior: Extended strikes altered consumer behavior. Audiences turn to
alternative forms of entertainment, impacting box office revenues, streaming subscriptions, and
advertising revenues for networks.

Recovery Period: Since strikes are resolved, there is a recovery period during which the industry
ramps up production to make up for lost time. This leads to a surge in spending and revenues.
Long-term Contract Adjustments: The terms negotiated in the aftermath of strikes set the
precedent for future contracts. This influenced compensation structures, residuals, and other
financial aspects for years to come.

Industry Reputation and Perception: Prolonged strikes impacted the reputation of the industry,
potentially affecting future investments, partnerships, and talent acquisition.

Legal and Administrative Costs: Strikes resulted in legal and administrative expenses for both
labor unions and management. These costs impact the financial outlook for both parties.

Streaming and Digital Platforms: The increasing prominence of streaming services and digital
platforms altered the financial landscape during and after strikes. These platforms experienced
shifts in demand and viewership patterns.

It's important to note that even though the strike ended more than a month ago, it is still
difficult to assess precise future forecasts. Given that new agreements have been created
between unions and AMPTP companies, it is still difficult to predict the future growth or decline
of company shares and earnings.

End of WGA Strike

Hollywood's prolonged and contentious writers' strike concluded on September 27, 2023, after
148 days, making it the second-longest strike in Hollywood's history.

The Writers Guild of America (WGA), representing writers, and the Alliance of Motion Picture
and Television Producers (AMPTP), representing major studios and production companies,
announced an agreement on September 24, following 146 days of labor stoppage.

The union's leadership voted to end the strike on September 26 and recommended the
membership to ratify the contract. The official end of the strike marked the commencement of
the membership's vote on October 2.

The agreement includes significant financial gains for writers, including higher minimum wage
and compensation, increased rates for pension and health funds, improvements in employment
terms, and team size regulations.
The agreement also addresses the use of artificial intelligence in content creation, allowing
writers to choose its use with company consent, but prohibiting its use to replace or reduce
writers and their compensation.

End of SAG Strike

Hollywood, that global symbol of glitz and glamour, was brought to a standstill for nearly four
months due to the longest strike in the history of the Screen Actors Guild — American
Federation of Television and Radio Artists (SAG-AFTRA). From July 14, 2023, to November 9,
2023, the American actors' union was embroiled in a labour dispute with the Alliance of Motion
Picture and Television Producers (AMPTP), leaving a profound impact on the entertainment
industry.

The strike's impact has caused delays and disruptions in TV and film production, particularly in
scripted content. The industry is anticipated to gradually return to normalcy, with certain talk
shows and late-night programs resuming production.

Conclusion

The financial losses incurred by workers, both within and outside Hollywood, have been
substantial, and studios have projected lower earnings for 2023 due to the strike's effects.

One of the most immediate and tangible impacts of the SAG-AFTRA strike is the staggering
economic loss it incurred. The strike, combined with the Writers Guild strike that ended in
September 2023, resulted in the loss of a massive 45,000 jobs, according to reports.

The U.S. Bureau of Labor Statistics released its September jobs report on Friday and, while it
was a strong report for the country (the U.S. added 336,000 jobs overall, with the
unemployment rate remaining steady), it also showed the continued impact of the strikes.
According to the BLS report, the film and TV sector lost another 7,000 jobs in Sept., after
reporting 17,000 job losses in August. Employment in the sector “has declined by 45,000 since
May, reflecting the impact of labor disputes.”

Moreover, the strike inflicted an estimated $6.5 billion in economic damage to the Southern
California region, which serves as the heart of the entertainment industry. This devastating
economic fallout had a ripple effect, affecting not only the actors but also thousands of
below-the-line workers, whose livelihoods depend on the thriving film and television production
industry. Many of these workers were forced to sell their homes or dip into their retirement
savings just to make ends meet, emphasising the grim reality of such protracted labour
disputes.