One Month Into Hollywood Shutdown, TV Producers Brace For Term-Deal Suspensions & Terminations

TV studios had been preparing for a work stoppage for months over the expiring WGA-AMPTP contract. In an ironic twist of fate, the stoppage came a little earlier, brought upon by a force nobody could’ve predicted.

A month into the mass Hollywood production shutdown over the coronavirus pandemic, anxiety among TV producers and staffers is running high. We’ve had the first major film and TV company, Disney, impose pay cuts and furloughs. Like was the case with layoffs in the aftermath of the Disney-Fox merger, the furloughs hit the combined film operations — mostly distribution, in light of movie theaters closures — but have not extended to the TV divisions, with no current plans to do so, I hear.

With all major media companies recently filing SEC statements warning of adverse material impact form the pandemic, it’s a matter of when, not if, other congloms follow Disney in implementing pay cuts and furloughs.

And then there are the hundreds of term deals, largely overall pacts, at the major TV studios. With production grinding to a halt, I hear studios have been engaging their writer-producers under overall deals, encouraging them to brainstorm new ideas and bring forward their passion projects.

But even with development and pitch/spec sales still going on — along with virtual writers rooms on existing shows and writing backup scripts for the pilots grounded by the health crisis —  the anticipation is that there will be reductions. They could come in the form of deal suspensions that would resume when the shutdown is over, or straight-out terminations.

Lists of pacts in danger of suspension or termination may already exist. With the WGA-AMPTP contract up May 1 and the drumbeat signaling a potential strike growing louder, the studios had been in preparation mode since late last year. Observers note that the volume of new overall deals had been going down in the past few months as studios have been reviewing their existing ones. Networks too have been giving fewer green lights that could be caught in a potential work stoppage.

“They all have been hunkering down,” one industry insider said.

The shock to the system from the COVID 19-related shutdown is way bigger and more far-reaching than what a potential writers strike would cause, but still, TV studios are a lot more prepared than they could’ve been for a global health crisis for which no Hollywood company could plan. They are ready to enforce the force majeure clauses in producers’ contracts — the unforeseen circumstances may not be what they had anticipated, but the result would be the same.

The top deals for sought-after talent are safe, but for the others all options are on the table, especially amid an overall deal bubble that sent prices skyrocketing over the past year or so. The 2007-2008 writers strike led to an overall deal bloodbath, with studios terminating pacts en masse. It took years for the overall deal market to return to pre-strike levels of volume and prices.

The coronavirus crisis is also throwing a wrench in WGA-AMPTP negotiations. The WGA does not have the biggest leverage at its disposal — a threat of a strike — because Hollywood production already has been stricken by the COVID-19 crisis. And the studios are in a far worse shape financially than they were just a month ago, before the pandemic hit in earnest.

As the two sides prepare to open negotiations amid the outbreak, industry insiders warn that, as bad as the impact of the health crisis on the scripted TV business has been, and as bad as the effect of a potential writers strike could be, a coronavirus-related shutdown followed by a writers work stoppage would be devastating and extremely hard to recover from, especially on linear, ad-supported television.

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