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Speaker 1: Welcome to Daily Variety, your daily dose of news and

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Speaker 1: analysis for entertainment industry insiders. It's Wednesday, January fourteenth, twenty

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Speaker 1: twenty six. I'm your host, Cynthia Littleton. I am co

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Speaker 1: editor in chief of Variety alongside Ramin Setuda. I'm in

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Speaker 1: la He's in New York, and Variety has reporters around

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Speaker 1: the world covering the business of entertainment. In today's episode,

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Speaker 1: we'll hear from Variety's Gene Mattis as he breaks down

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Speaker 1: the schedule and the issues on the table for this

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Speaker 1: year's Hollywood union negotiations. The contract bargaining is set to

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Speaker 1: begin February ninth, when sag after sits down with the

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Speaker 1: Alliance of Motion Picture and Television Producers. But before we

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Speaker 1: get to that, here are a few headlines just in

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Speaker 1: this morning that you need to know. Fresh off Big

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Speaker 1: Golden Globe wins for Adolescents, Matriarch Productions has signed a

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Speaker 1: first look deal with Disney Plus. The British production company

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Speaker 1: is led by Stephen Graham, who starred Adolescence and his

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Speaker 1: wife Hannah Walters. My colleague Alex Ritman in London had

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Speaker 1: the scoop the Vinyl comeback is real, thanks in large

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Speaker 1: part to Taylor Swift. Sales of vinyl albums rose nearly

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Speaker 1: nine percent last year, according to Luminate's year end report

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Speaker 1: on the Music Biz, Swift's album The Life of a

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Speaker 1: Showgirl moved an astounding one point six million units. The

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Speaker 1: next biggest seller was Sabrina Carpenter's Man's Best Friend, with

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Speaker 1: two hundred and ninety two thousand units sold. Euphoria Really

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Speaker 1: is coming back to HBO. The first trailer is out

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Speaker 1: touting the show's third season premiere on April twelfth. All

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Speaker 1: of these stories and so much more can be found

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Speaker 1: on Variety dot com right now. And now it's time

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Speaker 1: for conversations with Friday journalists about news and trends in

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Speaker 1: show business. Gene Mattis, Variety's senior media writer, joins me

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Speaker 1: to unpack the issues in the timeline for this year's

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Speaker 1: union contract negotiations for sag AFTRA, the Writer's Guild of

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Speaker 1: America and the Director's Guild of America. Just three years ago,

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Speaker 1: the town was on strike. Of course, a whole lot

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Speaker 1: of things have happened since then, as we discuss. Gene Mattis,

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Speaker 1: thanks so much for joining me.

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Speaker 2: Happy to do it.

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Speaker 1: Looking out ahead now as the negotiations calendar is coming

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Speaker 1: into focus, there are some unusual moves this time around,

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Speaker 1: and that starts with SAG AFTRA is going to be

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Speaker 1: the first to sit down, with the date of February

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Speaker 1: ninth on the calendar to sit down with the Alliance

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Speaker 1: of Motion Picture and Television Producers. Usually it's the Director's

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Speaker 1: Guild of America. It's the Helmers that are out first.

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Speaker 1: Let's start with SAG after it. And what do you

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Speaker 1: think is influencing them to be out early on February

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Speaker 1: ninth when their deal expires on June thirty.

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Speaker 2: I think the consensus is that there's still a lot

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Speaker 2: of more work to be done on AI. Obviously it's

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Speaker 2: much more of a tangible thing. Now. You saw the

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Speaker 2: Open AI deal with Disney not too long ago, so

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Speaker 2: that's really starting to be less of an abstract concern

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Speaker 2: and more of a tangible concern. We saw the Tilly

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Speaker 2: Norwood thing, which was ninety five percent hype, but there

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Speaker 2: was five percent of substance to it, and that caused

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Speaker 2: a lot of concern. And then the obviously the Disney

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Speaker 2: Open AI thing, and when you look at the details

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Speaker 2: of that, like they very sort of consciously, they're really

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Speaker 2: carved around the rights that zag Aftra secured for itself

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Speaker 2: last time and made sure that we're not going to,

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Speaker 2: you know, do likenesses, and we're not going to do

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Speaker 2: human representations, and it's all going to be animated characters.

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Speaker 2: But still, if that takes off, if that becomes a

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Speaker 2: thing that people enjoyed doing with Darth Vader and Yoda

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Speaker 2: and so on, like, why wouldn't they try to expand

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Speaker 2: it to the things that involve recognizable human actors. Then

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Speaker 2: you know, that's getting into a territory that's obviously a

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Speaker 2: very major concern for a lot of actors of like

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Speaker 2: am I competing with myself?

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Speaker 1: The settlement that allowed the business to go back to

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Speaker 1: work in twenty twenty three involved the use of actors

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Speaker 1: from existing material. If a studio wanted to use an

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Speaker 1: actor's license from existing material, they would need to get

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Speaker 1: both consent and some form of compensation. That was a

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Speaker 1: tenuous truce. But do you have any anecdotal information about

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Speaker 1: how that's gone. Are people getting those phone called are

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Speaker 1: extras getting their one thousand dollars or fifteen hundred dollars

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Speaker 1: as was spelled out in the last contract.

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Speaker 2: That is a good question. What I'm aware of certainly

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Speaker 2: is on the synthetic front, which has gone to the

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Speaker 2: sort of Tilly Norwood dynamic where you're creating an actor

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Speaker 2: out of thin air that's obviously based on thousands or

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Speaker 2: hundreds of thousands of performances of other actors, and like

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Speaker 2: to do the people whose work went into that training

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Speaker 2: data stay get a compensation for that, And the answer

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Speaker 2: as of now is no. But they also did negotiate

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Speaker 2: for at least notification of the union if studios were

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Speaker 2: going to do something like that, and so far none

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Speaker 2: has notified the union that that is actually a thing

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Speaker 2: that they are doing. And it's a question for political

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Speaker 2: leaders too in Washington, d C. And Sacramento and so on.

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Speaker 2: So whether that gets resolved in the bargaining table, I'm

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Speaker 2: not sure, but I can certainly foresee that people will

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Speaker 2: try to get something more on that front.

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Speaker 1: It's not gone unnoticed that big Tech has the president's

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Speaker 1: ear and seemingly vice versa.

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Speaker 2: And then on the streaming front, I feel like they

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Speaker 2: wanted a much more aggressive, ambitious, lucrative arrangement than they

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Speaker 2: ended up settling for, and so the question is can

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Speaker 2: they go back and get a little bit more this time.

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Speaker 1: Around, Especially they're sitting down at a time when Netflix

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Speaker 1: is poised to swallow up Hollywood's single largest studio, it

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Speaker 1: would seem like making big gains in that streaming residual

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Speaker 1: is going to be more elusive than ever.

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Speaker 2: And I think obviously it all comes down to leverage.

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Speaker 2: I'm sure do have a more credible strike threat than

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Speaker 2: they have had before, and neither side ever wants a strike,

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Speaker 2: But does that remove leverage from one side more than

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Speaker 2: the other is sort of an open question?

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Speaker 1: Am I right in thinking that when SAG after sits

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Speaker 1: down with the AMPTP, they are going to need some

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Speaker 1: kind of an influx to shore up their health plan.

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Speaker 2: That will certainly be a topic of discussion. I feel

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Speaker 2: like it's a much more urgent topic, honestly for the

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Speaker 2: Writer's Guild and to maybe a little lesser extent for

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Speaker 2: the Director's Guild, but really for the Writer's Guild. We

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Speaker 2: wrote about a month or two ago that the guild,

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Speaker 2: the Writer's Guild a health plan, lost one hundred and

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Speaker 2: twenty million dollars in two years, and one of those

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Speaker 2: years was the strike year. So you can understand why

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Speaker 2: nobody was working and they were still getting their health coverage,

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Speaker 2: so obviously you would run a deficit. But then when

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Speaker 2: everybody went back to work, they were still losing money

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Speaker 2: in the health plan. That's obviously the function of there's

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Speaker 2: just a lot less work happening and there's still a

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Speaker 2: lot of people on the plan and the AMPTP honestly

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Speaker 2: their number one goal going into this is about addressing

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Speaker 2: the benefits and how can we restructure the benefits, And

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Speaker 2: they put out a rather lengthy and detailed document going

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Speaker 2: through how all the union sag WA, DGA, all of

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Speaker 2: them have pretty good health benefits. So there's a lot

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Speaker 2: of things that they would like to talk about on

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Speaker 2: the benefit front that could get really thorny because anytime

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Speaker 2: the union hears anything that smells like rollbacks, that's a

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Speaker 2: fighting word.

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Speaker 1: That's a flashpoint. And so seguin in here to talking

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Speaker 1: about the Writers Guild of America. They are scheduled at

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Speaker 1: this point to start March sixteenth and for a contract

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Speaker 1: that ends May first.

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Speaker 2: Yeah, they've definitely told their members that the health plan

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Speaker 2: is going to be a headline issue. Traditionally, they talk

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Speaker 2: for a couple of weeks, they take a couple week break.

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Speaker 2: They might have a strike authorization vote during that break,

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Speaker 2: then they go back to the table. It's a very

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Speaker 2: ritualized process.

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Speaker 1: And in terms of AI for the writers, they did

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Speaker 1: come away from twenty twenty three with the explicitly stated

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Speaker 1: that writing is work done by humans. Do you think

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Speaker 1: has there been any end run around some of those protections.

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Speaker 1: I think we would have heard if there had been

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Speaker 1: anything significant. But have you heard anything anecdotal about that

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Speaker 1: that explicit language is being disregarded.

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Speaker 2: The concern, again, I think is on the training side.

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Speaker 2: We'll see what they come up with in terms of proposals.

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Speaker 2: But the big thing they didn't get was some sort

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Speaker 2: of control over whether their work could be used to

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Speaker 2: train AI models. And now, in the three years since

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Speaker 2: we've had some studios working with AI companies, I think

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Speaker 2: that is still the big unfinished business on that issue.

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Speaker 2: From the writer's skilled standpoint, they got a deal that

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Speaker 2: was like, if company policy allows it, you can use

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Speaker 2: AI in your writing and it just won't affect your pay.

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Speaker 2: That was the big thing.

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Speaker 1: And so of the big three, the last to go,

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Speaker 1: which is usually the first to go, but this time

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Speaker 1: around it'll be The DGA is scheduled to start talks

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Speaker 1: on May eleventh, with again the contract expiring June thirtieth.

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Speaker 1: Did it surprise you that they are going to be

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Speaker 1: the last to go this I'm around.

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Speaker 2: Tag After is while they're going first. I don't know

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Speaker 2: that anybody expects that they will actually finish before the

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Speaker 2: writers start. I mean it's possible, but I don't think

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Speaker 2: it's particularly likely. So what you probably have is sag

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Speaker 2: After talks for a month or so with a big,

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Speaker 2: long list of issues, and then they go on a break,

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Speaker 2: they talked to WGA, they talk to DJA, and then

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Speaker 2: they come back to sag After at the very end.

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Speaker 2: So the whole idea in the past has been the

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Speaker 2: DJA sort of comes in early and sets the pattern

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Speaker 2: for the others. Well, that went out the window in

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Speaker 2: twenty twenty three. Oh Now everybody's going to sort of

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Speaker 2: be focused on their own thing, focused on what their

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Speaker 2: own individual priorities are, and it may all align in

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Speaker 2: the end.

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Speaker 1: Given the great leaps and advances in generative AI in

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Speaker 1: video form, the ability for AI tools to create a

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Speaker 1: quick shot so that you don't have to send a

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Speaker 1: second unit out on location to grab that sunset you

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Speaker 1: can just recreate that. Is that an air where you

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Speaker 1: could cut a quick corner that would in the aggregate

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Speaker 1: and in the long term have a real impact on

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Speaker 1: jobs or are you hearing people talk about that from

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Speaker 1: the director's point of view.

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Speaker 2: Honestly, the directors have been the least concerned of the

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Speaker 2: three about AI, and they did get AI terms. They

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Speaker 2: were in fact the first union to get AI terms

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Speaker 2: because they were the first one to get a deal

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Speaker 2: last time, and their terms were basically, we get consultation,

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Speaker 2: and they didn't push for anything more aggressive than that.

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Speaker 2: And you know, it's tricky with this AI stuff. Of like,

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Speaker 2: there's definitely a downside in terms of a loss of jobs,

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Speaker 2: there's also an upside in terms of if things are

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Speaker 2: more efficiently done or more cheaply done, then you can

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Speaker 2: do more things. And so weighing those things, you don't

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Speaker 2: want to throw the baby out with the bathwater, right,

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Speaker 2: You want to capture the upside. You want to protect

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Speaker 2: yourself from the downside. So I feel like the DGA

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Speaker 2: of all three of those, is sort of most inclined

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Speaker 2: to embrace that thinking that you know this is not

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Speaker 2: all about and that there's potentially some value if we

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Speaker 2: could do this thing more efficiently. We should mention by

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Speaker 2: the way that MPTP has floated this idea of doing

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Speaker 2: a five year contract, which seems a little far fetched,

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Speaker 2: but stranger things have happened, and they would be willing

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Speaker 2: to pay a lot of money clearly to do that,

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Speaker 2: to buy an extra bit of labor piece as well.

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Speaker 2: So that's an interesting trible and that's been floated on their.

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Speaker 1: Part, talking specifically about the AI front. In this environment,

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Speaker 1: five years that would really seem to be a hard

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Speaker 1: sell because we've seen things change and grow so much

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Speaker 1: in basically two years since the previous deal. That would

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Speaker 1: seem they would have to put a lot of money

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Speaker 1: and a lot of incentives on the table. At this

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Speaker 1: time when a lot of the studios are quite frankly hurting,

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Speaker 1: Paramount is just starting a rebuilding process, Warner Brothers is

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Speaker 1: very much in a state of uncertainty. All of this

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Speaker 1: just makes for a very very difficult environment to do

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Speaker 1: anything that's like a real radical break with the past.

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Speaker 1: They would really have to have a angible sack of

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Speaker 1: money on the table to say this was worth committing

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Speaker 1: to this, because they would be committing themselves out to

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Speaker 1: twenty thirty one, which really does sound like an eternity.

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Speaker 1: You know, on the AMPTP side employer side, they have

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Speaker 1: new leadership in Greg Hessinger, who is not a stranger

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Speaker 1: to Hollywood. He had been at AFTRA four years. Any

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Speaker 1: sense of how that new dynamic there is going to

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Speaker 1: play and anything else that you think is on the

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Speaker 1: amptp's agenda.

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Speaker 2: I think what makes this year unusual. You know, remember

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Speaker 2: the pandemic year of twenty twenty, where they're basically they

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Speaker 2: punted every significant issue for three years because there was

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Speaker 2: literally zero leverage because nobody was working. And so similar

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Speaker 2: to that, we're in a position where there is very

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Speaker 2: little work happening currently and nobody wants to snuff out

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Speaker 2: what little embers of recovery might be out there. And

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Speaker 2: so that might argue for a less contentious negotiation on

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Speaker 2: both but once the negotiation gets underway, they are dealing

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Speaker 2: with very thorny issues, particularly on the healthcare front. Will

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Speaker 2: be a tough sell to members to get them to ratify.

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Speaker 2: You can imagine asking people to ratify a rollback in

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Speaker 2: health coverage is not going to be easy for any union.

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Speaker 2: They're going to want to say we fought tooth and

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Speaker 2: nail and here's what we got to offset that. So

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Speaker 2: it'll be tough. It's a union negotiation, and feelings are

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Speaker 2: still somewhat wrong, I'm sure from the strike three years ago.

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Speaker 1: Yeah, in hindsight, it's very clear that twenty twenty three

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Speaker 1: was the last throes of the PEAKTV boom that kept

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Speaker 1: so many people working and led to related frustration and

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Speaker 1: that really really deflated and so this time around the

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Speaker 1: dynamics are very different. So wow, a lot to watch for.

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Speaker 1: Thank you Gene for putting this all in context as

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Speaker 1: it's little less than a month away for SAG after

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Speaker 1: the sit downs.

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Speaker 2: Yep, absolutely, we'll stay.

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Speaker 1: On as we close out today's episode. Here's a few

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Speaker 1: things we're watching for another turn of the screw, and

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Speaker 1: the Warner Brothers Discovery sale is coming as Netflix is

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Speaker 1: poised to adjust its bid for the company. They're about

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Speaker 1: to turn to an all cash deal rather than a

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Speaker 1: mix of cash and stock. That definitely reflects the pressure

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Speaker 1: being exerted by Paramount's Guidance, which is still fighting to

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Speaker 1: get a hold of Warner Brothers Discovery on multiple fronts.

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Speaker 1: The price for Netflix shares have wobbled it since the

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Speaker 1: formal deal was announced on December fifth, so shifting to

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Speaker 1: all cash takes that variability away. We're gearing up for

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Speaker 1: Sundance next week, but south By Southwest in Austin, Texas

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Speaker 1: is also getting its lineup together for March. Margo's Got

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Speaker 1: Money Problems, the latest TV series from David E. Kelly

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Speaker 1: in A twenty four, will be among the big premieres

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Speaker 1: That show stars El Fanning and Nicole Kidman. We love

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Speaker 1: to hear from our listeners, so please send thoughts, gripes,

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Speaker 1: and other feedback about Daily Variety to podcasts at Variety

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Speaker 1: dot com. Before we go, congrat to Amy Homa. She's

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Speaker 1: just been promoted to Director and President of the Academy

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Speaker 1: Museum of Motion Pictures and the Academy Collection. She oversees

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Speaker 1: all the gems that are held in the Academy of

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Speaker 1: Motion Pictures Museum as well as the Margaret Herrick Library.

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Speaker 1: Thanks for listening. This episode was written and reported by

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Speaker 1: me Cynthia Littleton, with contributions from Gene Modis, Stick Snack't

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Speaker 1: hick Picks. Please leave us a review at the podcast

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Speaker 1: platform of your choice, and please tune in tomorrow for

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Speaker 1: another episode of Daily Variety,