Streaming CEOs Rake in Record Compensation. Writers Strike.

Picket line formed by writers that are on strike in New York City. Outside on location of the Marvel Studios Disney+ TV show, Daredevil: Born Again (filming/working title of Out the Kitchen). Photo: Fabebk. Wiki Commons. Used with permission.

Streaming CEOs Rake in Record Compensation. Writers Strike.
 
 
Recently, I saw a story by Alec Baldwin, saying that he thought there might’ve been an entertainment executive who got paid $240 million in one year alone. A quarter of a billion dollar payday sounded outlandish, so he wanted someone to verify it. Well, the number is right. In 2022, Warner Bros. Discovery CEO David. M. Zaslav received total compensation of $246.6 million, which probably played into the boos he received at the Boston University Commencement on May 21, 2023. What’s even more interesting is that Warner Brothers Discovery went on to lose -$7.3 billion in 2022. Ari Emmanuel, the CEO of William Morris Endeavor received even more, with total compensation ringing up to a staggering $308.2 million.
 
Here’s a summary of what 8 different CEOs were compensated over the last three years.

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CEO Salary Has Skyrocketed
According to the Economic Policy Institute, CEO pay has “skyrocketed” by 1,322% since 1978. Over the same period, minimum wage went from $3.10/hour to $7.25/hour (DOL.gov). Some cities, like Los Angeles, California, have a minimum wage of $15/hour. According to MIT, a livable wage in LA starts at $21/hour.

So should CEOs be compensated at rates that are so much higher than the talent that gives them the content? How much does Jason Sudeikis make for Ted Lasso? How much did Jim Cameron make for Avatar? Those two are some of the top earners in terms of writing. So, how do regular writers fair in the equation? And how will the Writer’s Strike impact the earnings at the studios?
 
Average Compensation for Writers
According to the Writers Guild of America, writers make a median amount of about $250,000 for a first draft. At the same time, there is a wide disparity between the pay rate of the superstars and the crew around the table. According to the Writers Guild, 49% of TV writers are paid the minimum rate, and many members are not making a living wage.
 
It’s also important to understand that many writers are not earning an annual salary. For instance, Jason Sudeikis reportedly got paid $1 million an episode for season three of Ted Lasso. However, it took two years for the season’s 12 episodes to be aired. James Cameron scored a stunning payday for Avatar and Avatar: The Way of Water, reportedly at $350 million and $95 million respectively (with most of the compensation coming on Cameron’s cut of the performance success). Avatar came out in 2009, while the sequel didn’t hit theaters until 2022. If a normal writer has 13 years between projects, that median $250,000 for a script becomes a poverty wage. A gap between gigs could also put your pension and health care at risk.
 
When you consider that a livable wage in Los Angeles would be at least $115,000 a year for someone with two children, if a writer is steadily working, then s/he should be living better than just hand to mouth, but not by a lot. Basic needs would eat up half of the salary, leaving only a little cushion for emergencies, retirement plans, vacations and any type of splurge. Housing alone in Los Angeles can be $25,000 a year. If you have two kids, transportation could cost another $12,000 – more when gas prices soar – with childcare costs above $24,000. Newer writers are receiving $100,000 when their screenplay is sold.


Statistics show us that most Millennials and Gen Z are spending 30% or more of their income on housing.
 
Income Disparity, and Wealth Accumulation at the Very Top
CEOs are certainly making an outsized salary. However, they are also paying a lower tax rate, as most of their compensation comes in the form of stock, which is taxed at a much lower rate than earned income. Additionally, if we look at the Forbes Billionaire’s List, the top billionaires are all anti-union. A few companies, like Google, Amazon and Microsoft, have recently organized. However, there is a very strong correlation between who makes it to billionaire status, and how little of that trickles down to their employees. When labor costs too much, they move it to a developing world country – if they can. That’s not as easy to do with talent, like writing.
 
Writers and celebrities who produce hits and take something on the backend are the most successful. Michael Jordan owns a piece of the Nike Air Jordan brand. Hopefully Zoe Saldana gets a little something from Avatar, above her $8 million actor’s fee.
 
The Profitability Argument
CEOs argue that margins and profitability are lean. As I mentioned at the top of this article, Warner Bros. Discovery lost -$7.3 billion in 2022. However, Disney earned $3 billion and Netflix earned $4.5 billion. Below is a Stock Report Card on some of the top studios.
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As you can see, no studio comes close to Apple’s 25% profit margins (with iPhone and Apple watch factories in China). With a potential recession in 2023, studios are, sadly, laying people off. Variety reported that Paramount will be laying off 25% of its staff. Paramount isn’t the only studio cutting costs. Disney is laying off 7,000 people in the U.S. Amazon Studios is also trimming back.
 
How Will the Strike Affect the Studios?
The studios cannot charge monthly streaming fees for reruns. CEOs will still receive rich compensation packages, in the tens of millions. However, their bonus compensation and stock awards might not be as robust as they were in 2022. The longer the Writers’ Strike extends, the uglier the studio quarterly earnings reports will look in the 2nd half of 2023.
 
Bottom Line
Income disparity, wage stagnation and inflation have hit a lot of workers across the land. While A-list writers can afford to live in La La Land, many gig writers have gaps in their employment, and are going to have trouble making ends meet. When life doesn’t add up and employees can’t make a living by working, we end up with lofty levels of people who stop looking for work, a very tight labor market and the potential for social unrest, like strikes. With margins pretty tight, stiff streaming competition and a potential 2023 recession, studios are cutting costs. Will the writers and the studios find common ground soon? It’s in everyone’s best interest, including the overpaid CEOs.
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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021. 
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