SAG-AFTRA Strike “Much More Disruptive” To Media Biz Than WGA Walkout, Wall Street Analyst Says, Creating “Bad Combination” Of Production Halt, Weak Ad Market And “Poor PR”

deadline.com:

While the 70-day-old WGA strike has been an “annoyance” for entertainment companies, in the view of one Wall Street analyst, the SAG-AFTRA walkout will be “much more disruptive.” Tim Nollen, a veteran media analyst with Macquarie Equity Research, issued a note to clients today on the impact of the first strike by writers and actors since 1960.

Media and tech stocks have pulled back a bit today, with Disney and Netflix shares off 2% and Comcast down 1%, but overall share prices and broader markets are not yet showing any severe reaction to the picketing.

That could change in the trading days to come, Nollen predicts. “Now, TV and movie filming grinds to a halt,” the analyst wrote. “Pay including royalties, working conditions including benefits, and terms around the use of generative AI are the sticking points, driven by wholesale changes that streaming has wrought in content production and consumption — writers and actors are often paid a lump sum only for the show, not for residuals, like windowing of linear TV or box office films.

The timing will affect many of this coming season’s scheduled scripted dramas on TV, which may ironically drive even more viewers to streaming services, where lead times can be 1-2 years for episodic series and hence won’t be affected until next year. “And on top of a weak TV ad market, media network groups face a bad combination of negative trends in both traditional subs and advertising, higher labor cost demands in linear and streaming production, and likely poor PR.