Globes, Oscars: The cost of cancellation

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Hollywood Insider spoke this morning with the Los Angeles County Economic Development Corporation’s chief economist Jack Kyser, who explained how the ongoing writers’ strike, the resulting cancellation of the Golden Globes, and the prospect of a year without the Academy Awards impacts those who count on Hollywood for a paycheck.

HOLLYWOOD INSIDER: What kind of an impact is the cancellation of the Golden Globes going to have on the local economy, and what will happen if the Academy Awards are canceled?
JACK KYSER: What we’re looking at is an economic impact from the Golden Globes of about $70 to $80 million each time the event is held, and with the cancellation, there’s probably a lot of people looking at refund policies, because the production costs were already spent with a lot of people planning on parties.

And the parties account for a big piece of the pie?
Oh yeah. It’s a huge impact. We count at least five parties that have been canceled, and that comes to about $2.5 million. And the pain is being spread to a lot of unexpected sectors of the economy. For example, the banquet staff at the hotel: They won’t be working that night, won’t be earning money in tips. The people that would be working the parties, the same situation. So you’ve got that impact.

Do you know which parties have been canceled?
NBC-Universal, HBO, Warner Bros-In-Style, The Weinstein Company, and Fox-Searchlight.

Even for the smaller parties that are going on, I would imagine stars aren’t going to be really excited about them without the big star-studded event.
Oh yeah. This is not going to be something that people want to watch. As somebody said, watching a press conference is almost like watching paint dry.

addCredit(“Ric Francis/AP”)

What about the Academy Awards?
We’ve done more research on that, and that’s around $130 million, and
it has unexpected impacts. For example, there’s a firm in Los Angeles
called ABS by Alan Schwartz,
and what he does is knock-offs of the most popular gowns on the red
carpet, and so if there’s no red carpet, there’s not business for Alan
Schwartz. So it’s just spreading.

What’s the cumulative effect of the writers’ strike so far?
Right
now the impact of the lost wages [of WGA members and below-the-line
workers], when you apply that ripple factor, it’s about $1.4 billion.

Do you know what these cancellation policies are like? There must be a deposit that’s lost in the process.
Yes, there is a deposit that is lost in the process. Literally,
when you’re blocking out a room for a party, there’s always the setup,
so you’re taking it out of circulation for at least three days so there
would be a significant cancellation policy. There’s pain for a lot of
people out there.

This is the first strike that’s really affected the awards shows,
with the exception of a strike in 1980 that affected the Emmy’s. Do you
think this is going to give the public more strike fatigue, and do you
think the tide is going to be turning on the WGA because of all of
these lost jobs?

Yeah, I think the problem for the production
workers is that they have to work a certain number of hours per year to
qualify for health and retirement benefits. There’s pain there, and I
think you are going to start to see the WGA probably lose some
sympathy. What they’re doing with this policy of not allowing what you
call the industry award shows — the Golden Globes and the Academy
Awards — is taking away a promotion venue for the studios. A lot of
people are expecting prestige films to garner most of the nominations,
and generally those [movies] don’t bring in a lot of the box office.
They’re trying to hit the studios in their pocketbooks.

Do any of your numbers or predictions account for advertising that would be lost in airing these shows?
NBC estimates that they’re going to lose about $14 to $15 million in ad revenues.

It doesn’t seem like people really thought this would go into the New Year.
And that negotiations would be so bitter. By the time SAG [contract
negotiations] come up, I think the hash will be settled because I think
the DGA will start to negotiate [before then] and we’ll figure out if a
pattern is being set. If a pattern does seem to be set [by DGA talks],
then both SAG and WGA will sort of be forced to go along with it.

Has this provoked any movement from Gov. Schwarzenegger?
No, the governor has his hands full up in Sacramento. He did this State
of the State and [he’s] looking at a $14 billion-plus state budget
deficit, so he has other things to look at. Some people have asked
about [Los Angeles] Mayor Villaraigosa, and here again, not much
movement.

Do you think this is going to have any affect on the presidential candidates?
No. If they come to Los Angeles they may talk about it, but remember,
this industry is very Los Angeles-centric, so if you’re trying to carry
California, you wouldn’t focus on this.

What about the Academy Awards?
We’ve done more research on that, and that’s around $130 million, andit has unexpected impacts. For example, there’s a firm in Los Angelescalled ABS by Alan Schwartz,and what he does is knock-offs of the most popular gowns on the redcarpet, and so if there’s no red carpet, there’s not business for AlanSchwartz. So it’s just spreading.

What’s the cumulative effect of the writers’ strike so far?
Rightnow the impact of the lost wages [of WGA members and below-the-lineworkers], when you apply that ripple factor, it’s about $1.4 billion.

Do you know what these cancellation policies are like? There must be a deposit that’s lost in the process.
Yes, there is a deposit that is lost in the process. Literally,when you’re blocking out a room for a party, there’s always the setup,so you’re taking it out of circulation for at least three days so therewould be a significant cancellation policy. There’s pain for a lot ofpeople out there.

This is the first strike that’s really affected the awards shows,with the exception of a strike in 1980 that affected the Emmy’s. Do youthink this is going to give the public more strike fatigue, and do youthink the tide is going to be turning on the WGA because of all ofthese lost jobs?
Yeah, I think the problem for the productionworkers is that they have to work a certain number of hours per year toqualify for health and retirement benefits. There’s pain there, and Ithink you are going to start to see the WGA probably lose somesympathy. What they’re doing with this policy of not allowing what youcall the industry award shows — the Golden Globes and the AcademyAwards — is taking away a promotion venue for the studios. A lot ofpeople are expecting prestige films to garner most of the nominations,and generally those [movies] don’t bring in a lot of the box office.They’re trying to hit the studios in their pocketbooks.

Do any of your numbers or predictions account for advertising that would be lost in airing these shows?
NBC estimates that they’re going to lose about $14 to $15 million in ad revenues.

It doesn’t seem like people really thought this would go into the New Year.
And that negotiations would be so bitter. By the time SAG [contractnegotiations] come up, I think the hash will be settled because I thinkthe DGA will start to negotiate [before then] and we’ll figure out if apattern is being set. If a pattern does seem to be set [by DGA talks],then both SAG and WGA will sort of be forced to go along with it.

Has this provoked any movement from Gov. Schwarzenegger?
No, the governor has his hands full up in Sacramento. He did this Stateof the State and [he’s] looking at a $14 billion-plus state budgetdeficit, so he has other things to look at. Some people have askedabout [Los Angeles] Mayor Villaraigosa, and here again, not muchmovement.

Do you think this is going to have any affect on the presidential candidates?
No. If they come to Los Angeles they may talk about it, but remember,this industry is very Los Angeles-centric, so if you’re trying to carryCalifornia, you wouldn’t focus on this.

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Comments (62 total) Add your comment
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  • Mozz

    while i find the subject fascinating, i have to disagree with the “turning on the WGA!” anyone how has done a little bit of research knows that if the producers come to the table ready to negotiate internet agreements, the oscars will be on. I praise and support the WGA, by cancelling the Globes and hopefully cancelling the oscars, producers may come to the realization that without writers, hollywood wouldn’t exist at all. Which is a thought they’d dared not entertain until this moment.

  • Jelana

    I’ll miss the awards shows, but good for the WGA! If you have that kind of leverage, use it!

  • Hanna

    Great Article!

  • bonnie

    SAG Awards show ought to back out as well. Our writers are our most prized artists, and have received so little recognition, control over their work and a few schekels for their efforts, they’ve put this off far too long. If I were involved in these shows, I wouldn’t show, and have little respect for the actors who will.

  • CC

    Love it. As much as it sucks that so many hard-working people are being financially affected by this strike, It’s even better to see the AMPTP taking the hit too. They’re the ones with the power. They’re the ones that walked away from the table. They’ve earned all the negative attention they get and they’re the ones responsible for hurting the Los Angeles economy.

  • ceej

    It just goes to show you how much money Hollywood wastes throwing itself a stupid party. $1 billion could save out school system or feed all the displaced downtown homeless folks.
    Team WGA.

  • ceej

    out=our

  • qwerty

    I think this whole thing is unfair to the people whom are out of work because of the outright greed of the WGA. While the producers should be willing to come to the table and make an offer that can be accepted, the WGA has no right to keep an entire industry hostage while it tries to get a few cents on the dollar more for their work. If it were me, I’d fire them all and hire writers who would kill for the chance to work.

  • Jame$ Ford

    Just pay the damn writers already… i need my full season of LOST!!!!!!

  • J

    I think it is the wake-up call that the entertainment industry needs, and I think the WGA should stay on strike so that the American people fully appreciate how little the WGA is missed, and how much they can enjoy their life WITHOUT WGA writers. It is time that the entertainment industry is more diversified and the same, tired, pathetic melodramas and sitcoms that WGA and TV/film industry keeps pumping out is disgraceful. America simply does not need them.

  • J

    99 percent of America would not miss Hollywood if it was no longer existed as the monolithic, low-quality, trashy industry it currently is today. Good riddance.

  • dmatt

    what happens when it is settled and no one is watching tv anymore? It took 4 years to rebuilt when Baseball was on strike in 1994. Hockey has never recovered. I believe this strike will have ramifications for years. Everyone will be hurt in the end. That includes WGA.

  • John K

    Strikes are almost never, ever the best option to resolve a dispute, and the writers are just digging themselves a deeper hole every day this goes on. Even if this was settled today the writers will come out of this at a loss versus where they were when this started. As I said somewhere else, the studios and the producers put up a lot of money up front to make a TV show or a movie and they are the ones who stand to lose millions if it doesn’t work out. It isn’t odd then that they are also the ones to reap in the millions if it does succeed. The writers, on the other hand, risk very little up front so why is it shocking that they get so much less of the reward?
    And now the strike is really impacting people that have no direct stake in the dispute. Just an awful affair right now and no end in sight. Shame on both parties for not compromising enough and shame for even having the strike to begin with.

  • Nomers

    This is an industry of based entirely on dollars and box office revenue. And while I think it’s ridiculous how much studio heads make, has anyone thought of how much more we’re going to have to pay once the writers get what they want. Are episodes of “The Office” still going to cost $1.99 on iTunes, or are we going to have to pay more so the writers get their share of the pie? How about throwing our support behind real causes,like the homeless people still trying to survive in New Orleans, or brining our troops home.

  • kC

    No sympathy for WGA anymore! at all!

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