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Hollywood directors reach deal with studios as writers strike enters sixth week

The Directors Guild of America (DGA) reached a tentative deal on a new three-year contract with the Alliance of Motion Picture and Television Producers (AMPTP), which bargains on behalf of studios including Netflix, Amazon, Apple, Disney, Warner Bros. Discovery, NBCUniversal, Paramount, and Sony.

The agreement, reached over the weekend, includes gains in wages and benefits, a 76% increase in foreign streaming residuals (a type of royalty payment), a "groundbreaking agreement" confirming that AI is not a person and therefore cannot perform the duties of DGA members, and the banning of live ammunition on sets after the October 2021 shooting death on the set of "Rust."

The tentative deal will be submitted for board approval on Tuesday where further details will be revealed.

The Director's Guild of America reached a tentative agreement with the Alliance of Motion Picture and Television Producers as the writers' strike enters its sixth week
The Director's Guild of America reached a tentative agreement with the Alliance of Motion Picture and Television Producers as the writers' strike enters its sixth week (ASSOCIATED PRESS)

"In these negotiations we made advances on wages, streaming residuals, safety, creative rights and diversity, as well as securing essential protections for our members on new key issues like artificial intelligence – ensuring DGA members will not be replaced by technological advances," Jon Avnet, chair of the DGA’s Negotiations Committee, said in a statement.

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The news comes as Hollywood writers, represented by the Writers Guild of America (WGA), enter their sixth week of strikes. The WGA began its strike in early May in protest of higher wages and other demands amid the streaming boom. That set off a production shutdown across the entire industry.

Moody's has said that some media companies could see credit ratings suffer as a result of the strike, with studio executives like Paramount Global (PARA) CEO Bob Bakish warning it could impact the company's bottom line the longer it continues.

In a statement provided to Yahoo Finance, the WGA said while it congratulates the DGA on reaching an agreement, "the AMPTP will not be able to negotiate a deal for writers with anyone but us," adding the studios' "divide and conquer strategy won’t work this time."

"As always, we will see you out on the picket lines this week,” the union said.

Bank of America analyst Jessica Reif Ehrlich wrote in a note to clients on Monday the DGA agreement does not necessitate a WGA deal due to the differences in their demands.

"Studios will benefit from a temporary (i.e. a few months) but not prolonged strike as they are prepared for such a pause due to a robust backlog of content while the strike also enables a pare back in content spending," she added. "If more prolonged, we anticipate studios to lean into unscripted shows and internationally produced content."

Photo by: NDZ/STAR MAX/IPx 2023 6/1/23 Members of the Writers Guild of America (WGA) and its supporters picket outside of Warner Bros Discovery, Inc. on June 1, 2023 in New York City.
Photo by: NDZ/STAR MAX/IPx 2023 6/1/23 Members of the Writers Guild of America (WGA) and its supporters picket outside of Warner Bros Discovery, Inc. on June 1, 2023 in New York City. (NDZ/STAR MAX/IPx)

'Doesn't make any sense'

Chris Keyser, co-chair of WGA’s Negotiating Committee, told Yahoo Finance's Akiko Fujita streaming giants like Netflix (NFLX) have fundamentally changed the way they both employ and pay writers.

“A bunch of tech companies came in during the streaming era and imposed a kind of efficiency and productivity onto the creative process that doesn’t make any sense,” Keyser said. “They pay us by the week and say, give us your great idea and go home. Doesn’t work anymore.”

In a statement to Yahoo Finance, the AMPTP said: “Member companies remain united in their desire to reach a deal that is mutually beneficial to writers and the health and longevity of the industry, and to avoid hardship to the thousands of employees who depend upon the industry for their livelihoods.”

SAG-AFTRA — the union which represents approximately 160,000 actors, announcers, recording artists, and other media professionals around the world — is set to enter its negotiations with the AMPTP on Wednesday. It is currently conducting a strike authorization vote and will announce the results on Monday.

In a statement, SAG-AFTRA said the DGA deal does not influence any of its own negotiating tactics.

"Our bargaining strategy has never relied upon nor been dependent on the outcome or status of any other union’s negotiations, nor do we subscribe to the philosophy that the terms of deals made with other unions bind us," said Duncan Crabtree-Ireland, executive director at SAG-AFTRA.

"We continue to stand in strong solidarity with the members of the WGA and with their strike, and we congratulate the DGA on their bargaining and look forward to reviewing the detailed terms of their agreement as soon as possible."

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com

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