Disney Sticks It to Writers and Actors
The mega studio cancels shows to halt residuals to striking workers and Trump-era tax cuts help them
Never underestimate the creative power of greed. While actors and writers are striking for the right to make a living wage, Disney is applying its magical powers to deprive writers and actors of residuals while simultaneously reaping huge rewards for itself.
Disney’s CEO, Bob Iger, collected $499 million in salaries and bonuses over the past five years. Yet, Disney says they can’t afford to pay residuals to the actors and writers who create their content.
Now they’ve come up with a new trick. They are canceling shows — in some cases, very successful shows, which will allow them to stop paying actors and writers the residuals they deserve legally.
Disney claims the move to cancel the shows is due to low audience engagement. Therefore, it doesn’t make sense for them to keep the shows on their streaming platforms. But here’s how we know they’re lying: they are also trying to claim a $1.5 B loss from that decision.
How can shows no one watches lose money when they’re canceled?
“If you take a show off because people are not watching it, you can’t in good conscience turn around and claim a billion dollars, or even $100 million, because you’re taking it off because people are not watching it,” — Aswath Damodaran, a professor of finance at New York University’s Stern School of Business
Disney also benefits from a relatively new tax law called “bonus depreciation.” This allows Disney to take the deduction for production costs upfront rather than amortize them over time, which is the usual way they are handled.
That provision has allowed just 25 major companies to save $67 billion on their taxes since 2017, according to a recent report by the Institute for Taxation and Economic Policy. One of those companies, Disney, has saved billions of dollars on tax breaks from bonus depreciation. — The Lever
So Disney produces content that includes agreements to pay residuals to actors and writers. They write off the entire cost of the production in year one — then they stop airing the content on their streaming services — which means they no longer owe any residuals to actors/writers.
In the long run, this is not a working model. Granted, if Disney cancels shows, it must create new shows to keep the revenue flowing. That means more expenses and new residuals for writers and actors. However, without a more fair contract, it’s still a bad deal for the writers.
If, as with the old broadcast model, residuals to writers were adjusted based on the popularity of shows, this wouldn’t be so bad. But with the existing contracts, streaming residuals are not connected to a show’s popularity.
“If you write for a streamer, you get two residuals payments — one for domestic streaming and one for foreign streaming. It’s a set amount of money. If it’s a big hit, you do not get paid more residuals in streaming, whereas in the broadcast model, you do because of its success.” — Daily Mail
The system is rigged to benefit the studios. If we want quality programming to be available on streaming platforms, we need a system that appropriately compensates the people who determine the quality of the programs — and that is the talented writers and actors who are on strike now.