Studios rake in profits during writers' strike with plans for streaming price hikes

Disney said it will introduce a cheaper ad-supported streaming service in Europe while their ad-free service will increase in price

The strike by the writers, which began in May, has already run longer than the union’s previous work stoppage in 2007. New film and TV production, particularly for scripted series, has almost ground to halt. Picture: Bebeto Matthews/AP

Large media companies have been reporting stronger-than-expected profits as the twin strikes by Hollywood writers and actors grind on.

While the executives who make and distribute films and TV shows all say they’d like their workers to return soon, their businesses are seeing a huge short-term benefit from the work stoppages: No production means no expenses.

Netflix kicked off earnings season last month with this nugget of news: Projected free cash flow will be about $1.5bn (€1.36bn) greater this year than originally forecast, due to the strikes.

Warner Bros Discovery Inc saved $100m (€90.67m) on film and TV production costs in the second quarter. That will grow into hundreds of millions if the strikes continue to the end of the year.

Walt Disney Co said on Wednesday that the strikes will contribute to a projected $3bn (€2.72bn) reduction in film and TV production costs this year.

All of which partly explains why there’s been so little progress toward a settlement. The studios have vast libraries, including newly completed films and TV shows, and will rake in billions of dollars in extra cash before longer-term damage from the strikes becomes evident.

Similarly, many members of the striking Writers Guild of America and Screen Actors Guild have other jobs outside of Hollywood and face little pressure to compromise.

The strike by the writers, which began in May, has already run longer than the union’s previous work stoppage in 2007. New film and TV production, particularly for scripted series, has almost ground to halt. The actors walked out in July.

At the same time, Disney announced plans to hike prices later this year for its streaming customers, including increases for customers in Europe.

The entertainment giant said the price hikes will include a 27% increase for the advertising-free version of the flagship Disney+.

Starting October 12, the ad-free version of Disney+ will cost $14 a month, up from $11 currently. The ad-free version of Hulu is going up by 20% to $18.

It’s the second price increase for Disney+ in less than a year — and underscores the company’s drive to make its streaming business profitable by September 2024. The lowest-priced plans, Disney+ and Hulu with ads, will remain at $8 a month.

Outside the US, Disney said it will expand choice and value options with the launch of a new standard tier, as well as standard with ads in select European markets and Canada. The new ad-supported plans start at £4.99/€5.99 month in EMEA and $7.99/month in Canada.

Disney said existing subscribers will remain in the premium tier with no ads when their subscription price increases in December, unless they opt to switch into one of the new lower-priced plans.