Operations

Writers’ Strike Over But Damage to Small Businesses is Done

Posted on February 13, 2008 by LCT Staff - Also by this author - About the author

LOS ANGELES — Hollywood writers scored a historic victory in their three-month long strike but the dispute came at a devastating cost for small businesses caught in the cross-fire, analysts said.

Determined to avoid the mistakes of a 1988 deal relating to home videos, writers successfully negotiated a contract that gives them a slice of profits from new media and Internet sales, where previously they received nothing.

The new deal was described as a "groundbreaking" achievement by University of Southern California film industry expert Jason Squire.

While writers were right to stick to their guns during the strike, Squire said, the impact of the dispute upon businesses who indirectly rely on the entertainment industry had been devastating.

"There have been very significant losses for companies that rely on seasonal work. They have lost 14 weeks worth of business," Squire said. "That is a dreadful and damaging impact for smaller companies."

The Los Angeles Economic Development Corporation (LAEDC) estimates that the strike's total cost may be in the region of $2 billion — most of it coming from service sector industries.

LAEDC said an estimated 1.3 billion was lost by companies such as caterers, hoteliers and limousine rental firms that rely heavily on the entertainment industry for business.

Alan Shanedling, president of the Greater California Livery Association said his firm had lost around $200,000 in January as the strike hit Hollywood award shows.

Total industry losses arising from the cancellation of the Golden Globes alone would run into several hundred thousand dollars, Shanedling told AFP.

"If you look at the Golden Globes there would have been 800 to 1,000 cars rented for eight to 10-hours minimum each, at 50 to 100 dollars hour. That is a very significant amount of money however you look at it," Shanedling said.

Mark Deo, director of the Small Business Advisory Network, told the Hollywood Reporter that businesses hit by the strike would in the future seek to diversify their base instead of relying on a handful of television productions.

SOURCE: AFP

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