We all love those movies where the underdog triumphs over the big guys -- maybe because it so rarely happens in real life.
Since the Writers Guild of America strike started in November, NBC -- a division of General Electric ( GE) -- lost millions in ad revenue in last weekend's stripped-down version of the Golden Globes. Scaling back the Academy Awards in a few weeks will be even more costly to ABC -- a division of Walt Disney ( DIS) -- which charged $1.7 million for a 30-second commercial during last year's broadcast. Add in parties, limo rentals and spa services leading up to the event, and the awards pump an additional $130 million into the local economy, according to the Los Angeles County Economic Development Corporation. But major broadcasters and movie studios probably won't be the ones feeling pain in the long run. Peter Chernin, president of News Corp., said in an earnings call that the company will actually save money during the strike by not having to pay development costs for new TV pilots. Major movie studios have stockpiled movie scripts that will last them into 2009.
The Biggest Losers
The hundreds of independent contractors who work only when a TV show is in production are the ones now living day to day, hoping they'll still have a business to run when the strike is over. "We're down to about a third of our normal business," says Amy Bernays, a trainer and agent at Phil's Animal Rentals , which provides animals to television shows such as Heroes and Desperate Housewives. Since November, there's been barely enough work to keep the company's four full-time staffers busy, not to mention their 10 or so freelance trainers. Despite a steep drop in income, the company's fixed costs remain the same. "We've got more than 200 animals," says Bernays. "The reindeers still have to be fed." Phil's Animal Rentals, which has been in business more than 30 years, is just getting by, thanks to work on commercials, but "we're jumping on anything that comes along," says Bernays. For now, the strike's impact is being felt most by the network of independent contractors that keep your favorite weekly television series going -- from the caterer who feeds hundreds of crew members to the auto buff who rents fleets of police cars to detective shows. With scripted TV series in reruns for the foreseeable future, small businesses such as Phil's Animal Rentals have seen their main source of income vanish.
Hard as the strike has been on small businesses, its overall economic impact may not be so dramatic. Jerry Nickelsburg, an economist at UCLA's Anderson School of Management, calculated that the strike would cost the California economy $380 million if it continued through March -- well below the $1 billion figure some experts have suggested. On average, for Los Angeles as a whole, the strike will lower personal incomes by only one quarter of 1%. However, he warns, "the individual economic impacts are very real and can be substantial for the small businesses involved."