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Hollywood’s Middle-Class Workers Forced to Rethink Finances in Peak TV Era

The gig economy is nothing new to Hollywood’s workforce. Writers, directors, producers and craft and tech artisans have for decades lived a project-by-project existence.

But managing the finances of the industry’s middle- and upper-middle-class workers has never been more challenging amid fundamental shifts in the compensation structure for film and TV creatives. The recent federal tax reform bill has introduced other wrinkles for the creative community.

“Our clients are required to be more focused and mindful of their [personal] budgets and their spending rates in particular,” says Eric Wasserman, co-founder and managing partner of WG&S, a business management firm that has a high volume of Hollywood creatives as clients.

The boom in television production and the trend toward series with shorter episode orders means writers and others need to take on multiple projects in a calendar year to maintain steady paychecks.

Fewer episodes of a program means fewer paychecks for those who are paid by the episode, just as screenwriters are typically compensated per draft of a movie script. In TV, episode orders of six to 13 episodes per season is the new normal for cable and streaming series, compared with the 22- and 24-episode standard that ruled broadcast TV for years.

Hollywood writers are accustomed to dealing with lumpy income streams. But now the bottom line is becoming lumpier and more logistically challenging.

For writers with experience, there are plentiful job opportunities in the current climate, thanks to Peak TV driving exponential growth in the number of programs produced every year. But lining up a succession of TV or movie assignments without any scheduling conflicts still takes a lot of hustle. Mid-level writers are spending more time taking meetings and pitching themselves around town to build a strong profile and to network with studios and showrunners. The demands of that job-hunting have led more writers to retain managers and business managers in addition to agents and lawyers. With checks coming in from multiple employers, the record-keeping is considerable.

Established writers working on a TV series can make $15,000 to $40,000 an episode, depending on the show. Under the old model, a 22-episode season provided a regular paycheck for an eight- or nine-month period. Also, many writers could expect to see a low five-figure residual check or two flow in during the course of a season from repeat telecasts of episodes they wrote. Writers with a track record could count on striking an “overall” deal to work exclusively for a given studio and receive the assurance of a steady paycheck through the term of the agreement.

From the media’s most powerful executives to Hollywood’s biggest stars, an inside look at the money at the top of the industry.
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Today those residual fees are few and far between, and studios are more selective in handing out overall deals. The Big Four broadcast networks have cut back considerably on the volume of the repeats they run because viewers simply won’t tune in when there are so many more options vying for their time. The largest networks have leaned toward programming low-cost unscripted series or short-order scripted series to fill the unavoidable gaps between new episodes of their biggest franchise series.

The slowdown in residual income has added to the pressure on writers to assemble a patchwork quilt of income streams.

“You have to assume that everything you get is going to come on the front end now,” says a longtime TV literary agent. “You always need to have something that is around the corner ready to go.”

The shift to short-order series has come with heightened expectations of the time commitment for working on such programs. In many cases, writers are expected to spend as many months crafting an eight- to 13-episode season as they would have a 22-episode series. That has had the effect of stretching those per-episode paychecks to the point where seasoned writers are barely making scale fees spelled out in the Writers Guild of America’s master contract with the major studios.

The difficulties of adjusting to the new paradigm of production was the key driver of conflict between the WGA and Hollywood’s major studios last year as the sides sat down to hammer out a three-year agreement. In the end, a strike was averted when the studios acknowledged the strain on writers and agreed to new compensation formulas for writers working on short-order shows and making less than $350,000 per season.

Wasserman noted that the changing nature of income streams has led to more creatives establishing their own corporations to take advantage of tax benefits that come with incorporation. In the past, Wasserman advised clients to incorporate if they were pulling in between $600,000 to $1 million annually. Now, that threshold has dropped to about $200,000 a year, he says.

One big reason is that under federal tax reform legislation, individuals can no longer deduct commissions paid to agents, lawyers and managers as business expenses, but corporations can. The cost of setting up a corporation as a funnel for earnings is not high, but there are tighter rules on accounting and how money is moved through the coffers. There are also benefits in setting money aside for retirement, although the rules on how those tax-free deferrals are handled are as complicated as they come. It’s no wonder that recommendations for good accountants and business managers are a hot topic at any gathering of Hollywood creatives these days.

The blurring lines between film, TV, music and digital content opportunities have also kept business managers on their toes. Wasserman cited his recent experience in running the numbers for a prominent musician who had the chance to join the cast of a TV series slated for 10 episodes on a streaming service. Joining the show hampered the musician’s ability to mount a tour because of the production schedule. The performer would have made far more money by hitting the road, but as a career-building move, the TV series opportunity was too good to pass up.

“This was a case of balancing their earnings potential with a desire to advance their career and acting ability,” Wasserman says. “It’s not always about the money.”

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