As streamers cut costs, TV shows — and residuals — vanish
Apr 7, 2023, 5:30 AM
Actor Diana-Maria Riva is all too familiar with one of her shows being canceled. For a performer, it’s a painful, unfortunate part of show business. But this was different.
In December, Riva was floored when she found out that “Westworld,” “The Time Traveler’s Wife,” “Minx,” “Mrs. Fletcher” and numerous animated and reality series.
For Riva, the developments were crushing. Over 10 episodes, the critically lauded series followed a plus-sized 12-year-old named Cucu as she and her Dominican family adapt to life in 1980s Miami.
“It was as if somebody had broken up with you and then came back to remind you a couple of weeks later that we’ve broken up,” says Riva, who played Cucu’s mother. “It was already heartbreaking. But then it’s an added punch to just say, ‘Now we’re going to wipe the evidence of you ever having been here.’”
As streamers face mounting pressure to save money, several have followed HBO’s lead. Erasing original shows from their libraries can help streamers get tax write-downs and, to a smaller extent, save on residual payments. But it brings criticism that they are sidelining already marginalized voices and shortchanging creatives out of already slimmer residual paychecks. These issues have increased tension between executives and writers amid union contract negotiations that started late last month and could lead to a significant work stoppage this spring.
Streaming companies offer this defense: They never promised that shows would live forever. In a hyper-competitive, changing market, they say, each streamer is trying to balance ample offerings with sheer survival.
STREAMERS TIGHTEN THEIR BELTS
Amid the downturn in the tech and media industries, streamers are being pushed to cut spending and turn a profit rather than “chasing growth at all costs,” media analyst Dan Rayburn says.
“These companies have had to change the way they’re spending on content because Wall Street says you’ve got to get to profitability much faster,” Rayburn says. He cites how Disney’s stock nosedived in November after the company revealed that its direct-to-consumer unit, which includes Disney+, Hulu and ESPN+, lost nearly $1.5 billion in one quarter.
HBO’s 2022 purges — which occurred as its parent company, Warner Bros., merged with Discovery, enabling a slew of tax write-off possibilities — were the most notable example. But its rivals quickly followed suit. In January, Starz erased a handful of shows including “Dangerous Liaisons,” a costume drama that disappeared from its streaming app days after the finale aired. Some fans said they missed the last episode.
Then, a few weeks later, Showtime underwent its own culling. It eliminated the Jeff Daniels-led drama “American Rust,” among others. Paramount+, with Showtime integrating into the service, did the same with some of its offerings, including Jordan Peele’s revival of “The Twilight Zone.”
Some of those shows have found new homes. For those that haven’t, including “Gordita Chronicles,” the effects of their disappearance are widespread. Potential viewers might never have a chance to discover it. Actors and writers no longer know whether their work will be seen again. And the original streamer no longer has to pay residuals.
How much money streamers save through these erasures is unclear. But Rayburn says the companies clearly concluded that the excised shows weren’t bringing in enough new customers or significantly aiding retention efforts. Instead, streamers have been shopping the programming to rivals, including free, ad-supported streaming TV channels like Tubi, which recently began hosting some HBO shows, including “Westworld.”
Streamers, Rayburn says, are under no obligation to host shows for years. What’s more, customers have gotten used to hopping among apps to hunt down titles that bounce between them.
Casey Bloys, chair and CEO of HBO and HBO Max, said on a recent episode of “The Watch” podcast that streamers are taking a closer look at their libraries and seeing how best to profit.
“The idea that everything a company produces will be in one spot forever and ever, for $15 a month, for eternity, is a relatively new concept,” Bloys said. “$15 a month is going to cover everything for the rest of time? It’s a nice idea, but it’s not viable.”
THE DECLINE OF RESIDUALS
The shifting landscape has alarmed creatives who have already seen their residuals dwindle over the years.
Residuals were once a cornerstone of an actor’s or writer’s livelihood, with large checks consistently rolling in as series were syndicated and appeared as reruns. Now, creatives say, their residual income has plummeted as streamers have grown. As part of union-negotiated contracts, streamers still pay residuals, but those back-end payments are hardly the size that casts and crews receive from TV channels.
Per the Writers Guild of America West’s contract with the Alliance of Motion Picture and Television Producers, a single rerun of an hourlong prime-time broadcast show on ABC would currently net its writer $24,558. But if that show were on Netflix, the writer would earn — at most — $20,018 in domestic residuals for the episode. And if the show were on a smaller streamer like HBO Max, that annual payment would max out at $13,346. Each additional year a show is on a streamer, the residuals decrease. That, of course, assumes the show remains part of the library.
The decline of residuals is an issue that industry insiders say could come to a head as the WGA’s contract expires in May, followed shortly by the expiration of the directors’ and actors’ guild contracts, which are both due to lapse June 30. In addition to seeking better residual rates, writers want higher minimum pay rates and better financial security in an industry that is far more likely to order a 10-episode season than the 22-episode season that was standard when broadcasters dominated the medium. The last writers’ strike, a 100-day work stoppage that ended in 2008, cost the California economy an estimated $2 billion.
“In case y’all are wondering why a WGA strike may be impending, my first residual check for the broadcast show I wrote on was $12,000. I just got my first residual check for my streaming show… $4,” screenwriter Kyra Jones tweeted.
Even though residuals have fallen, Riva says they play a crucial role in ensuring that an actor makes enough money over a given year — currently $26,470 — to retain insurance eligibility via the actors’ guild, SAG-AFTRA.
“If you didn’t get much work recently, but at least had enough residuals to get you over that minimum threshold — that means you can insure your family,” Riva says.
MARGINALIZED VOICES SHELVED
In a February news release, the Writer’s Guild of America West decried HBO’s removal of its shows, saying it “illustrates how consolidation increases the power of gatekeepers at the expense of marginalized voices.”
The guild cited HBO’s decisions to pull “Gordita Chronicles” and “Tuca & Bertie,” an animated series whose two leads were voiced by women of color. It also highlighted the studio’s highly unusual move to ax “Batgirl” — a nearly completed movie starring Leslie Grace, an Afro-Latina actor — that HBO shelved for a tax write-off instead of releasing. In January, Warner Bros. Discovery CFO Gunnar Wiedenfels said the company is “done” pursuing those content-related write-offs.
“We can’t just let shows disappear, especially shows that depict immigration and Latinx families in a positive light,” said “Gordita Chronicles” showrunner Brigitte Muñoz-Liebowitz. “Our communities are humanized through comedy. And to not have the show be there as part of our media lexicon, it shows a regression to me.”
In a statement, HBO Max said cancelling “Gordita Chronicles” was a “very difficult decision” it made as part of a shift away from family entertainment. The streamer also confirmed it has returned the show’s rights to Sony.
While other affected shows have found new homes through licensing deals, “Gordita Chronicles” remains in limbo, all but impossible to find. For a while, some episodes were still streaming on American Airlines flights, but they, too, recently vanished from in-flight viewing options.
Both Muñoz-Liebowitz and Juan Javier Cardenas, who played Cucu’s father on the show, hope Sony finds a new home for it. Cardenas says that when other shows of his were canceled, he took solace in knowing “the work would survive.” That’s not the case with “Gordita Chronicles” — at least, not now.
“To know that in the end,” Cardenas says, “despite all the heart and soul we put into the show, that it won’t be available for people in the future to watch and enjoy — that’s a very sad thing.”