In last week’s Pivot podcast Professor Scott Galloway drew an analogy between the current Hollywood Writers Guild of America (WGA) strike and the UK coal miners’ strike in the early 1980s during which Margaret Thatcher’s government effectively “broke” the mining union, the NUM. Galloway’s warning was that this episode didn’t end well for the miners.
And he’s right. At the time of the miners’ strike in 1984/5, there were approximately 130 deep mines producing 130 million tonnes of coal annually and employing 180,000 miners in the UK. Today those numbers are effectively zero. So if Galloway’s comparison is anything to go by, then it doesn’t look good for the writers.
However, fast forward to today and GLOBAL coal production in the intervening period has almost doubled from 4 billion tonnes to 8 billion tonnes. And the percentage of global coal output produced in China has increased from 15% to 50%. So it’s not that coal isn’t being mined anymore. It’s just being mined in China not the UK, where it became uneconomic to do so.
Similarly, the media and entertainment industry is far from dead. As any parent of a teenage child with a smartphone will tell you, young people are consuming more media than ever before. It’s just that that the content is increasingly being produced in China or, more accurately, on Chinese-owned TikTok. And given that the content is user-generated with an effective production cost of $0, that’s a pretty tough business model to compete with.
I grew up in the 1980’s just outside Sheffield, which was right at the heart of the South Yorkshire region where the miners’ strike was centered. The events provided the backdrop to the movie “Billy Elliot”. So I’ve seen first-hand the devastation that the strike caused to the former mining communities. But the most egregious fault of the Thatcher government was not that it “caused” the decline of the UK mining industry – that was an inevitable long-term trend that had been happening for decades, and it was back-breaking labour in terrible working conditions. No, this was a shift that had to happen. The mistake was, knowing that it was coming, so little was done to prepare the affected communities for the future. To not invest in next generation industries, education, and re- training to manage the transition into a new era was the mistake. Instead, those communities were largely left to wither and die. And the UK’s economic future became increasingly focused on London in general, and the tax revenues from the exploding finance industry specifically. The economic and social implications of those decisions echo through to the present day with these “left behind” communities becoming a fertile breeding ground for populist political viewpoints and the epicenter of the Brexit movement.
The message to the Hollywood Studios and Writers Guild may not be how do we cling onto and protect the “old” media industry? Those days aren’t coming back. But rather how do we collectively re-shape and prepare for the media industry of the future?
As an excellent recent Sean McNulty article in The Ankler showed, the “dying” linear/cable TV industry is still both extremely important and extremely profitable – accounting for an average of 50% of the revenues and almost ALL the profits of the major media companies WBD, Disney, Paramount, etc.
So how might those profits be used now to manage the transformation that is being inevitably wrought by technology? The investor community might value improved free cash flow and increased dividends and stock buybacks. And it would be naïve to think that a media company CEO with a fiduciary responsibility could simply ignore their opinions. But the stock market – in theory at least – should also be focused on long-term value creation.
Can the two sides come together to create a compelling vision for the future of the industry which will excite both themselves and the investor community alike? After all isn’t imagination, creativity, and storytelling the bedrock on which Hollywood was built? What new skills need to be taught? How do we lean into AI? What new creative jobs need to be imagined? How do we take advantage of next generation production technologies? What institutions and partnerships need to be created to power this transition? What are the Palo Altos, DARPAs, and Stanfords of the 21st century?
What legacy do the leaders on both sides want to leave? To become divisive Margaret Thatcher figures, revered and reviled in equal measure? Or the Founding Fathers (and Mothers!) of a 21st Century Hollywood?
After many tough years, Sheffield is finally rebounding. It is renowned as a global leader in high quality precision engineering, has an outstanding university, a Premier League football club, and a thriving arts and cultural scene. But did it need 40 years to get to this point?
As Winston Churchill famously said, “Those who fail to learn the from history are destined to repeat it.” The Hollywood Hills and the coalfields of South Yorkshire may seem a world apart, but maybe there’s an important lesson to be learned?
