Welcome back to What I’m Hearing, coming at you today and Thursday from another secret summer hideaway. While I’m traveling, I’ll have a couple items and then Jonathan Handel (today) and Julia Alexander (Thursday) will take over.

Programming note: This week on The Town: Lucas Shaw and I pondered who might buy into ESPN, David Herrin estimated what Warner Bros. spent to market Barbie, and Michael Pachter explained why Netflix should split from the AMPTP, not the other way around. Subscribe here.

And if you’re still not a Puck member, click here.

Discussed in this issue: Greta Gerwig, Chris Nolan, Bob Iger, Rich Gelfond, Tom Cruise, Jerry Jones, Karen Bass, Fran Drescher, Donna Langley, and Kathryn Murdoch’s futurific protopia.

But first…

That’s ironic for a couple reasons: First, the Chris Nolan camp wasn’t exactly thrilled when Warner Bros. dated Barbie on his preferred July weekend in response to his setting up a spite store at Universal after Warners mishandled Tenet (in his view) and began releasing films day-and-date on HBO Max. Universal’s Donna Langley won the Nolan project in part because she agreed to a year-long marketing bonanza, which was unheard of for three-hour talky biopics, and a 120-day theatrical window, which will ensure that Oppenheimer doesn’t make a dime on home video until Thanksgiving. Now Nolan has his career-best non-Batman opening thanks in part to the creative and marketing prowess that his old studio executed on that rival film, Barbie.

Second, it’s more than a bit ironic that Nolan, the consummate anti-streaming auteur, benefited so much from all those 20-somethings turning “Barbenheimer” into TikTok and Twitter phenomenons. So many people around town are already attempting to take “lessons” from this weekend: Audiences only want fresh franchises! Or: Stale sequels like Indiana Jones 5 and Fast X and Mission Impossible 7 are OVER. Or: Studio heads like Langley, and I.P. owners like Mattel C.E.O. Ynon Kreiz, will be rewarded if they just trust in filmmakers like Nolan and Greta Gerwig to execute their distinct visions. After all, that same Quorum survey showed that 58 percent of moviegoers who saw both Barbie and Oppenheimer watched the latter first, suggesting there were more Nolan fans who added Barbie to their list than vice-versa.

All that may be true, or… sadly, this weekend might be a fluke—a creation of social media and marketing that caught the zeitgeist as movies used to do with much more regularity, and the films happened to both deliver for their intended audiences. It can still happen, and that’s great news. Gerwig will get to make whatever she wants now; Nolan already does. Tons of money will now be spent on Mattel movies that may or may not work. Hollywood can still launch new franchises.

But does this weekend change the movie business? That’s doubtful. As with Minions: The Rise of Gru, The Super Mario Bros. Movie, and arguably M3GAN, Universal has now seen several of its recent tentpoles explode online, something that its own marketing gurus would admit is kinda beyond their control. Don’t get me wrong: both Universal and especially Warners did a fantastic job creating must-see events out of these movies, neither of which is an obvious blockbuster. But what catches on is kinda a crapshoot these days. It’s almost like Barbenheimer awakened normal people to the continued existence of a theatrical window—they just decided, for some reason, and prodded by great marketing, that they would get excited about these movies.

I do feel a little bad for Tom Cruise, who clearly saw this coming when he was lobbying behind the scenes to lure premium large format (PLF) screens away from Barbie and Oppenheimer. But Cruise arguably supercharged Barbenheimer when he endorsed the phenomenon in a June video (he kinda had to, P.R.-wise, after I reported on his efforts to steal their thunder). Plus, Cruise wasn’t merely informed of Paramount’s unfortunate dating plan for MI: 7; Paramount doesn’t make a move on this franchise without Cruise’s full approval and buy-in. No one can be faulted for a wildcard like Sound of Freedom, which is stealing those older white moviegoers in the South and Midwest, and, incredibly, ended up beating Mission this weekend. But losing screens and momentum so quickly to rivals from other studios was 100 percent foreseeable. I’m betting it won’t happen on Dead Reckoning Part Two.

Two separate producers described seeing the packed theaters this weekend as “emotional” for them. “The energy was why we got into the business,” Matt Baer texted, “and it felt like a long time since we’ve seen it.” So yeah, it was great to see that success and relevance return. But…Box office is still running more than 20 percent behind 2019, there aren’t any obvious blockbusters in August (though I’d take the over on The Meg 2 and Teenage Mutant Ninja Turtles), and the actor and writer strikes are threatening the fall calendar, just when movies seem to have a bit of momentum. But, hey, it was a nice weekend.

And now Jonathan on the latest theater of conflict in Hollywood’s summer from hell: the P.R. games…

After a week-plus in which the AMPTP has seen the actors, and their increasingly Che Guevara-like president Fran Drescher, whip up public support for their cause, this act of P.R. reciprocity seemed like an attempt to level the playing field and demonstrate that the studios had been doing their part to get everyone back to work. After all, in this highly sensitive strike season, no side wants to look greedy or aloof. Perhaps this public demonstration was also intended to suggest that the studios really are doing everything in their power to reset the system equitably.

But, in fact, the AMPTP deal points are far less impressive than that P.R.-ready talking point, and a billion dollars is an overestimate, too. At a very high level, $1 billion sounds like real money, but that’s only $333 million per year for each year of the three year contract among all the combined studios, a relatively small cost saving—basically a CNN+ each. If you drill down further, there are about nine AMPTP members (five legacy studios, three pure play streamers and Fox) who will collectively cover that figure in their proceeds.

Plus, there are the other signatories that aren’t at the table: Lionsgate and a host of indies, for instance. So the back of the envelope math means that an alleged billion-dollar package is quickly reduced to just $30 million per year per company. That’s less than many entertainment C.E.O.s earn out annually, and it’s obviously chump change for companies that spend billions on content.

That makes it genuinely hard to fathom why the AMPTP would put this offer forward other than to demonstrate, perhaps to Wall Street, that they are digging in, and not capitulating to the striking actors, Drescher, or media narratives. After all, the simple math exercise that I’ve just provided is readily evident to anyone with a calculator watching this fiasco play out in real time. Neither the studios nor the actors want to look greedy, but this latest bit of studio spin seems like a real miscalculation: it all plays into the negotiating strengths of the actors.

What’s more: that billion-dollar estimate is also based on a false premise. A management source explained to me that the value of the basic wage and pension and health increases were estimated by taking the 2022 wages that drove the contributions to the P&H plans and then calculating the value of the studios’ offer, which is a 5 percent increase in the first year of the contract, then 4 percent and 3.5 percent in years two and three. So I did that calculation based on the management figure of about $2.6 billion in 2022 wages and came up with a package value of $869 million.

How does that work? A 5 percent increase applied to 2022 wages results in about $2.8 billion in 2023 wages, which amounts to an increase of $132 million in payouts versus 2022. A 4 percent bump applied to that $2.8 billion figure results in 2024 wages of nearly $2.9 billion, which is $242 million higher than the 2022 figure. A similar calculation for 2025 results in an increase of $343 million. Add those up, then add pension and health contributions on top and the result is $869 million. (I’m not trying to do some Beautiful Mind type arithmetic here. Email me for my spreadsheet if you want to see the details.)

And how do the studios get from $869 million to $1 billion? Factor in the value of residuals increases, background actor bumps and other items in the studio offer and that’s how they reach the billion-dollar figure. They’re not being disingenuous. This is just the latest iteration of Hollywood math at its finest.

The error here is that the scale wage increases don’t enhance overscale compensation, which is negotiated by actors’ agents, and not the union. Thus, if scale increases by 5 percent, that doesn’t imply that an actor who makes overscale is also going to demand a parallel increase. The two labor marketplaces aren’t linked.

Yet, my source asserted that if scale wages increase, agents themselves would likely seek comparable increases in overscale compensation for their clients. But that’s not credible: Overscale compensation is usually driven by the individual actor’s leverage and the agent’s skill. It’s seldom tied to union scale, except in the occasional situation where an overscale performer receives, for example, twice scale. But that’s the exception, not the rule.

Anyway, what does SAG-AFTRA have to say about the deal? Nothing in detail on the record, but a union-side source told me they estimate that the total value of the AMPTP offer comes in at even less than what the studios assert—about $772 million. That amounts to about $23 million per company per year, money they can find under the couch cushions.

But the studios and streamers are likely to stand firm—and so is the union, which is asking for an 11 percent bump in the first year, in order to catch up with the past several years of red hot inflation. That delta is another reason why this negotiation has a ways to go.

For the legacy media companies to survive, they have to build worldwide streaming video platforms to compete with Netflix, but without four key advantages Netflix enjoyed: first mover advantage, easy money as a tech company, investors who were willing to pay for growth at the expense of profits, and a more favorable economic climate. None of that is true today, as the legacy companies struggle to compete and even survive.

And, in addition, the studios and streamers are also concerned that if they give a better package to SAG-AFTRA, the WGA will want more, and IATSE and the Teamsters are watching closely too, in advance of their contract expirations next year. (More strikes in the offing? Yikes!) A smaller SAG-AFTRA contract, covering soap operas and reality TV hosts, also expires next year, increasing the cost of any concessions now.

What’s more, the companies have to pay Social Security and other government-mandated fringes (unemployment insurance and the like) on wages and residuals, which increases the overall cost to them by roughly 10 percent. That increases management reluctance to yield to union demands, at least for now.

Adding to the woes for both sides: money isn’t the only thing in play. Precarity and technological displacement add to labor’s concerns. Writers are concerned about mini-rooms—pint-sized writing rooms in short-season episodic TV—not just because of the monetary impact of smaller staffs and shorter employment duration, but also because those mini-rooms often close before production begins, depriving new scribes of the opportunity to do production rewrites and participate in post-production, necessary skills for moving up the career ladder.

And then there’s the fear of technological displacement, an issue dating back two hundred years to the beginning of the industrial age, but newly explosive as generative A.I. burst onto the scene. Labor is afraid of being replaced by bots while the studios and streamers are wary of agreeing to restrictions that would lock them into today’s economics as technology races ahead. Meeting the moment is going to require deft negotiation, but for now, workers are on the picket lines while the companies just say no.

Join me and five entertainment mediators on a free Beverly Hills Bar Assn. Zoom this Friday as I moderate a panel exploring how to mediate the strikes. Register for the webinar here.

My buddy Adam Aron bailed on his scheme to wring more money out of the good seats at AMC Theatres after customers unfortunately realized the only discounted seats were the very front rows. [Bloomberg]

More Adam: AMC inched closer to possible bankruptcy after the judge in its shareholder suit rejected a proposed settlement following an “unprecedented” 2,800 objections from Ape shareholders. [Reuters]

Puck’s streaming guru Julia Alexander takes Derek Thompson through the big-picture doomsday numbers showing Hollywood’s business model in serious peril. [Plain English]

Actors and writers are using the strike to gain Twitter clout, with unintended consequences. [WaPo]

Yes, Kathryn Murdoch named her new production studio “Futurific.” Even better, she says it’s about “encouraging more protopian stories.” (I realize this is coming from a couple whose foundation is called “Quadrivium.”) [VF]

Noam Scheiber puts the separation of TV writing and producing into the context of a larger labor trend that—shocker—pushes down wages. [NY Times]

“In contemporary culture, have we ever seen such a beloved figure with such a sterling track record muddy their legacy this significantly with an eleventh hour return? By returning to a compromised marketplace with no easy solutions, somehow losing all of the articulate elegance that made him such a statesman before, and facing the prospect of selling off major TV assets that once powered the Mouse House, Iger is in the unique position to go down as the man who mortgaged the empire he helped build.” —An analyst

“I don’t know how you can look at the demands and responses from WGA and SAG-AFTRA and quote with a straight face someone saying the sides are “only 20 percent apart.” The rhetoric is high pitched because the issues are extreme. I think your side note about transparency is one of the keys. If the streamers have been cooking the books about viewership and subscriptions, the whole overvaluation on Wall Street crumbles if they reveal it. But the underpay for writers and actors by companies with $5 billion sitting around is reprehensible. Amazon just paid The Rock $50 million for one movie. Netflix paid $50 million for one Jerry Jones series. But writers get a few hundred a year for residuals?” —A writer-producer

“ASCAP and BMI can measure when a song is heard around the world on all streaming platforms. There is already full transparency by the streamers for music. Why not apply the same formula used by ASCAP and BMI for measuring the success of movies and episodes. The data already exists! Remember music is used in almost every show broadcast by streamers.” —A producer

“Karen Bass as a potential ‘dealmaker’ between the AMPTP and the guilds is comical. Bass doesn’t know anything about the business, nor did she seem to study up on it while becoming mayor of LA. She came to a DGA meeting to address filmmaker issues at her 100-days-in-office mark and talked about the homeless the whole time. Like, what? It would be like the mayor of Las Vegas knowing nothing about casinos or gambling.” —A filmmaker

“Ted Sarandos wasn’t just elected chair of the Academy Museum board of trustees… Ron Meyer’s resignation from Comcast and the board created that vacancy. Old guard of Hollywood (and its out-of-date culture) self-imploded and Netflix survived to reap the rewards of the barren landscape. It’s a near perfect microcosm of our industry. I say all of that as a fan of Ron Meyer, btw!” —An executive

Got a question, comment, complaint or an embarrassing picture wearing pink in a movie theater? Email me at Matt@puck.news or call/text me at 310-804-3198.