Hollywood strikes taking steep toll on peripheral businesses

Hoping to capitalize on that good fortune, the shop moved in January to a North Hollywood space twice the size of its old building.

Then Hollywood’s screenwriters and actors went on strike. Now, says co-owner Shon LeBlanc, Valentino’s can no longer afford to pay its rent.

“My chest is tightening because the money is so tight,” says LeBlanc, bemoaning the Alliance of Motion Picture and Television Producers’ apparent lack of urgency to try to reach an agreement with the unions. “When is the mayor going to step in and say, ‘I’m ordering you guys to figure something out because you’re about to collapse the economy in Los Angeles?’”

It has been well over 100 days since members of the Writers Guild of America stopped working, and more than a month since the actors union joined them. LeBlanc’s is just one story of many detailing the financial ripple effects.

From studio rentals and set construction to dry cleaning for costumes and transportation to sets, it’s hard to find a corner of the Los Angeles economy that has entirely escaped the reverberations.

“A movie set in one day can generate tens of thousands of dollars,” says Kevin Klowden, chief strategist with the Milken Institute, a think tank that researches social and economic issues. “Depending on the level of activity, it can be hundreds of thousands of dollars.”

The last writers strike, more than 15 years ago, took three months to resolve and is conservatively estimated to have cost $2.1 billion in lost output. This time around, the number will be harder to measure given how much production costs, locations and timelines have changed in recent years thanks to technological improvements and increased globalization.

“We tend to think of productions as sort of a self-contained thing,” Klowden says, while in reality, a production often spans companies and even countries. Projects are often “shipped off” to New Zealand for the addition of visual effects, he cites as an example. “The larger a production is, the more likely you are to see a whole bunch of different tax credit mentions at the end.”

Both guilds are seeking to address issues brought about by the dominance of streaming services, which have changed all aspects of production, from how projects are written to when they’re released.

For the writers, the guild has said the use of small staffs for shorter time periods has made a living income hard to achieve. Actors’ concerns include protections on the use of artificial intelligence.

Although talks between the WGA and the AMPTP have resumed, there are no plans between the actors and studios to return to the bargaining table.

“I’m not really understanding what the silent treatment is,” SAG-AFTRA President Fran Drescher said last week. “It could be a tactical strategy to see if we they can wait us out until we lose our resolve and then they can make a better deal for themselves.”

In an earnings call at the beginning of August, Hudson Pacific executives tried to assuage concerns about the financial impact that the strikes are having on their businesses, while still conceding the reality behind those fears. The company owns both Quixote and Sunset Studios, two major equipment and studio rental companies in the entertainment industry.

“We’re all hugely aware of the shrapnel around the industry in general and all of the residual businesses that are getting affected. It will start to feel fairly painful,” warned its chair and CEO Victor Coleman in response to questions of how long the strikes may last. “It will be damaging. And I think everybody is very cognizant of that.”

The uncertain duration of the strikes looms large over every business feeling the financial effects, with fallout spreading well beyond the entertainment industry. Restaurants, coffee shops, even nail salons that neighbor major studios — they’re all desperate for a quick resolution.

Patys Restaurant, a Toluca Lake staple that boasts regulars including Steve Carell and Adam Sandler, has seen a major slump in business from diners and catering orders, according to owner George Metsos. He cites lost businesses from obvious patrons — actors, writers, crew members — but also speaks of other regulars who aren’t coming in: electricians, set carpenters and the drivers who stop in for breakfast on their way to work at the nearby valley studios.

Despite the burdens being placed on people in peripheral lines of work, many of them say there is a general sense of solidarity. LeBlanc, the Valentino’s co-owner, continues to underscore his support, even amid the uncertain future of his 25-year-old business. 

To keep the shop afloat, Valentino’s has started a GoFundMe to pay the rent for now. LeBlanc is hopeful that if they can raise enough money for the next month or so, Halloween and school productions starting back up will get them through the rest of the year.

“We do have things coming up,” he has assured the landlord. “We just need to get some money in here to get us over the hump.”