As streamers cut costs, TV shows — and residuals — vanish

Actor Diana-Maria Riva is all too familiar with a show being canceled. For a performer, it’s painful, unfortunate part of show business. But this was different.

In December, Riva was floored when she found out that “Gordita Chronicles” would be removed entirely from HBO Max's vast streaming library — one of dozens of shows that HBO effectively wiped from existence for U.S. viewers.

“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 the mother of a plus-sized 12-year-old named Cucu in the critically lauded comedy about a Dominican family adapting to life in 1980s Miami.

As streamers face mounting pressure to save money, several have followed HBO’s lead. Erasing original shows 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. These issues have increased tension between executives and writers amid union contract negotiations that started in March and could lead to a significant work stoppage.

Streaming companies offer this defense: They never promised shows would live forever. In a hyper-competitive market, they say, each streamer is trying to balance ample offerings with sheer survival.

Amid the downturn in tech and media, streamers are being pushed to cut spending and turn a profit rather than "chasing growth at all costs,” media analyst Dan Rayburn says.

HBO's 2022 purges occurred as its parent company, Warner Bros., merged with Discovery, enabling a slew of tax write-off possibilities. In January, Starz erased a handful of shows including “Dangerous Liaisons,” which disappeared just days after the finale aired. A few weeks later, Showtime underwent its own culling. It eliminated the Jeff Daniels-led drama “American Rust,” among others. Cuts at Paramount+, merging with Showtime, included Jordan Peele's revival of “The Twilight Zone."

How much money streamers save through these erasures is unclear. But Rayburn says the companies clearly concluded the excised shows weren't bringing in enough new customers or significantly aiding retention. Streamers, Rayburn says, are under no obligation to host shows for years. What's more, customers are used to hopping among apps to hunt down titles.

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 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 with reruns. Now, that income has plummeted as streamers have grown. As part of union-negotiated contracts, streamers still pay residuals, but those back-end payments are a fraction of the checks 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. At a smaller streamer, that annual payment would max out at $13,346. Each additional year a show is on a streamer, residuals decrease — assuming it remains part of the library.

Industry insiders say the issue could come to a head as the WGA’s contract expires in May, followed shortly by the June 30 expiration of the directors’ and actors’ guild contracts. In addition to seeking better residual rates, writers want higher minimum pay rates and better financial security in an industry now far more likely to order shorter seasons. 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.

Residuals also help ensure actors make enough money to retain insurance eligibility via their guild.

“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.

In a February, WGA West decried HBO’s removals, saying it “illustrates how consolidation increases the power of gatekeepers at the expense of marginalized voices.”

“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,” said “Gordita Chronicles” showrunner Brigitte Muñoz-Liebowitz.

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. Juan Javier Cardenas, who played Cucu's father, hopes Sony finds a new home for it.

“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.”