© Reuters. FILE PHOTO: Members of SAG-AFTRA and the Writers Guild of America walk the picket line outside Paramount Studios in Los Angeles, California, U.S., June 7, 2023 REUTERS/Mike Blake/File Photo

By Lisa Richwine

LOS ANGELES (Reuters) -Hollywood’s actors union and major Hollywood studios agreed to extend their current labor contract through July 12 and keep talking to try to reach a new labor agreement, both sides said in a statement on Friday.

Seeking to avert a second labor strike this summer, studios including Walt Disney (NYSE:) Co and Netflix Inc (NASDAQ:) are in talks with the SAG-AFTRA actors union. Members of the Writers Guild of America (WGA) walked off the job on May 2.

SAG-AFTRA’s contract with studios had been set to expire at midnight on Friday. The extension gives the two sides more time to try to work out a deal.

“The parties will continue to negotiate under a mutually agreed upon media blackout,” the parties said in their statement on Friday evening.

A-list stars including Jennifer Lawrence and Meryl Streep, in a letter to union leadership this week, said they were ready to walk off the job if negotiators could reach a “transformative deal” on higher base pay and safeguards around use of artificial intelligence (AI).

Negotiations were taking place during a difficult time for Hollywood studios. Conglomerates are under pressure from Wall Street to make their streaming services profitable after pumping billions of dollars into programming to attract subscribers.

The rise of streaming has eroded television ad revenue as traditional TV audiences shrink.

A strike by SAG-AFTRA, which represents 160,000 actors, would ramp up pressure on studios already grappling with a nearly two-month work stoppage by the WGA.

The walkout by 11,500 writers has shut down a wide swath of TV production and delayed the filming of movies including Marvel’s “Thunderbolts” and “Blade.” Any ongoing filming would have to halt if actors also strike.

Leaders of SAG-AFTRA and the WGA say the entertainment industry has changed dramatically with the rise of streaming television and the emergence of new technology such as generative AI, which they fear could be used to write scripts or create digital actors.

The WGA walkout is hitting caterers, prop suppliers and other small businesses that generate a large portion of their income from Hollywood productions. The last writers’ strike in 2007 and 2008 cost the California economy an estimated $2.1 billion.

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