Nightmare before Christmas in Hollywood

A simple office party can reflect an entire industry. A couple of weeks ago, employees in some Disney divisions received an email that hit them hard: their annual Halloween celebration had been cancelled. It had not happened in years. Suspicion began to spread, followed by rumours and then certainty. In the coming weeks, perhaps even days, many are expecting another wave of layoffs. And this comes as the industry is enjoying one of its best years at the box office. They are not the first cuts, either at Disney or across the entertainment industry. At the start of 2023, 7,000 employees were laid off. In mid-2025, there was another major round of layoffs; this spring, around 1,000 more jobs were cut; and in October, another 300. The company behind Mickey Mouse has now been joined by another giant. Netflix recently laid off around 1,000 employees, roughly 6% of its workforce. The final blow seemed to come on Thursday, October 16, with the departure of Bela Bajaria, the company’s chief content officer. But there was more to come on Monday, when Dan Lin, head of film, was fired from the company.Hollywood is bracing for even more turbulence. Alongside the recent layoffs looms an even darker cloud: Paramount’s acquisition of Warner Bros. Discovery, a merger that will operate under the name Skydance. The deal is worth nearly $100 billion, but it has also sparked deep anxiety across the industry.The concern is not only that fewer projects or productions may be commissioned. For now, Warner Bros. Discovery and Paramount remain separate companies, each with its own corporate structure. But industry insiders expect the real integration to begin within about six months, with services, office spaces and departments gradually merged. Will there still be two sales teams, two marketing departments or two communications divisions? Probably not. Many workers expect job cuts to begin by early 2027.Whether it is a cause or a consequence, Los Angeles is also losing ground as the heart of the audiovisual industry. The pandemic dealt a severe blow, as did the writers’ and actors’ strikes of 2023, which secured improvements in collective bargaining agreements and working conditions. But those victories have come with a downside: many companies are reluctant to absorb the higher labor costs that resulted from the new contracts, prompting productions to move away from the city and from California altogether.That is why, a couple of years ago, industry professionals launched the platform Stay In LA, through which hundreds of workers have urged studios to keep productions in the city. They have campaigned both through civic initiatives and legal efforts to make Los Angeles “the easiest (and most competitive) place in the world to shoot.” So far, the battle has not been an easy one.A study by Ernst & Young, which analyzed film and television production between 1999 and 2024, found that shoots are moving away from Hollywood and, increasingly, from the United States altogether. The share of film production budgets spent in the U.S. has fallen from 74% to 42%. In other words, the proportion spent overseas has risen from 26% to 58%, now accounting for more than half of all production spending.According to the study, if those productions had remained in the country, they would have generated an additional $2 billion in domestic production spending, with knock-on effects for both direct and indirect employment and, in turn, the wider economy. Television shows tell a similar story: the share of episodes filmed in the United States has dropped from 94% of the total to 64%, a 30% drop.In recent years, the population of Los Angeles has been shrinking and this year more than ever. According to U.S. Census data, cited by local media, more than 54,000 people left Los Angeles County between July 2024 and July 2025. The county’s population has fallen from more than 10 million residents in 2020 to 9.7 million in 2025.In the city itself, the average home value now stands at $928,000, according to the real estate platform Zillow. Local media report that buying a home is 108% more expensive than renting, citing a study by a construction company. They are difficult living conditions to sustain in such an uncertain environment.All of this comes as 2026 is shaping up to be the strongest year for the U.S. box office in years. Summer ticket sales alone reached $5 billion, driven above all by The Odyssey and Spider-Man, but also by animated hits such as Toy Story 5, Super Mario Galaxy and Minions & Monsters, which together grossed nearly $1.1 billion in the United States. The year’s biggest successes also include the Michael Jackson biopic, Project Hail Mary, surprise hits Obsession and Backrooms, and the long-awaited sequel to The Devil Wears Prada.Worldwide, five films have already surpassed the $1 billion mark, something that has not happened since 2019. Yet despite the booming box office, Hollywood remains an industry clouded by uncertainty, and the dark cloud hanging over it shows little sign of lifting.Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition