The AI generated content would not be copyrightable. Manipulations of that AI content by people would still be copyrightable.
Copyrightable output of pure AI is the nightmare situation. Imagine Disney trains an AI on purely content from in-house work-for-hire artists. They would then be free to generate an infinite amount of content that they claim ownership of.
Copyright law, like all laws are intended to benefit society, not individuals. They can be changed as circumstances change. Sure, lobbyists can have a strong influence and attempt to tilt the playing field towards some individuals, but the primary strength of lobbyists is that they show up. Change goes to those who show up.
It means that studios will shift how they lobby for copyright law as they train internal AI models on their asset catalogs. Eventually, Allen's claim will be mainstream.
Disney may well buy AI companies that may compete with them (like a next level acquisition equivalent of when they bought Pixar) and copyright everything instead.
We live in an insane world where capitalism is a weapon which destroys and limits art, rather than art enriching us and the world.