Warner Bros. Discovery (WBD) has publicly disclosed that it could lose up to a half billion dollars due to the ongoing WGA and SAG-AFTRA strikes.
Key Details
- On May 2, the Writers Guild of America (WGA) began a multi-week strike over issues with streaming compensation and fears over how AI will affect their jobs.
- On July 14, the Screen Actors Guild (SAG) began to strike over the same issues.
- On September 5, WBD disclosed in a filing to the Securities and Exchange Commission that it expects a $300 to $500 million hit to earnings due to the strikes.
- WBD expects to exceed $1.7 billion cash flow in the third quarter thanks to strong ticket sales for Barbie, but will still take a hit.
- The company lowered its 2023 earnings expectations from its forecasted $11.0 billion–$11.5 billion range to $10.5 billion–$11.0 billion.
Why It’s Important
Companies like WBD and Disney have generally been quite hostile to the ongoing strikes, claiming that the demands of the strikers are unreasonable and moving forward with many of their directives amid protests. Disney CEO Bob Iger caught flack after a July 13 interview for CNBC’s Squawk Box, where he dismissed the demands of the actors guild as “unrealistic” and “disturbing.”
WBD CEO David Zaslav has been similarly negative in his response to the strikes, with his company currently negotiating to bring an end to the stoppage that has already resulted in delays for major WBD films like Dune: Part II, due to the inability for actors to help promote the blockbuster film. The company mentioned in a recent earnings call that it expected the strike to resolve by September.
As we previously reported, 2023 has been a historic year for labor strikes, with 325,000 Americans going on strikes in the first half of this year.
Notable Quotes
“While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end. With both guilds still on strike today, the company now assumes the financial impact to WBD of these strikes will persist through the end of 2023,” says a Tuesday statement from WBD.
“Uncertainty in the studio segment has increased with the dual strikes. This may have implications for the timing and performance of the remainder of the film slate as well as our ability to produce and deliver content,” CFO Gunnar Wiedenfels previously argued.
“And while we are hoping for a fast resolution, our modeling assumes a return-to-work date in early September. Should the strikes run through the end of the year, I would expect several hundred million dollars of incremental upside to our free cash flow guidance and some incremental downside for adjusted EBITDA.”