Warner Bros. Discovery expects the ongoing Hollywood strikes to have a $300 million-$500 million negative impact on the company’s 2023 earnings.
In an SEC filing Tuesday, the David Zaslav-led media giant stated it was expecting lower adjusted earnings for the full year of between $10.5 billion-$11 billion, based on the projection that the continuing WGA and SAG-AFTRA work stoppages will mean a hit of $300 million to $500 million for the company.
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The WGA strike began May 2 after the union failed to ink a new deal with the studios’ org, the AMPTP. SAG-AFTRA joined them on the picket lines July 14.
“While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end,” Warner Bros. Discovery said in the filing. “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.”
Warner Bros. Discovery released this update on its financials ahead of Zaslav participating in an investor conference Wednesday, during which he is expected to discuss the impact of the dual strikes on the company. Without this new information, the investors and analysts listening to Zaslav’s remarks would be working off the most recent financial forecast provided by WBD about the state of its business, which was the Q2 earnings call Aug. 3, when the company had assumed the strikes would be resolved by early September.
At that time, Warner Bros. Discovery CFO Gunnar Wiedenfels disclosed that the company had saved more than $100 million due to the WGA strike during the second quarter. If the strikes continue through the end of the year, Wiedenfels expects “incremental upside” to WBD’s free cash flow, as the company noted in the SEC filing — while he also forecast “incremental downside” to earnings, “due to the strikes’ impact on timing and performance of the remainder of the 2023 film slate” and Warner Bros. Discovery’s content production pipeline.
“WBD continues to to prioritize and work diligently with other industry leadership to resolve the current WGA and SAG-AFTRA strikes in a manner that is fair and values the important work of, and partnership with, the writers and actors,” the company said in its Tuesday filing.
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