Warner Bros. Discovery Says Company Will Take $300 Million-$500 Million Earnings Hit Due to Hollywood Strikes
Warner Bros. Discovery expects the ongoing WGA and SAG-AFTRA strikes to negatively impact the company’s 2023 earnings report to the tune of a potential $300 million-$500 million hit.
An SEC filing from Tuesday showed that the company lowered its 2023 adjusted EBITDA expectations from the company’s $11.0 billion-$11.5 billion range to a prediction of $10.5 billion-$11 billion.
Warner Bros. Discovery, which is led by CEO David Zaslav, noted that the company “continues 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.”
While the company is “hopeful that these strikes will be resolved soon,” they are not able to predict when that will occur, and with that comes the financial reality of Hollywood on strike. According to the filing, the impact of the strikes will influence WBD finances through the end of 2023, as the company continues to adjust expectations. The studio recently pushed November release “Dune: Part Two” to 2024.
Alongside the adjusted EBITDA, WBD is raising its free cash flow expectations for the year “to at least $5 billion.” Additionally, “the company now expects to exceed $1.7 billion in free cash flow for the third quarter of 2023, in part due to the strong performance of Barbie as well as incremental impact from strike-related factors.”
The filing notes that Warner Bros. Discovery will “continue to update its assumptions based on the timing and any additional impacts of the eventual resolution of the strikes.”
In its latest quarter, Warner Bros. Discovery shed 1.8 million direct-to-consumer subscribers for a total of 95.8 million globally and reported an adjusted EBITDA loss of $3 million, a $555 million year-over-year improvement.
Zaslav will be attending an investor conference on Sept. 6, where he is expected to discuss the impact of the strikes on WBD.
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