Warner Bros Discovery finances massively hit by Hollywood strikes: Earnings forecast lowered by $500mn
Written By Kshitij Rawat
Published: Sep 05, 2023, 22:13 IST | Updated: Sep 05, 2023, 22:13 IST
Warner Bros Discovery has lowered its 2023 adjusted earnings.
Warner Bros Discovery has announced a significant financial impact resulting from the ongoing strikes in the entertainment industry. The company has lowered its 2023 adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) forecast to a range of $10.5 billion to $11.0 billion, as per The Hollywood Reporter. This revision represents a substantial hit of $300 million to $500 million.
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The strikes, which have disrupted the normal flow of operations, are predominantly responsible for this financial setback. Initially, management had anticipated resolving the strikes by early September, as mentioned during the second-quarter earnings conference call. However, the uncertainty surrounding the strikes has intensified, prompting the company to revise its projections.
Earlier, Gunnar Wiedenfels, WBD's CFO, had highlighted the implications of these strikes on the studio segment, affecting the timing and performance of the film slate and content production and delivery. While the company remains hopeful for a speedy resolution, its financial modelling now assumes that the strikes will persist through the end of 2023.
Last month, Zaslav revealed that the ongoing double strike has resulted in unexpected savings of approximately $100 million for the studio, as reported by Variety. Zaslav made this revelation during the company's earnings call, where he shed light on the cost-cutting benefits stemming from the production shutdowns across the studio.
The double strike, which began with the Writers Guild of America strike about three months ago on May 2, raised concerns about fair compensation for their labour within the entertainment industry. On July 14, SAG-AFTRA joined the strike. At the moment, there appears to be no end in sight for either of the strikes despite several rounds of negotiations.