Warner Bros. Discovery is bracing for the ongoing effects of the prolonged strikes by writers and actors, letting shareholders know they expect its adjusted earnings to take a hit of $300 million to $500 million.
The strikes, with the Writers Guild of America union members on picket lines for over 100 days and actors joining in July, have hit the media industry at a critical juncture when companies are striving to make their streaming ventures profitable and lure audiences back to theatres.
The company anticipates that its adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) will suffer a significant blow, ranging from $300 million to $500 million. This adjustment places their full-year earnings outlook in the range of $10.5 billion to $11 billion.
The strikes, with the Writers Guild of America union members on picket lines for over 100 days and actors joining in July, have hit the media industry at a critical juncture when companies are striving to make their streaming ventures profitable and lure audiences back to theatres.
Warner Bros. Discovery is not just a studio owner but also boasts the largest collection of pay TV networks. They express hope for a swift resolution to the strikes but emphasise their inability to predict when that might happen.
Tensions have escalated during negotiations between studios and writers, with Warner Bros. Discovery CEO David Zaslav actively involved in the discussions. The impact of these strikes has already led to schedule adjustments, including the delay of “Dune: Part Two” to March 15, 2024, and other film release date changes.
While the strikes affect Warner Bros. Discovery’s free cash flow, they have also been buoyed by the success of “Barbie,” which is now their highest-grossing release. Despite these challenges, the company maintains its goal of meeting its net leverage target, actively reducing the substantial debt load stemming from the 2022 merger of Warner Bros. and Discovery.
Previously, Warner Bros. Discovery’s financial expectations were based on the assumption that the strikes would conclude by early September.
However, the revised outlook acknowledges the reality of a more protracted disruption, emphasising the uncertainty surrounding the strikes’ resolution and their financial impact.
