Posted in: Max, Movies, Opinion, streaming, TV, TV, Warner Bros | Tagged: opinion, SAG-AFTRA, warner bros discovery, wbd, wga

Warner Bros. Discovery: $300M-$500M Hit from SAG-AFTRA/WGA Strikes

CEO David Zaslav's Warner Bros. Discovery is expecting an earnings hit of $300M-$500M this year for not doing right by SAG-AFTRA & the WGA.

As the SAG-AFTRA and WGA strikes roll on and very little public negotiating movement going on with the AMPTP, we're entering a fall television & film season that's already beginning to show the impact of shuttered productions. And with eyes already looking to 2024, future prospects production-wise don't get much better from here on out. Earlier today, we got a better sense of just how much the strikes are impacting one of the biggest voices on the AMPTP's side. CEO David Zaslav's Warner Bros. Discovery shared in an adjusted 2023 EBITDA (earnings before interest, taxes, depreciation & amortization) filing with the Securities and Exchange Commission that the company expects to take a $300M-$500M due to the strikes. In the filing, WBD states that "it is expecting lower adjusted EBITDA for the full year in the range of $10.5 to $11 billion, reflecting the company's assumption that adjusted EBITDA will be negatively impacted by approximately $300 to $500 million, predominantly due to the impact of the strikes."

If there's a silver lining that WBD could present to Wall Street, it's that the company's free cash flow expectations for the year have increased to $5B – with $1.7B in free cash flow expected in the Q3 of 2023 due to Barbie and strikes-related shutdowns. While Wall Street has been looking for these companies to cut costs to improve their pretty rough financial situations (with WBD and CEO Bob Iger's Disney finding themselves in very similar situations) – and has rewarded them for it – those weren't during strikes that had no end in sight. Increasing your free cash flow at the expense of content – when your business is to produce content – could have a nastier Wall Street boomerang effect that some folks are realizing. "WBD 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," the filing also included – along with a note that the company will update its financial forecasting "based on the timing and any additional impacts of the eventual resolution of the strikes."

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