Warner Bros. to lose approximately $300M-$500M in 2023 earnings due to SAG-AFTRA and WGA strikes

A still from the SAG-AFTRA strike (Image via Getty)
A still from the SAG-AFTRA strike (Image via Getty)

The SAG-AFTRA and WGA strikes continue to persist without much sign of resolution in sight. But it seems that the impact of this work stoppage is finally hitting the big studios, with Warner Bros. reportedly lowering its 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast by almost $300M-$500M, bringing their estimated earnings forecast to $10.5-$11.0 billion.

As reported by the company, this was because of the impact of the SAG-AFTRA and WGA strikes, which have effectively stopped almost all production in Hollywood. Previously, WB's targeted low end earnings were at $11.0-$11.5 billion.

In the previous filing, the studio had assumed that the strike would wrap up by early September, which does not seem to be the case anymore. The company did not mention in the new filing when they think the strikes could end, but updated its numbers about the previous prediction.

"The financial impact to WBD of these strikes will persist through the end of 2023"- Warner Brothers on SAG-AFTRA and WGA strikes' impact on the earnings

In Tuesday's filing update, Warner Bros. revealed a few things about the net earing and its impact due to the SAG-AFTRA and WGA strikes. Previously, Gunnar Wiedenfels, the Chief Financial Officer of Warner Bros. Discovery, had predicted the changes this entire ordeal of the strikes will have.

Wiedenfels had said:

"Uncertainty in the studio segment has increased with the dual strikes...This may have implications for the timing and performance of the remainder of the film slate as well as our ability to produce and deliver content. And while we are hoping for a fast resolution, our modeling assumes a return-to-work date in early September. Should the strikes run through the end of the year, I would expect several hundred million dollars of incremental upside to our free cash flow guidance and some incremental downside for adjusted EBITDA."

However, as the strikes failed to find a resolution by September, Warner Bros. has also updated its statement in the new filing, as reported by The Hollywood Reporter (THR). The new statement read:

"While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end. 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."

According to reports from THR, the new filing states that WB now expects lower adjusted EBITDA for the full year of 2023. They also claimed that the negative growth would be "approximately $300 million-$500 million, predominantly due to the impact of the strikes."

The filing additionally stated:

"Further, 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"

Meanwhile, Davis Zaslav, the CEO of Warner Bros. continues to be one of the primary negotiators in the SAG-AFTRA and WGA strikes, trying to strike up a balance with the actors and writers. As of now, the studios continue to refuse the artists' demands of increased compensation.

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Edited by Siddharth Dhananjay