Warner Bros. Predicts $500 Million Loss Due To WGA, SAG Strikes
By Movieguide® Contributor
Warner Bros. Discovery is predicting a $300 to $500 million loss this year due to the WGA and SAG-AFTRA strikes.
“While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end,” a filing from the company about 2023 earnings read. “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.”
WBD CFO Gunnar Wiedenfels spoke further about the “uncertainty” studios are facing right now.
“Uncertainty in the studio segment has increased with the dual strikes,” he explained. “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 [earnings before interest, taxes, depreciation, and amortization].”
WBD’s filing shared that they’re expecting a $300-$500 million loss “predominantly due to the impact of the strikes.”
However, the studio also forecasts a free cash flow expectation of at least $5 billion “in part due to the strong performance of BARBIE as well as incremental impact from strike-related factors.”
Some are pointing out that the losses Warner Bros. is projecting cost more than what the WGA’s proposed changes would cost studios — around $429 million.
“While a hefty sum, this number is lower than the highest projected EBITDA loss from just one studio, Warner Bros. Discovery,” Screen Rant explained.
The ongoing strikes will soon start to affect the overall economy, according to Kevin Klowden, chief global strategist at the Milken Institute.
Klowden hypothesized that the national economy will lose out on upwards of $5 billion, adding, “The main thing we’re really factoring into it is the lost wages.”
Movieguide® previously reported on the financial impacts of the WGA and SAG-AFTRA strikes:
Barry Diller, former Paramount and 20th Century Fox CEO, believes the current SAG and WGA strikes need to be resolved by September 1, otherwise, the industry will face an “absolute collapse.”
“What will happen is, if in fact, it doesn’t get settled until Christmas or so, then next year, there’s not going to be many programs for anybody to watch,” Diller explained. “So, you’re gonna see subscriptions get pulled, which is going to reduce the revenue of all these movie companies [and] television companies, the result of which is that there will be no programs.”
“And at just the time [the] strike is settled [and] you want to get back up, there won’t be enough money,” he warned.
