Warner Bros. Expects As Much As a $500 Million Hit From the Hollywood Strikes

Warner Bros. Discovery now expects the impact of the Writers Guild of America's 125-day strike against major studios to last through the end of the year.

In a filing with the Securities and Exchange Commission Tuesday, WBD said it expects its adjusted 2023 EBITDA "will be negatively impacted by approximately $300 to $500 million, predominantly due to the impact of the strikes." Its full-year total for that will be in the range of $10.5 billion to $11 billion, down from the previously expected $11 to $11.5 billion it predicted in August. 

The guild began striking the major studios represented by the Alliance of Motion Picture and Television Producers trade association on May 2, demanding higher pay and a stable pay structure, fairer deals and contracts with provisions about artificial intelligence. Warner Bros. had previously said it expected the strike to end by early September and has now revised its guidance.

"While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end," the company said in its regulatory filing. "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."

The company raised its free cash flow expectations for the full year to at least $5 billion, compared to the $4.5 billion to $5 billion range it predicted in August. Warner Bros. added that it expects to exceed $1.7 billion in free cash flow for the third quarter of 2023, primarily due to the success of Barbie and cash saved from strike-related factors. 

During the company’s second quarter earnings call last month, WBD CFO Gunnar Widenfels said that the company had saved “in the low $100 million range” as a result of stalled productions.

WBD CEO David Zaslav, who has been portrayed as the chief antagonist of the strikes, is expected to participate at a Goldman Sachs investor conference on Wednesday to discuss the impacts of the WGA and Screen Actors Guild strikes.

Negotiations between the WGA and the studios have stalled recently, after an Aug. 22 meeting between the two groups’ elders turned into a “lecture,” according to the guild. Shortly thereafter, the studios publicly released details of the proposal it had sent to the WGA on Aug. 11 and stated that it directly addressed the writers’ concerns. The guild has said it sent a counter-offer on Aug. 15, although the studios claim it is waiting on an official response, according to Deadline.

Representatives of major studios, including Netflix and the Walt Disney Co., reportedly met last week to get on the same page amid infighting and executives blaming each other for ongoing issues, per Deadline. 

“[The AMPTP] are in the process of wrestling amongst themselves, ramping up their public relations, and coming to terms with the fact that – with writers on strike – and actors on strike behind them – this negotiation is different,” WGA Negotiating Committee co-chair Chris Keyser said in a Labor Day video. “And they are going to have to do more – offer more – than they usually do."