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Warner Bros. Discovery says strikes hurt its profits by nearly $500 million

By Nithya Bose in US business news, posted September 6, 2023

Warner Bros. Discovery is facing substantial profit declines due to the ongoing twin strikes in Hollywood.

The company estimates losses from $300 million to $500 million.

It led to a revised full-year earnings outlook between $10.5 billion and $11 billion, significantly lower than previous projections.

These labor actions have notably disrupted the company's scripted television production.

It postponed the highly anticipated "Dune: Part Two" release to the following year.

The strikes in the television and movie production industry began in May.

The Writers Guild of America initiated work stoppages, followed by the performers' guild, SAG-AFTRA, in mid-July.

It affected key industry players like Warner Bros. Discovery, Netflix, and Walt Disney Co.

Despite extensive negotiations, there has been limited progress on crucial matters such as the size of writers' rooms and residuals based on streaming show viewership.

Warner Bros. had initially expected a resolution to the strikes by mid-September.

But it now predicts their financial impact will persist through the end of 2023.

However, the company succeeded in releasing "Barbie," a blockbuster hit generating nearly $1.4 billion in global box office earnings since its July premiere.

This success would contribute significantly to Warner Bros’s third-quarter free cash flow, projected to exceed $1.7 billion.

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The company aims to achieve at least $5 billion in free cash flow for the entire year, a critical objective for managing its substantial debt load.

Warner Bros. Discovery CEO David Zaslav's optimistic earlier comments about resolving the strikes have yet to materialize, prolonging the disruption in the industry.

Hollywood leaders had hoped to end the strikes by Labor Day, but negotiations have stalled, with little progress made.

The industry now faces the risk of jeopardizing an entire television season, along with potential impacts on next summer's movie releases.

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