Warner Bros. Discovery is preparing investors for the effects of the writers’ and actors’ strikes, should they persist until the end of the year.

In a filing with the Securities and Exchange Commission on Tuesday, the company disclosed that it has adjusted its expectations, anticipating that the financial impact of the strikes will continue through the end of the year. It noted that this is not a prediction of when the strikes will end, but rather illustrates the financial impact on its television and film studios as production is suspended.

Warner Bros. Discovery anticipates a $300 million to $500 million decline in its adjusted earnings before interest, taxes, depreciation, and amortization, placing its full-year range between $10.5 billion and $11 billion.

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The Writers Guild of America has been on strike for more than a hundred days, and actors joined the strike in July. The strike has occurred at a time when media companies are attempting to make their streaming businesses profitable and are encouraging consumers to return to theaters.

Warner Bros. Discovery owns not only a film and television studio, but also the largest portfolio of pay television networks.

“While [Warner Bros. Discovery] hopes these strikes will be resolved quickly, it cannot predict when they will end,” the company said in a securities filing on Tuesday.

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Recently, negotiations between studios and writers have been acrimonious, and Warner Bros. Discovery CEO David Zaslav has participated.

Due to labor strikes that jeopardize its marketing capabilities, Warner Bros. Discovery removed “Dune: Part Two” from the 2023 box office schedule last month. The film has been moved from this autumn to March 15, 2024, replacing “Godzilla x Kong: The New Empire,” which has been moved to April 12, 2024. In addition, the animated film “Lord of the Rings: The War of the Rohirrim” was rescheduled for December 13, 2024.

In addition to the impact on earnings, the strikes also have an impact on Warner Bros. Discovery’s free cash flow. However, increasing its free cash flow expectations for this year to at least $5 billion is in part due to “Barbie,” Warner Bros.’ highest-grossing release to date.

The company anticipates achieving its net leverage target. Warner Bros. Discovery has been reducing the substantial debt resulting from the 2022 merger between Warner Bros. and Discovery.

Previously, Warner Bros. Discovery’s expectations were predicated on the assumption that the strikes would end in early September, as stated by CFO Gunnar Wiedenfels on the August earnings call. He stated at the time that adjusted EBITDA and cash flow projections would be impacted if the strikes continued through the end of the year.

Ahead of Zaslav’s Wednesday appearance at Goldman Sachs’ Communacopia + Technology conference, expectations have been revised.


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