Warner Bros. Discovery, led by CEO David Zaslav, has announced a downward revision of its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast for 2023. The company now expects its EBITDA to range between $10.5 billion and $11.0 billion, lower than the previous estimate of $11.0 billion to $11.5 billion. This revision is attributed to the ongoing writers’ and actors’ strikes.
In a regulatory filing on Tuesday, Warner Bros. Discovery stated that it remains engaged in negotiations with Hollywood unions in an effort to end the work stoppage. However, the company did not specify when the strikes are expected to conclude. Previous guidance had assumed that the strikes would be resolved by early September, but with no resolution in sight, the company now anticipates the financial impact of the strikes to persist through the end of 2023.
Despite the impact of the strikes, Warner Bros. Discovery also provided updated guidance for its full-year 2023 performance. The revised forecast anticipates lower adjusted EBITDA in the range of $10.5 billion to $11 billion, taking into account an estimated negative impact of approximately $300 million to $500 million primarily due to the strikes. On the other hand, the company raised its free cash flow expectations for the year, expecting to generate at least $5 billion. Additionally, the company projects that the third quarter of 2023 will see free cash flow exceeding $1.7 billion, boosted by the success of the Barbie franchise and the incremental impact of strike-related factors.
Warner Bros. Discovery remains committed to achieving its financial targets. It maintains its expectation of reducing net leverage to below 4.0x by the end of 2023 and aims for a gross leverage range of 2.5x-3.0x by the end of 2024. The company will continue to update its assumptions as negotiations progress and any additional impacts of the strikes become evident.
The writers’ and actors’ strikes have had a significant impact on various segments of the entertainment industry. These work stoppages have disrupted film and television production, leading to delays in the release of new content and financial repercussions for companies like Warner Bros. Discovery. The strikes have arisen due to disputes over working conditions, compensation, and other labor-related issues. Efforts are ongoing to reach a resolution that satisfies the unions’ demands and allows production to resume.
Warner Bros. Discovery’s CEO, David Zaslav, has been actively involved in negotiations with the Hollywood unions to bring an end to the strikes. Both sides are working to find common ground and address the concerns raised by the writers and actors. The resolution of these strikes is crucial for the company and the industry as a whole, as it will restore normal operations and ensure the timely production and release of new content.
The impact of the strikes is not limited to Warner Bros. Discovery alone. Other major entertainment companies have also faced challenges as a result of the work stoppages. The strikes affect the entire ecosystem of the industry, from production studios to streaming platforms and talent agencies. The delays and financial losses incurred during the strikes can have far-reaching consequences for the industry’s overall revenue and reputation.
In conclusion, Warner Bros. Discovery has adjusted its 2023 earnings forecast due to ongoing writers’ and actors’ strikes. The company expects its adjusted EBITDA to be between $10.5 billion and $11.0 billion, reflecting the estimated negative impact of the strikes. However, the company remains optimistic that a resolution will be reached and continues to engage in negotiations with the unions. Warner Bros. Discovery also raised its free cash flow expectations for the year and maintains its financial targets for reducing leverage. The industry is eagerly awaiting the resolution of the strikes, which will allow production to resume and bring stability back to the entertainment sector.