As the Writers Guild of America continues to strike, studios are slowly starting to feel the heat.
The Hollywood Reporter states that Warner Bros. Discovery has lowered its 2023 adjusted earnings before interest, taxes, depreciation, and amortization forecast from $11.0 billion-$11.5 billion to $10.5 billion-$11.0 billion. This is a $300 million-$500 million loss. This change was made due "to the impact of the strikes," according to WBD’s filing.
On Tuesday, CFO Gunnar Wiedenfels didn't go into detail about when the strikes could possibly end but did say, “Uncertainty in the studio segment has increased with the dual strikes. 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.”
“While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end," WBD said in its filing update. "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."
After the story was published, WGA East published on X, formerly known as Twitter, that the studios could resolve this loss of $300-$500 million dollars by agreeing to the WGA's proposal, which would cost WBD an estimated $45 million a year.
Agreeing to the WGA’s proposal would cost Warner Bros. Discovery an estimated $45M a year… #WGAstrike https://t.co/gR7H5yWd72 pic.twitter.com/QzgIBzSbgP
— Writers Guild of America, East (@WGAEast) September 5, 2023
Although WBD states that the company would like to resolve the strikes quickly, the simple and fair solution is not the one they want to choose. Rather than pay writers $45 million a year, the company seems eager to point a finger at the strikes to blame for its quarterly loss of $500 million. But noney is not the issue that is prolonging any deal between the WGA and studios and streamers in the AMPTP.
While proper compensation is high on the list of priorities for the WGA, it seems that the snag in negotiations is around artificial intelligence and how it will impact writers in Hollywood. We don't know the details in full, but we will keep you updated on any movement in the WGA negotiations.