THE BIG PICTURE
Warner Bros. Discovery’s Chief Financial Officer, Gunnar Wiedenfels, is currently grappling with the repercussions of Hollywood’s strikes, and the outcome is far from favorable.
In an unexpected twist, Warner Bros. Discovery now anticipates a substantial hit to its full-year 2023 earnings, with a staggering loss of approximately $500 million.
However, amidst this financial turbulence, Wiedenfels remains optimistic about finding a solution and returning to a normal production schedule once the strikes are resolved.
Imagine a scenario where you owe someone a mere $45 for a job, but you stubbornly refuse to pay up. As a result, your work grinds to a halt, and eventually, it ends up costing you a mind-boggling $500 million. Sounds pretty ludicrous, right? Well, add a few zeros to those figures, and you’re in the shoes of major Hollywood player Warner Bros. Discovery, who’ve learned the hard way that greed can be just as costly as it is lucrative.
CFO Gunnar Wiedenfels of Warner Bros. Discovery is currently tackling not one, but two, Hollywood strikes that have brought TV and film productions to an unexpected standstill. He is well aware of the devastating impact these strikes have had on the industry’s operations and is committed to swiftly resolving this precarious situation. These remarks come in the wake of Warner Bros. Discovery’s recent disclosure, where they projected a colossal blow to their full-year 2023 earnings due to these dual strikes. Consequently, they’ve revised their expected adjusted earnings for the year, which now hover in the range of $10.5 billion to $11 billion. The first strike, led by the WGA writers, kicked off on May 2, and the SAG-AFTRA actors joined the picket lines on July 14.
Wiedenfels succinctly sums up this predicament by stating, “It’s an unfortunate situation… We have to get back to work.” He emphasized that Warner Bros. Discovery is actively working towards a solution where “everyone feels they are respected and treated fairly.”
This sentiment marks a sharp contrast from Wiedenfels’ upbeat remarks just a month ago when he suggested that the strike had saved the company around $100 million.
Confidence in Finding a Resolution
According to the Writers Guild of America’s calculations, accepting the union’s proposed contract terms would have incurred an annual cost of approximately $45 million for Warner Bros. Discovery. Ironically, their refusal ended up costing them ten times that amount due to sheer greed. Wiedenfels revealed that Warner Bros. Discovery’s CEO, David Zaslav, has been actively engaging with industry peers to expedite the resolution of the WGA and SAG-AFTRA work stoppages. He expressed unwavering confidence in finding a solution and stressed that the company would swiftly revert to a regular production schedule once these issues are successfully addressed.
“We are confident there will be a solution. Once that happens, we will get back to a normal production cadence as soon as possible.”
During the Q2 earnings report on August 3, Wiedenfels acknowledged that the company had initially hoped the strikes would conclude by early September. However, since this optimism failed to materialize, Warner Bros. Discovery issued a somber warning about the profound impact of these strikes on its overall earnings.
This grim outlook is primarily attributed to the anticipation of subdued content releases in Q3 and Q4, coupled with the potential repercussions on Warner Bros.’s film lineup. Notably, actors governed by SAG-AFTRA regulations are barred from promoting struck work, exacerbating the disruption and leading to the postponement of highly anticipated films on the Warner slate, including the eagerly awaited “Dune Part Two.”
Frequently Asked Questions (FAQs) about Hollywood Strikes
What are the Hollywood strikes mentioned in the article?
The Hollywood strikes refer to labor disputes involving the Writers Guild of America (WGA) and the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA). These strikes have brought TV and film productions to a halt.
How much money did Warner Bros. Discovery expect to lose due to the strikes?
Warner Bros. Discovery expected to lose approximately $500 million as a result of the strikes, a significant financial setback for the company.
Why did Warner Bros. Discovery refuse to pay the $45 million union deal?
Warner Bros. Discovery declined to pay the $45 million union deal proposed by the Writers Guild of America (WGA). They believed that accepting these contract terms would be too costly for the company.
What is the CEO of Warner Bros. Discovery doing to resolve the strikes?
The CEO of Warner Bros. Discovery, David Zaslav, has been actively engaging with industry peers to facilitate the resolution of the strikes involving WGA and SAG-AFTRA. The company is working towards a solution where everyone feels they are treated fairly.
How did the strikes impact Warner Bros. Discovery’s earnings and production schedule?
The strikes had a substantial impact on Warner Bros. Discovery’s full-year 2023 earnings, causing them to revise their expected earnings projection. Additionally, the disruption in production schedules resulted in delayed content releases, affecting the company’s film lineup, including “Dune Part Two.”