The ongoing writers and actors strikes are poised to hit Warner Bros. Discovery (WBD) where it hurts — its bottom line.
WBD said it could see the strikes costing $300 million to $500 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for 2023. In a filing with the Securities and Exchange Commission, WBD said it plans to lower its adjusted EBITDA estimate to a range of $10.5 billion to $11 billion.
The news follows last week’s employment report from the US Bureau of Labor Statistics that said the motion picture and sound recording industries had lost 17,000 jobs “reflecting strike activity.” Since entertainment industry writers began striking for increased pay and job security, the effects have been far-reaching. It also comes amid a mixed summer for Warner Bros., with the success of Barbie offset by massive flops like The Flash and Shazam! Fure of the Gods.
The Hollywood strikes — particularly with the writer’s guild — is lasting longer than the company expected. The disagreement stems from the rise of streaming services, which has altered how writers get paid, and writers have argued that the new model isn’t fairly compensating them. Streamed shows have fewer episodes and longer breaks between seasons in comparison to broadcast TV series. This means smaller paychecks for writers. There are also far fewer residuals, or those checks paid out to writers and actors after the show airs.
In addition to the striking TV show and movie writers, represented by the Writers Guild of America, SAG-AFTRA joined the effort with its own list of concessions. Actors want higher pay along with more contributions to pension and healthcare funds as well as recalculated residuals members are paid through streaming service revenue. The union also wants changes for the self-taping audition process and, like writers, protection against the use of AI.
In the filing, WBD said it had assumed the strikes would be resolved by early September. The striking writers and actors and the Alliance of Motion Picture and Television Producers (AMPTP) have yet to strike a deal. In addition, the WGA and SAG-AFTRA said they’re prepared to continue strikes in 2024 with the support of most Americans, according to a Gallup poll.
The first Hollywood strike in 15 years leaves the fate of the 2023-2024 television season up in the air along with several movie projects. In the meantime, networks are filling in fall season programming gaps with reality TV and game shows.
WBD wasn’t immediately available for comment.