Hollywood Strike Takes a Toll on Studios, with Warner Bros. Discovery Reporting Second Financial Quarter

AG-AFTRA union on strike, Jane Fonda and June Diane in picket line near Sunset Bronson studios.

As the one-month mark closes in since the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) strike first started (and more than three months since the Writers Guild of America (WGA) strike started), studio executives are reviewing their numbers from the second financial quarter and having some challenging earnings calls.

What exactly are the strikes about? They’re disputes between the two unions (SAG-AFTRA and WGA) and the Alliance of Motion Picture and Television Producers (AMPTP). The unions are seeking better pay, job security, and residuals for their members. They are also seeking guidelines around the use of AI in TV and film.

Warner Bros. Discovery’s Second Quarter Earnings Call

According to Warner Bros. Discovery (WBD), the studio claims they’ve saved in the “low $100 million range” in three months as their spending has plummeted during the second financial quarter of the year as they revealed their earnings on August 3, 2023.

Negotiations between the unions and the studios have not yet resumed. However, WBD, which owns Warner Bros., HBO, and CNN Global, is currently projecting that the strikes will end in early September and that TV and film production will resume.

WBD Earnings 2023 Second Quarter
Earning Reports for WBD’s 2023 Second Quarter

Variety reported that Gunnar Wiedenfels, the Chief Financial Officer of  WBD, said on a call with financial analysts that the strikes had created uncertainty among studios. And that uncertainty could impact the timing and performance of the remainder of the film slate and the company’s ability to produce and deliver content.

“While we are hoping for a fast resolution. Our modeling assumes a return to work date in early September,” Wiedenfels adds. “Should the strikes run through the end of the year, I would expect several $100 million upside to our free cash flow guidance and some incremental downside for adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization.)

Picketing at the Warner Brothers Lot
≈ Photo Credit:
Gerry Matthews

The Writers Guild of America (WGA) strike during WBD’s second financial quarter severely impacted TV and film productions, even though only WGA members were on strike.

WBD CEO David Zaslav also spoke on the call about the “significant impact” on the company’s second-quarter results.

“We cannot do any of that without the entirety of the creative community, the great creative community. Without the writers, directors, editors, producers, actors, the whole below-the-line crew. Our job is to enable and empower them to do their best work.” Zaslav said.

“We’re hopeful that all sides will get back to the negotiating room soon. And that these strikes get resolved in a way that the writers and actors feel they are fairly compensated. And their efforts and contributions are fully valued,” he added.

The WGA has been on strike since May 2, 2023, after failing to reach a new contract with the Alliance of Motion Picture and Television Producers (AMPTP). And the SAG-AFTRA joined them on July 14, 2023, after also failing to sign a new deal with the AMPTP.

Interested in the specific numbers for WBD’s second quarter? View the earnings document here.


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