Warner Bros. Discovery is cutting its profit expectations for the year, saying it will likely incur costs as high as $500 million tied to the ongoing Hollywood writers’ and actors’ strike.
The U.S. Film and television industries remain paralyzed by the dual strikes. The writers strike began in May and the actors joined them on July 14.
Warner Bros. Discovery owns HBO and Max, CNN, TNT and a host of other entertainment outlets, including DC Comics.
The company said in a regulatory filing that it now expects 2023 adjusted earnings before interest, taxes, depreciation and amortization to be between $10.5 billion to $11 billion, down from $11 billion to $11.5 billion.
“While (Warner Bros. Discovery) is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end. With both guilds still on strike today, the company now assumes the financial impact to (Warner Bros. Discovery) of these strikes will persist through the end of 2023,” the company stated.
Shares of Warner Bros., based in New York City, rose about 2% Tuesday.
Warner Bros. Discovery has been at the center of the ongoing negotiations with Hollywood’s unions, both because of its status as a major television and movie studio and because its CEO David Zaslav has become a subject of particular criticism. Zaslav and other media company CEOs came under fire for their large pay packages, and it didn’t help that a shareholder advocacy group found Zaslav to be the “most overpaid” CEO in the corporate world. Last year, Zaslav made $39.3 million in total compensation, but the year before he made a whopping $246 million. Tensions boiled over in May when he was booed while giving the commencement speech at Boston University.
Unlike some of his peers, Zaslav has maintained a conciliatory tone towards striking writers and actors—at least in public. In May, at the start of the writers strike, he urged both parties to find a solution. “Let’s try and get this resolved,” he told CNBC in an interview. “Let’s do it in a way that the writers feel that they’re valued — which they are — and they’re compensated fairly. And then off we go.”
He also made overtures to writers and actors on an earnings call in August, saying the company needed “the great creative community” to make its content. “We all got to fight to get this resolved and it needs to be resolved in a way that the creative community feels fairly compensated and fully valued,” Zaslav said.
