Warner Bros Discovery Warner Bros Discovery

Citing the ongoing writers and actors strikes, Warner Bros. Discovery lowered its 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast to $10.5 billion – $11 billion, a drop of $300 million – $500 million from previous predictions.

The company’s updated expectations were included in a regulatory filing with the Securities and Exchange Commission on Tuesday.

WBD had expected the WGA and SAG-AFTRA strikes to end in early September; previous earnings predictions were based on that date. This week’s revised forecast was filed without a suggested end date now that the early September prediction has proved inaccurate.

According to the report:

While WBD 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 WBD of these strikes will persist through the end of 2023.

Although WBD has suggested no new possible end date for the strikes, the company insists it is working with other involved parties to end them as soon as possible:

WBD continues to prioritize and work diligently with other industry leadership to resolve the current WGA and SAG-AFTRA strikes in a manner that is fair and values the important work of, and partnership with, the writers and actors.

The WGA began picketing on May 2; SAG-AFTRA joined on July 14. The last time studios met with the writers’ union was on August 22; they have yet to sit down with SAG-AFTRA since that strike began.

Besides updating the company’s annual earnings forecast, Tuesday’s filing also says that WBD has increased its cash flow expectations for the entire year to at least $5B. The company now expects to exceed $1.7B in free cash flow for the third quarter of this year, based on Barbie’s huge box office performance and “incremental impact from strike-related factors.”

While WBD has had to readjust many of its financial predictions, WBD is maintaining its expectation of achieving net leverage below 4.0x by the end of 2023 and its target gross leverage range of 2.5x-3.0x by the end of 2024.

Given the uncertain nature of the dual strikes, other adjustments could be on the way. According to the filing, “The company will continue to update its assumptions based on the timing and any additional impacts of the eventual resolution of the strikes.”

Jamie Lang

Jamie Lang is the Editor-in-Chief of Cartoon Brew.