Warner Bros. Cuts Profit Outlook as Hollywood Strikes Drag On

livemint.com:

Warner Bros. Discovery cut its full-year adjusted earnings outlook as the Hollywood labor strikes drag on longer than the entertainment conglomerate expected. The parent company of CNN, HBO and other networks had hoped the strikes would be resolved by early September.

Warner Bros. said Tuesday in a securities filing that it can’t predict when the strikes will end, and it now expects the financial fallout to affect the company through the end of the year. Warner Bros.

said it is now targeting full-year adjusted earnings, before interest, taxes, depreciation and amortization, of $10.5 billion to $11 billion, down by $500 million on both the lower and upper bounds from guidance issued last month. The company said the hit is mostly a result of the strikes. At the same time, the company also raised its free-cash-flow outlook for the year to at least $5 billion, driven in part by the strong performance of the Barbie movie.

Matthew Thornton, an analyst at investment bank Truist, said the change to full-year guidance was unsurprising given the state of the strikes. Shares of Warner Bros. were flat in premarket trading.

The Writers Guild of America and the Screen Actors Guild have been striking since May and July, respectively. If a deal isn’t reached soon, the 2023-2024 television season and many high-profile movies are likely to be delayed or scrapped altogether. A coalition representing Hollywood studios and streaming services have offered concessions to the WGA, but the union has said the offers fall short of their expectations.