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Every media firm is concerned about a shifting media environment, the state of the economy, and the simultaneous writers’ and actors’ strikes that have halted production in Hollywood. Warner Bros. Perhaps even more than its rivals, Discovery has concerns.
The combined organization has had significant growing pains since the merger of WB and cable powerhouse Discovery last year, which were highlighted in Thursday’s second quarter earnings figures.
As was to be predicted, global streaming subscriptions decreased, and box office results were disappointing, mostly due to a few DC universe duds. Of course, the writers’ and actors’ strikes that have been upending the business for months were the main topic that everyone wanted to discuss.
Likewise, Warner Bros. Compared to some other leaders up to this point, Discovery had more specific projections. At Thursday’s results conference, Chief Financial Officer Gunnar Wiedenfels stated that “our modeling assumes a return to work date in early September,” despite the company’s hopes for a speedy settlement to the strike.
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Strikes Drag On
Should the strikes continue until the end of the year, I would anticipate an increase of several hundred million dollars in free cash flow and a slight decrease in adjusted EBITDA.
Or, to put it another way, stopping productions has reduced operational expenses (by around $100 million in the second quarter), but it will also leave studios, networks, and streamers short on material as the year goes on. Throughout the earnings call, executives brought up the strike again.
Chief Executive Officer David Zaslav avoided the ongoing disagreements between the writers’ (Writers Guild of America) and actors’ (Screen Actors Guild-American Federation of Television and Radio Artists) unions, which are defended by the Motion Picture and Television Producers Alliance.
He reaffirmed recent CEO demands for a fair agreement for all parties while omitting to describe what that may entail.
Warner Bros. Discoveries Lost: Streaming and Advertising Analysts had expected to see declines in streaming and advertising going into the call, and those predictions came true.
Zaslav pointed out that although it hurt other businesses, the overall softening of the advertising market had a particularly significant effect on Discovery because of its extensive cable holdings, which include TBS, TNT, Discovery Channel, CNN, HGTV, and more.
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Source: Forbes
