Warner Bros. Discovery CFO Reveals Company Has Saved Over $100 Million Due To Ongoing Writers And Actors Strike
Warner Bros. Discovery Chief Financial Officer (CFO) Gunnar Weidenfels recently revealed the company has saved over $100 million due to the ongoing Writers Guild of America (WGA) and SAG-AFTRA strikes.
During the company’s Q2 2023 Earnings Results webcast, Weidenfels touted the company’s $1.7 billion in free cash flow and pointed to a number of factors contributing to it.
One of the points is cost savings due to the WGA and SAG-AFTRA strikes, he said, “Modest cash savings from the impact of the WGA and SAG-AFTRA strikes, which we estimate were in the low $100 million range during the quarter.”
Later during the webcast Weidenfels said, “Uncertainty in the studio segment has increased with the dual strikes. This may have implications for the timing and performance of the remainder of the film slate as well as our ability to produce and deliver content.”
He continued, “While we are hoping for a fast resolution, our modeling assumes a return to work date in early September, should the strikes run through the end of the year, I would expect several $100 million of incremental upside to our free cash flow guidance and some incremental downside for adjusted EBITDA.”
RELATED: Report: SAG-AFTRA Strike Costing Studios “About $600,000 Per Week”
This appears to fly in the face of a report from Variety’s Brent Lang, Tatiana Siegel, and Matt Donnelly that cited an anonymous media CEO claiming the strikes were costing studios $600,000 per week.
They quoted the CEO saying, “The collateral damage from the work stoppage is intense and unyielding. For big-budget projects like Gladiator 2 and Deadpool 3, the cost of holding on to soundstages packed with sets and costumes runs about $600,000 per week.”
As for where Warner Bros. Discovery stands on the strikes, CEO David Zaslav addressed the strike in his opening remarks as well as later on during the Q&A portion of the webcast.
In his opening remarks he stated, “We’re in the business of storytelling. Our goal is to tell great stories. Stories with the power to entertain, and, when we’re at our best, inspire with stories that come to life on screens big and small.”
“We cannot do any of that without the entirety of the creative community, the great creative community,” he continued. “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. 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.”
In the Q&A portion Zaslav said, “On the strike, I’m very focused on it because this is our business. This is all we do. And it’s critically important that everybody, the writers, the directors, the actors, the producers, all the below-the-line crews– everybody needs to be fairly compensated and they need to feel valued and feel they are fairly compensated in order to do their best work. And we have to focus on getting that done. So I’m hopeful that it’s going to happen soon.”
“I think all of us in this business are very keen to figure out a solution as quickly as possible. We are in some uncharted waters in terms of the world as it is today and measuring it all. And so I think in good faith 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 fairly valued,” he concluded.
Elsewhere in the call, Zaslav did indicate the company was well positioned for the strike. He touted the company’s ability to create unscripted content saying, “Our ability to make unscripted content quickly, inexpensively, and tailored to viewers’ preferences is also a key differentiator. And we believe this optionality provides us with greater longevity and sustainability.”
While asked about the company’s content licensing strategy, Zaslav said, “We have one of the best TV and motion picture libraries in the world. If you look at the overall economics, I think we’re actually below the last couple of years in terms of what we’re selling. If the strike continues there may be more demand. We are always looking to maximize. We’re hoping this strike gets settled as soon as possible. It’s important. It’s important that we get going, that we get back to work doing what we love. We are hoping this strikes get resolved soon.”
Zaslav’s remarks about resolving the strike are in sharp contrast to Disney CEO Bob Iger who told CNBC’s David Faber in July, “Well, I think it’s very disturbing to me. I, you know, we’ve talked about disruptive forces on this business and all the challenges that we’re facing and the recovery from Covid, which is ongoing, it’s not completely back. This is the worst time in the world to add to that disruption.”
“I understand any labor organizations’ desire to work on the behalf behalf of its members to get, you know, the most compensation and to be compensated fairly based on the value that they deliver,” Iger continued. “We managed as an industry to negotiate a very good deal with the Directors Guild that reflects the value that the directors contribute to this great business. We wanted to do the same thing with the writers and we’d like to do the same thing with the actors.”
However, he then stated, “There’s a level of expectation that they have that is just not realistic and they are adding to a set of challenges that this business is already facing that is quite frankly very disruptive and dangerous.”
When asked to explain what he meant by their demands being unrealistic, Iger punted, “I can’t, I can’t answer that question. I, again, I respect their right and their desire to get as much as they possibly can in compensation for their people, You know, I completely respect that. I’ve been around long enough to understand that dynamic and to appreciate it. But you also have to be realistic about the business environment and what this business can deliver.”
He concluded, “It is and has been a great business for all of these people and it will continue to be even through disruptive times. But, you know, being realistic, is imperative here.”
What do you make of this revelation that Warner Bros. Discovery has actually saved over $100 million due to the strikes?
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