The ongoing strikes by Hollywood actors and writers have dealt a significant blow to Warner Bros Discovery, the entertainment conglomerate formed by the merger of Warner Bros and Discovery, Inc. These strikes, the first dual work stoppage of writers and actors in 63 years, have disrupted the industry, forcing major studios to adjust their schedules and costing California’s economy billions of dollars.
“Dune 2” Release Delay and Profit Impact: One of the most notable consequences of the actors’ strike is the delay of the highly anticipated sequel, “Dune 2.” Warner Bros movie studio announced last month that it would push back the planned November release to March due to the unavailability of its stars for promotional activities during the strike. This move was met with disappointment from fans and financial repercussions for Warner Bros Discovery.
The company had initially provided financial guidance for 2023, assuming that the strikes would be resolved by early September. However, with no resolution in sight, Warner Bros Discovery is now bracing for a hit to its full-year profit. Adjusted earnings are expected to decrease by approximately $300 million to $500 million for the year, with a projected range of $10.5 billion to $11 billion.
Max Willens, Senior Analyst at Insider Intelligence, remarked, “WBD’s updated guidance is likely directly attributable to its decision to push ‘Dune 2’ back to 2024… it’s likely WBD was expecting the sci-fi sequel to at least match the box office performance of its predecessor.”
Ripple Effects on Cinema Chains: The delays in major movie releases, including “Dune,” are not only impacting Warner Bros Discovery but also dealing a blow to cinema chains such as AMC Entertainment, Cineplex, and Cinemark. These chains are still in the process of recovering from the setbacks brought about by the COVID-19 pandemic, and “Dune” was among the most anticipated films on their late 2023 schedules.
CEO to Address Implications in Investor Conference: In response to these challenges, Warner Bros Discovery has announced that CEO David Zaslav will participate in an upcoming investor conference on September 6th. Among the topics expected to be discussed are the implications of the ongoing strikes and how the company plans to navigate this unprecedented disruption in the industry.
Despite these challenges, the studio is not without positive developments. Warner Bros Discovery is raising its full-year free cash flow expectations to at least $5 billion, with a particularly strong third quarter expected to exceed $1.7 billion. The success of the “Barbie” movie and certain strike-related factors are contributing to this positive outlook.
As the strikes continue to impact the entertainment landscape, all eyes are on Warner Bros Discovery’s leadership to guide the company through these turbulent times and adapt to the changing dynamics of the industry.