General Entertainment WBD will take a $300 million to $500 million charge against earnings due to the twin Hollywood strikes

[Commissar SFLUFAN]

Warner Bros. Discovery Says It Will Take $300 Million-$500 Million Hit in 2023 Earnings Due to Dual WGA/SAG-AFTRA Strikes

VARIETY.COM

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Warner Bros. Discovery expects the ongoing Hollywood strikes to have a $300-$500 million negative impact on the company's 2023 earnings.

 

Quote

 

Warner Bros. Discovery expects the ongoing Hollywood strikes to have a $300-$500 million negative impact on the company’s 2023 earnings.

 

In an SEC filing Tuesday, the David Zaslav-led media giant stated it was expecting lower adjusted earnings for the full year between $10.5-$11 billion, based on the projection that the continuing WGA and SAG-AFTRA work stoppages will mean a hit of $300 to $500 million for the company.

 

The WGA strike began May 2 after it failed to ink a new deal with the studios’ org, the AMPTP. SAG-AFTRA joined them on the picket lines July 14.

 

“While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end,” Warner Bros. Discovery wrote. “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.”

 

Warner Bros. Discovery released this update on its financials ahead of Zaslav participating in an investor conference Wednesday, during which he is expected to discuss the impact of the dual strikes on the company. Without this new information, the investors and analysts listening to Zaslav’s remarks would be working off the most recent financial forecast provided by WBD about the state of its business, which was the Q2 earnings call Aug. 3, when the company had assumed the strikes would be resolved by early September.

 

 

[CitizenVectron]

Release Dune 2, you cowards.

[TheLeon]

1 hour ago, CitizenVectron said:

Release Dune 2, you cowards.

They can’t, not without their marketing team Zendaya’s Instagram.

[Firewithin]

i think i saw somewhere that it would like 50M to settle the strike stuff and they would rather take this hit.  they are COOKIN some books and dont want it known 

[CitizenVectron]

23 minutes ago, Firewithin said:

i think i saw somewhere that it would like 50M to settle the strike stuff and they would rather take this hit.  they are COOKIN some books and dont want it known 

 

Either their streaming numbers are much lower than they say (which means they have been lying to investors/committing some kind of fraud) or they are much higher than they say (which means they've been massively underpaying residuals/committing some kind of fraud).

[Commissar SFLUFAN]

36 minutes ago, Firewithin said:

i think i saw somewhere that it would like 50M to settle the strike stuff and they would rather take this hit.  they are COOKIN some books and dont want it known 

 

This requires some clarification.

 

The estimated cost to WBD (and only WBD) to settle the writer's strike only is around $50 million per year, not a one-time charge of $50 million.

[Firewithin]

34 minutes ago, Commissar SFLUFAN said:

 

This requires some clarification.

 

The estimated cost to WBD (and only WBD) to settle the writer's strike only is around $50 million per year, not a one-time charge of $50 million.

True but they would still be willing to eat 100s of Mil instead a year. Of course with the strike its not like they got anything much to lose it all on anyway

[Commissar SFLUFAN]

4 minutes ago, Firewithin said:

True but they would still be willing to eat 100s of Mil instead a year. Of course with the strike its not like they got anything much to lose it all on anyway

 

Have zero doubt that studio financial analysts have conducted rigourous Net Present Value (NPV) calculations and determined that the loss of those hundreds of millions of dollars pales in comparison to the perpetual extra costs that acquiescing to the strike demands would incur.

[SoberChef]

5 hours ago, Firewithin said:

i think i saw somewhere that it would like 50M to settle the strike stuff and they would rather take this hit.  they are COOKIN some books and dont want it known 

Gotta love Hollywood "math"

[Jason]

I used to be friends with a talent agent, I'm sure he's supremely pleased with himself right now that he pivoted to e-sports a few years ago.

[Spork3245]

7 hours ago, Commissar SFLUFAN said:

 

This requires some clarification.

 

The estimated cost to WBD (and only WBD) to settle the writer's strike only is around $50 million per year, not a one-time charge of $50 million.

I know you were just clarifying, but a loss of $300-500m in a single quarter (and probably growing next quarter) vs $50m/year is lol. WTF is wrong with these companies.

[Fizzzzle]

9 hours ago, CitizenVectron said:

 

Either their streaming numbers are much lower than they say (which means they have been lying to investors/committing some kind of fraud) or they are much higher than they say (which means they've been massively underpaying residuals/committing some kind of fraud).

I've been shouting from the mountain tops for a while, it says a lot that Disney was willing to do anything to keep the ScarJo lawsuit from going to trial. Why? Because if it went to trial, Disney would have been forced to publicly disclose all of their streaming revenue. Paying ScarJo $50 million (or whatever it ended up being) just to shut her up was worth it to them.

 

As you say, they're purposefully obfuscating their streaming revenue.

 

I feel like the whole "AI is going to take our jobs" thing is just a smoke screen. The real issue is streaming revenue. They don't want you to know how much it is and where it goes.

[BloodyHell]

5 hours ago, Fizzzzle said:

I've been shouting from the mountain tops for a while, it says a lot that Disney was willing to do anything to keep the ScarJo lawsuit from going to trial. Why? Because if it went to trial, Disney would have been forced to publicly disclose all of their streaming revenue. Paying ScarJo $50 million (or whatever it ended up being) just to shut her up was worth it to them.

 

As you say, they're purposefully obfuscating their streaming revenue.

 

I feel like the whole "AI is going to take our jobs" thing is just a smoke screen. The real issue is streaming revenue. They don't want you to know how much it is and where it goes.

Lol no, they don’t want people getting their emails and correspondence. Settling lawsuits is rarely just about money, it’s about not exposing their c-suite executives. They aren’t scared of the costs, they’re scared of everything else. The dirt in the subpoenas is far more damaging than paying ScarJo is. 
 

it’s also doubtful she got anywhere near 50m.

[BloodyHell]

7 hours ago, Spork3245 said:

I know you were just clarifying, but a loss of $300-500m in a single quarter (and probably growing next quarter) vs $50m/year is lol. WTF is wrong with these companies.

It’s minor compared to decades of future revenue hits on residuals.

[Spork3245]

13 minutes ago, BloodyHell said:

It’s minor compared to decades of future revenue hits on residuals.

 

Is the $50m/year estimate not with residuals? Because $500m in lost potential rev is 10 years worth of that, then factor in next Q likely being significantly worse (as the well of all of the unreleased post production content that they've still been able to put out is now dried up) and it's more like 25+ years worth, and getting worse each and every month.

[Ghost_MH]

7 hours ago, Spork3245 said:

I know you were just clarifying, but a loss of $300-500m in a single quarter (and probably growing next quarter) vs $50m/year is lol. WTF is wrong with these companies.

 

Capital expenses do hurt, but that pain is temporary compared to a permanent increase in operating expenses.

[Spork3245]

1 minute ago, Ghost_MH said:

 

Capital expenses do hurt, but that pain is temporary compared to a permanent increase in operating expenses.

 

2 minutes ago, Spork3245 said:

 

Is the $50m/year estimate not with residuals? Because $500m in lost potential rev is 10 years worth of that, then factor in next Q likely being significantly worse (as the well of all of the unreleased post production content that they've still been able to put out is now dried up) and it's more like 25+ years worth, and getting worse each and every month.

 

It's only a drop in the bucket if this is a one time miss of potential rev: it's not. It grows every day.

[BloodyHell]

Just now, Spork3245 said:

 

Is the $50m/year estimate not with residuals? Because $500m in lost potential rev is 10 years worth of that, then factor in next Q likely being significantly worse (as the well of all of the unreleased post production content that they've still been able to put out is now dried up) and it's more like 25+ years worth, and getting worse each and every month.

There is far more than just the revenue, they want guarantees on staff size, minimum number of weeks per season on shows, and frankly a lot of it MAY be that they don’t have to even consider the writers demands until SAG strike is taken care of. At this point, WGA is the least important union. So why not starve the WGA while they deal with SAG? I don’t actually know, that’s just a guess.

 

obviously their math shows the losses aren’t as bad as capitulation.

[Spork3245]

3 minutes ago, BloodyHell said:

There is far more than just the revenue, they want guarantees on staff size, minimum number of weeks per season on shows, and frankly a lot of it MAY be that they don’t have to even consider the writers demands until SAG strike is taken care of. At this point, WGA is the least important union. So why not starve the WGA while they deal with SAG? I don’t actually know, that’s just a guess.

 

And is it not included in the $50m/year estimate?

 

3 minutes ago, BloodyHell said:

obviously their math shows the losses aren’t as bad as capitulation.

 

There's no proof of this and you're making an assumption: they're trying to "starve them out" and likely were expecting them to cave by now, like last time. Another quarter of this and I have no idea how the math could be in their favor when we're talking about potentially over $1b of losses in just 6-months.

[Ghost_MH]

2 minutes ago, Spork3245 said:

 

 

No money is leaving their pocket right now, though. That's just an estimate on potential future losses that have yet to be realized. I don't think investors care about what the numbers will look like in 25 years or even in the next ten. They'd likely be more concerned with being sure that revenue is back up in 2024 versus a single hit in the back half of 2023.

[Spork3245]

5 minutes ago, Ghost_MH said:

No money is leaving their pocket right now, though. That's just an estimate on potential future losses that have yet to be realized.

 

Yes, I understand that. And when you're slashing estimates by over 5%, that's not a good thing.  

 

5 minutes ago, Ghost_MH said:

They'd likely be more concerned with being sure that revenue is back up in 2024 versus a single hit in the back half of 2023.

 

 

I dunno, down 20% since the adjusted Q3 estimate isn't exactly good. 

Further, it's going to be a rough path of getting rev back up in 2024 unless the strike is over. Every day potential rev is lost and the loss increases as they run out of content from their back burners. Not to mention it'll take months to get new shows/movies out once the strike eventually ends.

[Greatoneshere]

On top of lost revenue, not sure how hurting your business relationships en masse with the very necessary WGA and SAG is good for future profits? I mean, Nolan won't even work with WB anymore after the shit they pulled on him with Tenet, just as a very public example of this which is why they aren't involved in Oppenheimer. That may not seem like a big deal in the short term, but I think it's gonna hurt business as well.

[Brian]

WBD is already losing billions in OI and CF. Add Flash, Blue Beetle and another $500M? 

 

The message: WBD is a shit company. 

[BloodyHell]

6 hours ago, Spork3245 said:

 

And is it not included in the $50m/year estimate?

 

 

There's no proof of this and you're making an assumption: they're trying to "starve them out" and likely were expecting them to cave by now, like last time. Another quarter of this and I have no idea how the math could be in their favor when we're talking about potentially over $1b of losses in just 6-months.

50m a yr from writers. And ive seen other reports putting it as high as 80m. 
 

Now add in SAG’s demands, which will obviously cost even more. 
 

I think the idea that studio’s are hurting is a bit far fetched. They aren’t putting out hundreds of millions or more per quarter either. And they are pulling in revenue from services still, even if its not what they expected. 
 

Disneys last few movies lost them a few hundred million. These companies are able to absorb loss better than average union members can. They have obviously decided it’s not worth it to meet current demands.

[Spork3245]

28 minutes ago, BloodyHell said:

50m a yr from writers. And ive seen other reports putting it as high as 80m. 

That’s still significantly less than the loss in revenue in, again, just a single quarter.

 

28 minutes ago, BloodyHell said:

Now add in SAG’s demands, which will obviously cost even more. 
 

 

Uh-huh. And how much more?

 

28 minutes ago, BloodyHell said:

I think the idea that studio’s are hurting is a bit far fetched.

 

I never stated this.

 

28 minutes ago, BloodyHell said:

 

Disneys last few movies lost them a few hundred million.

Movies that don’t turn profits can become write offs and recoup over time, movies that don’t exist cannot.

[BloodyHell]

2 hours ago, Spork3245 said:

That’s still significantly less than the loss in revenue in, again, just a single quarter.

 

 

Uh-huh. And how much more?

 

 

I never stated this.

 

Movies that don’t turn profits can become write offs and recoup over time, movies that don’t exist cannot.

 

And again, does it prove anything? You’re making claims with no more insight than anyone else. Obviously the studio’s have decided negotiation is more expensive than waiting it out. 
 

I have no love for WBD, so in the end I don’t care if it hurts them, but there’s definitely been math done and a decision made.

 

SAG will probably cost them a lot more. No numbers, but it’ll be far higher just based off memberships alone. (~160000 SAG vs less than 12000 WGA members)

[Fizzzzle]

11 hours ago, BloodyHell said:

Lol no, they don’t want people getting their emails and correspondence. Settling lawsuits is rarely just about money, it’s about not exposing their c-suite executives. They aren’t scared of the costs, they’re scared of everything else. The dirt in the subpoenas is far more damaging than paying ScarJo is. 
 

it’s also doubtful she got anywhere near 50m.

The only source we have so far says she got at least $40 million (I think she initially sued for $80m). How accurate that is, who can say.

 

Point still stands, the issue of that lawsuit was streaming revenue, and Disney was willing to pay hand over fist to make it go away. Like riley said, either they aren't making as much from streaming as they say they are and they're lying to their investors, or they're making far more than they claim so they can lie to their workers. Either way, they're lying to someone and that case going to trial would have exposed it.

 

It should be noted that at the time of the Scarlett Johansson settlement (September of 2021), Disney's stock price was coasting at an all-time high of around $180, so it is possibly more accurate that they *weren't* making as much as they said they were and they wanted to keep that stock price afloat.

[Commissar SFLUFAN]

On 9/5/2023 at 7:18 PM, CitizenVectron said:

Either their streaming numbers are much lower than they say (which means they have been lying to investors/committing some kind of fraud) or they are much higher than they say (which means they've been massively underpaying residuals/committing some kind of fraud).

 

17 hours ago, Fizzzzle said:

I've been shouting from the mountain tops for a while, it says a lot that Disney was willing to do anything to keep the ScarJo lawsuit from going to trial. Why? Because if it went to trial, Disney would have been forced to publicly disclose all of their streaming revenue. Paying ScarJo $50 million (or whatever it ended up being) just to shut her up was worth it to them.

 

As you say, they're purposefully obfuscating their streaming revenue.

 

31 minutes ago, Fizzzzle said:

Point still stands, the issue of that lawsuit was streaming revenue, and Disney was willing to pay hand over fist to make it go away. Like riley said, either they aren't making as much from streaming as they say they are and they're lying to their investors, or they're making far more than they claim so they can lie to their workers. Either way, they're lying to someone and that case going to trial would have exposed it.

 

It should be noted that at the time of the Scarlett Johansson settlement (September of 2021), Disney's stock price was coasting at an all-time high of around $180, so it is possibly more accurate that they *weren't* making as much as they said they were and they wanted to keep that stock price afloat.

 

Ahem...

 

Investors Sue Disney Over Alleged Chapek Era “Cost-Shifting Scheme” to Hide Streaming Losses

WWW.HOLLYWOODREPORTER.COM

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The suit takes aim at former CEO Bob Chapek's lofty subscriber growth and profitability targets for Disney+. The entertainment giant faces a host of litigation dealing with efforts to boost subscriptions for its streaming service.

 

Quote

 

As Disney stock hovers at its lowest levels in nearly a decade, the company was hit with another lawsuit alleging it misled investors about the success of Disney+ by concealing the true costs of operating the platform.

 

Disney is being accused of lying about the extent of its losses to hit lofty subscriber growth targets and claiming that the streaming service was on track to achieve profitability by the end of 2024. Investors detail a scheme to “inappropriately shift costs” by debuting content created for Disney+ on legacy platforms to move marketing and production costs.

 

The complaint filed on Aug. 23 in California federal court is at least the third taking issue with the company’s efforts to boost subscriptions for its streaming platform. It faces an identical investor suit over an alleged “cost-shifting scheme” in its streaming division and claims that it obstructed a deal between TSG Entertainment Finance and 20th Century Studios, which Disney owns, to “prop up” Disney+ and inflate its stock price. 

 

The suit claims that company executives hid the expense and difficulty of maintaining subscriber growth as it suffered “staggering costs” to create content. In an effort to hide losses, the complaint claims, former chief executive Bob Chapek, his lieutenant Kareem Daniel and former CFO Christine McCarthy aired The Mysterious Benedict Society and Doogie Kameāloha, M.D. — which were supposed to be Disney+ originals — on the Disney Channel to make the streaming service appear more successful than it actually was.

 

 

[Spork3245]

8 hours ago, BloodyHell said:

 

And again, does it prove anything?

 

Prove what? What am I trying to prove? I lol’d at them rather losing $500m in 3 months, and probably over a billion in 6 months, vs paying out $50m/year. If you think I was making some point in that post rather than just lol’ing/jfc’ing at the absurdity of the situation, you’re reading way too much into it. You’re the one that seems to be making claims and trying to “prove” things here  

 

8 hours ago, BloodyHell said:

You’re making claims with no more insight than anyone else.

lolololololololololol

My “claims” are the numbers and information given and really nothing else.

 

8 hours ago, BloodyHell said:

Obviously the studio’s have decided negotiation is more expensive than waiting it out. 

We don’t know how long they planned for this to go. For all we know the studios are just digging their heels in at this point.

 

8 hours ago, BloodyHell said:

I have no love for WBD, so in the end I don’t care if it hurts them, but there’s definitely been math done and a decision made.

 

That math ends after a point
 

8 hours ago, BloodyHell said:

SAG will probably cost them a lot more. No numbers, but it’ll be far higher just based off memberships alone. (~160000 SAG vs less than 12000 WGA members)

Is it more or less than $1b in 6 months?

[BloodyHell]

4 hours ago, Spork3245 said:

 

Prove what? What am I trying to prove? I lol’d at them rather losing $500m in 3 months, and probably over a billion in 6 months, vs paying out $50m/year. If you think I was making some point in that post rather than just lol’ing/jfc’ing at the absurdity of the situation, you’re reading way too much into it. You’re the one that seems to be making claims and trying to “prove” things here  

 

lolololololololololol

My “claims” are the numbers and information given and really nothing else.

 

We don’t know how long they planned for this to go. For all we know the studios are just digging their heels in at this point.

 

 

That math ends after a point
 

Is it more or less than $1b in 6 months?

Pretending the calculation is about how much they “lose” in 6 months is ridiculous. If it was dire for the studio, they would be negotiating. Pretending they dug in their heels for spite is ridiculous. One company, maybe, but a whole industry? No.

[Spork3245]

3 hours ago, BloodyHell said:

Pretending the calculation is about how much they “lose” in 6 months is ridiculous.

WBD made the announcement of current ER slashed by 5%. It’s lost revenue, and as I’ve stated multiple times, but, I’ll make it clearer since you aren’t reading my replies:

On 9/6/2023 at 10:29 AM, Spork3245 said:

 

 

It's only a drop in the bucket if this is a one time miss of potential rev: it's not. It grows every day.

 

 

3 hours ago, BloodyHell said:

Pretending they dug in their heels for spite is ridiculous.

I guess you didn’t read the “for all we know” in my reply, or missed the reports ITT that their current strategy is to “starve them out” because “it worked last time”. Sounds pretty spiteful to me!

 

EDIT/Correction: The mentions of the current strategy are in the strike thread.

[Spawn_of_Apathy]

I’m guessing it could be higher if they hadn’t stopped spending $250m+/project on trying to make movies and tv shows while the strikes drag on. But at a certain point they’re spending money on property and staff that are in no way contributing to revenue.