Warner Bros. Discovery Cuts EBITDA Forecast By Up To $500M, Citing Strikes' Impacts

Warner Bros. Discovery (WBD) now expects its 2023 EBITDA to come in $300 million to $500 million lower than previously forecast, primarily due to the impacts of the ongoing Writers Guild of America (WGA) and SAG-AFTRA strikes.

The guidance adjustment was reported in a filing with the Securities and Exchange Commission on Tuesday.

EBITDA (earnings before interest, taxes, depreciation and amortization) are now expected to come in at between $10.5 billion and $11 billion.

The company’s previous guidance in its August 3 Q2 earnings call was based on the assumption that the strikes would be over by early this month.

“While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end,” the filing states, adding that WBD “continues to prioritize and work diligently with other industry leadership to resolve the current WGA and SAG-AFTRA strikes in a manner that is fair and values the important work of, and partnership with, the writers and actors.”



WBD also warned that the strikes could have negative effects on the “timing and performance of the remainder of the 2023 film slate,” as well as the company’s “ability to produce and deliver content.”

On the plus side, WBD raised its free cash-flow expectation for the year to at least $5 billion -- including more than $1.7 billion in free cash flow in Q3, partly as a result of the record box-office performance of “Barbie,” and in part due to lower spending in some areas as a result of the strikes.

It also reported that for the present, it will maintain its net leverage target of below 4X for 2023 and gross leverage target of 2.5X to 3X for 2024.

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