David Zaslav is confident that Warner Bros. Discovery will be able to resume production on its films and television shows “very quickly” once the SAG-AFTRA and Writers’ Guild of America strikes are resolved.
“We are ready and raring,” the CEO told analysts during an investor conference hosted by Goldman Sachs on Wednesday. “As soon as these strikes are resolved, everybody is ready to get back to work.”
His comments come as the WGA has been on strike for over 100 days and SAG-AFTRA has been on strike for over a month. While the WGA and AMPTP have returned to the negotiating table, a formal deal remains out of reach. Some in the industry are looking to the end of September in hopes of a deal being reached to avoid significant disruption to the fall broadcast schedule.
“People need to be compensated fairly and they need to feel valued,” Zaslav added. “I was in L.A. the last two days and we really have to focus as an industry and we are on trying to get this resolved in a way that’s really fair and everyone feels fairly treated.”
On Tuesday, WBD updated its financial guidance, with the company now expecting to take a $300 million-$500 million hit to adjusted EBITDA due to the strikes. It expects adjusted EBITDA for the full year in the range of $10.5 billion to $11 billion.
Additionally, the company raised its free cash flow expectations for the year to at least $5 billion, with $1.7 billion expected in the third quarter of 2023, in part due to “the strong performance of Barbie as well as incremental impact from strike-related factors.” Zaslav expects free cash flow to be “meaningfully more” than those estimates.
“If we can get [the strikes] resolved soon, then the longer-term impacts will be minimized,” he added. “But there is real industry challenges here.”
WBD has already delayed “Dune: Part 2” and “Godzilla x Kong: The Lost Empire” as a result of the strikes.
In addition to the guidance changes on adjusted EBITDA and free cash flow, WBD maintained that it would achieve net leverage below 4 times by the end of 2023 and a target gross leverage range of 2.5 to 3 times by the end of 2024.
When asked about how M&A fits into WBD’s strategy moving forward, Zaslav said that the company would be focused on investing in the business once its leverage targets are reached.
“I don’t think we need other big assets, but I think the opportunity to look at IP and also the opportunity to have a balance sheet where we could buy things if we feel that we need them will make us really unusual in a crowded media space where free cash flow and real growth is hard to find,” he added.
Shares of Warner Bros. Discovery have climbed 20.4% year to date.
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