Hollywood's actors’ and writers’ strikes last year had Warner Bros. Discovery (WBD) in a chokehold, and not in a good way. The entertainment giant has just revealed how severe the monthslong strikes drained its pockets during the fourth quarter of 2023 and the year as a whole as it reported that its studio and content revenues took a major hit.
In May last year, the Writers Guild of America hit the picket lines for concerns such as streaming and the effect it had on residuals, and actors union SAG-AFTRA followed in WGA's footsteps two months later with similar concerns.
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Warner Bros. was one of the major studios that both unions were in negotiations with over their contracts. WGA ended its strike in September, and SAG-AFTRA exited the picket lines a month later as both unions were able to successfully settle on tentative contract agreements with the studios.
The strikes caused major fallout in Hollywood as many studios had to pause several film and TV productions as a result, which reportedly led to California’s economy facing a $6 billion loss.
Warner Bros. also took a significant hit financially as it revealed in its fourth-quarter earnings report that it earned only $10.2 billion in total revenue, which is a 7% decrease compared to the same quarter last year.
Its studio revenues for the quarter also decreased by 18%, and its content revenue shrunk by 20%, which it attributes to a decline in TV revenue claiming that it is “significantly primarily due to the impact of the WGA and SAG-AFTRA strikes and certain large licensing deals in the prior year.”
What offset some of the financial loss for Warner Bros. during the quarter was an increase in theatrical revenue from movie releases such as “Wonka,” “Aquaman and the Lost Kingdom” and “The Color Purple,” but most of those were also reported flops in the box office.
“Wonka, the co-financing partnership, has had great success at the global box office and performed well above expectations, while Aquaman and the Lost Kingdom and The Color Purple unfortunately did not,” said Gunnar Wiedenfels, chief financial officer at Warner Bros during a recent earnings call.
For 2023 entirely, Warner Bros. faces a 4% decrease in total revenue compared to 2022, and its studio revenues also decreased by 12%, which it claims is mainly from last year’s Hollywood strikes.
“The impact of the strikes contributed roughly $1 billion to free cash flow while negatively impacting our EBITDA by a few hundred million dollars,” said Wiedenfels during the earnings call.
Shortly after Warner Bros. released its fourth-quarter earnings, its stock plummeted by 12% and is currently selling for around $8.60 per share.
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