Warner Bros. Discovery (WBD) -) shares moved higher Monday even after the entertainment and studio group said the ongoing Hollywood actors' and writers' strike would clip nearly half a billion dollars from its full year profits.
Warner Bros trimmed its full year earnings forecast, which now sees adjusted earnings of between $10.5 billion and $11 billion, while raising its free cash flow estimate to around $5 billion in a Securities and Exchange Commission filing on Tuesday.
The group said the impact of the Writers Guild of America and the Screen Actors Guild strikes, which it had forecast to end in September, would likely rise to between $300 million and $500 million by the end of the year.
Late last month, the group's studio division said it would delay the release of its "Dune: Part Two" sequel, originally set for November, until at least March of next year following a warning from CEO David Zaslav that the industry is in "unchartered waters" as a result of the industrial action at the heart of the global movie industry.
In its second quarter earnings update on August 3, Warner Bros. cautioned that if the writers' and actors' strike industrial action extend into the end of the year, it would see improved cash flow but take a hit to its overall bottom line "due to the strikes’ impact on timing and performance of the remainder of the 2023 film slate, as well as the company’s ability to produce and deliver content."
"Warner Bros. Discovery 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," the company said in the SEC filing.
"While Warner Bros. Discovery is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end," the statement added. "With both guilds still on strike today, the Company now assumes the financial impact to Warner Bros. Discovery of these strikes will persist through the end of 2023."
Warner Bros. Discovery shares were marked 2.5% higher in early Tuesday trading following the SEC filing to change hands at $11.88 each, a move that would trim their six-month decline to around 21.4%.
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