Warner Bros. Discovery’s CFO, Gunnar Wiedenfels, discussed the impact of strikes on the company’s finances during the Q2 earnings call. While the CEO, David Zaslav, remains hopeful for a resolution, Wiedenfels revealed that the strikes resulted in “modest cash savings” amounting to an estimated low $100 million during the quarter.
On a positive note, the company’s free cash flow for Q2 was remarkable, reaching $1.7 billion. This figure was more than double that of Q2 2022 and surpassed Wall Street’s predictions. Looking ahead, Wiedenfels projects an additional $1.7 billion in cash flow for Q3, with larger savings anticipated due to the strikes and the success of the Barbie movie, which has grossed close to $1 billion worldwide. These factors are expected to contribute to a total free cash flow of $4.5 billion for the year, with adjusted EBITA projected to be around $11 billion to $11.5 billion.
However, Wiedenfels cautions that their outlook assumes a return to work in early September. If the strikes continue until the year’s end, there could be several hundred million dollars in incremental upside to their free cash flow guidance, along with some downside to their adjusted EBITA.
Regarding the company’s entertainment releases, Wiedenfels hinted that more theatrical release date changes may be necessary due to the ongoing strikes. The situation has made the release dates and performance expectations for feature films and Warner Bros TV production fluid, leading the company to reassess options and update the market accordingly.
Zaslav expressed his strong desire for a swift resolution to the strikes during the call, emphasizing the company’s focus on resolving the issue. Warner Bros. Discovery faced a challenging second quarter and is now aiming for $5 billion in merger savings.
However, shareholders expressed concerns about Zaslav’s compensation for 2022, which totaled nearly $39.3 million. In comparison, the figure was significantly higher at $246 million in 2021 due to a substantial option grant.
The company remains cautiously optimistic but is closely monitoring the situation with the hope of reaching a resolution soon.
