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Wednesday, 8 November 2023

Deadline: Warner Bros. Discovery CEO David Zaslav “Hopeful” For Resolution To SAG-AFTRA Strike As He Touts Studios’ Final Offer; Hints At M&A

Story from Deadline:

“Let me start by saying that we are hopeful we will reach a resolution to the SAG-AFTRA strike,” Warner Bros. Discovery CEO David Zaslav said Wednesday at the top of the company’s post-earnings call with Wall Street. “We made a last and final offer, which met virtually all of the union’s goals, and includes the highest wage increase in 40 years, and I believe it provides for a positive outcome for all involved. We recognize that we need our creative partners to feel valued and rewarded and look forward to both sides getting back to the business of telling great stories.”

Zaslav, who has been directly involved in the most recent rounds of negotiations on the strike, has spoken in the same vein before about the SAG-AFTRA and (now-settled) WGA strikes. But actors are closer now with the AMPTP’s last and final offer currently being tweaked.

The strike hit Warner Bros. Discovery, the industry’s biggest content producer hard in the third quarter, with production at a standstill. It will squeeze the current fourth quarter too and the impact will likely spill into 2024, said CFO Gunnar Weidenfels.

“As as we begin to formulate the initial framework or TV production business getting back to work into 2024, there is simply a lot we don’t know yet. We have every confidence that this will eventually work itself out throughout the next year. And there should be an eventual tailwind from the end of the work stoppage. This is an evolving process. And there is a real risk at this point that some negative financial impact of the strike will extend into 2024.”

The actors guild and studios appear to be in the final phase of contract talks with AI the outstanding issue.

The biggest producer of television and motion pictures, Warner Bros. Discovery said its streamer Max lost subscribers last quarter on the lightest original content schedule in years. The next installment of True Detective was pushed out because “we didn’t have Jodie Foster to promote it,” Zaslav said. It will be coming next year along with a beefed-up lineup including The Regime starring Kate Winslet, The Sympathizer with Robert Downey Jr., The Franchise comedy series about superhero moviemaking created by Armando Iannucci and Sam Mendes, and limited series The Penguin based on the DC Comics character starring Colin Farrell. New seasons of House of the Dragon and Curb Your Enthusiasm are also on the way.

“We’re coming off of a quarter with virtually no fresh content on the platform. We want to get behind that when we come back, when Casey’s content comes back to the platform. … We have a real opportunity here,” said Weidenfels, referring to HBO content chief Casey Bloys. The ace programming executive, who’s had a recent contretemps involving trolling TV reviewers, was mentioned a number of times on the call.

The execs had a clear message today: Warner Bros. Discovery’s newfound strength and stability. That despite a mixed third quarter, it has finally morphed into a relatively healthy company with strong cash flow and streaming profits that is steadily paying down debt. That it’s in a way better place than it was a year ago and in a superior position to some its peers, who may need to be on guard.

“This is a generational disruption we’re going through. With a streaming service that’s losing billions of dollars, you know, it’s really, really difficult to go on offense. It’s difficult to maneuver. And with interest rates where they are at, the challenges in the marketplace, [weak] advertising, this is when you’re going to see which are the real companies,” Zaslav said. “This is a company that’s generating over $5 billion in free cash flow. We’ve paid down $12 billion in debt. What that gives us is stability and sustainability. And ultimately, in a difficult environment, it’s going to give us optionality because we’re surrounded by a lot of companies that don’t have the geographic diversity that we have, aren’t generating real free cash flow, have debt.

“We’re delivering at a time when our peers are levering up. At a time when our peers are unstable. And there is a lot of excess competition, excess players in the market. So this will give us a chance, not only to fight to grow in the next year, but to have the kind of balance sheet and the kind of stability…that we could be really opportunistic over the next 12 to 24 months.”

He didn’t opine on potential targets.

© 2023 Deadline Hollywood.