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Investago | Strikes are causing troubles for Warner Bros.
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Strikes are causing troubles for Warner Bros.

Warner Bros., one of Hollywood's legendary film studios, is facing a storm of challenges as strikes and labor disputes sweep through its production teams. These labor actions have disrupted some of the industry's most highly anticipated film and television projects, raising concerns about the studio's bottom line and its reputation in the entertainment world. In this analysis, we delve into the strikes plaguing Warner Bros., their impact on the entertainment giant, and the potential ramifications for the broader film and television industry.

Strikes will damage the revenue

Warner Bros Discovery is preparing for a significant dent in its annual profit as the Hollywood actors and writers strike persists without signs of abating. Hollywood is grappling with its first dual work stoppage of writers and actors in over six decades, leading to widespread production halts and substantial economic losses in California. The actors' strike has forced movie studios to reorganize film schedules, given the absence of celebrities for promotional activities. Warner Bros Movie Studio, for instance, recently announced the postponement of the highly anticipated "Dune" sequel from November to March due to the strike. Initially, Warner Bros Discovery had provided financial guidance for 2023 with the assumption that the strikes would be resolved by early September. However, now the company foresees adjusted earnings taking a hit of approximately 300 million to 500 million USD for the full year, estimated in the range of 10.5 billion to 11 billion USD.[1] This financial setback, largely attributed to the delay of Dune 2, underscores the film's expected box office performance and its significance to Warner Bros Discovery's revenue stream.

Dune and Lord Of The Rings delayed

Warner Bros Movie Studio has made the decision to postpone the eagerly awaited release of the high budget Dune sequel from its initial November schedule to March due to the ongoing actors' strike, preventing its stars from engaging in promotional activities for the film. This setback presents a significant challenge for cinema chains like AMC Entertainment, Cineplex, and Cinemark, which are still on the path to recovery from the impacts of the COVID-19 pandemic. The rescheduled release date, March 15, was previously reserved for Warner Bros' film "Godzilla x Kong: The New Empire," which has been pushed to April 12 as a result. In turn, this rescheduling has prompted the relocation of an animated Lord of the Rings film, originally planned for April, to December.

Dune: Part Two, featuring Zendaya and Timothée Chalamet in a sci-fi sequel based on Frank Herbert's novel, generated 402 million USD at the global box office with its first installment in 2021. However, with top stars refusing to promote upcoming projects due to the actors' strike, movie studios across the industry are having to adjust their film schedules, particularly concerning promotional activities.

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Movement of Warner Bros Discovery stocks since coming to the market. (Source: Google Finance) *

* Past performance is no guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.

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