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Warner Bros. Discovery Cash Woes Could Hit Sports Rights

  • Filing details projected hit of $300 million to $500 million in adjusted earnings from strikes
  • Company seeking a renewal of NBA rights, but on very different terms than current deal
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The ongoing Hollywood writers’ and actors’ strikes have already dealt a significant financial blow to Warner Bros. Discovery — and now could ultimately impact the company’s ability to acquire additional sports rights.

On Tuesday, the parent of networks such as TBS and TNT said in a filing with the U.S. Securities & Exchange Commission that the tandem Hollywood strikes — the first such paired actions since 1960 — have negatively impacted its projected full-year adjusted earnings by about $300 million to $500 million. 

“While WBD is hopeful that these strikes will be resolved soon, it cannot predict when the strikes will ultimately end,” the company said. “With both guilds still on strike today, the company now assumes the financial impact to WBD of these strikes will persist through the end of 2023.”

It is already a delicate period for WBD. Having gone through multiple waves of layoffs over the past 17 months, the company is now seeking a new NBA rights deal to succeed the current one expiring in 2025, but with changes to reflect the transforming media landscape.

WBD officials have downplayed the potential impact on sports, and other major programmers face similar challenges due to the strikes. But some analysts have still conveyed concern regarding the company’s overall situation, in part due to its $47.8 billion in gross debt.

“The issue facing Warner Bros. is a scenario where the networks segment remains in decline and the [direct-to-consumer] segment collapses due to no original [entertainment] content for months,” said Stone Fox Capital. “At the same time, Netflix, Amazon, and Apple can all afford to absorb any losses and continue investing when the strikes end.”

WBD CEO David Zaslav will appear Wednesday at a Goldman Sachs investor conference in San Francisco — along with top executives from Charter, T-Mobile, Verizon, Paramount, and Comcast, among others — and is expected to discuss the strikes and their financial impact.

Meanwhile, WBD is preparing a formal announcement of its long-awaited sports tier for Max, projected to debut around the start of the MLB playoffs next month. 

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