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1
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· Posted on
February 21, 2024

Warner Bros. and the Chamber of Lost Profits: How the Hollywood strike is putting a spell on its earnings

Warner Bros announced that they're bringing down their yearly target earnings by $500 million USD.

What's the key learning?

  • With the Hollywood strikes showing less signs of slowing down, Warner Bros is expecting some revenue damage by the end of the year.
  • While Warner Bros' balance sheet looks strong now thanks to low/no production costs - it's not a very sustainable place to be.
  • Warner Bros can't rely on their stockpile of old content again and again, because consumers will want new content and investors will want to see revenue growth.

👉 Background: Warner Bros is the American media and entertainment titan that's been around for 100 years. They're the ones behind iconic franchises like the Harry Potter series and DC films.

👉 What happened: Now, Warner Bros announced that they're bringing down their yearly target earnings by $500 million USD. With the Hollywood strikes showing less signs of slowing down, Warner Bros is expecting some revenue damage by the end of the year.

👉 What else: On the flip side, with the success of Barbie and less production costs at the moment, Warner Bros has actually got more cash saved in the bank... at least, for now.

What's the key learning?

💡Companies can't get by on their reserves forever. And they can’t just rely on their stockpile of old content again and again and again.

💡While Warner Bros' balance sheet looks strong now thanks to low/no production costs - it's not a very sustainable place to be. Soon enough, consumers will want new content, and investors will want to see revenue growth.

💡And Warner Bros isn't the only one facing this battle. Netflix and Disney are also projecting lower costs because of the strikes, and relying on older content in the meantime.

‍

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