David Zaslav Says Studios Don’t See Writers’ Strike as Cost-Saving Opportunity: ‘We Are Not Glad’ (Video)
Warner Bros. Discovery CEO David Zaslav pushed back against the idea that Hollywood studios see the Writers Guild of America strike as an opportunity to cut costs.
“We’re a pure storytelling company, and we’ve been fighting to get the greatest creatives to come work at Warner Bros.,” Zaslav said during an interview on CNBC’s “Squawk Box” on Friday. “In order to create great storytelling, we need great writers, and we need the whole industry to work together and everybody deserves to be paid fairly.”
Zazlav seemed as anxious as anyone to end the labor stoppage that began this week.
“So our number one focus is let’s try and get this resolved,” he said. “Let’s do it in a way that that the writers feel that they’re valued — which they are — and they’re compensated fairly. And then off we go, let’s tell great stories together.”
He added that WBD and other Hollywood studios are “not glad” that the writers’ strike is happening.
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LightShed Partners analyst Rich Greenfield wrote in an April 17 blog post that Warner Bros. Discovery’s stock would likely benefit from the strike, given investor focus on the company’s balance sheet.
“It’s worth noting that while a prolonged strike could boost earnings and free cash flow in 2023 while depressing 2024 to some degree as production ramps back up, it is possible that some content originally slated for 2024 gets pushed to 2025 to make room for delayed 2023 content — yielding minimal impact on 2024 earnings/free cash flow,” he said.
And if it lasts long enough, the WGA strike could allow studios to use “force majeure” clauses in their contracts to sever deals made with writers. “Force majeure” is a legal term common in contracts which addresses unforeseen or catastrophic circumstances.
“While we would not expect Warner Bros. to terminate its deals with star writers such as Chuck Lorre or Universal with Dick Wolf, there are lesser-known writers who struck overall deals with studios that do not make economic sense today,” Greenfield added. “Terminating out-of-market overall deals could be another positive earnings/free cash flow event for studios.”
A spokesperson for Warner Bros. Discovery declined to comment on that prospect.
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The Writers Guild of America on strike for the first time since November 2007 after the group was unable to reach a deal in contract negotiations with the Alliance of Motion Picture and Television Producers before Monday’s contract expiration. Picketing began in New York City and Los Angeles on Tuesday.
The strike involves a long list of concerns that the writers want Hollywood studios to address, from the low pay involved in writing streaming series to reining in “mini-rooms” used to skirt contractual pay practices to addressing the use of artificial intelligence.
When asked about what it would take to find common ground and resolve the writers’ strike, Zaslav replied “a love for the business and a love for working.”
“We all came into this business because we love storytelling, we want to entertain and when we’re at our best we get a chance to have an impact on the culture,” he said. “Almost all of us got into this business with a lot of sacrifice in order to be part of that journey and so that’s what’s gonna bring us together.”
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Zaslav’s comments on the strike come as Warner Bros. Discovery revealed that its streaming business in the U.S. is set to reach profitability in 2023, a year ahead of schedule.
The direct-to-consumer division added 1.6 million streaming subscribers during the first quarter of 2023 for a total of 97.6 million globally and reported a profit of $50 million, a $704 million year-over-year improvement on a pro forma combined basis.
Looking ahead, Warner Bros. Discovery reaffirmed previous guidance that the direct-to-consumer business will generate a $1 billion profit in 2025.
“We think streaming is going to be very profitable for us. We are unique. We have a lot of scale. We have the largest TV in motion picture library, and we have HBO some of the greatest creatives and we have all of our Discovery content,” Zaslav said.
For all of TheWrap’s WGA strike coverage, click here.
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