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SAG-AFTRA strike impact on Hollywood will linger

SAG-AFTRA members and supporters chant outside Paramount Studios on day 118 of their strike against the Hollywood studios on November 8, 2023 in Los Angeles, California. 

Mario Tama | Getty Images

Before the actors’ union reached a labor deal with studios Wednesday night, Disney CEO Bob Iger told CNBC’s Julia Boorstin that the strike’s impact on the business had so far “been negligible.”

He also said that a resolution sooner rather than later would help preserve next year’s summer box office calendar – so the tentative agreement does just that.

But media and entertainment companies are feeling different impacts.

Because of the actors’ strike, Sony cut its movie unit’s fiscal year operating-profit forecast to 115 billion yen from 120 billion yen.

“Due to delays in production and constraints in promotion activities, we are seeing negative impact such as a delay in the release of certain motion pictures and a delay in the delivery of television productions,” Sony executives said on Thursday morning’s earnings call. “We have incorporated the impact that can be assumed at the present time into our forecast for the fiscal year.”

In July, while Hollywood actors and writers were both on strike, Sony postponed the release of Marvel Studios collaboration “Kraven the Hunter” to next year and delayed its next “Spider-Verse” movie, both potential blockbusters.

Sony executives also cautioned about potential ripple effects from the labor stoppages.

“Even after the strike ends, it will take time for business activities to normalize due to the concentration of productions and theatrical releases, so we expect this to have a negative impact on next fiscal year’s results,” they said. “However, we plan to engage in cost control and other measures to try to reduce the impact.”

Before the deal was announced Wednesday night, AMC Entertainment earlier in the day implored the two sides to make a deal.

Members of the Writers Guild of America (WGA) and the Screen Actors Guild walk the picket line outside of Fox Studios in Los Angeles, California, on August 9, 2023. Film and TV production ground to a halt 100 days ago when writers downed their pens, only to be joined on the picket lines in mid-July by actors. 

Alexi Rosenfeld | Getty Images Entertainment | Getty Images

“There has been and will be much collateral damage from these lengthy work stoppages,” said the company, which reported earnings after the bell. AMC shares fell more than 10% Thursday morning after earnings and the company announced its plan to sell more shares through a secondary offering.

“The short-term impacts of the Writer’s and Actor’s strikes will cause additional and needless challenges for AMC in 2024,” CEO Adam Aron said.

For the fourth quarter, the saving graces for AMC, though, could be Taylor Swift and Beyoncé. Swift’s concert film has delivered big grosses, while Beyoncé’s is due in December.

“With the writers and actors’ strikes, there were some movies that were going to move out of the fourth quarter. So there were some holes in the calendar in the fourth quarter,” Aron said on a call with analysts. “It was a pleasant thing for movie theater operators that rolled over to have an unanticipated gift of a Taylor Swift concert film and a Beyoncé Knowles-Carter concert film added to the calendar for the fourth quarter, just added just literally a month or two in advance of the quarter commencing.”

Then there’s Warner Bros. Discovery, whose shares tanked Wednesday after the media giant reported earnings.

CFO Gunnar Wiedenfels said on the earnings call that the Hollywood strikes weighed on its studios’ performance – particularly on the TV front. He noted the strikes hurt “production and delivery of TV content as TV revenues declined significantly, offsetting strong films and games performance.”

He also cautioned that there is “a real risk at this point that some negative financial impact of the strike will extend into 2024 to some extent.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is a member of the Alliance of Motion Picture and Television Producers.

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