Six weeks after the end of the Hollywood writers strike Warner Bros Discovery CEO David Zaslav has said the union was right and expressed no regrets “overpaying” for the new three-year contract.
“They are right about almost everything,” Zaslav told The New York Times in ’How David Zaslav Blew Up Hollywood’ a far-reaching interview published on Wednesday. “So what if we overpay? I’ve never regretted overpaying for great talent or a great asset.”
The Writers Guild of America (WGA) contract is estimated to cost the studios and streamers $700m over three years after the union and Alliance of Motion Picture and Television Producers reached a tentative deal on September 24, two weeks before union members ratified the deal.
The deal included a minimum compensation increase, accommodations on residuals and staffing levels, and AI protections. Zaslav attended negotiations towards the end of the process with his fellow ‘Gang of Four’ executives Donna Langley (NBCUniversal), Bob Iger (Disney), and Ted Sarandos (Netflix). The group also participated in the SAG-AFTRA talks.
Zaslav’s comment on overpaying will raise eyebrows in Hollywood in light of his $246.6m compensation in 2021, months before the Discovery-WarnerMedia merger was finalised.
The $43bn acquisition officially closed in April 2022 and resulted in a $56bn debt load for WBD, which Zaslav and his CFO Gunnar Wiedenfels have been addressing in part through cuts – revising the target from an initial $3bn in late 2022 to $4bn earlier this year – and job losses.
The SAG-AFTRA strike ended on November 9 and the union has said its tentative three-year deal is expected to cost the studios and streamers around $1bn over the contract term. The deal has gone before the union’s 160,000-strong membership in a ratification vote timed to end on December 5.
Wiedenfels told The New York Times that WBD expects to generate in the region of $1bn in free cash flow from the Hollywood work stoppages.
That comes from savings on production and related costs during the long production pause which began on May 2 when the writers went on strike and ended last week with the tentative deal between the Hollywood companies and SAG-AFTRA.
As part of cost-saving, Zaslav and Wiedenfels have shelved films for corporate tax write-downs. They started with Batgirl and Scoob! Holiday Haunt in 2022 in a move that sparked outrage from the directors and the broader Hollywood creative community.
However the executives have just reversed course on the completed $70m Coyote vs. Acme from Looney Tunes after initially planning to shelve it and reportedly generate a $30m write-down.They been screening the film to potential streamer buyers this week including Amazon, Apple and Netflix.
WBD has removed around 200 older episodes of Sesame Street from the Max streaming platform (which combines HBO Max and Discovery+) to save on residuals payments; and the company has licenced content like Six Feet Under and Ballers to Netflix to earn licencing fees.