UK-listed Videndum issues profit warning as US screenwriters strike

Videndum lost about a tenth of its value on Tuesday after the UK-listed broadcast and film supplier was forced to warn that a screenwriters strike in the US was hitting demand for its products.

The FTSE 250 company said speculation about a strike by the Writers Guild of America (WGA) had caused some US cinema and scripted TV productions to be paused, which had hit short-term US demand. The company said about a fifth of its revenues were linked to this business.

In a statement to investors on Tuesday, Videndum said it had expected revenues to bounce back in a no-strike scenario, but the decision by screenwriters to strike would “potentially cause further deferral of revenues”.

It added that, if the strike were to be prolonged, the company “believes that the group’s full-year 2023 performance will be below our previous expectations”.

Hollywood went on its first strike in 15 years after talks between screenwriters and movie studios ended on Monday. Videndum has become one of the first companies to warn of the international financial impact, with the Californian economy expected to be hit hard if no resolution is found.

The WGA’s last strike was in 2007-2008 and lasted 100 days, with $2.1bn estimated to have been lost in the local economy. Shows such as ‘The Simpsons’, ‘Breaking Bad’ and ‘The Office’ were affected.

Late-night talk shows are set to be the first hit this time, with ‘The Tonight Show’ and ‘The Daily Show’ expected to begin showing reruns. Any delays to TV and film productions depend on how long the strike continues.

Streaming groups are braced for an extended strike. Netflix told investors last month the company had a “pretty robust slate of releases” of international programming to protect its business.

Videndum said the strike would add to an already challenging macroeconomic environment, “particularly with low business confidence in the US”.

It said: “We are not yet seeing a recovery in the consumer environment, improvement in the Independent Content Creator segment, nor any significant retail restocking.”

Videndum supplies broadcasters, film studios, production and rental companies, photographers and independent content creators with camera and audio equipment, monitors, and live streaming and lighting kit.

Videndum said it would look at initiatives to cut its cost base and would “review options to unlock more shareholder value” for its creative solutions division “and all options remain on the table”. 

It said a weighting of revenues to the second half of the year would “slightly increase” its net debt-to-earnings ratio “from our previous expectations”. 

The business was “implementing a wide range of actions to conserve cash and reduce our debt”, it said. “We continue to manage inventory closely, along with the rest of working capital, and to carefully control costs.”

Videndum shares closed down 9 per cent at £7.13 on Tuesday.