Zoo Digital to take hit from US writers' strike, shares slide
Updated : 13:24
Zoo Digital tanked on Thursday as it warned it will suffer a "significant" EBITDA loss for the first half as the writers’ strike in the US dents revenues.
In an update ahead of its annual general meeting, the company - which provides cloud software-based subtitling, dubbing, and media localisation services to the TV and movie industry - said the market disruption outlined in the full-year results in August was ongoing.
"Major media organisations are in the process of realigning for profitability, and industrial action by writers and actors is ongoing. Consequently, visibility remains limited, and resolution of the strikes is essential for normal order flow to resume," it said.
"There has been encouraging progress over the last week in negotiations between the Writers' Guild of America and the Association of Motion Pictures and Television Producers resulting in a provisional deal that it is expected will pave the way for writers to resume work."
The group said that while orders are being processed monthly, they remain at historically low levels. As a result, first-half revenues are expected to be around $21m, leading to a significant EBITDA loss for the first half of the year.
At 1320 BST, Zoo shares were down 19% at 42p.
Russ Mould, investment director at AJ Bell, said: "The Hollywood writers’ strike may have drawn to a close, but the impact of disruption to the TV and film industry is still taking its toll on businesses.
"Zoo Digital, which supplies subtitles and dubbing services, saw its share price slump by a third after saying earnings visibility was still limited.
"It had been banking on order levels getting back to normal from October but says that now looks unlikely.
"Hollywood studios will be itching to get back to work and churn out that prized content, so it might simply be a short-term rocky period for Zoo Digital. Indeed, the fact it will continue to invest in dubbing capabilities in hope of a rapid rebound in work shows the board is thinking about the long-term prize, not panicking because of short-term problems."