Box office smash “Barbie” helped Warner Bros Discovery top core quarterly profit estimates but the effects of two Hollywood strikes and a weak advertising market could hamper earnings into next year, company executives said on Wednesday.
The dour outlook sent the company’s shares tumbling over 14%.
Although Hollywood’s film and television writers ratified a new three-year contract in September, ending their 148-day work stoppage, members of the SAG-AFTRA actors union have been on strike since July, roiling the industry’s 2024 film slate and depriving media companies of new content to sell.
Chief Financial Officer Gunnar Wiedenfels on a call with investors said there’s a “real risk” that the financial hit from the strike will linger into 2024.
“It is becoming increasingly clear now that much like 2023, 2024 will have its share of complexity, particularly as it relates to the possibility of continued sluggish advertising trends,” Wiedenfels said. “We don’t see when this is going to turn.”
Chief Executive David Zaslav said the company saw its lightest original content slate in years and had to delay some releases, leading to a drop in third-quarter streaming subscriber numbers.
Wiedenfels said that for full-year 2023 there will likely be a few hundred million dollars of a negative impact on EBITDA due to strike impacts, and several hundred million dollars of positive cash flow as a result of not being able to spend on production.
“The extreme success of the Barbie movie may be a one-off for them that won’t be repeated for at least a few years,” said Michael Schulman, chief investment officer at Running Point Capital.
The media company, forged by the union of WarnerMedia and Discovery, posted third-quarter adjusted core earnings of $2.97 billion, above estimates of $2.92 billion, according to LSEG data. Overall revenue of $9.98 billion was in line with estimates.
The company reported free cash flow of $2.06 billion, compared with $1.72 billion in the prior quarter. This surpassed expectations for $1.74 billion, according to Visible Alpha.
The company posted a net loss of $417 million, narrowing from a $2.3 billion net loss from a year-ago period.
“The market is not thrilled with the fact that even with the unparalleled blockbuster success of Barbie, they still found a way to lose $417 million in the quarter. Not ideal,” Great Hill Capital Chairman Thomas Hayes said.
Advertising revenue at its networks segment declined 12% to $1.71 billion as global conflicts and inflation created an uncertain climate for marketers.
The company’s streaming unit posted an adjusted core profit of $111 million, compared with a loss of $634 million a year ago. Global average revenue per user in the segment rose 6%.
Warner Bros Discovery had 95.1 million global direct-to-consumer customers at the end of the quarter, down from 95.8 million in the previous quarter.
In May, it launched its Max streaming service — combining HBO Max’s scripted entertainment with Discovery’s reality shows.
The company lost 17 cents per share, larger than estimates for a loss of 6 cents.
US talk show host Stephen Colbert has condemned the cancellation of fellow late-night star Jimmy Kimmel as a “blatant assault on freedom of speech”, as America’s top late night presenters came out fighting.
The move by Disney-owned ABC has been widely criticised, with the network accused of kowtowing to President Donald Trump, who celebrated the decision.
Also airing on Thursday night, Jon Stewart, host of Comedy Central’s Daily Show, appeared in a garish gold set, in parody of Mr Trump’s redesign of the White House, to tell viewers the episode would be “another fun, hilarious, administration-compliant show”.
Stewart, playing the role of an over-the-top, politically obsequious TV host under authoritarian rule, lavished praise on the president and satirised his criticism of US cities and his deployment of the National Guard to fight crime.
“Coming to you tonight from the real […] crime-ridden cesspool that is New York City. It is a tremendous disaster like no-one’s ever seen before. Someone’s National Guard should invade this place, am I right?” he said.
He then introduced his guest – Maria Ressa, a journalist and author of the book How To Stand Up To A Dictator.
Image: Jon Stewart. Pic: Associated Press
Over at The Tonight Show, Jimmy Fallon told his audience he was “not sure what was going on” but that Kimmel is “a decent funny and loving guy and I hope he comes back”.
Fallon then promised viewers that in spite of people being “worried that we won’t keep saying what we want to say or that we will be censored”, he was going to cover the president’s recent trip to the UK “just like I normally would”.
He was then replaced by a voiceover describing Mr Trump as “incredibly handsome” and “making America great again”.
Image: Jimmy Fallon on Thursday’s Tonight Show. Pic: The Tonight Show X
Seth Meyers also joined the fray.
“Donald Trump is on his way back from a trip to the UK,” he said at the top of his show Late Night, “while back here at home, his administration is pursuing a crackdown on free speech… and completely unrelated, I just wanted to say that I have always admired and respected Mr Trump.
“I have always believed he was a visionary, an innovator, a great president, and an even better golfer.”
Kimmel’s removal from the show he has hosted for two decades led to criticism that free speech was under attack.
But speaking on his visit to Britain, Donald Trump claimed he was suspended “because he had bad ratings”.
It came after fellow late-night host Colbert saw his programme cancelled earlier this year, which fans claimed was also down to his criticism of Mr Trump, who has since railed against Kimmel, Meyers, and Fallon.
He has posted on Truth Social that they should all be cancelled.
Image: Jimmy Kimmel hosting last year’s Oscars. Pic: AP
Figures from both the worlds of entertainment and politics lined up to lament ABC’s removal of Kimmel.
Chat show doyenne David Letterman said people should not be fired just because they don’t “suck up” to what he called “an authoritarian” president.
During an appearance at The Atlantic Festival 2025 in New York on Thursday night, he added: “It’s no good. It’s silly. It’s ridiculous.
“I feel bad about this, because we all see where see this is going, correct? It’s managed media.”
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Image: Barack Obama on Jimmy Kimmel Live in 2016. Pic: Susan Walsh/AP
Former US president Barack Obama wrote on X: “After years of complaining about cancel culture, the current administration has taken it to a new and dangerous level by routinely threatening regulatory action against media companies unless they muzzle or fire reporters and commentators it doesn’t like.
“This is precisely the kind of government coercion that the First Amendment was designed to prevent, and media companies need to start standing up rather than capitulating it.”
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