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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.

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Politics

Calls for Starmer to publish security services’ concerns about Mandelson’s US appointment

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Calls for Starmer to publish security services' concerns about Mandelson's US appointment

The Conservatives have urged Sir Keir Starmer to publish all concerns raised by the security services about the appointment of sacked US ambassador Peter Mandelson.

Shadow cabinet office minister Alex Burghart said his party would push for a vote in parliament demanding the government reveal what issues the security services had in relation to Lord Mandelson’s relationship with the disgraced sex offender and financier Jeffrey Epstein.

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Peter Mandelson was sacked as the UK's ambassador to Washington on Thursday. Pic: PA
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Peter Mandelson was sacked as the UK’s ambassador to Washington on Thursday. Pic: PA

It comes after Sky News’ deputy political editor Sam Coates revealed that Number 10 appointed Lord Mandelson to the Washington role despite the security services’ reservations about the move.

Mr Burghart said material from the security services is not usually made public, but that a substantial amount of information was already in the public domain.

He told Sky News Breakfast: “What we’re going to do is we’re going to try and bring a vote in parliament to say that the government has to publish this information.

“It will then be up to Labour MPs to decide whether they want to vote to protect Peter Mandelson and the prime minister or make the information available.”

Mr Burghart said he had spoken to Labour MPs who were “incredibly unhappy about the prime minister’s handling of this”, and that it would be “very interesting to see whether they want to be on the side of transparency”.

Tory leader Kemi Badenoch said she believed Lord Mandelson’s appointment revealed that the prime minister “has very bad judgment”.

“It looks like he went against advice, security advice and made this appointment…and what we’re asking for is transparency.”

The Liberal Democrats have also called for parliament to be given a role in vetting the next US ambassador.

“I think it will be right for experts in foreign affairs on the relevant select committee to quiz any proposal that comes from 10 Downing Street, and so we can have that extra bit of scrutiny,” the party’s leader Ed Davey told broadcasters.

The former UK ambassador to France, Lord Ricketts, said the government should not be “rushing into an appointment” to replace Lord Mandelson.

“I would urge the government to take their time, and I would also make a strong case to the government to go for a career diplomat to steady the ship after this very disruptive process,” he said.

Labour MP Chris Hinchcliff posted on X that the former US ambassador should also be removed from the House of Lords.

Nigel Farage said Sir Keir’s decision to appoint Lord Mandelson as UK ambassador to the US was a “serious misjudgement” by the PM.

“We don’t yet know what the intelligence briefings would have said, but it looks as though Morgan McSweeney, the prime minister’s right-hand man, and the prime minister, ignored the warnings, carried on,” he said.

“He was then reluctant to get rid of Mandelson, and he’s now left himself in a very vulnerable position with the rest of the parliamentary Labour Party.

“It is about the prime minister’s judgement, but it is also about the role that Morgan McSweeney plays in this government.”

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Reform UK leader Nigel Farage says Keir Starmer ignored the warnings about Lord Mandelson.

The timing of the sacking comes ahead of Donald Trump’s state visit next week, with the US president facing questions over his own ties with Epstein.

The prime minister sacked Lord Mandelson on Thursday after new emails revealed the Labour grandee sent messages of support to Epstein even as he faced jail for sex offences in 2008.

In one particular message, Lord Mandelson had suggested that Epstein’s first conviction was wrongful and should be challenged, Foreign Office minister Stephen Doughty told MPs.

The Foreign Office said the emails showed “the depth and extent of Peter Mandelson’s relationship with Jeffrey Epstein is materially different from that known at the time of his appointment”.

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Mandelson exit ‘awkward’ before Trump state visit

Downing Street has defended the extensive vetting process which senior civil servants go through in order to get jobs, which has raised questions about whether or not they missed something or Number 10 ignored their advice.

The prime minister’s official spokesman also said yesterday that Number 10 “was not involved in the security vetting process”.

“This is managed at departmental level by the agency responsible, and any suggestion that Number 10 was involved is untrue,” he told reporters.

Asked repeatedly if any concerns were flagged to Downing Street by the agencies that conducted the vetting of Lord Mandelson, he did not dismiss the assertion, repeating that Number 10 did not conduct the vetting.

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Speaking to Sky News this morning, Scotland Secretary Douglas Alexander said his reaction to the publication of the emails was one of “incredulity and revulsion”.

He said he was “not here to defend” Lord Mandelson but said the prime minister “dismissed” the ambassador when he became aware of them.

The cabinet minister said Lord Mandelson was appointed on “judgement – a judgement that, given the depth of his experience as a former trade commissioner for the European Union, his long experience in politics and his policy and doing politics at the highest international levels, he could do a job for the United Kingdom”.

“We knew this was an unconventional presidential administration and that was the basis on which there was a judgement that we needed an unconventional ambassador,” he said.

Mr Alexander added: “If what has emerged now had been known at the time, there is no doubt he would not have been appointed.”

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World

Russia-Belarus drills begin as tensions high after drone incursion in Poland

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Russia-Belarus drills begin as tensions high after drone incursion in Poland

Thousands of troops are taking part in a joint military exercise between Russia and Belarus, as tensions with the EU run high following a Russian drone incursion into Polish airspace earlier this week.

The Zapad joint military exercise which began on Friday will involve drills in both Russia and Belarus as well as in the Baltic and Barents seas, the Russian defence ministry said.

Belarusian defence officials initially said about 13,000 troops would participate in the drill, but in May, its defence ministry said that would be cut nearly in half.

It comes just two days after Poland, with support from its NATO allies, shot down Russian drones over its airspace.

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Poland’s Prime Minister Donald Tusk on Friday morning hit back at a suggestion by US President Donald Trump on Thursday that the incursion may have been a “mistake”.

He said in a post on X: “We would also wish that the drone attack on Poland was a mistake. But it wasn’t. And we know it.”

Russia said its forces had been attacking Ukraine at the time of the incursions and that it had not intended to hit any targets in Poland.

Friday also saw Foreign Secretary Yvette Cooper travelling to Ukraine’s capital of Kyiv on the same day the UK announced fresh sanctions against Moscow.

Prince Harry was also in Kyiv for a surprise visit to help with the recovery of military personnel seriously injured in the three-year war with Russia.

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Prince Harry arrives in Kyiv

Ms Cooper, who was appointed foreign secretary last week, posted about her visit on X saying: “The UK’s support for Ukraine is steadfast. I am pleased to be in Kyiv on my first visit as Foreign Secretary.”

The UK’s new sanctions include bans on 70 vessels that Britain says are part of Russia’s “shadow fleet” that transports Russian oil in defiance of sanctions already in place.

Yvette Cooper with Volodymyr Zelenskyy in Kyiv. Pic: Valentyn Ogirenko/PA
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Yvette Cooper with Volodymyr Zelenskyy in Kyiv. Pic: Valentyn Ogirenko/PA

Some 30 individuals and companies – including Chinese and Turkey-based firms – have also been sanctioned for their part in supplying Russia with electronics, chemicals, explosives and other weapons components.

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Meanwhile on the frontline, Ukrainian drones struck Russia’s oil-loading Primorsk port overnight, an SBU official said.

The attack caused fires and suspended oil-loading operations, the official added.

Russian defence systems also intercepted and destroyed 221 Ukrainian drones overnight.

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UK

Police appeal after woman raped in ‘racially aggravated attack’ in West Midlands

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Police appeal after woman raped in 'racially aggravated attack' in West Midlands

Police have said they are investigating a “racially aggravated” rape in the West Midlands.

Officers were called just before 8.30am on Tuesday after a Sikh woman in her 20s reported being attacked by two white men in the area around Tame Road in Oldbury.

The Sikh Federation (UK) said the perpetrators allegedly told the woman during the attack: “You don’t belong in this country, get out.”

One of the men is described as having a shaved head, of heavy build, and was reported to be wearing a dark coloured sweatshirt and gloves.

The second man was reportedly wearing a grey top with a silver zip.

West Midland Police said it is being treated as a “racially aggravated attack” and has appealed for anyone in the area who may have seen the men to contact the force.

Chief Superintendent Kim Madill said: “We are working really hard to identify those responsible, with CCTV, forensic and other enquiries well under way.

“We fully understand the anger and worry that this has caused, and I am speaking to people in the community today to reassure them that we are doing everything we can to identify and arrest those responsible.

“Incidents like this are incredibly rare, but people can expect to see extra patrols in the area.”

Dabinderjit Singh, the lead executive for political engagement at the Sikh Federation (UK), said: “The current racist political environment is driven by popularism and created by politicians playing the anti-immigration card who are unashamedly exploiting those with right-wing and racist views.

“More than 48 hours later we await the public condemnation by politicians on all sides of this brutal racist and sexual attack where a young Sikh woman has been viciously beaten and raped.”

Gurinder Singh Josan, Labour MP for Smethwick, wrote on X: “This is a truly horrific attack and my thoughts are with the victim.”

He added: “The incidence is being treated as a hate crime.

“The police are working extremely sympathetically with the victim at her pace who has been traumatised by the attack.

“We are grateful for all the CCTV and information that has already been forthcoming from the community.”

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