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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

‘Urgent’ review announced into foreign interference in British politics

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'Urgent' review announced into foreign interference in British politics

Sir Keir Starmer has authorised an “urgent” review into the extent of foreign interference in British politics, as he prepares to change the law to tighten donation rules.

Ministers have initiated a rapid inquiry into current financial rules on donations and election safeguards, which will report at the end of March.

It will be led by Philip Rycroft, the former permanent secretary of the Brexit department.

Politics latest: Who could lead Labour instead of Starmer?

The inquiry is a direct response to the jailing of Nathan Gill, the former leader of Reform UK in Wales, who admitted accepting tens of thousands of pounds in cash to make pro-Russian statements to the media and European Parliament.

In this case, officers said that they believed some individuals had a direct link to Vladimir Putin.

Communities Secretary Steve Reed, who announced the inquiry to the Commons on Tuesday, wants Mr Rycroft to assess how well the rules work at the moment and promised the report will be published in full.

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Mr Reed told MPs that the “conduct [of Gill] is a stain on our democracy”.

“The independent review will work to remove that stain,” he said.

The review could then lead to changes in the Elections Bill, due this spring, which could significantly change the way elections are financed.

Tuesday’s announcement is likely to ignite a firestorm of criticism.

Among the changes that could result from the Rycroft report could be a clampdown on cryptocurrency donations, which Reform UK leader Nigel Farage has said in the past would be a direct attack on his party.

It could introduce new rules for donations to thinktanks, which fall outside any regulatory regime at the moment, and could see new rules around foreign donations.

Philip Rycroft will carry out the review
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Philip Rycroft will carry out the review

Foreign donors can effectively give money if they have a trading UK subsidiary at the moment.

The government has already promised to clamp down on “shell” companies, but this could give more clarity over how this will work.

It could also look at funding of “troll farms” – vast banks of social media accounts based overseas designed to try and sway public opinion as part of state disinformation campaigns.

However, the financial affairs of and donations to Labour MPs could be in the scope of the review, and those named in the report could face fresh disciplinary consequences.

The government also singled out Christine Lee, the UK-based lawyer accused of working covertly on behalf of the Chinese Communist Party, as another case of concern.

Christine Lee is accused of working on behalf of the CCP
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Christine Lee is accused of working on behalf of the CCP

Nevertheless, other parties are likely to suggest this is an attempt to change the donation rules in Labour’s favour, after promising to lower the voting age to 16 and cancelling some mayoral elections because of a local government re-organisation.

The review will invite all party leaders to take part in “in-depth assessment of the current financial rules and safeguards and offer recommendations to further mitigate risks from foreign political interference”.

Mr Rycroft cannot compel politicians to give evidence, but he will have access to the security services, though the extent of their cooperation is unclear.

The conduct around the Brexit referendum has been specifically excluded in the terms of reference, and Mr Rycroft will be instructed to focus on more “recent” cases, although there is no specific start date.

The 12-week timeline for the inquiry, alongside the lack of statutory powers, is likely to make it hard for Mr Rycroft to uncover substantial new incidents of bribery or corruption and prove them to a standard necessary to put details in the public domain.

The publication date, at the end of March, comes just five weeks before local elections in which Reform UK is expected to do well, and opposition politicians are likely to question the timing.


How worried should we be about Russia bribing politicians?

Mr Rycroft has previously locked horns with Boris Johnson.

He argued that, at times, Mr Johnson was a PM who “only speaks for England”, his government was “not sensitive to the niceties of constitutional convention” and had “imperious disregard” for devolved policies, fuelling the breakup of the UK.

In June last year, just before the election, when Rishi Sunak was PM, he signed a letter to The Times which said: “Trust in politics, and in the people and institutions of public life, is at an all-time low.

“This is a serious problem for the health of our democracy and is indicative of the need for substantial improvement in the governance of the UK.”

Mr Rycroft has previously expressed his caution about the relationship between big tech and politics, telling Sky News two years ago: “Politicians do have to be a little bit careful in this space.

“Nobody’s elected Elon Musk, his opinions are those of a businessman, he is not a statesman.

“Clearly, they can court business people for their investment, but they shouldn’t look as though they’re kowtowing to them in terms of their regulatory concepts.

“They should listen to their views, but it should be democratically elected politicians that take those really, really important decisions, and let’s hope that’s the case in the UK.”

It comes as Reform and the Conservatives both received significantly higher donations than Labour in the first three quarters of this year.

They included the largest ever political donation from a living person: £9m to Reform UK from British-Thai businessman Christopher Harborne.

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Justice Secretary Angela Constance survives no confidence vote amid grooming gangs row

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Justice Secretary Angela Constance survives no confidence vote amid grooming gangs row

Scotland’s justice secretary has survived a vote of no confidence amid claims she misrepresented a leading expert on grooming gangs and therefore misled parliament.

MSP Angela Constance has ignored calls to stand down and has First Minister John Swinney’s full backing in the wake of comments she made about Professor Alexis Jay.

Mr Swinney led her defence, describing her as a “sincere minister” who was “getting on with the job of making Scotland safer”.

Both Scottish Labour and the Scottish Conservatives lodged motions of no confidence, with a debate held at Holyrood on Tuesday afternoon.

Scottish Labour, the Scottish Tories and the Scottish Liberal Democrats joined forces to vote against Ms Constance, but the motion failed due to the backing of the SNP and Scottish Greens.

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Justice Secretary Angela Constance at Holyrood on Tuesday. Pic: PA
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Justice Secretary Angela Constance at Holyrood on Tuesday. Pic: PA

MSP Russell Findlay, leader of the Scottish Conservatives, said: “Shameless SNP and Green MSPs put partisan politics before truth and integrity, to the understandable fury of grooming gang victims.

“To any reasonable person, Angela Constance’s position is untenable. She misled parliament by misrepresenting Professor Jay, tried to cover it up and then publicly lied after being caught.

“She twisted Professor Jay’s words to reject our calls for a Scottish grooming gangs inquiry and then failed to correct the record.

“It’s an open-and-shut case of a ministerial code breach for which she should lose her job.”

The row revolves around a comment made by Ms Constance as MSPs debated the Victims, Witnesses and Justice Reform (Scotland) Bill in September.

Amid a failed Scottish Conservative amendment for a public inquiry to be established into grooming gangs in Scotland, Ms Constance insisted Professor Jay agreed with her that such a probe was not needed.

However, emails made public by the Scottish government last week revealed the professor – who led the Independent Inquiry into Child Sexual Exploitation in Rotherham in 2014 – later contacted Ms Constance to say she would “appreciate” her position “being clarified”.

Professor Jay added that her comments quoted by Ms Constance had “nothing to do” with the situation in Scotland.

Read more: Scottish government orders review of grooming gangs evidence

Scottish Labour leader Anas Sarwar said he supported the motion as “victims and survivors of grooming gangs and child sexual exploitation have lost confidence in this justice secretary”.

He added: “The justice secretary misrepresented Professor Jay’s views in order to find an excuse not to have an inquiry into grooming gangs.

“Victims and survivors should be able to rely on their justice system, and their government, to tell the truth, to act with integrity and to put them first.

“On this, the justice secretary has failed.”

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During First Minister’s Questions last week, Mr Swinney claimed Ms Constance “was making a general comment” on the situation as he gave his justice secretary his full backing.

He reiterated his support for Ms Constance during the debate, saying: “The cabinet secretary in the debate in September did not state that Professor Jay was speaking directly about the amendment.

“She made a general point drawing on the publicly stated views of Professor Jay.

“But I acknowledge that members of parliament and members of the public will draw different conclusions from the words we all use.”

Mr Swinney described Ms Constance as a “sincere minister who would never address parliament in a way that would in any way mislead parliament or the public”.

The first minister added: “She’s never shied away from asking tough questions about our approach to justice.

“Nor has she ever avoided tackling some of the biggest issues that we face.

“For these reasons, Angela Constance has my full confidence as justice secretary.

“She’s getting on with the job of making Scotland safer, and I urge members to enable her to continue doing that by rejecting this motion today.”

The motion was defeated by 57 votes to 67, with one abstention

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Imran Khan’s sons ‘fear they may never see him again’ as former Pakistan PM ‘held in death cell’

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Imran Khan's sons 'fear they may never see him again' as former Pakistan PM 'held in death cell'

The sons of former Pakistani prime minister Imran Khan have said they fear they might never see their father again as he is being “psychologically tortured” in a “death cell”.

Speaking to Sky News’ The World with Yalda Hakim, Kasim and Sulaiman Khan said they had not spoken to their father, who has been in prison since August 2023, for months.

Imran Khan's sons being interviewed by Yalda Hakim
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Imran Khan’s sons being interviewed by Yalda Hakim

Kasim described the conditions the former Pakistani leader has been kept, saying: “He’s been in a solitary confinement cell for over two years where he’s had filthy water, he is around inmates who are dying of hepatitis, the conditions are disgusting and also he is completely isolated from any human contact.”

He continued: “It’s getting harder to see a route out at this point. We’re trying to have faith. But at the same time, right now, the conditions are getting worse.

“It’s very hard to see a way out… We’re now worried we might never see him again.”

Kasim said his father was being subjected to “psychological torture tactics” as even the prison guards weren’t allowed to communicate with the former Pakistani leader, who led the country between 2018 and 2022.

Imran Khan, pictured in March 2023 before his arrest on corruption charges. File pic: Reuters
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Imran Khan, pictured in March 2023 before his arrest on corruption charges. File pic: Reuters

Sulaiman said his father’s cell, where he allegedly spends 23 hours a day, has been described as a “death cell”.

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He said an army spokesperson announced on Friday that Imran Khan, who has in the past been shot three times, was now officially in full isolation.

He added that Imran Khan was being kept in “completely substandard conditions that don’t meet international law for any sort of prisoner”.

The brothers’ words echo what one of Khan’s sisters reported after being allowed to meet the former cricketer in prison at the start of the month.


Who is Imran Khan?

Uzma Khanum said at the time that Khan was facing isolation and psychological strain in prison following weeks in which his family said access had been blocked.

The former leader was jailed after being convicted in a string of cases that he says were politically driven following his ousting in a 2022 parliamentary vote.

Before launching his political career, Imran Khan was best known as a star of international cricket and for leading Pakistan to Cricket World Cup victory in 1992.

Kasim said his father would “never take a deal and leave all of his other party members in jail to die and fester in these jails…

“Instead he stays in those conditions, happy to rot and it means that he can move towards his goal of ridding Pakistan of corruption, a goal that he has stated to us a million times.”

Mosharraf Zaidi, a Pakistani government spokesperson, will be speaking to Yalda Hakim tonight on Sky News from 9pm.

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