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Warner Bros. Discovery (WBD) announced a staggering $417 million loss for the quarter, which exceeded Wall Street's predictions. This financial setback came despite the blockbuster success of the movie "Barbie," which generated an incredible $1.5 billion in revenue.
However, when factoring in certain adjustments such as interest, taxes, depreciation, and amortization, the company did manage to report a narrow profit, reports CNN.
Revenue Boost from "Barbie" Fails to Attain Significant Sales Growth
WBD, the parent company of CNN, had anticipated a 2% increase in sales, relying heavily on the revenue generated by "Barbie." Unfortunately, the company fell short of its sales target, with quarterly revenue amounting to just under $2 billion.
Nonetheless, the movie's success at the box office did offset a significant decline in advertising revenue within WBD's networks unit, where it experienced a 12% drop.
Production Strikes and Their Impact on Revenue
According to Forbes, WBD faced additional challenges, attributing a decrease in revenue to the strikes organized by the Writers Guild of America and SAG-AFTRA, the union representing 160,000 actors. These strikes resulted in the suspension of television and movie production for several months. Back in September, the company had already estimated potential earnings losses of up to $500 million for the year.
CEO David Zaslav admitted that the strike necessitated the delay of some releases and significantly affected their original content schedule for the quarter. However, no specific dollar estimates related to the cost of the strike were provided by the company.
Improvement From Last Year's Losses
Although Warner Bros. Discovery's net loss in the quarter showed improvement compared to the same period last year, amounting to $2.3 billion, the loss per share was larger than anticipated at 17 cents per share. In contrast, analysts surveyed by Refinitiv had expected a 6-cent-a-share loss.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) showed a 22% increase, reaching just under $3 billion. However, both the networks and studio units witnessed a decline in profits, despite the success of "Barbie" at the box office.
On a brighter note, WBD's streaming services reported another profitable quarter. Adjusted EBITDA for this segment swung from a $634 million loss to a $111 million profit compared to the previous year. Although the number of subscribers decreased by 700,000 to 95.1 million globally, higher subscription prices and a substantial 29% increase in advertising revenue helped to drive these positive results.
Following the disappointing financial results, WBD shares plummeted by close to 16% during morning trading.
