Success of “Barbie” helps Warner Bros. Discovery weather effects of strike and advertising weakness

Warner Bros Discovery beat estimates for third-quarter earnings on Wednesday, as the box office success of “Barbie” helped offset the weakness of the advertising market and the lack of content in the studio segment due to two strikes in Hollywood.

Although Hollywood film and television writers ratified a new three-year contract in September that ended a 148-day strike, members of the SAG-AFTRA actors union have been on strike since July.

This has jeopardized the industry’s 2024 film schedule and deprived media companies of new content to sell.

The media company forged by the union of WarnerMedia and discovery It posted adjusted core earnings of $2.97 billion, above estimates of $2.92 billion, according to LSEG data. Total third-quarter revenue of $9.98 billion was in line with estimates.

The company posted free cash flow of $2.06 billion, up from $1.72 billion in the previous quarter, as it spent less on production as a result of the strikes. This beat expectations of $1.74 billion, according to Visible Alpha.

The results place the company “on track to significantly exceed $5 billion (free cash flow) for the year and contribute to our nearly $12 billion in debt amortization to date”stated CEO David Zaslav.

Advertising revenue from its networks segment fell 12% to $1.71 billion as global conflicts and inflation create an uncertain climate for marketers.

The company’s streaming unit posted an adjusted core profit of $111 million, down from a loss of $634 million a year ago. Global average revenue per user in the segment increased 6%.

Warner Bros. Discovery had 95.1 million direct-to-consumer customers at the end of the quarter, up from 95.8 million in the previous quarter. In May, it launched its Max streaming service, which combines HBO Max’s scripted entertainment with Discovery’s reality shows.