Warner Bros. Discovery WBD posted a wider-than-expected third-quarter loss as the impact of Hollywood strikes hit the top and bottom lines of the entertainment and studio group.
The shares were hit hard in early trading when Chief Financial Officer Gunnar Wiedenfels said the impact of the strikes could extend into 2024, adding that it needs to see a "meaningful recovery" in the television ad market.
Warner Bros. said its adjusted loss for the three months ended in September was 17 cents a share, narrowed from the 95 cents a share loss over the year-earlier period but weaker than the Wall Street consensus forecast of 6 cents a share.
Core earnings were pegged at $2.97 billion, narrowly ahead of the LSEG estimate of $2.92 billion. Free-cash flow came in at $2.06 billion as spending on new content slowed amid the ongoing industrial action in Hollywood.
Group revenue rose 1.6% from a year earlier to $9.98 billion, essentially matching Wall Street forecasts.
Earlier this autumn, Warner Bros. said the impact of the Writers Guild of America and the Screen Actors Guild strikes, which it had forecast to end in September, would likely rise to between $300 million and $500 million by year's end.
The studio division has also delayed the release of its "Dune: Part Two" sequel, originally set for November, until at least March of next year. That followed a warning from Chief Executive David Zaslav that the industry is in "unchartered waters" as a result of the job action at the heart of the global movie industry.
"I am very pleased with the strong financial results that our company delivered in Q3, underscored by 22% growth in adjusted Ebitda and over $2 billion in free cash flow, putting us on track to meaningfully exceed $5 billion for the year and contributing to our nearly $12 billion in debt paydown to date," Zaslav said in a statement alongside the earnings release.
"Among the highlights, our Direct-to-Consumer business had another profitable quarter and launched its new live-programming offerings with CNN Max and the Bleacher Report AddOn, which are showing early signs of contributing to increased engagement and lower churn on Max," he added.
"We’ve made great strides in just 19 months and are excited to continue building on this strong momentum, as we focus on driving future growth and creating long-term value for our shareholders."
Warner Bros. Discovery shares at last check were off 16% at $9.71. In 2023 through trading on Tuesday, the stock had been up 22%.
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