Warner Bros. Discovery posts wider Q3 loss as Hollywood strikes, ad slump bites

Updated at 8:07 am EST

Warner Bros. Discovery WBD posted a wider-than-expected third quarter loss Wednesday as the impact of Hollywood strikes hit both the top and bottom lines of the entertainment and studio group.

Warner Bros. said its adjusted loss for the three months ending in September was pegged at 17 cents per share, a tally that narrowed from the 95 cents per share loss over the same period last year but fell outside the Street consensus forecast of 6 cents per share.

Core earnings were pegged at $2.97 billion, narrowly ahead of the LSEG estimate of $2.92 billion, while free-cash flow came in at $2.06 billion as spending on new content slowed amid the ongoing industrial action in Hollywood.

Group revenues, Warner Bros. said, rose 1.6% from last year to $9.979 billion, a total that essentially matched Street forecasts. 

Earlier this autumn, Waner 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 the end of the year.

The studio division has also delay the release of its "Dune: Part Two" sequel, originally set for November, until at least March of next year following a warning from CEO David Zaslav that the industry is in "unchartered waters" as a result of the industrial 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 were marked 0.4% lower higher in pre-market trading immediately following the earnings release to indicate an opening bell price of $11.56 each.

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