Warner Bros Discovery Reports Losses Despite Barbie's $15 Billion Contribution

Barbie, a highly successful film, raked in an astonishing $1.5 billion in revenue for Warner Bros. Discovery. Despite this, the company's quarterly loss amounted to $417 million, surpassing predictions made by Wall Street analysts.

Nevertheless, the company managed to scrape together a marginal profit by incorporating various adjustments such as interest, taxes, depreciation, and amortization into their calculations.

Warner Bros. Discovery, the CNN owner, relied on the success of "Barbie" to achieve a modest 2% increase in sales, bringing the company's quarterly revenue to just under $2 billion. Despite a 12% decline in advertising revenue within WBDs networks division, the film's impressive performance managed to offset this setback. Additionally, the company faced an unspecified decrease in revenue due to the strikes led by the Writers Guild of America and SAG-AFTRA, the union representing 160,000 actors. These strikes resulted in a significant disruption to television and movie production for several months. While the writers strike has concluded, SAG-AFTRA remains on strike, and negotiations between the union, studios, and streaming services are still ongoing.

In September, the company projected a potential earnings impact of up to $500 million for the entire year due to the strike. While the company's net loss showed improvement compared to the $2.3 billion loss reported in the same quarter the previous year, the loss per share of 17 cents exceeded analysts' forecast of a 6-cent per share loss, as reported by Refinitiv.

The company's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 22%, reaching just under $3 billion. Despite the success of "Barbie" at the box office, profits declined in both the networks and studio divisions.

However, WBD experienced a profitable quarter in its streaming services, with adjusted EBITDA turning a $634 million loss from the previous year into a $111 million profit. Despite a decrease of 700,000 subscribers compared to the previous year, with a total of 95.1 million worldwide, higher subscription prices and a 29% increase in advertising revenue helped to improve the company's financial performance.

Netflix reported its initial profit from streaming in the first quarter of this year but experienced a slight loss in the second quarter. Despite being profitable, the majority of legacy media companies and computer manufacturer Apple have not consistently reported profits from their streaming services.