(Reuters) -Warner Bros Discovery topped third-quarter profit and free-cash flow estimates on Wednesday as the box-office hit “Barbie” helped offset a sluggish advertising market and a studios segment starved of content due to two Hollywood strikes.
Although Hollywood’s film and television writers ratified a new, three-year contract in September, ending their 148-day work stoppage, members of the SAG-AFTRA actors union have been on strike since July, roiling the industry’s 2024 film slate and depriving media companies of new content to sell.
The media company forged by the union of WarnerMedia and Discovery posted adjusted core earnings of $2.97 billion, above estimates of $2.92 billion, as per LSEG data. Overall third-quarter revenue of $9.98 billion was in line with estimates.
The company reported free cash flow of $2.06 billion, compared with $1.72 billion in the prior quarter, as it spent less on production as a result of the strikes. This surpassed expectations for $1.74 billion, according to Visible Alpha.
The results put the company “on track to meaningfully exceed $5 billion (free cash flow) for the year and contributing to our nearly $12 billion in debt paydown to date,” CEO David Zaslav said.
Advertising revenue at its networks segment declined 12% to $1.71 billion as global conflicts and inflation create an uncertain climate for marketers.
The company had 95.1 million global direct-to-consumer customers at the end of the quarter, down from 95.8 million in the previous quarter. In May, it launched its Max streaming service – combining HBO Max’s scripted entertainment with Discovery’s reality shows.
(Reporting by Samrhitha Arunasalam in Bengaluru and Helen Coster in New York; Editing by Saumyadeb Chakrabarty)
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