Nov 9, 2023 - Economy

"Barbie" boosted the economy, but couldn't save Warner Bros.' bottom line

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

Media giant Warner Bros. Discovery posted another loss, despite the success of "Barbie," the top-grossing movie of the year.

Why it matters: Warner Bros. Discovery is the poster child for the challenges faced by traditional media companies amid the rapid transition to streaming.

State of play: The company — created by the merger of AT&T's WarnerMedia unit with Discovery — has failed to turn a profit since the deal was completed in early 2022.

  • Its challenges are tied to its cable channel offerings — TNT, HGTV, the Food Network and CNN among them — which have struggled along with the decline in cable television viewership.
  • The company also owns the prestige television network HBO and the streaming service Max.

Between the lines: The Warner Bros. film studio was a bright spot for the company during Q3, thanks to its release of "Barbie," which grossed $1.3 billion globally and became something of a cultural phenomenon over the summer.

Yes, but: Despite Barbie's blockbuster status, Warner Bros.' operating earnings for its studio division declined 6%, to $727 million, compared to last year.

  • And the film's earning power couldn't offset the declines the company is seeing in its other businesses, disappointing Wall Street.

What they're saying: "The market is not thrilled with the fact that even with the unparalleled blockbuster success of 'Barbie,' they still found a way to lose $417 million in the quarter. Not ideal," Thomas Hayes, chairman of equity fund manager Great Hill Capital, told Reuters.

The bottom line: The stock plunged 18%.

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