"Barbie" boosted the economy, but couldn't save Warner Bros.' bottom line
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.
- Along with the wild success of Taylor Swift's summer tour, "Barbie" was sometimes credited with boosting the economy.
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%.