Shares of Warner Bros. Discovery (WBD) fell more than 15 per cent in early trading on Wednesday after the company noted continued weakness in the advertising market and said it could affect its outlook through 2024.

Chief Financial Officer Gunnar Wiedenfels said in a conference call after earnings that 2024 “will have its share of challenges, especially with the possibility of continued sluggish advertising trends.”

He added that “from today’s perspective, it is unlikely that we will reach our target leverage range by the end of 2024 without a significant recovery in the TV advertising market.”

WBD, like other media companies, is facing an unfavourable advertising environment. Earlier this summer, the company said it would reorganise its advertising sales division, including its management team, amid weak advertising demand.

In the third quarter, network advertising revenue fell 13% from a year earlier, matching the decline in the second quarter.

The company’s streaming subscribers totalled 95.1 million in the third quarter, down 700,000 from the second quarter.

Last month, the company launched a new sports tier on its Max service, following the launch of CNN Max, which offers 24-hour news streaming, in late September as part of the Max service’s open beta.

WBD CEO David Zaslav said in an earnings release that both of these offerings “are showing early signs of driving engagement growth and reducing subscriber churn on Max.”

Streaming losses declined despite subscriber growth coming in below consensus estimates. The company reported third quarter adjusted EBITDA of $111 million, up $745 million year over year.

The company posted a third-quarter loss of $0.17 per share, more than the $0.08 per share loss expected by analysts but better than last year’s loss of $0.95.

Revenue of $9.98 billion matched the Bloomberg consensus estimate and was up 1 per cent on a currency-neutral basis compared with Q3 2022.

Free cash flow exceeded analysts’ forecasts to more than $2 billion, largely due to lower content costs as a result of the Hollywood strikes and ongoing post-merger synergies.

One of the bright spots in the earnings report was box office. Total revenue for the studio units was $3.2 billion, up 3% excluding FX from the previous quarter, helped by the record-breaking success of the “Barbie” film, which debuted in July.

According to the company, “Barbie” became the highest-grossing film in Warner Bros. history and grossed nearly $1.5 billion at the worldwide box office.

Online content revenues fell 22 per cent year-on-year to $215 million. This led to a 7% decline in total network revenue to $4.87bn in the quarter.

The company reiterated its September full-year adjusted EBITDA expectations of $10.5 billion to $11 billion, compared with its previous guidance of $11 billion to $11.5 billion.