Warner Bros Discovery reported a bigger-than-expected quarterly loss on Friday, as the media conglomerate battled a weak advertising market and the fallout of the twin Hollywood strikes on content generation.

Shares of the company, forged by the union of WarnerMedia and Discovery, tumbled nearly 12%, even as it beat Disney and Paramount to an inaugural annual profit for the streaming business. Shares of Paramount fell more than 5%.

The results highlight the challenges after the strikes by writers and actors paralyzed production for months before ending in September and November, respectively.

Warner Bros Discovery’s studio business revenue sank 17% in the fourth quarter as it had little to follow the success of “Barbie”, which released in July and topped $1 billion in ticket sales worldwide.

The company is pinning its hopes on the March release of the second installment of sci-fi epic “Dune,” featuring Timothee Chalamet and Zendaya. The release was delayed from November due to the Hollywood strikes.

Advertising revenue at its networks segment declined 12% to $1.95 billion, hurt by the ongoing decline in audiences for traditional television and a weaker economic outlook.

Overall fourth-quarter revenue of $10.28 billion missed analysts’ average estimate of $10.35 billion, per LSEG data. Excluding items, the company lost 16 cents per share, larger than expectations for a loss of 7 cents.

The decline of cable TV has in part fueled the recent buzz about a fresh consolidation in the industry. Reuters reported in January, citing a source, Skydance Media CEO David Ellison was exploring a bid for Paramount’s parent, National Amusements.

That followed another Reuters report in December that Warner Bros Discovery CEO David Zaslav and Paramount top boss Bob Bakish had met to discuss a potential deal.

Warner Bros Discovery earlier this month said it would form a joint venture with Walt Disney and Fox to launch a sports streaming service this autumn to capture younger viewers who are not tuned in to television.

Meanwhile, the streaming business extended its strong show. The unit had 97.7 million global customers at the end of the fourth quarter, including 1.3 million subscribers from its acquisition of BluTV.

For the full year, the streaming division reported a profit of $103 million, compared with a loss of $1.6 billion in 2022.

Core earnings for the business is expected “to be modestly negative in the first half and then profitable again in the second half”, finance chief Gunnar Wiedenfels said on a post-earnings call.

Free cash flow came in at $3.31 billion for the quarter, topping estimates of $2.6 billion, according to Visible Alpha, as costs fell by nearly 19% to $10.47 billion.

(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Sriraj Kalluvila)

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