A sign outside the Warner Bros. Discovery Teckwood Turner Broadcasting Company campus on June 26, 2024 in Atlanta, Georgia.
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Warner Bros. DiscoveryThe company’s shares fell on Wednesday after it reported a $9.1 billion writedown on its television network assets and revenue that missed analysts’ expectations.
Here’s how Warner Bros. Discovery performed, according to a survey of analysts by LSEG:
- Loss per share: 36 cents, expected loss of 22 cents
- income: US$9.7 billion, expected US$10.07 billion
The company’s shares fell about 9% in after-hours trading.
Wednesday Warner Bros. Discovery Channel report Non-cash goodwill impairment charge, resulting from a revaluation of the television network segment’s book value. As traditional TV networks continue to see customer churn, advertisers are choosing to spend money on digital and streaming media, with book values higher than market values.
“While I certainly don’t discount the magnitude of the damage, I think it’s equally important to recognize that the other side of this reflects a shift in value across different business models,” Chief Financial Officer Gunnar Wiedenfels said on Wednesday’s earnings call. .
He said Warner Bros. Discovery Channel’s balance sheet contains a lot of goodwill from the merger, which is when Warner Bros. and Discovery Channel merge in 2022.
“It’s fair to say that even two years ago, the market valuations and prevailing conditions for legacy media companies were very different than they are today,” Chief Executive David Zaslav said in Wednesday’s earnings call. The impairment recognizes this and better aligns our book value with our future prospects.
Executives emphasized Warner Bros. Discovery’s continued mission to pay down debt, much of which stems from the 2022 merger. The company paid down $1.8 billion in debt in the second quarter. As of June 30, it had total debt of $41.4 billion and cash on hand of $3.6 billion.
The company also noted the uncertainty about future sports rights renewals, including the NBA. Warner Bros. Discovery sued the NBA in July, seeking to forcibly invoke its rights to select games. AmazonPrime Video as part of the Alliance’s new media rights agreement.
Second-quarter revenue at Warner Bros. Discovery’s television networks, which includes TBS, TNT, Discovery and TLC, fell 8% to $5.27 billion, with both distribution and advertising revenue falling in the segment.
However, the company’s Max platform-centric streaming business is a bright spot.
The company said on Wednesday it added 3.6 million new subscribers in the quarter ended June 30, bringing its total number of global streaming customers to 103.3 million.
Executives said on Wednesday that user growth driven by international expansion and increased streaming ad spending were driving profitability in its streaming business and expected that to continue.
Zaslav also touted the Warner Bros. Discovery Channel’s emerging streaming bundle — with disney’s Disney+ and Hulu — as well as including Disney’s ESPN and fox It’s set to launch this fall.
Still, direct-to-consumer streaming revenue fell 5% to $2.57 billion, due to a 70% decline in content revenue due to lower third-party licensing deals. However, the company said streaming ad revenue grew 99% due to higher domestic engagement with Max and growth in ad-supported users. Global revenue also grew 4%, driven by the advertising layer.
Total revenue fell 6% to $9.7 billion in the quarter. Total adjusted earnings before interest, taxes, depreciation and amortization fell 15% to $1.8 billion.
Correction: This article has been updated to reflect Warner Bros. Discovery Channel’s revenue for the season was $9.7 billion.
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