A sign is seen outside the Warner Brothers Discovery Techwood Turner Broadcasting campus on June 26, 2024 in Atlanta, Georgia.
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Warner Bros. DiscoveryApple Inc. shares fell on Wednesday after it reported a $9.1 billion loss at its television networks and failed to meet analysts' revenue estimates.
Here's how Warner Bros. Discovery is performing, based on an analyst survey conducted by LSEG:
Loss per share: 36 cents vs. 22 cents expected Revenue: $9.7 billion vs. $10.07 billion expected
The company's shares fell about 9% in after-market trading.
Warner Bros. Discovery Inc. on Wednesday announced a non-cash goodwill impairment charge, imposed due to a revaluation of the book value of its television networks segment. The book value was higher than market value as traditional TV networks continued to see customers flee and advertisers opt to spend on digital and streaming instead.
“While I certainly don’t discount the magnitude of this weakness, I think it’s equally important to recognize that the other side of this reflects the value shift across business models,” CFO Gunnar Weidenfels said on an earnings call Wednesday, adding that the company is focused on growth in its studios and streaming units.
He said Warner Bros. Discovery's balance sheet carries a lot of goodwill from mergers and acquisitions, especially the combination of Warner Bros. and Discovery in 2022.
“It’s fair to say that even two years ago, market valuations and conditions for traditional media companies were very different than they are today, and this writedown acknowledges that and brings our book values more in line with our future expectations,” CEO David Zaslav said on a call Wednesday.
Executives highlighted Warner Bros. Discovery’s ongoing mission to pay down debt, much of which stems from the 2022 merger. During the second quarter, the company paid down $1.8 billion in debt. As of June 30, it had $41.4 billion in total debt and $3.6 billion in cash on hand.
The company also noted uncertainty over future renewals of sports broadcast rights, including the NBA. Warner Bros. Discovery sued the NBA in July, seeking to invoke its matching rights to a package of games for television broadcast. AmazonAs part of the league's new media rights deal.
Revenue at Warner Bros. Discovery's television networks — the portfolio that includes TBS, TNT, Discovery and TLC — fell 8% to $5.27 billion in the second quarter, as distribution and advertising revenues across the segment declined.
However, the company's streaming business, which is centered around the Max platform, has been a bright spot.
The company said Wednesday it added 3.6 million subscribers during the quarter ended June 30, bringing its total global streaming customers to 103.3 million.
International expansion that's driving subscriber growth, as well as increased ad spending on live streaming, is pushing the streaming business toward profitability, with expectations that will continue, executives said Wednesday.
Zaslav also praised the streaming packages that Warner Bros. Discovery is forming – an entertainment pairing with Disneys Disney+ and Hulu — and a sports bundle with ESPN and Disney's fox It is scheduled to be released this fall.
However, direct-to-consumer streaming revenue fell 5% to $2.57 billion, driven by a 70% decline in content revenue due to lower third-party licensing deals. However, the company said ad revenue for live streaming rose 99%, driven by higher domestic engagement on Max and ad-supported subscriber growth. Global revenue also increased 4%, driven by ad volume.
Total revenue for the quarter fell 6% to $9.7 billion. Adjusted earnings before interest, taxes, depreciation and amortization fell 15% to $1.8 billion.
Correction: This article has been updated to reflect that Warner Bros. Discovery's revenue was $9.7 billion in the quarter.
