Warner Bros faces nearly $10B loss due to TV network writedowns

Warner Bros. Discovery’s (WBD) stock dropped 9.8% in after-hours trading Wednesday after the company reported a nearly $10 billion quarterly loss, mainly due to a writedown of the value of its TV networks, including CNN, TNT and TBS.

WBD’s total revenue was $9.7 billion, falling short of the expected $10.07 billion.

The company’s traditional media, cable television networks like TBS, TNT, Discovery, and TLC, took a hard hit, with revenue falling by 8% to $5.27 billion in the second quarter.

The decline was attributed to cord-cutting, falling ratings, and a weak advertising market. Streaming platforms like Netflix have also drawn audiences away from traditional TV.

Additionally, the recent loss of TNT’s NBA game broadcast rights has impacted potential subscriber fees and ad revenue.

CEO David Zaslav acknowledged the changing nature of consumer behavior in a call yesterday, noting, “It’s fair to say that even two years ago market valuations and prevailing conditions for legacy media companies were quite different than they are today.”

Silver lining
WBD-owned streaming platform Max gained 3.6 million subscribers, reaching 103.3 million global customers.

Streaming advertising revenue increased by 99%, driven by higher engagement on Max and growth in ad-supported subscribers.

CEO Zaslav mentioned new streaming bundles, including a collaboration with Disney+ and Hulu and a sports bundle with ESPN and Fox, which are set to launch in the fall.

Overall, in the second quarter, WBD reduced its debt by $1.8 billion and aims to continue paying down its total gross debt of $41.4 billion, resulting from the 2022 merger between Warner Bros. and Discovery.