Warner Bros. Discovery – Many major corporations have just released their fourth-quarter revenue results.
Some have improved, while others have remained stagnant, and some have suffered severe losses.
Warner Bros. Discovery was one of the corporations that reported a huge loss in the fourth quarter.
The news
On Thursday, Warner Bros. Discovery published a statement disclosing a massive loss in fourth-quarter sales of more than $11.1 billion, falling short of analysts’ expectations.
A sluggish advertising market can be blamed for some of the company’s decline.
Warner Bros. Discovery’s TV networks segment fell 6% to $5.5 billion, owing to a decline in ad income.
TNT, TBS, and Discovery are among the cable networks affected.
Refinitiv compared the company’s earnings report to analyst projections:
- Posted revenue: $11.01 billion, expected revenue: $11.36 billion
- Posted loss per share: 86 cents, expected loss per share: 21 cents
Moreover, Warner Bros. Discovery had a $2.1 billion quarterly loss.
The company’s stock dropped after hours as well.
Warnings
Last summer, Warner Bros. Discovery cautioned about a deteriorating advertising market.
As a result, earnings at other media businesses, such as Paramount Global, have fallen.
According to Warner Bros. Discovery CFO Gunnar Weidenfalls on the company’s results call on Thursday, basic advertising patterns dropped in the fourth quarter.
These concerns were exacerbated by the smaller audience.
Warner Bros. Discovery CEO David Zaslav commented on the current economic situation, predicting an improvement in 2023.
“We are assuming things will get better in the second half,” said Zaslav.
The business has been analyzing restructuring expenses and impairment charges as a result of the Warner Bros. and Discovery merger in 2022.
They were also working hard to make their streaming firm lucrative.
Debt
Warner Bros. Discovery ended the fourth quarter with balance-sheet debt of $45.5 billion and cash on hand of $3.9 billion.
The company’s initial priority has been to reduce debt and slash expenditures.
According to corporate leaders on Thursday, the company intends to continue its efforts over the next two years to remove a significant percentage of its debt from its balance sheet.
The corporation repaid $1 billion in debt in the most recent quarter and $7 billion since the April purchase.
“With the major restructuring decisions behind us, this year we are focused on building and growing our businesses for the future,” said Zaslav. “And we’re off to a great start.”
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The streaming segment
Warner Bros. HBO Max and Discovery+ are the two primary streaming platforms operated by Discovery.
According to the firm, its worldwide direct-to-consumer streaming user base increased from 1.1 million to 96.1 million at the end of the quarter.
On Thursday, the firm announced a 6% rise in sales.
The rise is attributable to an increase in ad-supported tier subscriptions.
Despite this, streaming company losses have lessened.
Warner Bros. Discovery shed $217 million over that timespan, a $511 million increase year over year.
Plans
Warner Bros. Discovery plans to create a bundled streaming service in the spring of 2022 .
The business will hold an investor briefing on April 12.
Previous rumors stated that the unified platform will be dubbed Max.
While plans to mix Discovery+ and HBO Max content are in the works, Zaslav noted that the former will have its own streaming service, saying:
“We have profitable subscribers that are very happy with the offering of Discovery+, why would we shut that off?”
Warner Bros. Discovery announced earlier this month that the price of HBO Max’s ad-free membership had been increased from $1 to $15.99.
This is the platform’s first price increase since its introduction in May 2020.
In addition, the corporation stated that it intends to invest in fresh content and user experience.
Revenue
Last summer, when the advertising market began to deteriorate, Warner Bros. Discovery revenue was impacted.
Last week, Paramount Global reported decreased quarterly profitability due to decreasing ad expenditure.
The company’s network TV section is heavily influenced by major sporting events.
Many networks broadcast college football and the FIFA World Cup during the fourth quarter.
Warner Bros. Discovery’s income has decreased due to reduced theatrical releases and fewer TV license agreements, and studio business fell 23%.
The fourth quarter of 2022 saw the release of Black Adam.
Meanwhile, other movies were released during the same time period in 2021, including:
- Dune
- King Richard
- The Many Saints of Newark
- The Matrix Resurrection
David Zaslav has officially confirmed that Warner Bros. Discovery has signed a deal to make a few more “Lord of the Rings” films, which is one of the company’s most successful properties.
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