A sign is seen outside the Warner Brothers Discovery Techwood Turner Broadcasting campus on June 26, 2024 in Atlanta, Georgia.
Kevin Dietsch | Getty Images
Warner Bros. DiscoveryApple shares fell Wednesday after the company reported a $9.1 billion writedown at its television networks and missed analysts' revenue estimates.
Here's how Warner Bros. Discovery performed, according to a survey of analysts conducted by LSEG:
- Loss per share: 36 cents versus an expected loss of 22 cents
- Revenue: $9.7 billion versus the expected $10.07 billion
The company's shares fell about 9% in after-hours trading.
Warner Bros. Discovery reported a non-cash goodwill impairment charge on Wednesday, triggered by a restatement of the carrying value of its television network segment. The carrying value was higher than the market value as traditional television networks continue to see customers leave and advertisers are choosing to invest in digital media and streaming.
“While I'm not dismissing the magnitude of this decline, I think it's equally important to recognize that the flip side of this reflects the value shift in business models,” CFO Gunnar Wiedenfels said on Wednesday's earnings call, adding that the company is focusing on growing its studio and streaming units.
He said Warner Bros. Discovery's balance sheet has a significant amount of goodwill from mergers and acquisitions, namely the combination of Warner Bros. and Discovery in 2022.
“It's fair to say that even two years ago market valuations and prevailing conditions for traditional media companies were quite different than they are today, and this deterioration acknowledges this and better aligns our book values with our future outlook,” Chief Executive David Zaslav said on Wednesday's call.
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 gross debt and $3.6 billion in cash on hand.
The company also pointed to uncertainty surrounding future sports rights renewals, including the NBA. Warner Bros. Discovery sued the NBA in July, seeking to forcibly invoke its matching rights on a package of games intended for AmazonPrime Video as part of the league's new media rights deal.
Revenue from Warner Bros. Discovery Networks (a portfolio that includes TBS, TNT, Discovery and TLC) fell 8% to $5.27 billion in the second quarter, with revenue from distribution and advertising in the segment declining.
The company's streaming business, centered on the Max platform, was a bright spot, however.
The company said Wednesday it added 3.6 million subscribers during the quarter ended June 30, bringing its total number of global streaming customers to 103.3 million.
International expansion that boosts subscriber growth, as well as higher spending on streaming advertising, is driving its streaming business toward profitability, executives said Wednesday, with expectations that will continue.
Zaslav also touted the streaming packages that Warner Bros. Discovery is forming: an entertainment alliance with Disney's Disney+ and Hulu, and a sports package with Disney's ESPN and Fox Its launch is planned for this autumn.
Still, direct-to-consumer streaming revenue declined 5% to $2.57 billion, driven by a 70% drop in content revenue due to lower volume from third-party licensing deals. Streaming advertising revenue, however, rose 99%, the company said, driven by higher domestic share on Max and growth in ad-supported subscribers. Global revenue also rose 4% driven by the level of advertising.
Total revenue for the quarter fell 6% to $9.7 billion. Total adjusted earnings before interest, taxes, depreciation and amortization decreased 15% to $1.8 billion.
Correction: This article has been updated to reflect that Warner Bros. Discovery revenue was $9.7 billion for the quarter.
