Warner Bros. Discovery – Numerous big companies have just reported fourth-quarter revenue.
Some have improved, while others have stagnated, and some have experienced significant losses.
Warner Bros. Discovery was among the companies that disclosed a heavy loss in the fourth quarter.
The news
Warner Bros. Discovery issued a statement revealing a significant loss of more than $11.1 billion in fourth-quarter revenues, falling short of analysts’ estimates.
Some of the company’s downturn can be attributed to a slow advertising market.
Due to a reduction in ad revenue, Warner Bros. Discovery’s TV networks sector fell 6% to $5.5 billion.
Cable networks affected include TNT, TBS, and Discovery.
Refinitiv compared the earnings report to analyst forecasts:
- Posted revenue: $11.01 billion, expected revenue: $11.36 billion
- Posted loss per share: 86 cents, expected loss per share: 21 cents
Furthermore, Warner Bros. Discovery lost $2.1 billion in the fourth quarter.
The company’s shares subsequently plummeted after hours.
Warnings
Earlier last summer, Warner Bros. Discovery issued a warning about a weakening advertising market.
Earnings at other media companies, such as Paramount Global, have suffered as a result.
The studio CFO Gunnar Weidenfalls, during the company’s earnings call on Thursday, said fundamental advertising trends fell in the fourth quarter.
The limited audience increased these fears.
David Zaslav, the CEO of Warner Bros. Discovery made a statement on the present economic scenario, forecasting a recovery in 2023.
“We are assuming things will get better in the second half,” said Zaslav.
As a result of the Warner Bros. and Discovery merger in 2022, the company has been examining restructuring expenditures and impairment charges.
They were also dedicated to making their streaming firm prosperous.
Debt
Warner Bros. Discovery exited the fourth quarter with $45.5 billion in balance-sheet debt and $3.9 billion in cash on hand.
The company’s first priority has been to decrease debt and cut expenses.
According to business executives on Thursday, the company aims to continue its efforts over the next two years to eliminate a large portion of its debt from its balance sheet.
The company paid down $1 billion in debt in the most recent quarter and $7 billion since the April acquisition.
“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. Discovery’s two key streaming platforms are HBO Max and Discovery+.
According to the company, at the conclusion of the quarter, its global direct-to-consumer streaming user base climbed from 1.1 million to 96.1 million.
The company announced a 6% increase in revenue on Thursday.
The increase is due to a growth in ad-supported tier subscriptions.
Despite this, the losses of streaming companies have decreased.
Warner Bros. Discovery ended up losing $217 million during that span of time, a $511 million gain year on year.
Plans
Warner Bros. Discover, I n the spring of 2022, intends to launch a packaged streaming service.
On April 12, the company will have an investor briefing.
According to previous speculations, the unified platform would be called Max.
While there are plans to combine Discovery+ and HBO Max content, Zaslav stated 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 stated earlier this month that the ad-free membership fee for HBO Max had been raised from $1 to $15.99.
This is the first price hike for the platform since its launch in May 2020.
Furthermore, the company claimed that it aims to invest in new content and user experience.
Revenue
As the advertising market began to weaken last summer, Warner Bros. Revenue from discovery was impacted.
This week, Paramount Global announced lower quarterly profitability owing to lower ad spending.
Major sporting events have a strong effect on the company’s network TV division.
During the fourth quarter, many networks show college football and the FIFA World Cup.
Due to fewer theatrical releases and fewer TV licensing deals, Warner Bros. Discovery’s income had diminished, and studio business has decreased by 23%.
Black Adam was released in the fourth quarter of 2022.
Meanwhile, other films were released in 2021 at the same time period, including:
- Dune
- King Richard
- The Many Saints of Newark
- The Matrix Resurrection
Warner Bros. Discovery has officially confirmed, according to David Zaslav, to produce a couple more “Lord of the Rings” films, which is one of the company’s most profitable franchises.
Image source: Sportico
