Discovery of Warner Bros. Thursday posted a steep loss and recorded about $11.1 billion in fourth-quarter revenue, excluding analyst estimates, as the media industry faces a weak advertising market.
The company’s TV networks segment – which includes cable TV channels like TNT, TBS and Discovery – fell 6% to around $5.5 billion, as advertising revenue notably fell.
Here’s what the company reported, compared to analyst estimates, according to Refinitiv:
- Income: $11.01 billion vs $11.36 billion expected
- Loss per share: 86 cents vs. 21 cents expected
The company reported a loss of $2.1 billion for the period, or 86 cents per share. Shares of Warner Bros. Discovery dropped after hours.
Warner Bros. executives Discovery began warning of a deteriorating advertising market last summer, and other media companies, including Paramount Global, have seen it weigh on their revenue. Underlying advertising trends continued to ease in the fourth quarter and were exacerbated by declining viewership, Warner Bros.’ chief financial officer said. Discovery, Gunnar Wiedenfels, during Thursday’s earnings call.
While Zaslav said on Thursday it was a “very difficult” macroeconomic environment, he forecast an improvement later this year. “We assume things will be better in the second half,” Zaslav said.
The company also faced restructuring costs and impairment charges resulting from the 2022 merger of Warner Bros. and Discovery, while trying to push its streaming business toward profitability.
The company ended the fourth quarter with $45.5 billion in debt on its balance sheet and $3.9 billion in cash. One of the main goals of Warner Bros. Discovery has been reducing its heavy debt load and cutting costs.
Warner Bros. executives said on Thursday that they plan to continue to significantly reduce debt on its balance sheet over the next two years. During the fourth quarter, the company repaid $1 billion in debt and has repaid $7 billion since April, when the merger closed.
“With major restructuring decisions behind us, this year we are focused on building and growing our business for the future, and we are off to a great start,” CEO David Zaslav said in the earnings release on Thursday. company results.
The company, which owns streaming services HBO Max and Discovery+, said its global direct-to-consumer streaming subscriber base grew by 1.1 million to 96.1 million at the end of the quarter.
Revenue from the streaming segment rose 6%, the company said Thursday, thanks to an increase in subscriber growth for its ad-supported tiers.
Losses in its streaming segment narrowed, the company said. It posted a loss of $217 million for the period, “a $511 million year-over-year improvement,” it added.
In the spring, the company will launch its combo streaming offering, with an investor tour scheduled for April 12. The merged platform is expected to be called Max, CNBC previously reported.
Earlier this month, the company raised the ad-free monthly price of HBO Max by $1 to $15.99, the first price hike since the streamer launched in May 2020. The company said it would invest more in content and user experience.
Zaslav said Thursday that while plans to combine Discovery+ and HBO Max content on one platform go ahead, Discovery+ will also remain a standalone streaming service. “We have profitable subscribers who are very happy with the Discovery+ offering, why would we do that?” says Zaslav.
Warner Bros. Discovery reported continued weakness in the advertising market, which has weighed on its revenue since last summer, when executives first warned of a slowdown in ad spending. Last week, World Paramount reported a decline in quarterly revenue due to lower ad spend.
The company’s network television segment was particularly hard hit as major sporting events, including college football and the men’s World Cup, took place on other networks during the fourth quarter.
Meanwhile, the company saw a 23% decline in revenue from its studio segment, noting that it had lower TV licensing deals and fewer theatrical releases. The DC Comics movie “Black Adam” was released in the fourth quarter of last year, compared to several releases including “Dune”, “The Matrix Resurrections”, “King Richard” and “The Many Saints of Newark” at the same period in the previous year.
On Thursday, Zaslav announced that Warner Bros. Discovery had signed a deal to make several “Lord of the Rings” films, as the media company looks to its franchises.
