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Warner Bros. Discovery – Numerous large corporations have released their fourth-quarter revenue reports in recent weeks.
Some have improved, while others have remained the same, and some have suffered major losses.
Warner Bros. Discovery is one of the corporations that reported a huge loss in the fourth quarter.
The news
Warner Bros. Discovery released a statement on Thursday, reporting a large loss of more than $11.1 billion in fourth-quarter sales, falling short of analysts’ expectations.
A lackluster advertising market can be blamed for some of the company’s decline.
Warner Bros. Discovery’s TV networks division shrank by 6% to $5.5 billion, with an emphasis on ad income.
TNT, TBS, and Discovery are among the cable networks affected.
Refinitiv compared the company’s report to analyst estimates:
- Posted revenue: $11.01 billion, expected revenue: $11.36 billion
- Posted loss per share: 86 cents, expected loss per share: 21 cents
In addition, Warner Bros. Discovery reported a $2.1 billion loss for the quarter.
The company’s stock dropped after hours as well.
Warnings
Earlier this summer, Warner Bros. Discovery Executives warned about a deteriorating advertising market.
Other media firms, such as Paramount Global, saw their earnings suffer as a result.
On the company’s results call on Thursday, Warner Bros. Discovery CFO Gunnar Weidenfalls, fundamental advertising trends slowed in the fourth quarter.
These were exacerbated by the shrinking viewership.
The Warner Bros. Discovery CEO David Zaslav also commented on the current macroeconomic situation, forecasting an improvement in 2023.
“We are assuming things will get better in the second half,” said Zaslav.
The business has been considering restructuring expenditures and impairment charges as a result of the Warner Bros. and Discovery merger in 2022.
At the same time, they were striving to steer its streaming business toward profitability.
Debt
Warner Bros. Discovery ended the fourth quarter with a balance sheet debt of $45.5 billion and $3.9 billion in cash on hand.
The company’s priority has been to reduce its debt and slash expenditures.
According to officials on Thursday, the company expects to continue its efforts to reduce a significant percentage of its debt from its balance sheet during the next two years.
The corporation repaid $1 billion in debt during the last quarter and $7 billion since the deal occurred in April.
“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
The Warner Bros. Discovery is the parent company of two major streaming platforms: HBO Max and 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 posted a 6% rise in sales.
The rise can be attributable to an increase in subscribers for its ad-supported tiers.
Nevertheless, losses in the streaming market have shrunk.
Warner Bros. Discovery lost $217 million over that time period, a $511 million improvement year over year.
Plans
In the spring, Warner Bros. Discovery will debut a bundled streaming service.
The business will have an investor walk-through on April 12.
According to prior rumors, the combined platform would be known as Max.
While there are plans to combine Discovery+ and HBO Max content under a single roof, Zaslav confirmed 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?”
Earlier this month, Warner Bros. Discovery revealed that t he price of HBO Max’s ad-free subscription had been raised from $1 to $15.99.
That is the platform’s first price increase since its introduction in May 2020.
In addition, the corporation stated that it intends to invest in additional content and user experience.
Revenue
With last summer’s indications of a deteriorating advertising market, Warner Bros. Discovery has had an impact on its revenue.
Last week, Paramount Global reported a reduction in quarterly income due to decreasing ad expenditure.
Major athletic events particularly impacted the company’s network TV division.
Several networks broadcast college football and the FIFA World Cup during the fourth quarter.
Due to reduced TV licensing deals and fewer theatrical releases, Warner Bros. Discovery’s income for the studios division fell by 23%.
The fourth quarter of 2022 saw the release of Black Adam.
Meanwhile, several titles were published in 2021 over the same time period, including:
- Dune
- King Richard
- The Many Saints of Newark
- The Matrix Resurrection
Finally, David Zaslav disclosed that Warner Bros. Discovery has agreed to develop numerous “Lord of the Rings” films, which is one of the company’s most profitable properties.
