Warner Bros. Discovery reported worse-than-expected quarterly profits Friday, largely due to the studio’s box office failure, and the media giant’s shares plummeted more than 9% in midday trading.
The David Zaslav-run company, which along with Warner Bros. Studios also owns CNN, TNT and streaming service Max, had fourth-quarter revenue of $10.28 billion, above analysts’ average estimate. This was lower than the previous figure of $10.35 billion.
Excluding items, the company lost 16 cents per share, beating Wall Street’s estimate of 7 cents.
However, studio revenues declined in the fourth quarter due to poor performance of highly anticipated productions such as “The Color Purple,” a musical starring Fantasia Barrino and Taraji P. Henson, and “Aquaman and the Lost Kingdom.” decreased by 17%. ” Starring Jason Momoa.
“The bottom line is that the studio’s performance has been really weak, and it has suffered quite a bit, including at the end of the year,” Zaslav said during a conference call after the report was released.
“But we’re very optimistic about this year and it gives us a chance to make a lot of money over the next two years. I mean, we really struggled.”
The Color Purple grossed just $68 million on a reported budget of about $100 million, while the Aquaman sequel grossed $433 million worldwide. However, the budget is reported to be approximately $215 million. The first film grossed $1 billion.
Despite the huge success of Barbie, starring Margot Robbie and Ryan Gosling, which grossed $1.45 billion worldwide, profits were low.
Gunnar Wiedenfels, WBD’s chief financial officer, said the company has high hopes for its next action movie, “Superman: Legacy,” but that “there are some issues on the superhero side.” He also acknowledged that there are real challenges.
“On the movie side, it’s obviously going to continue to be a hit-driven business,” he said. “And, you know, just last year was a great example of one of the biggest successes in movie studio history, and we had some big challenges across the industry on the superhero side.”
There was also good news in other areas of WBD. Revenue from the company’s direct-to-consumer division, which includes its streaming platform, rose 3% to $2.53 billion.
Free cash flow for the quarter rose 33% to $3.31 billion, beating analysts’ expectations of $2.5 billion.
While Rich Greenfield, an analyst at Lightshed Partners, touts the company’s free cash flow, driven primarily by significant cost reductions, Zaslav has yet to point to a market in which the company can grow. said.
“The challenge is they haven’t been able to grow their business,” Greenfield said. Yahoo Finance.
“What we’re seeing from investors is that it’s hard to make meaningful payments to companies if they don’t believe in future earnings and earnings growth. However, cost reduction is not a long-term strategy…”
