Warner Bros. Discovery posted a bigger-than-expected quarterly loss as advertising sales at its cable TV division slumped and its studio division grappled with the fallout from last year’s Hollywood strike and weak demand for its “Suicide Squad” game. .
Advertising trends in the U.S. and some international markets have been subdued as companies grappled with the possibility of higher long-term interest rates, a drag for Warner Bros. Discovery and other media companies.
Warner posted a loss of $966 million in the first quarter. Advertising revenue at its networks division, which includes CNN and Discovery Channel, fell 11% in the first quarter.
Rival Disney also reported on Tuesday a decline in its traditional TV business for the January-March period.
Things remained bright for Warner Bros. Discovery’s streaming division as global subscriber numbers increased by 2 million to 99.6 million.
The business also reported a 72% increase in adjusted profit, a metric that investors are closely watching as it prompts companies to cut back on large investments and focus on profitability. be.
The segment reported adjusted EBITDA of $86 million, compared with $50 million in the prior year period.
As Netflix solidifies its leadership position in the streaming wars, investors are asking the company to shift its focus from subscriber growth to profitability.
Warner announced Wednesday that it is partnering with Disney to offer a bundle of Disney+, Hulu and Max streaming services in the U.S. starting this summer. The two companies, along with Fox, announced sports streaming operations earlier this year.
“We are effectively seeing a resurgence of large bundles delivered over the internet,” said Paolo Pescatore, an analyst at PP Foresight.
Expectations for the NBA
CEO David Zaslav said the company is “hopeful” to reach an agreement with the NBA regarding the continuation of Max and TNT in the league.
The stock was flat after falling earlier, as NBA rights are seen as central to the company’s efforts to drive growth in its streaming business and retain cable customers.
Ross Venez, senior analyst at eMarketer, said Warner Bros. Discovery “will be a weak third pillar” of the new sports streaming business if the NBA contract is not renewed.
The company’s studio revenue was impacted by the poor performance of its game “Suicide Squad: Kill the Justice League” compared to 2023 bestseller “Hogwarts Legacy.”
Despite March releases such as “Dune: Part 2,” which grossed more than $700 million worldwide and was the highest-grossing movie so far in 2024, the business’s revenue fell by 12%. Diminished.
The company continues to face challenges brought on by last year’s twin Hollywood strikes, which delayed production and reduced episode counts in the first three months of the year.
Warner Bros. Discovery’s revenue was $9.96 billion, below analysts’ average estimate of $10.23 billion, according to LSEG data.
