OAN’s James Meyers
10:33 AM – Thursday, May 9, 2024
Warner Bros. Discovery posted a steep quarterly loss that was higher than anticipated.
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On top of the Hollywood writers strikes, the studio was obliged to make financial adjustments when its cable TV unit’s advertising revenues failed to meet expectations. In addition, its highly-marketed “Suicide Squad” game was released with very low demand.
The company posted a first-quarter loss of $966 million. Advertising revenue in its network segment, which includes the Discovery Channel and CNN, dropped 11% in the first quarter.
The entertainment conglomerate has also faced other hurdles in advertising trends. U.S. markets and other international markets were subdued as businesses responded to the realization of higher-than-usual interest rates, which is impactful for Warner Bros Discovery and other media companies.
Disney, a rival, also reported a significant drop on Tuesday in its traditional TV business for the January through March period.
However, Warner Bros Discovery’s streaming unit showed a positive outcome as global subscribers increased by two million to 99.6 million.
The mass media company also reported a high 72% jump in its adjusted profit, as investors pushed companies to cut back on large investments and focus on profitability. Additionally, the business reported an adjusted EBITDA of $86 million, compared with $50 million a year earlier.
Investors in the company have called for a focus on profitability, instead of boosting subscription, as Netflix is currently dominating the streaming wars.
The latest numbers come after Warner on Wednesday joined a partnership with Disney to offer a bundle of the Disney+, Hulu and Max streaming services in the U.S., starting this summer. Additionally, the companies also announced a sports-streaming project earlier this year.
“We are effectively seeing the return of the big bundle, delivered over the internet,” said Paolo Pescatore, analyst at PP Foresight.
Meanwhile, CEO David Zaslav said the company was “hopeful” that it would reach an agreement with the NBA to keep the basketball league on Max and TNT, which has held the rights for almost 40 years.
Furthermore, the company is still overcoming challenges due to the Hollywood strikes last year, which caused production delays and fewer episodes during the first three months this year.
Warner Bros Discovery’s revenue of $9.96 billion missed analysts’ average estimate of $10.23 billion, according to LSEG data.
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