Warner Bros. Discovery (WBD) earnings Q4 2023

The exterior of the Warner Bros. Discovery Atlanta campus is pictured after the Writers Guild of America began its strike against the Alliance of Motion Pictures and Television Producers, in Atlanta, Georgia, on May 2, 2023.

Alyssa Pointer | Reuters

Warner Bros. Discovery missed analyst targets for both profit and revenue in the fourth quarter as advertising slumped and the company failed to provide free cash flow guidance for 2024.

Shares of Warner Bros. Discovery closed down 10% on Friday after the report.

The company’s fourth-quarter net loss was $400 million, or 16 cents per share, compared with a loss of $2.1 billion, or 86 cents per share, during the year-ago period. Warner Bros. Discovery reported a 14% decline in linear television advertising revenue excluding changes in foreign exchange and a 4% drop in actual distribution revenue.

“This business is not without its challenges,” Chief Executive Officer David Zaslav said during the company’s fourth-quarter earnings conference call. “Among them, we continue to face the impacts of ongoing disruption in the pay TV ecosystem and a dislocated, linear advertising ecosystem. We are challenging our leaders to find innovative solutions.”

Here’s what the company reported for the quarter ended Dec. 31, versus analysts’ estimates, according to LSEG, formerly known as Refinitiv:

  • Loss per share: 16 cents vs. 7 cents expected
  • Revenue: $10.28 billion vs. $10.35 billion expected

Fourth-quarter adjusted EBITDA was $2.5 billion, down 5% from a year ago, excluding the impact of foreign exchange, as studio revenue lagged as a result of strikes by the Writers Guild of America and the Screen Actors Guild-American Federation of Television and Radio Artists.

Studio revenue dropped 17% to $3.17 billion in the quarter. Adjusted EBITDA for the unit fell 29% to $543 million.

“The studio has really been underperforming, including the end of the year, where we had some real struggle,” Zaslav said during the earnings conference call.

Free cash flow

Max profitable for 2023

Sports JV

President and Chief Executive Officer of Warner Bros. Discovery David Zaslav attends the world premiere of the 4k restorated 1959 movie “Rio Bravo” presented at the Opening Night of the 2023 TCM Classic Film Festival in the TCL Chinese Theatre in Hollywood, California, April 13, 2023.

Aude Guerrucci | AFP | Getty Images

“We don’t see a lot of people unsubscribing to cable in order to get this,” Zaslav said. “The younger generation that is not subscribing, we’re able to go after those that we’re missing.”

Warner Bros. Discovery continues to negotiate with the NBA for renewed media rights, but won’t overpay according to the company’s internal estimates of the league’s value, Wiedenfels said.

“It’s very easy to lose control over sports rights investments,” Wiedenfels said. “That’s not how we do it. We know exactly what value we assign, and we stay disciplined during our discussions.

Disclosure: NBCUniversal is the parent company of CNBC.

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