Warner Bros Discovery writes down TV assets by $9 bln amid uncertainty over fees, sports rights renewals
Adds CFO comment, details and background on content in paragraphs 4 9-11, 15, 16
By Harshita Mary Varghese and Akash Sriram
Aug 7 (Reuters) -Warner Bros Discovery WBD.O said on Wednesday it wrote down the value of its TV assets due to the uncertainty of fees from cable and satellite distributors and sports rights renewals, sending its shares down nearly 10% in extended trading.
The film and entertainment studio, which owns sports network TNT and streaming service Max, recorded a $9.1 billion non-cash goodwillcharge in the second quarter. This charge, stemming from a reassessment of the assets' value since the merger of WarnerMedia and Discovery, contributed to a $10 billion net loss for the quarter.
The media landscape has significantly changed in the past two years, impacting valuations and expectations for traditional media companies and this current situation is reflected in the write down, CEO David Zaslav said in a call with analysts.
Asked whether the company was considering hiving off assets, CFO Gunnar Wiedenfels said on the call: "We've said before, you shouldn't be surprised to see us engaging in you know, whatever M&A processes are going on out there."
The shift of viewers from traditional television to streaming services has led to a decline in advertising revenue and affiliate fees, impacting the profitability of Warner Bros. Discovery's television assets. This decline is further compounded by the escalating costs of acquiring sports rights.
TNT failed to renew a broadcast deal with National Basketball Association games, at a time when live sports have become crucial for companies to increase viewership. The company sued the NBA last month.
Losing the lawsuit would accelerate the decline of its TV business, analysts said.
"The huge impairment charge from Warner Bros Discovery is essentially the final nail in the coffin of the traditional linear TV business," said Bob O'Donnell, chief analyst at TECHnalysis Research.
Content revenue in Warner Bros Discovery's studio segment fell 6%, as the game "Suicide Squad: Kill the Justice League", released earlier this year underperformed, compared to last year's top game "Hogwarts Legacy".
Director George Miller's much-awaited "Furiosa: A Mad Max Saga" underperformed at the box office following its release in May. The film raked in $67.5 million at the domestic box office, IMDb's Box Office Mojo data showed, while it had a reported a budget of $168 million, according to analysts at TD Cowen.
The studio's stock has shed a third of its value this year.
NOT ENOUGH
Still, the company's direct-to-consumer customer base grew thanks to its cheaper ad-supported offerings and expansion of the Max streaming service to new markets.
Global direct-to-consumer customers at the end of the quarter was 103.3 million, up from 99.6 million subscribers in the January-March period, and beating analysts' estimates of 101.6 million, according to Visible Alpha data.
Revenue from advertisements on its direct-to-consumer platforms nearly doubled to $240 million, trouncing Wall Street expectations, due to higher engagement on the Max streaming platform and strong subscriber growth, the company said.
The company's rival Walt Disney DIS.N said on Wednesday that its Entertainment unit, including its streaming businesses Disney+, Hulu and ESPN+, recorded its first profit in the April-June quarter.
"Strong streaming subscriber growth is not enough to make up for weakening fundamentals, the loss of NBA broadcast rights, advertising weakness, and misses across free cash flow, revenue, EBITDA, and earnings," said Michael Ashley Schulman, chief investment officer of Running Point Capital.
Excluding one time items such as the goodwill charge, the company's loss was 36 cents per share, wider than estimates of 22 cents per share, according to LSEG data.
The film raked in $67.5 million at the domestic box office, IMDb's Box Office Mojo data showed. It had a reported budget of $168 million, according to analysts at TD Cowen.
The media giant reported revenue of $9.71 billion in the second quarter on Wednesday, compared to analysts' estimate of $10.07 billion.
Reporting by Harshita Mary Varghese and Akash Sriram in Bengaluru; Additional reporting by Dawn Chmielewski in Los Angeles; Editing by Pooja Desai and Sayantani Ghosh
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.