Warner Bros. Discovery's stock falls as earnings reflect traditional-media woes

By Ciara Linnane and Emily Bary

Studio and networks revenue each declined

Traditional media businesses have had a tough time even as they navigate a march into the streaming era, and Warner Bros. Discovery Inc.'s earnings could be the latest example of that.

The company posted a wider-than-expected first-quarter loss and revenue that fell short of estimates, helping to send shares down 3% in premarket action.

Warner (WBD) had a net loss of $966 million, or 40 cents a share, for the quarter, narrower than the loss of $1.07 billion, or 44 cents a share, posted in the year-earlier period. The loss factored in $1.88 billion of pretax charges related to acquisition-related amortization of intangibles, step-ups in the fair value of content and restructuring expenses, according to the release.

Analysts had been looking for a 20-cent GAAP loss per share.

Revenue fell to $9.96 billion from $10.70 billion. The FactSet consensus was for revenue of $10.22 billion.

Warner signaled profit improvements in the direct-to-consumer business. The company posted $86 million in adjusted earnings before interest, taxes, depreciation and amortization for its direct-to-consumer business, up $36 million from a year before.

The company added 2 million global direct-to-consumer subscribers relative to the December quarter, bringing its total to 99.6 million.

Revenue for direct-to-consumer, meanwhile, was essentially flat at $2.46 billion.

However, Warner saw some challenges in its traditional-media business. Studio revenue was down 13%, for example, as theatrical sales picked up but TV revenue got hit "meaningfully" by the Hollywood strikes, which meant that less new content was available.

Adjusted Ebitda for studios was off 70% from a year before, when excluding current impacts.

In the networks business, revenue and adjusted Ebitda each declined by 8%. Warner flagged an 11% decline in advertising revenue partly related to "audience declines in domestic general entertainment and news networks." But content revenue within networks was up 8% thanks in big part to a bump in licensing to streaming.

The stock has fallen 31% in the year to date, while the S&P 500 has gained 8.8%.

-Ciara Linnane -Emily Bary

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05-09-24 0856ET

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