Warner Bros. Discovery plunges due to weak ad reviews
Discovery of Warner Bros.WBD) stock fell more than 15% in early trading Wednesday after the company noted continued weakness in the advertising market, saying it could impact visibility for 2024.
Chief Financial Officer Gunnar Wiedenfels said during the company’s post-earnings conference call that 2024 will “counter its fair share of complexity, particularly with respect to the possibility of continued sluggish advertising trends.”
He added that “it is unlikely, from today’s perspective, that we will achieve our leverage target by the end of 2024 without a significant recovery in the television advertising market.”
WBD, like other media companies, is struggling with an unfavorable advertising environment. Earlier this summer, the company said it would realign its advertising sales divisionincluding its management team, amid this low advertising demand.
The network’s advertising revenue fell 13% in the third quarter compared to the year-ago period, matching the decline seen in the second quarter.
The company reported a loss of $0.17 per share in the third quarter, more than the loss of $0.08 per share expected by analysts, but an improvement over the company’s loss of $0.95. last year. Revenue of $9.98 billion was in line with consensus estimates compiled by Bloomberg and increased 1% excluding foreign exchange (FX) from the third quarter of 2022.
Free cash flow jumped to more than $2 billion, more than analysts expected, largely due to lower content spending following Hollywood strikes and continued post-merger synergies.
The company’s total streaming subscribers for the third quarter were 95.1 million, a decrease of 700,000 global subscribers since the end of the second quarter. Streaming losses reversed, however, with WBD reporting direct-to-consumer (DTC) adjusted EBITDA of $111 million in the third quarter, a year-over-year improvement of $745 million.