Warner Bros. Discovery (WBD) earnings Q2 2024

Warner Bros. DiscoveryThe company’s shares fell on Wednesday after the corporate reported $9.1 billion in write-downs at its TV networks and missed analysts’ revenue estimates.

Here’s how Warner Bros. Discovery performed based on an analyst survey conducted by LSEG:

• Loss per share: 36 cents in comparison with an expected loss of twenty-two cents
• Revenue: 9.7 billion US dollars in comparison with expected 10.07 billion US dollars

The company’s shares lost about 9 percent in after-hours trading.

Warner Bros. Discovery on Wednesday reported the non-cash goodwill impairment triggered by the revaluation of the carrying value of the TV Networks segment. The carrying value was higher than the fair value as traditional TV networks proceed to lose customers and advertisers prefer to take a position in digital media and streaming as a substitute.

“While I certainly don’t deny the magnitude of this impairment, I believe it is equally important to recognize that the flip side of this reflects the shift in value across all business models,” CFO Gunnar Wiedenfels said on Wednesday’s conference call, adding that the corporate is concentrated on growth in its studios and streaming units.

He said Warner Bros. Discovery’s balance sheet reflects significant goodwill resulting from mergers and acquisitions, particularly the mix of Warner Bros. and Discovery in 2022.

“It is fair to say that market valuations and prevailing conditions for traditional media companies were very different just two years ago than they are today. This impairment reflects that and better aligns our book values ​​with our future prospects,” CEO David Zaslav said within the conference call on Wednesday.

Executives stressed that Warner Bros. Discovery plans to proceed to scale back debt, much of which is attributable to the merger in 2022. In the second quarter, the corporate paid down $1.8 billion in debt. As of June 30, the corporate had gross debt of $41.4 billion and $3.6 billion in money available.

The company also pointed to uncertainties regarding the renewal of future sports rights, including the NBA. Warner Bros. Discovery sued the NBA in July, in search of to forcibly invoke its matching rights for a package of games that were Amazon‘s Prime Video as a part of the league’s recent media rights deal.

Revenues for Warner Bros. Discovery’s TV networks – which include TBS, TNT, Discovery and TLC – fell 8% to $5.27 billion within the second quarter, with each distribution and promoting revenues declining within the segment.

One vivid spot, nonetheless, was the corporate’s streaming business across the Max platform.

The company said Wednesday that it added 3.6 million subscribers within the quarter ended June 30, bringing its total global streaming customers to 103.3 million.

International expansion, which is driving rising subscriber numbers, in addition to increased promoting spending on streaming are driving the streaming business toward profitability, executives said Wednesday, and that trend is anticipated to proceed.

Zaslav also promoted the streaming packages that Warner Bros. Discovery is currently developing – an entertainment pairing with Disney’s Disney+ and Hulu – and a sports package with Disney’s ESPN and Fox The market launch is planned for this autumn.

Still, direct-to-consumer streaming revenue fell 5% to $2.57 billion, driven by a 70% decline in content revenue attributable to a lower volume of third-party licensing deals. However, streaming promoting revenue increased 99%, the corporate said, driven by higher domestic participation in Max and growth in ad-supported subscribers. Global revenue also increased 4%, driven by the promoting tier.

Total revenue for the quarter fell 6% to $9.7 billion. Adjusted earnings before interest, taxes, depreciation and amortization fell 15% to $1.8 billion.

Correction: This article has been updated to reflect that Warner Bros. Discovery’s revenue for the quarter was $9.7 billion.