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Warner Bros. Discovery nosedives on weak ad commentary
Warner Bros. Discovery (WBD) stock fell more than 15% in early trading Wednesday after the company noted ongoing weakness in the ad market, saying it could impact visibility for 2024.
CFO Gunnar Wiedenfels said on the company’s post-earnings conference call that 2024 “will have its share of complexity, particularly as it relates to the possibility of continued sluggish ad trends.”
He added that “it is unlikely from today’s perspective that we will hit our target leverage range by the end of 2024 without a meaningful recovery of the TV ad market.”
WBD, like other media companies, has grappled with an unfavorable ad environment. Earlier this summer, the company said it would realign its advertising sales division, including its leadership team, amid that weak ad demand.
Network advertising revenue tumbled by 13% in Q3 from the year-earlier period, matching the drop seen in Q2.
The company posted a loss of $0.17 a share in the third quarter, wider than the loss of $0.08 a share analysts had expected but an improvement from the prior year’s loss of $0.95. Revenue of $9.98 billion came in on par with consensus estimates compiled by Bloomberg and increased 1% excluding foreign exchange (FX) compared to Q3 2022.
Free cash flow jumped to over $2 billion, stronger than analysts expected, largely due to lower content spending from the 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, however, reversed with WBD reporting direct-to-consumer (DTC) adjusted EBITDA of $111 million in the third quarter, a $745 million year-over-year improvement.
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