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Shares of Warner Bros. Discovery (WBD) are plunging in after-hours trading after taking a $9.1 billion impairment charge on its linear networks. The release states that the charge was a "response to the difference between market capitalization and book value, continued softness in the U.S. linear advertising market, and uncertainty related to affiliate and sports rights renewals, including the NBA."
As a result, the company reported a loss of $4.07 per share in the second quarter compared to the expected loss of $0.21. Revenue of $9.7 billion was short of the expected $10.2 billion.
WBD added 3.6 million global direct-to-consumer subscribers in the quarter, more than the 1.89 million the Street was anticipating.
Market Domination Overtime anchors Julie Hyman and Josh Lipton break down the entertainment giant's earnings.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.
This post was written by Stephanie Mikulich.
Well, let's get to Warner Brothers Discovery earnings, uh, coming out and the shares down a quick 7% here. That's because the numbers, uh, were disappointing compared with estimates here. So let's go through the numbers. Total subscriber growth not bad here. 103.3 million. That's the total subscribers, a little bit ahead of estimates here. Um, and if you look at some of the other numbers, you've got Studios revenue that fell short of estimates at $2.45 billion dollars. Network advertising revenue also short of of of, um, of estimates here. Excuse me. Um, and if you look across direct to consumer revenue, $2.57 billion, a missing estimate. So largely here, we saw the revenue number overall missing estimates because of those, uh, individual shortfalls in the various divisions. The second quarter loss per share, $4.07, which is much, much deeper than estimated, and that's because the company included a $9.1 billion impairment charge. So that's what is going on there with that huge loss that the company experienced.
Yeah, CEO David Zaslav trying to sound an optimistic tone here, talking about another strong quarter of growth with, uh, he mentions 3.6 million net adds. Uh, talks about international expansion, investments they're making in content, uh, talks about existing linear partnerships, pursuing new bundling opportunities, but at least the immediate reaction here, not good.
Yeah, I mean, so basically what they have done here is writing down or taking a charge of $9.1 billion because the value of the traditional TV networks has fallen to such an extent that David Zaslav, the CEO, thought that this was a necessary step. Now remember, the context for this is that the NBA dropped Warner Brothers as its broadcast partner. Um, the $76 billion media rights deal instead got awarded to Disney Comcast and Amazon. So, it's unclear if this is they have a lawsuit. Right, it's unclear if this right now is tied solely to that, or just largely to that, but however way you slice it, uh, this right down not welcome news for investors.
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