WBD Hammered: Reports $10B Quarterly Loss

Warner Bros. Discovery posted a nearly $10 billion quarterly loss mostly due to a write-down of the value of its cable networks, a stunning acknowledgment of how the television industry has deteriorated since the blockbuster deal that created the conglomerate two years ago.

The Wall Street Journal reports the $9.1 billion noncash impairment comes as the cable networks of Warner Bros. Discovery including CNN, TNT and TBS have been hammered by cord-cutting, declining ratings and a weak advertising market. Streaming platforms such as Netflix have taken audiences and subscribers away from what was once the engine powering the media industry.

Another recent blow to the company’s cable business was TNT’s inability to strike a new deal to keep rights to carry National Basketball Association games beyond next season, which could adversely affect subscriber fees and ad revenue for the channel.

David Zaslav

“It’s fair to say that even two years ago, market valuations and prevailing conditions for legacy media companies were quite different than they are today,” Chief Executive David Zaslav said during a call with investors. “And this impairment acknowledges this.”

Warner Discovery isn’t the only company whose cable-television business is facing challenges. Disney and Paramount Global’s traditional cable channels are also dealing with declining revenue and profitability.

Despite the woes of the company whose stock has nearly halved in the past year, executives poured cold water on recent speculation that Warner Discovery might consider splitting up the company to unlock value.

Chief Financial Officer Gunnar Wiedenfels said the company has been operating under one Warner Bros. Discovery strategy since the creation, and “I’m seeing evidence of the benefits.”

Last month, the NBA announced new deals with Amazon, Disney and NBC that are worth a combined $77 billion over 11 years and are set to go into effect after the 2024-25 season. TNT, which has been an NBA media partner for more than three decades, had a contractual right to match a rival offer to carry games. It exercised that right, but its bid was rejected by the NBA. 

Warner has sued the NBA, alleging the league breached its media contract. The suit said Amazon’s deal was structured in a way that made it impossible for Warner to match the offer, but provided scant details on the provisions at issue. 

The NBA has said Warner’s claims are without merit.