Warner Bros. Discovery Sees $2.1 Billion Loss in Q4 After Big Writedown; Ad Sales Tumble
variety.comSubmitted by Neo2199 t3_11a9aao in television
Comments
WordsAreSomething t1_j9qowvw wrote
The ad sales decreasing makes sense considering they absolutely gutted stuff like TNT and TBS. Harder to sell ads on reruns of things. It's been weird to see them advertise stuff like Silicon Valley on TBS so hard like it is a new show and won't just be a watered down rerun of what people that want to have already seen.
Jaguarluffy t1_j9qsuz9 wrote
no - its harder to sell ads when cable tv is dying - literally every single tv company is facing the same problem
WordsAreSomething t1_j9qvqv0 wrote
It's still pretty easy to sell ads on cable for things that people watch though.
Jaguarluffy t1_j9qxs13 wrote
yes - but its a far smaller pool so advertisers are giving you far less money - unless you somehow find better ways to sell ads for streaming the struggle will continue
reddig33 t1_j9qus9x wrote
Why not both?
AgentElman t1_j9qynqr wrote
Except that cable companies are doing better than streaming.
Only Netflix makes money streaming. Everyone else is losing huge amounts of money.
formicatile t1_j9s43rd wrote
Which cable companies?
aw-un t1_j9rt8qm wrote
Hulu makes money
formicatile t1_j9s4cgt wrote
Does it?
aw-un t1_j9s561w wrote
formicatile t1_j9s7112 wrote
> Despite guidance from Disney that Hulu won't achieve profitability until 2023, Moffett estimates the that the streaming service has been profitable for the last two quarters
Doesn’t sound that cut and dry
Carl_Spakler t1_j9ss42i wrote
> Netflix makes money streaming
The company runs a negative cash flow business model.
It's borrowing huge amounts for content production that need to be paid back
yeroii t1_j9stbqj wrote
They report profits and revenue tho. They do make money.
Carl_Spakler t1_j9sure7 wrote
they play with the numbers bro
vitorgrs t1_j9rvz6u wrote
And Zaslav just loves cable tv... My impression is that he will stay as CEO for 3 or so years and leaves...
Dear-Attempt-2182 t1_j9rigqm wrote
"Harder to sell ads on reruns of things."
Might legitimately be a new idea for a guy whose success was in the old broadcast network and recent unscripted cable models. Both of which essentially ran on the idea that people turn on a channel and will keep it on all evening, even if lots of the night is reruns.
In this call, he also kept playing up how Discovery+ users will stay subscribed no matter what, and HBO Max subscribers will cancel between shows... so obviously, the answer is to make HBO Max more Discovery+-like
Radulno t1_j9ss322 wrote
I'm actually not sure. We know people re-watch a lot their favorite shows on streaming too and it's probably the same on cable TV. Sure it's better to have a new hit but between a new show that may very well fail (most do) and a proven old show that people like and re-watch (like a sitcom), not sure which will be the best for ads.
jreed66 t1_j9uto7t wrote
It would be interesting to see if advertising is even effective when people are watching old shows in the background. I might have 8 episodes of the office on while I do other things, but that doesn't mean I actually paid attention for more than 15-20 minutes.
pm_me_reason_to_livx t1_j9qo8dx wrote
billion? geesh. i thought their whole plan was to be profitable.
NO_FIX_AUTOCORRECT t1_j9ucufi wrote
I'm not a business person but i would think you'd lose money as an immediate result of restructuring but hope to make more in the long term because of it.
addictedtolols t1_j9ra8b1 wrote
the streaming gold rush showed that none of them can beat netflix. in 3 years most of them will close up shop and go back to producing tv shows for netflix and making a few movies for theaters. i wont be surprised if disney shuts down disney+
Coz91 t1_j9rdy4f wrote
Is Disney+ losing a lot as well?
Radulno t1_j9ss63m wrote
Yeah a few billions per quarter too.
f_d t1_j9rxml4 wrote
They are, but I don't know how it compares with their long-term plans. Unlike Warner, they can afford to keep spending to overtake Netflix.
>Disney’s direct-to-consumer division, which also includes Hulu and ESPN+, on Tuesday reported an operating loss of nearly $1.5 billion, more than doubling its loss of $630 million during the same quarter a year earlier.
goliathfasa t1_j9sltlj wrote
Uhhhh why the downloadsvotes? It’s literally the truth.
yeroii t1_j9strof wrote
Because it goes against the hive mind.
SeanOuttaCompton t1_j9tfy7m wrote
You’re delusional if you think Netflix is surviving too
LovingTurtle69 t1_j9tsnat wrote
Netflix profited 4.5 billion in 2022. They are doing just fine.
GarlVinland4Astrea t1_j9tmff3 wrote
Netflix is profitable. Everyone else is wondering how much money they can justify throwing into a black hole and hoping other streamers die off to give them a boost. Netflix doesn't need that
WR810 t1_j9w2b15 wrote
Do you think Netflix is going bankrupt?
dragonmp93 t1_j9ri4ja wrote
Zazlav caused WBD a $50 billion debt.
petepro t1_j9rmm46 wrote
No, what nonsense.
vitorgrs t1_j9rw5f6 wrote
not 50 billion, but yes, 30bi. Discovery didn't had the money to buy Warner, he made 30 billion debt in discovery to acquire 30% of Warner... And months later the company loose most of the value, and he could basically buy 100% of warner with that old money lol
petepro t1_j9rwwxl wrote
No, AT&T is going put its debt into WB regardless.
Radulno t1_j9ss9js wrote
Not if they didn't have an offer. That debt is basically to add to the price Zaslav was just a big enough sucker to accept to buy at that price. Even companies which could stomach that debt like Apple just said no
petepro t1_j9ssnrs wrote
AT&T plan to spin off WB and offload some of their debt into it way before any offer.
vitorgrs t1_j9rxzi8 wrote
I'm putting a fact here: "Discovery on Wednesday priced $30 billion in senior unsecured notes in a debt offering to raise cash for its merger with WarneMedia."
https://deadline.com/2022/03/discovery-debt-sale-warnermedia-merger-att-1234974970/
WR810 t1_j9rxntm wrote
AT&T was deep in debt and that's a major reason they sold Warner Brothers.
The debt wasn't new, it just has a new owner.
vitorgrs t1_j9ryh7i wrote
Never said the their entire debt was new. Just saying Discovery indeed create a 30bi+ debt to acquire Warner. It's a fact.
https://deadline.com/2022/03/discovery-debt-sale-warnermedia-merger-att-1234974970/
The thing was, we don't really know how much WarnerMedia division had in debt prior to the sale because it was unified with AT&T.
WR810 t1_j9rz4xz wrote
Obviously new debt was created to pay off the old debt.
The point was Warner Brothers and its properties have been mismanaged well before Discovery and was a major albatross around AT&T's neck. We would see reductions like this even if Discovery hadn't borrowed the money to buy Warner Brothers because the last owner was also indebted.
vitorgrs t1_j9rzsi4 wrote
Obviously that would happen a with every new sale/merger, the new owner usually try to cut costs and do "synergy cuts".
But if the new owner didn't had enough money in cash to buy the company, obviously the problem with debt get's bigger, as now you need to make the new company profitable to pay it's own debts, and to pay the debts that it made to buy it.
WR810 t1_j9s06l1 wrote
AT&T already wasn't profitable with Warner Brothers.
vitorgrs t1_j9s203n wrote
Yes, and I never said otherwise... Read again.
WR810 t1_j9sabtx wrote
>Read again.
What you did say was "you now need to make the new company profitable" as if Warner Brothers' mismanagement were substitutable. If Discovery hadn't purchased Warner Brothers then AT&T would have had to make similar cuts at some point.
vitorgrs t1_j9safz1 wrote
Again, I never said they wouldn't need that. I'm saying Discovery created a even BIGGER problem, because they literally created 30bi more in debt. It's that simple actually.
WR810 t1_j9sbqo7 wrote
>It's that simple actually.
Again, I'm telling you that it's not.
Discovery didn't create billions in debt. That debt existed on a AT&T balance sheet from well before the merger. Discovery just moved that debt from AT&T's balance sheet to their balance sheet in return for Warner Brothers (basically). The liabilities attached to Warner Brothers were nothing new.
As per my second comment we would see cuts and reductions in Warner Brothers if AT&T sold or not because AT&T was in debt and because AT&T mismanaged Warner Brothers.
GarlVinland4Astrea t1_j9tmuq0 wrote
What you are missing that others are pointing out is that WB was in such bad shape that it didn't matter if Discovery was involved.
- If it stays with AT&T it's such a big loss that they start similar cutdowns.
- If they find a non Discovery buyer, AT&T are folding debt into the sale and the buyer would assume that and still have to make cut downs.
There was no third option where WB doesn't have significant debt and doesn't need a massive overhaul. As others have said, companies that could have taken on the debt, didn't want it. It was just mismanaged for years. When everybody loved HBO Max, they were basically burning money as fast as they could and everyone knew it.
Dangerous-Hawk16 t1_j9qplwm wrote
Well they just have to pray and hope they do better. Zaslav did say today he wants to go back to Warners early 2000s glory days with dark knight triology, lord of the rings, and Harry Potter franchise. Gunn hopefully reboots the DC ip. Maybe get better writers for Harry Potter franchise. They announced today they have film right back for lord of the rings. HBO max shows are still their top products tho
tetsuo9000 t1_j9s7ybp wrote
Aww yes, the early 00's... when Time Warner merged with AOL to become AOL Time Warner which immediately blew up in everyones' faces. I too would definitely call this the "golden age" of the company.
GarlVinland4Astrea t1_j9tmwbc wrote
Killed WCW too
SupervillainEyebrows t1_j9wnma8 wrote
They hilariously sold WCW to Vince McMahon for less than 5 million dollars.
DMPunk t1_j9u6qjt wrote
A fact which terrifies me for AEW
Tyster20 t1_j9vlpvq wrote
I think AEW is safe, they just announced a new behind the scenes show, which shows confidence in the brand.
Saar13 t1_j9qs30u wrote
They will come to Q1 2023 very pressured. The Last of Us has good ratings, but what will that mean in subscriber earnings for HBO/HBOMax? If they continue with these successive minimum increases, they will have serious problems in maintaining a minimum of investor confidence. Even more so now that Wall Street seems to have had enough of believing in streaming.
52ndstreet t1_j9raq6h wrote
I don’t know that Wall Street doesn’t believe in streaming anymore, per se. But I think everyone now realizes that the notion of unlimited growth in the sector is fiction and the streamers need to run their business in a way that makes them profitable without relying on attracting hordes of new subscribers.
But as a business model, Netflix brings in roughly $2.6 Billion per month. (Source: Netflix 10k report, Q4 2022). So they have a lot of money coming in every month. Wall Street can absolutely believe in a business that brings in $33.61 Billion per year.
NeoNoireWerewolf t1_j9tvvgq wrote
All the trade outlets for the industry have been reporting on how the studios are cooling on streaming and looking at new ways to try and make money on it. Netflix is the only streamer that isn’t setting fire to mountains of cash right now, with Amazon and Apple being the others that look sustainable solely because their movie/TV divisions are small investments offset by their lucrative retail and tech businesses. All of the traditional studios, though? They’re hurting, and everybody in the industry is lost as to what the hell the future looks like. With all the guilds prepping for a possible strike to negotiate for a bigger cut of streaming this year, as well, there’s a crazy amount of uncertainty within the business about the future. Cable is in its twilight years, physical media is now exclusively for a niche audience, movie theaters are struggling to draw audiences, and streaming is unsustainable for most studios. It’s bad news on every front.
SupervillainEyebrows t1_j9wnuia wrote
Do you think this is going to cause more monopolisation?
Massive companies like Amazon that can afford to run at a loss because of other revenue streams buying up all the media companies who are floundering?
Brainiac7777777 t1_j9u9yzq wrote
I’m confused wouldn’t Warner Bros be a small investment for AT&T since it’s a really big company like Apple and Amazon
NeoNoireWerewolf t1_j9um5j3 wrote
AT&T doesn’t own Warner Media anymore; Discovery does. That’s why Warner is in so much debt; AT&T has been a horribly run company for years and had amassed an insane amount of debt. They decided to redistribute a huge chunk of that debt (~$50 billion) to Warner Media when spinning the company off to Discovery. That’s why there’s been a bloodbath at Warner under the new boss Zaslav - the company is going under if they don’t shed a shit ton of debt in the coming years. AT&T was pumping out tons of content in an effort to make HBO Max a Netflix competitor, but the problem is HBO Max hasn’t really grown much since launching three years ago. AT&T also gutted things like DC Comics, pondered selling off the entire video game division at one point (which Zaslav rightfully sees as a huge potential moneymaker and wants more funding to go towards), and managed to weaken major IP like Harry Potter and DC. That’s not getting into AT&T’s comical business blunders like buying DirecTV while cable is dying. They may be a big company, but AT&T is absolutely inept when compared to major players like Amazon and Apple. If Discovery can’t pay off it’s debts and Warner Media folds with them, then the death of one of the legacy studios is on AT&T’s hands, not Discovery’s. I’m not convinced the company is necessarily going to be in better hands with Discovery, but at this point it has a chance of surviving, at least.
Radulno t1_j9sslwu wrote
Netflix is profitable since a few years with around 4-5 billions profits per year. But Netflix is also having far more subscribers than the others so maybe that's the key. HBO Max still should search subscriber growth, they are far from the level of Netflix.
SupervillainEyebrows t1_j9wo5f3 wrote
HBO Max isn't available everywhere that the other streamers are as well.
I know we don't get it here in the UK because of WB's deals with Sky.
smokeyjay t1_j9riruu wrote
A lot of that money is spent on new content to remain competitive. Actual net revenue is more like 1-2 billion annually.
Radulno t1_j9sssa5 wrote
In 2021, it was 5.1 billions and 4.5 billions in 2022 so a little more
Radulno t1_j9sshpt wrote
If they want subscribers, they maybe should have not stopped their international expansion. Tons of places don't have HBO Max
Sonicfan42069666 t1_j9y6nsq wrote
> maybe get better writers for Harry Potter franchise
I know you probably didn't intend this as a dig at JK Rowling but it made me laugh.
lightsongtheold t1_j9qx5ts wrote
During a call with investors, Gunnar Wiedenfels, the company’s chief financial officer, indicated a new projection for $4 billion in cost savings by the end of 2024, a new target.
Oof! Expect a new raft of content being cancelled and disappeared! So much for the worst of the gutting being over.
Warner Bros. Discovery’s TV networks, which also include Discovery, CNN and Food Network saw revenue fall 6% to roughly $5.5 billion, with declines evident in affiliate fees as well as advertising.
Remember when Zaslav said cable was the future? Anybody on Wall Street still dumb enough to believe that utter tosh?
Studios operations saw revenue fall about 23% as the company’ collected less from licensing of its content.
So making less TV shows and movies resulted in less revenue for the studios? Who could have seen this coming when the gutted HBO Max, sold the CW (WBTV’s best buyer), and made a total arse of Warner Bros movie output due to lack of investment?
Meanwhile, losses in its streaming operations narrowed. The operating loss in its streaming operations came to $217 million in the quarter for its streaming assets, compared with pro-forma losses of $728 million in the year-earlier period.
Finally some positive news. For all the groaning that streaming is a bust Zaslav has actually got HBO Max close to profitability in less than 9 months in charge. Year on year losses have improved significantly and the overall quarterly losses are nothing like those we see at rival media companies like Disney, Paramount, and NBCU. These numbers are in line with the lesser players like Lionsgate and AMC. They will probably be profitable by 2024.
The bad news was streamers additions of just 1.1 million. Missing the 1.6 million forecast. The cuts are getting them on the fast track to profitability but the cost is stalled or anaemic growth. Be interesting to see the Q1 additions. They had/have practically no content for the first 2.5 months but the one show they did offer was a massively big budget show that has delivered both in terms of acclaim and viewership. They also finish Q3 with a burst of content like Succession and Perry Mason to spark new acquisitions. Which should put them in a better position for gains than we seen in Q4 when they had a completely dead December in terms of content.
The other good news was the speed of the debt repayments. Debt now $45 billion. Down $7 billion in just 9 months. That is very impressive and exactly what Zaslav and Malone need for keeping this pump and dump on schedule. A year or two more of this and they will have WBD looking like an attractive buy again with a far more reasonable debt load.
Gooman422 t1_j9s0c4n wrote
You should do the quarterly calls haha. Very informative but concise.
cabose7 t1_j9t6pws wrote
>Finally some positive news. For all the groaning that streaming is a bust Zaslav has actually got HBO Max close to profitability in less than 9 months in charge.
Warners prior to Discovery was trying to expand HBO Max through big ticket spending, of course he was able to cut costs significantly by completely abandoning that strategy.
That isn't some brilliant idea. He just gave up on building a big streaming service.
wacct3 t1_j9v0v5g wrote
If they lost 2 billion dollars how did they repay 7 billion in debt? Or does that loss include them paying down the debt?
lightsongtheold t1_j9v61zw wrote
It included them paying debt. It was an on paper loss. They were actually free cash flow positive and had better year on year free cash flow vs the same quarter of the previous year. The $7 billion debt repayments was spread over the last 9 months. The $2 billion reported loss was over the last 3 months.
jogoso2014 t1_j9qza7y wrote
They’re going to raise the price to add Discovery content I don’t want
They’re going to keep the Discovery name.
They’re going to remove the HBO name.
Secret to success?
TheWretchedSpirit t1_j9r6fig wrote
Agree – letting Discovery+ people opt out of HBO, but forcing HBO people to take on Discovery+ content with a price increase is asinine. This is the big flaw in their current plans and could crater HBO Max subscribership if they massively raise the price for content no one wants.
Trot1995 t1_j9s85uo wrote
Yeah if they combine the content and bump the price up a few dollars fine. I'll pay an extra couple buck to watch old mythbusters episodes and dirty jobs.
If they jack the price up I'll cancel.
johnppd t1_ja2m6os wrote
>They’re going to keep the Discovery name.
>They’re going to remove the HBO name.
The Discovery name will only exist for Discovery+. The HBO name will exist for the cable channel. Both brands will exist, the new service won't have any of them in the name.
jogoso2014 t1_ja31mbk wrote
I’m only discussing the streaming. After all, all of their networks on cable will keep their cable name.
A rebranding without a connection is always going to be a tricky. My point is Discovery will be distinct and HBO may have NO streaming connection in the marketing.
It will only be a hub on the new streamer.
They are burying the bigger brand name from streamer recognition.
For people who keep track or already have the service, it’s not a big deal, but it’s an extra explanation for the service on the basis of combining it with its least interesting content for potential customers.
My issue as a current customer is that I want a cheaper option too but my price is going to increase due to the Discovery content I probably won’t watch.
johnppd t1_ja32t8b wrote
Both Discovery and HBO are going to be hubs on the new service, they're not burying any brand. If anything, the removal of HBO from the name will only help with the confusion of HBO Max ≠ HBO, that was already an extra explanation for most people. The price would still increase at some point even without the combination.
jogoso2014 t1_ja3ecwo wrote
Again they are keeping a Discovery app and removing an HBO Max app.
I don’t know how you can’t see there being a discrepancy.
This isn’t about the combined app except that it will be the only place to get HBO whereas Discovery has two options and apparently there will be more on the Discovery app.
So not only will I be paying more, I won’t even get all the content that I don’t want for the higher price.
If the new service costs 20 bucks it’s effectively the same price as the current separate services. Since they already admitted that Discovery+ folks don’t even want HBO content enough to switch, then why make HBO subscribers take on content they don’t want for a higher price point?
Is that a better value to you?
AYMM69 t1_j9s12h2 wrote
Those LOTR NFTs didn't do so well lol
Gabagool1987 t1_j9sybz8 wrote
Thank god we got Velma though
Saar13 t1_j9qobxu wrote
The EPS is much lower than expected. WBD will have a hard time convincing the market, with this very slow growth in subscriptions. If Q1 2023 doesn't turn out really well, I bet Wall Street folds.
Jaguarluffy t1_j9qt2m9 wrote
wall street no longer cares about subscriber numbers - they care about profitability now - which warner is in the process of doing by repaying their debt and smarter spending.
Saar13 t1_j9quoeh wrote
Exactly. That's why I said negative EPS almost 5 times worse than predicted was the worst case scenario. Investors expected to lose x and lost 5x.
WR810 t1_j9ry089 wrote
> wall street no longer cares about subscriber numbers - they care about profitability now
Netflix didn't post so good of numbers but Wall Street ran with the stock because they added some seven million new subscribers.
WorldsAbove t1_j9sbli6 wrote
Warner Bros and HBO Max as a whole has had very little legitimate growth since launching 3 years ago now.
They converted like 37-38 million HBO subs which added no revenue, and even through various promotions have had very little subscriber growth. In 3 years.
The91outsider t1_j9scro8 wrote
The photo they went with to use is literally why no one cares! Cool white sunglasses man. We can all relate from loosing billions
heybart t1_j9vspvb wrote
1.2B in restructuring? Costs that much to fire people?
[deleted] t1_j9qr93u wrote
[deleted]
Kalse1229 t1_j9rx1c0 wrote
[deleted] t1_j9u1z4n wrote
[deleted]
[deleted] t1_j9rwgtg wrote
[deleted]
Carl_Spakler t1_j9ss5x0 wrote
Who would have thought giving away content without advertising was profitable?
HUNK_IRONBODY t1_ja2ncri wrote
Good. They deserve worse things for what they did to Star Trek. Bastards
downonthesecond t1_j9rkdi3 wrote
I lost $0.23.
throw123454321purple t1_j9upf3x wrote
I heard it was all allegedly caused by WB CEO David Zaslav, who happened to cancel Westworld one season before the series’ planned conclusion, and who also allegedly loves to pee on himself in front of small children in public just to feel something warm against his cold, dead heart.
corruptboomerang t1_j9qo76f wrote
Good punish them for their bullshit!
ChronicMaster912 t1_j9qsx7j wrote
If anything this'll push then further in that direction
They were cutting and burying things to stop the bleeding they inherited from AT&Ts poor financial management of the brand
Question is how much more the creative side will have to suffer to fix a problem that's been unaddressed for over a decade at Warner
Jaguarluffy t1_j9qtict wrote
why are we acting like this is a problem unique to warner - literally every single streamer is going through the smae issue because their not making as much money under streaming - this is why amc is cutting, paramount is cutting, starz is cutting, showtime is cutting, disney is cutting - the only ones not usting are amazon and apple where thier streaming network is more like advertising for the brand rather than profit.
ChronicMaster912 t1_j9s1gnw wrote
Warners was particularly bad under AT&T since DirectTV was also bleeding money.
You're right though they're not unique in that regard, they're just a few years further down the slope then everyone else most likely
Saar13 t1_j9qv8jy wrote
Well, the CFO just updated that they're going to hit $4 billion of cost cutting (up from $3.5 billion previously). As much as they say the worst is over, the bleeding won't stop.
[deleted] t1_j9tz2bd wrote
[deleted]
corruptboomerang t1_j9qvfyc wrote
Then the users just need to keep punishing them. Make good shit, and we reward you, bake bad shit and we will walk away.
Jaguarluffy t1_j9qxu5s wrote
disney literally disproves that
dkggpeters t1_j9rcwug wrote
Also, most people are fed up with having to have 5 or 6 different streaming services. The value is no longer there.
Hellofriendinternet t1_j9risx8 wrote
I seriously can’t help but think they’re trying to tank the company so that they can leverage a loss against taxes they might have to be paying. The only thing that suffers is the content and, by proxy, our culture. WB can suck a fat one.
DeadpoolAndFriends t1_j9sgroh wrote
And now they are going to commit the unforgivable sin of remake the LotR trilogy. I love me some House of the Dragon, but fuck these guys. Hope they lose 10 billion next year.
Neo2199 OP t1_j9qlj2o wrote
> The New York owner of the TNT and TBS cable networks, the HBO Max streaming service and the Warner Bros. production studio reported a net loss of $2.1 billion for its fiscal fourth quarter after the company wrote down $1.85 billion in assets and faced nearly $1.2 billion in restructuring expenses.
> Revenue fell 9%, excluding the results of foreign exchange, and the company saw ad sales decrease 14% as its TV networks, even as it worked to add subscribers to its HBO Max and Discovery+ streaming outlets.