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UPDATE—May 9, 2024: This article has been updated to reflect more recent share price information.
Key Takeaways
- Warner Bros. Discovery’s revenue fell more than estimated in the first quarter and the entertainment conglomerate reported a wider-than-expected net loss.
- Shares seesawed in early trading Thursday following the release.
- Ongoing negotiations with the NBA over the league’s next broadcasting deal, along with a streaming bundle partnership with Disney the companies announced Wednesday, could substantially impact WBD’s future earnings.
Warner Bros. Discovery’s ( WBD ) revenue fell more than estimated in the first quarter and the entertainment conglomerate reported a wider-than-expected net loss. Shares seesawed in early trading Thursday following the release.
Revenue Misses Estimates, Larger Net Loss Than Expected
WBD’s revenue fell 7% year-over-year to $9.96 billion from the $10.7 billion the company reported in the year-ago period, falling short of the $10.25 billion consensus estimate compiled by Visible Alpha.
The movie and television producer also reported a larger net loss than expected at $966 million, nearly double the $501.7 million analysts had expected, but narrowed from the $1.07 billion loss registered a year ago. On a per-share basis, WBD posted a loss of 40 cents, slightly smaller than last year’s 44 cents but nearly double analyst estimates of 21 cents.
Revenue decreased 12% in WBD’s studios segment, which is made up of movie and video games studios, and fell 8% its networks division, which comprises its TV holdings, including CNN and the Turner family of networks like TNT and TBS. Revenue was nearly flat in the company’s direct-to-consumer segment, which consists of HBO and the Max and Discovery+ streaming services.
NBA Rights, Disney Streaming Partnership Could Make Big Impact on Future Reports
WBD’s TV division could see both its revenue and costs impacted over the next several years if the company loses out on a portion of the next broadcasting rights deal for the National Basketball Association (NBA). WBD’s TNT has broadcast select NBA regular-season and playoff games for decades.
WBD Chief Executive Officer (CEO ) David Zaslav reportedly said at a recent event that the network remains “in constructive negotiations with the NBA,” after saying in 2022 that the company and network did not necessarily “have to have the NBA,” according to Front Office Sports.
A day ahead of the company’s earnings report, WBD and Disney ( DIS ) announced plans to offer bundle packages of Max along with Disney-owned Hulu and Disney+, both in ad-supported and ad-free bundles, starting this summer. Pricing information was not included in the initial release.
WBD shares wavered between gains and losses in early trading Thursday, up 1.5% at $7.92 as of 10:50 a.m. ET. They’ve lost about 30% of their value since the start of the year.