Warner Bros. Discovery Finds Profit in Streaming Amid Earnings Challenges
Warner Bros. Discovery has reported financial outcomes indicating mixed fortunes within its various business segments. The company's streaming service, Max, achieved profitability with a pre-tax profit of $103 million in its direct-to-consumer division for the year 2023. This milestone for Max comes as it aggregates content from various entities including HBO, Warner Bros. films, and several networks under the Discovery umbrella.
Despite the streaming success, the company's overall financial performance fell short of expectations. The fourth quarter saw the company post a loss of $400 million or 16 cents per share, which was more significant than the anticipated 6-cents-a-share loss. Revenues declined by 7% compared to the same period in the previous year. This decline was attributed to a 14% drop in advertising revenue for its TV channels and ongoing struggles in the theatrical movie business. Furthermore, the overall revenue for the year decreased from $11 billion to nearly $10.3 billion, in part due to a reduction in cable subscriptions as viewers continue to shift towards streaming platforms.
The stock price of Warner Bros. Discovery reflected these challenges, experiencing an 11% decrease to $8 per share following the report. The company also highlighted the current environment of softer advertising demand for linear TV and mentioned ongoing contract renewal negotiations for media rights with the NBA, amid expected competition from Amazon and other tech companies. Cost-saving measures, including reductions in content spending, have been part of the strategy to manage these financial headwinds.
