Warner Bros. Discovery (WBD) is set to report its first quarter earnings before the bell on Thursday, amid efforts to reduce its debt levels and tackle a weakening linear advertising environment and unfavourable advertising market. Investors will also keep a close eye on any progress in negotiations with the National Basketball Association (NBA), following a Wall Street Journal report suggesting that WBD is at risk of losing these rights to rival NBCUniversal (CMCSA). The company has experienced difficulties in recent quarters due to the weak linear advertising environment and pressure on affiliate fees paid by television providers to networks. This is predicted to affect the company’s first-quarter EBITDA and may cause the adjusted EBITDA for the whole year to fall below $10bn, according to the most recent Bloomberg estimates. This is significantly lower than the figure anticipated at the time of the merger. Here are the forecasts for the first quarter, based on estimates from Bloomberg:
– Revenue: $10.27bn vs $10.70bn in Q1 2023
– Adjusted loss per share: -$0.24 vs -$0.44 in Q1 2023
– Subscriber net additions: 1.25m vs 1.6m in Q1 2023
“WBD has an important year ahead, and 1Q probably won’t be great,” explained Macquarie analyst Tim Nollen in a note to investors prior to the results being announced. Despite this, Nollen stated that the company still has momentum thanks to its upcoming sports streaming collaboration with Disney (DIS) and Fox (FOXA) as well as its Max streaming service, which recently launched in various international locations such as Latin America and Europe. In February, the company announced that its direct-to-consumer streaming division generated a profit of $103m in EBITDA during the previous fiscal year, compared to a total loss of approximately $2.1bn in full-year 2022. Subscriber gains have remained relatively stagnant, but “international launches and hits such as ‘House of the Dragon’ should revitalise growth”, suggested Bloomberg Intelligence analyst Geetha Ranganathan. The company is reportedly planning additional cost-cutting measures and higher subscription prices, according to Bloomberg. These moves might potentially involve layoffs following WBD’s decision to terminate around 2,000 employees over the last year. WBD has also emerged as a focal point in M&A discussions now that its two-year post-merger lock-up phase has expired. During a speech at the Milken Institute conference, WBD chief executive David Zaslav declined to comment on rumours regarding a potential acquisition of Paramount (PARA), which is presently pursuing a buyout. “Paramount is a fantastic firm. We have a lot of outstanding content organisations,” he remarked. “Your objective is to perform well with the resources you already possess.” Shares in WBD have decreased by roughly 30% since the beginning of the year. To access the latest earnings reports, analysis, whispers, and news, visit this link.
Leave a Reply