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Warner Bros. Discovery Inc. reported a staggering $9.99 billion net loss for the second quarter of 2024, a dramatic shift from the $1.24 billion loss recorded in the same period last year. The massive loss primarily stems from a $9.1 billion noncash impairment related to the devaluation of its cable networks, including CNN, TNT, and TBS.
This impairment reflects the severe impact of cord-cutting, declining viewership, and a challenging advertising market on the cable television industry. Streaming platforms like Netflix have increasingly captured audiences and subscribers, further diminishing the value of traditional cable networks. Additionally, the company faced a setback when TNT failed to secure a new deal to retain NBA game broadcasting rights beyond next season, potentially affecting both subscriber fees and advertising revenue.
The company's stock plunged by 9.8% in after-hours trading following the announcement. Warner Bros. Discovery’s cable television struggles echo similar issues faced by other media giants like Disney and Paramount Global, which are also grappling with revenue declines and profitability challenges in their cable segments.
Despite these setbacks, Warner Bros. Discovery executives dismissed recent speculation about a potential split of the company to unlock value. The company has been in a legal dispute with the NBA, alleging that the league breached its media contract by structuring a deal with Amazon in a way that the company claims was impossible to match. The NBA has countered that Warner’s claims lack merit.
On a positive note, Warner Bros. Discovery reported growth in its direct-to-consumer segment, with its Max streaming platform expanding to 65 countries and increasing its global subscriber base to 103.3 million, up by 3.6 million from the previous quarter. The direct-to-consumer unit also saw growth in ad revenue.
Overall, the company's revenue fell 6.2% to $9.71 billion, missing Wall Street’s forecast of $10.07 billion. Distribution and content revenue dropped 5% to $4.88 billion and $2.11 billion, respectively, while advertising revenue declined by 3.5% to $2.43 billion. Adjusted earnings were reported at $1.80 billion, a decrease from $2.15 billion a year ago. Analysts had anticipated a smaller loss per share of 27 cents, compared to the reported loss of $4.07 per share.
