WBD takes $9B hit as linear cable assets continue to shrink

Warner Bros. Discovery took a massive $9 billion write-down on its linear cable TV networks for the second quarter of 2024, a move that extends the company’s weak financial outlook.

“The (write-down) was triggered in response to the difference between market capitalization and book value, continued softness in the U.S. linear advertising market, and uncertainty related to affiliate and sports rights renewals, including the NBA,” reads a summary of second-quarter financials posted by the company for investors. 

TV revenue decreased 17% to $4.3 billion, primarily driven by fluctuations in licensing revenues, according to the company.

Advertising revenue also decreased 11%, following overall downward trends in linear advertising.

Affiliate and subscription revenue decreased 5%, driven by subscriber declines and a 1-percentage point decrease from the absence of pay-per-view boxing events, partially offset by pricing increases.

Licensing and other revenue decreased 48%, reflecting fewer availabilities, including the final season of “Jack Ryan” in 2023, and a lower volume of licensing in the secondary market.

The company posted a net loss of nearly $10 billion for the quarter, which includes the write-down value.

WBD’s linear TV networks are likely to continue to face shaky futures as traditional cable subscriptions dry up and a pivot to streaming continues to prove challenging.

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The company did manage to grow its direct-to-consumer to consumer business by 3.6 million subscribers, but posted a $107 million loss for the quarter after posting a profit of $86 million in Q1 of 2024.

Filmed entertainment revenue decreased 18% to $679 million due to timing of releases in the quarter. Theatrical revenues decreased 40%, reflecting the comparison to the release of the major title “Transformers: Rise of the Beasts” in the prior year.

Film licensing and other revenue decreased 9%, principally due to lower revenues from the licensing of film library titles.

WBD noted that it was able to save some $500 million in costs over the quarter, a key part of its strategic plan.