Warner Bros Discovery writes down its tv channels by $9bn

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Warner Bros Discovery has written down the worth of its conventional tv networks by $9.1bn, a dramatic recognition of how briskly streaming is eroding the cable enterprise mannequin behind channels corresponding to CNN, HGTV and the Meals Community.

The non-cash cost led the US leisure group to report a quarterly web lack of $10bn, which in comparison with Wall Road’s expectations of a $542mn loss and exceeded its whole income of $9.7bn.

The stark revaluation displays a dedication that WBD’s tv channels are now not what they have been price simply two years in the past, when the corporate was shaped from the merger of Discovery and WarnerMedia.

“It’s truthful to say that even two years in the past, market valuations and prevailing situations for legacy media firms have been fairly totally different than they’re as we speak, and this impairment acknowledges this,” chief govt David Zaslav informed traders. “The market situations inside the conventional enterprise are robust.”

“It’s an accounting reflection of the state of the trade,” mentioned chief monetary officer Gunnar Wiedenfels.

“Am I upset in regards to the impairment? Sure,” Wiedenfels mentioned. “There’s been speak about restoration [in the traditional television market] a 12 months, or 12 months and a half in the past. It hasn’t actually occurred.”

Shares in WBD dropped greater than 9 per cent in after-hours buying and selling. The corporate’s inventory had already fallen by virtually 70 per cent because it was shaped in 2022 in a $40bn merger that was meant to assist two legacy media teams survive the brutal streaming battle.

Quarterly income fell in need of forecasts, weighed by WBD’s tv networks, which have been hit exhausting by shrinking audiences as folks cancel their pay-TV subscriptions.

Income at WBD’s tv enterprise unit dropped 8 per cent from a 12 months in the past to $5.3bn. Rival Disney reported earlier on Wednesday that its tv community income fell 7 per cent to $2.7bn within the quarter.

Zaslav and his group have been discussing strategic choices as they attempt to reverse WBD’s sinking share value. They thought-about breaking apart the corporate however have concluded that this isn’t at the moment the most suitable choice, the Monetary Occasions reported earlier this week.

Zaslav on Wednesday informed analysts: “We have now to . . . think about all choices. However the primary precedence is to run this firm as successfully as doable.”

The group’s streaming and HBO cable companies added 3.6mn direct-to-consumer subscribers within the quarter, reaching 103.3mn subscribers globally. 

“We recognised early on this was a generational disruption . . . requiring us to take daring, needed steps,” mentioned Zaslav.