Warner Bros. Discovery announced results that did not meet the predictions of financial analysts due to a slump in TV advertising revenue and the underperformance of its film studios. The parent company of channels such as CNN and TNT declared first-quarter revenue of $9.96 billion (£7.43 billion), falling short from Wall Street’s forecasted $10.3 billion, and a decrease of 7% from the previous year. The adjusted earnings before interest, taxes, depreciation and amortisation of $2.1 billion were also beneath market expectations of $2.18 billion, down 20% compared to last year, even with some successful projects like Dune: Part Two which, according to the company, generated the most revenue at the global box office in 2024.
There was a 4.4% drop in shares in premarket trading. This disappointing earnings report was partly due to the less than stellar revenue of Suicide Squad: Kill the Justice League, as acknowledged by the company in a statement released on Thursday.
Warner Bros. studios’ revenue decreased by 12% to $2.82 billion as a consequence of strikes that halted production the past year and the Suicide Squad video game’s comparative underperformance. The first quarter of the previous year benefitted from the strong performance of Hogwarts Legacy, a game inspired by Harry Potter.
CEO David Zaslav has instructed his team to identify further cost-saving measures for achieving financial goals over the next few years, as revealed by Bloomberg. This could possibly lead to more redundancies within the company, which has already cut over 2,000 jobs in the past year, according to insiders.
HBO’s parent company and the Warner Bros. studios have planned to increase subscription fees in their bid to earn $1 billion next year from the mobile services of Max and Discovery+. The company, along with Walt Disney, plans to collectively sell their various streaming services – Disney+, Hulu and Max – in a packaged offer beginning in the summer in the US.
TV advertisement sales, the company’s principal source of income, fell by 11% to $1.99 billion due to reduced viewership of domestic entertainment and news networks.
The profits before interest, taxes, depreciation and amortisation of the streaming sector, comprising of the Max and Discovery+ platforms, saw a rise of 72 per cent compared with the previous year, reaching $86 million. The total subscription count reached 99.6 million, surpassing the anticipated average of 98.9 million. Furthermore, there was an increase in the advertising within those domains, according to Bloomberg.