We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Warner Bros. Discovery (WBD) Q2 Earnings Miss, Ad Sales Fall Y/Y
Read MoreHide Full Article
Warner Bros. Discovery (WBD - Free Report) reported second-quarter 2024 loss of $4.07 per share, significantly wider than the Zacks Consensus Estimate of a loss of 18 cents. The company had incurred a loss of 51 cents in the year-ago quarter.
Revenues decreased 6.2% year over year to $9.71 billion, which missed the Zacks Consensus Estimate by 3.5%.
Advertising revenues decreased 3.5% year over year to $2.43 billion. Distribution revenues dropped 5% year over year to $4.87 billion. Content revenues declined 13.8% year over year to $2.1 billion. Other revenues were $295 million, up 14.3% from the year-ago quarter.
Warner Bros. Discovery, Inc. Price, Consensus and EPS Surprise
Studios (25.2% of total revenues) reported revenues of $2.44 billion, down 5.1% from the year-ago quarter. Revenues decreased 4% ex-FX from the prior-year quarter on a pro forma combined basis.
Within the segment, content revenues fell 6% ex-FX to $2.23 billion. TV revenues declined 27% ex-FX, primarily due to the timing of initial telecast productions as well as lower licensing sales.
Games revenues declined 41% ex-FX, primarily due to the weak performance of Suicide Squad: Kill the Justice League this year compared with the strong performance of Hogwarts Legacy in the prior year.
Theatrical revenues increased 19% ex-FX, primarily due to higher home entertainment revenues from Dune: Part Two, and higher box office carryover due to the performance of Godzilla x Kong: The New Empire, which was released at the end of March.
Other revenues increased 20% ex-FX, primarily driven by the June 2023 opening of Warner Bros. Studio Tour Tokyo.
Networks revenues (54.3% of total revenues) decreased 8.4% on a year-over-year basis to $5.27 billion. The AT&T (T - Free Report) SportsNet exit negatively impacted the growth rate by approximately 200 basis points (bps).
Within the segment, distribution revenues decreased 8% ex-FX, primarily due to a 9% decline in domestic linear pay-TV subscribers and an approximately 300 bps impact from the AT&T SportsNet exit, partially offset by a 5% increase in domestic affiliate rates.
Advertising revenues decreased 9% ex-FX, primarily due to a decline of 13% in domestic network audiences and the soft advertising market in the United States.
Content revenues increased 5% ex-FX, primarily driven by the timing of third-party licensing deals, partially offset by lower inter-segment content licensing to DTC.
DTC revenues (26.4% of revenues) declined 6% from the year-ago quarter to $2.56 billion.
Within the segment, distribution revenues increased 1% ex-FX, primarily driven by a 7% rise in subscribers following the launch of Max in Latin America in the first quarter of 2024 and in Europe in the second quarter of 2024, partially offset by continued domestic linear wholesale subscriber declines.
Advertising revenues surged 99% ex-FX, primarily driven by higher domestic Max engagement and ad-lite subscriber growth.
Content revenues plunged 70%, primarily due to lower volume of third-party licensing deals.
Subscriber Details
WBD ended second-quarter 2024 with 103.3 million global DTC subscribers, which increased 3.6 million sequentially.
Global DTC ARPU increased 4% ex-FX to $8.00, primarily driven by the growth of the ad tier domestically, along with the continued subscriber mix shift from linear wholesale to other distribution channels, partially offset by a rise in lower ARPU international markets.
Operating Details
In the second quarter, selling, general and administrative expenses decreased 3.9% from the year-ago quarter’s levels to $2.46 billion.
Adjusted EBITDA declined 16.5% from the year-ago quarter’s levels to $1.79 billion.
Second-quarter 2024 cash provided by operating activities came in at $1.22 billion compared with $2.01 billion in the prior-year period.
The company reported a free cash flow of $976 million compared with a free cash flow of $1.72 billion in the prior-year period.
The company reported an operating loss of $10.28 billion compared with an operating loss of $906 million in the year-ago quarter.
Net loss available to Warner Bros. Discovery was $10 billion, which includes a $9.1 billion non-cash goodwill impairment charge from the Networks segment, as well as $2.1 billion of pre-tax acquisition-related amortization of intangibles, content fair value step-up and restructuring expenses.
The goodwill impairment 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.
Balance Sheet
As of Jun 30, 2024, cash & cash equivalents were $3.61 billion compared with $3.78 billion as of Mar 31, 2024.
WBD repaid $1.8 billion of debt during the reported quarter and ended the quarter with $41.4 billion of gross debt and 4x net leverage. WBD purchased $3.4 billion of debt for $2.6 billion through a tender offer funded by cash on hand and a €1.5 billion senior notes offering.
As of Jun 30, 2024, the average duration of the company's outstanding debt was 13.7 years with an average cost of 4.6%.
The company maintains an undrawn $6 billion revolving credit facility.
Q2 Highlights
The company successfully launched Max and migrated subscribers to the new platform across Europe, including new market launches in France and Belgium. Max is now available in 65 countries and territories.
The 2024 CNN Presidential Debate was the highest-rated linear program in the history of CNN.
TNT Sports continued to strengthen its sports portfolio with multi-year domestic agreements for BIG EAST men's and women's college basketball, the French Open, Mountain West college football and the College Football Playoffs.
Adult Swim’s second-quarter primetime ratings grew 14% year over year, its third consecutive quarter of primetime growth.
Zacks Rank & Stocks to Consider
Currently, Warner Bros. Discovery carries a Zacks Rank #4 (Sell).
Shares of Flutter Entertainment PLC have lost 5.6% year to date. The Zacks Consensus Estimate for FLUT’s 2024 revenues is pegged at $13.86 billion. The consensus mark is pegged at $4.98 per share, which has remained steady over the past 30 days.
Shares of On Holding have jumped 37% year to date. The Zacks Consensus Estimate for ONON’s 2024 revenues is pegged at $2.58 billion, indicating year-over-year growth of 29.37%. The consensus mark for earnings is pegged at 97 cents per share, up 2.1% over the past 30 days.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Warner Bros. Discovery (WBD) Q2 Earnings Miss, Ad Sales Fall Y/Y
Warner Bros. Discovery (WBD - Free Report) reported second-quarter 2024 loss of $4.07 per share, significantly wider than the Zacks Consensus Estimate of a loss of 18 cents. The company had incurred a loss of 51 cents in the year-ago quarter.
Revenues decreased 6.2% year over year to $9.71 billion, which missed the Zacks Consensus Estimate by 3.5%.
Advertising revenues decreased 3.5% year over year to $2.43 billion. Distribution revenues dropped 5% year over year to $4.87 billion. Content revenues declined 13.8% year over year to $2.1 billion. Other revenues were $295 million, up 14.3% from the year-ago quarter.
Warner Bros. Discovery, Inc. Price, Consensus and EPS Surprise
Warner Bros. Discovery, Inc. price-consensus-eps-surprise-chart | Warner Bros. Discovery, Inc. Quote
Top-Line Details
Studios (25.2% of total revenues) reported revenues of $2.44 billion, down 5.1% from the year-ago quarter. Revenues decreased 4% ex-FX from the prior-year quarter on a pro forma combined basis.
Within the segment, content revenues fell 6% ex-FX to $2.23 billion. TV revenues declined 27% ex-FX, primarily due to the timing of initial telecast productions as well as lower licensing sales.
Games revenues declined 41% ex-FX, primarily due to the weak performance of Suicide Squad: Kill the Justice League this year compared with the strong performance of Hogwarts Legacy in the prior year.
Theatrical revenues increased 19% ex-FX, primarily due to higher home entertainment revenues from Dune: Part Two, and higher box office carryover due to the performance of Godzilla x Kong: The New Empire, which was released at the end of March.
Other revenues increased 20% ex-FX, primarily driven by the June 2023 opening of Warner Bros. Studio Tour Tokyo.
Networks revenues (54.3% of total revenues) decreased 8.4% on a year-over-year basis to $5.27 billion. The AT&T (T - Free Report) SportsNet exit negatively impacted the growth rate by approximately 200 basis points (bps).
Within the segment, distribution revenues decreased 8% ex-FX, primarily due to a 9% decline in domestic linear pay-TV subscribers and an approximately 300 bps impact from the AT&T SportsNet exit, partially offset by a 5% increase in domestic affiliate rates.
Advertising revenues decreased 9% ex-FX, primarily due to a decline of 13% in domestic network audiences and the soft advertising market in the United States.
Content revenues increased 5% ex-FX, primarily driven by the timing of third-party licensing deals, partially offset by lower inter-segment content licensing to DTC.
DTC revenues (26.4% of revenues) declined 6% from the year-ago quarter to $2.56 billion.
Within the segment, distribution revenues increased 1% ex-FX, primarily driven by a 7% rise in subscribers following the launch of Max in Latin America in the first quarter of 2024 and in Europe in the second quarter of 2024, partially offset by continued domestic linear wholesale subscriber declines.
Advertising revenues surged 99% ex-FX, primarily driven by higher domestic Max engagement and ad-lite subscriber growth.
Content revenues plunged 70%, primarily due to lower volume of third-party licensing deals.
Subscriber Details
WBD ended second-quarter 2024 with 103.3 million global DTC subscribers, which increased 3.6 million sequentially.
Global DTC ARPU increased 4% ex-FX to $8.00, primarily driven by the growth of the ad tier domestically, along with the continued subscriber mix shift from linear wholesale to other distribution channels, partially offset by a rise in lower ARPU international markets.
Operating Details
In the second quarter, selling, general and administrative expenses decreased 3.9% from the year-ago quarter’s levels to $2.46 billion.
Adjusted EBITDA declined 16.5% from the year-ago quarter’s levels to $1.79 billion.
Second-quarter 2024 cash provided by operating activities came in at $1.22 billion compared with $2.01 billion in the prior-year period.
The company reported a free cash flow of $976 million compared with a free cash flow of $1.72 billion in the prior-year period.
The company reported an operating loss of $10.28 billion compared with an operating loss of $906 million in the year-ago quarter.
Net loss available to Warner Bros. Discovery was $10 billion, which includes a $9.1 billion non-cash goodwill impairment charge from the Networks segment, as well as $2.1 billion of pre-tax acquisition-related amortization of intangibles, content fair value step-up and restructuring expenses.
The goodwill impairment 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.
Balance Sheet
As of Jun 30, 2024, cash & cash equivalents were $3.61 billion compared with $3.78 billion as of Mar 31, 2024.
WBD repaid $1.8 billion of debt during the reported quarter and ended the quarter with $41.4 billion of gross debt and 4x net leverage. WBD purchased $3.4 billion of debt for $2.6 billion through a tender offer funded by cash on hand and a €1.5 billion senior notes offering.
As of Jun 30, 2024, the average duration of the company's outstanding debt was 13.7 years with an average cost of 4.6%.
The company maintains an undrawn $6 billion revolving credit facility.
Q2 Highlights
The company successfully launched Max and migrated subscribers to the new platform across Europe, including new market launches in France and Belgium. Max is now available in 65 countries and territories.
The 2024 CNN Presidential Debate was the highest-rated linear program in the history of CNN.
TNT Sports continued to strengthen its sports portfolio with multi-year domestic agreements for BIG EAST men's and women's college basketball, the French Open, Mountain West college football and the College Football Playoffs.
Adult Swim’s second-quarter primetime ratings grew 14% year over year, its third consecutive quarter of primetime growth.
Zacks Rank & Stocks to Consider
Currently, Warner Bros. Discovery carries a Zacks Rank #4 (Sell).
Some better-ranked stocks that investors can consider in the broader Consumer Discretionary sector are Flutter Entertainment PLC (FLUT - Free Report) and On Holding (ONON - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Flutter Entertainment PLC have lost 5.6% year to date. The Zacks Consensus Estimate for FLUT’s 2024 revenues is pegged at $13.86 billion. The consensus mark is pegged at $4.98 per share, which has remained steady over the past 30 days.
Shares of On Holding have jumped 37% year to date. The Zacks Consensus Estimate for ONON’s 2024 revenues is pegged at $2.58 billion, indicating year-over-year growth of 29.37%. The consensus mark for earnings is pegged at 97 cents per share, up 2.1% over the past 30 days.