Warner Bros. Discovery Inc. tempered its full-year profit guidance, saying its financial performance will depend in part on when the labor strikes get resolved and the ad market starts to recover.
(Bloomberg) — Warner Bros. Discovery Inc. tempered its full-year profit guidance, saying its financial performance will depend in part on when the labor strikes get resolved and the ad market starts to recover.
On an earnings call Thursday, Chief Financial Officer Gunnar Wiedenfels said the company, home of CNN, HBO and the Warner Bros. studio, was on pace to hit the lower end of its target of between $11 billion and $11.5 billion in adjusted EBITDA.
Whether the TV ad market improves will be the biggest factor, he said, while the Hollywood strikes may have implications for its film slate. He added the company’s financial models assume its film studio returns to work in early September.
“We’re hoping this strike gets settled as soon as possible,” Chief Executive Officer David Zaslav told analysts on the call.
The company, meanwhile, also reported a smaller-than-expected quarterly loss from streaming, suggesting it’s making progress in its path toward profitability in the nascent business.
The company, which relaunched its streaming service as Max in May, on Thursday posted a second-quarter loss of $3 million in its direct-to-consumer business, which encompasses its streaming services. Analysts had forecast a loss of $285.6 million, on average. Streaming revenue was boosted by licensing content to other services.
The company’s shares fell 3.1% to $12.16 at 10:11 a.m. in New York. The stock was up 32% this year after the close on Wednesday.
Subscribers to its streaming services, which include Max and Discovery+, decreased by 1.8 million, Warner Bros. Discovery said in a statement. The company said the loss was due in part to the overlapping subscriber bases between the previous service, HBO Max, and Discovery+. In May, the company reported a surprise first-quarter profit in its streaming video business.
The company, which also operates cable channels such as TNT, said total sales fell 4% to $10.4 billion, just shy of Wall Street analysts’ estimates. TV advertising revenue declined 13%, driven by audience declines and a soft ad market. The company posted a loss of 51 cents a share. Analysts estimated a 41-cent loss.
Warner Bros. Discovery was created last year through the merger of Discovery Inc. and the WarnerMedia operations of AT&T Inc.
(Updates with company comments in second and fourth paragraphs and changes in share price in seventh paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.