Warner Bros. Discovery dips as earnings miss amid slower ad revenue
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Warner Bros. Discovery (NASDAQ:WBD) is 3% lower in early postmarket action on its fourth-quarter earnings report, where it missed financial expectations as restructuring costs continued to wash through the media giant's financials.
Fourth-quarter revenues came to just over $11B - down 9% excluding foreign exchange effects, and missing consensus for $11.23B.
Applicable net loss landed at $2.1B, including $1.85B in pretax amortization from acquisition-related intangibles, and $1.2B in pretax restructuring costs.
In non-GAAP terms, adjusted earnings before interest, taxes, depreciation and amortization was $2.603B - down 2% year-over-year excluding foreign exchange.
"With the major restructuring decisions behind us, this year we are focused on building and growing our businesses for the future, and we're off to a great start," CEO David Zaslav said.
Global direct-to-consumer subscribers (to HBO, HBO Max or Discovery+) rose by 1.1M, to 96M at the end of Q4. That was helped in part by the re-launch of HBO Max on Amazon Channels in December.
The company pointed to continued content strength, with 22 nominations and eight wins at this year's Golden Globe Awards, and 14 Oscar nominations. It also noted its TBS, TLC and TNT networks were among prime time's top five for adults 25-54.
Free cash flow was $2.48B. The company ended the quarter with $3.9B in cash on hand, $49.5B in gross debt, and net leverage of 5.0x.
Revenue by segment: Studios, $3.84B ($5.149B pro forma, down 25% year-over-year); Networks, $5.52B ($6.04B pro forma, down 9% year-over-year); Direct-to-Consumer, $2.45B ($2.36B pro forma, down 50% year-over-year).
Also, the company's gaming division has a shot in the arm as the Harry Potter franchise videogame Hogwarts Legacy has sold more than 12M units and drawn $850M in global sales in its first two weeks on consoles and PCs - the biggest-ever launch for Warner Bros. Games.
Conference call to come at 4:30 p.m. ET.