WBD earnings call: 'year of building,' new 'Lord of the Rings'; stock turns up
Kevin Winter

Warner Bros. Discovery (NASDAQ:WBD) reversed some postmarket losses during an afternoon conference call for its fourth-quarter earnings, a financial miss that wrapped up a 2022 that seemed to be filled with month after month of a substantial remake of the company's structure and media schedules.
Full-year revenue came to $33.8B, and while comparisons are difficult after the company's April 2022 emergence from the merger of WarnerMedia and Discovery, that was down 3% on a combined basis year-over-year (excluding foreign-exchange effects). That included a full-year net loss of $7.4B, including $6.2B in amortization from acquisition-related intangibles, and $3.8B in restructuring expenses.
On the call, CEO David Zaslav appeared to be ready to turn the page on all those transformations.
"Last year was a year of restructuring," Zaslav said; "2023 will be a year of building. And off we go."
Zaslav made some news in noting WBD has a deal to make "multiple" Lord of the Rings movies, adding more content to "one of the most iconic storytelling franchises of all time."
The company's plan to release a larger streaming service combining HBO Max and Discovery+ is on track for the spring, Zaslav said, and he touted an April 12 press event to launch the combined rollout.
"In today's increasingly dynamic and crowded media environment, the best hand has great storytelling and brilliant creatives, a full slate of production and distribution capabilities and broad global reach that stretches across premium pay TV, free-to-air theatrical streaming, licensing, and gaming, the entirety of the ecosystem," Zaslav said. "And that is exactly the hand that we have, and we intend to play it decisively, with a focus on free cash flow, and an eye toward sustainable future growth."
Net leverage at the end of Q4 was an even 5.0x, but Zaslav pointed to that transforming as well in 2023. "But I'm very pleased that we see our net leverage clearly below four times, by the end of this year," repeating that for emphasis.
Zaslav also delivered a speech touting HBO Max's weekly episode release model against the full-season "binge" release model still promoted by key streaming rival Netflix (NFLX).
He cited his time at NBC, and that network's former hold on Thursday nights as "Must-see TV."
"Those shows had a super-sized effect on people and culture," he said. "And back then you had to watch the show on Thursday night. Today with direct-to-consumer, more and more people are joining the party. That's the power of streaming. And HBO streaming is the new must-see TV, with all of its cultural impact and excitement."
He pointed to the company's latest hit, The Last of Us, noting that a building wave of press and word-of-mouth has led 35M people to watch episode one in the five weeks since its release.
Chief Financial Officer Gunnar Wiedenfels added the update that the company now expects even more merger synergies, boosting that expectation by $500M to a total $4B in merger savings.
That revelation helped send the stock into positive ground postmarket, up 1.7%.