Why did Warner Bros. Discovery stock dive today? First full quarter shows hurdles
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Warner Bros. Discovery (NASDAQ:WBD) slid 16.5% Friday - leaving it re-approaching its lowest point since the April combination of Discovery and WarnerMedia that created the company, but not quite there.
Shares closed at $14.59, while they had hit $12.77 on June 30. But the double-digit drop came as WBD's first full quarter as a merged entity culminated in a "kitchen sink" report rife with merger adjustments and showing a revenue miss, net loss, a pile of debt and warnings of the challenges ahead as the company moves into the new media era.
That included a hefty loss of $3.42B laden with some unique costs, including more than $2B in amortization, $1B in restructuring and other charges, and $983M in transaction/integration costs.
Revenues on a pro forma basis fell 1% year-over-year in constant currency. And the company gave a number of strategic signals alongside the report.
One is that CEO David Zaslav sees streaming as an important way ahead - but not the only way. That was communicated before earnings as the company canceled planned straight-to-streaming originals Batgirl and Scoob: Holiday Haunt, films that reportedly cost $90M and $40M respectively, and though Batgirl was substantially completed and nearing a release.
Zaslav gave some elaboration on that in the company's earnings call: "We have a different view on the wisdom of releasing direct-to-streaming films," he said. "Our streaming strategy has evolved over the past year, and really reflects the importance of - rather than the dependence on - this segment of our global content monetization plans."
He and executives also confirmed the company would combine its HBO Max and Discovery+ streaming offerings into one service hitting the U.S. in summer 2023, though there wasn't elaboration on a name, marketing or pricing points yet.
Barclays noted company cuts to EBITDA expectations for the next two years were bigger than expected, and spoke for much of Wall Street seeing the adjustments and warnings as a kitchen-sink report.