((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Adds context to paragraphs 5-6, 9-10, analyst comments to paragraphs 7, 11) by Harshita Mary Varghese
Warner Bros. Discovery posted a larger-than-expected quarterly loss as advertising sales fell at its cable TV unit and the studio segment dealt with the fallout from last year’s Hollywood strikes and a low demand for the game “Suicide Squad”.
The results magnified the difficulties media companies faced in coping with weak advertising in the United States and some international markets, as companies responded to the possibility of higher interest rates for a long time by limiting their costs.
Advertising revenue from the company’s networks segment
WBD.O fell 11% during the first quarter. On Tuesday, rival Disney DIS.N also announced a decline in its traditional television business.
The streaming unit remained a bright spot for Warner Bros. Discovery, adding 2 million subscribers and reporting a 72% jump in adjusted core profit to $86 million.
Investors have been pushing for the group to focus on profitability and not growing subscriptions, as Netflix consolidates its leadership position in the streaming wars.
Warner Bros. Discovery partnered with Disney on Wednesday to offer a bundle of Disney+, Hulu and Max streaming services in the United States, starting this summer. The two companies, along with Fox Corp, unveiled a sports streaming project earlier this year.
“We are indeed witnessing the return of the bundled offer, distributed on the Internet,” said Paolo Pescatore, analyst at PP Foresight.
“HOPE OF THE NBA
Chief Executive David Zaslav said the company “hopes” to reach an agreement with the NBA to keep the league on Max and TNT, which has held those rights for nearly four decades.
The NBA rights are seen as key to the company’s efforts to drive growth in its streaming business and retain cable customers.
Warner Bros. Discovery “will become a weak third leg” in the new sports streaming venture if its deal with the NBA is not renewed, said Ross Benes, senior analyst at Emarketer.
The company’s studio revenues were hurt by the underperformance of “Suicide Squad: Kill the Justice League” compared to “Hogwarts Legacy,” the best-selling game of 2023.
Revenue from that business fell 12%, despite “Dune: Part Two,” being the highest-grossing 2024 film to date, with more than $700 million in revenue overall. worldwide box office.
The company continues to face challenges posed by two Hollywood strikes last year, which led to production delays and fewer episodes in the first three months of the year.
Revenue of $9.96 billion fell short of estimates of $10.23 billion, according to LSEG data. The loss of 40 cents per share was wider than forecasts of a loss of 24 cents.
