Warner Bros Discovery Q4 revenues dip
February 24, 2023
Warner Bros Discovery (WBD) has reported financial results for the quarter and year ended December 31st 2022.
David Zaslav, President and Chief Executive Officer of WBD, commented: “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. We’re seeing strong momentum across the enterprise, including our exciting long-term plans for DC Studios, the historic success of our latest HBO series The Last of Us, the significant financial and operating gains in DTC, and the record sales of our newest game Hogwarts Legacy. And with our unparalleled portfolio of assets and IP, a growing roster of exceptional creative talent, and some of the buzziest storytelling in the industry, we believe we have repositioned our businesses to take full advantage of the many opportunities ahead.”
Q4 Financial Summary & Operational Highlights:
Q4 total revenues were $11.01 billion, below estimates. Revenues decreased 9 per cent ex-FX compared to the prior year quarter, on a combined basis.
Net loss available to WBD was $(2.1) billion, and included $1.85 billion of pre-tax amortisation from acquisition-related intangible assets and $1.2 billion of pre-tax restructuring expenses.
Q4 total Adjusted EBITDA was $2.6 billion. Adjusted EBITDA decreased 2 per cent ex-FX compared to the prior year quarter, on a combined basis. Q4 cash provided by operating activities increased to $2.84 billion and reported free cash flow increased to $2.48 billion.
Ended Q4 with $3.9 billion of cash on hand, $49.5 billion of gross debt, and 5.0x net leverage.
Global DTC subscribers increased 1.1 million to 96.1 million at the end of Q4 – which was below estimates – versus 95 million subscribers at the end of Q3.
In Q4, TBS, TLC, and TNT were among the top-5 cable networks in Primetime for adults 25-54, but network advertising revenue fell by 17 per cent in the fourth quarter, or 14 per cent excluding foreign exchange
Commenting on the results, Ashwin Navin, CEO of Samba TV said: “We continue to see an increasingly competitive landscape in the subscription and advertising supported entertainment market as we enter 2023. Our data shows that many streaming services are vulnerable to subscriber churn and subscription cycling, where viewers sign up for a service to watch a specific programme with the intent to immediately cancel after one month. While over two thirds of adults report they plan to cycle in the next six months complicating forecasting and altering our perception of the true annualised value of a ‘subscriber’, our data indicates that HBO Max is faring slightly better than most other streamers in delivering multiple programmes of interest to viewers that will help stave off churn.“We’re seeing that some of HBO Max’s popular tentpole franchises like House of the Dragon have become appointment viewing, with other programmes also enjoying a much longer shelf-life attracting new viewers far longer than those of its streaming counterparts. The most recent season of The White Lotus for example was among the top three streaming premieres in the second half of 2022 and the show continued to draw in new audiences week after week to the service. As we shift from a model that was largely focused on acquisition to one that balances the critical need for retention in 2023, HBO Max’s strong portfolio of diverse content is well positioned to help the service as we enter the next phase of the streaming wars.”