Company Performance - Warner Bros. Discovery (WBD) closed at $10.74, reflecting a +0.85% change from the previous session, outperforming the S&P 500's 0.08% gain [1] - The stock has decreased by 3.53% over the past month, which is better than the Consumer Discretionary sector's loss of 8.41% and the S&P 500's loss of 7.33% [1] Earnings Forecast - WBD is projected to report earnings of -$0.13 per share, indicating a year-over-year growth of 67.5% [2] - The consensus estimate for quarterly revenue is $9.84 billion, down 1.16% from the previous year [2] Full-Year Estimates - Full-year estimates suggest earnings of -$0.12 per share and revenue of $39.1 billion, representing year-over-year changes of +97.4% and -0.57%, respectively [3] - Recent analyst estimate revisions indicate a positive outlook for the company's business [3] Analyst Ratings - The Zacks Rank system, which evaluates estimate changes, currently ranks WBD at 3 (Hold) [5] - The consensus EPS projection has decreased by 192.95% in the past 30 days [5] Industry Context - The Broadcast Radio and Television industry, part of the Consumer Discretionary sector, has a Zacks Industry Rank of 64, placing it in the top 26% of over 250 industries [6] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [6]

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WBD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. This is not advice to buy or sell this stock. I am not an accountant or investment advisor. This article is intended to provide information to ...

Subscriber Growth and DTC Performance - Warner Bros. Discovery had 116.9 million DTC subscribers as of December 31, 2024, with a strong growth of 19.3 million global subscribers added in 2024[40] - The DTC segment's revenue composition for the year ended December 31, 2024, was 87% from distribution, 8% from advertising, and 4% from content[44] - HBO's crime drama The Penguin grew its premiere-night audience by 54% from debut to finale in 2024, highlighting strong content performance[40] - The company launched Max in 73 new markets in 2024, contributing to the growth of its DTC business globally[41] - The DTC segment anticipates additional launches of streaming services in major markets in 2025 and 2026[40] - The company experienced a 20% increase in DTC subscribers, partially offsetting revenue declines[211] Financial Performance and Revenue - Total revenues for 2024 decreased by 5% to $39.321 billion compared to $41.321 billion in 2023[208] - Advertising revenues decreased by 7% to $8.090 billion, while content revenues dropped by 8% to $10.297 billion[208] - Distribution revenues fell by 1%, impacted by an 8% decline in domestic linear subscribers and a $225 million loss from exiting the regional sports business[211] - Total costs and expenses increased by 15% to $49.353 billion, leading to an operating loss of $10.032 billion[208] - Net loss available to Warner Bros. Discovery, Inc. was $11.311 billion, compared to a net loss of $3.126 billion in 2023[208] - Selling, general and administrative expenses decreased by 4% to $9.296 billion[208] - Depreciation and amortization expenses decreased by 12% to $7.037 billion[208] - The company reported a gain on extinguishment of debt amounting to $632 million[208] Corporate Structure and Strategic Initiatives - Warner Bros. Discovery's new corporate structure, effective January 1, 2025, aims to enhance strategic flexibility and unlock shareholder value[22] - The company announced a new corporate structure to be implemented in 2025, which may incur unforeseen costs and execution risks[119] - Plans for a corporate reorganization are set for 2025 to better align with strategic and operational objectives, which may lead to business disruptions and higher costs[141] - The company initiated a strategic realignment plan associated with its Warner Bros. Pictures Animation group during 2023[199] Competition and Market Challenges - The company faces significant competition for content development and acquisition, impacting viewership and advertising sales[50] - The ability to secure distribution agreements is crucial for retaining audiences, with contractual terms subject to renewal and renegotiation[51] - The company faces significant competition in the media and entertainment industries, impacting its ability to attract talent, content, and advertising spending[78] - The company faced significant competition for sports programming licenses, leading to increased programming costs and potential adverse effects on financial results[102] - The decline in linear television viewership is expected to continue, which could negatively impact advertising and distribution revenues[87] Legal and Regulatory Risks - The company is committed to protecting its intellectual property through various legal measures, although challenges may arise from third parties[54] - The company is subject to evolving domestic and international privacy and data protection laws, which could impose significant compliance costs[132] - Legal proceedings related to the merger, including multiple class action lawsuits, could negatively impact the company's financial condition and results of operations[143] - The company is currently involved in ongoing litigation matters, including class action lawsuits related to the merger, but does not expect these to materially affect its financial position[176][177] Operational Challenges and Restructuring - The company experienced delays in content completion and delivery in Q1 2024 due to strikes in 2023, but did not face material impacts for the remainder of 2024[15] - Significant costs have been incurred post-merger for organizational restructuring and facility consolidation, which are necessary to achieve anticipated cost synergies[141] - The company incurred approximately $4.7 billion in pre-tax restructuring charges as of December 31, 2024, out of an expected range of $4.1 - $5.3 billion[199] - The integration of WarnerMedia continues to present operational challenges and unforeseen costs that could adversely affect financial performance[140] Cybersecurity and Data Protection - The company's cybersecurity program includes continuous threat monitoring and a Cybersecurity Incident Response Plan, with annual tabletop exercises to test response capabilities[165] - The company has a governance structure for cybersecurity, with the Audit Committee receiving quarterly updates on risk posture and incident reports[169] - The company has established cybersecurity information sharing practices with government agencies and industry partners to enhance resilience[168] - The company has a multi-layered technical defense strategy for cybersecurity, including intrusion detection systems and antivirus solutions[164] - As of December 31, 2024, the company is not aware of any cybersecurity incidents that have materially impacted its business[171] Economic and Market Conditions - Global economic conditions, including inflation and high interest rates, may adversely impact consumer discretionary spending and overall business performance[156] - Decreases in consumer spending could lead to reduced subscriptions for DTC products and lower attendance at movie theaters, negatively affecting revenues[157] - The advertising market is sensitive to economic conditions, which could lead to reduced spending from advertising partners[82] - The market price of the company's common stock has been highly volatile, influenced by various factors including financial results and market sentiment[159] Employee and Talent Management - The company emphasizes a talent-driven culture, aiming to attract and develop top talent through competitive benefits and performance-based pay[71] - The company provides a range of learning and development opportunities, including tuition reimbursement for eligible courses[74] - As of December 31, 2024, the company had approximately 35,000 employees, with a balanced distribution of 50% in the U.S. and 50% outside[70] - The company is undertaking restructuring initiatives, including headcount reductions, which may disrupt operations and affect employee morale[148]

Core Insights - Warner Bros. Discovery (WBD) reported a fourth-quarter 2024 loss of $0.20 per share, missing the Zacks Consensus Estimate of a profit of $0.04 per share, and compared to a loss of $0.16 in the same quarter last year [1] - Revenues decreased by 2.5% year over year to $10.02 billion, falling short of the Zacks Consensus Estimate by 3.3% [1] Revenue Breakdown - Advertising revenues fell by 12% year over year to $1.83 billion, impacted by declines in domestic linear audience and a soft advertising market [2] - Distribution revenues remained flat at $4.91 billion, with growth in global DTC subscribers offset by domestic linear pay TV subscriber declines [2] - Content revenues decreased by 2% year over year to $2.9 billion, while other revenues increased by 16% to $371 million [2] Segment Performance - Studios segment, accounting for 36.5% of total revenues, reported a 15% increase in revenues to $3.65 billion, with content revenues up 16% ex-FX [3] - Games revenues declined by 29% ex-FX, attributed to the strong performance of last year's titles [4] - Networks revenues, making up 47.6% of total revenues, decreased by 5% year over year to $4.76 billion [4] Subscriber and ARPU Details - WBD ended Q4 2024 with 116.9 million global DTC subscribers, an increase of 6.4 million sequentially [8] - Global DTC ARPU decreased by 5% ex-FX to $7.44, influenced by growth in lower ARPU international markets and ad-tier subscriber growth [9] Operating and Financial Metrics - Selling, general and administrative expenses decreased by 9.7% year over year to $2.21 billion [10] - Total Adjusted EBITDA was $2.7 billion, an 11% ex-FX increase compared to the prior year [10] - Free cash flow was reported at $2.42 billion, down from $3.31 billion in the prior year [11] Balance Sheet Overview - As of December 30, 2024, cash and cash equivalents were $5.31 billion, up from $3.33 billion as of September 30, 2024 [13] - The company ended the quarter with $40 billion of gross debt and a net leverage ratio of 3.8X [13] - Average duration of outstanding debt was 13.4 years, with an average cost of 4.7% [13]

Core Viewpoint - Warner Bros. Discovery (WBD) anticipates that streaming profits will double this year and forecasts at least 150 million subscribers by 2026, driven by the global rollout of Max and stringent cost controls [1][6]. Group 1: Streaming Business Performance - WBD added 6.4 million streaming subscribers in the fourth quarter, surpassing the 4.9 million estimated by analysts, attributed to the global expansion and the content slate including "Dune: Prophecy" [4][8]. - The total number of subscribers now stands at nearly 117 million, significantly lower than Netflix's 302 million and Disney+'s 124.6 million [6]. - The streaming unit is projected to report adjusted EBITDA of about $1.3 billion in 2025, a substantial increase from $677 million last year [9]. Group 2: Financial Results - In the fourth quarter, the streaming unit posted an adjusted EBITDA of $409 million, exceeding expectations of $289.1 million, with revenue rising by 5% [10]. - Overall revenue for the company was $10.03 billion, falling short of the $10.19 billion estimate, and the company reported a loss of 20 cents per share, contrary to the expected profit of 1 cent [11]. Group 3: Strategic Moves - The company has decided to separate its cable TV businesses from streaming and studio operations, which may lead to a potential sale or spinoff of its TV business [2]. - CEO David Zaslav emphasized that this separation will allow WBD to capitalize on broader market opportunities as they arise [3].

Warner Bros. Discovery Inc. (NASDAQ:WBD) Q4 2024 Earnings Conference Call February 27, 2025 8:00 AM ET Company Participants David Zaslav - President, Chief Executive Officer Gunnar Wiedenfels - Chief Financial Officer JB Perrette - President, Global Streaming and Games Andrew Slabin - Executive Vice President, Global Investor Strategy Conference Call Participants Jessica Reif Ehrlich - Bank of America Securities Robert Fishman - MoffettNathanson Kannan Venkateshwar - Barclays Kutgun Maral - Evercore ISI Ric ...

Group 1 - Warner Bros. Discovery reported a quarterly loss of $0.20 per share, missing the Zacks Consensus Estimate of $0.04, and compared to a loss of $0.16 per share a year ago, representing an earnings surprise of -600% [1] - The company posted revenues of $10.03 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 3.17%, and down from $10.28 billion year-over-year [2] - Over the last four quarters, Warner Bros. Discovery has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during the same period [2] Group 2 - The stock has lost about 0.7% since the beginning of the year, while the S&P 500 has gained 1.3%, indicating underperformance in the market [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the coming quarter is -$0.02 on revenues of $10.24 billion, and -$0.04 on revenues of $40.17 billion for the current fiscal year [7] Group 3 - The Zacks Industry Rank places Broadcast Radio and Television in the top 34% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The current estimate revisions trend for Warner Bros. Discovery is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]

Core Insights - Warner Bros. Discovery reported mixed financial results for Q4 2024, with EPS at -$0.20, missing analysts' expectations of -$0.02 by $0.18, and revenue at $10.03 billion, below the estimate of $10.16 billion [2][3] Financial Performance - Revenue decreased by 2.5% year-over-year from $10.28 billion to $10.03 billion, missing estimates [3][6] - Net income was reported at -$494 million, a decline of 23.5% from -$400 million in Q4 2023 [3] - Adjusted EBITDA improved by 10.2% year-over-year to $2.72 billion [3][10] - Free cash flow decreased by 26.6% to $2.43 billion [3][10] Segment Performance - The Direct-to-Consumer (DTC) segment saw a revenue increase of 5% to $2.65 billion, with a net addition of 6.4 million subscribers, totaling 116.9 million [9] - The Studios segment experienced a 15% revenue increase to $3.66 billion, driven by enhanced content licensing [7] - The Networks segment faced a 5% revenue decline, primarily due to a 17% drop in advertising revenue [8] Strategic Focus - The company is focusing on expanding its DTC platforms internationally to capture new customer bases and enhance competitiveness in the streaming industry [12] - Warner Bros. Discovery aims to improve profitability and manage its high debt levels, which stood at $34.6 billion at the end of the quarter [13] - The company is prioritizing content innovation and leveraging its extensive intellectual property to sustain growth [13]

Warner Bros. Discovery (WBD) reported weaker-than-expected fourth-quarter results, but shares rose in premarket trading Thursday on an upbeat streaming outlook. The entertainment giant reported a net loss per share of $0.20 on revenue of $10.03 billion. Analysts polled by Visible Alpha had expected a profit of $0.02 per share and revenue of $10.22 billion. In its annual letter to shareholders, the company said its plans to continue expanding its Max streaming service to more countries and sees "a clear pat ...

Group 1 - Warner Bros. Discovery's revenue decreased by 1% to $10 billion, missing Wall Street forecasts, with a net loss of $640 million for Q4 2024 due to $1.9 billion in charges including restructuring expenses [1] - The Networks segment, WBD's largest, experienced a 5% revenue decline to $4.8 billion and a 13% drop in profits to $1.9 billion, with ad revenue falling 17% due to a 28% decline in domestic audience [2] - The company is undergoing a corporate restructuring that may lead to the separation of its cable networks, similar to plans by Comcast [3] Group 2 - Studio revenue increased by 16% to $3.7 billion, driven by a 64% rise in TV revenue from internal licensing agreements, despite previous year impacts from WGA and SAG-AFTRA strikes [4] - Direct-to-Consumer (DTC) revenue rose by 5% to $2.7 billion, with the segment achieving a profit of $409 million compared to a $55 million loss [4] - Advertising revenue in the DTC segment increased by 27%, while content revenue decreased by 40% due to fewer third-party licensing deals [4]