Shareholders at Warner Bros. Discovery gave a thumbs down to the company's executive compensation for 2024 — multi-million dollar paydays led by CEO David Zaslav's $51.9 million package. The vote, informally called say-on-pay, is required at publicly traded companies but nonetheless non-binding. Boards of directors insist that they take the votes to heart and if there's dissent engage seriously with their biggest shareholders, and that is sometimes the case. At Warner Bros. Discovery, however, Zaslav's pay ...

Core Points - A majority of Warner Bros Discovery shareholders voted against the 2024 pay packages for CEO David Zaslav and other top executives, with over 59% rejecting the proposal on a non-binding basis [1][3] - Zaslav's total compensation for 2024 increased by 4% from the previous year, reaching $51.9 million [3] - The company is facing challenges in its cable TV business due to cord-cutting and is focusing on its streaming and studios divisions [3] - Warner Bros Discovery missed first-quarter revenue estimates and reported a larger-than-expected loss [3] - The company is exploring a potential breakup, having laid the groundwork for a possible sale or spinoff of its declining cable TV assets [4][7] - In the January-March quarter, Warner Bros Discovery added 5.3 million streaming subscribers, surpassing market expectations but still trailing behind Netflix [5] - The company reverted to using the HBO branding for its streaming service, Max, after dropping it two years ago [6]

Core Viewpoint - Bank of America Securities analyst Jessica Reif Ehrlich maintains a Buy rating on Warner Bros. Discovery (WBD) with a price forecast of $14, citing increased strategic flexibility due to recent internal reorganization and an S&P debt downgrade, which is viewed as an "ironically positive" event [1][4]. Group 1: Strategic Developments - Recent developments, including an internal reorganization and S&P's downgrade of WBD's debt to BB+, have enhanced the company's strategic flexibility [1][4]. - The downgrade is seen as beneficial for WBD's equity, especially in light of the company's significant debt load [4][6]. - The new corporate structure divides WBD into two divisions: Global Linear Networks and Streaming & Studios, aimed at maximizing profitability and driving growth respectively [6][7]. Group 2: Financial Performance and Projections - Despite challenges, the analyst believes in WBD's valuable assets and upcoming catalysts, including easing studio comparisons and potential recovery in advertising [2][3]. - For 2025, projected revenues for WBD are $38.2 billion with earnings per share of $1.63 [7]. Group 3: Strategic Alternatives - The analyst suggests exploring strategic alternatives, such as a potential spin-off of the Studios and Streaming businesses, to unlock unrecognized value [3][6]. - The removal of the "double-trigger" change of control covenant allows for more strategic actions to be pursued without the previous risks [5][6].

Core Viewpoint - Warner Bros. Discovery (WBD) shares have underperformed significantly in 2023, losing 5% year to date compared to the Zacks Consumer Discretionary sector's 25.1% growth and entertainment peers like Disney, Paramount Global, and Netflix [1] Streaming Segment Performance - WBD's streaming business added 5.3 million subscribers in Q1, reaching a total of 122.3 million globally, and generated $339 million in adjusted EBITDA, aiming for at least $1.3 billion in streaming EBITDA for 2025 [2] - Popular shows like The White Lotus and The Last of Us have contributed to the streaming segment's success, with The White Lotus averaging over 25 million viewers per episode and The Last of Us attracting over 90 million viewers since its first season [2] Operational Performance - The Studios segment showed resilience with a 63% year-over-year increase in adjusted EBITDA to $259 million, driven by the success of the Minecraft Movie, which grossed nearly $900 million globally [3] - The Global Linear Networks segment faced challenges, with revenues declining 6% year over year due to cord-cutting and domestic advertising issues [3] Content Pipeline - WBD has a strong content pipeline, with the highly anticipated Superman film set to release on July 11, following a successful trailer with over 250 million views [4] - Renewals and new orders for shows like The Pitt and the upcoming Harry Potter series are expected to enhance subscriber growth for Max [4] Product Innovations - Recent product launches, such as the Extra Member Add-On feature and Profile Transfer capabilities for Max, aim to address password sharing and enhance revenue [5] - The WBD Storyverse advertising initiative and new solutions like NEO and DemoDirect are designed to improve advertiser value propositions amid challenging linear advertising markets [5] Financial Position - WBD maintained a 3.8x net leverage ratio while repaying $2.2 billion in debt in Q1, with $4.0 billion cash on hand and $38.0 billion gross debt [6] - The company reported free cash flow of $302 million in Q1, indicating improving cash generation capabilities despite concerns over elevated debt levels [6] Investment Outlook - WBD is rated as a Hold, with streaming momentum and content quality improvements being positive signs, but challenges in linear television and high leverage remain [7] - The Zacks Consensus Estimate for WBD's 2025 revenues is $37.8 billion, reflecting a 3.88% year-over-year decline, with an expected loss of 16 cents per share, an improvement from a loss of $4.62 in the previous year [8]

Investment Ratings - Walt Disney Co. (DIS): Buy-rated with a 12-month price target of $148 [27] - Fox Corp. (FOXA): Buy-rated with a 12-month price target of $61 [29] - Comcast Corp. (CMCSA): Buy-rated with a 12-month price target of $40 [30] - Warner Bros. Discovery Inc. (WBD): Neutral-rated with a 12-month price target of $10.50 [32] - Paramount Global (PARA): Not Rated [34] Core Insights - The report highlights a significant decline in traditional TV viewership, with prime time commercial ratings for broadcast (excluding sports) down 16% year-over-year in 2Q25-to-date [2] - Streaming viewership has reached an all-time high of 44.3%, with YouTube achieving a record share of 12.4% [6][10] - Cable viewership has also seen a slight increase, driven by sports and news programming, with cable share rising to 24.5% [8][9] Summary by Sections TV Viewership Trends - Streaming's share of total TV viewership increased by 0.5 percentage points month-over-month to 44.3% in April 2025 [6][10] - Broadcast share increased by 0.3 percentage points to 20.8%, driven by events like the Men's NCAA Basketball Championship [7][9] - Cable share rose by 0.5 percentage points to 24.5%, supported by strong sports viewership [8][9] Company Performance - In 2Q25-to-date, total day ratings for major networks declined significantly: DIS (-28%), PARA (-30%), WBD (-27%), CMCSA (-32%), while FOX saw an increase of 28% [3][4] - FOX's growth was primarily driven by a 46% increase in viewership at Fox News Channel [3][25] - The report indicates that linear TV has lost approximately 6 percentage points to streaming and other platforms year-over-year as of April 2025 [14] Valuation and Price Targets - The valuation methodologies for the companies include various EBITDA multiples, with DIS at 11X for Parks and Experiences, and FOX at 7.0X for NTM+1Y EBITDA [27][29][30] - The report emphasizes the importance of multi-channel and multi-platform distribution strategies for media companies to sustain growth in streaming engagement [6]

Core Viewpoint - Warner Bros. Discovery has been downgraded to junk status by S&P Global Ratings, reflecting significant financial challenges and increased default risk [1][2] Group 1: Credit Rating and Financial Health - S&P downgraded Warner Bros. Discovery's issuer credit rating to "BB+", one notch below the lowest investment-grade rating of "BBB-" [1] - The downgrade is primarily due to declining revenues and cash flows from traditional linear television, with projected leverage rising to 4.3 times by the end of 2025, exceeding the investment-grade threshold of 3.5 times [2] - The company currently has approximately $38 billion in outstanding debt, with about $31 billion included in the Bloomberg U.S. Corporate High Yield Index [2] Group 2: Market Perception and Investor Sentiment - Despite the downgrade by S&P, Moody's and Fitch maintain higher ratings for the company at Baa3 and BBB- respectively, which may still attract some investors [2][4] - Investor sentiment is expected to become more cautious regarding the company's bonds, especially if revenue and cash flow continue to decline [2][3] Group 3: Operational Challenges - Warner Bros. Discovery faces ongoing operational challenges, including a decline in traditional linear TV advertising and subscription users, high merger-related debt, content impairment, and rising costs associated with streaming transformation [4] - The company has struggled to reduce debt and improve leverage ratios to meet investment-grade standards, with analysts noting that the company's bonds still have higher option-adjusted spreads compared to other high-yield rated issuers [3]

Company Overview - Warner Bros. Discovery (WBD) has undergone significant changes since acquiring WarnerMedia assets, with notable achievements in its business segments [3]. - The company has transformed its streaming service from over $2 billion in losses to nearly $1 billion in profits over the trailing 12 months [3][4]. Financial Performance - WBD's linear business is reported to have leading margins within the industry, indicating strong financial health [3]. - The turnaround of the streaming service reflects effective management and strategic adjustments, contributing positively to the overall financial performance [3][4]. Cultural and Operational Changes - The company has emphasized a cultural shift towards collaboration, professional management, and accountability, which is expected to yield long-term benefits [4]. - A data-driven approach has been adopted, enhancing decision-making processes and operational efficiency within the organization [4].

Summary of Warner Bros. Discovery (WBD) 2025 Conference Call Company Overview - **Company**: Warner Bros. Discovery (WBD) - **Date of Conference**: May 15, 2025 Key Points Industry and Company Achievements - The company has undergone significant changes since acquiring WarnerMedia assets, achieving substantial success in its three segments: linear business, streaming service, and studio operations [5][4] - The streaming service has turned from over $2 billion in losses to nearly $1 billion in profits over the trailing twelve months [5] - A cultural shift within the company has emphasized collaboration, accountability, and a data-driven approach, which is expected to yield long-term benefits [5] Financial Performance and Projections - The company is targeting at least $1.3 billion in profit for 2023 from its streaming service [7] - International affiliate revenues have shown consistent growth for five consecutive quarters, indicating a positive trend in revenue generation [6] - The domestic market is facing challenges, but there are encouraging signs from partnerships, such as with Charter [6] Streaming Strategy - The rebranding of HBO Max emphasizes quality over quantity, with a focus on high-quality content that differentiates the brand [16][18] - The company aims to grow its subscriber base to 50 million, leveraging its content pipeline and international market expansion [20] - HBO Max has historically monetized above market averages due to its premium content, and there is potential for further monetization through advertising [23][24] Licensing and Content Strategy - The company maintains a flexible licensing strategy, opting for co-exclusive deals rather than outright sales of content [36][42] - The strategy includes maximizing value through partnerships, such as the deal with Sky in the UK, which allows for both licensing and independent streaming [42] Sports Rights and Advertising - The company has shifted its approach to sports rights, focusing on premium tiers for sports content and being selective about investments in sports rights [46][51] - The advertising landscape is evolving, with a shift towards data-driven solutions and a focus on both linear and streaming inventory [59] Studio Operations - The studio is expected to achieve a normalized profitability target of $3 billion, with a focus on balancing hit-driven projects and process discipline [64][67] - The company is investing in content creation, particularly in international markets, to enhance its global footprint [45] Debt Management and Investment Strategy - The company has successfully reduced its debt by nearly $19 billion since its formation, maintaining a focus on investment-grade ratings while pursuing growth opportunities [71][72] - The management is committed to balancing investments in content and maintaining financial health [72] Future Outlook - Warner Bros. Discovery is positioned to navigate industry disruptions with a strong content lineup and a focus on operational efficiency across its segments [75][76] - The company anticipates dynamic growth in both its streaming and studio operations, supported by strategic investments and a robust content pipeline [77] Additional Insights - The company is exploring opportunities in local content creation to enhance its international offerings [44] - The management emphasizes the importance of understanding the lifetime value of subscribers in both retail and wholesale models [30][31] This summary encapsulates the key discussions and insights from the Warner Bros. Discovery conference call, highlighting the company's strategic direction, financial performance, and future growth opportunities.

About this content About Angela Harmantas Angela Harmantas is an Editor at Proactive. She has over 15 years of experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from numerous countries around the world, including Canada, the US, Australia, Brazil, Ghana, and South Africa for leading trade publications. Previously, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government ...

Core Insights - Warner Bros Discovery is rebranding its streaming platform back to HBO Max, aiming to leverage the iconic HBO brand to drive subscriber growth internationally [1][9] - The rebranding signifies a commitment to delivering unique and premium content, with HBO known for critically acclaimed series like "Game of Thrones" and "The Sopranos" [2][4] - The decision to drop HBO from HBO Max in 2023 faced backlash, prompting the company to revert to the original branding to enhance viewer retention and appeal [5][7] Subscriber Growth and Strategy - Warner Bros Discovery reported a total of 122.3 million streaming subscribers as of the January-March quarter, with expectations to exceed 150 million by the end of 2026 [9] - The company has expanded its streaming service to over 70 countries and plans to launch in the UK, Ireland, Italy, and Germany, indicating a strong focus on international growth [9] - The success of shows like "The White Lotus" and "The Pitt" contributed to the increase in subscribers, highlighting the importance of high-quality content in attracting and retaining viewers [9]