After final yr’s messy mega-merger, executives at Warner Bros. Discovery Inc. on Thursday tried to pitch 2023 as an growth yr — one throughout which the media powerhouse’s studios will crank out extra motion pictures and attempt to experience the early success of its “Hogwarts Legacy” videogame.
Chief Executive David Zaslav mentioned the corporate — which oversees TV channels and streaming platforms like HBO, HBO Max, Discovery and Discovery+, DC Comics and a few videogames — would “more than double” the output from its studio section this yr. He known as out this month’s blowout debut of the sport “Hogwarts Legacy,” and introduced a brand new deal for “multiple” “Lord of the Rings” motion pictures additional out.
Chief Financial Officer Gunnar Wiedenfels, throughout Warner Bros. Discovery’s
WBD,
earnings name on Thursday, mentioned this yr could be “pivotal” for the corporate’s studio enterprise.
“Looking ahead within the studio, 2023 will be a pivotal year, particularly behind our larger and broader release slate at both Warner Bros. Pictures and at DC, not to mention a wonderful start with ‘Hogwarts Legacy’ on the games side,” he mentioned.
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“Hogwarts Legacy” launched on Feb. 10. Zaslav mentioned the sport had already introduced in additional than $850 million in retail gross sales, with extra on the best way as the sport hits extra platforms.
Still, the corporate — the results of a merger final yr between AT&T’s WarnerMedia and Discovery — must get by way of a weaker promoting backdrop that weighed on fourth-quarter outcomes, in addition to a subscriber depend that got here in beneath expectations.
Warner Bros. Discovery reported a fourth-quarter web lack of $2.08 billion, or 86 cents a share, after a revenue of $38 million, or 8 cents a share, in the identical quarter in 2021. Revenue got here in at $11 billion, in contrast with $3.19 billion within the prior-year quarter. The firm completed the quarter with 96.1 million subscribers.
On a GAAP foundation, analysts polled by FactSet anticipated Warner Bros. Discovery to report a lack of 35 cents a share, on income of $11.2 billion. They anticipated a subscriber depend of round 96.33 million.
Shares slid 3.4% after hours.
Zaslav, within the firm’s earnings launch, mentioned that “major restructuring decisions” have been “behind us.” However, Warner Bros. Discovery has confronted extra cautious advertisers, ongoing cord-cutting, competitors inside streaming and upheaval created from the merger deal itself. In an effort to shore up the underside line, the corporate has minimize jobs and content material — together with Mahaz News+ and a “Batgirl” movie set for HBO Max.
In a submitting in December, Warner Bros. Discovery mentioned it anticipated larger fees associated to content-impairment and improvement write-offs and pretax restructuring fees. But it mentioned that the continued reorganization, anticipated to be largely full by the top of subsequent yr, “could result in additional impairments above the revised estimates.”
Ahead of the fourth-quarter earnings, some analysts mentioned the outcomes would current a possibility for administration to reframe the corporate’s path ahead.
“More importantly, we believe 4Q is an opportunity for management to turn the page to 2023 and reset the narrative,” BofA analysts mentioned in a notice final month.
“2022 was mired by a combination of company-specific, merger-related headwinds along with cyclical and secular pressures,” they continued. “At this point, the majority of heavy lifting (related to restructuring charges etc.) has been completed, direct to consumer (DTC) losses peaked in ’22 with a path to breakeven in ’24 and the cyclical headwinds should abate as macro conditions improve.”
They added that promoting developments in January appeared to have improved from December.
The Wall Street Journal this month reported that Warner Bros. Discovery deliberate to maintain Discovery+ as a standalone streaming platform, as the corporate weighs the best way to make extra of its content material obtainable in a single place. The Journal mentioned that slightly than absolutely mix Discovery+ and HBO Max as as soon as deliberate, Warner will transfer forward with a platform that “will feature HBO Max content and most Discovery+ content, with Discovery+ remaining available as a standalone option.”
Benchmark analyst Matthew Harrigan, in a notice this month, mentioned that call was “not surprising given the likelihood of losing some price-sensitive customers for whom shows like ‘House of the Dragon’ or critically acclaimed new hit ‘The Last of Us’ does not resonate, or at least not enough to pay a likely higher price than the present $15.99/$9.99 (with ads) for HBO Max.”
Shares of Warner Bros. Discovery have tumbled 45.2% over the previous 12 months. By comparability, the S&P 500 index
SPX,
has fallen 5.8% over that interval.
Source web site: www.marketwatch.com
