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Warner Bros. Discovery (WBD) Q2 Loss Narrows, Ad Sales Decline
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Warner Bros. Discovery (WBD - Free Report) reported second-quarter 2023 loss of 51 cents per share, narrower than a loss of $1.50 in the year-ago quarter. The Zacks Consensus Estimate for loss was pegged at 39 cents per share for the reported quarter.
Revenues increased 5.4% year over year to $10.35 billion, which missed the Zacks Consensus Estimate by 1%.
Warner Bros. Discovery, Inc. Price, Consensus and EPS Surprise
Advertising revenues decreased 7.4% year over year to $2.51 billion. Distribution revenues increased 6.1% year over year to $5.13 billion. Content revenues increased 18.5% year over year to $2.44 billion. Other revenues were $258 million, up 26.5% from the year-ago quarter.
Studios (24.9% of revenues) reported revenues of $2.58 billion, down 23.3% from the year-ago quarter. Revenues decreased 24% ex-FX from the prior-year quarter on a pro forma combined basis.
Within the segment, content revenues decreased 25% ex-FX to $2.39 billion as TV revenues declined primarily due to the timing of production, fewer CW series and fewer series sold to the company’s owned platforms. Games revenues were lower due to the release of LEGO Star Wars: The Skywalker Saga in the prior year.
Home entertainment and theatrical revenues declined due to the stronger performance of film slate last year, including The Batman.
Networks (55.6% of revenues) revenues decreased 5.9% on a year-over-year basis to $5.75 billion. Advertising revenues decreased 13% ex-FX due to audience declines in domestic general entertainment and news networks and soft advertising markets mainly in the Unites States and to a lesser extent, certain international markets.
Additionally, the absence of the NCAA March Madness Final Four and Championship this year negatively impacted the year-over-year growth rate, partially offset by the broadcast of the NHL Stanley Cup Finals in the current year.
Within the segment, content revenues decreased 18% ex-FX due to the timing of inter-segment content licensing to direct-to-consumer (DTC).
DTC revenues (26.4% of revenues) increased 13.4% from the year-ago quarter to $2.73 billion. Global DTC average revenue per unit was $7.71, which increased 2% ex-FX versus the prior-year quarter.
WBD ended second-quarter 2023 with 95.8 million global DTC subscribers, which reflected a decline of 1.8 million global subscribers sequentially.
Operating Details
In the second quarter, selling, general and administrative expenses decreased 27.6% from the year-ago quarter’s levels to $2.56 billion.
Adjusted EBITDA increased 29.1% from the year-ago quarter’s levels to $2.14 billion.
Cash provided by operating expenses were $2.01 billion, owing to higher operating profits net of taxes, working capital improvement due to initiatives and lower net content spend, partially driven by the approximately $100 million impact of the WGA strike.
The company reported an operating loss of $906 million compared with an operating loss of $3.63 billion in the year-ago quarter.
Balance Sheet
As of Jun 30, 2023, cash & cash equivalents were $3.02 billion compared with $2.59 billion as of Mar 31, 2023.
As of Jun 30, 2023, the company had $5,295 million drawn on its revolving receivables program, which was relatively unchanged from the end of the first quarter.
Zacks Rank & Stocks to Consider
Currently, Warner Bros. Discovery carries a Zacks Rank #3 (Hold).
Lincoln Educational Services is set to release its quarterly report on Aug 7. Both The Honest Company and SciPlay are scheduled to report quarterly results on Aug 8.
The Zacks Consensus Estimate for HNST’s second-quarter 2023 earnings is pegged at a loss of 14 cents per share, which widened by 1 cent over the past 30 days.
The Zacks Consensus Estimate for LINC’s second-quarter 2023 earnings is pegged at a loss of 2 cents per share, which has remained unchanged over the past 30 days.
The Zacks Consensus Estimate for SCPL’s second-quarter 2023 earnings is pegged at 27 cents per share, up by 1 cent over the past 30 days.
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Warner Bros. Discovery (WBD) Q2 Loss Narrows, Ad Sales Decline
Warner Bros. Discovery (WBD - Free Report) reported second-quarter 2023 loss of 51 cents per share, narrower than a loss of $1.50 in the year-ago quarter. The Zacks Consensus Estimate for loss was pegged at 39 cents per share for the reported quarter.
Revenues increased 5.4% year over year to $10.35 billion, which missed the Zacks Consensus Estimate by 1%.
Warner Bros. Discovery, Inc. Price, Consensus and EPS Surprise
Warner Bros. Discovery, Inc. price-consensus-eps-surprise-chart | Warner Bros. Discovery, Inc. Quote
Top-Line Details
Advertising revenues decreased 7.4% year over year to $2.51 billion. Distribution revenues increased 6.1% year over year to $5.13 billion. Content revenues increased 18.5% year over year to $2.44 billion. Other revenues were $258 million, up 26.5% from the year-ago quarter.
Studios (24.9% of revenues) reported revenues of $2.58 billion, down 23.3% from the year-ago quarter. Revenues decreased 24% ex-FX from the prior-year quarter on a pro forma combined basis.
Within the segment, content revenues decreased 25% ex-FX to $2.39 billion as TV revenues declined primarily due to the timing of production, fewer CW series and fewer series sold to the company’s owned platforms. Games revenues were lower due to the release of LEGO Star Wars: The Skywalker Saga in the prior year.
Home entertainment and theatrical revenues declined due to the stronger performance of film slate last year, including The Batman.
Networks (55.6% of revenues) revenues decreased 5.9% on a year-over-year basis to $5.75 billion. Advertising revenues decreased 13% ex-FX due to audience declines in domestic general entertainment and news networks and soft advertising markets mainly in the Unites States and to a lesser extent, certain international markets.
Additionally, the absence of the NCAA March Madness Final Four and Championship this year negatively impacted the year-over-year growth rate, partially offset by the broadcast of the NHL Stanley Cup Finals in the current year.
Within the segment, content revenues decreased 18% ex-FX due to the timing of inter-segment content licensing to direct-to-consumer (DTC).
DTC revenues (26.4% of revenues) increased 13.4% from the year-ago quarter to $2.73 billion. Global DTC average revenue per unit was $7.71, which increased 2% ex-FX versus the prior-year quarter.
WBD ended second-quarter 2023 with 95.8 million global DTC subscribers, which reflected a decline of 1.8 million global subscribers sequentially.
Operating Details
In the second quarter, selling, general and administrative expenses decreased 27.6% from the year-ago quarter’s levels to $2.56 billion.
Adjusted EBITDA increased 29.1% from the year-ago quarter’s levels to $2.14 billion.
Cash provided by operating expenses were $2.01 billion, owing to higher operating profits net of taxes, working capital improvement due to initiatives and lower net content spend, partially driven by the approximately $100 million impact of the WGA strike.
The company reported an operating loss of $906 million compared with an operating loss of $3.63 billion in the year-ago quarter.
Balance Sheet
As of Jun 30, 2023, cash & cash equivalents were $3.02 billion compared with $2.59 billion as of Mar 31, 2023.
As of Jun 30, 2023, the company had $5,295 million drawn on its revolving receivables program, which was relatively unchanged from the end of the first quarter.
Zacks Rank & Stocks to Consider
Currently, Warner Bros. Discovery carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are The Honest Company (HNST - Free Report) , Lincoln Educational Services (LINC - Free Report) and SciPlay , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lincoln Educational Services is set to release its quarterly report on Aug 7. Both The Honest Company and SciPlay are scheduled to report quarterly results on Aug 8.
The Zacks Consensus Estimate for HNST’s second-quarter 2023 earnings is pegged at a loss of 14 cents per share, which widened by 1 cent over the past 30 days.
The Zacks Consensus Estimate for LINC’s second-quarter 2023 earnings is pegged at a loss of 2 cents per share, which has remained unchanged over the past 30 days.
The Zacks Consensus Estimate for SCPL’s second-quarter 2023 earnings is pegged at 27 cents per share, up by 1 cent over the past 30 days.