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Warner Bros. Discovery (WBD) Q4 Loss Narrows Y/Y, Ad Sales Fall
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Warner Bros. Discovery (WBD - Free Report) reported fourth-quarter 2023 loss of 16 cents per share, narrower than a loss of 86 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of 11 cents per share for the reported quarter.
Revenues decreased 6.6% year over year to $10.28 billion, which beat the Zacks Consensus Estimate of $10.22 billion.
Warner Bros. Discovery, Inc. Price, Consensus and EPS Surprise
Advertising revenues decreased 8.7% year over year to $2.08 billion. Distribution revenues dropped 1% year over year to $4.91 billion. Content revenues declined 13.9% year over year to $2.96 billion. Other revenues were $321 million, up 0.6% from the year-ago quarter.
Studios (30.9% of revenues) reported revenues of $3.17 billion, down 17.4% from the year-ago quarter. Revenues decreased 18% ex-FX from the prior-year quarter on a pro forma combined basis.
Within the segment, content revenues declined 20% ex-FX to $2.93 billion. TV revenues fell significantly, primarily due to the impact of the WGA and SAG-AFTRA strikes and certain large licensing deals in the prior year.
Theatrical revenues increased due to the larger release slate in the reported quarter (Wonka, Aquaman and the Lost Kingdom and The Color Purple).
Games revenues increased meaningfully due to the continued performance of Hogwarts Legacy, including the fourth-quarter launch on the Nintendo Switch.
Other revenues increased 12% ex-FX due to the second-quarter opening of Warner Bros. Studio Tour Tokyo, partially offset by the impact of the WGA and SAG-AFTRA strikes on studio production services.
Networks revenues (49% of revenues) decreased 8.7% on a year-over-year basis to $5.03 billion. Within the segment, advertising revenues decreased 14% ex-FX, primarily due to audience declines in domestic general entertainment and news networks and soft linear advertising markets mainly in the United States and, to a lesser extent, certain international markets, as well as exiting the AT&T SportsNet business. The AT&T SportsNet exit negatively impacted the year-over-year growth rate by approximately 100 basis points.
Content revenues decreased 16% ex-FX, primarily due to lower third-party licensing deals and international sports sublicensing deals.
DTC revenues (24.6% of revenues) rose 3.2% from the year-ago quarter to $2.52 billion. Global DTC average revenue per user was $7.94, which increased 7% ex-FX compared with the prior-year quarter.
WBD ended fourth-quarter 2023 with 97.7 million global DTC subscribers, which included 1.3 million subscribers from the acquisition of BluTV. Excluding BluTV and TNT Sports Chile, subscribers increased 0.5 million sequentially.
Operating Details
In the fourth quarter, selling, general and administrative expenses decreased 2.2% from the year-ago quarter’s levels to $2.45 billion.
Adjusted EBITDA declined 5.1% from the year-ago quarter’s levels to $2.47 billion.
Fourth-quarter 2023 cash provided by operating activities increased 26% year over year to $3.57 billion.
Reported free cash flow increased 33% year over year to $3.31 billion. The rise was primarily attributable to lower content spend due to a more disciplined approach to content investment and the impact of the WGA and SAG-AFTRA strikes, as well as ongoing working capital improvement initiatives, partially offset by lower operating profits.
The company reported an operating loss of $182 million compared with an operating loss of $1.89 billion in the year-ago quarter.
Balance Sheet
As of Dec 31, 2023, cash & cash equivalents were $3.78 billion compared with $2.38 billion as of Sep 30, 2023.
As of Dec 31, 2023, the company had $5.2 billion in its revolving receivables program, which remained unchanged from the third quarter and declined $166 million year over year.
Zacks Rank & Stocks to Consider
Currently, Warner Bros. Discovery carries a Zacks Rank #3 (Hold).
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Warner Bros. Discovery (WBD) Q4 Loss Narrows Y/Y, Ad Sales Fall
Warner Bros. Discovery (WBD - Free Report) reported fourth-quarter 2023 loss of 16 cents per share, narrower than a loss of 86 cents in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of 11 cents per share for the reported quarter.
Revenues decreased 6.6% year over year to $10.28 billion, which beat the Zacks Consensus Estimate of $10.22 billion.
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 8.7% year over year to $2.08 billion. Distribution revenues dropped 1% year over year to $4.91 billion. Content revenues declined 13.9% year over year to $2.96 billion. Other revenues were $321 million, up 0.6% from the year-ago quarter.
Studios (30.9% of revenues) reported revenues of $3.17 billion, down 17.4% from the year-ago quarter. Revenues decreased 18% ex-FX from the prior-year quarter on a pro forma combined basis.
Within the segment, content revenues declined 20% ex-FX to $2.93 billion. TV revenues fell significantly, primarily due to the impact of the WGA and SAG-AFTRA strikes and certain large licensing deals in the prior year.
Theatrical revenues increased due to the larger release slate in the reported quarter (Wonka, Aquaman and the Lost Kingdom and The Color Purple).
Games revenues increased meaningfully due to the continued performance of Hogwarts Legacy, including the fourth-quarter launch on the Nintendo Switch.
Other revenues increased 12% ex-FX due to the second-quarter opening of Warner Bros. Studio Tour Tokyo, partially offset by the impact of the WGA and SAG-AFTRA strikes on studio production services.
Networks revenues (49% of revenues) decreased 8.7% on a year-over-year basis to $5.03 billion. Within the segment, advertising revenues decreased 14% ex-FX, primarily due to audience declines in domestic general entertainment and news networks and soft linear advertising markets mainly in the United States and, to a lesser extent, certain international markets, as well as exiting the AT&T SportsNet business. The AT&T SportsNet exit negatively impacted the year-over-year growth rate by approximately 100 basis points.
Content revenues decreased 16% ex-FX, primarily due to lower third-party licensing deals and international sports sublicensing deals.
DTC revenues (24.6% of revenues) rose 3.2% from the year-ago quarter to $2.52 billion. Global DTC average revenue per user was $7.94, which increased 7% ex-FX compared with the prior-year quarter.
WBD ended fourth-quarter 2023 with 97.7 million global DTC subscribers, which included 1.3 million subscribers from the acquisition of BluTV. Excluding BluTV and TNT Sports Chile, subscribers increased 0.5 million sequentially.
Operating Details
In the fourth quarter, selling, general and administrative expenses decreased 2.2% from the year-ago quarter’s levels to $2.45 billion.
Adjusted EBITDA declined 5.1% from the year-ago quarter’s levels to $2.47 billion.
Fourth-quarter 2023 cash provided by operating activities increased 26% year over year to $3.57 billion.
Reported free cash flow increased 33% year over year to $3.31 billion. The rise was primarily attributable to lower content spend due to a more disciplined approach to content investment and the impact of the WGA and SAG-AFTRA strikes, as well as ongoing working capital improvement initiatives, partially offset by lower operating profits.
The company reported an operating loss of $182 million compared with an operating loss of $1.89 billion in the year-ago quarter.
Balance Sheet
As of Dec 31, 2023, cash & cash equivalents were $3.78 billion compared with $2.38 billion as of Sep 30, 2023.
As of Dec 31, 2023, the company had $5.2 billion in its revolving receivables program, which remained unchanged from the third quarter and declined $166 million year over year.
Zacks Rank & Stocks to Consider
Currently, Warner Bros. Discovery carries a Zacks Rank #3 (Hold).
Some better-ranked stocks that investors can consider in the broader Consumer Discretionary sector are Hilton Grand Vacations (HGV - Free Report) , American Public Education (APEI - Free Report) and The Honest Company (HNST - Free Report) , 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.
Shares of Hilton Grand Vacations have gained 15% year to date. HGV is set to report its fourth-quarter 2023 results on Feb 29.
Shares of American Public Education have gained 10.6% year to date. APEI is slated to report its fourth-quarter 2023 results on Mar 5.
Shares of The Honest Company have decreased 0.6% year to date. HNST is set to report its fourth-quarter 2023 results on Mar 6.