This week, Warner Bros. Discovery also reported Q3 earnings, but, unlike Disney, their results disappointed investors. The company reported a drop in the total number of its subscribers to the “Max” streaming service as well as lower advertising revenues.
Revenue from advertising on its television networks fell 12% compared to last year, driven by a dramatic decrease in the cable audience for both its sports and news channels. During Wednesday’s earnings call, the company predicted a challenging ad market going forward and increased costs from the new labor agreements with actors and writers.
During the quarterly earnings call, CEO David Zaslav said, “This is a generational disruption we’re going through. Going through that with a streaming service that’s losing billions of dollars, it’s really difficult to go on offense.” WBD shares traded down 12% for the week.
One positive note from the earnings report was the announcement that the company was able to retire $2.4 billion from its outstanding $45 billion in debt. Some of this was accomplished through a tax write-off from canceling upcoming productions. Last year, the company followed a similar approach when it canceled the upcoming release of BATGIRL, which had actually been completed but was never released.
This week, they took the same approach for the animated film COYOTE VS. ACME, which resulted in a $30 million write-off to the Q3 period. This was despite the movie testing well with family audiences, which is an unfortunate break for exhibitors who are eager to see a flow of new movies after the end of the industry’s labor strikes.