After final 12 months’s messy mega-merger, executives at Warner Bros. Discovery Inc. on Thursday tried to pitch 2023 as an growth 12 months — 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 Govt 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 “greater than double” the output from its studio section this 12 months. He known as out this month’s blowout debut of the sport “Hogwarts Legacy,” and introduced a brand new deal for “a number of” “Lord of the Rings” motion pictures additional out.
Chief Monetary Officer Gunnar Wiedenfels, throughout Warner Bros. Discovery’s
earnings name on Thursday, mentioned this 12 months could be “pivotal” for the corporate’s studio enterprise.
“Wanting forward throughout the studio, 2023 will probably be a pivotal 12 months, significantly behind our bigger and broader launch slate at each Warner Bros. Footage and at DC, to not point out a beautiful begin with ‘Hogwarts Legacy’ on the video games facet,” 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 way in which as the sport hits extra platforms.
Nonetheless, the corporate — the results of a merger final 12 months between AT&T’s WarnerMedia and Discovery — must get by means 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 internet 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. Income got here in at $11 billion, in contrast with $3.19 billion within the prior-year quarter. The corporate 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 “main restructuring selections” had been “behind us.” Nonetheless, 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 CNN+ and a “Batgirl” movie set for HBO Max.
In a submitting in December, Warner Bros. Discovery mentioned it anticipated larger expenses associated to content-impairment and growth write-offs and pretax restructuring expenses. Nevertheless it mentioned that the continuing reorganization, anticipated to be largely full by the top of subsequent 12 months, “might lead to further impairments above the revised estimates.”
Forward of the fourth-quarter earnings, some analysts mentioned the outcomes would current a possibility for administration to reframe the corporate’s path ahead.
“Extra importantly, we imagine 4Q is a chance for administration to show the web page to 2023 and reset the narrative,” BofA analysts mentioned in a observe final month.
“2022 was mired by a mixture of company-specific, merger-related headwinds together with cyclical and secular pressures,” they continued. “At this level, nearly all of heavy lifting (associated to restructuring expenses and so on.) has been accomplished, direct to client (DTC) losses peaked in ’22 with a path to breakeven in ’24 and the cyclical headwinds ought to abate as macro circumstances enhance.”
They added that promoting tendencies in January appeared to have improved from December.
The Wall Avenue Journal this month reported that Warner Bros. Discovery deliberate to maintain Discovery+ as a standalone streaming platform, as the corporate weighs the way to make extra of its content material accessible in a single place. The Journal mentioned that reasonably than absolutely mix Discovery+ and HBO Max as as soon as deliberate, Warner will transfer forward with a platform that “will characteristic HBO Max content material and most Discovery+ content material, with Discovery+ remaining accessible as a standalone choice.”
Benchmark analyst Matthew Harrigan, in a observe this month, mentioned that call was “not shocking given the chance of shedding some price-sensitive prospects for whom reveals like ‘Home of the Dragon’ or critically acclaimed new hit ‘The Final of Us’ doesn’t resonate, or no less than not sufficient to pay a possible greater value than the current $15.99/$9.99 (with advertisements) for HBO Max.”
Shares of Warner Bros. Discovery have tumbled 45.2% over the previous 12 months. By comparability, the S&P 500 index
has fallen 5.8% over that interval.