On November 7, 2024, Warner Bros. Discovery Inc (WBD, Financial) released its 8-K filing detailing its financial performance for the third quarter of 2024. The company reported total revenues of $9.6 billion, falling short of the analyst estimate of $9.8 billion. Despite this, the company achieved a net income of $0.1 billion, a significant improvement from a loss of $417 million in the same quarter last year.
Company Overview
Warner Bros. Discovery Inc (WBD, Financial) was formed in 2022 through the merger of WarnerMedia and Discovery Communications. The company operates in three primary segments: studios, networks, and direct-to-consumer (DTC). Its studios segment is renowned for Warner Bros. Pictures, while the networks segment includes popular cable networks like CNN and HGTV. The DTC segment features streaming services such as HBO Max and Discovery+, which have been consolidated under the Max brand, available in over 60 countries.
Performance and Challenges
Warner Bros. Discovery Inc (WBD, Financial) faced a 3% decrease in total revenues compared to the previous year, primarily due to a decline in studio revenues by 17% and a decrease in adjusted EBITDA by 18%. The company attributed these challenges to lower box office revenues and a decrease in games revenue. Despite these hurdles, the company reported its largest quarterly growth in global DTC subscribers, adding 7.2 million new subscribers, bringing the total to 110.5 million.
Financial Achievements
The company reported a total adjusted EBITDA of $2.4 billion, although this represented an 18% decrease from the prior year. Warner Bros. Discovery Inc (WBD, Financial) also managed to repay or repurchase $0.9 billion of debt, ending the quarter with $3.5 billion in cash and a net leverage ratio of 4.2x. These financial maneuvers are crucial for maintaining liquidity and reducing debt, which is vital for a diversified media company operating in a competitive industry.
Income Statement and Key Metrics
Warner Bros. Discovery Inc (WBD, Financial) reported a net income of $135 million for Q3 2024, a turnaround from a loss of $417 million in Q3 2023. The company's free cash flow was $632 million, down from $2.1 billion in the previous year, largely due to increased content investment and lower operating profits. The company's balance sheet showed total assets of $106.3 billion, with liabilities amounting to $70.2 billion.
Segment Performance
The studios segment saw a 17% decline in revenues, impacted by lower theatrical and games revenues. The networks segment, however, experienced a 3% increase in revenues, driven by sublicensing Olympic sports rights in Europe. The DTC segment reported a 9% increase in revenues, supported by subscriber growth and higher pricing.
Warner Bros. Discovery's Q3 results demonstrate once again that while we continue to confront extraordinary disruption in our environment, the strategy we have undertaken to ready Warner Bros. Discovery for future success is showing important results. Thanks to our rapid international expansion and continued investment in high quality, diverse content, we saw momentum accelerate in our global Direct-to-Consumer business in Q3. – David Zaslav, President & CEO
Analysis and Outlook
Warner Bros. Discovery Inc (WBD, Financial) is navigating a challenging media landscape with strategic investments in content and international expansion. The company's ability to grow its DTC subscriber base significantly is a positive indicator of its competitive positioning in the streaming market. However, the decline in studio revenues and adjusted EBITDA highlights the need for continued adaptation and innovation in content offerings. The company's focus on debt reduction and maintaining liquidity will be crucial as it seeks to capitalize on growth opportunities in the evolving media industry.
Explore the complete 8-K earnings release (here) from Warner Bros. Discovery Inc for further details.
