In a sort of one-two punch, Warner Bros. Discovery said the bulk of its operations in the third quarter were affected not only by significant costs related to the merger that set the company on its current path earlier this year, but by an economic downturn that affected lines of revenue tied to advertising and distribution.
The owner of HBO, Discovery Channel and the Warner Bros. studio had a net loss of $2.3 billion, which included $1.92 billion of pre-tax amortization from acquisition-related intangible assets and $1.52 billion tied to pre-tax restructuring and other charges.
Overall revenue in the quarter came to $9.82 billion, representing a drop of 8% from the year-earlier period. Warner Bros. Discovery posted a loss of 95 cents per share, as it saw an 11% drop in advertising at its TV networks, among other shortfalls, and issued fewer releases from its studios.
Warner Bros. Discovery made progress in its streaming business, adding 2.8 million direct-to-consumer streaming customers in the third quarter, which brought its total to 94.9 million subscribers. Even so, revenue for the direct-to-consumer segment fell 6% to $2.3 billion, as the company grappled with shortfalls in licensing and distribution revenue.
In a statement, the company’s top officer acknowledged a challenging operating environment. “We are reimagining and transforming the organization for the future while driving synergy enterprise-wide, increasing our target to at least $3.5 billion, and making significant progress on our combined DTC product,” said David Zaslav, Warner Bros. Discovery’s CEO. “While we have lots more work to do, and there are some difficult decisions still to be made, we have total conviction in the opportunity ahead.”
Other companies have been grappling with the economy, with Paramount Global on Monday disclosing revenue shortfalls in advertising and affiliate fees and Comcast suggesting it would potentially cut employees by the end of the year. Fox Corp. on Tuesday said it was buoyed by political advertising from its local stations, something Warner Bros. Discovery does not have.
Some of Warner Bros. Discovery’s performance was previewed. In late October, the company disclosed restructuring efforts that it expects to complete by the end of 2024, and that will incur approximately $3.2 billion to $4.3 billion in total pre-tax restructuring charges.
