Warner Bros. Discovery posted disappointing results in the first quarter despite the growth of streaming.
But the stock increased Thursday on renewed speculations according to which the company will run its slipper channels.
At the end of last year, the entertainment led by David Zaslav Warner Bros. Discovery has divided its activities into two divisions to separate its activity from cable channel in difficulty but always profitable.
A division is anchored by its film and television studios from Burbank, HBO and Streaming. The second contains the large stable of wired networks of the company, which includes CNN, Cartoon Network, HGTV and TLC.
On Thursday, the company’s shares opened the fall on financial results, but jumped 5% after CNBC said that the company could lose its wired channels. At noon, shares were negotiated at around $ 9.
Traditional entertainment companies, including Warner Bros. Discovery and Paramount Global have experienced difficulties in the recognition of investors that young consumers have little interest in cable television, who has long provided a firm financial basis for television companies.
The problem is particularly acute for Zaslav, which has spent almost a decade inflating its portfolio with expensive acquisitions that have added more canals.
Wall Street wants companies to reproduce. The competitor Nbcuniversal plans to run its wired channels, including CNBC, MSNBC, USA and Golf Channel, this year in a new listed company called the slope.
When calling the results, Zaslav refused to say if a spin-off in his company was in preparation.
“We can move quickly if we decide to change,” said Zaslav.
The company posted a net loss of $ 453 million, which highlighted continuous difficulties in key commercial units, including lower television advertising in its wired chains.
The company lost 18 cents by share on an adjusted basis, which was worse than analysts awaited it. However, the result was an improvement compared to the first quarter of last year, when Warner Bros. Discovery has lost nearly a billion dollars.
The company generated $ 8.98 billion in revenue in the last quarter, lacking estimates by the $ 9.61 billion analyst.
During the first quarter, cable channel revenues decreased 7% to 4.8 billion dollars.
The company added 5.3 million streaming subscribers during the first quarter, which presented the third season of the HBO exotic murder series “The White Lotus” and the drama of Max “The Pitt”.
The streaming unit, which includes the HBO linear canal, now has 122 million customers. Streaming income increased by nearly $ 2.7 billion in the quarter, and its adjusted profits came to $ 339 million, compared to $ 86 million during the annual period.
“Our commitment to high quality narration … continues to be the engine that feeds the discovery of Warner Bros.,” Zaslav told analysts.
The company’s Burbank film studio did not correspond to the success of “Dune: Part” from last year. His big release for the quarter, the science fiction film by Bong Joon Ho “Mickey 17”, with Robert Pattinson, fought to break.
“Mickey 17” had a budget reported of $ 118 million and the studio spent millions of people in marketing. World ticket sales have reached $ 132 million.
Revenue studio, which includes television production and video games, dropped from 18% to 2.3 billion dollars in the first quarter.
Earlier this spring, it was reported that Zaslav will not get worse with his management team of the film studios.
But the studio started its second quarter with a bang: “A Minecraft Movie”, a blockbuster that exceeded $ 875 million in world ticket sales. Ryan Coogler’s “sinners” followed and approach the $ 250 million mark.
“We are going to have an absolutely incredible second quarter,” promised analysts the financial director Gunnar Wiedenfels.
Since Zaslav and his Discovery team have taken over Warner companies three years ago, the company strongly swivel its strategy.
The previous owner AT&T has spent billions to launch HBO max in order to rely on the reputation of high quality HBO. The Zaslav team abandoned HBO of the title to try to please a wider audience.
The leaders struck the programming and instituted several cycles of personnel discounts.
The programmers ordered a series with a large appeal like “The Pitt”, which was a solid artist for Max.
The company refused to spend big to keep the National Basketball Assn., And it will therefore lose these rights for its TNT channel this fall.
“In the end, sport is a rental company,” said Zaslav. “We do not want to flood the area. … It is a question of harvesting our (intellectual property).”
Now Zaslav has said that the company focuses on the production of less content. He hoped to return to an era when the company was known for its high quality films and shows by HBO and Warner Bros.
Last year, Zaslav’s remuneration package increased to $ 52 million despite the rocky year for his business.
