New York, CNN — David Zaslav, the CEO of Warner Bros. Discovery, faced a challenging day as the company’s stock price took a significant hit following the release of second-quarter earnings. The stock plummeted over 10% in after-hours trading, reaching a new low of $6.90. This decline was triggered by a $9.1 billion write-down on the company’s troubled network assets, reflecting the rapid deterioration of the traditional television business.
Warner Bros. Discovery owns popular cable channels such as CNN, HGTV, TNT, and TBS, all of which have experienced audience declines due to cord-cutting. The company’s reliance on linear channels for revenue has become increasingly risky as viewership patterns shift. The recent public dispute with the NBA, its partner of four decades, has further complicated matters. The legal battle over the rights to Amazon’s new $1.8 billion per year package of games has added to the company’s challenges.
Despite these setbacks, the one bright spot in the legacy television business has been live sports programming, which continues to attract high viewership. However, the potential loss of NBA games starting in the 2025-26 season will have a financial impact on Warner Bros. Discovery. The company acknowledged the uncertainty surrounding affiliate and sports rights renewals in its financial summary.
The changing media landscape, driven by the rise of streaming services like Netflix, has left many legacy media companies struggling to adapt. Paramount Global, another major player in the industry, has also faced difficulties transitioning to a streaming-focused business model. The company’s value has declined by 27% this year, highlighting the challenges faced by traditional media giants.
During the earnings call, David Zaslav acknowledged the harsh reality of the television business and emphasized the success of Warner Bros. Discovery’s streaming platform, Max. Despite the positive performance of the streaming service, Zaslav recognized the tough conditions in the legacy business.
The company’s current financial situation has sparked speculation about potential asset sales. Warner Bros. Discovery’s CFO, Gunnar Wiedenfels, indicated that management is considering strategic options, including engaging in M&A processes and partnership discussions. However, the company has shown reluctance to sell off major assets, raising questions about its ability to navigate out of its current predicament without drastic measures.
In conclusion, Warner Bros. Discovery’s challenges reflect the broader shifts in the media industry towards digital streaming and away from traditional linear television. The company’s struggles underscore the need for adaptation and innovation in an increasingly competitive and evolving landscape.
