• by Wayne Friedman , August 3, 2023

Warner Bros. Discovery continues to face challenges with its global advertising revenues -- down 13% on a constant currency basis for the second quarter to $2.45 billion.

“TV advertising continues to post weak results globally,” says media agency research/media stock analyst Brian Wieser.

Overall, the ad industry declines have now “expanded by mid-single digit levels in the second quarter [and] is likely experiencing an accelerated shift from TV to pure-play digital platforms -- even before the consequences of U.S. actor and writer strikes have impacted what was once the dominant part of the advertising industry,” Wieser adds.

WBD’s TV network revenues were down 5% to $5.7 billion. Mid-Thursday trading of the company’s stock was down 2.4% to $12.24.

Declines in advertising revenues are primarily attributable to its partnership with Paramount Global that included the airing the “NCAA March Madness” final four and championship games. WBD did not air those games this year.

Revenues from distribution slipped 1% to $2.94 billion. The company was able to eke out a 18% gain -- $64 million -- in content sales during the period.

More positive results came from WBD's closely watched direct-to-consumer business, which includes its Max and discovery+ platforms. David Zaslav, chief executive officer of the company, anticipates reaching a major goal by year’s end 2023 -- profitability.

For its second quarterly period, D2C revenues grew 14% to $2.7 billion. Its adjusted cash flow -- earnings before interest tax depreciation and amortization (EBITDA) -- was at just $3 million, down from $518 million a year ago.

Advertising revenue grew 25% to $121 million for its business on Max and discovery+ -- partly driven by a slight increase in global average revenue per user -- up 2% to $7.71. In the U.S. and Canada, it rose 2% to $11.09.

Distribution revenues  -- coming from subscription fees -- were up 2% on a pro forma basis to $2.2 billion. Content sales more than tripled  to $410 million. 

During the period, D2C subscribers declined 2% to 95.8 million -- partly due to the relaunch of Max from the former HBO Max. Some of Max's library of TV shows now include content from discovery+ programming.

Company-wide revenues were down 4% to $10.4 billion, while net losses for the company narrowed to $1.2 billion.