• by Wayne Friedman , October 4, 2023

Although the ad market seems to be improving, Warner Bros. Discovery, like many legacy TV networks, may still be in for a rough fourth-quarter period with regard to TV/video advertising revenue.

Guggenheim Securities is estimating a 6.8% drop in revenue for the fourth quarter -- which follows a 10.4% decline in the third quarter.

But Michael Morris, media analyst for Guggenheim Securities, says to “expect more meaningful improvement in the fourth quarter as the company benefits from the upfronts.” 

Overall, he anticipates that in line with management's prior estimates, high single-digit declines of 8.5% will continue overall for the last six months of 2023.

Warner Bros. Discovery direct-to-consumer business -- Max, Discovery+ -- may also be slowing in terms of subscribers. Guggenheim is now estimating just 250,000 net global subscriber additions in the fourth quarter. Previously it projected 2.3 million additions. Some of this is due to a delay in the global Max rollout in Latin American territories.

All this follows an announced monthly price increase this week for Discovery+ for its ad-free service to $8.99/month from $6.99/month. Its ad-supported option will remain at $4.99. (Max is at a $9.99/month price tag currently.

Price changes will cause subscriber losses. “We expect this price increase will accelerate the churn of dual subscribers who have both Max and Discovery+ subscriptions.”