• by Wayne Friedman , August 8, 2024

Following continued declines in TV network advertising revenue for its most recent second-quarter reporting period -- down 3% -- Warner Bros. Discovery says longer-term upfront deals made some gains, with “almost 50%" more volume for the upcoming 2024-25 TV season, according to company executives.

During its earnings call with analysts company also said sports on its linear TV networks had strong upfront pricing and double-digit volume growth, according to Michael Morris, media analyst of Guggenheim Securities.

Pricing for non-sports content -- scripted and non-scripted entertainment programming -- wasn’t disclosed.

Still, Morris projects that for the near term third-quarter period, core domestic advertising revenue declines will accelerate, sinking 15% in the third quarter from a 12.5% second-quarter estimate drop.

The broader view of all its global and domestic networks -- including its Eurosport -- estimates a 6.6% drop in third-quarter advertising, which will see a “modest” Olympics advertising benefit.

Looking ahead to next year, WBD and its TNT network will have another season of strongly viewed NBA programming. Recently the company filed a lawsuit against the league because of the NBA’s rejection of what WBD says was its right to make a matching offer for one of the TV packages.

Bigger news was continued erosion of revenue at its TV networks -- with advertising (down 10% to $2.2 billion) and distribution/subscription fees (falling 9% to $2.7 billion). 

And because of this, the company is taking a massive non-cash “goodwill impairment” charge of $9.1 billion. Overall network revenues were down 8% to $5.3 billion in the period, while adjusted cash flow dropped 8% to $2.0 billion.

Its direct-to-consumer (D2C) business -- including Max and discovery+ -- witnessed revenues slipping 6% to $2.6 billion. Much of this came from lower content sales -- down 70% to $123 million. Distribution revenue was flat at $2.2 billion; advertising revenue was double the total of the previous year, to $240 million.

The company’s D2C business posted a net loss of $107 million in the period. But the company expects to be in the black in the next quarter and for the full year overall. For the entire 2025 period,WBD continues to show guidance of $1 billion in net income.

Studio revenue was down 5% to $2.5 billion -- with video-game revenue sinking 41% and theatrical revenue 19% higher. The latter benefited from home entertainment revenue of “Dune: Part Two” and high box office  “carryover” revenue from “Godzilla x. Kong: The New Empire.”

Overall company-wide revenue for WBD was down 6% to $9.7 billion with a net loss of $10 billion -- almost entirely due to the “impairment” charge. Adjusted cash flow sank 16% to $1.8 billion.

WBD’s stock fell 11% in after-market trading when it had its earnings release, and the stock closed up 2% to $7.71 on Wednesday.