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Warner Bros. Discovery saw revenue dip but losses narrow in the last quarter of 2023. Free cash flow grew — a key metric that allows the David Zaslav-led media giant to continue chipping away at its hefty debt, which it is doing.
It ended the year with 97.7 global streaming subscribers — including 1.3 million from BluTV, the Turkish streamer it acquired in December.
Revenue of close to $10.3 billion compared with $11 billion the year before, down 7%. Revenue at the television studio was hit by the impact of the WGA and SAG-AFTRA strikes, with production still revving up.
Theatrical revenue was higher on more releases, including Aquaman And The Lost Kingdom, despite a bit of a softer opening than expected that had analysts lowering their studio forecasts.
Advertising at the network segment fell 14%.
Free cash flow rose to $3.31 billion, from $2.48 billion.
“After executing against our strategic plan to reposition the company, we are now on solid footing with a clear pathway to growth. We generated $6.2 billion in free cash flow and paid down $5.4 billion in debt in 2023, which puts us at 3.9x net leverage. We have an attack plan for 2024 that includes the roll-out of Max in key international markets, a more robust creative pipeline across our film and TV studios, and further progress against our long-range financial goals and are confident in our ability to drive sustained operating momentum and enhanced shareholder value,” said Zaslav.
The stock has been in the tank, malingering at about $9.50. It was up early trading ahead of the numbers but has now settled back in negative territory..
Zaslav and WBD execs will host a call at 8 ET to go over the numbers and take questions. It’s the first call since WBD, Disney and Fox announced a sports streaming joint venture, which has already faces a legal challenge. And also the first since speculation heated up around a sale of Paramount Global, with Zaslav initially in the mix having had meetings with Shari Redstone and Bob Bakish.
Studios revenues decreased 18% (excluding foreign exchange) to $3.17 billion. Content revenue fell 20%. decreased TV revenue declined significantly primarily due to the impact of the WGA and SAG-AFTRA strikes and certain large licensing deals in the prior year, WBD said. Theatrical revenue increased due to the larger release slate in the current year quarter (Wonka, Aquaman and the Lost Kingdom,
and The Color Purple).
It gave a shoutout to games revenue, which increased meaningfully on fHogwarts Legacy, including a Q4 launch on the Nintendo Switch.
Studios operating expenses fell 15%.
SG&A expenses increased 38% ex-FX, primarily driven by higher theatrical marketing expense due to the larger release slate.
Studios adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) fell 30%.
At networks, revenues fell 8% to just over $5 billion, hit in part by WBD’s exiting the AT&T SportsNet regional sports networks business. Distribution revenue dipped 3% primarily driven by declines in U.S. pay-TV subscribers.
Advertising revenue dropped 14% on audience declines in domestic general entertainment and news networks, and soft linear advertising markets in the U.S. and some international markets.
Content revenue fell 16% on lower international sports sublicensing.
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