Warner Bros. Discovery (WBD) is set to report quarterly results after the bell on Thursday as the company grapples with increased cord cutting, more streaming competition, and an expected double-digit decline in its TV advertising business.
The embattled media giant — which recently announced a price increase for its popular ad-free HBO MAX streaming plan — was pressured in 2022 by macroeconomic challenges, further subscriber losses in linear television, a slowdown in advertising, and various restructuring charges following the completion of its highly-publicized merger last spring.
Despite a messy 2022, analysts at both Goldman Sachs and Bank of America signaled brighter days ahead for the company earlier this year.
Here’s what Wall Street expects from the company’s fourth quarter results, according to data from Bloomberg:
Advertising revenue could decline by double digits in the fourth quarter after falling 14% (or 11% excluding foreign exchange) in Q3 as macro headwinds continue to pressure legacy media giants.
On the streaming side, the company could see a subscriber boost after HBO Max returned to Amazon Prime Video Channels (AMZN), in addition to the debuts of popular original series like “The Last of Us,” “The White Lotus,” and “House of the Dragon.”
Investors will be closely eyeing any new updates surrounding the much-anticipated relaunch of HBO Max/Discovery+ this spring, along with recent reports Discovery+ will keep running as a standalone streaming service alongside the soon-to-launch combo platform.
Management has guided a long-term subscriber target of 130 million paying users by 2025.
Still, subscribers are not nearly as important to investors as profitability — which remains a top concern as faith in streaming fundamentals wanes.
In the third quarter, the company reiterated its 2022 adjusted EBITDA guidance between $9 billion and $9.5 billion, a decline from previous forecasts of $10 billion. Management had also cut its full-year 2023 EBITDA guidance from $14 billion to $12 billion.
WBD is targeting $3.5 billion in cost saving synergies over the next years, including $750 million in 2022 and $2 billion 2023.
Shares of the company, which struggled in 2022, are up a whopping 60% year-to-date.
Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]
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Source: https://finance.yahoo.com/news/warner-bros-discovery-to-report-results-amid-streaming-upheaval-macro-challenges-142035445.html