Movies

Warner Bros. Discovery breakup speculation ramps up after weak earnings report

BBG News

Warner Bros. Discovery posted disappointing first-quarter results despite growth in streaming.

However, the stock price increased on Thursday due to revived talk about the possibility of the firm separating its struggling cable networks into a separate entity.

Towards the end of last year, the entertainment giant Warner Bros., headed by David Zaslav, reorganized its operations into two distinct sectors in order to isolate its cable channels, which though facing challenges, continue to generate profits.

one branch is firmly rooted in its Burbank film and television production facilities, as well as HBO and streaming services; the other encompasses a vast array of cable networks that comprise CNN, Cartoon Network, HGTV, and TLC.

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one part is centered on its Burbank film and TV studios, HBO, and online streaming; the second houses the company’s expansive collection of cable networks, such as CNN, Cartoon Network, HGTV, and TLC.

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the first segment is grounded in Burbank film and TV studios, HBO, and streaming platforms; the second consists of the company’s extensive family of cable networks, including CNN, Cartoon Network, HGTV, and TLC.

On Thursdays, the company’s stocks initially dropped due to financial reports, but surged by 5% following a CNBC announcement suggesting the company might divest from its cable networks. By noon, the stocks were being traded around $9.

Modern entertainment conglomerates like Warner Bros. Discovery and Paramount Global are facing challenges as investors acknowledge that younger audiences tend to prefer streaming platforms over traditional cable television, which previously served as a solid financial base for TV businesses.

For Zaslav, the issue has become especially pressing as he’s amassed a substantial portion of his holdings through expensive acquisitions, which have expanded his number of channels over the past decade.

Financial institutions are urging companies to reduce their holdings. On the other hand, NBCUniversal intends to separate its cable networks such as CNBC, MSNBC, USA, and Golf Channel by the end of this year, forming a new, independently-traded company named Versant.

On the earnings call, Zaslav declined to say whether a spinoff at his company was in the works.

“We can move quickly if we decide to change,” Zaslav said.

Hollywood Inc.

Investors rejoiced upon hearing that Warner Bros. Discovery intends to divide their cable networks (except for HBO) into a standalone entity.

The corporation reported a total deficit of $453 million, highlighting ongoing difficulties within crucial departments, such as a decline in television ad revenue at their cable networks.

The company reported a disappointing earnings per share of 18 cents (on an adjusted basis), falling short of analyst predictions. However, it’s important to note that this result was significantly better compared to the previous year’s first quarter, where Warner Bros. Discovery incurred a loss of almost $1 billion.

In the latest quarter, the firm’s earnings reached approximately 8.98 billion dollars, falling short of the projected 9.61 billion dollars by analysts.

During the first quarter, the cable channels revenue declined 7% to $4.8 billion.

Over the first quarter, our company gained approximately 5.3 million new streaming subscribers. This period saw the premiere of HBO’s captivating third season of “The White Lotus,” an exotic resort murder series, as well as the debut of “The Pitt,” a riveting medical drama set in a Max hospital.

In this current period, the streaming service, encompassing the HBO linear channel, boasts a customer base of approximately 122 million subscribers. The streaming sector’s income experienced an 8% increase, reaching almost $2.7 billion during the quarter. Furthermore, its adjusted profits skyrocketed to $339 million, marking a significant improvement from the $86 million recorded in the same period last year.

Zaslav emphasized that our dedication to exceptional storytelling remains the driving force behind Warner Bros. Discovery,” he stated to the analysts.

Business

As a passionate cinema enthusiast, I’m sharing some news that might interest fellow gamers. Warner Bros. Discovery Inc., a name synonymous with both movies and gaming, has decided to shutter three of their video game studios and pause production on an eagerly awaited Wonder Woman game title. The aim? To enhance the profitability of their interactive entertainment sector.

As a passionate cinephile, I must confess that this year didn’t start off as rosy as we had hoped at our Burbank film studio. The much-anticipated sequel to last year’s blockbuster “Dune: Part Two” didn’t quite live up to its hype. Our big bet for the quarter, Bong Joon Ho’s science fiction masterpiece “Mickey 17,” featuring the talented Robert Pattinson, failed to generate the profits we were aiming for. It was a tough pill to swallow, but such is the unpredictable nature of our beloved film industry.

The movie “Mickey 17” was said to have cost around $118 million in production, but the studio ended up investing even more on promotions, bringing the total expenditure to over millions. However, it managed to rake in a global box office revenue of $132 million.

In the initial three months, the studio’s earnings from both TV productions and video games decreased by 18%, totaling approximately $2.3 billion.

Previously this past spring, rumors surfaced indicating that Zaslav was growing restless with the management team at his movie studios.

Kicking off the second quarter, the studio made an impressive start with a hit: “A Minecraft Movie,” raking in over $875 million at worldwide box offices. Next up was Ryan Coogler’s “Sinners,” approaching the $250-million milestone.

Gunnar Wiedenfels, our CFO, assured the analysts that we are looking forward to a truly outstanding second quarter,” or simply, “Our CFO, Gunnar Wiedenfels, indicated to analysts that the second quarter will be exceptional.

Hollywood Inc.

For Subscribers

Benched by the NBA, Warner Bros. Discovery boss David Zaslav faces tough questions

Bank of America analyst Jessica Reif Ehrlich expressed concern, stating that things can’t continue in this manner due to the underperforming stock and a series of mistakes by Warner Bros. Discovery CEO David Zaslav.

Over the past three years, ever since Zaslav’s team from Discovery assumed control of Warner’s operations, the company has undergone a significant strategic shift.

Previously, AT&T invested heavily to debut HBO Max, leveraging HBO’s well-known reputation for premium quality. However, under Zaslav’s leadership, they decided to drop ‘HBO’ from the service name, aiming to attract a broader demographic.

Executives slashed programming and instituted multiple rounds of staff cuts.

Max’s popular programming series, such as “The Pitt,” were strategically arranged due to their wide audience appeal. This series has proven to be quite successful for him.

The organization decided against investing heavily to keep the National Basketball Association, consequently they’ll no longer have the broadcasting rights for their TNT channel this autumn.

In summary, Zaslav stated that sports are essentially temporary services we provide, not permanent possessions. He emphasized the importance of not overwhelming the market, and instead focusing on maximizing our profits from our intellectual properties.

Currently, as per Zaslav’s statement, the main priority lies in creating fewer pieces of content. The goal is to revive a time when the company garnered acclaim for its exceptional movies and series from HBO and Warner Bros.

Hollywood Inc.

Significant shifts are on the horizon for the board at Warner Bros. Discovery, as John Malone, a trailblazer in the cable TV industry and mentor to current CEO David Zaslav, has revealed his intention to relinquish his voting position.

In the previous year, Zaslav’s remuneration package climbed up to a staggering $52 million, even though his company faced a bumpy ride.

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2025-05-08 20:31

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