Warner Bros. Discovery posts a much narrower loss than a year ago

New York (CNN) — The media industry continues to struggle as consumers cut the cord and advertisers pull back on their spending. Warner Bros. Discovery is no exception – and though it lost far less money in the final quarter of 2023 than in the same period a year earlier, its loss was still wider than expected.

The company, which owns CNN among other media properties, reported a net loss of $400 million, down from the $2.1 billion it lost a year earlier. That brought its full-year loss to $3.1 billion, just less than half of the $7.4 billion it lost in 2022. But its loss of 16 cents a share in the quarter was worse than the 10-cent-a-share loss forecast.

Revenue in the quarter fell 7% compared to a year earlier to $10.3 billion, falling slight short of forecasts.

Company executives said they were pleased by success in its continued efforts to deleverage, as it paid $1.2 billion in debt in the quarter, leaving it with $44.2 billion in gross debt. That’s down $12 billion from the time of the merger of Discovery and Warner Media in 2022.

“Bottom line, we’re a far healthier company now and we’re building real momentum,” CEO David Zaslav told investors Friday. “And we expect 2024 will be a year to drive that momentum forward even further. That said, this business is not without its challenges.” He cited the loss of revenue from those ending their cable service and the drop in ad revenue.

Among the headwinds it faces: advertising revenue at its network segment fell to $1.9 billion, down 14% from a year earlier, excluding the impact of currency exchange rates, while revenue from subscriber fees fell 3% on that basis to $2.8 billion. The network segment still produced operating earnings of $2.2 billion, but that was down 11%.

Its streaming services posted a 3% sales increase, but that unit posted an operating loss of $55 million. That was also an improvement from the $217 million loss it reported a year earlier, but it was the worst performance since then, as the unit produced an operating profit in the first and third quarters, and near break-even results in the second quarter.

Zaslav blamed part of the problem on its new Max streaming service not having some of the new content it needed to attract viewers due to the strikes by writers and actors last year that shut down much of production for nearly six months.

“We’re excited to be refreshing and reigniting our content pipeline at Max,” he said. “The fact is the strikes really slowed down production, and we didn’t have as much content as we wanted for Max. And we’re now moving forward with a great slate.”

Global subscribers of 97.7 million were up 2% from the third quarter, and 1% from a year earlier. It posted those gains despite a domestic streaming subscribers slipping to 52 million, down 1% compared to the third quarter, and down 5% compared to a year earlier.

Shares of Warner Bros. Discovery fell about 12% in morning trading after the report. Including that decline, shares are down more than 25% so far this year, and 46% over the last 12 months.

This is a developing story. It will be updated.

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