Financial Details
In the fourth quarter, Warner Bros. reported a loss of 16 cents per share with revenue totaling $10.28 billion. This result did not meet analysts’ expectations, who anticipated a loss of 8 cents per share with revenue reaching $10.34 billion. Comparatively, in the same period last year, the company reported a loss of 86 cents per share on revenue of $11 billion.
Revenue Segments
The networks segment experienced a 14% decrease in advertising revenue, totaling $1.95 billion due to audience declines. Revenue from the studios segment also declined by 18% to $3.17 billion from the previous year. The quarter was additionally impacted by strikes from writers and actors, which hindered TV content production and delivery.
Concerns and Future Outlook
Beyond the financial figures, Warner Bros. expressed concerns during the conference call regarding its game releases for the upcoming year. This potential issue could have a negative impact on studio revenue, adding to the challenges faced during the quarter.
Warner Bros. Faces Tough Year-over-Year Comparison with Suicide Squad
“This year, Suicide Squad, one of our key videogame releases in 2024, has fallen short of our expectations since its release earlier in the quarter, setting our games business up for a tough year-over-year comp in Q1,” stated Wiedenfels. The disappointment follows the success of Hogwarts Legacy, which made its debut last year and reached the Nintendo Switch in the fourth quarter.
Analysts’ Views on Warner Bros.
TD Cowen analyst Doug Creutz expressed positivity in the short term but maintained skepticism about the future outlook. In a recent note, he indicated that Warner Bros.’ direct-to-consumer business had achieved “modest profitability” in 2023.
Financial Performance and Future Challenges
Warner Bros. reported a profit of $103 million for its direct-to-consumer business in the previous year. The company also saw a significant increase of 86% in free cash flow, totaling $6.16 billion by the end of 2023. Despite making strides in reducing debt by $5.4 billion, Warner Bros. still grapples with $44.2 billion in remaining debt.
Industry Transformation and Challenges Ahead
Antitrust Lawsuit Impacts Joint Sports-Streaming Platform
Warner Bros., alongside Disney’s ESPN and Fox, announced plans for a collaborative sports-streaming platform to move away from standalone DTC services. However, this initiative faces legal challenges, including an antitrust lawsuit filed by competitor FuboTV.