After Months of Cuts and Cancellations, Warner Bros. Discovery Streaming Strategy Is Leading to Promising Financial Future
Warner Bros. Discovery isn’t out of the financial woods just yet, but it’s trending in the right direction. And if things keep up, the company could see profitability for its streaming division sooner rather than later. On Thursday, WBD reported streaming losses of $217 million as part of its fourth-quarter earnings, which — while not great — is markedly better than the over $600 million losses it reported in the segment during the third quarter. Moreover, the loss of $217 million for the period was a $5.11 million year-over-year improvement.
Comparatively, Disney posted streaming losses at over $1 billion in the quarter ending in December, nearly doubling year-over-year, and Peacock reported a loss of $978 million in the fourth quarter. So, things aren’t as bleak as they could be for Warner Bros. Discovery.
WBD’s progress can be attributed, in part, to the aggressive cuts it made over the past several months. The company is still battling to climb out of a deep financial hole brought on by last year’s merger. When WarnerMedia was acquired by Discovery in April 2022, the combined company incurred expenses and debts totaling more than $5 billion. As a result of these costs being higher than expected, WBD has been cutting content like there’s no tomorrow.
It all started over the summer when WBD made the decision to axe the nearly complete $90 Batgirl feature film, which caught the industry off guard. The company only ramped up its efforts from there, pulling content from HBO Max left and right and canceling series after series.
WBD has promised the company is done canceling shows and movies for tax write-offs as it looks to 2023 to be a year of relaunching and building.
“Last year was a year of restructuring, 2023 will be a year of building. And off we go,” WBD CEO David Zaslav said during the company’s earnings call.
Research institute MoffetNathanson issued a report following Warner Bros. Discovery’s earnings call noting that the difficult decisions made over the past year seem to be paying off for company executives.
“The past year of restructuring was a difficult one for the company given a tougher macro backdrop combined with negative surprises of the inherited realities of the acquired assets,” MoffetNathanson analysts said. “WBD management laid out with more confidence having a greater command over the trajectory of the business. [But,] given secular and cyclical pressures on advertising and distribution revenues, it isn’t clear to us that the company is clearly out of the woods yet.”
Zaslav, though, remains optimistic that WBD is on the right track, especially as his management team begins to fully utilize the deep library of intellectual property at the company’s disposal.
“We have a great hand, and we are doing a lot right,” he said. “That said, there is still more that we need to get right, and we are hard at work.”
Those efforts include multiple new “Lord of the Rings” films, a “new era” at DC Studios that will see the development of five movies and five TV shows, and the continuing success of HBO originals, including “The White Lotus,” “House of the Dragon,” “Euphoria” and “The Last of Us.” While the past nine months of staff and content cuts, movie and series cancellations, and general uneasiness for WBD has led to a great deal of concern for consumer and analysts alike, it does appear that — at least when it comes to streaming — Zaslav and company have turned the corner and are pointed toward profitability.
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