WBD eyes further savings & FAST push amid revenue losses

The Last Of Us

Warner Bros. Discovery (WBD) has reported a net loss of $2.1bn during the fourth quarter of 2022, with a 9% drop in revenues year-on-year to $11bn, while subscriber gains missed Wall Street predictions.

The company’s losses encompassed a $1.85bn asset write down and close to $1.2bn in restructuring costs, though WBD president and CEO David Zaslav reiterated comments made earlier this month that the major organisational changes, which have led to content cuts and staff lay-offs since the Discovery and WarnerMedia merger, have now been completed.

CFO Gunnar Wiedenfels, meanwhile, revealed that WBD is now expecting to make savings of $4bn over the next two years, up from its previous target of $3.5bn, with the “potential opportunity” of this rising to a new target of $5bn.

WBD’s global streaming subscriber total increased to 96.1 million at the end of Q4, adding 1.1 million on the 95 million subscribers reported at the end of Q3, which the media giant said was helped in part by the re-launch of The Last Of Us streamer HBO Max on Amazon Channels in December 2022.

Trixie Motel

FAST ambitions

Zaslav also addressed the decision to retain Trixie Motel streamer Discovery+ as a solo service once WBD launches its merged streamer on 12 April.

Responding to an investor query, he explained that “the churn is very low and it’s profitable” and added: “Our strategy is no sub left behind. We have profitable subscribers that are very happy with the product offering of Discovery+, why would we shut that off?”

Wiedenfels also talked up WBD’s FAST strategy, an area where he admitted that the company does not yet have “a strong enough position in that market.”

Regarding WBD’s recent FAST deals with Roku and Tubi, which he referred to as “a toe in the water,” Wiedenfels said it was “a beginning” for the company.

He added: “There’ll be more to come as we go through the year and we want to have a bigger presence in that space because we see consumer behavior continuing to shift and having a very robust amount of consumers around the world, who will want to consume ad-supported content.”

David Zaslav

DTC uptick

Overall WBD’s studios revenue in the quarter dropped 23% year on year to $3.8bn, with the segment’s content revenue (including gaming and home entertainment) down by 24%, due to factors including lower TV licensing deals and home entertainment revenue impacted by fewer new theatrical releases in the current year.

Networks revenues for Q4 2022 were $5.5bn, down 6% overall, with advertising revenue dropping by 14% as well.

Content revenue for this segment, however, increased 7%, primarily driven by third-party content licensing deals, an area that WBD has been looking to ramp up since the merger completed.

On the DTC front, revenues increased 6% to $2.5bn in Q4, with advertising revenue up by 75% in this segment, driven by subscriber growth on WBD’s DTC ad-supported tiers. Content revenue increased 28%, due to higher third-party licensing of HBO content.

Full-year total revenues were $33.8bn, a decrease of 3% on the year prior, with studios bringing in $9.7bn, networks $19.3bn and DTC $7.3bn over the course of 2022. The company’s total gross debt stood at $50bn.

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