Q1 2024 Financial Performance
Warner Bros. Discovery (WBD) faced a setback in the first quarter of 2024 with a loss of 40 cents per share, wider than the expected loss of 24 cents. This marks a significant deviation from the company’s performance in the year-ago quarter when it reported a loss of 44 cents per share. Revenues for the quarter fell by 6.9% year over year to $9.95 billion, falling short of the expected $10.28 billion.
Ad Sales and Revenue Breakdown
Advertising revenues saw a 6.5% decline, totaling $2.14 billion. Distribution revenues dropped by 3.4% to $4.98 billion, while content revenues suffered a significant 13.4% decline, amounting to $2.55 billion. Other revenues witnessed a modest 6.3% increase from the year-ago quarter, reaching $267 million.
Segment Analysis
Studios, which accounted for 28.3% of total revenues, experienced a 12.2% decrease in revenue compared to the prior year. Within this segment, factors such as content, games, TV, and theatrical revenues had varying impacts on the overall performance.
Networks, representing 51.5% of total revenues, reported an 8.2% decline year over year. Distribution, advertising, and content revenues within this segment contributed to the overall decrease, with influences from factors like the AT&T T SportsNet exit.
DTC revenues, constituting 24.7% of total revenues, increased marginally by 0.2% year over year to $2.46 billion. Distribution, advertising, and content revenues within the DTC segment all played a role in the overall performance for the quarter.
Subscriber Growth and Operating Details
At the end of Q1 2024, Warner Bros. Discovery had 99.6 million global DTC subscribers, indicating a rise of 2 million sequentially. Domestic subscribers reached 52.7 million, while international subscribers increased to 46.9 million. Operating details highlighted a decline in adjusted EBITDA and operating income from the previous year.
Financial Position and Outlook
Warner Bros. Discovery’s balance sheet as of March 31, 2024, reflected a decrease in cash & cash equivalents. The company ended the quarter with $43.2 billion of gross debt and maintains an undrawn $6 billion revolving credit facility. The company’s Zacks Rank stands at #3 (Hold).
Stock Recommendations
Investors seeking opportunities in the Consumer Discretionary sector may consider stocks like Manchester United and Netflix, both carrying a Zacks Rank #1 (Strong Buy) currently. While Manchester United has seen a downturn in share value, Netflix has shown substantial growth year to date.
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