Warner Bros. Discovery Lost $2.1 Billion in Q4

HBO, HBO Max, and Discovery+ ended 2022 with a combined 96.1 million direct-to-consumer subscribers.
Dwayne "The Rock" Johnson, "Black Adam"
Dwayne "The Rock" Johnson, "Black Adam"
Courtesy of Warner Bros.

Warner Bros. Discovery recorded a loss of $2.1 billion in the final quarter of 2022. (The previous quarter, WBD lost $2.3 billion; in the one before that, the first in the new company’s existence, it lost $3.4 billion. Hey, it’s an improvement!)

These whopping numbers are mostly due to the ongoing recognition of costs from the April combination of WarnerMedia and Discovery, Inc. In the fourth quarter, for example, the net loss included $1.85 billion in amortized merger costs and almost $1.2 billion in related restructuring expenses. Accounting, you know?

From October to December, Warner Bros. Discovery added 1.1 million direct-to-consumer subs, and the combination of linear HBO and streaming services HBO Max and Discovery+ now adds up to 96.1 million.

Wall Street forecast a 20-cent loss on a per-share basis for Warner Bros. Discovery in the fourth quarter, on revenue of $11.36 billion. The company didn’t make either benchmark, reporting a loss of 86 cents per share on $11.008 billion in revenue. Shares in WBD, which closed Thursday’s regular-trading day at $15.73 apiece, declined as much as 5 percent in immediate after-hours trading. (It mostly recovered within about an hour of close, after the company announced new “Lord of the Rings” movies.)

The direct-to-consumer business itself recorded a $217 million loss. Still, David Zaslav remains undeterred.

“With the major restructuring decisions behind us, this year we are focused on building and growing our businesses for the future, and we’re off to a great start,” the WBD president and CEO said in a Thursday statement. “We’re seeing strong momentum across the enterprise, including our exciting long-term plans for DC Studios, the historic success of our latest HBO series ‘The Last of Us,’ the significant financial and operating gains in DTC, and the record sales of our newest game ‘Hogwarts Legacy.’ And with our unparalleled portfolio of assets and IP, a growing roster of exceptional creative talent, and some of the buzziest storytelling in the industry, we believe we have repositioned our businesses to take full advantage of the many opportunities ahead.”

Warner Bros. Discovery ended Q4 with $3.9 billion of cash on hand and gross debt of $49.5 billion.

Theo James in "The White Lotus" Season 2
Theo James in “The White Lotus” Season 2HBO

WBD plans to combine HBO Max and Discovery+ into one super-service this spring — specifically, in the second quarter. In a relatively new development, the company will also continue the much cheaper Discovery+ as a standalone platform. Not all Discovery programming will be made available on the future, pricier combined streamer.

Warner Bros. Discovery also plans to launch its own FAST (free, ad-supported streaming television) in the future. The company has already licensed a bunch of its programming, including “Westworld,” to launch branded FAST channels at Tubi and The Roku Channel.

The company’s top priorities have been to cut costs, reduce a pile of debt, and build out a profitable streaming business. There have been layoffs aplenty, and even more content scrubbed from the archives. Some of the removed series and movies are being licensed (read: monetized) elsewhere, while others — like, famously, “Batgirl” — simply served as tax write offs.

“Black Adam” and “Don’t Worry Darling” were the big Warner Bros. movies in the fourth quarter; both were disappointments. New DC heads James Gunn and Peter Safran have already stated that the Black Adam character, played by Dwayne Johnson, is not in their future plans. Find their slate for the “First Chapter” of New DC here.

Undoubtedly, HBO’s big show of Q4 was Season 2 of “The White Lotus.” For HBO Max, “Sex Lives of College Girls” was a standout.

Zaslav and his fellow Warner Bros. Discovery senior executives will host a conference call at 4:30 p.m. ET to discuss the final quarter — and full-year — of 2022 in greater detail.

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