Warner Bros. Discovery will not meet deleveraging targets by the end of 2024 without a recovery in TV ads, CFO warns
Warner Bros. Discovery Inc.’s stock tumbled 18% Wednesday to put it on track for its worst one-day performance in more than two years, after the studio and streaming-video company reported a wider-than-expected third-quarter loss.
On the company’s earnings call with analysts, Chief Executive David Zaslav said the company is hopeful the SAG-AFTRA actors strike will be resolved soon — one of two factors, along with declining TV ad revenue, to weigh on performance. Warner has been focused on paying down debt to free capital for growth opportunities, he said. The company repaid $2.4 billion of debt in the quarter, which allowed it to eliminate nearly all of its floating-rate debt.
“We have taken significant financial and operating risk off the table over the last year, and we are fully committed to our gross leverage target range of 2.5 times to 2 times adjusted Ebitda,” Zaslav said, referring to earnings before interest, taxes, depreciation and amortization. TD Cowen, which has an outperform rating on the stock, said its model is under review following the debt news.along with some extended negative impact from the strikes, though they do expect the studio business to make a full recovery,” analysts Doug Creutz and Mei Lun Quach wrote.Warner Bros. said revenue for its network segment fell 22% from a year ago to $215 million. Studio revenue rose 4% to $3.226 billion.
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