Warner Bros. Discovery reports a $148 million loss as sale process heats up

Warner Bros. Discovery reported a $148-million nonaccomplishment successful the 3rd quarter, hitting a sour enactment arsenic the institution began fielding involvement from would-be buyers arsenic Hollywood braces for a transforming deal.

Earnings for the amusement institution that includes HBO, CNN and the Warner Bros. movie and TV studios fell abbreviated of analysts’ expectations. A twelvemonth ago, the institution reported nett of $135 cardinal for the 3rd quarter.

Revenue of $9.05 cardinal declined 6% from the year-earlier period. The institution swung to a nonaccomplishment of 6 cents a share, compared with past year’s net of 5 cents a share.

Still, Chief Executive David Zaslav spent overmuch of Thursday’s telephone with analysts touting his company’s underlying strengths — portion avoiding giving details astir the company’s sale.

“It’s just to accidental that we person an progressive process underway,” Zaslav said.

Warner Bros. Discovery connected Thursday reiterated that it is forging up with antecedently announced plans to divided into 2 abstracted entities by the spring. However, the Warner committee acknowledged past period that it was besides entertaining offers for the full institution — oregon its parts — aft David Ellison’s Paramount expressed its involvement with ceremonial bids.

Paramount has made 3 offers, including $58 cardinal successful currency and banal for each of Warner Bros. Discovery. That bid would wage Warner stockholders $23.50 a share.

The Ellison household appears determined to triumph 1 of Hollywood’s astir storied amusement companies to brace with Paramount, which the Ellisons and RedBird Capital Partners acquired successful August.

But Warner Bros. Discovery’s board, including Zaslav, voted unanimously to cull Paramount’s offers and alternatively opened the auction to different bidders, which is expected to pb to the steadfast changing hands for the 3rd clip successful a decade.

Board members are betting that the company, which has shown flickers of a turnaround, is worthy much than Paramount’s offers connected the table. Warner’s shares slipped 1.5% to $22.42 connected Thursday.

“Overall we are precise bullish,” Zaslav said of the company’s concern prospects.

“When you look astatine our films similar ‘Superman,’ ‘Weapons’ and ‘One Battle After Another,’ the planetary scope of HBO Max and the diverseness of our network’s offerings, we’ve managed to bring the best, astir treasured traditions of Warner Bros. guardant into a caller epoch of amusement and [a] caller media landscape,” helium said.

But the company’s results underscored its concern challenges.

Warner Bros. Discovery witnessed a large diminution successful advertizing gross successful the 3rd quarter, reporting $1.41 billion, down 16% from the erstwhile year, which executives attributed to declines successful the assemblage for its home linear channels, including CNN, TNT and TLC.

Distribution gross for the networks besides took a hit, arsenic the institution reported income of $4.7 billion, a alteration of 4% compared with a twelvemonth earlier.

Studio gross accrued 24% to $3.3 billion, powered by the occurrence of DC Studios’ “Superman,” fearfulness flick “Weapons” and the latest installment of “The Conjuring.” But adjacent those box-office wins couldn’t wholly offset shortfalls successful different areas of its contented business.

Last year, the institution was capable to sublicense its rights to broadcast the Olympics successful Europe, which pushed contented gross to $2.72 billion. But this year, gross was down 3% to $2.65 billion.

Burbank-based Warner Bros. has had a drawstring of successes successful theaters, with 9 films opening astatine the apical spot globally astatine the container office. The workplace precocious surpassed $4 cardinal successful worldwide box-office revenue, making it the archetypal workplace to bash truthful this year.

Warner Bros. past achieved that milestone successful 2019.

Zaslav would similar to proceed with Warner’s breakup plans, which were announced past June.

The determination would let him to enactment connected to negociate a smaller Hollywood-focused entity made up of the Warner Bros. studios, HBO, streaming work HBO Max and the company’s immense library, which includes “Harry Potter” movies and award-winning tv shows specified arsenic “The Pitt.”

The company’s ample portfolio of cablegram channels, including HGTV, Food Network and Cartoon Network, would go Discovery Global and run independently.

Beyond Paramount, Philadelphia-based Comcast, Netflix and Amazon person expressed involvement successful considering buying parts of the company.

Warner Bros. Discovery said its third-quarter nonaccomplishment was the effect of a $1.3-billion expense, including restructuring costs.

TD Cowen media expert Doug Creutz noted the stronger results astatine the movie workplace and HBO Max streamer, which added 2.3 cardinal subscribers successful the 4th to scope 128 cardinal worldwide. Creutz’s steadfast has a “hold” connected Warner’s stock, but raised its people to $22 a share.

“Our caller terms people assumes an 80% probability WBD is acquired astatine an assumed terms of $25, and a 20% probability that nary woody happens,” Creutz wrote successful a enactment to investors.

MoffettNathanson expert Robert Fishman added successful a abstracted study to investors: “Now that [third-quarter] results are down america without large surprises, we would expect much chatter astir imaginable bids to vigor up successful the weeks ahead.”