By Harshita Mary Varghese
(Reuters) -Warner Bros Discovery said on Wednesday it wrote down the value of its TV assets due to uncertainty of fees from cable and satellite distributors and sports rights renewals, sending its shares down 8% in extended trading.
The company, home to sports network TNT as well as streaming service Max, took a $9.1 billion goodwill charge in the second quarter related to the reassessment of the value of those assets, which was set at the time of the merger of Warner Bros and Discovery. The charge took the company’s net loss in the period to $10 billion.
That value has declined over the last two and a half years as the popularity of streaming services has led to a drop in traditional television viewers.
The media landscape has significantly changed in the past two years, impacting valuations and expectations for traditional media companies and this current situation is reflected in the write down, CEO David Zaslav said in a call with analysts.
TNT failed to renew a broadcast deal with National Basketball Association games, at a time when live sports have become crucial for companies to increase viewership. The company sued the NBA last month.
“WBD continues to be weighed down by declining linear assets, a problem that will only get worse if the company loses its lawsuit to retain NBA rights,” said Emarketer analyst Ross Benes.
Content revenue in its studio segment fell 6%, as it continues to see challenges from the underperforming game “Suicide Squad: Kill the Justice League”, released earlier this year, compared to last year’s top game “Hogwarts Legacy”.
Director George Miller’s much-awaited “Furiosa: A Mad Max Saga” also performed poorly at the box office following its May release.
Excluding one time items such as the goodwill charge, the company’s loss was 36 cents per share, wider than estimates of 22 cents per share.
The film raked in $67.5 million at the domestic box office, IMDb’s Box Office Mojo data showed. It had a reported budget of $168 million, according to analysts at TD Cowen.
The media giant reported revenue of $9.71 billion in the second quarter on Wednesday, compared to analysts’ estimate of $10.07 billion, according to LSEG data.
(Reporting by Harshita Mary Varghese and Akash Sriram in Bengaluru; Editing by Pooja Desai)
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