A sign outside of the Warner Brothers Discovery Techwood Turner Broadcasting campus is seen on June 26, 2024 in Atlanta, Georgia. The Techwood campus houses departments for cable networks including CNN, TBS, TNT, Turner Classic Movies, Cartoon Network, truTV, and other assets.
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Shares of Warner Bros Discovery (WBD.O) tumbled 12% in premarket trading on Thursday following the company's announcement of a staggering $9.1 billion write-down on its television assets, Reuters reported.
The write-down has cast a spotlight on the ongoing challenges facing the company's traditional broadcasting sector, overshadowing positive news in its streaming division.
In its second-quarter earnings report, Warner Bros Discovery revealed a massive net loss of $10 billion, largely attributed to the asset write-down. The company also fell short of Wall Street's revenue expectations, with actual earnings coming in at $9.71 billion compared to analysts' forecast of $10.07 billion.
Despite notable gains in streaming subscriber numbers and the expansion of its Max streaming service into new markets, these successes were not enough to offset the broader financial difficulties.
The company is facing trouble keeping its market value up after losing a major sports deal and the industry's shift to streaming. VCPost earlier reported that NBA chose to partner with Amazon, Disney and NBC Universal instead.
Since WarnerMedia and Discovery merged in April 2022, the company's value has dropped by more than $40 billion. Ross Benes from eMarketer suggests that this sharp decline makes investors question whether big media mergers are truly beneficial.
The stock, which has already decreased by more than 32% this year, is on track to open at a 15-year low, potentially resulting in a further $2 billion decline in market valuation if premarket losses persist.
Now, analysts show "clear disappointment" with the company's results and has urged the Warner Bros to have a straightforward turnaround plan.
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