Warner Bros Discovery writes down TV assets by $9 billion amid uncertainty over fees, sports rights renewals
Warner Bros Discovery said on Wednesday it wrote down the value of its TV assets due to the uncertainty of fees from cable and satellite distributors and sports rights renewals, sending its shares down nearly 10% in extended trading.
The film and entertainment studio, which owns sports network TNT and streaming service Max, recorded a $9.1 billion non-cash goodwill charge in the second quarter. This charge, stemming from a reassessment of the assets' value since the merger of WarnerMedia and Discovery, contributed to a $10 billion net loss for the quarter.
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.
Asked whether the company was considering hiving off assets, CFO Gunnar Wiedenfels said on the call: «We've said before, you shouldn't be surprised to see us engaging in you know, whatever M&A processes are going on out there.»
The shift of viewers from traditional television to streaming services has led to a decline in advertising revenue and affiliate fees, impacting the profitability of Warner Bros. Discovery's television assets. This decline is further compounded by the escalating costs of acquiring sports rights.
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.
