Warner Bros. Discovery Stock Drops After Second Quarter Expenses

Warner Bros. shares Discovery fell more than 7% on Wednesday after the media conglomerate – heavily reliant on its pay-TV business – booked as much as $11.2 billion in impairments, including a $9.1 billion write-down due to the loss of value of several of its linear television networks.

In after-hours trading, WBD shares fell below $7.20 per share. The stock’s lowest closing price was on June 18, 2024, when it ended the day at $6.99 per share. Until now, shares of Warner Bros. Discovery already down 34%.

At the end of the trading day Wednesday, WBD’s market capitalization was $18.8 billion, compared with more than $50 billion after the completion of Discovery’s acquisition of WarnerMedia in April 2022.

The company’s falling stock prices, disappointing second-quarter earnings, massive debt burden and loss of NBA rights starting with the 2025 season will put more pressure on CEO David Zaslav to find a strategy – and quickly – to to right the ship.

“In the face of industry headwinds, we have and will continue to take bold steps, such as reimagining our existing linear partnerships and pursuing new bundling opportunities, with the goal of bringing Max faster and at a fraction of the purchase costs on more consumers’ devices. Zaslav said in prepared remarks on second-quarter earnings.

Last month, Warner Bros. fired Discovery is hiring nearly 1,000 workers in a new effort to cut costs. There could be a merger and acquisition event on WBD’s horizon – similar to the deal Skydance Media negotiated that would see it merge with Paramount Global (which also operates a business focused on TV).

Zaslav said at an investment conference this spring that Warner Bros. Discovery will be “opportunistic” in seeking mergers and acquisitions over the next two or three years. “There are a lot of players who lose a lot of money,” he said. “There will be some players looking to get out of the business and consolidate their streaming businesses with others.”

During the Allen & Co. retreat. last month in Sun Valley, Idaho, Zaslav said he favored any presidential candidate who could cut through red tape and pave the way for mergers and acquisitions. “We just need an opportunity for deregulation so that companies can consolidate and do what we need to do to be even better,” he said.