Warner Bros. Discovery Hammered By Investors

By Douglas A. McIntyre Published Mar 2, 8:39AM EST

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Warner Bros. Discovery Hammered By Investors — © 2023 Getty Images / Getty Images Entertainment via Getty Images

Investors have punished Warner Bros. Discovery (NASDAQ: WB), the conglomerate put together by merging the assets of Discovery and AT&T’s Warner operations. Most of what was created comprises “old media” assets. Old media companies, both public and private, have been punished by owners. Warner Bros. Discovery’s stock has fallen 42% in the last year. The S&P 500 is up 30%.

A quick look at the Warner Bros. Discovery assets shows why the company is under siege by investors. One of the largest operations is CNN. It once had profits of over $1 billion. Those are dropping sharply. It is primarily a TV network funded by traditional cable providers and national TV advertising. Cable companies are being dismantled by streaming and cannot afford to pay fees for CNN. Google, Facebook, and Amazon have cannibalized national advertising. CNN’s online ads have struggled with the same huge competitors for digital ad dollars.

Warner Bros., the century-old movie studio, competes with streaming services, particularly giants Amazon Prime Video and Netflix. The number of people who go to movie theaters has dropped. Warner Bros. Discovery’s Max streaming channel was supposed to offset falling theater attendance. However, consumers will only pay for so many streaming services. Max has to elbow out Netflix and Amazon, along with Disney+, Apple TV+, Hulu, and a number of smaller players. Netflix may be America’s greatest media company.

Most of Warner Bros. Discovery’s other TV assets are niche cable channels, including Turner Classic Movies and Asian Food Network.

The company’s most recent effort to get itself out of its predicament is a merger with also troubled Paramount (NASDAQ: PARA). Why combine two falling companies? Merger talks were called off recently.

Warner Bros. Discovery’s revenue dropped 7% in the most recently reported quarter to $10.3 billion. The company had a net loss of $400 million. Revenue at the famous studio business fell 17% to $3.2 billion. Revenue at the networks, which includes CNN, dropped 9% to $5 billion. The streaming business continues to struggle.

The simple view of Warner Bros. Discovery is that while it has some good brands, it is in businesses that are being destroyed by competition from huge, successful companies like Alphabet (Google ad revenue) and Amazon (Prime Video streaming).

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.