Warner Bros. Discovery teases extra ‘Lord of the Rings’ movies — and its ‘pivotal’ 2023 may hold on this videogame
After final yr’s messy mega-merger, executives at Warner Bros. Discovery Inc. on Thursday tried to pitch 2023 as an enlargement yr — one throughout which the media powerhouse’s studios will crank out extra films and attempt to journey the early success of its “Hogwarts Legacy” videogame.
Chief Govt David Zaslav mentioned the corporate — which oversees TV channels and streaming platforms like HBO, HBO Max, Discovery and Discovery+, DC Comics and a few videogames — would “greater than double” the output from its studio section this yr. He known as out this month’s blowout debut of the sport “Hogwarts Legacy,” and introduced a brand new deal for “a number of” “Lord of the Rings” films additional out.
Chief Monetary Officer Gunnar Wiedenfels, throughout Warner Bros. Discovery’s
WBD,
earnings name on Thursday, mentioned this yr could be “pivotal” for the corporate’s studio enterprise.
“Trying forward inside the studio, 2023 shall be a pivotal yr, significantly behind our bigger and broader launch slate at each Warner Bros. Photos and at DC, to not point out a beautiful begin with ‘Hogwarts Legacy’ on the video games aspect,” he mentioned.
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“Hogwarts Legacy” launched on Feb. 10. Zaslav mentioned the sport had already introduced in additional than $850 million in retail gross sales, with extra on the best way as the sport hits extra platforms.
Nonetheless, the corporate — the results of a merger final yr between AT&T’s WarnerMedia and Discovery — must get by a weaker promoting backdrop that weighed on fourth-quarter outcomes, in addition to a subscriber rely that got here in beneath expectations.
Warner Bros. Discovery reported a fourth-quarter web lack of $2.08 billion, or 86 cents a share, after a revenue of $38 million, or 8 cents a share, in the identical quarter in 2021. Income got here in at $11 billion, in contrast with $3.19 billion within the prior-year quarter. The corporate completed the quarter with 96.1 million subscribers.
On a GAAP foundation, analysts polled by FactSet anticipated Warner Bros. Discovery to report a lack of 35 cents a share, on income of $11.2 billion. They anticipated a subscriber rely of round 96.33 million.
Shares slid 3.4% after hours.
Zaslav, within the firm’s earnings launch, mentioned that “main restructuring selections” had been “behind us.” Nonetheless, Warner Bros. Discovery has confronted extra cautious advertisers, ongoing cord-cutting, competitors inside streaming and upheaval created from the merger deal itself. In an effort to shore up the underside line, the corporate has reduce jobs and content material — together with CNN+ and a “Batgirl” movie set for HBO Max.
In a submitting in December, Warner Bros. Discovery mentioned it anticipated greater costs associated to content-impairment and improvement write-offs and pretax restructuring costs. But it surely mentioned that the continuing reorganization, anticipated to be largely full by the tip of subsequent yr, “may end in extra impairments above the revised estimates.”
Forward of the fourth-quarter earnings, some analysts mentioned the outcomes would current a chance for administration to reframe the corporate’s path ahead.
“Extra importantly, we consider 4Q is a chance for administration to show the web page to 2023 and reset the narrative,” BofA analysts mentioned in a observe final month.
“2022 was mired by a mixture of company-specific, merger-related headwinds together with cyclical and secular pressures,” they continued. “At this level, nearly all of heavy lifting (associated to restructuring costs and so on.) has been accomplished, direct to client (DTC) losses peaked in ’22 with a path to breakeven in ’24 and the cyclical headwinds ought to abate as macro circumstances enhance.”
They added that promoting traits in January appeared to have improved from December.
The Wall Avenue Journal this month reported that Warner Bros. Discovery deliberate to maintain Discovery+ as a standalone streaming platform, as the corporate weighs methods to make extra of its content material accessible in a single place. The Journal mentioned that fairly than absolutely mix Discovery+ and HBO Max as as soon as deliberate, Warner will transfer forward with a platform that “will function HBO Max content material and most Discovery+ content material, with Discovery+ remaining accessible as a standalone possibility.”
Benchmark analyst Matthew Harrigan, in a observe this month, mentioned that call was “not shocking given the chance of dropping some price-sensitive clients for whom exhibits like ‘Home of the Dragon’ or critically acclaimed new hit ‘The Final of Us’ doesn’t resonate, or no less than not sufficient to pay a possible larger worth than the current $15.99/$9.99 (with advertisements) for HBO Max.”
Shares of Warner Bros. Discovery have tumbled 45.2% over the previous 12 months. By comparability, the S&P 500 index
SPX,
has fallen 5.8% over that interval.