(Reuters) -Warner Bros Discovery reported a larger-than-expected quarterly loss, as advertising sales slumped at its cable TV unit and the studio segment struggled with the twin effects of last year’s Hollywood strikes and poor sales of a “Suicide Squad” videogame.
Shares of the company were down 7% in premarket trading on Thursday, set to add to its 31.5% decline this year.
Advertising trends in the U.S. and certain international markets have been subdued as businesses responded to the possibility of higher-for-longer interest rates, a drag for Warner Bros Discovery and other media companies.
Advertising revenue in its networks segment, which includes CNN and the Discovery Channel, fell 11% in the first quarter.
Rival Disney on Tuesday also reported a drop in its traditional TV business for the January-March period.
Warner Bros Discovery’s streaming unit remained a bright spot as global subscribers rose by 2 million to 99.6 million.
The business also reported a 72% jump in its adjusted profit – a metric closely watched by investors as they pushed companies to cut back on hefty investments and focus on profitability.
The unit reported an adjusted EBITDA of $86 million, compared with $50 million a year earlier.
Deepening its push into streaming, the company on Wednesday joined hands with Disney to offer a bundle of the Disney+, Hulu and Max streaming services in the U.S., starting this summer.
STUDIO WEAKNESS
Studio revenue was impacted by the underperformance of the game “Suicide Squad: Kill the Justice League”, compared with 2023’s top-seller “Hogwarts Legacy”.
Revenue at the business fell 12%, despite March releases such as “Dune: Part Two”, which with over $700 million in worldwide box office is 2024’s highest grossing movie to date.
The company continues to face challenges posed by the twin Hollywood strikes last year, which led to production delays and fewer episodes during the first three months of the year.
Warner Bros Discovery’s revenue of $9.96 billion missed analysts’ average estimate of $10.23 billion, according to LSEG data.
It reported a loss of 40 cents per share, compared to expectations for a loss of 24 cents.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Sriraj Kalluvila)
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