Subscriber Growth and DTC Performance - Warner Bros. Discovery had 116.9 million DTC subscribers as of December 31, 2024, with a strong growth of 19.3 million global subscribers added in 2024[40] - The DTC segment's revenue composition for the year ended December 31, 2024, was 87% from distribution, 8% from advertising, and 4% from content[44] - HBO's crime drama The Penguin grew its premiere-night audience by 54% from debut to finale in 2024, highlighting strong content performance[40] - The company launched Max in 73 new markets in 2024, contributing to the growth of its DTC business globally[41] - The DTC segment anticipates additional launches of streaming services in major markets in 2025 and 2026[40] - The company experienced a 20% increase in DTC subscribers, partially offsetting revenue declines[211] Financial Performance and Revenue - Total revenues for 2024 decreased by 5% to $39.321 billion compared to $41.321 billion in 2023[208] - Advertising revenues decreased by 7% to $8.090 billion, while content revenues dropped by 8% to $10.297 billion[208] - Distribution revenues fell by 1%, impacted by an 8% decline in domestic linear subscribers and a $225 million loss from exiting the regional sports business[211] - Total costs and expenses increased by 15% to $49.353 billion, leading to an operating loss of $10.032 billion[208] - Net loss available to Warner Bros. Discovery, Inc. was $11.311 billion, compared to a net loss of $3.126 billion in 2023[208] - Selling, general and administrative expenses decreased by 4% to $9.296 billion[208] - Depreciation and amortization expenses decreased by 12% to $7.037 billion[208] - The company reported a gain on extinguishment of debt amounting to $632 million[208] Corporate Structure and Strategic Initiatives - Warner Bros. Discovery's new corporate structure, effective January 1, 2025, aims to enhance strategic flexibility and unlock shareholder value[22] - The company announced a new corporate structure to be implemented in 2025, which may incur unforeseen costs and execution risks[119] - Plans for a corporate reorganization are set for 2025 to better align with strategic and operational objectives, which may lead to business disruptions and higher costs[141] - The company initiated a strategic realignment plan associated with its Warner Bros. Pictures Animation group during 2023[199] Competition and Market Challenges - The company faces significant competition for content development and acquisition, impacting viewership and advertising sales[50] - The ability to secure distribution agreements is crucial for retaining audiences, with contractual terms subject to renewal and renegotiation[51] - The company faces significant competition in the media and entertainment industries, impacting its ability to attract talent, content, and advertising spending[78] - The company faced significant competition for sports programming licenses, leading to increased programming costs and potential adverse effects on financial results[102] - The decline in linear television viewership is expected to continue, which could negatively impact advertising and distribution revenues[87] Legal and Regulatory Risks - The company is committed to protecting its intellectual property through various legal measures, although challenges may arise from third parties[54] - The company is subject to evolving domestic and international privacy and data protection laws, which could impose significant compliance costs[132] - Legal proceedings related to the merger, including multiple class action lawsuits, could negatively impact the company's financial condition and results of operations[143] - The company is currently involved in ongoing litigation matters, including class action lawsuits related to the merger, but does not expect these to materially affect its financial position[176][177] Operational Challenges and Restructuring - The company experienced delays in content completion and delivery in Q1 2024 due to strikes in 2023, but did not face material impacts for the remainder of 2024[15] - Significant costs have been incurred post-merger for organizational restructuring and facility consolidation, which are necessary to achieve anticipated cost synergies[141] - The company incurred approximately $4.7 billion in pre-tax restructuring charges as of December 31, 2024, out of an expected range of $4.1 - $5.3 billion[199] - The integration of WarnerMedia continues to present operational challenges and unforeseen costs that could adversely affect financial performance[140] Cybersecurity and Data Protection - The company's cybersecurity program includes continuous threat monitoring and a Cybersecurity Incident Response Plan, with annual tabletop exercises to test response capabilities[165] - The company has a governance structure for cybersecurity, with the Audit Committee receiving quarterly updates on risk posture and incident reports[169] - The company has established cybersecurity information sharing practices with government agencies and industry partners to enhance resilience[168] - The company has a multi-layered technical defense strategy for cybersecurity, including intrusion detection systems and antivirus solutions[164] - As of December 31, 2024, the company is not aware of any cybersecurity incidents that have materially impacted its business[171] Economic and Market Conditions - Global economic conditions, including inflation and high interest rates, may adversely impact consumer discretionary spending and overall business performance[156] - Decreases in consumer spending could lead to reduced subscriptions for DTC products and lower attendance at movie theaters, negatively affecting revenues[157] - The advertising market is sensitive to economic conditions, which could lead to reduced spending from advertising partners[82] - The market price of the company's common stock has been highly volatile, influenced by various factors including financial results and market sentiment[159] Employee and Talent Management - The company emphasizes a talent-driven culture, aiming to attract and develop top talent through competitive benefits and performance-based pay[71] - The company provides a range of learning and development opportunities, including tuition reimbursement for eligible courses[74] - As of December 31, 2024, the company had approximately 35,000 employees, with a balanced distribution of 50% in the U.S. and 50% outside[70] - The company is undertaking restructuring initiatives, including headcount reductions, which may disrupt operations and affect employee morale[148]

Core Insights - Warner Bros. Discovery (WBD) reported a fourth-quarter 2024 loss of $0.20 per share, missing the Zacks Consensus Estimate of a profit of $0.04 per share, and compared to a loss of $0.16 in the same quarter last year [1] - Revenues decreased by 2.5% year over year to $10.02 billion, falling short of the Zacks Consensus Estimate by 3.3% [1] Revenue Breakdown - Advertising revenues fell by 12% year over year to $1.83 billion, impacted by declines in domestic linear audience and a soft advertising market [2] - Distribution revenues remained flat at $4.91 billion, with growth in global DTC subscribers offset by domestic linear pay TV subscriber declines [2] - Content revenues decreased by 2% year over year to $2.9 billion, while other revenues increased by 16% to $371 million [2] Segment Performance - Studios segment, accounting for 36.5% of total revenues, reported a 15% increase in revenues to $3.65 billion, with content revenues up 16% ex-FX [3] - Games revenues declined by 29% ex-FX, attributed to the strong performance of last year's titles [4] - Networks revenues, making up 47.6% of total revenues, decreased by 5% year over year to $4.76 billion [4] Subscriber and ARPU Details - WBD ended Q4 2024 with 116.9 million global DTC subscribers, an increase of 6.4 million sequentially [8] - Global DTC ARPU decreased by 5% ex-FX to $7.44, influenced by growth in lower ARPU international markets and ad-tier subscriber growth [9] Operating and Financial Metrics - Selling, general and administrative expenses decreased by 9.7% year over year to $2.21 billion [10] - Total Adjusted EBITDA was $2.7 billion, an 11% ex-FX increase compared to the prior year [10] - Free cash flow was reported at $2.42 billion, down from $3.31 billion in the prior year [11] Balance Sheet Overview - As of December 30, 2024, cash and cash equivalents were $5.31 billion, up from $3.33 billion as of September 30, 2024 [13] - The company ended the quarter with $40 billion of gross debt and a net leverage ratio of 3.8X [13] - Average duration of outstanding debt was 13.4 years, with an average cost of 4.7% [13]

Core Viewpoint - Warner Bros. Discovery (WBD) anticipates that streaming profits will double this year and forecasts at least 150 million subscribers by 2026, driven by the global rollout of Max and stringent cost controls [1][6]. Group 1: Streaming Business Performance - WBD added 6.4 million streaming subscribers in the fourth quarter, surpassing the 4.9 million estimated by analysts, attributed to the global expansion and the content slate including "Dune: Prophecy" [4][8]. - The total number of subscribers now stands at nearly 117 million, significantly lower than Netflix's 302 million and Disney+'s 124.6 million [6]. - The streaming unit is projected to report adjusted EBITDA of about $1.3 billion in 2025, a substantial increase from $677 million last year [9]. Group 2: Financial Results - In the fourth quarter, the streaming unit posted an adjusted EBITDA of $409 million, exceeding expectations of $289.1 million, with revenue rising by 5% [10]. - Overall revenue for the company was $10.03 billion, falling short of the $10.19 billion estimate, and the company reported a loss of 20 cents per share, contrary to the expected profit of 1 cent [11]. Group 3: Strategic Moves - The company has decided to separate its cable TV businesses from streaming and studio operations, which may lead to a potential sale or spinoff of its TV business [2]. - CEO David Zaslav emphasized that this separation will allow WBD to capitalize on broader market opportunities as they arise [3].

Financial Data and Key Metrics Changes - The direct-to-consumer business ended 2024 with approximately 117 million subscribers, having added about 6.5 million subscribers in Q4 and nearly 20 million in less than a year [9] - Direct-to-consumer EBITDA reached almost $700 million, marking a $3 billion improvement over two years, with expectations to nearly double in 2025 [11] - The company aims for at least 150 million subscribers by the end of 2026, which will drive further revenue and EBITDA growth [10] Business Line Data and Key Metrics Changes - Warner Bros' television business is showing growth and strength, with multi-year renewal agreements with major pay TV providers in the U.S. [12] - The restructuring announced in December aims to provide better visibility into the strength of the streaming and studios business [13] Market Data and Key Metrics Changes - The company is experiencing positive net revenue impacts from international affiliate renewals, indicating growth in the international market [25] - The domestic affiliate business saw close to 6% rate increases in Q4, but future rate increases are expected to be in the low single digits [24] Company Strategy and Development Direction - The company is focused on enhancing shareholder value and positioning itself as a global media leader [14] - There is an emphasis on bundling strategies with regional players to enhance content offerings and consumer experience [44][46] - The company is exploring opportunities for consolidation in the industry, particularly with local players aligning with its strategy [43] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges in the linear television market but remains optimistic about the long-term growth potential of the streaming business [12][14] - The company is committed to improving free cash flow and reducing debt, having paid down $19 billion since the transaction closure [64] Other Important Information - The company is not providing consolidated financial guidance for the year but expects significant improvements in EBITDA across its segments [49][51] - The international market is showing better trends compared to the domestic market, with moderate pressures anticipated [56] Q&A Session Summary Question: Update on restructuring and linear pressure - Management confirmed progress on restructuring and expects to provide more clarity on segment reporting in the upcoming earnings report [20][22] Question: Scale in DTC and programming diversity - Management believes Max has a unique offering with a strong content library and is focused on quality storytelling [33] Question: Asset landscape and consolidation opportunities - Management sees potential for consolidation in the industry and is open to discussions with regional players [43][44] Question: Free cash flow and balance sheet outlook - Management emphasized the importance of free cash flow and plans to continue reducing net debt while focusing on content investments [65] Question: Sports costs and future savings - Management anticipates several hundred million dollars in sports expense savings in 2026 compared to 2025 [77] Question: DTC subscriber growth and ARPU pressures - Management expects a significant portion of subscriber growth to come from international markets, with some near-term ARPU pressure anticipated [84][86] Question: Long-term goals for networks and studios - Management aims to stabilize network revenues and achieve $3 billion in studio EBITDA, with confidence in future profitability [90][99]

Group 1 - Warner Bros. Discovery reported a quarterly loss of $0.20 per share, missing the Zacks Consensus Estimate of $0.04, and compared to a loss of $0.16 per share a year ago, representing an earnings surprise of -600% [1] - The company posted revenues of $10.03 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 3.17%, and down from $10.28 billion year-over-year [2] - Over the last four quarters, Warner Bros. Discovery has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during the same period [2] Group 2 - The stock has lost about 0.7% since the beginning of the year, while the S&P 500 has gained 1.3%, indicating underperformance in the market [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the coming quarter is -$0.02 on revenues of $10.24 billion, and -$0.04 on revenues of $40.17 billion for the current fiscal year [7] Group 3 - The Zacks Industry Rank places Broadcast Radio and Television in the top 34% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The current estimate revisions trend for Warner Bros. Discovery is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]

Core Insights - Warner Bros. Discovery reported mixed financial results for Q4 2024, with EPS at -$0.20, missing analysts' expectations of -$0.02 by $0.18, and revenue at $10.03 billion, below the estimate of $10.16 billion [2][3] Financial Performance - Revenue decreased by 2.5% year-over-year from $10.28 billion to $10.03 billion, missing estimates [3][6] - Net income was reported at -$494 million, a decline of 23.5% from -$400 million in Q4 2023 [3] - Adjusted EBITDA improved by 10.2% year-over-year to $2.72 billion [3][10] - Free cash flow decreased by 26.6% to $2.43 billion [3][10] Segment Performance - The Direct-to-Consumer (DTC) segment saw a revenue increase of 5% to $2.65 billion, with a net addition of 6.4 million subscribers, totaling 116.9 million [9] - The Studios segment experienced a 15% revenue increase to $3.66 billion, driven by enhanced content licensing [7] - The Networks segment faced a 5% revenue decline, primarily due to a 17% drop in advertising revenue [8] Strategic Focus - The company is focusing on expanding its DTC platforms internationally to capture new customer bases and enhance competitiveness in the streaming industry [12] - Warner Bros. Discovery aims to improve profitability and manage its high debt levels, which stood at $34.6 billion at the end of the quarter [13] - The company is prioritizing content innovation and leveraging its extensive intellectual property to sustain growth [13]

Core Insights - Warner Bros. Discovery reported a net loss per share of $0.20 on revenue of $10.03 billion, missing analyst expectations of a profit of $0.02 per share and revenue of $10.22 billion [1] - Despite the weaker-than-expected results, shares rose in premarket trading due to an optimistic outlook for its streaming service [1] Streaming Service Expansion - The company plans to expand its Max streaming service to more countries, aiming for at least 150 million global subscribers by the end of 2026, with strong growth in Direct-to-Consumer revenue and Adjusted EBITDA [2] - As of the end of the fourth quarter, Warner Bros. Discovery had 116.9 million Direct-to-Consumer subscribers [2] Strategic Restructuring - Warner Bros. Discovery is restructuring its operations into two segments: one for television networks (e.g., CNN, TBS, TNT) and another for film studios and the Max service [3] - The company expects to complete this restructuring by the second quarter [3] - Shares of Warner Bros. Discovery rose 5% in premarket trading, continuing a trend where shares increased by about 20% over the last 12 months [3]

Group 1 - Warner Bros. Discovery's revenue decreased by 1% to $10 billion, missing Wall Street forecasts, with a net loss of $640 million for Q4 2024 due to $1.9 billion in charges including restructuring expenses [1] - The Networks segment, WBD's largest, experienced a 5% revenue decline to $4.8 billion and a 13% drop in profits to $1.9 billion, with ad revenue falling 17% due to a 28% decline in domestic audience [2] - The company is undergoing a corporate restructuring that may lead to the separation of its cable networks, similar to plans by Comcast [3] Group 2 - Studio revenue increased by 16% to $3.7 billion, driven by a 64% rise in TV revenue from internal licensing agreements, despite previous year impacts from WGA and SAG-AFTRA strikes [4] - Direct-to-Consumer (DTC) revenue rose by 5% to $2.7 billion, with the segment achieving a profit of $409 million compared to a $55 million loss [4] - Advertising revenue in the DTC segment increased by 27%, while content revenue decreased by 40% due to fewer third-party licensing deals [4]

Core Insights - Warner Bros. Discovery (WBD) added 6.4 million global streaming subscribers in Q4, reaching a total of 116.9 million subscribers [1] - The streaming segment revenue for Q4 was $2.65 billion, a 5% increase from $2.53 billion in the same quarter last year [2] - The company forecasts adjusted EBITDA of $1.3 billion for its streaming business in 2025, aiming for 150 million global subscribers by the end of 2026 [3] Financial Performance - WBD's overall Q4 revenue decreased by 2% to $10.03 billion from $10.28 billion in Q4 2023 [5] - Full-year 2024 revenue was $39.32 billion, down 5% from $41.32 billion in 2023 [5] - The net loss for Q4 2024 was $494 million, compared to a net loss of $400 million in Q4 2023 [5] Segment Performance - TV networks revenue for Q4 was $4.77 billion, down from $5.04 billion in the previous year [6] - The studios business saw a revenue increase of 15% in Q4, totaling $3.66 billion compared to $3.17 billion in Q4 2023 [7] - The company anticipates further declines in cable subscribers and a faster-than-expected shrinking of the advertising market for U.S. linear television [6] Strategic Developments - Max will retain B/R Sports and CNN content at no additional cost for standard and premium subscribers, but will remove these from the basic ad-supported tier starting March 30 [4] - Max is set to launch on Sky in the UK and Ireland by Q2 2026, and in Germany and Italy by Q1 2026 [3]

Core Insights - Warner Bros. Discovery (WBD) is implementing a "disciplined" sports strategy to address ongoing declines in pay-TV subscriptions, emphasizing a creative response to the changing landscape [1][3] - The company reported mixed financial results for the fourth quarter, with a 2% revenue decline and an 11% drop in adjusted EBITDA, although the streaming segment gained 6.4 million subscribers [1] Financial Performance - Revenue decreased by 2% and adjusted EBITDA fell by 11% in the fourth quarter [1] - The streaming business added 6.4 million subscribers, indicating growth in that segment despite overall revenue decline [1] Sports Strategy - WBD will relinquish NBA broadcasting rights on TNT after the current season, marking the end of a long-standing relationship, while entering a more efficient long-term partnership with the league [2] - The company will retain some international rights and continue producing "Inside the NBA," which will also be licensed to ESPN in the U.S. [2] Market Challenges - The U.S. linear television advertising market has deteriorated more rapidly than anticipated, impacting the company's financial results [3] - The company acknowledges ongoing pay-TV declines and the challenges in forecasting advertising revenue due to reduced subscribers and pressure on linear viewership [4] Strategic Restructuring - In late 2024, WBD restructured its operations from three divisions to two, focusing on Global Linear Networks and Streaming & Studios, which has led to speculation about potential mergers and acquisitions [4] - The restructuring aims to enhance cash generation potential amid declining linear assets, following similar moves by Comcast [4]