Warner Bros. Discovery has posted a $9.1 billion change to its asset value for its Networks section of the company, leading to a net loss of $10 billion available to WBD in the quarter.
The massive plummet is due to what’s called a “non-cash goodwill impairment charge” coming from the Networks section of the company. Essentially, Warner Bros. Discovery has re-evaluated its overall assets and has determined its declining linear TV assets are worth roughly $9 billion less than the company previously assessed.
WBD credits the devastating change in value to “difference between market capitalization and book value, continued softness in the U.S. linear advertising market, and uncertainty related to affiliate and sports rights renewals, including the NBA.”
Warner Bros. Discovery just lost its rights to broadcast the NBA beginning after next season, and the company is in fact suing the NBA to retain the rights, saying that it matched Amazon’s offer for the NBA and that the NBA isn’t legally able to decline them if they matched.
That’s a big chunk of the pie, but not the only factor leading to that steep loss of value, as the decline of advertising for its linear networks has taken a toll on all the Discovery channels and the Turner cable channels.
The good news was that streaming perked up, with all of its DTC offerings between Max, HBO, and Discovery+ adding 3.6 million subscribers in the quarter for a total of 103.3 million subs. The direct-to-consumer segment however swung to a $107 million loss.
WBD CEO David Zaslav is set to speak to investors on the quarterly earnings call at 4:30 p.m. ET.
More to come…
