Stock in Warner Bros

UPDATED: Shares of Warner Bros. Discovery dropped by more than 12 percent in early trading on Thursday, reaching all-time lows. This came after the media conglomerate, which is highly dependent on its pay-TV business, disclosed a staggering $9.1 billion write-down, which reflected the loss of value of its linear television networks.

Following the release of the company’s earnings report for the second quarter of 2024 after the market closed on Thursday, WBD shares dropped to a low of $6.73 per share, representing a decline of 12.7%. On the 8th of August, the stock fell by 9%, closing at $7.02 per share.

When the stock reached its lowest closing price on June 18, 2024, it completed the day at $6.99 per share; its 52-week low intraday price was $6.94 (on June 20). The stock’s lowest closing price occurred on June 18. Shares of Warner Bros. Discovery have plummeted by forty percent so far this year.

More than $1.6 billion in market value was lost as a result of the stock decrease, and as of the close of trading on Thursday, Warner Bros. Discovery’s market capitalization was approximately $17.2 billion. This is in contrast to the more than fifty billion dollars that was acquired by Discovery subsequent to the completion of its acquisition of WarnerMedia in April of 2022.

When businesses are compelled to write down goodwill, which is defined as an amount that is greater than the asset’s fair market value, they subtract that value from their balance sheets and record an expense on their income statement to account for the loss brought on by the goodwill. The management has acknowledged that the early projections for investments or acquisitions did not come close to meeting the projections, and this step reflects that recognition. “Uncertainty” over NBA rights, which the business is poised to lose beginning with the 2025 season, and “continued softness” in the linear ad market were the circumstances that triggered the goodwill impairment for WBD’s television networks in the second quarter of 2024, according to WBD. The company is also expected to lose NBA rights beginning with the 2025 season.

David Zaslav, the CEO of the corporation, will be under more pressure to develop a strategy to right the ship as a result of the company’s price plummeting, the dismal results for the second quarter, the large debt burden, and the loss of the National Basketball Association.

“Taking bold steps, such as reimagining our existing linear partnerships and pursuing new bundling opportunities, with the goal of getting Max on the devices of more consumers faster and at a fraction of the acquisition cost,” Zaslav said in prepared remarks about the Q2 earnings. “In light of industry headwinds, we have and will continue to take bold steps,” Zaslav said.

In a new effort to save expenses, Warner Bros. Discovery terminated the employment of about one thousand staff in the previous month. WBD may be on the verge of a merger and acquisition (M&A) event, which would be comparable to the agreement that Skydance Media negotiated, which would result in the company’s merger with Paramount Global, which likewise operates a business that is heavily focused on television.

At an investment conference that took place in the spring of this year, Zaslav stated that Warner Bros. Discovery will be “opportunistic” in its pursuit of mergers and acquisitions opportunities within the next two or three years. The statement that he made was that “there are a lot of players who are losing a lot of money.” There are going to be some players that are interested in leaving the industry, and they will explore the possibility of merging their streaming businesses with those of other companies.

During the conference that Allen & Co. had in Sun Valley, Idaho, a month ago, Zaslav expressed his support for whichever presidential contender could reduce the amount of bureaucratic hurdles that stand in the way of mergers and acquisitions transactions. “We just need an opportunity for deregulation,” he continued, “so that companies can consolidate and do what we need to do in order to be even better.”

Stock in Warner Bros

By ki0nk

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