New York
CNN
—
David Zaslav had a rough day.
The Warner Bros. Discovery boss saw his company’s already anemic stock price drop more than 10% on Wednesday afternoon.
After WBD posted the sale was a Write down $9.1 billion in its complex collateral assets. How quickly the traditional TV business is deteriorating and threatening companies like WBD, which rely on linear channels for the majority of their revenue. WBD owns some of the most recognizable cable channels—including CNN, HGTV, TNT, and TBS—all of which have seen their viewership and home viewership crumble to shreds.
For WBD, that has been compounded in recent weeks by a public fracas—a legal battle with the NBA, its partner of four decades—after the media giant tried to use its matching rights to snag Amazon anew. $1.8 billion in games annually.
One bright spot in the traditional television business is live sports programming, which draws large audiences despite cable cancellations. WBD, which is now suing the NBA over the divorce, acknowledged Wednesday that the potential loss of games starting in the 2025-26 season would have a financial impact on the organization.
“The goodwill impairment was fueled by the difference between market capitalization and book value, continued softness in the US linear advertising market and uncertainty regarding the renewal of affiliate and sports rights, including the NBA,” WBD said in its financial summary.
To be fair, WBD isn’t the only once-high-flying legacy media behemoth struggling to find its footing in a shifting landscape fueled by the Netflix revolution. Paramount Global, a one-time titan, stumbled and found it difficult to restructure its business around streaming. The Shari Redstone-led company, which struck a merger deal with David Ellison’s Skydance last month, has lost 27% of its value this year.
Speaking candidly to investors on the company’s earnings call Wednesday, Zaslav acknowledged the grim reality of the television business.
“It’s fair to say that even two years ago, the market valuations and prevailing conditions for legacy media companies were quite different than they are today,” Zaslau said. “This flaw acknowledges this.”
Zaslav spoke about other parts of WBD’s business, describing the company’s Max streaming platform as “doing very well” as “the biggest upside.” But even as he offered a warm sentiment, Zaslav acknowledged the cold reality of “harsh conditions in the legacy business.”
The hole WBD now finds itself in has led to huge talk that the company may be forced to sell some of its assets. During Wednesday’s earnings call, Chief Financial Officer Gunnar Wiedenfels said management is “well aware” of the responsibility to have a view on whatever strategic options are available.
“We’re very clearly focused on valuation beyond running an operational business,” Wiedenfels said. “So we’ve said before, you shouldn’t be surprised to see us getting involved in the M&A processes going on there. You shouldn’t be surprised to see us getting involved in partnership discussions.
WBD was reluctant to sell any of its core assets. It may be difficult to get out of the corner it finds itself in without taking such action.
