Warner Bros. brought in HBO Max and other WarnerMedia properties in its first earnings report. On Thursday, Discovery missed revenue expectations by roughly $2 billion and reported a large loss due to charges related to the combination, sending its stock south.
Discovery WBD reported a second-quarter loss of $3.42 billion, or $1.50 a share, up from $3.06 billion a year ago, when it acquired the former WarnerMedia assets in a complicated spinout and merger deal with AT&T Inc. A year ago, the company did not provide adjusted earnings per share, but it did show nearly $4 billion in costs related to restructuring, transaction and integration expenses, and other charges.
According to FactSet, analysts expect earnings to be 12 cents a share on revenue of $11.83 billion. After the results were released, the shares went up by nearly 9% in the after-hours trading, after closing with a 4.6% increase at $17.48. Chief Executive David Zaslav said in a statement that we are confident we are on the right path to meet our strategic goals and really excel, both creatively and financially. In previewing the report, Benchmark analyst Matthew Harrigan wrote Wednesday that the house of the Dragon should minimally buffer subscriber erosion from AT&T Mobile promotions and may represent the most plausible 2022 -- 2023 stock catalyst outside visibility on $3 B in cost reductions and free cash generation. Executives did not provide a forecast in the announcement. Analysts were expecting third quarter adjusted earnings of 15 cents a share on sales of $11.34 billion, according to FactSet. Wall Street's reaction to the report may depend more on what executives say in their conference call, which starts at 4: 30 p.m. Eastern. A Direct-to- Consumer strategy update was promised in the call, due to reports of completed movies being scuttled even for streaming and large cuts in HBO Max original productions. The S&P 500 index SPX has declined 12.8%, while the Discovery stock has declined 25.6% since the beginning of the year. The merger was completed on April 8.