Warner Bros. Discovery pares losses, CEO Zaslav calls 2023 a ‘year of building’

Warner Bros. Discovery (WBD) CEO David Zaslav promised 2023 will be WBD’s year after the media giant reported fourth quarter earnings results that missed across the board on Thursday.

“This promises to be a very exciting year for our company,” he told investors during the company’s Q4 earnings call. “The bulk of our restructuring is behind us…we are one company now.”

Zaslav, who touted multiple times that the company’s strategy “is working,” stressed net leverage will be below 4x by the end of this year.

The embattled media giant also announced it will be adjusting its $3.5 billion cost saving synergy targets to $4 billion over the next two years. That will be accompanied by restructuring charges of $5.3 billion.

The stock pared some losses in after-hours trading as investors digested Zaslav’s comments; shares initially fell as much as 4% following the release.

Zaslav emphasized the company’s IP will be a clear driver in its success, announcing a new production deal for multiple “Lord of the Rings” movies, as well as a continued focus on its revamp of the DC Universe.

“DC is the biggest value creation opportunity for us,” Zaslav said, referencing the new “Superman” and “Batman” movies set for release in 2025, along with the upcoming “The Flash” film.

He also teased the much-anticipated relaunch of HBO Max/Discovery+ this spring, saying more details will be released at a press event scheduled for April 12. Zaslav also confirmed recent reports that Discovery+ will keep running as a standalone streaming service alongside the soon-to-launch combo platform.

The company added just 1.1 million paying users in the fourth quarter despite HBO Max returning to Amazon Prime Video Channels (AMZN), in addition to the debuts of popular original series like “The Last of Us,” “The White Lotus,” and “House of the Dragon.”

That number missed consensus estimates, although losses in the direct-to-consumer division came in at $217 million — a $511 million improvement over last year.

Warner Bros. Discovery CEO David Zaslav attends NRDC’s “Night Of Comedy” Honoring Anna Scott Carter at Casa Cipriani on September 20, 2022 in New York City. (Photo by Santiago Felipe/Getty Images)

The executive admitted cyclical headwinds and ongoing secular challenges will likely pressure the company in the year ahead, especially as it relates to advertising.

Network advertising revenue tumbled by 17% in the fourth quarter, or 14% excluding foreign exchange, after falling 11% (ex foreign exchange) in Q3.

Coupled with macro headwinds in the ad market, WBD has also been embroiled in controversy over the future of CNN with rumors swirling the news network could potentially be up for sale.

Zaslav essentially shut that down during the call, saying, “Chris Licht and the team are focused on building an asset for the long term across cable and digital that is worthy of that great global brand.”

He promised a “more inclusive range of voices and viewpoints” on the network, adding: “We must get it right…Nowhere is this more important in my view.”

Overall, Zaslav reiterated his confidence in the company’s future after a messy 10 months of restructuring efforts: “2023 will be a year of building — and off we go.”

Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]

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