Warner Bros Discovery to tap popular movie franchises, posts loss

Warner Bros Discovery to tap popular movie franchises, posts loss
The Warner Bros logo is seen during the Cannes Lions International Festival of Creativity in Cannes, France on June 22, 2022.
PHOTO: Reuters file

Warner Bros Discovery Inc is borrowing a page from the Walt Disney Co playbook, saying it will lean into its popular entertainment franchises — including Superman, Batman, Lord of the Rings and Harry Potter.

Chief Executive David Zaslav said that after completing 10 months of restructuring, the media company now looks to "take full advantage" of its roster of globally recognised characters through new movies and television shows.

"I believe that we have an overwhelming advantage in the marketplace with the IP that we own," said Zaslav, using the industry's shorthand for intellectual property.

"To get that advantage, we have to create great content."

Warner Bros Studios has struck a deal to make multiple films based on J.R.R. Tolkein's Lord of the Rings fantasy novels, Zaslav told investors Thursday, during the company's fourth-quarter investor call.

Warner Bros Discovery posted a US$2.1 billion (S$2.8 billion) loss in the quarter, reflecting charges related to the restructuring of the merged media companies.

The company, like its Hollywood peers, is working to create a profitable streaming business as consumers and advertisers flee traditional TV.

The Lord of the Rings announcement builds on plans to reinvigorate the DC Comics franchise in the mold of Disney's Marvel Cinematic Universe.


DC Studios co-Chairmen James Gunn and Peter Safran last month laid out an ambitious slate of 10 film and television projects that tell a single story that unfolds over eight to 10 years.

"It's one of the biggest value-creation opportunities for us," Zaslav told investors.

Warner Bros Discovery said the months-long merger-related restructuring, which resulted in thousands of layoffs and canceled film and television projects, is complete.

The company cited signs of gathering momentum, including the popularity of the HBO drama The Last of Us, the fourth HBO series to average more than 15 million viewers, as well as the chart-topping success of its Harry Potter video game Hogwarts Legacy.

The news came as Warner Bros Discovery reported revenue of US$11 billion, shy of analysts' consensus estimate of nearly US$11.36 billion.

Warner Bros Discovery reported a loss of 86 cents per share, versus expectations of a 21-cent-per-share loss.

Before-tax earnings, or adjusted Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA), of US2.6 billion modestly exceeded analysts' forecasts of US$2.58 billion.

Shares of Warner Bros fell 1.5 per cent in after-hours trading.

Warner Bros Discovery also said it had paid down US$7 billion in debt since April.

Chief Financial Officer Gunnar Wiedenfels said the company continues to look for efficiencies, and was on a path to deliver US$4 billion in savings through 2024.

Like other media companies, Warner Bros Discovery has yet to turn a profit on its HBO Max and Discovery+ streaming services, though the company has reduced losses from them.

The streaming unit reported an operating loss of US$217 million in the quarter, compared with pro-forma losses of US$728 million a year ago.

It booked US$2.45 billion in revenue, exceeding Wall Street forecasts of US$2.39 billion.


The relaunch of HBO Max on Amazon Channels in December helped add 1.1 million subscribers in the quarter, bringing the total to 96.1 million.

Streaming and games chief J.B. Perrette told investors a new version of the streaming service, with better performance, enhanced features and broader entertainment offerings, will be unveiled at a press event on April 12.

Zaslav confirmed reports that Discovery+ would remain available as a stand-alone service for those who are satisfied with its reality programming.

The studios segment reported operating income of US$768 million, down 34 per cent from the prior year's quarter. Revenue fell 23 per cent to US$3.84 billion, in part because of fewer theatrical releases.

Operating income for Warner Bros Discovery's television segment fell seven per cent to US$2.48 billion, on revenue of US$5.52 billion as US audiences shrank and the ad market remained weak.

TV ad revenue of US$2.2 billion fell short of expectations of US$2.5 billion, according to Factset.

ALSO READ: Warner Bros Discovery expects $1.3b more in scrapped content charges

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