Advertising sales fall at Warner Bros

Warner Bros Discovery reported a larger-than-expected loss in the first quarter as advertising sales slumped at its cable TV unit and the studio segment struggled with the twin effects of last year’s Hollywood strikes and poor sales of a Suicide Squad video game.

Shares of the company were down 7% in premarket trading on Thursday, but were 1.35% in the green by mid-morning.

Advertising trends in the US and some international markets have been subdued as businesses responded to the possibility of higher-for-longer interest rates, a drag for Warner Bros Discovery and other media companies.

Advertising revenue in its networks segment, which includes CNN and the Discovery Channel, fell 11%.

Rival Disney on Tuesday also reported a drop in its traditional TV business for the JanuaryMarch period.

Warner Bros Discovery’s streaming unit remained a bright spot as global subscribers rose by 2-million to 99.6-million. The business reported a 72% jump in its adjusted profit — a metric closely watched by investors as they push companies to cut back on hefty investments and focus on profitability.

The unit reported an adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) of $86m, compared with $50m a year earlier.

Deepening its push into streaming, the company on Wednesday joined hands with Disney to offer a bundle of the Disney+, Hulu and Max streaming services in the US, starting this summer.

Studio revenue was hit by the underperformance of the game Suicide Squad: Kill the Justice League, compared with 2023’s top seller Hogwarts Legacy.

THE STREAMING UNIT REMAINED A BRIGHT SPOT AS GLOBAL SUBSCRIBERS ROSE BY 2-MILLION TO 99.6-MILLION

Revenue at the business fell 12%, despite March releases such as Dune: Part Two, which is 2024’s highest grossing movie to date with more than $700m in worldwide box office.

The company continues to face challenges posed by the twin Hollywood strikes last year, which led to production delays and fewer episodes during the first three months of the year.

Its revenue of $9.96bn missed analysts’ average estimate of $10.23bn, according to LSEG data.

It reported a loss of 40c a share, compared with expectations for a loss of 24c.