Warner Bros. Discovery announced fourth-quarter results, and its earnings, including revenue and profit, missed analysts’ estimates. Although Chief Executive Officer David Zaslav told investors that the entertainment giant had prioritized generating free cash flow, investors were unimpressed in Friday’s earnings call. Warner Bros. Discovery share prices plunged by 10 percent as it missed both analysts’ revenue and profit estimates, and there was no future outlook.
David Zaslav and the board of directors at Warner Bros. Discovery have prioritized cash flow for several months to the extent that the CEO’s bonus has been tied to cash flow generation. However, investors are not on board with this strategy, and shares slumped on Friday after the fourth quarter earnings report was released. The company’s shares have declined 45 percent in the past 12 months.
Zaslav might have aimed to change the narrative to an increase in free cash flow. Still, investors are mainly focusing on subscriber additions, profit, and revenue, and the company has underperformed in the last two parameters in the fourth quarter.
Chief Financial Officer Gunnar Weidenfels did not give guidance for 2024, which might have also affected the decline in stock price. He said earnings remained unknown due to the uncertainty in advertising and increased spending on content on Max after the strikes by Hollywood writers and actors were resolved.
Zaslav’s focus on boosting free cash flow and paying down debt does not seem to galvanize investors looking at the slow decline of cable networks and the decline in advertising when subscribers leave cable for other services.
According to LSEG, formerly known as Refinitiv, analysts expected a loss of 7 cents per share, while Warner Bros. Discovery reported a loss of 16 cents per share. The reported revenue was $10.28 billion, while the estimate was higher at $10.35 billion.
Warner Bros. paid down $1.2 billion in debt in the quarter and $5.4 billion for 2023. It generated $3.31 billion in free cash flow in the last quarter and $6.16 for 2023, 86 percent higher than 2022. However, these numbers do not impress investors.
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