Warner Bros. Discovery, Inc. (WBD), one of the world’s largest media and entertainment conglomerates, has reported a net loss of $2.1 billion in its fourth quarter earnings for the period ending December 31, 2022.
The loss is significantly higher than analysts had expected and has also dampened investors’ enthusiasm for the stock. The latest results, announced in a statement on Thursday, is much lower than the estimated net profit of $1.1 billion and is the biggest ever quarterly loss posted by the company.
The loss was mainly attributed to the company’s acquisition of rival movie studio and streaming service, HBO Max, which was completed earlier this year. The $2.1 billion in losses covers a quarter of what the company originally had to pay for the acquisition.
Overall, WBD reported a net loss of $3.2 billion for FY 2022, in what was a choppy year due to the continuing pandemic. The company saw a 21.1% decline in revenue to $10.3 billion in fiscal 2022, compared to the year before.
This was partially offset by the company’s focus on exploiting digital platforms, and an increase in revenue from those platforms from $2.2 billion in FY 2021 to $3.3 billion in FY 2022.
“The pandemic necessitated fundamental shifts in strategy for the business, and we are executing against our plan to drive meaningful change and innovation,” said WBD’s chairman and CEO, Robert Kimble, in a statement.
WBD’s stock price dropped 1.88% in after-hours trading on Thursday, shortly after the announcement was made, but has rebounded slightly since then. The stock was trading at $31.81 at the time of this report.
Investors remain cautious of the company’s prospects, as the impact of the pandemic and higher costs associated with its acquisition of HBO Max may prove to be a drag on its performance in the near-term. However, the company remains positive and has expressed confidence in its ability to deliver positive results going forward.