English Entertainment
Warner Bros. Discovery posts Q2 net loss of $3.4 mn
Mumbai: Media conglomerate Warner Bros. Discovery has announced that second quarter revenues were $9.8 million, a one per cent decrease compared to the prior year quarter. Net loss was $3.4 million and included $2oo4 million of amortisation of intangibles, $1033 million of restructuring and other charges, and $983 million of transaction and integration expenses.
Adjusted Ebitda was $1.6 million. Cash provided by operating activities increased to $1 million and reported free cash flow increased to $789 million. The company ended the quarter with $3.8 million of cash on hand, gross debt of $53 billion and net leverage of 5x. It ended the quarter with 92.1 million global DTC subscribers, an increase of 1.7 million versus 90.4 million subscribers at the end of the first quarter, as adjusted for the company’s new DTC subscriber definition. The new definition resulted in the exclusion of 10 million legacy Discovery non-core subscribers and unactivated AT&T mobility subscribers from the Q1 subscriber count.
“We’ve had a busy, productive four months since launching Warner Bros. Discovery and have more conviction than ever in the massive opportunity ahead. We have the most powerful creative engine and bouquet of owned content in the world, as highlighted by our industry-leading 193 Emmy nominations, and we intend to maximise the value of that content through a broad distribution model that includes theatrical, streaming, linear cable, free-to-air, gaming, consumer products and experiences and more, everywhere in the world. We’re confident we’re on the right path to meet our strategic goals and really excel, both creatively and financially, and couldn’t be more excited about the future of our company” said WBD president, CEO David Zaslav.
Networks reported revenues were $5.7 million an increase of one per cent. Ad revenue increased by two per cent, primarily driven by strong demand for sports advertising, partially offset by lower news, kids, and general entertainment performance in the US International networks were impacted by modest declines in EMEA, offset by growth in Latin America, excluding the impact of Chilevisión, which was sold in September 2021.
Distribution revenue decreased by one per cent, as increases in US contractual affiliate rates were more than offset by a decline in linear subscribers in the US and lower contractual affiliate rates in some European markets. Networks reported operating expenses were $3.4 million. Adjusted Ebitda was $2.62 million.
Studios reported revenues were $2.7 million a growth of four per cent. Games were a strong contributor behind the release of “Lego Star Wars – The Skywalker Saga.” TV licensing revenues declined due to lower TV production revenue, partially offset by the timing of new series availabilities for distribution. Theatrical performance was unfavourably impacted by the timing of releases. Home entertainment across theatrical and television products was down due to strong Covid-induced demand in the prior year quarter. Studios reported operating expenses were $2.5 million. Adjusted Ebitda was $239 million.
DTC revenues were $2.2 million. Revenues increased by four per cent. Ad revenue increased to $98 million, primarily driven by the launch of the HBO Max ad-supported tier in June 2021 and subscriber growth on the discovery+ ad-lite tier. Distribution revenue increased by one per cent. Global retail subscriber gains at discovery+ and HBO Max compared to the prior year quarter were largely offset by lower domestic wholesale subscribers resulting from the Amazon Channels expiration in September 2021 for HBO Max. DTC’s operating expenses were $2.7 million. Adjusted Ebitda was a loss of – $518 million.
English Entertainment
Warner Bros. Discovery shareholders approve Paramount deal
Investors wave through a $111 billion megamerger but deliver a stinging, if toothless, rebuke over half-a-billion-dollar goodbye packages
NEW YORK: The shareholders said yes to the deal. They said no to the cheque. At a virtual special meeting on Thursday that lasted barely ten minutes, Warner Bros. Discovery investors voted overwhelmingly to approve Paramount Skydance’s $111 billion acquisition of the company — and then turned around and voted against the lavish exit pay packages lined up for chief executive David Zaslav and his fellow outgoing executives.
Not that it will make much difference. The compensation vote is purely advisory and non-binding. The Warner Bros. Discovery board can, and almost certainly will, pay out as planned.
But the symbolism stings. It is the second consecutive year that WBD shareholders have voted against the executive compensation packages, and this time they had good reason. Zaslav’s exit deal is, by any measure, extraordinary. Under the terms filed with the Securities and Exchange Commission, he is set to receive $34.2 million in cash severance, $517.2 million in equity in the combined company, and $44,195 in continued health coverage — a total of at least $550 million. On top of that, Warner Bros. Discovery has agreed to reimburse Zaslav up to $335 million for taxes assessed by the Internal Revenue Service on his accelerated stock vesting, though the company says that figure will decline depending on when the deal closes. As of March 11, Zaslav also held $115.85 million in vested WBD stock awards — and last month sold a further $114 million worth of WBD shares.
Shareholder advisory firm ISS recommended voting against the compensation measure, citing “problematic” tax reimbursements to Zaslav and the full vesting of his stock awards.
Zaslav will be bound by a two-year non-competition covenant and a two-year non-solicitation of customers and employees after the deal closes.
His lieutenants are not walking away empty-handed either. J.B. Perrette, chief executive and president of global streaming and games, is in line for $142 million, comprising $18.2 million in cash severance and $123.9 million in equity. Bruce Campbell, chief revenue and strategy officer, will receive an estimated $121.5 million, including $18.8 million in severance and $102.7 million in equity. Chief financial officer Gunnar Wiedenfels is set for $120 million, made up of $6.6 million in cash severance and $113.1 million in equity. Gerhard Zeiler, president of international, will get $82.6 million, including $11.9 million in severance and $70.7 million in equity.
The deal itself, clinched in February after Netflix declined to raise its bid for Warner Bros., still needs regulatory clearance from the Justice Department and European authorities. Several state attorneys general are also weighing legal action to block it.
Senator Elizabeth Warren, Democrat of Massachusetts, was unsparing. “The Paramount-Warner Bros. merger isn’t a done deal,” she said after the shareholder vote. “State attorneys general across the country are stepping up to stop this antitrust disaster. We need to keep up this fight.”
If it does go through, the combined entity would be a formidable beast, bringing together Paramount Skydance’s stable — CBS, CBS News, Paramount Pictures, Paramount+, BET, MTV and Nickelodeon — with WBD’s portfolio of HBO, Max, Warner Bros. film and TV studios, DC, CNN, TBS, TNT, HGTV and Discovery+. Paramount has said it expects $6 billion in cost savings from the merger, which is Wall Street shorthand for mass layoffs on a significant scale.
The ten-minute meeting was presided over by chairman Samuel Di Piazza Jr., with Zaslav, Campbell, Wiedenfels and chief communications officer Robert Gibbs in virtual attendance. Di Piazza was bullish. “We appreciate the support and confidence our stockholders have placed in us to unlock the full value of our world-class entertainment portfolio,” he said. “With Paramount, we look forward to creating an exceptional combined company that will expand consumer choice and benefit the global creative talent community.”
Zaslav echoed the sentiment. “Over the past four years, our teams have transformed Warner Bros. Discovery and returned the company to industry leadership,” he said. “Today’s stockholder approval is another key milestone toward completing this historic transaction that will deliver exceptional value to our stockholders.”
Paramount Skydance struck a similar note. “Shareholder approval marks another important milestone towards completing our acquisition of Warner Bros. Discovery,” it said in a statement, adding that it looked forward to “closing the transaction in the coming months.”
The shareholders have spoken on the merger. On the pay, they were ignored before the vote was even counted.
