Warner Bros. Discovery touted its “disciplined” sports strategy, saying sports is an area where it is responding “tenaciously and creatively” to ongoing pay-TV declines.
The company made the remarks in its quarterly letter to shareholders, released along with financial results for the fourth quarter, which were mixed. Revenue slipped 2% and adjusted EBITDA fell 11% but the streaming business added 6.4 million subscribers.
WBD is surrendering rights to the NBA after the current season, ending broadcasts on TNT after several decades. As result of the outcome of NBA talks, which saw NBCUniversal and Amazon prevail alongside incumbent Disney-ESPN, the company said it has “entered into a far more efficient long-term relationship with the league.” WBD will retain some international rights and will continue to produce Inside the NBA, which is known as the premiere studio show. ESPN has licensed the show in the U.S. Digital highlights will also circulate on the company’s Bleacher Report digital platform.
Sports is an example of the company’s effort to reckon with a changing landscape, the letter argued. The changes have come more quickly and dramatically than the management team was able to recognize. “The U.S. linear television advertising market has deteriorated faster than we expected, as evidenced by our results over the last several quarters,” the letter said.
“The earnings generated by our linear networks continue to support our ability to invest in our transformation,” the company wrote in the letter. “We are responding tenaciously and creatively to the secular headwinds we face in the broader linear television market, and we are squarely focused on maximizing our Networks’ ongoing cash generation potential.”
Pay-TV declines will continue, the letter affirmed. “Reduced subscribers combined with further pressure on linear viewership, particularly for general entertainment content, makes forecasting networks’ advertising challenging.”
