Merger costs add up as Warner Bros. Discovery posts $2.9-billion quarterly loss
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Warner Bros.Discovery’s impending sale has rattled Hollywood — and the company’s balance sheet as the auction’s high costs increasingly come into focus.The New York-based media company released its first-quarter earnings report Wednesday, which included a $2.9-billion loss.
That amount includes $1.3 billion in restructuring expenses, including updated valuations for Warner’s declining linear cable television networks.Contributing to the net loss was the $2.8-billion termination fee paid to Netflix in late February when the streaming giant bowed out of the bidding for Warner.
The auction winner, Paramount Skydance, covered the payment to Netflix, but Warner still must carry the obligation on its balance sheet in case the Paramount takeover falls apart.Should that happen, Warner would have to reimburse Paramount.Warner also spent an additional $100 million to run the auction and prepare for the upcoming transaction, according to its regulatory filing.Stockholders late last month overwhelmingly approved Warner’s sale to Paramount.
The $111-billion deal faces opposition among film and television industry workers, many of whom have been sidelined after previous consolidations among the original studios and a pullback in production that has hurt the L.A.economy.“As we prepare for our next chapter, our focus remains on executing our key strategic priorities: scaling HBO Max globally, returning our Studios to industry leadership, and optimizing our Global Linear Networks,” Warner Bros.
Discovery leaders said Wednesday in a letter to shareholders.Hollywood Inc.
The Ellisons and their team began plotting their comeback in December, the morning after Netflix clinched its deal to buy Warner Bros.In the January-March period, Warner generated $8.9 billion in revenue, a 3% decline from the same quarter one year ago, excluding the effect of foreign exchange rate fluctuations....