Discovery (WBD) reported a huge $9.1 billion write-down for its TV networks in its gloomy second-quarter earnings report, which came out yesterday. Because of this write-down, these cable TV networks are now worth less than $9 billion less than they were before.
Some people in the media industry were shocked by the news, which showed how hard it is for traditional TV networks to keep up with changing viewing habits and the rise of streaming services. Major networks like CNN, TNT, and TBS are owned by WBD. All of these networks have seen fewer listeners in recent years.
Around $107 million was lost by Warner Bros. Discovery in its streaming services, which include Max.
On the earnings call, Warner Bros. Discovery CEO David Zaslav said, “It’s fair to say that even two years ago, market valuations and the general state of affairs for legacy media companies were very different than they are today.” “This impairment recognizes this and makes our carrying values more in line with what we expect to happen in the future.”
Gunnar Wiedenfels, CFO of WBD, said that the second quarter had “a number of triggering events,” such as “the difference between our current market cap and the book value of the company,” “the continued softness in the US ad market,” and “uncertainty related to affiliate and sports rights renewals, including the NBA,” which made them have to change their plans.
“I’m not minimizing the severity of this impairment, but I think it’s just as important to see that the other side of this shows how the value of different business models has changed, and we are still sure of the growth and value opportunities in studios and our global direct-to-consumer business,” he said.
This big write-off shows that the value of these assets has been reevaluated in light of the current state of media. The company is having a hard time changing its business model to keep up with the needs of customers who are growing using streaming services to get their entertainment.