FILE PHOTO: The Warner Bros logo is seen during the Cannes Lions International Festival of Creativity in Cannes, France, June 22, 2022. REUTERS/Eric Gaillard/File Photo
(Reuters) - Shares of Warner Bros Discovery plunged 12% in premarket trading on Thursday after a $9.1 billion write-down of the media giant's TV assets sparked fresh concerns about its traditional broadcasting business.
The company reported a $10 billion net loss for the second quarter due to the write-down and missed Wall Street estimates for quarterly results, overshadowing strong streaming subscriber growth thanks to its cheaper ad-supported offerings and the expansion of its streaming service Max to new markets.
The results also underlined the loss of a key sports broadcast deal amid a broader hit from the shift to streaming.
The legacy media company, forged by the union of AT&T spinoffs WarnerMedia and Discovery in April 2022, has lost more than $40 billion in its market valuation since then.
"WBD's market cap is a fraction of what it was pre merger, which should make investors reconsider who really is enriched by giant media M&A deals," said Ross Benes, television and streaming analyst at eMarketer.
The stock, which has shed more than 32% of its value so far this year, was the top loser on the S&P 500 index before the bell.
It was on track to open at a more than 15-year low and lose more than $2 billion in market valuation, if premarket loses hold.
The company reported revenue of $9.71 billion in the second quarter on Wednesday, compared with analysts' estimate of $10.07 billion, per LSEG data.
"There's no dressing this up. A disappointing set of results with numerous challenges to overcome. There’s no easy fix and a clear concise turnaround strategy is very much needed," said Paolo Pescatore, analyst at PP Foresight.
(Reporting by Deborah Sophia and Harshita Mary Varghese in Bengaluru; Editing by Saumyadeb Chakrabarty)
