Warner Bros. Discovery (WBD), the multinational media and entertainment giant, has announced a huge loss of $2.1 billion for the fourth quarter of 2022.

The drop was largely attributed to a soft advertising market for media companies. Network advertising revenue tumbled by 17% in Q4.

WBD executives warned of a worsening advertising market last summer, and other media companies, including Paramount Global, have seen it impact on its earnings.

On an earnings call yesterday (February 23), WBD’s chief financial officer Gunnar Wiedenfels said underlying advertising trends continued to soften in the fourth quarter and were exacerbated by audience declines.

Last week, Paramount reported a decrease in quarterly revenue due to lower ad spending.

The company’s revenue for the period stood at a little over $11 billion, which missed analysts’ estimates. This represented a decrease of 9% from the prior year.

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WBD’s television business, which includes cable TV channels TNT, TBS, and Discovery, decreased by 6% to around $5.5 billion, as advertising revenue took a drop in particular.

The media heavyweight, which owns streaming services HBO Max and Discovery+, said its global direct-to-consumer (DTC) streaming subscriber base increased by 1.1 million to 96.1 million by the end of the quarter.

This was up from 95 million in Q3 and was helped in part by the re-launch of HBO Max on Amazon Prime Video Channels in December 2022.

Revenue for the streaming segment was up 6%, driven by an uptick in subscriber growth for its ad-supported tiers.

However, losses for its streaming business narrowed as it posted a drop of $217 million for the period, a $511 million improvement over last year.

In April, WBD is planning to launch its combined streaming service by bringing together HBO Max and Discovery+. The merged platform is set to be named Max, according to CNBC.

WBD chief executive David Zaslav said despite plans to merge the offerings on one platform, Discovery+ will also continue to operate as a standalone service.

The company ended the fourth quarter with $45.5 billion in debt on its balance sheet and $3.9 billion in cash on hand.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $2.6 billion, a decrease of 2% from last year.

Despite a “very challenging” macroeconomic environment, Zaslav is confident WBD’s financial situation will improve this year.

He told investors: "This promises to be a very exciting year for our company. The bulk of our restructuring is behind us…we are one company now.

“This year we are focused on building and growing our businesses for the future, and we’re off to a great start.” 

Earlier this week, WBD announced it will rebrand UK pay-TV broadcaster BT Sport as TNT Sports in July as part of its joint venture (JV) with telecoms company BT.

It is the first big move made by the companies since completing their 50-50 JV in September.

In terms of recent sports rights agreements, WBD agreed a five-year broadcast rights extension to continue showing the US Open grand slam tennis tournament across Europe.