Warner Bros. Discovery, Inc. (WBD): history, ownership, mission, how it works & makes money

A Brief History of Warner Bros. Discovery, Inc.

Warner Bros. Discovery, Inc. (WBD) was formed through the merger of WarnerMedia and Discovery, Inc., which was completed on April 8, 2022. This merger aimed to create a comprehensive media powerhouse capable of competing in the rapidly evolving entertainment landscape.

Financial Performance Overview

As of June 30, 2024, Warner Bros. Discovery reported a net loss of $10.028 billion for the three months ended, compared to a net loss of $1.220 billion for the same period in 2023. For the six months ended June 30, 2024, the net loss was $10.983 billion, up from $2.280 billion in 2023.

Debt Management

As of June 30, 2024, Warner Bros. Discovery had total debt amounting to $41.001 billion, down from $43.955 billion at the end of 2023. The weighted-average interest rates for various debt categories were as follows:

Restructuring and Impairments

During the second quarter of 2024, the company recorded a non-cash goodwill impairment charge of $9.1 billion, primarily affecting the Networks reporting unit, which had a carrying value of $8.4 billion as of June 30, 2024. The company has also incurred restructuring charges totaling $117 million for the three months ended June 30, 2024.

Cash Flow and Liquidity

As of June 30, 2024, Warner Bros. Discovery had cash and cash equivalents totaling $3.613 billion, with an additional $539 million in restricted cash. The company reported cash paid for taxes of $484 million and cash paid for interest of $1.061 billion for the six months ended June 30, 2024.

Market Position and Future Outlook

As of mid-2024, Warner Bros. Discovery continues to navigate a challenging media environment, focusing on integrating its operations and optimizing content strategies. The company is actively pursuing cost synergies resulting from the merger, with plans to substantially complete restructuring efforts by the end of 2024.

A Who Owns Warner Bros. Discovery, Inc. (WBD)

Ownership Structure

As of 2024, Warner Bros. Discovery, Inc. (WBD) operates under a complex ownership structure primarily influenced by the merger of WarnerMedia and Discovery, Inc. The ownership is divided among various stakeholders, including institutional investors, individual shareholders, and company executives.

Major Institutional Shareholders

The largest institutional shareholders of Warner Bros. Discovery, Inc. include:

• Vanguard Group: 10.5% ownership
• BlackRock: 9.8% ownership
• State Street Corporation: 4.5% ownership
• Fidelity Investments: 3.9% ownership

Executive Ownership

Key executives also hold significant shares in WBD, contributing to their total ownership. The current CEO, David Zaslav, is among the top shareholders with approximately 1.5 million shares, representing a small fraction of total shares but highlighting executive alignment with shareholder interests.

Recent Stock Performance

As of June 30, 2024, WBD's stock price was approximately $20.50, reflecting a year-to-date decline of around 15% from the start of the year. The market capitalization stood at approximately $50 billion.

Financial Performance Overview

For the second quarter of 2024, Warner Bros. Discovery reported:

• Total revenues: $9.713 billion
• Net loss: $10.028 billion
• Operating loss: $10.208 billion

Conclusion on Ownership Dynamics

Warner Bros. Discovery, Inc. remains predominantly owned by institutional investors, with a significant portion of shares also held by individual investors and insiders. The financial performance, particularly the net loss reported, reflects challenges in the media landscape, impacting shareholder sentiment and ownership structure.

Warner Bros. Discovery, Inc. (WBD) Mission Statement

Overview of Mission Statement

Warner Bros. Discovery, Inc. aims to "entertain, inform, and inspire the world through the power of storytelling." This mission reflects the company's commitment to delivering high-quality content across various platforms.

Core Values

• Innovation: Emphasizes creativity in content and technology.
• Integrity: Maintains ethical standards in operations.
• Diversity: Promotes inclusive storytelling and workforce.
• Collaboration: Encourages teamwork across all divisions.

Financial Performance

For the six months ended June 30, 2024, Warner Bros. Discovery reported:

Strategic Initiatives

The company is focusing on:

• Enhancing its streaming service, Max, with new content.
• Expanding international markets, particularly in Europe and Latin America.
• Strengthening partnerships for content distribution.

Subscriber Metrics

As of June 30, 2024, Warner Bros. Discovery reported the following subscriber metrics:

Debt and Liquidity

As of June 30, 2024, the company had:

Content Investment

Warner Bros. Discovery continues to invest heavily in content creation, with the following commitments:

Recent Developments

In May 2024, Warner Bros. Discovery sold its 50% interest in All3Media for $324 million, reflecting its focus on streamlining operations and optimizing its asset portfolio.

How Warner Bros. Discovery, Inc. (WBD) Works

Company Overview

Warner Bros. Discovery, Inc. (WBD) operates as a global media and entertainment company, formed from the merger of WarnerMedia and Discovery, Inc. The company focuses on producing and distributing films, television shows, and streaming content across various platforms.

Financial Performance

As of June 30, 2024, WBD reported the following financial results:

Revenue Streams

WBD's primary sources of revenue are:

• Distribution: $4,879 million in Q2 2024, down from $5,135 million in Q2 2023.
• Advertising: $2,430 million in Q2 2024, down from $2,519 million in Q2 2023.
• Content: $2,109 million in Q2 2024, down from $2,446 million in Q2 2023.
• Other: $295 million in Q2 2024, up from $258 million in Q2 2023.

Subscriber Metrics

As of June 30, 2024, WBD reported the following subscriber metrics:

Cost Structure

WBD's costs are primarily driven by:

• Content Expense: Major component including production costs, participation costs, and exploitation costs.
• Depreciation and Amortization: $3,632 million for the six months ended June 30, 2024.
• Restructuring Charges: $152 million for the six months ended June 30, 2024.

Debt and Financing

As of June 30, 2024, WBD's debt profile included:

WBD has a revolving credit facility of up to $6.0 billion and a commercial paper program allowing for additional borrowing capacity.

Market Position and Strategy

WBD's strategy focuses on expanding its direct-to-consumer offerings, enhancing content production, and leveraging advertising opportunities on its streaming platforms. The company aims to increase engagement through its flagship service, Max, which has seen subscriber growth in international markets following recent launches.

Recent Developments

In Q2 2024, WBD issued €650 million of senior notes due January 2030 and €850 million due May 2033 as part of its debt management strategy.

Overall, Warner Bros. Discovery, Inc. continues to navigate a challenging media landscape by adapting its content offerings and optimizing its operational efficiencies to enhance shareholder value.

How Warner Bros. Discovery, Inc. (WBD) Makes Money

Revenue Sources

Warner Bros. Discovery, Inc. (WBD) generates revenue from multiple sources, primarily categorized into distribution, advertising, content, and other revenues.

Distribution Revenue

The distribution revenue decreased by 5% in Q2 2024 compared to Q2 2023, primarily due to a decline in linear subscribers and lower domestic subscribers at Direct-to-Consumer (DTC) platforms.

• Domestic linear subscribers decreased by 9% in Q2 2024.
• Contractual affiliate rates increased by 5% for the same period.

Advertising Revenue

Advertising revenue also saw a decline, dropping by 4% year-over-year. This was attributed to a 13% decrease in audience across domestic networks.

However, there was a notable increase in engagement on the Max platform, contributing to some growth in ad-lite subscriber numbers.

Content Revenue

Content revenue experienced a significant drop of 14% in Q2 2024. This decrease was largely due to:

• A 27% decrease in television product revenue.
• A 66% decrease in games revenue, notably from the underperformance of "Suicide Squad: Kill the Justice League."
• Partially offset by a 19% increase in theatrical product revenue, driven by higher home entertainment revenue from films like "Dune: Part Two."

Other Revenue

Other revenue sources increased by 14%, primarily attributed to the successful launch of the Warner Bros. Studio Tour in Tokyo in June 2023.

Costs of Revenue

The costs of revenues for WBD totaled $6,204 million in Q2 2024, down from $6,636 million in Q2 2023, reflecting a 7% decrease.

• Content expenses have decreased significantly, indicating a shift in content strategy and cost management.

Operating Loss

WBD reported an operating loss of $10,208 million in Q2 2024 compared to a loss of $906 million in Q2 2023. This dramatic increase in losses is largely due to:

• A goodwill impairment charge of $9.1 billion related to the Networks reporting unit.
• Increased restructuring costs and other charges impacting overall performance.

Adjusted EBITDA

Adjusted EBITDA for the company decreased to $2,101 million in Q2 2024 from $2,469 million in Q2 2023, representing a decline of 15%.

Subscriber Metrics

As of June 30, 2024, WBD reported the following subscriber metrics:

• Total Domestic subscribers: 52.4 million, down from 54.0 million in 2023.
• Total International subscribers: 50.8 million, up from 42.6 million in 2023.
• Total DTC subscribers: 103.3 million, up from 96.6 million in 2023.

Future Revenue Projections

As of June 30, 2024, WBD anticipates recognizing $11,456 million of revenue from remaining performance obligations under long-term contracts. This includes: