Warner Bros Discovery is facing increasing financial challenges as S&P lowered its outlook on the company from "stable" to "negative." The downgrade comes as the media giant grapples with a significant decline in its cable TV business, which has been struggling due to a reduction in advertising revenue and the ongoing trend of consumers moving away from traditional TV to streaming platforms.
The cable TV segment, which accounts for approximately half of the company's revenue, has seen a steep decline, forcing Warner Bros Discovery to write down the value of its television assets by about $9.1 billion earlier this month. S&P highlighted that the company's debt levels are likely to remain elevated due to these struggles, which could hinder its ability to quickly reduce its $41.4 billion gross debt, reported as of June 30.
S&P's concerns are further exacerbated by the potential loss of broadcast rights for the National Basketball Association (NBA) games after the 2024-2025 season, which would further impact the company's already strained finances. Warner Bros Discovery recently lost its four-decade-long partnership with the NBA when the league awarded broadcast rights to Walt Disney's ESPN, Comcast-owned NBCUniversal, and Amazon.com. The company has since filed a lawsuit against the NBA after its matching bid for Amazon's package was rejected.
Despite these challenges, Warner Bros Discovery continues to expand its direct-to-consumer streaming services, with its user base growing to 103.3 million, driven by the introduction of cheaper ad-supported options and the expansion of its Max service to new markets. S&P noted that the company's vast film and TV library could still serve as a crucial asset in driving sustained growth in its streaming services, which will be essential to offset the ongoing declines in its linear TV business.
(Source:www.marketscreener.com)
The cable TV segment, which accounts for approximately half of the company's revenue, has seen a steep decline, forcing Warner Bros Discovery to write down the value of its television assets by about $9.1 billion earlier this month. S&P highlighted that the company's debt levels are likely to remain elevated due to these struggles, which could hinder its ability to quickly reduce its $41.4 billion gross debt, reported as of June 30.
S&P's concerns are further exacerbated by the potential loss of broadcast rights for the National Basketball Association (NBA) games after the 2024-2025 season, which would further impact the company's already strained finances. Warner Bros Discovery recently lost its four-decade-long partnership with the NBA when the league awarded broadcast rights to Walt Disney's ESPN, Comcast-owned NBCUniversal, and Amazon.com. The company has since filed a lawsuit against the NBA after its matching bid for Amazon's package was rejected.
Despite these challenges, Warner Bros Discovery continues to expand its direct-to-consumer streaming services, with its user base growing to 103.3 million, driven by the introduction of cheaper ad-supported options and the expansion of its Max service to new markets. S&P noted that the company's vast film and TV library could still serve as a crucial asset in driving sustained growth in its streaming services, which will be essential to offset the ongoing declines in its linear TV business.
(Source:www.marketscreener.com)
