Warner Bros. Discovery shares fell more than 8% to an all-time low on Wednesday after the media conglomerate – which relies heavily on its pay-TV business – took $11.2 billion in impairment charges, including a $9.1 billion write-down due to the decline in value of several of its linear TV channels.
In after-hours trading, WBD shares fell below $7.10 per share. The stock’s lowest closing price was reached on June 18, 2024, when it ended the day at $6.99 per share. Year-to-date, Warner Bros. Discovery shares had already fallen 34%.
As of Wednesday’s close, WBD’s market capitalization was $18.8 billion, compared to more than $50 billion following the completion of Discovery’s acquisition of WarnerMedia in April 2022.
The stock price decline, disappointing second-quarter results, enormous debt burden and the loss of the company’s NBA rights starting with the 2025 season will further increase the pressure on CEO David Zaslav to quickly find a strategy to turn things around.
“In the face of industry headwinds, we have taken and will continue to take bold steps, including re-engineering our existing linear partnerships and pursuing new bundling opportunities, with the goal of bringing Max to more consumers’ devices faster and at a fraction of the acquisition cost,” Zaslav said in prepared remarks on Q2 results.
Last month, Warner Bros. Discovery laid off nearly 1,000 employees as part of a new cost-cutting measure. WBD could be in line for a merger or acquisition – similar to the deal Skydance Media negotiated that would merge with Paramount Global (which also operates a TV-focused business).
Zaslav said at an investment conference this spring that Warner Bros. Discovery will “opportunistically” look for M&A deals over the next two or three years. “There are a lot of players that are losing a lot of money,” he said. “There will be some players that will want to get out of the business and will try to consolidate their streaming businesses with others.”
At the Allen & Co. retreat last month in Sun Valley, Idaho, Zaslav said he was supporting the presidential candidate who could cut government red tape and pave the way for mergers and acquisitions. “We just need an opportunity to deregulate so companies can consolidate and do what they need to do to get even better,” he said.
