Warner Bros. admits cable TV is worth $9B less than it used to be
The stock tumbled to a record low after a huge writedown of the value of its networks
It’s a rough day for Warner Bros. Discovery shareholders. The stock is down to a record low after the company posted a truly astounding $10 billion loss in the second quarter.
The deluge of red-ink was driven by a $9 billion non-cash charge — essentially an accounting adjustment — that recognizes that the rapidly collapsing value of its cable television networks.
This is essentially a forensic accounting admission that financiers drastically overpaid when Warner Bros. Discovery was created by fusing together WarnerMedia and Discovery networks in 2022.
And it underscores the challenge the company has in managing the nearly $40 billion in debt that it still has as a result of it being created in the first place.
“Even two years ago, market valuations and prevailing conditions for legacy media companies were quite different than they are today, and this impairment acknowledges this,” said David Zaslav, the CEO of the company — which owns a range of properties such as CNN, TNT, and HBO, as well as the Warner Bros. movie studio and the streaming platform Max.
Maybe so. But shareholders are paying dearly for that lack of judgment from the media moguls behind the company. Since the shares of the new company started trading in April 2022, they’re down more than 70%.
