June 13, 2024

Political Commentary

News Politics Business Sports

Warner Bros Discovery shares dive after warning over debt target

2 min read

Unlock the Editor’s Digest for free

Warner Bros Discovery shares were on course for their biggest daily drop in more than two years after the entertainment group warned investors it was “unlikely” to meet its goals for paying off debt.

The company behind HBO, CNN and the Warner Bros movie studio has been focused on cutting costs and trimming its debt following the $40bn merger of Warner with Discovery last year and against the backdrop of a rising interest rate environment.

That deal gave the newly combined group more heft in a high-stakes battle with Netflix, and consolidated power under chief executive David Zaslav. But it left WBD with a debt pile of $55bn.

Chief financial officer Gunnar Wiedenfels warned on Wednesday that his previous target — achieving a debt-to-adjusted earnings ratio of between 2.5 and 3 times next year — was now “unlikely” because of a tough advertising market and the lingering impact of the Hollywood labour strike.

“It is unlikely from today’s perspective, that we will hit our target leverage range by the end of 2024 without a meaningful recovery of the TV ad market,” said Wiedenfels. 

The television ad market had been “disappointing”, while there was a “real risk at this point” that the labour strike, which has halted TV production, will continue to hurt WBD’s finances in 2024, Wiedenfels warned.

“It is becoming increasingly clear now, that, much like 2023, 2024 will have its share of complexity”, he said.

Shares in WBD fell as much as 17 per cent in Wednesday morning trading on Wall Street, putting them on track for their biggest daily drop since March 2021.

Since the Federal Reserve began raising interest rates in 2022, Wall Street has become sceptical of Hollywood’s growth-orientated streaming revolution and is focused on profits.

Wiedenfels, a former McKinsey consultant from Germany, has built a reputation for…

2023-11-08 12:21:55

All news and articles are copyrighted to the respective authors and/or News Broadcasters. VIXC.Com is an independent Online News Aggregator

Read more from original source here…

Leave a Reply

Copyright © All rights reserved. | Newsphere by AF themes.