Warner Bros Discovery Falls Apart

24/7 Insights

• Warner Bros. Discovery Inc. (NASDAQ: WBD) stock has tumbled in the past year.
• The media giant’s challenge is that it has several problems that it has been unable to solve.

Warner Bros. Discovery Inc. (NASDAQ: WBD), a merger of AT&T’s media assets and Discovery’s, was supposed to have the assets to make it the industry leader, perhaps even ahead of juggernaut Disney. Instead, the cobbled-together company’s stock has fallen 43% in the past year, compared to a 23% jump in the S&P 500. Even stumbling Walt Disney Co. (NYSE: DIS) shares have risen 10% over the same period. Warner Bros. Discovery’s stock reached a 52-week low last week.

The Trouble With Warner Bros. Discovery

Streaming is among the most essential keys to the future of big company media stocks. Warner Bros. Discovery beat expectations in terms of subscriber count last quarter. However, the CEO described the hurdle he and his rivals face. David Zaslav said, “The churn is the killer in this business and we’ve been hyper focused on it. Adding bundling has been a big helper to decrease the loss of customers. We need to go at this … in an attack mode.” He has started the effort to keep customers by “bundling” with a deal to marry his Max streaming service with Disney+ and Hulu. The jury won’t be in on how that performs for several quarters.

Another challenge for Warner Bros. Discovery is its cable flagship CNN, whose operating income has been falling. Zaslav is now on his third CEO at the news operations. No matter who runs CNN, MSNBC and Fox News have been tough competition.

Warner Bros. Discovery’s challenge is that it has several problems that it has been unable to solve.

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