Episode summary
Warner Bros. Revenue Misses Estimates Amid Plans for Sale | Bloomberg Intelligence
Bloomberg Intelligence
· · 17 min · Hosts: Paul Sweeney, Scarlet Fu · Guests: Geetha Ranganathan, Mandeep Singh, Poonam Goyal
Summary
Warner Bros. Discovery’s third-quarter revenue miss did little to change the core argument around the company: the TV networks business is under pressure, but the studio and streaming assets are what buyers want. The analyst said the weak fundamentals “don’t matter all that much” right now because the company is really being judged on M&A, not quarterly results. She pointed to a 20% slump in TV advertising and a 20% decline in TV EBITDA, while noting that studio and streaming posted strong results and that Warner Bros. has about a 27% share of domestic box office.
The discussion centered on possible bidders and price. Paramount Skydance has already made three offers, with the highest at $23.5 a share, but Netflix and Comcast are described as focused only on studio and streaming. The analyst said a deal for those assets could require roughly $75 billion to $80 billion, while a full-company sale might need more than $30 a share.
Comcast’s planned Versant spinout, expected before year-end, was framed as another sign that cable networks remain challenged even as they still throw off cash. On tech-enabled consumer businesses, the panel said Uber and DoorDash continue to grow but investors are getting more cautious about heavy spending. Under Armour, meanwhile, was described as facing self-inflicted top-line weakness, tariff pressure, and a turnaround that remains uncertain.
Key takeaways
- The analyst said Warner Bros. Discovery’s quarterly miss matters less than whether its studio and streaming assets attract a bidder.
- Paramount Skydance has already made three bids, with the highest at $23.5 a share, but Netflix and Comcast want only the studio and streaming businesses.
- The analyst estimated Warner Bros. Discovery’s studio-and-streaming assets could fetch about $75 billion to $80 billion, while a full-company deal may need more than $30 a share.
- Comcast’s Versant spinout is expected before year-end, and the cable-network business is still seen as challenged but cash-generative.
- DoorDash and Uber are still growing, but the analyst said investors are increasingly skeptical of new spending cycles after years of cash burn.
- Under Armour’s weakness was described as partly self-inflicted, with tariffs cutting gross margin by about 200 basis points for the fiscal year.
Notable quotes
“fundamentals Scarlet really don't matter all that much um at this point especially”
“We expect uh you know a price tag somewhere in the ballpark of about 75 to 80 billion”
“The split's going to happen before uh year end, Paul”
“Tariffs are impacting them. In fact, more than some of our other companies who have been largely able to offset these headwinds, they are not able to”
How the episode opens
Bloomberg Audio Studios podcasts radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m.
Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. There's a lot going on in media or we keep hearing that there's going to be a lot going on in media because some companies are up for sale and other companies are looking to buy but we haven't gotten any actual bids just yet.
Githa Ranganathan is our US media analyst here at Bloomberg Intelligence and Githa we've been looking at Warner Brothers because it has uh announced plans to split itself up uh to extract more value. David Zasov, the CEO we know is a dealmaker. um yet it just came out with results that showed revenue in the third quarter dropped 6% from a year ago.
What does this mean for its plan to sell itself? Um so fundamentals Scarlet really don't matter all that much um at this point especially. Yes, the TV network's business as we know now for many many quarters has been severely challenged.
We saw a 20% slump in TV advertising. We saw a 20% decline in TV EBIDA. This was kind of well expected and this really speaks to why they need to separate themselves.
Why they need to separate the low growth or rather the no growth uh TV assets from one part from the part of the business that's actually growing which is studio and e and streaming. Uh that part of the business actually posted really good numbers. We saw the studio Warner Brothers has actually been having a a very very successful run at the box office the this year.
They have about a 27% share of domestic box office and we've seen that kind of translate into really strong IBIDA numbers and so we saw studio and streaming actually put up really really good numbers and that again speaks to why so many different parties including a Netflix including a Comcast are interested in going after those studio and streaming assets.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- media earnings
- sports betting partnerships
- ridesharing spending guidance
- e-commerce and retail outlook
- consumer tech spending
Companies and tickers mentioned
- DIS
- DKNG
- DASH
- LYFT
- PENN
- UAA
- UA
- Warner Bros. Discovery Inc.
- Walt Disney Co.
- DraftKings Inc.
- DoorDash Inc.
- Lyft Inc.
- Penn Entertainment Inc.
- Under Armour
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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