Warner Bros. Discovery — the parent company of CNN, Warner Bros., HBO, and numerous other media properties — is getting hammered by weak TV advertising, causing its earnings to fall short of expectations and its stock to plunge as investors worry about the media giant’s financial prospects.
Shares of Warner Bros. Discovery plummeted 12 percent early Friday before recovering slightly later in the day. The company said TV advertising revenue sank 14 percent for the most recent quarter — a sign that the ratings challenged CNN and the company’s other basic cable channels are still in dire condition.
Hollywood’s long-hoped-for recovery in the TV advertising market has failed to materialize as consumer sentiment continues to languish under the Biden administration, which has caused unprecedented inflation that has decimated households across the country.
Adding to Hollywood’s financial pain are the tens of millions of Americans who continue to cut the cable cord.
CNN has failed to reverse its ratings woes despite new leadership and programming shake-ups. The so-called “most trusted name in news” recently notched a pathetic average viewership of 538,000 during primetime — below such cable channels as the History Channel and Hallmark, and far behind Fox News and MSNBC.
Like other legacy Hollywood studios, Warner Bros. Discovery is betting the farm on streaming entertainment, even going so far as to add CNN for free to its flagship subscription streaming service, Max.
In a surprise, Max ended 2023 in the black — making it the first legacy Hollywood streaming service to turn an annual profit.
CEO David Zaslav pulled off the coup through ruthless cutting, including removing great swaths of content from the service in a bid to save money. The content purges have earned him the wrath of TV and movie fans.
He also oversaw layoffs last year that hit many of the company’s media properties, including HBO and TCM — further enraging cinephiles.
“This business is not without its challenges,” Zaslav said Friday during the company’s fourth-quarter earnings call. “Among them, we continue to face the impacts of ongoing disruption in the pay TV ecosystem and a dislocated, linear advertising ecosystem. We are challenging our leaders to find innovative solutions.”
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