The hangover from losing the N.B.A. appears to be lasting longer than Warner Bros. Discovery might have hoped.
The company reported a first-quarter loss of $2.9 billion on Tuesday, a figure that includes the continued reverberations of its unsuccessful effort to retain the basketball rights that had been a cornerstone of its TNT sports programming for nearly four decades. Advertising revenue fell 11 percent, a decline the company attributed in part to the absence of games that had reliably delivered young male viewers to advertisers selling trucks, beer and financial services.
"The loss of the N.B.A. negatively impacted the year-over-year growth rate," the company said, in what might qualify as understatement.
The broader picture at the company's linear television networks, which include TBS and TNT, was not appreciably cheerier. Revenue there fell 8 percent, to $4.4 billion, while distribution revenue dropped 7 percent as domestic pay-TV subscribers continued their migration to streaming services and, presumably, the outdoors.
The $2.9 billion loss figure also reflects $1.3 billion in restructuring expenses and, in a wrinkle that accountants may appreciate more than most, a $2.8 billion termination fee that Netflix paid in late February when it withdrew from the bidding for Warner. Paramount Skydance, the eventual auction winner, covered that payment — but Warner must still carry the obligation on its balance sheet in the event that the Paramount deal collapses. (One imagines the accounting department was pleased to learn of this arrangement.)
Looking ahead to the second quarter, the company said the absence of N.B.A. content would create a 16 percent headwind to streaming advertising revenue, a forecast that suggests the basketball-shaped hole in the schedule will remain visible for some time.
The N.B.A., for its part, has moved on.
Original story published in sportsbusinessjournal.com: "Warner Bros. Discovery continues feeling loss of NBA in Q1 loss"