NBA Talks to Warner Bros. Discovery facilitated a re-evaluation of its business. Company executives revealed that the NBA was an “energizing event” during its second-quarter earnings call. However, negotiations weren’t the only reason for the review.
The company’s Q2 2024 earnings report includes a $9.1 billion charge for goodwill impairment related to the company’s television networks. This number comes after asset valuation, which calculates the difference between an asset’s “fair value” and its “book value.”
Gunnar Wiedenfels, Warner Bros.’ CFO, said: “There’s a systematic process that we go through every quarter and we monitor for a so-called trigger event,” Discovery said Wednesday. “The NBA acts as a trigger event that then forces us to reexamine our business case in the strategic planning process with the latest assumptions, the best view of where the industry is and how we play in it. That’s what then drives the evaluation.”
Although Warner Bros. Discovery underwent a “comprehensive evaluation,” Wiedenfels noted, “it was not a response to any single factor.” He also noted that the result is “consistent” with the direction the market is taking in linear television, as well as what “the investment community is reflecting in our current stock price.”
Wiedenfels and CEO David Zaslav also declined to discuss how the loss of the NBA might affect negotiations with Warner Bros. Discovery declined to comment on its cable assets.
Even though Warner Bros. Discovery lost the NBA, sports remain a major part of the business. Zaslav pointed to the NCAA March Madness Men’s National Championship and the NHL Stanley Cup Playoffs as second-quarter realities. The WBD executive also noted that TNT Sports “continues to build a robust sports rights portfolio.”
In the past year, Warner Bros. Discovery has signed deals with NASCAR for 2025-2031, Roland Garros tennis for the next 10 years in the U.S., Big East men’s and women’s basketball starting with the 2025-2026 season and Mountain West soccer for a multi-year contract.
The company hopes that the strength of TNT’s sports coverage will help the launch of Max in the UK, which is expected to take place in 2026. Max’s expansion into Europe and Latin America has already attracted 4 million customers.
More to come…
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