Warner Bros. Discovery, the parent company of CNN, experienced a significant 13% decrease in advertising revenue during the latest quarter due to declining viewership and weak consumer spending. The challenges have been exacerbated by concerns over “Bidenflation” and rising energy prices.
As part of its cost-saving measures following a merger, Warner Bros. Discovery has been cutting jobs across its various media properties. CNN, in particular, continues to struggle with ratings lagging behind its competitors. Even with new talent like Kaitlan Collins, the anti-Trump network has failed to connect with viewers effectively.
In the second quarter, ad revenue for Warner Bros. Discovery’s networks dropped by 13% compared to the same period last year. The company attributed this decline to audience drops in domestic general entertainment and news networks, as well as soft advertising markets in the U.S. and certain international markets.
During an earnings call, CEO David Zaslav expressed concern about the lack of a meaningful recovery in the ad market during the second half of the year. The situation has prompted the company to seek alternative ways to compensate for the revenue loss.
The current ad market downturn is posing an existential crisis for Hollywood media giants, which heavily rely on TV network revenues to boost their corporate profits. The continuous trend of cord-cutting by millions of Americans is drastically impacting the industry.
Furthermore, consumer sentiment towards the economy under Joe Biden’s administration remains pessimistic, fueled by high prices for essentials like gas and groceries. Corporations are becoming more hesitant to invest in expensive commercials.
This advertising challenge has also contributed to Warner Bros. Discovery’s overall earnings missing estimates, causing the company’s stock to decline in Thursday trading. To address the situation, the company is restructuring its ad sales team.
Warner Bros. Discovery, like other Hollywood studios, is also dealing with uncertainty caused by the double Hollywood labor strike, with actors and writers picketing the studios. The ongoing labor dispute is forcing the company to reschedule the release dates of its major films.
Recent layoffs at Warner Bros. Discovery have affected various divisions, including Turner Classic Movies and HBO. The industry is facing a critical period as it navigates through changing consumer habits and economic challenges.