Warner Bros. Discovery was downgraded to junk status by S&P Global Ratings on Tuesday, with the credit agency pointing to challenges facing its linear TV business as the primary driver.
The downgrade, from BBB- to BB+, reflect S&P’s expectation that WB Discovery will not be able to offset its TV losses with growth from its streaming and studio businesses. Tuesday’s downgrade comes just a few weeks after WB Discovery reported a 10% decline in first quarter sales — a decline that was due largely to a 27% drop in content revenue, as WB Discovery failed to make as much money at the box office as it had a year ago.
Another issue for WB Discovery during the first quarter was that its advertising revenue also dipped 8% year-over-year. The company’s growth in global streaming subscribers during the quarter was not enough to counteract the continued decline of its domestic linear TV business.
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