Credit rating agency S&P has revised its outlook on Warner Bros Discovery (WBD) from stable to negative.
Affirming its issuer credit rating of BBB, S&P cited declining cash flow and revenues at the studio’s linear television operations. The agency said WBD’s first-half financial and operating performance had missed expectations and that its ability to organically reduce leverage to 3.5x in 2025 had become “more challenging”.
Amid what it called a “weak” environment, the agency said WBD had experienced a 10 per cent year-over-year decline in linear advertising over the second quarter. Total company revenue declined 6.6 per cent over the 2024 first half, with forecast revenues for the full year revised from 2.6 per cent growth to 1.6 per cent.
WBD has suffered a period of “significant volatility” in the wake of the 2023 writers/actors strike, said the agency, adding that the studio’s ability to grow its DTC and studio segments will be a key factor in stabilising long-term earnings.
S&P stated it could revise its rating to stable if the company is able to reduce leverage back to 3.5x while maintaining FOCF to debt above ten per cent on a sustained basis.
