Zaslav Warns of "Generational Disruption" as Warner Bros. Discovery Stock Sinks 19% due to Falling Ad Revenue

• Warner Bros. Discovery reported third-quarter earnings before the bell Wednesday.
• The company posted a decline in ad revenue.
• David Zaslav, CEO, stated that the media industry is undergoing a "generational upheaval."

On Wednesday, the company's shares dropped after it announced a decline in advertising revenue, a larger-than-anticipated loss, and disappointing streaming subscriber numbers.

According to LSEG, formerly known as Refinitiv, the company's quarterly report for the period ending September 30 differed from analysts' predictions.

• Loss per share: 17 cents vs. 6 cents expected
• Revenue: $9.98 billion vs. $9.98 billion expected

In the third quarter, Warner Bros. Discovery recorded a net loss of $417 million, or 17 cents per share, compared to the $2.31 billion, or 95 cents per share, loss in the previous quarter. Despite this, revenue increased by 2% to $9.98 billion.

The company's stock dropped 19% on Wednesday, following a media rally last week that was fueled by and earnings. This slide comes after a rival media giant is set to report earnings after the closing bell on Wednesday.

The TV networks segment of Warner Bros. Discovery experienced a 12% decline in ad revenue compared to the previous year, due to a decrease in viewership for general entertainment and news programming, as well as weak ad trends in the U.S.

In addition to the challenges ahead, the company cautioned about slow ad revenue and the lingering effects of the actors' strike.

The CEO stated that the current generational disruption makes it challenging to move forward with a streaming service that is losing billions of dollars.

Since the launch of Warner Bros. Discovery's flagship streaming service Max in May, the third quarter has been the first full quarter to include content from both HBO Max and Discovery+.

According to StreetAccount, the company had 95.1 million global direct-to-consumer subscribers, a 700,000 decrease from the previous quarter, and fewer subscribers than analysts projected at 95.4 million.

During the earnings call, CFO Gunnar Wiedenfels stated that the "modest sequential loss" was mainly due to the "extraordinarily light content slate."

The streaming business did swing to a profit in the quarter, however.

During the quarter, Warner Bros. Discovery made significant progress in paying off its debt, with $2.4 billion in repayments. Despite this, the company still has a gross debt of $45.3 billion.