Warner Bros. Discovery shares rose for the second day in a row

  • Warner Bros. Discovery’s shares jumped for the second day in a row after the company announced it was paying down some of its debt.
  • The media giant, which has a heavy debt load after the merger closed last year, has worked to cut costs and make the streaming business profitable.
  • The debt repayment was overshadowed by the ouster of CNN’s CEO.

Pavlo Gonchar | Lightrocket | Getty Images

Warner Bros. Discovery saw its stock rise for a second day in a row on Thursday, after announcing it had paid down part of its debt load this week.

The financial update, which was announced on Wednesday, had been overshadowed by the turmoil at the news channel CNN, where CEO Chris Licht was ousted. The stock rose 6% Thursday after closing more than 8% higher on Wednesday. The stock is up 49% so far this year.

The media giant has been struggling with a large debt load stemming from the 2022 merger of Warner Bros. and Discovery. The company, which ended the first quarter with $49.5 billion in debt, has been in the middle of various cost-cutting initiatives such as layoffs and reductions in content spending.

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Warner Bros. Discovery’s stock rose in recent days after the company announced it was paying down some of its heavy debt load.

In a public filing, Warner Bros. Discovery that they had repaid around $1.5 billion in debt on two of their loans. The company also announced that it was starting a $500 million cash tender offer.

That resulted in $2.05 billion in debt reduction in the second quarter, about $1 billion more than Wells Fargo had forecast, according to Steven Cahall, an analyst at the bank.

The analyst noted that Warner Bros. Discovery guided that it would have about $930 million in free cash flow in the second quarter, after ending the first quarter with $2.6 billion in cash.

“We take the debt reduction to indicate management’s confidence in 2023 cash generation and deleveraging,” Cahall wrote.

Warner Bros. Discovery has also worked to make its streaming business profitable. CEO David Zaslav recently said on a company earnings call that the streaming business is expected to reach profitability in the US in 2023, a year ahead of expectations. The company recently relaunched and rebranded its flagship streaming service as Max, combining content from HBO and its portfolio of cable TV networks such as Discovery Channel and TLC.

During the first quarter, Warner Bros. Discovery reported $10.7 billion in revenue, as well as a net loss of $1.1 billion.

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