Published - December 15, 2022 @ 4:25 PM (EET)

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As Warner Bros. Discovery (NASDAQ:WBD) tries to pare down operations, the company on Wednesday said it expects to face charges as much as $5.3 billion related to its acquisition of AT&T's WarnerMedia.

The film and TV giant had forecasted over $1 billion less in pretax restructuring charges less than two months ago.

Following the completion of the merger of Discovery and WarnerMedia earlier this year, the company has continued to cut costs and cancel programming commitments.  

There have also been significant layoffs which include top executives at HBO, CNN, Warner Bros, and other cable networks. Elsewhere, nay high-profile projects and shows have been killed or canceled as well as cuts of less-known shows.

Last week, The Hollywood Reporter said a new installment of "Wonder Woman" won't move ahead as planned, and that episodes of the costly "Westworld" will be removed from all HBO platforms.

These changes allow Warner Bros. Discovery to write down millions in amortization costs for canceled or de-platformed shows and movies.

WHAT HAPPENED

In October, Warner Bros. warned that substantial post-merger costs lay ahead for the combined company. At the time, the media conglomerate said it expected to record charges of up to $2.5 billion to write off some films and TV shows and drop some in development.

Led by Chief Executive Officer David Zaslav, management is grappling with cable TV, its biggest source of revenue, losing customers to online rivals like Netflix Inc. (NASDAQ:NFLX) while simultaneously merging two media companies.

Though the loss of new production might sound alarming, Zaslav notes that the company has a "strong foundational offering," which should give it the boost it needs.  

With a debt load of around $50 billion, cost-cutting was inevitable. Still, Warner Bros Discovery said it expects to complete its restructuring initiatives by the end of 2024.

NOW WHAT

Warners Bros Discovery said Wednesday some of the shows withdrawn from HBO and HBO Max might return to free ad-supported streaming platforms owned by other companies if they can reach licensing agreements.

"We are incredibly proud of Westworld and the remarkable work of our cast and crew. We are excited to have the opportunity to welcome a whole new audience to our show." - Creators Jonathan Nolan & Lisa Joy, Westworld.

Based on ten analysts' ratings covered by TipRanks, Warner Bros' stock is a Moderate Buy (4 Buys, 5 Holds & 1 Sell).

The average price target of 18.75% implies an upside potential of 70.77%.

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