Warner Bros. CFO says ‘unlikely’ to hit target leverage range by end 2024

On the company’s Q3 earnings call earlier, Warner Bros. Discovery CFO Gunnar Wiedenfels said, according to a transcript: “On the challenging side, it is becoming increasingly clear now that much like 2023, 2024 will have its share of complexity, particularly as it relates to the possibility of continued sluggish advertising trends. To that point, while streaming advertising remains robust, the state of the overall linear ad market during the second half of this year has been disappointing. And looking ahead, while it is early, the timing of an ad recovery is currently difficult for any of us to predict with any conviction. And finally, as we begin to formulate the initial framework of our TV production business getting back to work into 2024, there’s simply a lot we don’t know yet. While we have every confidence that this will eventually ride itself throughout the next year, and there should be an eventual tailwind from the end of the work stoppage, this is an evolving process, and there is a real risk at this point that some negative financial impact of the strike will extend into 2024 to some extent. Here’s what these factors mean as we look ahead. We will exit 2023 with great momentum and leverage reduction. We have taken significant financial and operating risk off the table over the last year. And we are fully committed to our gross leverage target range of 2.5 to 3x adjusted EBITDA. That said, taken together the factors just mentioned for an early view on 2024, it is unlikely from today’s perspective that we will hit our target leverage range by the end of 2024 without a meaningful recovery of the TV ad market.”