S&P cuts Warner Bros outlook to negative amid cable woes

S&P lowered its outlook on Warner Bros Discovery on Friday to “negative” from “stable”, citing declines in the media company’s cable TV business due to a tough advertising market and cord-cutting.

The ratings agency said the move reflected its expectation that Warner Bros Discovery’s debt levels would stay high as the traditional TV declines weigh on the company’s cash flow.

S&P reaffirmed its “BBB-” investment-grade credit rating for the company.

“The potential loss of the NBA broadcast TV contract after the 2024-2025 season could further exacerbate the challenges at the linear television networks segment,” S&P said in a statement.

Last month, the National Basketball Association awarded Walt Disney’s ESPN, Comcast-owned NBCUniversal and Amazon.com rights to carry the league’s games, ending a four-decade old partnership with Warner Bros Discovery.

The NBA has contributed a sizable amount to the company’s profit through ad dollars across its linear TV portfolio and streaming services, Max.

Analysts had raised concerns over the loss of NBA rights, stating that Max’s sports offering would be weaker without the league’s games.

Warner Bros Discovery has filed a lawsuit against the NBA after the league rejected its matching bid for Amazon’s package.

The media firm said it considers the NBA as a “unique asset” that cannot be easily replaced and would affect the price TNT, Warner Bros Discovery’s sports network, can charge advertisers. Reuters