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After the U.S. stock market closed on Wednesday, media and entertainment giant Warner Bros. Discovery released a dismal second-quarter financial report. Its performance for the quarter was worse than expected across the board, with all income statement categories falling sharply. Operating income fell 6.2% year-on-year to US$9.71 billion, and its net loss was close to US$10 billion, more than eight times the loss a year ago.

The most surprising and stock-hitting thing in the financial report is that Warner Bros. Discovery has significantly reduced the value of its traditional TV networks such as CNN and TNT by $9.1 billion. In 2022, Discovery acquired Warner Media, which was spun off from AT&T, for more than $40 billion, and the merger gave birth to Warner Bros. Discovery. These TV networks are part of the assets of the acquired Warner Media.

The commentary said that the huge write-downs confirm that traditional cable channels such as CNN and TNT are no longer worth as much as they will be when the $42 billion merger of Warner Bros. Discovery is completed in 2022. The revenue plunge of Warner Bros. Discovery's network division, which includes CNN, will not stop like in the second quarter. Warner Bros. Discovery laid off more than 2,000 people in the past year, and CNN laid off another 100 people last month. In fact, judging by the massive layoffs CNN is undergoing, it can be said that CNN's value is now negative and will remain so until it stops bleeding a lot of cash.

Warner Bros. Discovery CEO David Zaslav said in an earnings call after the market closed on Wednesday:

"Two years ago, the market valuations and realities of traditional media companies were very different than they are today. This impairment recognizes that and brings our book value more in line with future prospects."

The media pointed out that the $9.1 billion in non-cash write-offs in the second quarter occurred when CNN, TNT, TBS and other cable TV networks owned by Warner Bros. Discovery suffered heavy losses from user cancellations, declining ratings and a weak advertising market. Streaming platforms such as Netflix have snatched viewers and subscribers from traditional TV networks. Another recent blow to these cable TV businesses is that TNT failed to reach a new agreement with the NBA and lost the right to broadcast the National Basketball Association games next season. Last month, the NBA abandoned its cooperation with Warner Bros. Discovery and awarded Disney, Comcast and Amazon a 11-year media copyright agreement worth $76 billion. Warner filed a lawsuit against the NBA last month, accusing it of breach of contract.

Other comments said that more importantly, the write-down reflects that viewers continue to shift from cable TV networks such as CNN to streaming media, taking away most of the advertising sales and subscription fees of traditional TV. These changes have spread to the entire media. Disney's third-quarter results announced on Wednesday once again confirmed this. Disney's financial report showed that both cable TV advertising sales and the number of subscribers declined. Disney's stock price fell more than 4% on Wednesday, falling to its lowest point in a decade.

After the financial report was released, Warner Bros. Discovery fell nearly 10% after the market on Wednesday and continued to fall on Thursday. It fell to $6.73 in the early trading, hitting a new intraday low since the stock began trading in April 2022 after the merger, and fell 12.7% during the day. In the past two years, the company's stock price has fallen by more than 70%.