Warner Bros. Discovery Earnings: Cash Flow Continues Improving Despite Ugly Revenue Trends

Warner Bros. Discovery's fourth-quarter results were disappointing, as the Max streaming platform is yet to show any renewed momentum. Sales results in the networks and studios segments were also much worse than we anticipated, which we attribute in part to the actors and writers strikes during the second half of 2023. The top-line malaise makes it easy to write off the company's future, but we think that overlooks the cash the firm is increasingly generating and the opportunities it has to significantly improve profitability even without much sales growth. With those components in mind, we're reducing our fair value estimate from $22 to $20.