Warner Bros. Discovery, the parent company of the ratings-challenged CNN, saw its advertising revenue plummet 13 percent in the most recent quarter amid collapsing viewership and weak consumer spending tied to persistent fears over Bidenflation and soaring energy prices.
The plunge in ad revenue comes as company executives continue to swing the ax across its multiple media properties, cutting down wide swaths of employees in an effort to make good on merger-related savings. As for CNN, ratings for the anti-Trump network still lag far behind the competition, with bright new hope Kaitlan Collins failing to connect with viewers.
On Thursday, Warner Bros. Discovery reported that ad revenue for its networks tumbled 13 percent for the second quarter, compared to the same period last year.
The company cited “audience declines in domestic general entertainment and news networks and soft advertising markets mainly in the U.S. and, to a lesser extent, certain international markets.”
CEO David Zaslav sounded the alarm to investors during Thursday’s earnings call.
“A lot of us expected that there would be a meaningful recovery [in the ad market] in the second half of the year and we haven’t seen it, and we’ve needed to figure out how to make up for that,” he said.
The cratering ad market is creating an existential crisis for Hollywood media giants, which have traditionally relied on revenue from their TV networks to pump up corporate profits. However, continued cord cutting by tens of millions of Americans is gutting the industry and throwing Hollywood into an existential crisis.
In addition, consumer sentiment surrounding Joe Biden’s economy continues to be abysmal, as high prices for basic necessities like gas and groceries show no sign of going away. As a result, corporations are increasingly reluctant to shell out big bucks for splashy commercials.
“The advertising environment is just not picking up,” LightShed Partners analyst Rich Greenfield told Yahoo! Finance.
Advertising woes helped depress Warner Bros. Discovery’s overall earnings for the quarter, which missed estimates and caused the stock to slip in Thursday trading. Earlier this week, the company said it would restructure its ad sales team to address the crisis.
Like other Hollywood studios, Warner Bros. Discovery is facing additional uncertainty around the double Hollywood labor strike, with actors and writers picketing the studios. With no end in sight, the company is shifting the release dates of its tentpole movies.
Recent layoffs at the company include Turner Classic Movies and, most recently, HBO.