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Warner Bros(Baa3/BBB-/BBB-) Headline Results Miss; FCF Looks Strong

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  • Q1 revenue and EBITDA both ~3% behind consensus at -7% YoY and -20% YoY.
  • CFO and FCF both turned positive from outflows in Q123; CFO of USD 585mn vs. negative USD 631mn in Q123 while FCF of USD 390mn came against consensus of USD 240mn and negative USD 930mn in Q123, mostly driven by more disciplined cost investment, timings and lower restructuring costs.
  • Leverage of 4.1x from 3.9x at FY23 and 5x at Q123.
  • Also noting the news yesterday that Disney and WBD are to bundle streaming services.
  • WarnerMedia Holdings have just announced a 5y and 9y EUR mandate along with a tender of USD lines. Calls commencing 10 May.
  • Spread on WBD EUR 27s muted so far.

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