August 06, 2024 10:07 GMT
Warner Bros Earnings Preview
COMMUNICATIONS
Baa3/BBB-BBB-
- WBD reports Q2 earnings tomorrow after the US close – BBG consensus is looking for revenue -2.3% YoY, adj-EBITDA -3.6% and FCF -30.5%.
- While the earnings are unlikely to drive spreads to the extent that today’s FT article did, they present an opportunity for management to comment on recent speculation. We are also keen to hear more on the specifics around WBD’s litigative intentions around the loss of the NBA contract, the impact on affiliate fees and how freed-up funds will be re-allocated.
- As of writing we see the 27s/30s/33s roughly 33bp/40bp/31bp above levels seen just before the break-up rumours though accounting for the ~16bp widening in €IG this puts levels roughly 17bp/24bp/15bp wide.
- Q1 earnings were broadly soft with revenue and EBITDA both ~3% behind consensus with a slight increase in leverage from 3.9x at FY23 to 4.1x.
- As per a recent statement, the S&P rating/outlook is predicated on a drop to 3.5x by end-2025 with FOCF-to-debt maintained >10% against current S&P-adj levels of 4.8x and FOCF >16% as of 31 March.
Keep reading...Show less
174 words