What caused WBD's EPS surprises in 2024?

Warner Bros. Discovery (WBD) experienced a negative EPS surprise in 2024, with an EPS of -0.2 for the quarter ending December 31, 2024. This was largely due to several factors impacting its financial performance:

1. **Decline in Revenue**: Warner Bros. Discovery faced a 6.2% year-over-year revenue decrease, reaching $9.71 billion, missing the Zacks Consensus Estimate by 3.5%. This decline was notable in various segments, including advertising, distribution, and content revenues.
2. **Advertising and Network Revenues**: The company's advertising revenues fell by 3.5% year-over-year, reaching $2.43 billion. Distribution revenues dropped 5% year-over-year, amounting to $4.87 billion. These declines indicate challenges in monetizing its extensive media assets.
3. **Content and Studio Performance**: Content revenues declined by 13.8% year-over-year, reaching $2.1 billion. The Studios segment, which includes television and film production, reported revenues of $2.44 billion, down 5.1% from the previous year. This decline was due to underperformance from major releases like "Suicide Squad: Kill the Justice League" and "Mickey 17", despite successes with "Dune 2" and "Hogwarts Legacy".
4. **Linear TV Struggles**: The company's linear TV business continued to decline, which is a significant concern as it accounts for a large portion of the company's cash generation. This decline is reflective of broader industry challenges, including the shift to streaming and the impact of strikes in Hollywood.
5. **Strategic Investments and Costs**: The company has been investing heavily in its core business segments, including content creation and technology infrastructure. These investments have led to increased costs, which have negatively impacted short-term profitability.

In summary, Warner Bros. Discovery's EPS surprise in 2024 was primarily due to a combination of revenue declines across various segments, including advertising, content, and studio performance, along with the ongoing challenges posed by the decline in linear TV and the strategic investments being made to bolster its core business segments.