Warner Bros. Discovery Inc., the parent of CNN and TNT, posted a second-quarter charge of $9.1 billion after writing down the value of its traditional TV networks.

The company, created in 2022 when Discovery Inc. acquired WarnerMedia, has concluded that cable channels like CNN and TNT are no longer worth what they were when the $42 billion merger was completed.

“Two years ago market valuations and prevailing conditions for legacy media companies were quite different than they are today,” CEO David Zaslav said on a call with investors on Wednesday. “This impairment acknowledges this and better aligns our carrying values with our future outlook.” 

Shares of Warner Bros. fell as much as 9.9% to $6.95 in extended trading after the announcement. That’s the lowest price since the stock of the merged company began trading in April 2022.

The action follows last month’s decision by the NBA to drop Warner Bros. as a broadcast partner and award a $76 billion, 11-year media rights deal to Walt Disney Co., Comcast Corp. and Amazon.com Inc. Warner Bros. filed a lawsuit against the NBA last month alleging a breach of contract.

“At this point, we’ve handed it off to our lawyers,” Zaslav said on the call. “We have confidence in our position.”

The writedown reflects the continued exodus of viewers from cable networks like CNN to streaming, taking with them the advertising sales and subscriber fees that supply most of the revenue for conventional TV.

The changes have rippled across media. Disney, which announced third-quarter results earlier on Wednesday, reported declines in linear television advertising sales and subscribers.

In streaming, Warner Bros. added 3.6 million new subscribers, according to a statement, exceeding Wall Street’s expectations of 1.89 million. That brought the total to 103.3 million, also topping estimates. Ad revenue from streaming doubled to $240 million, beating analysts’ estimates of $191.4 million. 

Warner Bros. has eliminated more than 2,000 positions over the past year and slashed 100 jobs at CNN last month. The company raised subscription prices for its Max streaming service in June.

For the quarter, Warner Bros. reported a net loss of $10 billion, which included additional charges of $2.1 billion related to its merger. Revenue for the quarter fell 6.2% to $9.71 billion.

Under different management teams over the past 20 years, Warner Bros. has been involved in some of the most controversial and criticized merger deals. They include the $124 billion merger of Time Warner with America Online in 2001 and the later purchase of Time Warner by AT&T Inc. for $87 billion in 2018.

—Bloomberg News