Warner Bros. Discovery, the parent company of CNN, Warner Bros., HBO, and various other media properties, is facing significant challenges due to a decline in TV advertising revenue. This has led to a decrease in earnings and a drop in stock value, causing concern among investors about the company’s financial future.

The company’s shares experienced a sharp 12 percent decline early on Friday, although they did recover slightly later in the day. Warner Bros. Discovery reported a 14 percent decrease in TV advertising revenue for the most recent quarter, indicating ongoing struggles for CNN and its other basic cable channels.

Despite hopes for a recovery in the TV advertising market in Hollywood, consumer sentiment remains low under the Biden administration, leading to widespread inflation that has negatively impacted households nationwide. In addition to these challenges, the company is also facing the impact of a growing number of Americans choosing to cancel their cable subscriptions.

CNN continues to struggle with ratings, even after changes in leadership and programming. The self-proclaimed “most trusted name in news” recently recorded an average viewership of 538,000 during primetime, falling behind channels like the History Channel and Hallmark, and significantly trailing Fox News and MSNBC. Similar to other traditional Hollywood studios, Warner Bros. Discovery is heavily focusing on streaming services as a key part of its strategy. The company has even included CNN for free in its main subscription streaming service, Max.

Max unexpectedly finished 2023 with a positive balance, becoming the first traditional Hollywood streaming platform to achieve a yearly profit.

CEO David Zaslav achieved this feat by implementing aggressive cost-cutting measures, such as eliminating a significant amount of content from the platform to reduce expenses. These content removals have sparked outrage among fans of TV shows and movies. Additionally, he supervised a round of layoffs last year that affected various media outlets owned by the company, including HBO and TCM, causing further discontent among film enthusiasts.

“This business is not without its challenges,” Zaslav said Friday during the company’s fourth-quarter earnings call. “Among them, we continue to face the impacts of ongoing disruption in the pay TV ecosystem and a dislocated, linear advertising ecosystem. We are challenging our leaders to find innovative solutions.”