All Elite Wrestling continues to work towards reaching a new agreement with its current partner, Warner Bros. There were reports that both parties had signed an agreement in principle. However, the specialized media outlet Fightful later clarified that nothing official had been sealed so far thus causing further confusion among fans.

Despite this, both reports reveal that the willingness of both parties is to maintain their relationship. So everything points to the Tony Khan-led promotion continuing to be linked to WBD in the coming years. But now a major reveal can possibly turn out to be a new hurdle in the negotiations. So what is the new reveal?

Well, it turns out that Warner Bros. Discovery is not as profitable as they thought they were. According to IndieWire, Warner Bros. Discovery has just realized that its television networks are worth $9.1 billion less than it initially thought. This will lead to a net loss of $10 billion in the second quarter of 2024.

The huge plunge in valuation is recognized as a “non-cash goodwill impairment charge” coming primarily from the company’s “Networks” division, according to an internal audit. WBD blames the devastating change in value on the “difference between market capitalization and book value” due to the weakness of the U.S. advertising market and “uncertainty” around future broadcast deals, where the NBA’s loss does not help.

WBD CEO David Zaslav said on Wednesday’s earnings call that market valuations two years ago, when they first merged in April 2022, were “quite different than they are today,” and that doing so “recognizes” that shift in value and “better aligns” them with their forward-looking goals. Chief Financial Officer Gunnar Wiedenfels said he did not “disdain the magnitude” of the deterioration but that this represents the shift in value towards streaming, which the company still believes has strong momentum.

The company is on an economically downward spiral

The decline in advertising on its linear networks has taken its toll on all of Turner’s Discovery channels and cable channels. The direct-to-consumer segment posted losses of $107 million. Since Warner Bros. Discovery came forth as a merged company just over two years ago, in April 2022, the company’s shares have fallen nearly 70%. The company’s shares fell another 8 percent in after-hours trading and are now nearing an all-time low.

Late last month, Warner Bros. Discovery released a report that explored a possible spin-off of its film and television studios and streaming of its linear TV channels. Much of WBD’s $40 billion debt falls on linear channels, so a separation would free up the studio segment to unlock more value. But it also comes with enormous risks, and some analysts doubt this entirely. Until now, All Elite Wrestling did not have permission to talk to other companies because of an exclusive negotiation period that Warner had. However, that is no longer the case.

As confirmed by Sean Ross Sapp on Fightful Select, the exclusive negotiation window with All Elite Wrestling and Warner Bros. Discovery ended this week. The two sides continued to talk in recent days, but it is unknown if a deal has been reached. Importantly, Tony Khan will meet with Warner Bros. CEO David Zaslav this weekend in Paris. It would be interesting to see if this information causes Tony Khan’s All Elite Wrestling to change their mind and look for a different platform. What do you think? Will AEW continue with the negotiations with Warner Bros. Discovery? Let us know in the comments.