Warner Bros Discovery posted a bigger-than-expected quarterly loss on Thursday, as lackluster growth in its streaming unit and ongoing declines in its cable TV business eclipsed a strong showing from the media giant’s studio.
The company’s shares rose nearly 1% in volatile trading. They have more than doubled in value this year as the company weighs a full or partial sale, while advancing plans to split its studio and streaming operations from its shrinking cable-TV unit.
After a solid quarter last year fueled by the 2024 Paris Olympics and the first season of crime drama series “The Penguin”, WBD’s streaming business – home to HBO Max – faced a lull in fresh content in the July-September period.
It added 2.3 million streaming subscribers in the third quarter, missing Visible Alpha estimates of 2.75 million and lower than the 3.4 million additions in the preceding quarter.
Warner Bros Discovery ponders outright sale
NO DEADLINE FOR SALE OR SPLIT
WBD said there was no deadline for the sale or split. It would also consider an alternative structure that would involve selling its studio and streaming businesses, while spinning off its global networks division.
“It’s fair to say that we have an active process underway,” CEO David Zaslav said on an earnings call.
Reuters reported last week that Netflix was actively exploring a bid for WBD’s studio and streaming business. Comcast is also exploring a deal, although several analysts view David Ellison-led Paramount Skydance as a front-runner for WBD given its access to deep pockets and Washington ties.
While WBD declined to answer analysts’ questions about its business review, Zaslav spent several minutes touting the success of the film studio, its upcoming content slate and internal talent.
He lauded the work of DC Studios co-chairmen James Gunn and Peter Safran, who are working to revitalize Warner Bros’ roster of super heroes.
Upcoming films “Supergirl” and “Clayface” have been shot, and the script for the sequel to “Superman” is already written, Zaslav said.
He also said director Steven Spielberg will executive produce a new “Gremlins” film, slated for theatrical release in 2027.
SPORTS STRATEGY
Sports would be a “key pillar” for the Discovery Global business that would house the cable TV assets, Zaslav said, noting progress in plans to launch a standalone sports content app.
He said the app would serve as a dedicated U.S. sports platform after HBO Max stops carrying live sports after the planned spinoff and could be bundled with other services. Outside the U.S., sports will stay within HBO Max.
The company holds U.S. broadcast rights to MLB, NHL and the NCAA Men’s Basketball Tournament. It also secured access to coveted NBA content last year, but that excluded live games rights in the crucial U.S market.
The absence of those games, live-streamed on HBO Max and TNT, is expected to hit ad revenue. Its streaming division will take a hit of 300 basis points in the fourth quarter, with a bigger impact expected in the first half of 2026.
It also projected a hit of 400 basis points to fourth-quarter ad revenue in its cable network unit.
LATEST “SUPERMAN”, “CONJURING” RELEASES LIFT STUDIO BUSINESS
Warner Bros studio delivered a strong quarter as new releases “Superman”, “Weapons” and “The Conjuring: Last Rites” dominated the box office. The segment reported a better-than-expected 24% jump in revenue to $3.32 billion.
Meanwhile, its legacy cable TV unit continued to slump amid cord-cutting, with revenue plunging 22% after last year’s boost from a strong news cycle and the Olympic Games.
WBD reported a loss of 6 cents per share for the September quarter, bigger than analysts’ forecast of 4 cents, while total revenue fell 6% to $9.05 billion, just shy of estimates.
“This quarter further validates that the TV networks will appeal to value buyers,” eMarketer analyst Ross Benes said.
American Dollar Exchange Rate