- Warner Bros. Discovery profits fell 91% to $149 million, or 6 cents per share, and revenue declined 11% to $8.7 billion, compared to a loss of 1 cent per share and revenue of $9.21 billion expected by Wall Street
- The media giant’s streaming profits soared 75% to $512 million as revenue rose 10% to $3.08 billion, driven by HBO Max’s international expansion and ad-lite subscriber growth
- WBD shares popped 1.9% on Thursday following the release of the quarter’s results
Warner Bros. Discovery’s streaming business continued to make progress in the second quarter, with direct-to-consumer revenue climbing 10% to $3.08 billion and profits soaring 75% to $512 million, driven by HBO Max’s international expansion and ad-lite subscriber growth.
But those results were largely overshadowed by the legal limbo plaguing its pending $110 billion merger with Paramount and the ongoing struggles in its linear TV and studios businesses, which caused the David Zaslav-led media giant’s total quarterly profit to fall 91% to $149 million, or 6 cents per share, and revenue to decline 11% to $8.7 billion.
Weighing on the results were a 22% decline in ad revenue, driven by the absence of the NBA and continued pay TV subscriber declines, and a 26% drop in content revenue due to lower theatrical, TV and games revenues. WBD also incurred $1.1 billion in pre-tax acquisition, content and restructuring expenses.
During its earnings call on Thursday, Zaslav attempted to quell Wall Street’s concerns about its financials and future as Paramount’s litigation with a group of 12 state attorneys general and the Writers Guild of America heads to a 12-day trial in March 2027.
“[Warner Bros. Discovery] is performing at a very high level,” Zaslav told analysts. “We have every expectation that the transaction will close and that the company will be performing even better than the plan that we presented to [Paramount Skydance] when we did our deal.”
He praised WBD’s employees for their “inspiring” work ethic and focus despite the merger dominating the headlines.
“They’re working extremely hard,” he said. “I’m quite inspired by the culture here and the drive to continue to put points on the board and and take pride in the fact that this is a great company and we want to deliver a great company.”
Paramount said it would push the closing of the merger back until five days after the outcome of a trial, or June 1, 2027, whichever comes earliest. David Ellison is also on the hook to pay WBD shareholders over $1 billion in ticking fees during the delay before the trial even begins.
The merger has already received approval from Warner Bros. shareholders and regulators and governments representing 66 jurisdictions, including the U.S. Department of Justice, the United Kingdom’s Competition and Markets Authority (which gave the all clear on Thursday) and the European Commission. In addition to the state AGs and WGA, a Paramount shareholder and a group of consumers filed separate lawsuits to block the merger, though the latter was dismissed by a judge.
Per the terms of the merger, the outside date is March 4, 2027, though it includes an automatic one-time extension that would push back the deal’s deadline to June 4, 2027, if all closing conditions except for regulatory approvals and governmental orders have been satisfied or waived. In the event that the deal does not close at all due to regulatory matters, Paramount will pay WBD a $7 billion termination fee.
WBD shares popped 1.9% during Thursday’s trading session following the results.
Streaming stays strong
Streaming distribution revenue grew 12% to 2.7 billion, driven by HBO Max’s international expansion and growth in existing markets, including new distribution deals.
Ad revenue climbed 9% to $306 million, driven by an increase in ad-lite subscribers. But the company acknowledged the ad business was hurt by the absence of the NBA.
Meanwhile, content revenue tumbled 18% to $84 million. Streaming content released during the quarter included the latest seasons of “Euphoria,” “House of the Dragon,” “The Pitt” and “Hacks. “
WBD has joined Netflix and Disney in no longer breaking out streaming subscribers on a quarterly basis, but previously forecast it would exceed 150 million by year end. More than 50% of new subscribers selected ad-supported streaming plans during the quarter, bringing its overall global mix to 40%, an increase of 11% year over year.
Looking ahead, WBD expects year over year growth in subscriber-related revenue to further accelerate in the second half of the year and remain healthy into 2027, driven by its content lineup, continued engagement growth, robust global advertiser demand and ongoing product improvements. It also remains confident in its long-term streaming margin target of more than 20%.
Studios continue to struggle
Studios profit dropped 89% to $96 million and revenue fell 39% to $2.33 billion, which was primarily driven by a 41% decline in content revenue.
Theatrical revenue tumbled 46% on lower box office revenue compared to the performance of “A Minecraft Movie,” “Sinners,” and “Final Destination Bloodlines” in the prior year quarter. The only major releases this quarter were “Lee Cronin’s The Mummy” and “Mortal Kombat II.”TV revenue plunged 45%, primarily driven by lower intercompany content licensing due to the timing of renewals. Games revenue slid 45% on the release of “LEGO Batman: Legacy of the Dark Knight.”
Despite the results, WBD executives said the studios unit remains on track to generate over $3 billion in profit in the medium to long-term. The company’s film and television library has generated, on average, approximately $5 billion of revenue annually over the last few years.
“There’s no question that media is by nature a business full of hits and misses, and you see that reflected in our studio’s results. While a handful of recent films have underperformed expectations, importantly, we’ve spent years transforming and diversifying our studio segment to better manage risk and volatility,” Zaslav said. “The breadth of this business today, across theatrical, television, licensing, games, experiences, retail, and consumer products, has greatly improved its resilience and ability to generate consistent shareholder value.”
Looking ahead, its film slate for the second half of 2026 includes “Dune: Part Three,” “Practical Magic 2,” “Digger” starring Tom Cruise in his first original film in nearly a decade, and “The Cat In The Hat,” the first release from the revitalized Warner Bros. Pictures Animation.
Meanwhile, the 2027 film slate includes “F.A.S.T.” from Taylor Sheridan, “Oceans” starring Bradley Cooper and Margot Robbie, Superman-based “Man of Tomorrow” from James Gunn, a follow-up to “A Minecraft Movie,” “The Great Beyond” from J.J. Abrams, “The Lord of the Rings: The Hunt for Gollum,” and WBPA’s “Bad Fairies” and “Margie Claus.” Beyond 2027, the slate will include the theatrical event film “Aegon’s Conquest” from the Game of Thrones universe, the next installment of “The Matrix,” the next Batman film and a live-action Jetsons film starring Jim Carrey.
On the TV side, Warner Bros. has over 80 active shows produced for more than 20 third-party and our company-owned platforms. Warner Bros. TV Group expects 2026 to be an inflection point, with more first-run deliveries to streaming
platforms than broadcast and cable combined for the first time. Executives said it is “well positioned” to grow volume and profitability in 2027.
Additionally, WBD expects games to more meaningfully contribute to studios profitability as its pipeline expands, including the second installment of “Hogwarts Legacy.” Its releases during the second quarter, which included “LEGO Batman: Legacy of the Dark Knight” and mobile game “Game of Thrones: Dragonfire,” marked the first launches under its refocused gaming strategy centered on four core IPs.
Lastly, it expects the debut of HBO Max’s upcoming Harry Potter series to boost demand for its related experiences and consumer products, including the opening of the new Harry Potter Tour in Shanghai next year and the Harry
Potter Land in Abu Dhabi in the next few years. WBD said its “actively exploring” new locations to expand its Global Experiences and Retail footprint, as well as ways to leverage other franchises in its portfolio. The new show premieres in December.
Linear networks feeling the pressure
Global linear network profits declined 4% to $1.45 billion and revenue fell 17% to $4 billion. The results were driven by a 10% decrease in domestic linear pay TV
subscribers, which was offset by a 1% increase in domestic affiliate rates, and a 9% drop in content revenue due to the timing of third party licensing deals.
The segment was also weighed down by a 27% drop in ad revenue, largely due to a 17% decline in domestic audiences from the absence of the NBA. That was offset by the broadcast of the NCAA March Madness Final Four and Championship
in the current year, as well as the absence of the NHL Stanley Cup Finals broadcast. WBD also touted a 5% increase in general entertainment delivery across its networks, the first quarter of growth since 2022.
Internationally, WBD experienced softness in Poland, Germany, the UK, and Italy as advertisers pulled back spending due to higher energy prices from the wars in Iran and Ukraine, with the biggest impact in the automotive, consumer products, and travel and tourism categories. The 2026 FIFA World Cup also hurt its share of viewers and ad spend in several key markets in June and July.
WBD continues to expect high-single-digit operating expense improvement for the full year and remains focused on operating efficiency and strategically investing in content and certain digital initiatives, such as CNN All Access, to boost adjusted EBITDA and cash flow long-term.
