Warner Bros. Discovery swung to a profit thanks to the elimination of some debt, while revenue grew 1% during its second quarter thanks to its studios and streaming businesses. But the results were not enough to impress Wall Street, with shares falling over 5% on Thursday.
The streaming business saw revenue grow 9% to $2.8 billion and eked out a profit of $293 million, compared to a loss of $107 million a year ago, as HBO Max continued its international expansion. The company added 3.4 million streaming subscribers to bring its base to 125.7 million globally, with growth partly driven by the service’s launch in Australia in the first quarter.
Meanwhile, studios grew revenue 55% to $3.8 billion, while its operating profit came in at $863 million, up from $210 million a year ago, due to the strong box office performance of “A Minecraft Movie,” “Sinners,” and “Final Destination: Bloodlines” that resulted in a 38% increase in theatrical revenue.
But the global linear networks business weighed on the results with revenue falling 9% to $4.8 billion and profits falling 25% to 1.5 billion due to cord-cutting, the absence of the NCAA March Madness Final Four and Championship and the timing of third-party licensing deals.
“As we continue to navigate generational disruption and move forward with splitting into two independent, publicly traded companies in 2026 our current momentum will help position both future organizations for long term success,” WBD CEO David Zaslav told analysts on Thursday.
Here are the quarterly results:
Net income: $1.58 billion, compared to a loss of $9.99 billion a year ago. This included $1.7 billion of “pre-tax acquisition related amortization of intangibles, content fair value step-up, and restructuring expenses,” as well as a $3 billion “pre-tax gain on the extinguishment of debt.”
Earnings Per Share: 63 cents per diluted share, compared to a loss of 23 cents a share expected by analysts surveyed by Yahoo Finance.
Revenues: $9.81 billion, flat year over year, compared to $9.83 billion expected by analysts surveyed by Yahoo Finance.
Streaming subscribers: Added 3.4 million subscribers for a total of 125.7 million globally.
WBD is targeting at least 150 million streaming subscribers by the end of 2026 and anticipates the streaming segment will deliver a profit of approximately $1.3 billion in 2025. The company expects the studios business to generate $2.4 billion of profit for full year 2025 and has set a long-term goal to reach at least $3 billion of adjusted EBITDA.
Streaming
In the streaming segment, subscriber-related revenue grew 10% to $2.7 billion, but content revenue fell 17% to $102 million due to lower third party licensing. Distribution revenue grew 9% to $2.4 billion, from subscriber growth and a new distribution deal, and ad revenue rose 18% to $282 million, primarily driven by an increase in ad-lite subscribers.
Domestic average revenue per user fell to $11.16, primarily driven by broader wholesale distribution of HBO Max basic with ads, while international ARPU came in at $3.85.
Looking ahead, the company expects streaming segment distribution revenue growth in the low single-digit range in the third quarter, but expects a re-acceleration in the second half of 2025 and in 2026 as HBO Max expands to Germany, Italy, the U.K. and Ireland. The company said to not expect any price hikes soon.
“We think there’s still a lot of upside in terms of the scale and penetration of the product. So we want to keep it affordable and grow penetration in these markets,” WBD streaming chief JB Perrette told analysts. “But at the same time, with the quality of the slate, the return obviously to HBO Max is a brand, and what that stands for from a premium standpoint, we do think there is obviously meaningful growth also coming from price acceleration over the next couple of years.”
Perrette added that its paid sharing initiative will kick off in earnest in September, with “more fixed” rather than voluntary messaging. They expect to see benefits from that starting in the fourth quarter of 2025 and into 2026.
Studios
In the studio segment, total content revenue grew 61% to 3.6 billion, which included a 115% increase in TV revenue driven by higher intercompany licensing revenue due to the timing of renewals.
During the first half, content created by Warner Bros. Studios accounted for over half of global hours streamed on HBO Max, with almost all of its global viewing accounts having watched a WB-produced title.
It also noted that Warner Bros. film and TV libraries have generated roughly $5 billion of annual revenue on average over the last five years, some of which is through third-party licensing and internal licensing to HBO Max. The company expects internal licensing to HBO Max to weigh on the division’s profits in the near-term, but expects it to return through subscriber and revenue growth over the long term.
In the future, WBD said it would target 12 to 14 theatrical releases annually, including 1 to 2 Warner Bros. Pictures tentpoles primarily based on its well-known IP, 1 to 2 DC Studios films, 3 to 4 New Line Cinema releases, 1 to 2 WB Animation titles and a select number of “moderately budgeted” original films.
Global linear networks
In the global linear networks segment, distribution revenue fell 7% to $2.5 billion due to a 9% decline in domestic pay TV subscribers, while ad revenue fell 12% to $1.95 billion from a domestic audience decline of 23% and content revenue dipped 4% to $287 million.
WBD’s upfront negotiations are “largely complete,” with the company seeing strong pricing and demand for sports and “firm” pricing for general entertainment consistent with recent trends. It also touted healthy demand for HBO Max.
Looking ahead, the company expects global ad revenue to decline at a higher rate in the third quarter, driven by a lighter sports schedule, the comparison with last year’s summer Olympics and the benefit to CNN in the prior year from the U.S. election coverage. The loss of the NBA will impact ad revenue starting in the fourth quarter. Chief Financial Officer Gunnar Wiedenfels said there would be a roughly $100 million sports cost benefit in the fourth quarter and a net benefit of hundreds of millions of dollars from the lack of NBA rights costs.
WBD said it would continue to be “strategic and disciplined” in pursuing live sports rights that drive engagement and extend reach across linear, streaming and digital.
The latest results come as WBD is gearing up to split into two companies in mid-2026: Warner Bros. and Discovery Global.
The former, which will be led by WBD CEO David Zaslav, will house Warner Bros. Television Group, Warner Bros. Motion Picture Group, DC Studios, HBO and HBO Max, Warner Bros. Games, Tours, Retail and Experiences, as well as studio production facilities in Burbank and Leavesden.
The latter, which will be led by Wiedenfels, will include CNN, TNT Sports in the U.S., Discovery, top free-to-air channels across Europe, Discovery+ and Bleacher Report (B/R). Discovery Global will retain a 20% stake in Warner Bros. to help the company deleverage and is expected to take the majority of WBD’s debt.
In connection with the split, the company completed a tender offer and repaid a $1.5 billion term loan due in 2026 that was financed by a $17 billion bridge facility. That resulted in a $2.2 billion reduction in gross debt. It also repaid $500 million in debt, resulting in a total reduction of $2.7 billion in the quarter.WBD ended the quarter with $4.9 billion of cash on hand and $35.6 billion of gross debt.
As a result of the bridge loan, WBD expects its quarterly interest expenses to increase by approximately $80 million to over $500 million as a result of the higher interest rate through the end of the year. The company paid $250 million on separation-related costs during the quarter and will make a $725 million cash tax payment on the $3.2 billion of debt discounts captured in connection with the tender offers during the second half of 2025.
It will also incur one-time transaction and restructuring costs that will impact free cash flows through the closing of the separation, which it plans to quantify after finalizing separation decisions.
