David Zaslav
Warner Bros. Discovery's total revenues were $9.8 billion in Q2 2025, up modestly from the prior year quarter. Distribution revenues were relatively unchanged, as growth in global streaming subscribers was offset by continued domestic linear pay TV subscriber declines. Advertising revenues decreased 10%, as ad-lite streaming subscriber growth was more than offset by domestic linear audience declines. Content revenues increased 16%, primarily driven by higher box office revenues due to the stronger performance of the theatrical releases in the current year quarter.
In the streaming business, global subscribers were 125.7 million, an increase of 3.4 million global subscribers vs. Q1. Streaming revenues increased 8% to $2,793 million compared to the prior year quarter. Subscriber-related revenues increased 10% compared to the prior year quarter. Distribution revenue increased 9%, as a result of a 22% increase in subscribers following the continued global expansion of HBO Max, as well as new distribution deals, partially offset by an impact from a distribution deal with a former related party and lower global distribution ARPU due to a mix shift in the subscriber base across distribution channels, geography, and product type. “Early success in Australia reinforces our confidence in planned upcoming launches in Germany, Italy, and the U.K. and Ireland in 2026, where our content has been licensed to a third-party distributor and is well-known among consumers, much like in Australia. “This reinforces our confidence that we are on track to surpass 150 million streaming subscribers by the end of 2026,” CEO David Zaslav said in the shareholder letter. “In order to differentiate HBO Max, it’s important that there are a wealth of properties, quality properties, that reinforce that you only get this at HBO Max, and that’s working for us in terms of driving growth,” he added.
FUTURE
In a shareholder letter, WBD executives said that looking ahead the company intends to release 12-14 new films a year, split between 1-2 WB tentpoles, 1-2 DC Studios films, 3-4 New Line releases (including horror), 1-2 animated films, and 1-2 modestly budgeted original films. The company said that it had completed the last of its six major carriage renewals, locking in those deals for some time, and said that its upfront was nearly complete. The company is in the process of preparing to split itself into two, with the studios business, HBO, and HBO Max set to become a company called Warner Bros., and the linear networks set to become a company called Discovery. “A big piece of this will be cleaning up the consumer experience. I expect that we’ll look at this business four or five years from now and it won’t be 18 apps, and I think the companies that are most successful will be global,” Zaslav argued. “It’s just better together. Some of it will be the result of consolidation in some markets, and some of it will be white flags — I don’t want to lose money anymore and I want to get back to what a lot of companies want to get back to, what they do, which is just produce content and leave the global direct-to-consumer fight to others,” he added.
Advertising revenue increased 17%, primarily driven by an increase in ad-lite subscribers, partially offset by domestic pricing pressures. Global streaming ARPU decreased 11% to $7.14, mainly attributable to growth in lower ARPU international markets and an 8% decrease in domestic streaming ARPU to $11.16. The reduction in domestic streaming ARPU was primarily driven by the broader wholesale distribution of HBO Max Basic with Ads. Content revenue decreased 21%, primarily driven by the launch of HBO Max in new international markets, which resulted in lower third-party licensing. Streaming operating expenses decreased 7% to $2,500 million compared to the prior year quarter. Costs of revenues decreased 6%, primarily driven by lower domestic sports costs and the timing of domestic programming releases, partially offset by higher international content costs to support the global expansion of HBO Max. SG&A decreased 10%, largely due to lower marketing costs, and streaming Adjusted EBITDA was $293 million, a $400 million increase compared to the prior year quarter.
STUDIOS REVENUES
Studio's revenues increased 54% to $3,801 million compared to the prior year quarter, while content revenue increased 59%. TV revenue increased 115%, primarily driven by higher intercompany content licensing due to the timing of renewals. Theatrical revenue increased 38%, as a result of higher box office revenue, partially offset by lower content licensing. The increase in box office revenue was primarily due to the strong performance of "A Minecraft Movie," "Sinners," and "Final Destination: Bloodlines" in the quarter. Games revenue decreased 14%, primarily due to the absence of releases in the current year. Studios' operating expenses increased 30% to $2,938 million compared to the prior year quarter, and costs of revenues increased 38%. “Nowhere was our momentum more pronounced than in our film business, which has grossed over $3 billion in global box office year-to-date,” CEO David Zaslav said in the shareholder letter. “We expect this momentum to continue and project that the studios segment will generate at least $2.4 billion of [pretax earnings] for the full year,” Zaslav said. “This represents a substantial step toward our goal of over $3 billion in studios segment pretax earnings.”
TV content expense increased 87% primarily driven by higher intercompany content licensing costs due to the timing of renewals. Theatrical content expense increased 18% due to higher theatrical revenues, and games content expense decreased 49%, primarily driven by no games releases in the current year. SG&A increased 12%, driven by higher theatrical marketing costs, and studios' Adjusted EBITDA was $863 million, a $653 million increase compared to the prior year quarter.
Global Linear Networks' revenues decreased 9% to $4,803 million compared to the prior year quarter, and distribution revenue declined 7%, driven by a 9% decrease in domestic linear pay TV subscribers, partially offset by a 2% increase in domestic affiliate rates. Additionally, distribution revenues were negatively impacted by lower international affiliate rates and subscriber declines. Advertising revenue decreased 13%, primarily driven by domestic audience declines of 23%. Additionally, the absence of the NCAA March Madness Final Four and Championship this year, which was broadcast in the prior year, and the broadcast of the NHL Stanley Cup Finals in the current year negatively impacted the year-over-year growth rate by 2%.
Content revenue decreased 2%, primarily due to the timing of third-party licensing deals. Global Linear Networks' operating expenses of $3,291 million were relatively unchanged compared to the prior year quarter. Costs of revenues increased 2% ex-FX, primarily driven by higher domestic sports costs. SG&A decreased 6% ex-FX, primarily driven by lower overhead costs, and Global Linear Networks Adjusted EBITDA decreased 25% ex-FX to $1,512 million compared to the prior year quarter.
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