Warner Bros. Discovery (WBD) has released its financial results for the second quarter of 2024, presenting a mixed performance across its various business segments. The company reported total revenues of $9.7 billion, reflecting a 5% decrease on a constant currency basis compared to the same period last year. The company faced a significant net loss of $10.0 billion, primarily due to a $9.1 billion non-cash goodwill impairment charge within its Networks segment and $2.1 billion in pre-tax acquisition-related amortization and restructuring expenses.
The company's adjusted EBITDA also saw a decline, falling by 15% to $1.8 billion. Cash provided by operating activities decreased sharply to $1.2 billion from $2.0 billion, and free cash flow dropped to $976 million, down 43% from the previous year. These decreases were influenced by lower operating profits and higher net content investment, partially offset by lower restructuring costs.
In the Direct-to-Consumer (DTC) segment, WBD reported a subscriber increase, reaching 103.3 million globally, an addition of 3.6 million from the previous quarter. However, DTC revenues decreased by 5% to $2.6 billion. Despite the revenue decline, advertising revenue in this segment saw a significant increase of 99%, driven by higher domestic Max engagement and growth in ad-lite subscribers. The average revenue per user (ARPU) for global DTC increased by 4% to $8.00.
The Networks segment experienced an 8% decline in revenues to $5.3 billion, impacted by a decrease in domestic linear pay-TV subscribers and a weak U.S. advertising market. Despite these challenges, content revenue in this segment grew by 5% due to the timing of third-party licensing deals. The segment's adjusted EBITDA decreased by 7% to $2.0 billion.
WBD's Studios segment reported a 4% decrease in revenues to $2.4 billion, driven by declines in content, TV, and games revenues. Theatrical revenue, however, saw a 19% increase, supported by strong performances of films such as "Dune: Part Two" and "Godzilla x Kong: The New Empire." Despite a slight reduction in operating expenses, the segment's adjusted EBITDA dropped by 24% to $210 million.
On the financial front, WBD made significant efforts to manage its debt, repaying $1.8 billion during the quarter and ending with $3.6 billion in cash on hand and $41.4 billion in gross debt. The company also undertook a debt tender offer, purchasing $3.4 billion of debt for $2.6 billion.
CEO David Zaslav said: “At Warner Bros. Discovery, our top priority is our global direct-to-consumer business and we are extremely pleased with the growing momentum we are seeing, as demonstrated by another strong quarter of growth with 3.6 million net adds, fueled by our ongoing international expansion and investment in high quality, diverse content. In light of industry headwinds, we have and will continue taking bold steps, like reimagining our existing linear partnerships and pursuing new bundling opportunities, with the goal to get Max on the devices of more consumers faster and at a fraction of the acquisition cost, and we are seeing clear evidence that these and other actions we are taking will help drive segment profitability in the second half of the year and into 2025 and beyond.”