Warner Bros. Discovery reported its financial results for the quarter ended September 30, 2022. The group concluded the third quarter with 94.9 million global direct-to-consumer subscribers, an increase of 2.8 million versus 92.1 million subscribers at the end of the second quarter.
Leading the positive results of the DTC segment, the debut of “House of the Dragon” was the largest series premiere in HBO's history and also marked the largest series launch on HBO Max across the United States, Latin America, and EMEA. All episodes of the series are averaging around 29 million viewers in the United States, more than triple the average debut night audience, demonstrating strong catch-up viewing.
Financially speaking, the third quarter total reported revenues were US$9.823 million, below the US$10.36 billion analysts were expecting. Moreover, the company reported advertising revenue decreased to US$2 billion from US$2.7 billion in the previous quarter. Total reported Adjusted EBITDA was US$2.424 million.
At the same time, David Zaslav, the CEO of Warner Bros. Discovery, announced that the merged version of the company’s HBO Max and Discover+ streaming services will be coming in spring, earlier than the previously announced summer release date.
“At Warner Bros. Discovery, we have one of the strongest portfolio of assets and IP across sports, news, and entertainment, and the best leadership team in media executing against the right strategy and financial framework to drive profitability, generate meaningful shareholder value, and ultimately position us for long-term success. We are reimagining and transforming the organization for the future while driving synergy enterprise-wide, increasing our target to at least US$3.5 billion, and making significant progress on our combined DTC product. While we have lots more work to do, and there are some difficult decisions still to be made, we have total conviction in the opportunity ahead,” Zaslav said.
● CORPORATE DEMAND SHARE
Warner Bros. Discovery remains one of the top two content leaders in the entertainment industry, but as Wall Street reassesses the metrics of success for streaming, the company and its platforms’ futures remain in doubt, according to Parrot Analytics.
Audience demand data on the content side paints a very bright picture for WBD. The company as a whole is in second place in corporate demand share (17.9%), just behind Disney (19.8%). HBO Max leads the SVOD industry in on-platform demand for movies, and is in third place in on-platform demand for TV series. Disney is the only other company with entrants in the top three in each of these categories.
However, WBD’s stock is down about 50% since it officially merged in April. Loaded with a substantial amount of debt, its CEO David Zaslav and its CFO Gunnar Wiedenfels are attempting to cut US$3 billion. Their efforts have stirred confusion and doubt internally, in the creative community, and among consumers.
Just six months after Discovery and WarnerMedia officially merged, many in the industry assume the new company is already for sale, which could not legally happen until the second quarter of 2024. “We are certainly not above this M&A speculation, and our corporate demand data shows the benefits of a future WBD merger or sale to fellow legacy media giants NBCUniversal or Paramount Global,” Parrot Analytics said.
WDB’s removal of about 60 titles from HBO Max as part of the aforementioned cuts had a demonstrable negative impact on the platform’s TV demand share. Each of the shows removed had relatively low demand individually, but as a whole they still accounted for roughly the same audience demand as “Game of Thrones.”
“Even with the drop, HBO Max is still in a solid third place in on-platform TV demand share. Nevertheless, HBO Max’s demand share cannot be shrinking if WBD intends to leverage its crown jewel asset into entertainment industry dominance,” Parrot Analytics concluded.