Warner Bros. Discovery reported its second quarter of 2023 earnings results, revealing that its global direct-to-consumer subscribers decreased 1.8 million to 95.8 million at the end of the period, in comparison with the 97.6 million subscribers the group had at the end of the first quarter.
During the second quarter, Warner Bros. Discovery launched its new direct-to-consumer product, Max, in the United States. At the same time, it was nominated for an industry-leading 181 primetime Emmy awards, including 127 nominations for HBO and Max – the most of any network or platform.
Financially speaking, Warner Bros. Discovery’s Q2 total revenues were US$10.358 million. Revenues decreased 4% ex-FX, compared to the prior year quarter, on a combined basis. Net loss available to Warner Bros. Discovery was US$1.240 million, and included US$1.658 million of pre-tax amortization from acquisition-related intangible assets and US$146 million of pre-tax restructuring expenses. Total Adjusted EBITDA during the period was US$2.149 million.
“The important work we are doing to transform our businesses for the future continues to drive our strong financial performance as demonstrated by meaningful improvements to our balance sheet and our now increased synergy target of more than US$5 billion. This quarter alone we reported over US$1.7 billion in free cash flow, and we remain bullish with respect to our delevering story, and expect to be comfortably below 4.0x levered by the end of the year and at our target of 2.5-3.0x gross leverage by the close of 2024,” declared David Zaslav, President and CEO at Warner Bros. Discovery.
“All of this positions us well to lean into growth opportunities that will ultimately drive shareholder value, to include our direct-to-consumer business, which, in the wake of the successful launch of Max in the United States, is tracking well ahead of our financial projections, having generated positive EBITDA in the first half of the year,” Zaslav added.
● CORPORATE DEMAND SHARE
Warner Bros. Discovery is well positioned to retain audience attention as Hollywood’s labor strikes prolong into the late summer and beyond. Parrot Analytics finds Warner Bros. Discovery is the number two conglomerate in corporate demand share, meaning the company should be able to leverage its highly in-demand library to keep audiences engaged for the foreseeable future.
Furthermore, the rebranded and expanded Max platform is now less than one percentage point from overtaking Netflix at number one in total on platform demand share with US audiences. This data suggests combining Discovery+ with HBO Max is indeed creating one of the premiere four quadrant streamers, at least in the United States.
Max is also now host to an increased number of reality and unscripted series thanks to taking on the majority of Discovery+’s programming. This is the kind of strike-proof content that can still provide audiences with new episodes as the WGA and SAG-AFTRA strikes drag on. These shows are also the kind of “turn on in the background” series that keeps users on the platform for longer, Parrot noted.
Furthermore, Warner Bros. Studios boasts the summer’s hottest movie, with “Barbie” on pace to gross well over US$1 billion. This movie will likely see repeat viewing once it becomes available on Max.
“All this is to say that Warner Bros. Discovery does have short term solutions to Hollywood’s current curveballs. The company still must sort its debt load and handle fundamental issues like shrinking cable households and what to do with CNN,” Parrot Analytics said in its latest report.
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