Warner Bros. Discovery, the nation’s second-largest entertainment giant, reported Thursday that sluggish advertising sales dented third-quarter results as the company continues to eye cost-cutting layoffs and a viable streaming strategy.
The studio reported a loss of $2.3 billion on revenue of $9.82 billion. Analysts had been projecting an adjusted loss per share of 17 cents on $10.37 billion of revenue. It marks the second-straight quarter Warner Bros. has posted a loss after swerving $3.42 billion into the red.
WBD, like other Hollywood studios, faced macroeconomic headwinds such as further subscriber losses in linear television, sluggish advertising sales, and further restructuring charges from Discovery’s $44 billion acquisition of Warner Bros. that closed in April. And Wall Street is still looking for any signs that CEO David Zaslav is any closer to building out a streaming strategy as he combines HBO Max and Discovery+, while later adding CNN’s news programming to the mix.
Warner Bros. Discovery reported that it gained 2.8 million subscribers to its streaming services during the quarter, which was anchored by “House of the Dragon” that recently debuted. That’s compared to the 3 million net additions that Wall Street was expecting versus the 1.7 million new customers the studio picked up during the second quarter. The company has been projecting it will have 130 million paying streaming users by 2025.
“We are reimagining and transforming the organization for the future while driving synergy enterprise-wide, increasing our target to at least $3.5 billion, and making significant progress on our combined DTC product,” Zaslav said in prepared remarks. “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.”
Shares of Warner Bros. Discovery have fallen 49% year-to-date, and shed 5% to $12.04 ahead of the closing bell on Wall Street.
Investors have been keeping a careful eye on Zaslav’s plan to streamline the bloated studio, slashing a pledged $3 billion worth of costs over the next few years as it builds out its yet unnamed streaming platform. There have been widespread reports that morale at the company has been significantly low as WBD initiated a new round of layoffs last month across its scripted, unscripted, and animation units.
But, so far, there’s only been a few hundred jobs that have been eliminated — meaning more pain is yet to come.
More to come…