Warner Bros. Discovery Lost 1.8 Million Streaming Subs in Max Launch Quarter
Warner Bros. Discovery’s streaming business lost subscribers — and money — in the second quarter of 2023.
The company shed 1.8 million streaming subs from April to June, which was the quarter when HBO Max and Discovery+ came together to form Max. The company now has 95.8 million total streaming subscribers. Max launched on May 23; Discovery+ remains available as a standalone platform.
In the first quarter of 2023, Warner Bros. Discovery added 1.6 million total streaming subscribers and the streaming business turned a surprise $50 million profit before interest, taxes, depreciation, and amortization. Not this time around — though the segment’s loss was just $3 million, and the EBITDA is still positive for the first half of the year.
After the Q1 results, President and CEO David Zaslav predicted his streaming business would be profitable for 2023 as a whole.
Warner Bros. Discovery missed on Wall Street’s key financial estimates for the second quarter. Analysts had forecast a Q2 loss of 37 cents per share and revenue of $10.46 billion in revenue. Warner Bros. Discovery reported a loss of 51 cents per share on $10.358 billion in revenue.
Overall, the company lost $1.2 billion in Q2.
In Q1, Warner Bros. Discovery lost $1.1 billion on a (non-adjusted) net basis. Warner Bros. Discovery in totality has not turned a profit since forming via the April 2022 merger of WarnerMedia (then under AT&T) and Discovery, Inc. The company lost $3.4 billion in that merger quarter (Q2), then $2.3 billion (Q3 2022), and $2.1 billion (Q4 2022).
“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 $5 billion,” Zaslav said in a Thursday statement. “This quarter alone we reported over $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. All of which 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 U.S., is tracking well ahead of our financial projections, having generated positive EBITDA in the first half of the year.”
The Max rollout probably stole the show in the June quarter. (It certainly wasn’t “The Flash.”) The majority of the final “Succession” season aired during the period, as did the entirety of “Barry’s” own swan song. “The Idol” debuted in the quarter, airing most of its episodes by the June 30 cutoff.
Ben Affleck and Matt Damon’s “Air” came out theatrically in early April and on Amazon Prime Video a month-and-change later. “Evil Dead Rise” had plenty of life in it given a small budget. “The Flash,” which was supposed to be the big hit, was an abject bomb when it came out in mid-June.
Zaslav and his senior executive team will host a conference call at 8 a.m. to discuss the quarter in greater detail. They’ll probably only want to talk about “Barbie,” which to-date has made more than $381 million domestically and more than $800 million worldwide. While those results won’t count until WBD’s third quarter, the Q2 press release was (weirdly) coated in Barbie pink.
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