Warner Bros Discovery released its second-quarter earnings on Thursday, highlighting a strong performance from its streaming business that became the standout feature of the report. Revenue from streaming surpassed $3 billion, marking a 10% year-over-year increase.
The streaming segment's adjusted EBITDA exceeded $500 million. CEO David Zaslav emphasized during the analyst call that despite evolving entertainment consumption habits, the company's belief that "exceptional creativity and quality storytelling are irreplaceable" is now translating into financial results. He noted that the global breadth, artistry, and cultural impact of HBO programming directly contributed to HBO Max's financial progress, with growth driven by new market expansion and content contributions from shows like "Euphoria," "House of the Dragon," and "The Pitt." The company anticipates continued strong performance in the second half of the year, with major new titles such as "Harry Potter" and "The Gilded Age" on the horizon. Zaslav stated that the company has successfully established HBO Max as a "highly valuable global streaming service."
On the advertising front, streaming ad revenue grew 9%, primarily due to an increase in global ad-supported tier subscribers. However, the new rights package no longer includes NBA games, and the absence of basketball advertising dragged down the year-over-year growth rate by approximately 16% (excluding currency effects).
The outlook for the proposed merger remains uncertain. Paramount CEO David Ellison previously outlined plans to combine HBO Max and Paramount+ into a unified streaming service following the acquisition, projecting a combined subscriber base of around 200 million. He also emphasized that the HBO brand would not be diminished, stating, "HBO should remain HBO." The transaction is currently facing challenges from state attorneys general, with a trial scheduled for March of next year. The merger concept has sparked antitrust concerns, but both parties argue that sufficient scale is necessary to compete with industry giants.
The overall earnings picture was under pressure. Total revenue for the quarter was $8.72 billion, down 11% year-over-year and missing Wall Street expectations of $9.29 billion. Net income attributable to the company fell sharply to $149 million ($0.06 per share), compared to $1.58 billion ($0.63 per share) in the same period last year, primarily due to pre-acquisition intangible asset adjustments and restructuring costs. Adjusted EBITDA came in at $1.88 billion, slightly below the $1.95 billion reported a year earlier.
Additionally, CNN's linear viewership rose 24% year-over-year, with total platform viewing time growing 19%. Zaslav remarked that the quality and credibility of CNN's news coverage have been reaffirmed amid geopolitical instability.
Overall, the strong performance of streaming, particularly HBO Max, provides significant support for Warner Bros Discovery. However, the legal and regulatory uncertainties surrounding the proposed merger remain a key focus for the period ahead.