Streaming saves Warner from movie and TV losses

HBO Max and Discovery+ added 1.5 million new subscriptions in the quarter, bolstering Warner Bros. Discovery in the streaming space. Worldwide, the company’s platforms collectively reached 97.6 million users and reported quarterly revenue of $2.455 billion.

The performance is in stark contrast to losses seen elsewhere in the company, including in film and TV.

In light of this accomplishment, WBD said the streaming operation is already profitable in 2023, a year ahead of schedule. Subscription growth beat analyst forecasts, while operating expenses were down 24%. After a few months of decline, the company’s platforms have become the company’s best business right now.

According to David Zaslav, CEO of WBD, managing the business continues to be a challenge, but the difficulties are starting to be overcome. “When you run a business, you look for growth, what are we going to achieve in the streaming business, and we are striving to catch up across the business as the economy improves, but the key here is this: Our streaming business in the United States bleeds no more,” he said.

Currently, the company is preparing to merge HBO Max and Discovery+ into a new platform, called Max, which is scheduled to launch in the US on May 23rd. “In the short term, migration success is one of the key metrics, which is getting HBO Max customers to migrate to Max,” he said.

According to Zaslav, one of Warner’s strategies is to expand coverage of sports and news, which are still under-covered in the streaming format. “By keeping this business in check, focusing on what people love to watch and how to create content people love, and now with Max we can feed and delight subscribers with the greatness of HBO,” he explains.

The performance of the rest of the company, however, has raised alarm among investors.

While it reported $10.7 billion in revenue in the first quarter of 2023, meeting Wall Street expectations, the year-over-year comparison is down. Net losses were 44 cents a share, well below what analysts expected — a loss of 5 cents.

At the same time, in 2022, the conglomerate was facing a period of growth marked by the launch of ‘Batman’ (2022) and lucrative TV licensing deals. This year, revenue for Warner studios fell 7% to $3.2 billion. The channels sector also saw a 10% decline, with advertising down 14%.

According to WBD, the decline is due to “falling ratings on home entertainment and news networks” as well as a general contraction in the advertising market. Currently, the company has a debt of 49.5 billion dollars, which continues to grow. However, the company has promised investors to cut $4 billion in cost savings.

In the overall context, the last quarter has been quite a rough one for media companies. But the merger of HBO Max and Discovery+ could help WBD leapfrog its competition.

Source: Terra

Amanda

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