‘Barbie’ Wasn’t Kenough for Warner Bros. Discovery to Beat Q3 Revenue Forecasts

Warner Bros. Discovery shed more streaming subscribers in Max’s first full quarter of existence: July-September 2023. The company lost 700,000 streaming subs in the quarter, it reported on Wednesday; Max and Discovery+ now combine for 95.1 million streaming subscribers.

WBD’s streaming business was able to turn a profit in the third quarter — just like it did at the beginning of the year. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) at direct-to-consumer was $111 million. The same segment lost money in Q2, but surprised with positive EBITDA in Q1, which is also the last time WBD grew its streaming-subscriber base.

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The loss of subs in the past two quarters is not really unexpected. Max, which launched on May 23, is a combination of the former HBO Max and Discovery+. While Discovery+ remains available as a standalone platform, it is now pretty redundant for folks who had previously subscribed to both of the Warner Bros. Discovery streaming services.

Warner Bros. Discovery lost $417 million on a net basis in the summer quarter. The combination of the former WarnerMedia and Discovery, Inc. is still paying dearly for that merger. With some major adjustments, EBITDA was $2.969 billion; free cash flow was $2.059 billion. The company paid down $2.4 billion in debt in Q3.

In a prepared statement, President & CEO David Zaslav said he was “very pleased” with the quarterly results. Zaslav, CFO Gunnar Wiedenfels, and streaming chief JB Perrette will host a conference call with analysts (and media) at 8 a.m. ET to discuss the quarter in greater detail.

The big story of the summer for Warner Bros. was, of course, “Barbie.” But even with the Greta Gerwig film’s huge haul at the box office ($1.44 billion worldwide — the most in Warner Bros. history), Warner Bros. Discovery failed to meet Wall Street’s consensus Q3 revenue forecast of $10.04 billion as compiled by Yahoo Finance. (The company reported $9.979 billion in overall revenue, which was in line with what Seeking Alpha sought.) Not having Warner Bros. TV content to sell amid the writers and actors strikes certainly didn’t help matters; nor did double-digit declines (on a percentage basis) from advertising.

Other films put out by WB in the quarter were “Meg 2: The Trench” (Warner Bros. served as distributor), “Blue Beetle,” and “The Nun 2.” “Meg 2” will probably break even, “Blue Beetle” won’t, and “The Nun” is already a winner. “The Flash,” a bomb, came out with two weeks left in the second quarter.

In a post-“Succession” world, series were a bit slow. The excellent “How to with John Wilson” ended this summer with its third season. The final whistle blew on “Winning Time” after only two seasons. “Sex & the City” sequel series “And Just Like That” finished its second season in August.

Also of note, CNN Max, the successor to CNN+, launched at the end of the quarter. It’s already lasted longer than CNN+.

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