Warner Bros Discovery (WBD) added 6.7 million global paying subscribers to its streaming services around the world during its second financial quarter (Q2) of the year, the company revealed on Wednesday.
The additional subscribers helped WBD end the quarter with more than 103 million global paying customers of its direct-to-consumer streaming services, which include Max in the United States and parts of Europe and Discovery Plus in other territories.
In the United States, the addition of a live sports tier last year helped bring subscribers to Max during the NCAA March Madness tournament. WBD also offered a deep discount that allowed customers to subscribe to an annual plan of Max for around 40 percent off the normal rate, if they purchased the subscription before mid-April, which help further juice subscribers.
Total direct-to-consumer revenue declined to $2.56 billion, reflecting a 6 percent drop on a year-over basis. WBD said fewer third-party licensing deals were to blame for the lower revenue, as well as a higher operating loss of $107 million during Q2, compared to the $3 million loss incurred during Q2 2023.
The ad-supported tier of Max in the United States and certain other countries helped ease that pain somewhat, with the company seeing a 99 percent lift in ad revenue due to more uptake of the ad-supported plan and higher subscriber engagement with content, WBD said.
“Our top priority is our global direct-to-consumer business and
we are extremely pleased with the growing momentum we are seeing,” David Zaslav, the CEO of WBD, said in a statement that accompanied the company’s earnings report.
On the broadcast side, WBD said it will take a $9 billion impairment charge due to the loss of National Basketball Association (NBA) games to Amazon’s Prime Video and Comcast’s NBC Sports after the upcoming season. The 11-year media rights deal was announced by the NBA last month; WBD is suing the NBA in court, arguing that a provision in its still-in-force contract requires the NBA to accept a matching offer for those games.
WBD said the impairment charge was intended to address uncertainty in its linear cable channel networks segment associated with the games moving to Prime Video, NBC and Peacock after this upcoming year, which may impact advertising revenue associated with channels like TBS, TNT and Tru TV that carry the games under the TNT Sports banner.
“The goodwill impairment was triggered in response to the difference between market capitalization and book value, continued softness in the U.S. linear advertising market, and uncertainty related to affiliate and sports rights renewals, including the NBA,” WBD said in a statement.
WBD also said it will take a $2.1 billion charge related to “pre-tax acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses,” which appeared to be connected to rolling layoffs in the United States, New Zealand and other parts of the world over the last few months.
During the quarter, revenue from WBD-owned linear networks fell 8 percent to $5.2 billion, while its operating profit from linear channels dipped to $2 billion. Distribution revenue — or money earned from charging cable and satellite companies for the rights to offer their channels — also fell 8 percent as pay TV customers ditch expensive cable and satellite subscriptions in favor of cheaper streaming offerings.
Overall revenue for WBD clocked in at $9.7 billion, or 6 percent lower when compared to Q2 2023.
