The nation’s No. 2 biggest studio reported a $2.3 billion loss amid an advertising slump
By Joel Bruno
Warner Bros. Discovery, the nation’s second-largest entertainment giant, reported Thursday that sluggish advertising sales dented third-quarter results as the company continues to eye cost-cutting layoffs and a viable streaming strategy.
The studio reported a loss of $2.3 billion, or 95 cents a share, on revenue of $9.82 billion. Analysts had been projecting an adjusted loss per share of 17 cents on $10.37 billion of revenue. It marks the second-straight quarter Warner Bros. has posted a loss after swerving $3.42 billion into the red.
WBD, like other Hollywood studios, faced macroeconomic headwinds such as further subscriber losses in linear television, sluggish advertising sales, and further restructuring charges from Discovery’s $44 billion acquisition of Warner Bros. that closed in April. And Wall Street is still looking for any signs that CEO David Zaslav is any closer to building out a streaming strategy as he combines HBO Max and Discovery+, while later adding CNN’s news programming to the mix.
What will be a service that consumers are willing to pay for? That’s the big question as WBD launches its new combined streaming service as it does battle with industry leader Netflix and the burgeoning prowess of Disney+.
“It will be critically important to get the pricing right for the newly combined service. We’ve seen Netflix implement new ad-tiers which have shaken up the market. We’re seeing that streaming audiences want fewer, shorter and more relevant ads – and streaming technology enables that model,” said Dan Goman, CEO of Beverly Hills-based media supply chain company Ateliere.
“HBO Max has struggled with technology challenges, while Discovery+ has offered a more minimalist user experience,” he added. “WBD intends to combine the best of both services with the right technology to offer a robust user experience, addressing consumer concerns about advertising for its ad-supported tiers.”