Warner Bros Discovery (NASDAQ:WBD) faced a setback in its quarterly revenue, failing to meet market estimates, as a series of high-profile box office flops, including The Flash, overshadowed the growing momentum of its streaming business following the launch of Max.
For the second quarter, the company, resulting from the merger of WarnerMedia and Discovery Inc, reported revenue of $10.36 billion, slightly missing analysts’ average estimate of $10.44 billion, according to Refinitiv data.
Media companies have been striving to strike the right balance between content spending and maximizing profitability. Under the leadership of Chief Executive David Zaslav, Warner Bros Discovery (NASDAQ:WBD) has been focused on enhancing the efficiency of its direct-to-consumer business.
The studio segment’s revenue was $2.58 billion, below analysts’ expectations of $3.21 billion. During the quarter, films like The Flash underperformed at the box office, and the company also incurred marketing costs for its successful “Barbie” film, which hit theaters in July.
On a more positive note, the direct-to-consumer unit posted revenue of $2.73 billion, surpassing analysts’ estimates of $2.48 billion, according to Visible Alpha. However, the unit experienced a decline of 1.8 million subscribers, higher than the estimated 1.1 million, leaving it with a total of 95.8 million global subscribers for its HBO, Max, and Discovery+ services.
Warner Bros Discovery (NASDAQ:WBD) launched its new Max streaming service in the United States during the quarter, combining HBO Max’s scripted content with Discovery’s reality shows. The company’s Chief Executive, David Zaslav, expressed satisfaction with the performance of their Direct-to-Consumer business, stating that it is exceeding their financial projections, especially after the successful Max launch.
During a call with investors, Chief Financial Officer Gunnar Wiedenfels expressed confidence in achieving $4 billion in total synergies sooner than expected, with a clear path to achieving $5B or more in total harmonies through 2024 and beyond. He also projected full-year free cash flow in the range of $4.5 billion to $5 billion.
The net loss for the quarter was $1.24 billion, a significant improvement from the $3.42 billion loss recorded a year earlier. The company reported a drop of over 16% in total costs and expenses during the quarter.
Free cash flow for the three months ending in June amounted to $1.72 billion, surpassing estimates of $987 million, according to Visible Alpha.
However, Wiedenfels warned that the company anticipates a high single-digit decrease in global network advertising revenue during the second half of the year, which is worse than its previous forecast.
As a result of these developments, WBD Stock fell by 3% in early trading.
Featured Image: Unsplash © laura_lee
Author Faith Yakubu 
