Warner Bros Discovery Beats Studio Results but Misses Streaming Revenue Targets

Warner Bros Discovery (NASDAQ: WBD) released its quarterly earnings, revealing a mixed bag. While the studio division outperformed with box office hits like "Superman" and "The Conjuring: Last Rites," the streaming segment disappointed.

The company posted a wider loss than expected, primarily due to sluggish growth in HBO Max and Discovery+ subscribers, which added 2.3 million this quarter-well below the 2.75 million forecast. This shortfall caused shares to dip slightly in premarket trading.

Legacy cable TV continues to hemorrhage revenue as cord-cutting accelerates; the unit's sales tumbled by 22%. The decline was sharp following last year's boost from CNN's strong news cycle and the Winter Olympics, illustrating the challenge traditional media faces in a fast-evolving market.

Despite streaming struggles, Warner Bros Discovery's studio division was a beacon of strength, with revenues climbing 24% to $3.32 billion. Blockbuster releases seem to be keeping the studio profitable amid broader industry shifts.

Looking ahead, the absence of National Basketball Association (NBA) games-previously streamed on HBO Max-will hit advertising revenue hard, trimming roughly 300 basis points from the streaming unit's ad income in the fourth quarter and even more next year. The cable network segment is also bracing for a 400 basis point drop in similar ad revenue.

Total revenue fell 6% year-over-year, landing at $9.05 billion, slightly missing analyst estimates. And the company reported a loss of 6 cents per share, deeper than the anticipated 4-cent loss.

Warner Bros Discovery remains in exploration mode, weighing options like selling the company in full, breaking off parts, or possibly spinning off its global networks business. Notably, the firm isn't offering a timeline for these moves, leaving plenty of uncertainty swirling.

Streaming wars and cord-cutting trends continue to pressure traditional and digital content providers alike. How WBD navigates this crossroad-balancing strong studio momentum against streaming and cable woes-will be interesting to watch as the media world recalibrates.