Warner Bros. Discovery Q3 Earnings: Olympics and Blockbusters Drive Gains, CEO Highlights Subscriber Surge and New Partnerships

Warner Bros. Discovery, Inc (NASDAQ: WBD) reported a fiscal third-quarter revenue decline of 3% ex-FX year-on-year to $9.623 billion, missing the analyst consensus estimate of $9.799 billion. 

EPS of 5 cents beat the analyst consensus estimate loss of 9 cents. Net income was $135 million versus a loss of 417 million year-over-year. The stock gained after the print.

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The company reported an adjusted EBITDA of $2.41 billion, an 18% ex-FX decline.

Studios revenues were $2.68 billion, down 17% ex-FX Y/Y on a pro forma combined basis. Content revenue decreased by 18% due to the decline in theatrical and game revenue. 

Theatrical revenue decreased 40% ex-FX as the performance of Beetlejuice Beetlejuice and Twisters in the current year was more than offset by the more robust performance of Barbie in the prior year.

Games revenue declined 31% ex-FX, primarily driven by the better performance of the previous year’s slate, mainly Mortal Kombat 1.

Networks revenues were $5.01 billion, up by 3% ex-FX, on a pro forma combined basis. The AT&T SportsNet exit negatively impacted the growth rate by 200 bps. Distribution revenue decreased 7% ex-FX, primarily driven by declines in U.S. pay-TV subscribers. 

Advertising revenue fell 13% ex-FX, primarily driven by audience declines in domestic general entertainment and news networks and soft advertising markets, mainly in the U.S., partially offset by the broadcast of the Olympics in Europe in the current year.

DTC revenues were $2.63 billion, up 9% ex-FX Y/Y on a pro forma combined basis. Distribution revenue increased by 8% ex-FX, primarily driven by a 15% increase in subscribers and higher pricing following the launch of Max in Latin America and Europe during the first half of 2024.

Advertising revenue increased 51% ex-FX, primarily driven by increased domestic ad-lite subscribers.

Total DTC subscribers increased to 110.5 million from 95.9 million a year ago. Global DTC ARPU was $7.84, a 1% ex-FX increase from the prior year.

As of September 30, 2024, WBD generated $0.8 billion in operating cash flow and held $3.5 billion in cash and equivalents. 

Warner Bros. Discovery’s rapid international growth and sustained investment in diverse, high-quality content fueled momentum in its global Direct-to-Consumer segment this quarter, CEO David Zaslav noted.

Max added 7.2 million new subscribers—the platform’s highest quarterly growth since launch—boosting subscriber-related revenue and advancing its 2025 financial goals for this segment.

Additionally, Zaslav added that its new partnership with Charter Communications, Inc. CHTR for both linear network distribution and Max bundling reaffirms the strength of its content portfolio.

At the conference call, Warner Bros said it would launch max streaming service in seven Southeast Asian markets, and will launch in Australia next year. The company also said it has “A Fair Amount Of Room” to raise prices on the max service.

Price Action: WBD stock is up 10.30% at $9.24 premarket at the last check Thursday.

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