Warner Bros. Discovery Inc. shares gained slightly on Thursday after the entertainment conglomerate reported another quarterly loss, pressured by sharp declines in its traditional television business despite solid performances from its film studios and streaming units.
The results underscored the company’s continued struggle to balance its legacy operations with its push into digital streaming amid shifting consumer preferences.
WBD stock was up 0.4% to $22.85 on Thursday morning.
TV revenue decline weighs on results
The company posted an adjusted loss of 6 cents per share for the third quarter, compared with a profit of $135 million, or 21 cents per share, a year earlier.
Analysts polled by FactSet were expecting earnings of 3 cents per share on revenue of $9.18 billion.
Revenue came in at $9.05 billion, down 6% from the prior year and below Wall Street’s forecast.
The company’s TV networks business continued to be the largest drag, with revenue plunging 22% to $3.88 billion, missing analyst expectations of $3.99 billion.
The decline reflected accelerating cord-cutting as more consumers move away from traditional cable packages toward streaming alternatives.
Advertising sales also fell sharply, down 16% to $1.41 billion, while distribution revenue slipped 4% to $4.7 billion.
The company said that while its streaming subscriber base continues to grow, those gains were offset by steep declines in its linear TV audience and revenue base.
Content revenue dipped 3% to $2.65 billion, largely due to the sublicensing of Olympic sports rights to European broadcasters in the prior year.
Excluding that one-time impact, Warner Bros. Discovery said content revenue would have risen 23%, driven by a strong box-office performance during the quarter.
Studios shine, streaming growth steady
Warner Bros.’ studios segment proved to be a bright spot, with revenue surging 24% to $3.32 billion, surpassing analyst expectations.
The company credited its strong theatrical slate, including Superman, Weapons, and the latest installment of The Conjuring franchise, for driving performance.
Streaming revenue was relatively stable at $2.63 billion, slightly below forecasts but flat year-over-year.
The company’s streaming platforms, including HBO Max and Discovery+, ended the quarter with 128 million subscribers, up 2.3 million from the previous quarter.
While growth in the streaming segment remains modest, it continues to play an increasingly important role in offsetting declines in Warner Bros.’ traditional businesses.
However, profitability in streaming remains a longer-term goal as the company invests heavily to expand its global footprint and original content offerings.
Strategic review and potential split
Warner Bros. Discovery’s financial update comes as the company undergoes significant strategic review and restructuring efforts.
It reiterated on Thursday that it remains on track to split itself into two companies by mid-2026, though its board continues to evaluate “a broad range of strategic alternatives,” including the sale of some or all of its entertainment holdings.
One proposed entity would house the movie and television production studios, HBO, and the streaming business, while the other would contain its cable channels, such as CNN, TNT, Discovery, Food Network, and TBS.
The split could unlock value for shareholders and simplify operations amid a rapidly changing media landscape.
Reports have surfaced that Paramount, Comcast, and Netflix have expressed interest in acquiring parts of Warner Bros. Discovery.
The Wall Street Journal reported that Paramount has made three separate bids for the entire company, all of which were rejected.
Paramount Skydance is also pressuring Warner Bros Discovery to accept its $23.50-per-share acquisition proposal, reported CNBC.
Warner Bros. Discovery shares have surged 115% year-to-date, fueled by takeover speculation and optimism surrounding the company’s long-term restructuring plans.
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