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Warner Bros. Discovery posts robust Q3 growth amid box office woes
Warner Bros. Discovery (WBD) unveiled its third-quarter 2024 earnings results, showcasing an intriguing mix of highs and lows. While the company’s streaming platforms HBO, Max, and Discovery+ surpassed 110 million global subscribers, box office sales took a significant hit, tumbling 40% compared to the previous summer’s “Barbie” phenomenon.
Streaming success and subscriber milestones
The period from July to September marked a pivotal chapter in WBD’s streaming journey. Direct-to-consumer sales surged 9% to reach a commendable $2.6 billion. This uptick was further bolstered by an 8% rise in distribution and a striking 51% increase in ad sales. However, overall content sales dipped by 11%.
The second season of “House of the Dragon” and extensive Olympics programming played a crucial role in retaining viewer engagement. The ever-popular “Shark Week” added to Discovery’s appeal.
CEO’s optimistic forecast
On a call with investors, CEO David Zaslav expressed robust optimism, signaling that the company is poised to “meaningfully exceed” its projected $1 billion in streaming earnings by 2025. The momentum is being driven by rapid international expansion and continued investment in high-quality, diverse content.
Studios segment and theatrical performance
However, the studios segment faced a challenging quarter, with revenue plunging 17% to $2.7 billion. Television revenue climbed 30%, while video game sales suffered a 31% drop. The theatrical division was particularly hard-hit, with a 40% decline and underwhelming performances from films like “Beetlejuice Beetlejuice” and “Twisters”, starkly contrasting last summer’s runaway success, “Barbie”.
Networks division shines despite overall challenges
WBD’s networks division recorded a modest 3% rise in revenue to $5 billion compared to Q3 2023. Notably, content revenue surged 87%, although ad sales fell by 11% and distribution slightly dipped by 7%.
Financial performance and Wall Street projections
Wall Street anticipated a loss of 9 cents per share, equating to $9.8 billion in revenue. Defying expectations, WBD reported a diluted earnings per share (EPS) of 5 cents, translating to a profit of $135 million on $9.6 billion in revenue. Despite carrying a hefty $40.7 billion in debt, the company managed a free cash flow of $632 million for the quarter.
Strategic initiatives and future prospects
In a letter to shareholders, CEO Zaslav emphasized the success of their strategic initiatives amid ongoing industry disruption. He lauded the international expansion and the substantial subscriber growth for Max, which added 7.2 million net subscribers – the largest quarterly gain since its inception.
Additionally, Zaslav highlighted a recent strategic partnership with Charter Communications designed to enhance consumer experience through linear network distribution and Max bundling. This collaboration underscores WBD’s commitment to adapting to industry transformations and leveraging its expansive content portfolio.
Concluding thoughts
Warner Bros. Discovery’s Q3 performance reveals a dynamic landscape where streaming triumph reigns supreme amid box office turbulence. The company’s strategic foresight, coupled with robust international expansion and diversified content investment, paints a promising picture for the future.
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