Business people discussing financials

Warner Bros. Discovery Reports Net Loss of $3.4B in Q2

Company revealed a planned merger between D2C services, Discovery and HBO Max next summer.

Four months after the WarnerMedia and Discovery, Inc. merger, the newly formed Warner Bros. Discovery released their first full-quarter financial report. The company had total revenue of $9.8 billion, and a net loss of $(3.4) billion, or $(1.50) diluted earnings per share. The net loss included $2 million for amortization of intangibles, $1 million for restructuring and other charges, and $983 million in transaction and integration expenses.

“We’ve had a busy, productive four months since launching Warner Bros. Discovery, and have more conviction than ever in the massive opportunity ahead,” said David Zaslav, president and CEO, in an August 4, 2022 news release. “We have the most powerful creative engine and bouquet of owned content in the world, as highlighted by our industry-leading 193 Emmy nominations, and we intend to maximize the value of that content through a broad distribution model that includes theatrical, streaming, linear cable, free-to-air, gaming, consumer products and experiences, and more, everywhere in the world.”

“We’re confident we’re on the right path to meet our strategic goals and really excel, both creatively and financially, and couldn’t be more excited about the future of our company,” Zaslav added.

Second quarter highlights

Other highlights for the second quarter of 2022 include the following:

  • At the end of the quarter, the company had $3.9 billion of cash on hand and gross debt of $53 billion.
  • The company finished the quarter with 92.1 million global direct-to-consumer subscribers, an increase of 1.7 million from the end of the first quarter. Of the 92.1 million subscribers, 53.0 million were domestic and 39.1 were international subscribers.
  • Domestic ARPU was $10.54, International ARPU was $3.69, and Global ARPU was $7.66.
  • Warner Bros. Discovery was the #1 TV portfolio for total time spent by viewers in the U.S.
  • TNT was the #1 TV network overall for Men 18 to 49 and 18 to 34, driven by sports.
  • TLC was the #1 cable network in the industry, ex-sports, in Primetime for women 25 to 54.
  • HBO and HBO Max have had 140 Primetime Emmy nominations, more than any other network or platform.

In addition to the quarterly highlights, Warner Bros. Discovery said it expects its U.S. operations to break even by 2024. The company has a goal of 130 million global subscribers by 2025, and it hopes to have healthy global ARPU growth.

Perhaps one of the most notable highlights was the summer 2023 target date for the combined HBO Max – Discovery+ streaming service. The service will launch a free, ad-supported streaming TV (FAST) service. The service will be rolled out in Latin America in the fall of 2023, followed by Europe in early 2024, APAC in mid 2024 and new markets in the fall of 2024.

Insider Take

Just four months after the merger and Warner Bros. Discovery is making merger moves. This strategy was not a surprise, but logistically, it will be interesting to see how this works out. The company has a year to figure out the platform, content, pricing and distribution. Meanwhile, Warner Bros. Discovery has to find a way to slow the loss. During the earnings presentation, the company said it would experience peak EBITDA loss in 2022, so perhaps the worst is over.  

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