Warner Bros. Discovery (WBD) delivered a strong performance in the third quarter, exceeding analyst expectations and showcasing the power of its streaming strategy. The company’s revenue, excluding foreign exchange impacts, came in at $9.623 billion, narrowly missing the consensus estimate of $9.799 billion. However, the earnings per share (EPS) of 5 cents significantly beat the projected loss of 9 cents. This positive result led to a 10.30% surge in WBD stock price during premarket trading on Thursday.
The driving force behind this positive performance was the continued growth of the direct-to-consumer (DTC) segment, particularly the Max streaming platform. Max attracted 7.2 million new subscribers, marking its highest quarterly growth since launch. This impressive subscriber growth fueled an 8% increase in distribution revenue and a 51% surge in advertising revenue within the DTC segment, resulting in a 9% overall increase in DTC revenue year-over-year. This trajectory demonstrates the platform’s potential to meet its 2025 financial goals.
Warner Bros. Discovery’s CEO, David Zaslav, emphasized the significant impact of Max’s international expansion and its sustained investment in diverse, high-quality content. He highlighted the recent partnership with Charter Communications, Inc. (CHTR) for both linear network distribution and Max bundling as a testament to the strength of the company’s content portfolio. This strategic alliance further solidifies the company’s position in the evolving media landscape.
During the conference call, Warner Bros. Discovery announced plans to launch Max in seven Southeast Asian markets and its expansion into Australia in 2025. The company also expressed its confidence in raising prices for the Max service, indicating its belief in the platform’s value proposition.
While the studio revenue segment experienced a 17% decline year-over-year, primarily due to lower theatrical and gaming revenue, the company’s Networks revenue segment saw a 3% increase. However, this growth was partially offset by the exit from AT&T SportsNet, which negatively impacted the growth rate by 200 basis points.
Overall, Warner Bros. Discovery’s third-quarter results highlight its successful pivot towards streaming, particularly with the success of Max. The company’s strategic partnerships, global expansion plans, and confidence in price increases solidify its position as a major player in the evolving media landscape.
