Media giant Warner Brothers Discovery (WBD) reported a loss of $3.42 billion as of the end of the second quarter of this year. Issues related to the merger between the iconic film studio and Discovery Networks were seen among the factors driving the loss.
WBD’s stock value dropped by nearly 9% in after-hours trading following the release of its Q2 earnings report.
This is the first quarterly issued by the conglomerate since the entities merged together.
To address this issue moving forward, the conglomerate’s management team aims to reinforce the value of high content spending in light of the increased competition in the streaming media sector.
Streaming is King
WBD reported that it ended the first half of 2022 with 93.1 million subscribers across its streaming platforms. An increase of around 1.7 million subscribers was noted from the total posted at the end of the first quarter.
The company hopes to raise the number of its subscribers to 130 million worldwide by 2025.
David Zaslav, WBD’s chief executive officer, likewise added that content-driven spending is expected to increase with each passing year. He went so far as to say that WBD also plans to offer a free ad-supported streaming subscription plan in the near future.
Integration in Progress
Despite what appears to be a workable growth strategy, it will be an uphill climb for WBD as the conglomerate tries to integrate its core businesses, align its balance sheet, and improve its cash flow.
For example, the company previously stated that it planned to cut $3 billion in costs over a two-year period. Any savings resulting from the budget cuts will be distributed into the production of streaming content.
WBD execs expect the EBITDA for global streaming services will be at $1 billion by 2025, and its streaming business will break even by 2024. However, the company also expects to hit its peak streaming EBITDA loss within this year.
For now, the merged entities will pool and share their content. Select material from the Magnolia Network will be shown on HBO Max and Discovery+ next month. News network CNN has also been given a hub on Discovery+ which will offer several original series, including Anthony Bourdain: Parts Unknown and Stanley Tucci: Searching for Italy, in its programming lineup.