WarnerBros. Discovery posted weaker-than-expected second quarter earnings Thursday amid a firestorm of speculation about a restructuring at the company that would cull costs.
The media behemoth — which owns HBO, CNN, Warner Bros., HGTV and TLC — reported its earnings for the first time since it merged earlier this year, combining the properties of Discovery and WarnerMedia. Shares tumbled nearly 4% in after-hours trading.
David Zaslav CEO of WBD, focused on the company’s “busy, productive” four months since the merger.
“We’ve had a busy, productive four months since launching Warner Bros. Discovery, and have more conviction than ever in the massive opportunity ahead,” the CEO said. “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.”
During the quarter, the media giant posted a net loss of $3.42 billion, or a loss of $1.50 a share. The loss included over $2 billion in amortization of intangibles as well as $1 billion in restructuring and other charges, as well as nearly $1 billion in transaction/integration costs.
Revenues totaled $9.83 billion. Wall Street expected a net loss of 3 cents on revenue of $11.84 billion.
The company said its streaming subscriber base, which includes both Discovery+ and HBO Max, totals 92.1 million.
WarnerMedia had reported 76.8 million subscribers to HBO or HBO Max last quarter, with Discovery reporting 24 million subscribers, suggesting that the total number of subscribers fell from the first quarter.
Earlier this week, media types buzzed that Zaslav would soon roll out details that would help the company shore up $3 billion in 2023.
Investors got a glimpse at Zaslav’s plan on Tuesday when the media giant announced it would shelve its straight-to-streaming DC flick “Batgirl,” starring “In The Heights” star Leslie Grace, as well as “Scoob!: Holiday Haunt.” Cutting both films would save WBD a fortune in marketing costs and any back-end payouts.
There have also been rampant rumors that there would be some fallout from the merger of the firm’s two biggest streaming services, HBO Max and Discovery+. On Wednesday, Hollywood trade The Wrap reported that the company plans to lay off 70% of its development business.
Since the $43 billion merger of Discovery and WarnerMedia closed, life has been different at the newly-formed WBD. Zaslav’s no-nonsense, budget-focused leadership has translated to more than a few rip-the-bandaid-off decisions. Shortly after the deal closed, the CEO shuttered CNN’s month-old $300 million streaming service CNN+.
“We will clearly take swift and decisive actions on certain items, as you saw on CNN+ last week,” Zaslav told investors on an earnings call in April, vowing to not “overspend.”
Zaslav soon brought in Chris Licht, a former executive producer on “The Late Show with Stephen Colbert,” to replace former CNN chief executive Jeff Zucker, who resigned. Top brass is focused on building up CNN’s flailing ratings while reorienting from opinion-based reporting back to fact-based journalism.
Licht is currently scrambling to shore up costs and buffer ratings while looking for ways to drum up new revenue streams as the network’s profits are reportedly poised to drop below the $1 billion mark for the first time since 2016.