WBD streaming growth derailed by major decline in TV business in Q2

Game of Thrones spin-off House of the Dragon is in its third season

Warner Bros Discovery (WBD) has posted strong streaming results for the second quarter, with profits rising to more than half-a-billion dollars, but its financials were hit by the continued crumbling of its TV advertising business and poor results in its studios segment.

On the streaming side, total revenue grew 10% year-on-year to US$3.08bn, with adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) jumping by more than 60% to US$512m in the quarter.

WBD highlighted the returns of HBO originals Euphoria and House of the Dragon as key subscriber-acquisition and viewership drivers.

Growth in streaming was more than offset by significant declines in its global linear networks business, with revenue dropping 17% to US$3.99bn and adjusted EBITDA falling 4% to US$1.45bn. The decline was driven by a 27% decrease in TV ad revenue, which dropped to US$1.43bn. That drop was caused by a 17% audience decline following the loss of the NBA rights last year.

For context, in the same quarter four years ago, overall revenue in WBD’s networks segment was US$5.72bn and adjusted EBITDA was US$2.26bn, while TV ad revenue was US$2.62bn.

In the studios segment, Q2 revenue fell 39% to US$2.33bn, which was caused in part by a tough comparison to the prior year when Warner Bros released titles including A Minecraft Movie, Sinners and Final Destination Bloodlines. Adjusted EBITDA in the studios division fell 89% to US$96m in Q2.

Across the entire company, revenue fell 11% to US$8.72bn in Q2, with adjusted EBITDA down 4% to US$1.88bn. WBD ended Q2 with US$27.9bn of net debt.

Meanwhile, during a Q2 call with analysts on Thursday, president and CEO David Zaslav said WBD had “every expectation” that its controversial merger with Paramount Skydance (PSKY) would close.

Two weeks ago, the European Commission rubber-stamped the deal after PSKY agreed to several concessions, including agreeing to end a European joint venture with Universal Pictures within 13 months of closing the deal. This week, the UK’s Competition and Markets Authority (CMA) cleared the merger after an antitrust probe.

While the European parts of the approval have now been obtained, the merger faces a far stiffer test in the US, where a coalition of 12 states is suing to block the deal on antitrust grounds. Earlier this week, a federal judge set March 2027 for the trial to begin.