Variety: Warner Bros. Discovery Sheds 1.8 Million Streaming Subscribers During Max Launch Quarter

Story from Variety:

Warner Bros. Discovery lost 1.8 million streaming subscribers from April 1-June 30, the quarter during which it launched new combined streamer Max.

Streaming subscribers across Warner Bros. Discovery’s HBO, Max and Discovery+ now total 95.8 million, per the company’s Q2 earnings report released Thursday.

For comparison, HBO, HBO Max (now Max) and Discovery+ added 1.1 million subscribers in Q4 to end 2022 with a total of 96.1 million worldwide. At the conclusion of Q1, which ran Jan. 1-March 31, U.S. streaming subs were up 1.6 million to 97.6 million overall across those three platforms.

Warner Bros. Discovery’s combined HBO Max-Discovery+ streaming service Max launched May 23. The second quarter covers subscriber totals through April 1-June 30, meaning that while Q2 marks the first quarter during which the unified product was a factor, Q3 (July 1-Sept. 30) will be the first full quarter including Max results.

Investors had been warned by Warner Bros. Discovery to expect a drop in Q2 streaming subscribers during the first quarter, as 4 million streaming customers were subscribed to both Discovery+ and HBO Max and some Discovery+ subs were likely to cancel that service and switch to the rebranded Max.

Elsewhere in the earnings results, Warner Bros. Discovery boasted its $1.7 billion in cash flow for Q2 and reported it is now increasing its post-WarnerMedia-Discovery merger synergy target to more than $5 billion over three years.

“The important work we are doing to transform our businesses for the future continues to drive our strong financial performance, as demonstrated by meaningful improvements to our balance sheet and our now increased synergy target of more than $5 billion,” Warner Bros. Discovery CEO David Zaslav said in a letter to shareholders. “This quarter alone we reported over $1.7 billion in free cash flow, and we remain bullish with respect to our delevering story and expect to be comfortably below 4.0x levered by the end of the year, and at our target of 2.5-3.0x gross leverage by the close of 2024. All of which positions us well to lean into growth opportunities that will ultimately drive shareholder value, to include our Direct-to-Consumer business, which, in the wake of the successful launch of Max in the U.S., is tracking well ahead of our financial projections, having generated positive EBITDA in the first half of the year.