Warner Bros Discovery added more than seven million net subscribers in the third quarter of 2024 as its international Max rollout gathered pace, but other key earnings metrics dipped versus 2023 as box office revenues tumbled.Growth in the DTC segment was attributed to international expansion, as Max rolls out globally. Later this month on November 19, the service will launch in several Asia-Pacific markets. European rollout began in May. As such, global DTC subscribers were 110.5 million at the end of the quarter, with the 7.2 million added representing the biggest quarterly increase since the launch of Max.Total Warner Bros Discovery revenues were $9.62 billion, a 3% fall year-on-year, while total adjusted EBITDA was $2.41 billion, down 18%. Net income was just $135 million, thanks in large part to a $1.6 billion pre-tax cost relating to “acquisition-related amortisation of intangibles, content fair value step-up and restructuring expenses.” Free cash flow was down a significant 69% to $632 million.Wall Street analysts had expected total revenue of $9.81 billion, down from $9.98 billion in the same quarter a year ago when the impacts of the labor strikes were being keenly felt, as well as a loss per share of 8 cents, compared with a year-ago loss of 17 cents.Studios revenues came in at $2.68 billion, down 17% year-on-year, and adjusted EBITDA down 58% to $308M, as the lack of a mega-hit like Barbie weighed on the figures. In fact, theatrical revenue was down 40%, which Warner Bros Discovery said was due to the “lower” box office takings from the likes of Bettlejuice Bettlejuice and Twisters against Barbies stellar performance. On the other hand, TV revenue grew 30% against a strikes-impacted Q3 2023.On the networks front, revenue tiptoed up 3% to $5.01 billion, but distribution revenue fell 7% due to domestic pay-TV subs decreasing and impacts from the AT&T SportsNet exit, and advertising revenue was down 13% thanks to linear market softness. The Olympics generated a cumulative 215 million views across Warner Bros Discovery’s platforms, and sublicensing of the sporting event’s rights saw content brought in $578 million to increase content revenue to $618 million. However, network operation costs were up 22% due to broadcasting the Olympics in Europe, which negatively impacted adjusted EBITDA to the tune of $65 million.“Warner Bros. Discovery’s Q3 results demonstrate once again that while we continue to confront extraordinary disruption in our environment, the strategy we have undertaken to ready Warner Bros. Discovery for future success is showing important results,” said David Zaslav, President and CEO of Warner Bros Discovery.“Thanks to our rapid international expansion and continued investment in high quality, diverse content, we saw momentum accelerate in our global direct-to-consumer business in Q3. In total, Max delivered 7.2 million net subscriber adds, the strongest quarterly gain since the platform’s launch, resulting in healthy subscriber-related revenue growth and meaningful progress toward achieving our 2025 direct-to-consumer segment financial objectives.”The July-to-September quarter did not reflect two recent setbacks for Warner Bros Discovery: the October release of Joker: Folie à Deux, the biggest movie flop of 2024; and the loss of NBA rights, which will take effect in 2025, after the current season. While the NBA remains in place for now, its disappearance next year after nearly four decades in the Turner fold has prompted worries about the potential impact on carriage fees for TNT and other networks. Warner Bros Discovery did manage to secure an early distribution renewal with Charter Communications, the No. 1 U.S. pay-TV operator, in September despite the basketball news.Zaslav said the Charter deal “not only reinforced the value of our content portfolio, but represented our willingness to work with our partners to enhance the consumers’ experience as our industry undergoes transformation.”Warner Bros Discovery is also a partner in joint venture Venu Sports alongside Disney and Fox. The streaming service’s planned August launch was scrubbed after a federal judge granted a request for a preliminary injunction by Fubo, a pay-TV provider suing Venu’s backers for antitrust violations.Shares in Warner Bros Discovery have traded in the $7 to $8 range since the springtime as investors fret about its reliance on linear TV, which has been ravaged by cord-cutting. Last August, the company took a $9.1 billion write down on the value of its cable networks, citing the loss of the NBA.An earnings call will be held at 8am P.T. today.
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