The media conglomerate swung to a $3.42 billion loss in the second quarter, partly due to obstacles related to its recent merger. The stock plummeted in after-hours trading, down as much as 9%.
Here are Warner Bros. Discovery second quarter results compared to Wall Street's consensus estimates, as compiled by Bloomberg:
Revenue: $9.82 billion versus $11.91 billion expected
Total DTC subscribers: 1.7 million net additions versus 1.65 million net additions expected
In total, the company said it ended the second quarter with 92.1 million subscribers across its streaming platforms, up about 1.7 million from the first quarter. It expects to see 130 million global streaming subscribers by 2025.
The leadership team doubled down on the importance of high content spend, explaining that reducing churn remains the number one factor amid increased competition.
CEO David Zaslav maintained that content spend will go up each year in the years to come.
The company estimated that EBITDA for global streaming will hit $1 billion by 2025 with the streaming business breaking even by 2024. It expects peak EBITDA loss in streaming by this year.
Zaslav added that the company is weighing a free, ad-supported streaming plan, too.
Still, despite the growth plans, analysts anticipate messy quarters to come as the streaming conglomerate works to integrate the two businesses, drive free cash flow, and deleverage its balance sheet.
Warner Bros. Discovery previously said it expects to slash $3 billion worth of costs over the next two years, and distribute those savings into streaming content.
HBO Max, Discovery+ to merge into one service
Zaslav provided a bit more clarity on the future of HBO Max during the company's earnings call. He confirmed that the streaming service will combine with Discovery+ to be one platform, set to launch next summer.
In the interim, the two services will share content. The company provided an update on its programming prior to the announcement, revealing that select content from Chip and Joanna Gaines' Magnolia Network will arrive on HBO Max in September. It will remain available on Discovery+, as well.
Additionally, CNN will receive its own hub on Discovery+ that will include original series like "Stanley Tucci: Searching for Italy" and "Anthony Bourdain: Parts Unknown."
As the company looks to cut costs, the studio confirmed on Wednesday that two films slated for an HBO Max release — "Batgirl," starring "In The Heights" star Leslie Grace, as well as "Scoob!: Holiday Haunt" — have been pulled.
The DC Comics film was nearly complete and cost the studio a reported $70 million to $90 million to produce.
"We're not going to release any film until it's ready," Zaslav said on the earnings call, explaining that the studio has a 10-year focused plan on DC franchises and that the decision was part of a "strategic shift."
"We can't find an economic case for direct-to-streaming films," the CEO continued, adding the emphasis "will always be on theatrical."
As investors digest the recent cost-cutting headlines, critics were quick to point out the sky-high pay of CEO David Zaslav.
According to regulatory filings, Zaslav's 2021 compensation package — which runs through the end of 2027 — jumped to a whopping $246 million, significantly higher compared to 2020 ($37.7 million) and 2019 ($45.8 million).
Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at firstname.lastname@example.org