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Zaslav updates Warner Bros. Discovery timeline, strategy: 'We expect a healthy inflection'

Warner Bros. Discovery's (WBD) combination service is coming to market earlier than expected.

During the streaming giant's third quarter earnings call, WBD CEO David Zaslav said that the target launch date for the platform has been moved up from summer 2023 to spring 2023, adding that the company will be "aggressively tackling" an ad-supported streaming market that now includes Netflix (NFLX) and will soon include Disney (DIS).

"We expect a healthy inflection with the launch of our combined service and expanded global footprint," Zaslav told investors. "We've been very hard at work. We can make the service available to consumers around the globe and get the business running on all cylinders."

Management hinted that price hikes are likely to come to the platform in 2023, as well.

"By 2023 HBO Max will not have raised its price since launch, which we think is an opportunity," noted JB Perrette, president of the company's streaming division.

'Elvis' (Courtesy: Warner Bros. Picture)
'Elvis' (Source: Warner Bros. Pictures)

Zaslav revealed that the company has increased its merger synergy target to $3.5 billion from $3 billion, with an eye on doubling down on its strong intellectual property, content deals, and optionality.

"We're leaning in on [content]," Zaslav said on the call, explaining that WBD has spent more on content than ever before — addressing recent headlines of slashed production budgets, shut down projects, along with the removal of several titles from the HBO Max platform. He went on to say that "it's taken real courage" to restructure the company as one unit.

The stock sank in after-hours trading, down more than 5% as investors digested the company's third quarter earnings results, which missed expectations across the board.

Increased restructuring charges, macroeconomic challenges like foreign exchange headwinds, further subscriber losses in linear television, and a slowdown in advertising continued to pressure profits in the quarter.

Revenue fell 11% to $9.82 billion while the company also reported a net loss of $2.3 billion after a $3.4 billion loss in the second quarter.

And despite "House of the Dragon's" record-breaking success, the company added just 2.8 million direct-to-consumer subscribers in the third quarter versus expectations of 3.27 million. Management has guided a long-term target of 130 million paying users by 2025.

Profitability continues to remain a top concern for investors as faith in streaming fundamentals wanes. WBD reiterated its 2022 adjusted EBITDA guidance between $9 billion and $9.5 billion, a decline from a previous forecast of $10 billion.

Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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