Warner Bros. Discovery on Thursday reported that streaming subscriptions grew just 1.1 million last quarter, less than Wall Street expected, despite a slate of hot HBO Max debuts including House of the Dragon and season two of The White Lotus.
For the quarter that ended in December, WBD’s streaming unit, which includes HBO Max and Discovery+, reported an operating loss of $217 million on $2.45 billion in revenue, down from losses of $728 million a year ago.
Overall, the company missed expectations on the top and bottom lines, reporting revenue of $11 billion and losses of $2.1 billion that were mostly due to ongoing restructuring charges from last year’s merger between Warner Bros. and Discovery.
CEO David Zaslav said that after completing 10 months of restructuring, the media company now looks to ‘take full advantage’ of its roster of globally recognized franchises, including Superman, Batman, Lord of the Rings and Harry Potter.
‘I believe that we have an overwhelming advantage in the marketplace with the IP that we own,’ said Zaslav, using the industry’s shorthand for intellectual property. ‘To get that advantage, we have to create great content.’
CEO David Zaslav said that after completing 10 months of restructuring, the media company now looks to ‘take full advantage’ of its roster of globally recognized franchises
House of the Dragon was a widely anticipated HBO Max debut last quarter
Zaslav revealed that Warner Bros Studios has struck a deal to make a series of news films based on J.R.R. Tolkein’s Lord of the Rings fantasy novels.
The Lord of the Rings announcement builds on plans to reboot the DC Comics franchise in the mold of Disney’s Marvel Cinematic Universe.
DC Studios bosses James Gunn and Peter Safran last month laid out an ambitious slate of 10 film and television projects that will tell a single story over the next eight to 10 years.
“It’s one of the biggest value-creation opportunities for us,” Zaslav told investors of the DC Universe re-launch, which will include new Superman and Batman movies in 2025, following The Flash this summer.
Warner Bros Discovery said the months-long merger-related restructuring, which resulted in thousands of layoffs and canceled film and television projects, is complete.
Zaslav said the company is raising its two-year target of costs savings from the merger, known as synergy, to $4 billion, from $3.5 billion. That will be accompanied by restructuring charges of $5.3 billion.
The company cited signs of gathering momentum, including the popularity of the HBO drama The Last of Us, the fourth HBO series to average more than 15 million viewers.
WBD, like its Hollywood peers, is racing to create a profitable streaming business as consumers and advertisers flee traditional TV.
But like other media companies, Warner Bros Discovery has yet to turn a profit on its HBO Max and Discovery+ streaming services, though the company has reduced losses in the segment.
Warner Bros. Discover stock was down 1.5% in extended trading on Thursday
Season two of The White Lotus built on the popularity of the HBO series
The company cited signs of gathering momentum, including the popularity of the HBO drama The Last of Us, the fourth HBO series to average more than 15 million viewers
Paid subscribers for the services rose to 96.1 million last quarter, from 94.9 million, a smaller gain than the consensus expectation after HBO Max returned to Amazon Channels in December.
Executives also confirmed that HBO Max is set to re-launch this spring as a combined service with Discovery+, expanding the streamer’s offerings.
Streaming and games chief J.B. Perrette told investors the new version of the streaming service, with better performance, enhanced features and broader entertainment offerings, will be unveiled at a press event on April 12.
Zaslav confirmed reports that Discovery+ would remain available as a stand-alone service for those who are satisfied with its reality programming.
The Warner Bros. Studios segment reported operating income of $768 million, down 34% from the prior year’s quarter.
Revenue fell 23% to $3.84 billion, in part because of fewer theatrical releases during the typically busy holiday season.
The DC Comics film Black Adam was the studio’s major release in the fourth quarter last year, compared with a packed slate last year.
One year ago, the studio’s fourth-quarter releases included Dune, The Matrix Resurrections, King Richard and The Many Saints of Newark.