WBD’s overall revenue is down – but streaming and sports could lead to a recovery

Warner Bros. Discovery is in trouble as its television revenue has fallen by double digits and growth opportunities such as streaming media have not recovered. (still.)

Last quarter, WBD’s overall revenue was down 7% year-over-year, with revenue from linear TV advertising sales down 14%. WBD hasn’t given up on its linear business, but expects increased investment in streaming and sports programming to offset losses and return to profitability.

WBD’s revamped streaming service Max, which combines HBO Max and Discovery+ content, is still in the “early stages,” CEO David Zaslav told investors on WBD’s earnings call on Friday. However, the studio’s top priority is to “foster profitable growth” for Max.

However, it is still “long” [distance] It remains,” Zaslav said on the path.

To the MAX

Max is the light at the end of the tunnel for WBD, which is still in the dark.

WBD reported a 51% year-over-year increase in streaming ad revenue compared to the fourth quarter of 2022, before HBO Max was rebranded to Max. And the pace of growth in streaming ad revenue is accelerating, CFO Gunnar Wiedenfels said.

While this number may sound promising, it’s not surprising. Advertisers prefer centralized streaming purchases, which is why so many media companies bundle their content. (Another example is Disney+ and Hulu.)

Consumers also prefer accessing content from one place. Although the studio only gained 500,000 streaming subscribers in the fourth quarter (not counting subscribers from its acquisition of Turkish streamer BluTV in December), Max Zaslav said it had the lowest churn rate in Max history.

In addition to stable subscriber numbers, rising streaming ad revenue explains why WBD’s average revenue per streaming user increased 7% year-over-year to $7.94.

In the world

WBD plans to continue its streaming growth trajectory due to globalization and, of course, increased content.

Ad-supported Max is currently only available in the US. While some international regions still offer ad-supported HBO Max, Max launches in Latin America next week, followed by Europe, Asia, Africa, and the Middle East later this year. According to Zaslav, by the end of the year, the ad-supported Max will be available in more than 40 international markets.

And to make the most of its global launch, WBD is investing in new content that leverages well-known franchises.

Yet another “Game of Thrones” series prequel, “A Knight of the Seven Kingdoms,” is set to premiere in 2025, and another “Harry Potter” movie is scheduled for release in 2026.

sports opportunities

But most importantly, WBD is focused on sports.

It’s no coincidence that Max’s overseas expansion coincided with the summer Olympics in Paris. NBCUniversal holds the broadcast and digital rights, while WBD will live stream the match on its Eurosport channel.

Max also hopes to use the Olympics’ publicity to gain more overseas subscribers for other sports programs. For example, Zaslav said WBD is currently in talks with the NBA about renewing its rights.

Last but not least, WBD promoted the new joint venture between Disney and FOX. The joint venture plans to launch his sports-focused streaming app in 2025. This app is provided to His Max subscribers as part of a bundle.

But that’s only if the app actually happens. Pay-TV companies and the Justice Department have raised antitrust concerns about the nature of the business. The three studios collectively cover 55% of U.S. sports rights, according to Citi analysts. And sports-focused programming company Fubo actually filed a lawsuit earlier this week alleging anti-competitive business practices among broadcasters.

Only time will tell whether WBD can regain its position in the streaming market share battle.