Warner Bros. Discovery (WBD) reported a challenging third quarter for 2023, with revenue declining significantly despite notable successes from its film studio. The company announced a consolidated revenue drop of 16% to $1.4 billion, falling short of Wall Street expectations. Additionally, WBD posted a net loss of $148 million, while adjusted earnings increased by 2% to $2.5 billion. The quarter was marked by substantial restructuring expenses totaling $1.3 billion.
The film studio experienced a dramatic surge in theatrical revenue, which rose by 74% and contributed to a 23% increase in overall studios revenue, amounting to $3.3 billion. This growth was fueled by three successful film releases within the quarter. Notably, Superman, directed by James Gunn, grossed $615 million worldwide since its release on July 11, 2023. The film Weapons, released in August, has grossed over $267 million, while The Conjuring: Last Rites, which debuted on September 5, 2023, surpassed $490 million in ticket sales.
Despite these wins, WBD’s advertising revenue took a hit, declining 16% to $1.4 billion. This downturn was attributed to difficult comparisons with 2024, during which the company held European streaming and pay-TV rights for the Summer Olympic Games in Paris. The ongoing decline in domestic pay-TV subscribers also contributed to this decrease.
In streaming, HBO Max added 2.3 million subscribers, bringing the total to 128 million. The platform is set to continue its global expansion with launches planned in Germany and Italy in the first quarter of 2026. Streaming revenue remained flat at $2.6 billion, though profit increased by 19% to $345 million.
WBD’s strategic direction has been under scrutiny, especially following its announcement earlier this year to consider splitting its business into two distinct entities. The company has also attracted attention from potential buyers, including Netflix, Comcast, and Amazon-MGM. Discussions are ongoing, particularly with David Ellison, the new owner of Paramount, who has made three offers, the latest being $23.50 per share. WBD has rejected all proposals so far but is open to further negotiations.
If no acquisition occurs, WBD plans to proceed with its intended split of its studio and streaming operations from its linear television segment by mid-2026. The company also successfully paid down $1.2 billion of debt during the quarter.
CEO David Zaslav will address stakeholders during a conference call scheduled for 8:00 AM ET to discuss the company’s direction and address investor concerns. As WBD navigates these financial challenges, its film successes illustrate the potential for growth within its entertainment division amidst broader industry struggles.
