The hero of Warner Bros. Discovery's third-quarter earnings was Superman , which helped drive its studio business to double-digit growth, but linear TV continues to to be a drag on the company's bottom line, with TV advertising hit particularly hard.
Not even Superman can save the linear TV business, it seems.
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Streaming continues to grow, with global streaming subscribers rising by 2.3 million to 128 million.
Warner Bros. Discovery reported total revenue of $9 billion, down 6 percent from last year and a net loss of $148 million, owing to the struggles in linear TV, and a flat performance in streaming.
The timing of the company's Q3 earnings report comes as WBD is in the midst of a strategic review that could include "proceeding with the planned separation, a potential transaction for the entire company, or separate transactions for the Warner Bros. and/or Discovery Global businesses. As part of the review, we will also consider an alternative separation structure that would enable a merger transaction involving Warner Bros., while Discovery Global would be spun off to our shareholders."
The company said Thursday that it did not have any update yet on its plans, and would not provide an update until it had a deal or was otherwise deemed necessary. Warners also said it would not answer any questions on the topic on its earning call.
On the earnings call, executives continued to discuss strategy as though the planned separation of its business in two would proceed as planned.
WBD's streaming segment saw $2.6 billion in revenue, essentially flat from last year, though ad revenue grew by 15 percent, suggesting that the company was making progress in that area. Adjusted EBITDA was $345 million, up 35 percent from last year.
The company told investors that it expects HBO Max distribution revenue to "reaccelerate" early next year, but that streaming will face some headwinds in Q4 and early next year due to the lack of NBA games on the platform, as well as some costs associated with international launches.
WBD's studios business saw revenues soar by 24 percent to $3.3 billion, thanks to Superman , Weapons , The Conjuring: Last Rites , with some slight declines in the TV studios segment as the company delivered fewer episodes in the quarter.
The company warned however that studios "will face a difficult comparison" in Q4 due to a library licensing deal with HBO Max.
"Mike and Pam are doing really a terrific job," Zaslav said of the Warner Bros. film chiefs. "This four part strategy where we really use tentpoles, and then mini tentpoles, whether it's Lord of the Rings , Batman , Superman , Wonder Woman , that that we use the tentpoles that we have that are known all around the world, and then the mini tentpoles, which might be, Gremlins and Goonies and Practical Magic , and then original, which with a lot of discipline is very strong. Our content, I've been saying for a long time has been underused. We haven't seen Harry Potter for 14 years. You haven't seen Lord of the Rings for over a decade, and Peter Jackson has been working hard with us on that film that you'll see in '27 and so we're very excited about about mining and the original together."
Linear networks continue to be the biggest driver of cash flow, with revenues of $3.9 billion, but those revenues were down 22 percent from last year, with distribution revenue falling by 8 percent thanks to continued cord-cutting, and advertising revenue falling 20 percent due to lower viewership. The segment was hurt comparatively by the Olympics last year, with the company holding European rights, as well as a tough comparison for CNN, which was in the midst of election coverage a year ago.
The company said that it is developing a new TNT Sports streaming app that will house its sports rights in the ecosystem, and that it will aggressively pursue bundle deals to help it grow.
And WBD CEO David Zaslav said that CNN's recently-launched app is "off to a very good start," touting the opportunity of a standalone service three years after the shuttering of CNN+.
"It's a terrific everyday product with robust opportunity to get nourished with all kinds of news other than the live feed, or to have multiple live feeds," Zaslav said. "But in a world of AI and in a world of so many voices of what is really going on, to be able to be anywhere in the world at any time and hear something is happening, and be able to go to this, we're very bullish on this as an independent product that will be really scaled, but also really important for society that we have this and making use of everything that's been built at CNN, and again, that could be packaged with almost anybody."
Zaslav also touted HBO, telling analysts that "we get a lot of the best product for less money, because they want to be on HBO and they want to be seen," adding that the leadership team is "exceptional."
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