Warner Bros. Discovery (WBD) has experienced significant growth in its global streaming subscriber base, reaching an impressive 110.5 million by the end of the third quarter of 2024. This remarkable increase of 7.2 million subscribers from the previous quarter marks the largest gain since the launch of its Max streaming service. The surge in subscribers positively impacted the company’s stock, which saw a more than 10% rise by November 7, reflecting investor confidence in WBD’s streaming strategy.
Despite the impressive growth in subscribers, WBD’s overall corporate revenue for the quarter experienced a slight decline. Revenue decreased by 4% to $9.673 billion compared to the same period the previous year. In contrast, WBD reported a net income of $136 million, a substantial turnaround from the $417 million loss reported in Q3 2023. This positive shift in net income indicates that despite the decrease in total revenue, the company managed to improve its operational efficiency and cut costs effectively.
Domestic and International Performance
Domestically, WBD saw a modest increase in subscriptions, with 0.2 million additional subscribers, bringing the total to 52.6 million. This figure has remained relatively steady year-on-year, indicating a stable domestic market. However, the networks segment of WBD experienced notable declines in both distribution and advertising revenues. Distribution revenue fell by 8%, and advertising revenue decreased by 13% year-over-year. These declines contributed to a 12% drop in the segment’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Internationally, WBD’s direct-to-consumer (DTC) revenues showed significant growth. When excluding the impact of foreign currency changes, DTC revenues increased by 9% to $2.634 billion compared to the previous year. This growth was driven by a 51% increase in advertising revenue, largely attributed to an increase in domestic ad-lite subscribers. The DTC segment’s operating expenses saw only a marginal increase of 1% ex-FX to $2.345 billion. This growth in the DTC segment highlights the potential for further international expansion.
Future Outlook
WBD’s strong performance in the streaming segment underscores a positive trend towards a more digital-focused future. The significant subscriber growth and increased DTC revenues suggest that WBD is successfully navigating the challenges posed by declining traditional pay TV revenues. The company’s strategy to invest in its streaming services and expand its global reach appears to be paying off.
Looking ahead, WBD aims to continue capitalizing on the growing demand for streaming content. By further enhancing its content library and leveraging its vast intellectual property, the company is well-positioned to attract and retain subscribers. Additionally, WBD’s efforts to improve operational efficiency and cut costs could further boost profitability, ensuring sustained growth in the competitive streaming market.
Overall, while WBD faced challenges with declining revenues in traditional segments, its strong performance in the streaming arena signals a promising shift towards a digital-centric future.
