Warner Bros. Discovery earnings tumble amid film studio struggles
Warner Bros. Discovery stumbled in the second quarter, demonstrating the hazard of depending heavily on blockbuster returns from its Burbank film studio.
Disappointing performances by “Supergirl” and “The Bride,” drove down quarterly theatrical revenue by 46%. The tepid showing illustrated how the Warner Bros. studio has fallen since last year when it was riding high at the box office with “Sinners,” and “A Minecraft Movie.”
Warner’s lackluster earnings, released Thursday, comes as tech scion David Ellison’s Paramount Skydance remains eager to complete its $111-billion deal to buy Warner Bros. Discovery to combine streaming operations and the storied film studio with Melrose Avenue’s Paramount Pictures.
Overall, profit for Warner Bros. Discovery, which also is the parent of HBO, CNN, TLC and HGTV, plummeted 91% to $149 million, or 6 cents per share, compared to $1.6 billion in the second quarter of 2025 amid the film studio’s blazing run.
The company also fell short of Wall Street expectations for revenue, which sank 11% to $8.7 billion, despite noteworthy gains in its HBO Max streaming business.
Warner missed having NBA games on its TNT channel, which contributed to a 27% drop in advertising to $1.4 billion. The NBA’s departure, and the absence of the NHL Stanley Cup finals, contributed to a 17% ratings decline at Warner’s cable networks.
Chief Executive David Zaslav opted not to renew the pricey basketball contract as Warner has been straining to pay down debt brought on by its last merger in 2022. Instead, NBCUniversal picked up the NBA arrangement.
Warner executives disclosed the company still is carrying about $30 billion in debt.
The company’s earnings revealed continued weakness in the cable television division amid consumer cord-cutting, which has slowed down in recent quarters.
Still, the channels remain a significant part of Warner’s overall revenue and profit picture.
Revenue to the global linear networks, which includes TNT, Discovery and international channels, declined 17% to $4 billion. Adjusted earnings before interest, taxes, depreciation and amortization in that division fell 4% to $1.4 billion.
Despite the gloomy results, Warner’s stock climbed more than 1% in early Thursday trading to $26.25. Investors seemed heartened by news that British authorities have cleared Ellison’s proposed takeover.
Britain’s Competition and Markets Authority found the Paramount-Warner combination would not restrict media competition in Britain.
Warner investors are expecting more than $31 a share should Paramount succeed in its proposed Warner Bros. purchase. The blockbuster acquisition has stalled amid an antitrust challenge filed last month by California Atty. Gen. Rob Bonta and 11 other state attorneys.
Bonta’s coalition, including prosecutors from New York, Colorado, Minnesota and Nevada, contends the deal violates U.S. antitrust law.
“We’re confident this transaction will close,” Zaslav told analysts on an early morning conference call.
Earlier this week, a federal judge scheduled a March 2, 2027 trial — months later than Paramount had hoped — to determine whether the deal should move forward.
Paramount faces a June 4 deadline to wrap up the purchase — or pay a $7 billion breakup fee to Warner.
Warner’s earnings bright spot came from its streaming segment, which includes HBO.
Streaming revenue grew 10% to $3 billion as the company continued its international rollout of HBO Max. The service benefits from Warner films, cartoons and HBO’s critically acclaimed original content including “Euphoria,” “Hacks,” “The Gilded Age” and “A Knight of the Seven Kingdoms,” which debuted earlier this year.
Adjusted earnings before interest, taxes, depreciation and amortization in the streaming division soared 75% to $512 million.
Streaming chief JB Perrette said his division was bullish about next year when HBO will introduce new seasons of “The White Lotus,” “The Last of Us” and “The Pitt.”
Warner executives acknowledged their film studio’s struggles. The company does not break out theatrical revenue figures, but said total revenue for the film and television studios declined 39% to $2.3 billion.
The studios’ adjusted earnings before interest, taxes, depreciation and amortization dropped 89% to $96 million.
Zaslav conceded Warner Bros. would release fewer films this year than it had initially anticipated because some weren’t ready for audiences. The studio should release 14 movies this year but plans to boost its output to 19 next year.
“We’re very confident that we’re going to be able to maintain that larger number,” Chief Financial Officer Gunnar Wiedenfels said on the call.
The studio will rebound, Zaslav said.
“Next year, we’re going to have ‘Lord of the Rings,’ ‘Batman,’ ‘Superman,’ [and] ‘Minecraft’ too,” Zaslav said. “Our overall philosophy [is] making sure that we bring the motion picture to the market when the film is ready.”
Ellison, in his bid for Warner Bros., has promised regulators that the combined studio would release 30 films a year — an amount that some experts believe is overly ambitious.
Late Wednesday, Regal Global Entertainment Chief Executive Eduardo Acuna cited Ellison’s commitment to a strong pipeline in announcing his theater chain’s support for the Paramount-Warner Bros. merger.
“We need a thriving studio system to ensure that the industry has a platform from which to grow,” Acuna said in a statement. “I believe David is sincere in making these commitments, and he has offered to execute a consent decree to the State AGs. These are tangible and important commitments that will benefit the industry.”
Staff writer Samantha Masunaga contributed to this report.
