Warner Bros. Discovery ($WBD) announced significant quarterly subscriber growth for its Max streaming platform during the September period, amidst a surprising turnaround in net income, despite a decline in revenue compared to the previous year, compounded by a sluggish box office performance. The media and entertainment giant reported a 4% year-on-year decrease in total revenue during the three months ending September 30, amounting to $9.62 billion, which fell short of the consensus on Capital IQ that projected $9.79 billion.
However, net income stood at $0.05 per share, recovering from a loss of $0.17 per share in the same quarter last year. Market analysts had anticipated a GAAP loss of $0.07, leading to a notable 14% surge in stock value during Thursday’s trading session. "While we continue to confront extraordinary disruption in our environment, the strategy we have undertaken to ready Warner Bros.
Discovery for future success is showing important results," stated Chief Executive David Zaslav. The Max platform added a remarkable 7.2 million net subscribers, marking the strongest quarterly gain since its inception, which consequently fueled notable revenue growth related to subscriptions and substantial strides towards achieving the company's 2025 financial objectives within its direct-to-consumer segment, according to Zaslav.
In the third quarter, direct-to-consumer revenue witnessed an 8% increase, rising to $2.63 billion, as total subscriptions reached 110.5 million. Networks revenue also saw a 3% uptick, climbing to $5.01 billion, with content benefitting from Olympic broadcast rights, as reported by the company. However, a downturn in box office earnings impacted the studios segment, leading to a 17% revenue drop to $2.68 billion.
Theatrical revenue plummeted by 40%, primarily attributed to lower box office returns, where the performances of 'Beetlejuice Beetlejuice' and 'Twisters' this year fell short, overshadowed by the significant success of 'Barbie' the previous year. "Even in an industry of hits and misses, we must acknowledge that our studios business must deliver more consistency," Zaslav remarked in a conference call with analysts, referencing a Capital IQ transcript.
"For the past two years, we've been driving changes within our motion picture studio to enhance greenlight governance and franchise management, which will remain focal points moving forward." Expectations for the fourth quarter film business suggest it will likely align with performance from the same period last year, despite 'Joker: Folie a Deux' not meeting expectations.
Chief Financial Officer Gunnar Wiedenfels conveyed to analysts that the film, featuring Lady Gaga and Joaquin Phoenix, has received harsh criticism, obtaining a mere 32% rating on Rotten Tomatoes, an opinion aggregator..