Warner Bros. Discovery earnings may queue up streaming revamp, layoffs
Warner Bros. Discovery (NASDAQ:WBD) reports earnings after the closing bell Thursday - its first full quarter as a combined company - and buzz is growing that the report will include more sea changes for the powerhouse media/streaming operation.
CEO David Zaslav hasn't been shy about making heavy alterations once he took over WarnerMedia from AT&T, notably including demolishing the CNN+ news streaming service not quite a month after it was launched.
The company says it's holding a call to discuss not only its results but also a direct-to-consumer strategy update, suggesting big news about a long-in-the-works move to combine streaming services Discovery+ and HBO Max - somehow - sometime in 2023.
And that move is likely to lead to heavy layoffs to remove redundancies at the big units. Specific numbers may not be revealed Thursday, but TheWrap reported HBO Max's development staff could be culled by up to 70%.
A combined mega-streaming service bringing together HBO's prestige properties, Warner television's popular TV series and Discovery's ocean of unscripted programming likely needs a new name, which could be revealed Thursday after the close (and Warner creative employees reportedly never liked the HBO Max name anyway).
HBO seems too important a brand to subsume in Discovery completely; HBO Discovery, anyone? Alternately, former chief Jason Kilar was very much in favor of making the name about Warner somehow, such as Warner+.
Another hint among tea leaves to read is that HBO content chief Casey Bloys, who's taken over ably for former HBO head Richard Plepler, is reportedly set to take on a bigger role at WBD.
Aside from streaming news likely to take the news lead, observers will look for more color on cost cuts as Zaslav and company went into action after the merger working on achieving some $3B in synergies.
Investors will also likely look to hear something about film strategy signaled by the week's developments, including the shocking cancellation of a $90M Batgirl film that was substantially completed. The film, set to go straight to streaming as an HBO Max original, seems to have fallen at odds with Zaslav's desire to preserve key Warner intellectual property for theatrical blockbusters rather than to feed the streaming content maw.
Rumors are also rampant about the fate of fellow DC Comics film property The Flash, an expensive property with a reported $200M budget, currently set for a July 2023 release, but wrestling with troubling headlines linking star Ezra Miller to abuse and misconduct. Another major title, Joker: Folie Ã  Deux, a sequel to 2019's Joker, starring Joaquin Phoenix, is now set for release on Oct. 4, 2024.
After some modest subscriber growth in the previous quarter, to 24M direct-to-consumer subscribers from the its fourth quarter figure of 22M, WBD is expected to land at 25.6M subscribers amid ongoing moderating growth.
Last quarter saw total revenue rise 13%, led by international results. U.S. Networks revenues rose 7%, while International Networks rose 25%, or up 30% excluding foreign exchange effects.
WBD is expected to post earning of 12 cents a share on revenue of $11.9B, which would mark a 289% year-over-year increase.