Warner Bros. Discovery, which went public in April, missed Wall Street’s expectations in the second quarter as the media giant looks to work through the growing pains of its merger.
Warner Bros. Discovery, which is the $43 billion combination of Discovery and the AT&T spinoff WarnerMedia, trimmed some debt during the quarter and is trying to rein in costs. The company said that Warner Bros. started some projects before the merger that increased costs after the combination of the businesses was complete.
Earlier this week Warner Bros. sent shock waves through Hollywood when it announced that it axed the “Batgirl” film planned for HBO Max, opting to shelve the $90 million film. Warner Bros. also shelved “Scoob!: Holiday Haunt,” an almost-completed sequel to 2020′s “Scoob!”
Under new Warner Bros. Discovery CEO David Zaslav, Warner Bros. is shifting its strategy on film releases and trimming costs.
The company is planning to merge its HBO Max and Discovery+ streaming services, with a U.S. rollout anticipated for next year. Zaslav, who noted during a call with analysts that “our streaming strategy has evolved over the past year,” said the company is “exploring the opportunity for a fast or free ad-supported streaming offering that would give consumers who do not want to pay a subscription fee access to great library content, while at the same time serving as an entry point to our premium service.”
The New York-based company lost $3.42 billion, or $1.50 per share, in the quarter. Its adjusted loss was 11 cents per share. Analysts surveyed by Zacks Investment Research expected breakeven results.
Revenue for the three months ended June 30 totaled $9.83 billion, below the $11.53 billion that Wall Street was calling for.
Shares tumbled 17% in Friday afternoon trading.
Jonathan Kees of Daiwa Capital Markets America Inc. said in a client note that “management made it a point to comment that the Warner Bros. businesses were worse than they expected and what they saw during the pre-merger review.”
“This is not a good start to the first quarter as a combined company,” he wrote.