Warner Bros. Discovery’s second quarter results aligned with Wall Street’s expectations for revenue, but the market reacted negatively as investors focused on challenges beyond the headline numbers. Management attributed performance to strong creative output, highlighted by box office momentum and subscriber gains at HBO Max. CEO David Zaslav emphasized, “We’re seeing momentum at Motion Pictures, where Warner Bros. became the first studio ever to open five consecutive films with more than $45 million in domestic box office.” The company also noted that investments to bolster studio capabilities and content libraries pressured near-term financial results, as fewer external licensing deals were made to prioritize differentiation for HBO Max and future streaming growth.
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Warner Bros. Discovery (WBD) Q2 CY2025 Highlights:
- Revenue: $9.81 billion vs analyst estimates of $9.85 billion (1% year-on-year growth, in line)
- Adjusted EPS: $0.31 vs analyst estimates of -$0.12 (significant beat)
- Adjusted EBITDA: $1.95 billion vs analyst estimates of $1.79 billion (19.9% margin, 8.9% beat)
- Operating Margin: -1.9%, up from -105% in the same quarter last year
- Market Capitalization: $29.83 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Warner Bros. Discovery’s Q2 Earnings Call
- Robert Fishman (MoffettNathanson) asked about the willingness to license Warner Bros. and HBO content to third-party streamers. CEO David Zaslav replied the company will continue to prioritize HBO Max exclusivity but will assess licensing opportunities case by case.
- Jessica Reif Ehrlich (Bank of America Securities) inquired about future franchise development and the impact on the broader business. Zaslav emphasized strategic use of major intellectual property like Harry Potter and Superman, aiming for two to three tentpole releases per year to stabilize performance.
- Michael Ng (Goldman Sachs) questioned the potential for DC and other franchises in live events and theme parks. Zaslav confirmed increased focus on monetizing these assets through selective partnerships and licensing, rather than building parks directly.
- John Hodulik (UBS) asked about the effects of legacy distribution deals on HBO Max and the path to reacceleration. CFO Gunnar Wiedenfels explained that a contractual reset will temporarily slow growth, but international launches and pricing actions should restore momentum.
- Bryan Kraft (Deutsche Bank) probed efforts to reduce churn and convert unauthorized account sharing. JB Perrette described early-stage initiatives to enforce account controls, expecting tangible benefits from these actions starting later this year.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the execution and reception of new franchise content launches in film and streaming, (2) the impact of European HBO Max rollouts on subscriber trends and churn, and (3) the effectiveness of tighter account sharing enforcement and pricing strategies. Progress in leveraging major brands for cross-platform monetization and continued deleveraging will also be important markers of strategic success.
Warner Bros. Discovery currently trades at $12.09, down from $12.81 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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