Warner Bros. Discovery posts a $217 million loss on its streaming business

Warner Bros. Discovery reported Thursday that streaming subscriptions grew just 1.1 million in the latest quarter, less than Wall Street had expected, despite a slate of HBO Max debuts including House of the Dragon and the second. season of The White Lotus.

For the quarter ending in December, WBD’s streaming unit, which includes HBO Max and Discovery+, reported an operating loss of $217 million on $2.45 billion in revenue, down from a loss of $728 million a year ago.

Overall, the company missed expectations in results, reporting revenue of $11 billion and losses of $2.1 billion that were mainly due to ongoing restructuring charges from last year’s merger between Warner Bros. and Discovery.

CEO David Zaslav said that after completing 10 months of restructuring, the media company is now looking to “get the most out of” its roster of globally recognized franchises, including Superman, Batman, Lord of the Rings and Harry Potter.

“I think we have an overwhelming advantage in the market with the IP we own,” Zaslav said, using industry shorthand for intellectual property. “To get that advantage, we have to create great content.”

Zaslav revealed that Warner Bros. Studios has reached an agreement to make a series of news movies based on JRR Tolkein’s The Lord of the Rings fantasy novels.

The Lord of the Rings announcement builds on plans to reboot the DC Comics franchise in the mold of Disney’s Marvel Cinematic Universe.

DC Studios bosses James Gunn and Peter Safran last month laid out an ambitious list of 10 film and television projects that will tell a single story over the next eight to 10 years.

“It’s one of the biggest value creation opportunities for us,” Zaslav told investors about the DC Universe relaunch, which will include new Superman and Batman movies in 2025, following The Flash this summer.

Warner Bros. Discovery said the months-long merger-related restructuring, which resulted in thousands of layoffs and canceled film and television projects, is complete.

Zaslav said the company is raising its two-year target for cost savings from the merger, known as synergy, to $4 billion, from $3.5 billion. That will be accompanied by restructuring charges of $5.3 billion.

The company cited signs of momentum, including the popularity of HBO drama The Last of Us, the fourth HBO series averaging more than 15 million viewers.

WBD, like its Hollywood peers, is racing to create a profitable broadcast business as consumers and advertisers flee traditional television.

But like other media companies, Warner Bros. Discovery has yet to turn a profit on its HBO Max and Discovery+ streaming services, though the company has pared losses in the segment.

Paid subscribers for the services rose to 96.1 million last quarter, from 94.9 million, a smaller-than-general expectation after HBO Max returned to Amazon Channels in December.

The executives also confirmed that HBO Max will relaunch this spring as a bundled service with Discovery+, expanding the streamer’s offerings.

Gaming and streaming chief JB Perrette told investors that the new version of the streaming service, with better performance, enhanced features and broader entertainment offerings, will be unveiled at a press event on April 12. .

Zaslav confirmed reports that Discovery+ would remain available as a standalone service for those who are satisfied with their reality programming.

The Warner Bros. Studios segment reported operating income of $768 million, down 34% from the prior-year quarter.

Revenue fell 23% to $3.84 billion, in part due to fewer theatrical releases during the typically busy holiday season.

The DC Comics Black Adam movie was the studio’s biggest release in the fourth quarter of last year, compared to a full slate last year.

A year ago, the studio’s Q4 releases included Dune, Matrix Resurrections, King Richard and The Many Saints of Newark.