Warner Bros. Discovery lost 1.8 million streaming subscribers in the second quarter as it launched its combined streaming platform Max in the United States in May.
During 2Q, the company saw a loss of 1.8 million subscribers above the Wall Street estimate of 1.6 million.
The subscriber count across its HBO, Max and Discovery+ was 95.7 million at the end of 2Q, compared to 97.6 million at the end of the first quarter.
Warner Bros experienced a higher churn rate in 2Q as customers with overlapping subscriptions to these services consolidated their accounts.
The decline in subscribers is concerning for Warner Bros amid competition from other streaming services, as Netflix added 5.9 million subscribers during 2Q with the performance of Disney+ and Amazon Prime Video yet to be reported for the April to June period.
The segment posted an earnings before interest, taxes, depreciation and amortization (EBITDA) loss of $3 million, but Warner Bros said its streaming business remains on track to achieve profitability later in 2023.
Meanwhile, the company is hopeful the ongoing dual Hollywood writers and actors strikes will end soon.
Warner Bros CEO David Zaslav told investors on the company’s 2Q earnings call: “We're hopeful that all sides will get back to the negotiating room soon and that these strikes get resolved in a way that the writers and actors feel they are fairly compensated and their efforts and contributions are fully valued.”
The company said it has seen “modest cash savings” due to the strikes of about $100 million during 2Q, with “sequentially larger savings” expected in 3Q as the labor action continues.
Last month, A-list actors joined film and television writers on the picket line after contract negotiations between the actors’ union SAG-AFTRA and the Alliance of Motion Picture and Television Producers (AMPTP), which represents traditional studios and streamers including Warner Bros, Netflix and Disney, broke down.
The actors are prepared to strike for another six months, SAG-AFTRA president and The Nanny star Fran Drescher said on Wednesday.
However, the Writers Guild of America (WGA), which represents the 11,500 striking writers, said earlier this week that it would be meeting with studio representatives on Friday to consider restarting talks.
Warner Bros shares traded modestly lower following its 2Q earnings report, down 0.1% at US$12.54 at noon on Thursday.
Contact the author at emily.jarvie@proactiveinvestors.com
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