Warner Bros Discovery Inc (NASDAQ:WBD, XETRA:J5A) reported mixed financial results for the third quarter, sending its shares almost 6% lower in early trade on Thursday.
The media giant posted total revenues of $9 billion for the quarter, a 6% decline from the same period last year and below Wall Street expectations of roughly $9.73 billion to $9.81 billion.
Earnings per share (EPS) came in at a loss of $0.06, missing the analyst consensus of -$0.04, though adjusted EBITDA of $2.5 billion slightly exceeded expectations.
The quarter showed a mix of performance across the company’s segments. Streaming subscribers grew by 2.3 million sequentially to reach 128 million, but domestic average revenue per user declined.
Advertising and content revenues came in below Wall Street estimates, while the studios segment and theatrical releases performed strongly, with content revenues up significantly when excluding the impact of the 2024 Olympics in Europe.
Net loss for the quarter totaled $148 million and included $1.3 billion in acquisition-related expenses, amortization, and restructuring costs.
Distribution revenues fell 4%, and advertising revenues dropped 17% as gains in ad-lite streaming subscriptions were offset by declines in domestic linear audiences.
Content revenues were down 3%, primarily due to prior-year Olympic sublicensing agreements, though theatrical performance helped offset some of the decline.
“We continue to focus on executing against our key strategic pillars and moving with momentum towards our planned separation alongside the Board’s process to review and evaluate strategic alternatives,” the company wrote in its letter to shareholders, referring to its plan to separate into two companies by mid-2026.
“The investments we have made in strengthening our operating capabilities throughout the organization over several years are delivering significant returns, and we intend to continue to capitalize on that hard work.”
The company generated $1 billion in cash from operating activities and $0.7 billion in free cash flow, which was impacted by about $500 million in separation-related items.
During the quarter, Warner Bros Discovery repaid $1.2 billion of debt, including $1 billion on a bridge loan facility, leaving the company with $4.3 billion in cash and $34.5 billion in gross debt at quarter-end.