Warner Bros. Discovery ended the second quarter of 2022 with 92.1 million global direct-to-consumer subscribers across its HBO/HBO Max and Discovery+ streaming platforms, a 1.7 million subscriber increase from the 90.4 million it reported at the end of Q1.
The numbers were adjusted for the company’s new DTC subscriber definition, which excluded 10 million legacy Discovery non-core subscribers as well as unactivated AT&T mobility subscribers from the Q1 subscriber count.
On a conference call with shareholders following the report’s release, CEO David Zaslav (pictured) also confirmed speculation that the company will merge HBO Max and Discovery+ streaming services into a single SVOD platform.
“Our main priority right now is launching an integrated SVOD service,” Zaslav said of the plan to “bring HBO Max and Discovery+ together under one offering.”
He also added that the company is also exploring more ad-supported options as a potential way to entice new customers.
“Once our SVOD service is established in the market, we see real potential, and are 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…. while at the same time serving as an entry point to our premium service.”
Meanwhile, WBD’s streaming chief, JB Perrette, put a timeline on the launch of the merged platform — a summer 2023 launch for North America.
Perrette added that the current plan is for a Latin American launch in the fall of 2023, with European and Asia Pacific markets set for 2024. In terms of reach, the goal is to have 130 million global subscribers by 2025.
“We have a lot of work to do,” Perrette said of the plan to combine HBO Max and Discovery+, calling them “very unique and complementary streaming services.”
Perrette called the previously announced integrations of CNN content on Discovery+ and the inclusion of Magnolia Network content on HBO Max as “interim initiatives” to the eventual merger of the two services.
The recently-merged conglomerate reported revenues of more than US$9.82 billion in the second quarter, while posting a net loss of almost $3.42 billion, including more than $2 billion in the amortization of intangibles, $1 billion in restructuring and other costs and $983 million worth of “transaction and integration expenses.”
Overall DTC revenues surpassed $2.22 billion, an increase of 4% excluding foreign exchange costs (ex-FX) from the prior-year quarter. Pro forma combined ad revenue rose to $98 million, mainly on the launch of the ad-supported tier of HBO Max in June 2021 and subscriber growth on ad-lite tier of Discovery+.
“We’ve had a busy, productive four months since launching Warner Bros. Discovery, and have more conviction than ever in the massive opportunity ahead,” said Zaslav in a statement to shareholders. “We have the most powerful creative engine and bouquet of owned content in the world, as highlighted by our industry-leading 193 Emmy nominations, and we intend to maximize the value of that content through a broad distribution model that includes theatrical, streaming, linear cable, free-to-air, gaming, consumer products and experiences, and more, everywhere in the world.”
The company’s Networks division, which includes its TV properties like CNN, TNT, TBS, Discovery and Magnolia Network, saw revenues of more than $5.74 billion. Pro forma combined revenues ticked up 1% from the same period a year earlier ex-FX.
The Studios unit, meanwhile, saw revenues hit almost $2.8 billion, while pro forma combined revenues were 4% year-over-year ex-FX.
“We’re confident we’re on the right path to meet our strategic goals and really excel, both creatively and financially, and couldn’t be more excited about the future of our company,” Zaslav said in his shareholder statement.