Tumbling network advertising revenues at Warner Bros Discovery -- down 14% to $1.9 billion -- were a major factor in pushing down third-quarter revenues for the period.
Overall business revenue dropped 8% to $9.8 billion.
TV network business, including distribution, dropped 11% in revenue to $5.2 billion, while distribution slipped 5% to $2.9 billion.
“Looking forward, macro advertising and secular cord cutting pressures are likely to persist while incremental savings and a refreshed DTC product launch are pursued,” writes Michael Morris, media analyst at Guggenheim Securities. “Cash flow guide remains on track, critical to further de-levering.”
Direct-to-consumer business -- including HBO Max and Discovery+ -- was down 7% in revenue to $2.32 billion. The company is pursuing a combined launch of HBO Max/Discovery+ in the spring 2023.
Distribution/subscription fees -- a big piece of the company’s streaming platforms -- were down 8% to $2.1 billion -- due to the Amazon Channels expiration of the company’s streamers carriage in September 2021, partially offset by retail gains.
Advertising revenue doubled to $106 million vs. the year-prior period.
New D2C subscriber additions grew only 2.8 million in net additions from the second quarter, compared to analyst expectations of 3.3 billion.
U.S. subscribers now total 53.5 million (up 500,000), while international subscribers total 41.4 million (up 2.3 million).
Content sales at the company's studio unit was down 8% to $3.1 billion. Home entertainment revenue was lower due to strong demand driven by the COVID-19 pandemic the prior year, as well as fewer theatrical releases year-to-date.
Network content sales sank 39% to $277 million due to the company sublicensing of the broadcast rights for the Olympic Games in Europe in 2021.
One major silver lining for Warner Bros. Discovery was that it narrowed its net loss to $2.3 billion from $3.4 billion in the second quarter. The company continues to cut costs including big layoffs -- now around 26% of its total staff.
Warner Bros. stock closed on Thursday down 5.6% to $11.97, with after-market trading dipping another 5.4% to $11.33.