• by Karlene Lukovitz  @KLmarketdaily, November 8, 2023

Warner Bros. Discovery’s direct-to-consumer business gained 5% in revenue in Q3, including a 30% jump in advertising revenue to $138 million, despite a generally soft market for advertising in the period.

The D2C unit, which turned a profit in Q1 but lost $3 million in Q2, returned to profitability in Q3, with adjusted EBITDA of $111 million.

That was despite losing 700,000 streaming subscribers in the period, as Discovery+ subscribers churned or migrated to Max following the addition of much of Discovery+’s content to Max. WBD subscriptions totaled 95.1 million, versus 95.8 million in Q2.

But the volume decline was offset by price hikes and a higher average revenue per user/ARPU (up 6% globally excluding foreign exchange/FX expenses, versus a year ago, to $7.82), as well as the ad revenue increase

Distribution revenues totaled $2.18 billion, up 6% from Q3 2022, although content revenue declined 17%, to $120 million. D2C ad revenue totaled $138 million in the quarter.

The business’s bottom line also benefitted from a 21% decrease (ex-FX) in operating expenses.

The introduction of live streamed CNN Max and the Bleacher Report sports add-on tier for Max “are showing early signs of contributing to increased engagement and lower churn on Max,” WBD CEO David Zaslav reported.

WBD overall saw a 1% increase in revenue, thanks to “Barbie” and other hits, despite a 7% revenue decline in its networks segment, including a 12% decline in advertising.

WBD decreased its net loss to $417 million, from $2.3 billion in the year-ago quarter, and its adjusted EBITDA rose by 22% year-over-year, to $2.97 billion. WBD has cut its debt load by nearly $12 billion since it was created by the Discovery/Warner Bros. merger 19 months ago.