Aug 6 (Reuters) – Warner Bros Discovery missed second-quarter revenue expectations on Thursday, hurt by lackluster box-office performance and soft advertising sales due to the absence of NBA games.
Studio revenue slumped 39%, with releases including “Mortal Kombat II” and “Supergirl” failing to replicate the blockbuster success of last year’s top grosser “A Minecraft Movie” and “Sinners”.
Warner’s film slate is weighted toward the second half of the year, with major releases such as “Digger” and “Dune: Part Three” expected to boost box-office performance.
Britain’s Competition and Markets Authority cleared Warner’s $110 billion merger with Paramount on Thursday saying it was unlikely to harm competition in the country.
Still, the merger remains tied up in court, with California and 11 other states seeking to block it on antitrust grounds. Paramount has agreed to pause the deal until June 2027, while a federal trial is set for March 2027.
Speaking on a post-earnings call, the CEOs of both companies expressed confidence that the deal would be completed.
NBA LOSS HITS ADS, STREAMING REMAINS BRIGHT SPOT
The absence of the National Basketball Association games broadcasts this year, coupled with declines in domestic linear TV audiences, drove a 22% drop in advertising revenue for Warner Bros during the second quarter.
Higher energy prices linked to conflicts in Iran and Ukraine weighed on international advertiser spending. Warner said the 2026 FIFA World Cup reduced its share of viewers and advertising revenue in several markets during June and July.
While revenue at the CNN-owned networks division fell 17%, a 23% decline in operating expenses due to the absence of costs tied to NBA rights and lower content spending helped Warner post a surprise quarterly profit of 6 cents per share.
Analysts polled by LSEG had expected a loss of 13 cents.
Warner’s streaming business, which is central to the deal, remained a bright spot in the second quarter with HBO Max’s international expansion and original content like “The Pitt” driving revenue up 10%.
The combined HBO Max and Paramount+ service is expected to give greater scale to compete with streaming giants Netflix and Disney.
Warner Bros Discovery reported revenue of $8.72 billion in the second quarter, well below the LSEG-compiled estimate of $9.29 billion.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Arun Koyyur)
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