Disney, Warner Bros. Keep White-Knuckling the Linear TV Churn

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Wednesday’s media industry double feature was a scare-fest.

Both Disney and Warner Bros. Discovery delivered quarterly earnings reports. The bottom line? It’s still a tumultuous time to be a major media conglomerate.

When You Wish Upon a Streaming Service

Despite some promising fundamentals, WBD had the objectively worse day of the two. The good news is the company’s streaming unit posted something close to a profit. Its $111 million in adjusted EBITDA was a massive swing from the $634 million loss a year ago. Meanwhile, Barbie’s $1.5 billion summer box office haul helped WBD’s film studio revenue climb 4% to $3.2 billion. But even the biggest hit in the company’s century-long history wasn’t enough to cover a company loss of $417 million — enough to see its share price slide nearly 20% on Wednesday. Ouch.

Disney, meanwhile, posted a $420 million loss in its all-important streaming arm. While that’s a big step up from the $1.4 billion loss a year ago, the dual talent strike in Hollywood halted virtually all production and related spending — and the company still doesn’t expect direct-to-consumer profitability until at least Q4 of next year. But better-than-expected overall net income, fueled by a strong Parks and Experiences segment, helped Disney shares claw back a few points from a decade-low in after-hours trading.

Both companies, however, face the exact same demon:

• The shift to streaming has pulled viewers away from both companies’ long-lucrative linear TV businesses — and the pain is starting to pile on. WBD reported a 12% decline in network TV advertising revenue.
• Disney attributed its 9% dip in linear TV revenue to fewer impressions and lower average viewership. Disney earlier this summer flirted with selling ABC, its flagship linear TV network.

“This is a generational disruption we’re going through,” WBD CEO David Zaslav said during the earnings call.

Growth or Die: WBD’s adjusted profit in streaming was helped in part by combining HBO Max and Discovery+ into a single service, Max, early this summer. Now Disney has finally tipped its hand on when it may do something similar, announcing that a beta version of a combined Disney+ and Hulu app will launch in December, followed by an official launch next spring. That comes as Disney inches toward completing its buyout of Comcast’s outstanding one-third stake in Hulu before December 1, at a price tag of at least $8.6 billion. It may be safe to say your streaming bills will continue to get bigger in the near future.