After a week in which three major media companies released their quarterly earnings, the results from Warner Bros. Discovery could prove to be most consequential. On the heels of their Q1 earnings announcement, WBD is reported to be pursuing a split of its cable business from its studio and streaming divisions. This news was well-received by Wall Street, showing the persuasive logic of the conglomerate moving on from its legacy TV operations.
With Disney reporting strong growth and Paramount doing better than expected as it marches towards the completion of its Skydance merger, Warner Bros. Discovery’s earnings were disappointing in most areas. Revenues from its studio division were down 18% from the same quarter last year, with disappointing box office results from COMPANION and MICKEY 17.
The company’s cable TV group also reported a sharp decline in advertising sales, with revenues down 7% compared with Q1 2024. On the bright side, the company’s streaming platform Max grew by bringing on 5.3 million new subscribers in the quarter, leading to revenue growth of 8%.
It should be noted that the company’s studio fortunes have improved substantially since the beginning of the second quarter, with the blockbuster successes of A MINECRAFT MOVIE and SINNERS. A spin-off of WBD’s cable business would follow the lead of NBCUniversal, which announced its intention last year to create a new company to run most of its cable channels, which they announced this week would be named Versant.
WBD foreshadowed this move late last year when they created two distinct operating divisions within WBD, one focused on the linear cable business and the other including its studio and streaming divisions, including HBO. As the studio and streaming business continues to grow, it seems logical to find a way to separate it from the declining cable operations.
