Warner Bros. Discovery reports 10% jump in streaming revenue ahead of proposed Paramount combination

Warner Bros. Discovery on Thursday said it saw record-breaking revenue growth in its streaming segment, anchored by HBO Max, ahead of increased scrutiny over its proposed merger with Paramount Skydance.

The media company said in its second-quarter earnings report that its streaming segment surpassed $3 million in revenue, marking a 10% increase from the year prior, with more than $500 million in adjusted earnings before interest, taxes, depreciation, and amortization.

The company said the gains in streaming were reflective of growth in new markets for HBO Max as well as its content slate, including popular shows like "Euphoria," "House of the Dragon" and "The Pitt." The second half of the year is expected to be strong with additions like "Harry Potter" and "Gilded Age," the company added.

Zaslav said the company has "succeeded in making HBO Max a highly valuable global streaming service."

Warner Bros. also said advertising revenue for its streaming business increased 9%, primarily due to an increase in global ad-lite subscribers. However, following a new media rights package that no longer includes NBA games for the streaming service, Warner Bros. said the lack of basketball advertising negatively impacted the year-over-year growth rate by 16%, excluding the impact of foreign currency exchanges.

Paramount CEO David Ellison said in May that he plans to merge HBO Max and Paramount+ into one streaming service under his proposed acquisition of the the company. That merger has been held up by a challenge by state attorneys general and will go to trial in March. The concept of a combined streaming business drew early criticism from lawmakers who deemed the deal anticompetitive, though Paramount and WBD say they need scale to compete with the industry giants.

Paramount+ had roughly 81 million global subscribers as of the end of its most recent quarter. A combined Paramount+ and HBO Max service would have about 200 million subscribers, Ellison previously said. Ellison added he wouldn't disrupt the HBO brand and that "HBO should stay HBO."

Zaslav added on the call with analysts that CNN linear viewership increased 24% over the previous year, with minutes spent across all CNN platforms increasing 19%. "In a turbulent geopolitical moment, the quality, trustworthiness and reliability of CNN's journalism again proved itself," he said.

For its second quarter, Warner Bros. Discovery reported revenue of $8.72 billion, a decline of 11% from the year-ago period and falling short of Wall Street expectations of $9.29 billion, according to LSEG. WBD posted net income attributable to the company of $149 million, or 6 cents per share, compared with $1.58 billion, or 63 cents per share, in the same quarter a year prior. The company said that drastic decrease was the result of pre-acquisition adjustments to the value of intangible assets as well as restructuring costs...