Warner Bros Discovery rides tough streaming market – The Average Joe
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    Warner Bros Discovery rides tough streaming market


    April 26, 2022


    Warner Bros Discovery (NASDAQ:WBD) started its first month as its own publicly-traded company in a highly unfavorable market for streamers.

    $WBD fell 7.7% after reporting earnings yesterday — lowering its 2022 earnings forecast.

    What’s the big deal? Warner Bros Discovery is the product of a merger between media giants WarnerMedia and Discovery, Inc. — which began trading on April 11 on the NASDAQ.

    • The new company includes the film studio Warner Bros and TV networks (i.e., CNN, HBO).
    • The deal created a new company better positioned to compete against Disney+ and Netflix.

    WBD owns an extensive library of content, but it has also inherited many problems: internal issues at CNN, a slowdown in streaming services and a highly competitive market.

    Taking decisive action: WBD’s management team promises to cut $3B in costs, and one of its first big moves was axing CNN+ a month after launch.

    According to A Media Operator, this was a smart business move, allowing WBD’s CEO to prove that he was serious about cutting costs.

    • Page out of Disney’s playbook: $WBD plans to combine its two popular streaming services, HBO Max and Discovery+, into one offering.
    • Swayed by the markets: WBD plans to launch an ad-supported tier, but so is Disney+. Netflix even hinted at the possibility.

    WBD’s CFO hinted at the possibility of shutting down other “chunky investments” and potential layoffs.

    Unlike Netflix, which recorded a net drop in subscribers — HBO and HBO Max increased subscribers by 2M in the first quarter, totalling 76.8M — and Discovery+ grew by 2M subs to total 24M.

    Streaming services are down more than the broad market since Netflix reported earnings — $WBD is down 19%, $NFLX is down 43% and $DIS is down 12%.

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