Warner Bros Discovery rides tough streaming market
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.
- 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%.