Warner Bros. Discovery CEO, David Zaslav, expressed a conciliatory and urgent tone during the studio’s second-quarter financial analyst call regarding the ongoing Hollywood writers and actors strikes.
Zaslav emphasized the importance of the creative community, including writers, directors, editors, producers, actors, and the crew. He hoped both sides would return to negotiations and find a resolution that fairly compensates the writers and actors for their valuable contributions.
The strikes pose challenges for Warner Bros. Discovery and other major players in Hollywood, affecting the timing and performance of future content. The studio’s CFO, Gunnar Wiedenfels, revealed that the strikes saved the studio more than $100 million in operating costs in the second quarter and acknowledged their potential impact on future content.
Despite the challenges, Warner Bros. Discovery reported a narrower quarterly streaming loss, with streaming revenue rising by 13 percent in the second quarter. Zaslav highlighted opportunities for ad sales on the studio’s streaming platforms, expressing optimism for the future.
During the second quarter, Warner Bros. Discovery’s global streaming subscribers declined to 95.8 million due to the integration of Discovery+ and HBO Max into the new streamer Max. Analysts predicted a user drop during this transition.
Looking ahead, Zaslav confirmed the company’s commitment to making the streaming business sustainably profitable and highlighted the potential of their U.S. direct-to-consumer business to be suitable for all of 2023.
The earnings report also revealed that the studio’s overall EBITDA increased by 22 percent, driven by solid streaming performance. However, the Studios unit EBITDA declined by 25 percent due to a difficult comparison with the previous year’s results.
The networks unit also faced challenges, with advertising revenue falling by 13 percent and distribution revenue decreasing by 1 percent. Despite these obstacles, the company is focused on growth opportunities and plans to retire up to $2.7 billion in additional debt.
The megamerger between Discovery and WarnerMedia, which closed in April 2022, allowed the company to reposition its businesses and focus on direct-to-consumer opportunities. Zaslav highlighted the successful launch of Max in the U.S., which generated positive EBITDA in the first half of the year.
Overall, Warner Bros. Discovery remains committed to overcoming challenges, driving growth, and delivering value to its shareholders through its direct-to-consumer business and streaming platforms. The company is determined to navigate the changing landscape of the entertainment industry while sustaining profitability.
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