Warner Bros. Discovery Looks to Be Sticking Around in the Streaming Profitability Club

Max added 7 million net subscribers, most of them international, and the company is on pace to "meaningfully exceed" $1 billion in DTC profits by next year.

There’s only a select few companies that have consistently reached profitability in their direct-to-consumer segments. Netflix of course founded the club, Hulu has been a long-time member, and Disney and Disney+ recently joined. Warner Bros. Discovery though has been a prospective member, reaching profitability before but also falling back out of it since. WBD and Max now though look like they’re on the right track.

Warner Bros. Discovery on Thursday, November 7 reported adjusted earnings of $289 million in its DTC division, up from $111 million in the same quarter a year prior. It added 7 million net streaming subscribers in the quarter to reach 110 million globally.

Granted, almost all of those streaming adds came internationally, and just a few thousand domestically. But WBD and Max aired the Olympics overseas this past quarter, and it has the Paris Games and the 215 million cumulative views across WBD’s platforms to thank for that subscriber growth.

But more importantly, CEO David Zaslav said on the call that it should “meaningfully exceed” the company’s goal of reaching $1 billion in streaming profitability within 2025. Wall Street especially liked hearing that, and WBD’s stock price rose to its highest point since February. At time of writing, WBD stock sat at $9.28, though it’s still 20 percent below where it sat at the top of the year.

Zaslav also credited “The Penguin” as one of the reasons Max is starting to see some improvement. He argued that the streamer is hitting a better “cadence” in its programming, and the company claimed “The Penguin” has reached some viewership levels that rival “The Last of Us” and “House of the Dragon.”

To that end, streaming chief JB Perrette did however on the earnings call hint that Max could be looking at its own password sharing crackdown before the end of the year.

WBD was without a “Barbie” this quarter, so despite some good help from “Beetlejuice Beetlejuice” and the international release of “Twisters,” the company’s theatrical receipts were down 40 percent year-over-year. The dismal results for “Joker Folie a Deux” won’t come home to roost until next quarter.

Zaslav also made a passing reference to the election, saying that with a new administration coming in — i.e. the return of Donald Trump to the White House — it could be good for more industry consolidation.

“It’s too early to tell, but it may offer a pace of change and an opportunity for consolidation that may be quite different, that would provide a real positive and accelerated impact on this industry that’s needed,” Zaslav said. “These are great companies. If the best content is going to win, there needs to be some consolidation in order to have these businesses be stronger and have a better consumer experience.”

Zaslav reiterated some prior comments about the issue of discovery when it comes to streaming, that people can’t find the content they want between all the different streaming offerings available, and it’s not “sustainable” for the customer experience in the long run.

“Consumers put on their TV set and they see 16 apps and each of those is doing different pricing, you’re sitting there with your phone and Googling where a show is or where a sport is,” he said. “You’re going from one to another, and there are so many.”