WBD

Netflix's revenue growth is cooling, and the line that actually compounds for shareholders has been running far ahead of it. Netflix (NFLX) has lost about 35% of its value over the past year while the S&P 500 gained 21%, and revenue growth has cooled to 13.4% in the second quarter of 2026, the slowest of the last four quarters. The sales line, though, is not the main thing driving Netflix's per-share earnings. Earnings Per Share Compounded About 50% A Year Over Three Years Over the past three years per-share earnings compounded at about 50% a year, against 14.6% for revenue. Two levers opened that gap, and neither is the top line: an operating margin that traveled from 17.5% three years ago to 23.8% two years ago and 29.7% over the last twelve months, on $48.4 billion of revenue, and a shrinking share count. So the number a shareholder owns can keep compounding while the top line decelerates. Content Spending Is Growing More Slowly Than Revenue On Purpose That margin is a policy, not a windfall. For 2026, management forecasts content expense up about 10% against full-year guided revenue growth of 13% to 14%, or roughly 12% excluding currency, and says outright that it grows content spend slower than revenue. That 10% is above the 8% averaged over the past five years, and the gap doing the work here is only a few points wide. The mix inside the budget is where the trade-offs show. Live programming is set to take about 5% of the 2026 content budget and produce about 1% of viewing hours, and management's case for it is sign-ups rather than hours, since six of the ten biggest new-member sign-up days over the past five years came from live events. Cloud games and video podcasts are expanded gradually where management believes it can add more value for members, with the games investment still very small relative to overall content spend. Margin that comes from cost discipline is the sort of profitability trend the Trefis High Quality Portfolio looks for in its holdings. A $4.7 Billion Buyback Quarter, The Largest In Netflix's History Netflix repurchased $4.7 billion of stock in the second quarter of 2026, with about $27 billion of authorization still open. Over three years the share count is down about 5.6%, and buybacks have run ahead of stock-based compensation, so the reduction is real rather than a plug for dilution. Fewer shares against a faster-growing profit pool add a further, smaller push on top of the margin gains. At 24 Times Earnings, What Would Have To Go Wrong The case is not that growth is about to re-accelerate. That margin, 29.7% over the last twelve months, is up from only 29.5% a year earlier, so the compounding from here leans more on holding content growth below revenue and on the buyback than on fresh margin, and a content bill that outran revenue would end it. At 24 times earnings, toward the low end of a ten-year range running from 15.3 to 285, the price appears to give that profit line little credit, and sorting names that have fallen this far on what they still earn is what a dip-buying screen is built to do. Even A Compounding Engine Can Re-Rate Downward Netflix's three-year per-share compounding did not stop the stock from giving up about a third of its value over the past year, which is what a single position can do even when the business behind it is working. The Trefis High Quality Portfolio takes the other route, spreading that risk across a rules-based basket of quality names. That portfolio has a track record of outpacing the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000.

Warner Bros. Discovery’s Q2 results reflected a mixed performance, with revenue falling short of Wall Street expectations but GAAP profit surpassing analyst forecasts. Management attributed the quarter’s positive aspects to ongoing strength in its global streaming segment, particularly HBO Max, which delivered accelerated subscriber revenue and improved profitability. CEO David Zaslav highlighted that new and returning HBO series, such as "The Pitt" and "House of the Dragon," drew large global audiences and contributed to streaming engagement. Meanwhile, management acknowledged that the studio segment faced challenges due to a lighter slate of tentpole films and tough comparisons to the prior year. Is now the time to buy WBD? Find out in our full research report (it’s free). Revenue: $8.72 billion vs analyst estimates of $9.18 billion (11.2% year-on-year decline, 5% miss) Adjusted EPS: $0.06 vs analyst estimates of -$0.11 (significant beat) Adjusted EBITDA: $1.88 billion vs analyst estimates of $1.90 billion (21.6% margin, 0.9% miss) Operating Margin: 2.7%, up from -1.9% in the same quarter last year Market Capitalization: $69.42 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Steven Cahall (Wells Fargo) asked about the sustainability of HBO’s scripted content pipeline and how management plans to maintain strong engagement. CEO David Zaslav and JB Perrette stressed continued investment in both global and local programming, highlighting upcoming series and distribution gains. Cahall (Wells Fargo) also questioned the path to reaching $3 billion in studio EBITDA, particularly given recent volatility. CFO Gunnar Wiedenfels detailed diversification efforts, new IP-driven releases, and higher-margin ancillary businesses as levers for achieving long-term targets. Richard Greenfield (LightShed Partners) pressed for details on the ramp-up in annual film production and the confidence level in maintaining higher output. Wiedenfels confirmed a planned increase to 19 films next year and emphasized the strategic balance of original and IP-based projects. Sean Diffley (Morgan Stanley) asked about the severe linear advertising decline and underlying ad market strength. Wiedenfels explained that NBA programming shifts and cautious international ad trends were key factors, with some markets still showing softness into the next quarter. Jessica Reif Ehrlich (Bank of America) questioned the company’s ability to maintain focus during the ongoing Paramount Skydance merger process. Zaslav described a resilient corporate culture and highlighted strong employee commitment and execution during this period. Looking forward, the StockStory team will monitor (1) the rollout and reception of new tentpole film releases and original streaming series, (2) progress in expanding international content and capturing licensing demand, and (3) the effectiveness of bundling strategies in reducing churn and boosting streaming profitability. We will also track how swiftly the studio segment rebounds as the film slate grows and whether advertising revenue stabilizes amid ongoing industry changes. Warner Bros. Discovery currently trades at $27.58, up from $25.97 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Warner Bros. Discovery (WBD) is back in focus after reporting second quarter 2026 earnings, with revenue of US$8.7b and net income of US$149 million, alongside a wider loss over the first half. See our latest analysis for Warner Bros. Discovery. At a share price of US$27.75, Warner Bros. Discovery has seen a 7 day share price return of 5.11%, while the 1 year total shareholder return of 135.57% and 3 year total shareholder return of 117.48% point to strong momentum over a longer period. If Warner Bros. Discovery's move has you thinking about where else growth stories might emerge, it could be a good time to scan 20 top founder-led companies Warner Bros. Discovery's rally comes just days after it reported a profit in the quarter but a loss over the first half, along with ongoing uncertainty around the Paramount Skydance deal. Do recent gains reflect fundamentals or shifting sentiment around the stock’s future valuation? According to the most followed narrative on Warner Bros. Discovery, the fair value sits at $18.17 compared with the current share price of $27.75, which implies a sizable valuation gap that investors are watching closely. Read the complete narrative. Want to see what sits behind that confidence in Warner Bros. Discovery? The narrative leans heavily on future margins, stronger cash generation and a premium earnings multiple that assumes the merger thesis plays out in full. According to SteveGruber, this narrative points to a fair value of $18.17 for Warner Bros. Discovery, which is well below the current share price. The narrative applies a discount rate of 10.30% to projected cash flows and assumes a future profit profile that supports a high future P/E multiple. Those building a thesis around the stock now need to weigh that story driven fair value against Warner Bros. Discovery's recent share price momentum and the ongoing integration and execution questions tied to the Paramount transaction. Result: Fair Value of $18.17 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, that story still faces meaningful risks, including Warner Bros. Discovery's current net loss of US$3.2b and the execution complexity around the Paramount transaction. Find out about the key risks to this Warner Bros. Discovery narrative. While the leading narrative pegs Warner Bros. Discovery’s fair value at $18.17, our DCF model points in the opposite direction. At $27.75, the stock is trading about 25.6% below an estimated fair value of $37.31, which presents Warner Bros. Discovery as undervalued instead of overvalued. Which perspective do you think fits the risk you want to take? To see how this cash-flow-based view is built and what would need to change for the signal to flip, check out Look into how the SWS DCF model arrives at its fair value. With mixed sentiment around Warner Bros. Discovery, it helps to move quickly and review both sides of the story using the 2 key rewards and 1 important warning sign If Warner Bros. Discovery is on your radar, use this moment to broaden your watchlist with a few focused stock ideas that match your style. Target potential bargains by scanning companies that combine quality fundamentals with attractive pricing using the 51 high quality undervalued stocks Prioritize resilience and sleep easier at night by reviewing the 88 resilient stocks with low risk scores Get ahead of the crowd by checking the screener containing 18 high quality undiscovered gems This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include WBD. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8:00 a.m. ET Senior Vice President, Investor Relations - Peter Lee President and Chief Executive Officer - David Zaslav Chief Financial Officer - Gunnar Wiedenfels CEO and President, Global Streaming and Games - JB Perrette Operator: Ladies and gentlemen, welcome to the Warner Bros. Discovery Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Additionally, please be advised that today's conference call is being recorded. I would like to hand the conference over to Mr. Peter Lee, Senior Vice President, Investor Relations. You may begin. Peter Lee: Good morning, and thank you for joining us for our Q2 2026 earnings call. Joining me today from Warner Bros. Discovery's management is David Zaslav, President and Chief Executive Officer; Gunnar Wiedenfels, our Chief Financial Officer; and JB Perrette, CEO and President, Global Streaming and Games. This morning, we issued our earnings release, shareholder letter and trending schedule, and these materials can be found on our website at ir.wbd.com. Today's presentation will include forward-looking statements that we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements about the benefits of the proposed transaction between Warner Bros. Discovery and Paramount Skydance, future financial and operating results, the combined company's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of WBD's management and are subject to significant risks and uncertainties outside of our control that could cause actual results to differ materially from our current expectations. For additional information on factors that could affect these expectations, please see the company's filings with the U.S. Securities and Exchange Commission, including, but not limited to, the company's most recent annual report on Form 10-K and its reports on Form 10-Q and Form 8-K. WBD is not under any obligation and expressly disclaims any obligation to update, alter or otherwise revise any forward-looking statements. whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, except to the extent required by applicable law. In addition, we will discuss non-GAAP financial measures on this call. Reconciliations of these non-GAAP financial measures to the closest GAAP financial measure can be found in our earnings release and in our trending schedule, which can be found in the Investor Relations section of our website. I will turn the call over to David for some brief remarks, after which we will take your questions. Before doing so, I ask that you limit your questions to topics related to our Q2 results and related business and financial topics. As noted in our shareholder letter, management will not be taking questions regarding the proposed Paramount Skydance transaction. And with that, I'll turn it over to David. David Zaslav: Good morning, everyone. From the beginning, we've said that our plan and strategy is to build the world's leading storytelling company, one that attracts and retains the best creative talent, reaches global audiences and ultimately creates shareholder value. For all that's changing in how people consume entertainment, we have held firm to our conviction that there is no substitute for creative excellence and quality storytelling, and it's driving strong results. Nowhere is it more evident than our Streaming business, where the breadth, artistry, and cultural influence of HBO programming across the globe is translating into great financial progress for HBO Max as a streaming offering. In Q2, our Streaming segment delivered more than $3 billion in revenues for the first time ever as subscriber-related revenue growth accelerated 200 basis points sequentially to 10% ex FX with positive engagement and subscriber trends. And just as important, streaming generated $512 million in adjusted EBITDA, a more than 60% EBITDA improvement over the same period in 2025 and a nearly 17% adjusted EBITDA margin. This all together represents a powerful and impressive business turnaround, from a predominantly U.S.-only HBO streaming business losing $2 billion plus in 2022 to a global high-growth asset where HBO is globally recognized as the highest quality streaming service in the world. HBO series are finding a bigger global audience more consistently than ever before. So far in 2026, The Pitt, A Knight of the Seven Kingdoms, House of the Dragon, and Euphoria have each averaged at least 25 million global viewers per episode with several programs exceeding 30 million average viewers. And with the new season of Gilded Age and the debuts of Lanterns and Harry Potter coming soon as well as our strong content pipeline in 2027, we expect that momentum to continue. This year's Emmy awards also attest to our commitment to storytelling excellence with WBD leading the industry with 150 nominations. HBO Max alone led the industry and garnered 122 Emmy nominations, spanning 21 individual programs, including 26 for Season 2 of The Pitt and 25 for the final season of Hacks. And Warner Bros. Television again showed that it is among the world's best television producers with 52 Emmy nominations, including 28 for programs that we produce for third-party platforms like Shrinking and Abbott Elementary. Our quality programming is also fueling our global network's resilience as they contend with continued headwinds. In Q2, our roster of premium sports properties showed its value as we saw the highest rated national championship basketball game ever on TNT Sports, a more than 20% increase in viewership for the MLB regular season thus far and a 50% viewership increase for the NHL playoffs. In a turbulent geopolitical moment, the quality, trustworthiness, and reliability of CNN's journalism again proved itself. In Q2, CNN linear viewership increased 24% over the previous year, and minutes spent across all CNN platforms increased 19%. And our network brands were home to 4 of the top 10 shows in general entertainment across all cable networks during the second quarter. Just recently, Discovery's Shark Week saw its highest year-over-year growth in more than a decade with Discovery ranked as the #1 cable network in prime time among people aged 25 to 54 across Shark Week's first 3 nights. There's no question that media is by nature a business full of hits and misses, and you see that reflected in our studios results. While a handful of recent films have underperformed expectations, importantly, we've spent years transforming and diversifying our Studio segment to better manage risk and volatility. The breadth of this business today across theatrical, television, licensing, games, experiences, retail and consumer products has greatly improved its resilience and ability to generate consistent shareholder value. We are excited by what's in the pipeline from our remaining 2026 and 2027 film slate to Ted Lasso, the opportunities generated by Harry Potter. Over the long term, we continue to expect this segment to deliver our goal of generating over $3 billion in adjusted EBITDA. Taken together, our results this quarter show how much we've readied each segment of our business for the future. We've succeeded in making HBO Max a highly valuable global streaming service and are seeing strong financial returns now after years of heavy investment. We've optimized our global networks and continue to invest in general entertainment, sports and news that serve tens of millions of global viewers. And over the last year, we've shown our studios remain the industry's creative leader while simultaneously transforming its operating model and financial profile. As stated in our shareholder letter, we remain confident that our agreed upon sale to Paramount Skydance will be completed. We are excited for what's ahead in the remainder of 2026 and beyond. And with that, we welcome your questions. Operator: [Operator Instructions] Our first question comes from the line of Steven Cahall with Wells Fargo. Steven Cahall: David, can you speak a little more to the scripted show pipeline you've got upcoming on HBO? I think you recently finished some big series, including Hacks and Euphoria, maybe The White Lotus and A Knight of the Seven Kingdoms fall into there. But will there be fewer returning shows in 2027? And are there any big IP shows that we should be aware of now that you've expanded into more territories globally to drive the growth in this segment? And then on the studio, I know you had a remarkable year last year. You talked about how it's a lumpy business, understandably a little lighter this year. As we just think about a path to getting back to $3 billion in EBITDA, I'm struggling a little bit to get there. You weren't quite there in 2025 when kind of everything went well. So help us understand how you can get back to that $3 billion in EBITDA level with the studio longer term? David Zaslav: Thanks so much, Steven. Let me just start with HBO. Casey Bloys and Amy and Franny, the whole team over there have done a remarkable job. We -- in 2022, HBO was basically producing almost all of its content, but they weren't using Warner Bros. We've teamed them up together. and we've invested significantly in driving the overall quality of the content. And Casey has -- and his team now have the strongest HBO we've ever had. Together with all of the tentpole shows, we also have local content around the world. We have Lanterns coming up, White Lotus is coming back, Gilded Age is coming soon, and we greenlit Harry Potter for the next 10 consecutive years. I've already seen the first 3 episodes. It's very strong. We'll be debuting that on Christmas Day. We have a very strong HBO, and we're seeing it in the engagement. We're seeing it in the overall growth, and we're seeing it in how people see HBO as a quality service that they can rely on with their family. Before we get to the free cash flow, JB, we've seen a lot of real growth across Europe. Just talk about what we're seeing with Max because it's -- not only is it a terrific turnaround, it's a high-growth business now and next quarter will even be stronger. Jean-Briac Perrette: Yes. And Steven, on the content side, just to echo what David said, we actually have -- 2027 is arguably our best year yet. We obviously have White Lotus coming back. We got A Knight of the Seven Kingdoms, which is obviously a breakthrough series that came out this year that didn't exist 12 months ago and that Casey and the team came up with to be able to be repeatable on a frequent basis. We got Pitt coming back, got The Last of Us coming back. So we feel actually even better about '27 than we already did about '26. So we feel very strongly about that. Our original content efforts around the world, as David said, we're starting to see real traction with more and more shows from the international markets, particularly as Casey and his team have continued to get closer to the development in those markets. And so we're excited about the local content coming out of the international markets. And we're starting to see it because not only did you see, obviously us return to double-digit distribution growth this quarter, but we still were lapping for part of the quarter this related party deal that we disclosed a while back. And if you looked at it, excluding that related party deal, our distribution growth would actually have been in the low teens. And that trajectory looks very solid for the remainder of the year. And so a return to not only double digit, but sort of teens level growth on distribution is a testament to both distribution and subscriber growth led as well as monetization on ad sales, engagement and all the other levers that we're continuing to push. Gunnar Wiedenfels: All right. Thank you, JB. Steve, this is Gunnar. For the studio, look, I have 0 doubts about our long-term $3 billion EBITDA target for the studio. And what's important here, let me go through a couple of points. Number one, the quarter, obviously, in the film business wasn't what we expected. At the same time, you already mentioned this, Q2 of 2025 was an outstanding quarter. We had massive content licensing deals, one very big one internal, and then we had Sinners and Minecraft. So it was a tough comp. But nonetheless, against that year, the film business is going to have a harder time this year, no doubt. What matters here is we have invested significant amounts of money, time, management attention into diversifying and transforming the studio so that we're in a position to be able to digest a quarter like this. And these investments are going to pay off. If we go through business by business, we've always said that we're really looking forward to 2027 for the film business. The lineup is fantastic. It's a richer scale and more promising tentpole IP in there relative to 2026. So that's really something to look forward to. And our plan longer term assumes a larger number of films than what we're seeing this year. Warner Bros. TV, as David said a minute ago, is performing really well, more than 80 shows on air across every platform with all of the key buyers. And one thing that's going to help us going forward, if you take a step back, we're going to start benefiting from SVOD shows coming back to replenish our library. We've gone through a bit of an adjustment if you look at a decade worth of this business going from preliminary -- predominantly broadcast-focused production to more and more SVOD production with longer windows and a larger upfront margin and fee, that's going to come back and start replenishing and driving library and associated licensing and downstream revenues going forward. So there's a really positive outlook there for that business. I mentioned the investments that we have made in sort of the ancillary areas like consumer products, retail, our tours business. Those are things that were underdeveloped in Warner Bros., and we have spent years deploying the capital and setting the company up for great returns with a very predictable high-margin, highly cash-generative returns, and we're approaching this in a much more integrated way now where these things are not an afterthought, but part of the planning from the outset with every new story that we're developing. And then finally, games, where JB and the team have restructured the portfolio, LEGO Batman launching this year, very encouraging as sort of first installment in that new strategy. And here, we see growth opportunities down the line as well. And the biggest individual title to look forward to, obviously, here is the second installment of Hogwarts Legacy. So taking all these together, we have a detailed plan for the next 3 to 5 years with a lot to look forward to. Operator: Your next question comes from the line of Rich Greenfield with LightShed Partners. Richard Greenfield: You appear pretty confident on the studio side about the future. Could you just comment -- Gunnar, I just want to elaborate, you made a comment about ramping up film production or the number of films. How many films are you making this year? How many films next year? And how confident are you about maintaining that level of theatrical output from 2027 and beyond? That would be really helpful. And then, Gunnar, in a worst-case scenario where the Paramount deal didn't happen, and I know you're planning on closing the transaction. But if it didn't happen, given all of the work you did before the transaction to split the companies, how many months or how much time do you think it would take to actually effectuate a split of the company if a deal didn't happen? David Zaslav: Rich, just first and foremost, we're confident this transaction will close. And we've been trying to drive the value of the company to deliver to PSKY and to David the best company possible. The company is performing at a very high level. And we have every expectation that the transaction will close and that the company will be performing even better than the plan that we presented to PSKY when we did our deal. Gunnar Wiedenfels: Great. And look, the -- Rich, to your question on the studios, we're making 14 films this year, ramping up to 19 next year, and we're very confident that we're going to be able to maintain that larger number. We have the unique benefit of a great creative team, great relationships in the talent communities, and an enormous amount of IP. So the way Mike and Pam and Peter and James are running this, strategically is to find the right mix between original films, leveraging our IP to make the right number of tentpole IP-driven films. We're ramping up the animation output. We've got a great label with New Line. So this allows us to put together a really nicely balanced slate, which I think from a financial perspective, is going to help us manage risk, the inevitable risk in this business pretty well also. So I'm really looking forward to these upcoming years. David Zaslav: One of the issues that we see this year, and we really were striving to have both original content and big tentpoles and midsized tentpoles. For this year -- next year, we're going to have Lord of the Rings, Batman, Superman, Minecraft 2. It's just because of the -- our overall philosophy of making sure that we bring the motion picture to the market when the film is ready. We're a little light on those tentpoles. We do have Cat in the Hat coming. We got Practical Magic, and we think the back end of the year is going to be good for us. But when you compare that with what we have coming next year and the amount of tentpoles, if we had to do it, we would have kind of spread those a little bit more over this year and next year. And so I think you'll see next year and in the years ahead that we're really taking advantage of the big tentpoles and the great IP that Warner Bros. has to balance out the original content as we develop more bigger movies from scratch. Operator: Your next question comes from the line of Sean Diffley with Morgan Stanley. Sean Diffley: Two, if I may. First, on linear advertising, down nearly 30%. Obviously, NBA 20 points. But just comment on the underlying ad market. Any categories you'd call out as weak? Any crowding out from the World Cup? And then second question on the licensing front. How would you describe the demand environment right now from other streamers? Obviously, you mentioned Ted Lasso. And then on the $5 billion of library revenue that you've generated on average, any help with how to think about margins there? Obviously, pretty high as you guys referenced, but any help there would be appreciated. Gunnar Wiedenfels: Sure. Sean, so let me start with the licensing side quickly. We're seeing very healthy demand. This goes back to the enormous value of our library. I mean we're getting healthy demand even for shows that are a decade old, and it's a healthy marketplace right now. And as you said, the margins are great. You could almost look at the Studios business as a library-driven content licensing business, which we replenish with new creative every year. That's certainly the way from a financial perspective, how it works. And that business is in very, very good shape right now, and I see no reason why that should change. As we said before, we have shifted a little bit, and we're utilizing a lot more of that content internally now, which obviously doesn't drive the immediate profits that an external sale would generate. But you can see in this quarter how the consolidated profits are benefiting from some of those licensing deals that we've done over the year as we're utilizing content on JB's business and to some extent, on our linear networks that were -- that we have self-created and that way internalized the margins. For linear advertising, you mentioned the biggest adjustment factor here with the NBA. That's been obviously a negative driver on ad revenues, a positive driver on profits in the second quarter as much as -- or more so even than in the first quarter. On an underlying basis, if we take it market by market here, in the U.S., trends are pretty consistent with what we've seen in the first quarter or into the end of last year. We're -- as David said earlier, we're very pleased with how our viewership is developing. We're up in general entertainment and very significantly up in news and sports. And sort of on the advertising side, we've kind of held a similar rate as earlier in the year. And so from that perspective, no trend change here. The picture is slightly different internationally, where Q2 was worse than Q1. And across all of our markets, we are seeing indications of just some caution, consumer weakness in the understandably difficult geopolitical environment. Again, the trends are slightly different from market to market, but Q2, a little weaker than Q1. And what we're seeing so far into Q3 in terms of July and August is also a mixed picture. Some markets are looking better, others continue to look similar to the second quarter. So visibility is not great looking out into the rest of the year, and we'll see. And you already mentioned the World Cup, obviously, everywhere in the world, especially with the broader field this year has had an impact on everybody who's not sort of been benefiting from that . David Zaslav: One of the things that we're seeing, and it varies by market, but the benefit of the work that Casey and JB and the team have done in driving HBO Max globally, where as you look at a number of countries, we're outrunning the decline by the significant growth that we're seeing at HBO Max. That's not true for all markets. But we're seeing it meaningfully in a number of markets, which is encouraging. And the continued growth of HBO Max becoming a critical element of us as a growth engine and countering the cyclical decline that we're seeing. Operator: Your next question comes from the line of Jessica Reif Ehrlich with Bank of America. Jessica Reif Cohen: I think actually a couple of things. One, it seems like one of the most challenging things right now, given that the deal has been pushed out and pushed out is maintaining focus. Can you just talk about how you kind of manage the troops and keep everybody aligned at this, I guess, challenging time? Second, you haven't talked about DC for a while. I know with films, sometimes they perform, sometimes they don't. But is there any change in strategy? And can you talk about kind of the cadence from here? And then finally, on HBO Max, Disney mentioned on their call yesterday that the bundle is really working for both of you. Can you talk about what you've seen from bundling in general or specifically with the Disney bundle? How much churn has come down? Like you just talk about the magnitude of the benefits, that would be great. David Zaslav: Thanks, Jessica. The overall culture of this company and the work ethic of the company has been inspiring. It has been challenging to -- our focus has been how do we drive a stronger company to meet and exceed our business plan and deliver a stronger and higher growth company to PSKY and David so that Paramount coming together with Warner Bros. is even stronger. But it's -- I thought it was going to be quite challenging. But when you look at the way this company is performing and you look at the close to 40,000 people coming in every day, I went all across Europe in the last 6 weeks and met -- and was in most of those countries meeting with people. They're working extremely hard. And the focus has been that this is a great company and that how do we take advantage of every day we're here and try and focus on best performance possible, but also this idea of what stories will we tell. And the drive to continue to tell great stories at HBO, at Warner Bros, on the motion picture side at each of our cable channels around the world on our free-to-air and cable channels everywhere. I'm quite inspired by the culture here and the drive to continue to put points on the board and take pride in the fact that this is a great company, and we want to deliver a great company. And I think -- I do think it's unusual when you look at the overall performance of the company and how hard people are working. And so we're lucky, and I think that we have an unusual set of employees that really love these assets. And as long as we're here, we're going to be working hard every day to continue to honor Warner and HBO and Discovery and all the great assets. On the DC side, James is focused on Man of Tomorrow. I saw some pictures yesterday that looked amazing. Actually, yesterday was James' birthday, and he's out working. He's working 16, 18 hours a day. It looks fantastic. We're super excited about it. Matt Reeves, I spoke to over the weekend, and he's working very hard on Batman. And we have Clayface coming up soon, which looks terrific. We've got Lanterns launching in the next few weeks on HBO, which Casey and Sarah are super excited about. And so the DC feels very good, and we have a robust pipeline, and Peter and James are hard at work. JB, do you want to talk about the bundles and how those are working around the world as well as with Disney here in the U.S.? Jean-Briac Perrette: Yes, Jessica, you know we've been big believers, David has been a big champion of bundles and the power that they can have for consumers, particularly in a time where obviously pricing continues to increase across the individual services. And we continue to see both benefits on subscriber acquisition as well as obviously retention and meaningful improvements in churn with those bundles. And it's a combination of distributor bundles like Verizon in the U.S., where -- who bundles Netflix and us or Mercado Libre and Claro in Latin America or Canal+ or Sky here in Europe as well as programmer bundles, which Disney, obviously, in the U.S. has been our longest and most successful to date. RTL+ in Germany when we launched early this year, which has the best of local and the best of global coming together. We'll be announcing more -- another bundle coming later in this fall in Europe. We have a Viu bundle in Southeast Asia. And so we continue to be big believers in it. We see the proof is in the data in both, as I say, acquisition and meaningfully better churn. And the good news is that, along with all the other components that go into engagement and retention, content, the product, our marketing and so on, we are looking at a 2026 year where the trends give sort of high confidence that we're going to have our best year ever in terms of retention and lower churn in 2026. And so that trend is also helping. And we see that trend continuing, particularly as we talked about earlier, as the strength of our content lineup and the consistency of it throughout the year makes us feel even more bullish for 2027. Operator: That concludes our question-and-answer session and today's conference call. Thank you all for joining. You may now disconnect. Before you buy stock in Warner Bros. Discovery, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Warner Bros. Discovery wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Warner Bros. Discovery. The Motley Fool has a disclosure policy. Warner Bros. Discovery (WBD) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Warner Bros. Discovery, Inc. WBD stock gained 1.7% following its Aug. 6, 2026, earnings release against the Zacks Broadcast Radio and Television industry’s 2.4% fall.The company reported second-quarter 2026 earnings of 6 cents per share, down 90.5% from 63 cents year over year but beating the Zacks Consensus Estimate of a loss of 13 cents.Revenues fell 11.2% year over year to $8.72 billion and missed the consensus mark by 6.19%. The top-line decline reflected sharp weakness in Studios and Global Linear Networks. Streaming was the bright spot, with revenues rising 10% ex-forex and Adjusted EBITDA up 63% ex-forex. During the quarter, Distribution revenues increased 1% ex-forex to $4.95 billion, supported by global streaming growth but partly offset by domestic linear pay-TV subscriber declines and the HBO Max domestic distribution renewal with a former related party.Advertising revenues fell 22% ex-forex to $1.72 billion, while content revenues declined 26% to $1.83 billion. The absence of the NBA weighed on advertising, while lower theatrical revenues in the Studios segment drove the content decline. Warner Bros. Discovery, Inc. price-consensus-eps-surprise-chart | Warner Bros. Discovery, Inc. Quote Streaming revenues increased 10% ex-forex to $3.08 billion. Distribution revenues grew 11% ex-forex, while advertising revenues advanced 8% as global ad-lite subscribers increased. Subscriber-related revenues rose 10% ex-forex to $3.00 billion.Streaming Adjusted EBITDA climbed to $512 million from $293 million, producing a nearly 17% margin. About 40% of global HBO Max subscribers were on the ad-supported tier at quarter-end, an 11% increase year over year. International streaming advertising revenues jumped 73% ex-forex following HBO Max launches in Germany, Italy, the U.K. and Ireland. Studios revenues declined 39% ex-forex to $2.33 billion. Content revenues fell 41%, with theatrical revenues down 46% against the prior-year strength of A Minecraft Movie, Sinners and Final Destination Bloodlines. TV revenues decreased 45% on lower intercompany content licensing.Games revenues increased 45% ex-forex following the release of LEGO Batman: Legacy of the Dark Knight. Studios Adjusted EBITDA declined 89% ex-forex to $96 million, while operating expenses decreased 24% ex-forex. Management continues to expect the segment to generate more than $3 billion of Adjusted EBITDA in the medium to long term. Global Linear Networks revenues fell 17% ex-forex to $3.99 billion. Distribution revenues declined 9%, mainly because domestic linear pay-TV subscribers fell 10%, while domestic affiliate rates increased 1%.Advertising revenues dropped 27% ex-forex, reflecting 17% domestic audience declines and the absence of the NBA. Global Linear Networks Adjusted EBITDA decreased 5% ex-forex to $1.45 billion despite a 23% reduction in operating expenses. WBD still expects high-single-digit operating expense improvement for the segment in 2026. WBD ended the second quarter with $3.37 billion of cash and cash equivalents, $33.06 billion of gross debt and $29.69 billion of net debt. Net leverage was 3.4x. The company refinanced its $15 billion bridge facility with $13 billion and €1.7 billion term loans and expects about 150 basis points of annual interest-cost savings versus the original bridge structure.Cash provided by operating activities totaled $848 million, while free cash flow fell 19% year over year to $572 million. Free cash flow absorbed roughly $350 million of separation and transaction-related items. Management expects subscriber-related revenue growth to accelerate further in the second half of 2026 and remain healthy into 2027. The company reiterated its long-term Streaming Adjusted EBITDA margin target of more than 20%, while noting that fourth-quarter marketing around Harry Potter could cause quarterly margin volatility.The second half also includes the planned HBO Max premiere of Harry Potter on Christmas Day. Warner Bros. Discovery remains confident that its pending merger with Paramount Skydance Corporation will be completed, with closing on hold until the earlier of five days after legal proceedings are complete or June 1, 2027. Currently, Warner Bros. Discovery carries a Zacks Rank #4 (Sell).Kontoor Brands KTB, Newsmax Inc. NMAX and Viking Holdings VIK are some better-ranked stocks that investors can consider in the broader Consumer Discretionary sector.Kontoor Brands, Newsmax and Viking Holdings carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Kontoor Brands is slated to announce second-quarter 2026 results on Aug. 12. Meanwhile, Newsmax will report on Aug. 13, and Viking Holdings is scheduled to release results on Aug. 19. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Warner Bros. Discovery, Inc. (WBD) : Free Stock Analysis Report Kontoor Brands, Inc. (KTB) : Free Stock Analysis Report Viking Holdings Ltd. (VIK) : Free Stock Analysis Report Newsmax Inc. (NMAX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Warner Bros. Discovery, Inc.? Here are five stocks we like better. Streaming surpassed $3 billion in quarterly revenue for the first time, while adjusted EBITDA rose more than 60% year over year to $512 million. HBO Max benefited from subscriber growth, stronger engagement, advertising monetization and improved churn through distribution bundles. Warner Bros. Discovery highlighted a strong global HBO pipeline, including “The Pitt,” “House of the Dragon,” “Euphoria” and upcoming titles such as “Lanterns” and “Harry Potter.” Management sees 2027 as a potential peak content year, supported by returning series and international originals. The company plans to increase film production from 14 releases in 2026 to 19 in 2027, featuring major franchises such as “Batman,” “Superman,” “Lord of the Rings” and “Minecraft.” Despite recent film underperformance and continued advertising pressure in linear networks, management remains confident in its long-term studio EBITDA target and the pending Paramount Skydance transaction. Plot Twist: 12 States Could Stall the Paramount-Warner Bros. Discovery Mega-Merger Warner Bros. Discovery (NASDAQ:WBD) said its streaming segment surpassed $3 billion in quarterly revenue for the first time in the second quarter of 2026, as HBO Max benefited from subscriber growth, engagement and advertising monetization. President and Chief Executive Officer David Zaslav said streaming revenue growth accelerated during the quarter, with subscriber-related revenue up 10% excluding foreign exchange effects. The segment generated $512 million in adjusted EBITDA, representing an increase of more than 60% from the second quarter of 2025 and an adjusted EBITDA margin of nearly 17%. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth The Netflix-Lionsgate Rumor Exposed a Bigger Shift in Media M&A Zaslav characterized the result as a continuation of HBO Max's transition from a mostly U.S.-focused streaming service that lost more than $2 billion in 2022 to a global growth asset. He said HBO programming has helped drive the service's performance internationally. According to Zaslav, several HBO series have reached substantial global audiences in 2026. “The Pitt,” “A Knight of the Seven Kingdoms,” “House of the Dragon” and “Euphoria” have each averaged at least 25 million viewers per episode worldwide, with several programs surpassing 30 million average viewers. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Plot Twist: How the $110B Paramount-Warner Deal Rewrites Media The company highlighted upcoming programming including “The Gilded Age,” “Lanterns” and a “Harry Potter” series. Zaslav said Warner Bros. Discovery has greenlit “Harry Potter” for the next 10 consecutive years and plans to debut the series on Christmas Day. He also cited the return of “The White Lotus” and a content slate extending into 2027. JB Perrette, CEO and President of Global Streaming and Games, said management views 2027 as potentially its strongest content year yet. He pointed to returning series including “The White Lotus,” “The Pitt” and “The Last of Us,” along with continued development of international originals. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Perrette said distribution revenue would have grown in the low teens excluding the impact of a previously disclosed related-party deal that the company was still lapping during part of the second quarter. He said the company expects the trajectory of distribution growth to remain solid through the rest of the year, supported by subscriber gains, advertising, engagement and pricing-related monetization efforts. Management also emphasized the role of streaming bundles. Perrette said bundles with distributors and programmers have contributed to subscriber acquisition and retention, with “meaningful improvements in churn.” He cited offerings involving Disney in the U.S., Verizon, Netflix, MercadoLibre, Claro, Canal+, Sky, RTL+ and Viu. Warner Bros. Discovery expects 2026 to be its best year for retention and lower churn, he said. Zaslav said the company’s networks continued to face broader industry headwinds but benefited from sports, news and entertainment programming. TNT Sports aired what he described as the highest-rated national championship basketball game ever, while Major League Baseball regular-season viewership was up more than 20% and NHL playoff viewership increased 50%. CNN’s linear viewership rose 24% from the prior year during the quarter, while minutes spent across CNN platforms increased 19%, according to Zaslav. He also said Warner Bros. Discovery’s network brands accounted for four of the 10 top general-entertainment cable shows in the quarter. Discovery’s “Shark Week” recorded its highest year-over-year growth in more than a decade during its first three nights, with Discovery ranking first among cable networks in prime time among viewers ages 25 to 54, Zaslav said. Chief Financial Officer Gunnar Wiedenfels said linear advertising revenue was affected by the absence of NBA programming, which was a negative factor for ad revenue but a positive contributor to profits in the second quarter. In the U.S., he said advertising trends remained broadly consistent with the first quarter and late 2025. Internationally, however, second-quarter conditions were weaker than the first quarter amid consumer caution and geopolitical uncertainty. Wiedenfels said visibility for the rest of the year remained limited and noted that the World Cup could affect viewership and advertising across markets for media companies not carrying the event. Management acknowledged that a number of recent films underperformed expectations and that the studio business remains subject to volatility. Still, Wiedenfels reiterated Warner Bros. Discovery’s long-term target of more than $3 billion in adjusted EBITDA from the studio segment. The company is producing 14 films in 2026 and plans to increase output to 19 films in 2027, Wiedenfels said. He said the larger slate is expected to include a mix of original movies, tentpole franchises, animation and films from the New Line label. Zaslav said the 2027 lineup is expected to include “Lord of the Rings,” “Batman,” “Superman” and a sequel to “Minecraft.” The company also has “Cat in the Hat” and “Practical Magic” scheduled for the latter part of 2026. Wiedenfels said the studio’s television production, consumer products, retail, tours and games operations are intended to reduce the volatility of theatrical results. He cited more than 80 Warner Bros. Television shows currently on air across platforms and said licensing and library revenue should benefit as subscription-video productions return to replenish the company’s content library. Demand for library programming remains healthy, including for shows that are about a decade old, Wiedenfels said. He described the studio as a library-driven licensing business that is replenished by new content, while noting that Warner Bros. Discovery increasingly keeps programming for internal use across HBO Max and its linear networks. The company also cited games as a future opportunity following a portfolio restructuring. Wiedenfels said “LEGO Batman” is due to launch this year, while a second installment of “Hogwarts Legacy” is the major title ahead. Warner Bros. Discovery did not take analyst questions regarding its proposed transaction with Paramount Skydance. Zaslav said the company remains confident the agreed-upon sale will be completed and said employees remain focused on improving operating performance while the transaction is pending. Warner Bros. Discovery (NASDAQ: WBD) is a global media and entertainment company formed when WarnerMedia and Discovery, Inc combined their businesses in 2022. Headquartered in New York City, the company assembles a broad portfolio of film and television production, linear and cable networks, streaming services and consumer distribution operations. Its assets span well-known studio brands, premium scripted and unscripted programming, news and factual entertainment, and licensed franchise properties. The company's core activities include film and television production and distribution through units such as Warner Bros. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Warner Bros. Discovery Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Warner Bros. Discovery (WBD) came out with quarterly earnings of $0.06 per share, beating the Zacks Consensus Estimate of a loss of $0.13 per share. This compares to earnings of $0.63 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +146.15%. A quarter ago, it was expected that this operator of cable TV channels such as TLC and Animal Planet would post a loss of $0.1 per share when it actually produced a loss of $1.17, delivering a surprise of -1070%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Warner Bros. Discovery, which belongs to the Zacks Broadcast Radio and Television industry, posted revenues of $8.72 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 6.19%. This compares to year-ago revenues of $9.81 billion. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Warner Bros. Discovery shares have lost about 9.9% since the beginning of the year versus the S&P 500's gain of 12.8%. While Warner Bros. Discovery has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Warner Bros. Discovery was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.01 on $9.04 billion in revenues for the coming quarter and -$1.08 on $36.93 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Broadcast Radio and Television is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Bilibili (BILI), another stock in the same industry, has yet to report results for the quarter ended June 2026. This Chinese video sharing website is expected to post quarterly earnings of $0.23 per share in its upcoming report, which represents a year-over-year change of +27.8%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Bilibili's revenues are expected to be $1.16 billion, up 13.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Warner Bros. Discovery, Inc. (WBD) : Free Stock Analysis Report Bilibili Inc. Sponsored ADR (BILI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Streaming revenue exceeded $3 billion for the first time, driven by a 10% growth in subscriber-related revenue, representing a 200 basis point sequential acceleration and a significant turnaround from 2022 losses to a 17% adjusted EBITDA margin. Management attributed streaming success to the global scaling of HBO Max and the cultural influence of high-engagement series like 'The Pitt' and 'House of the Dragon,' which averaged over 25 million viewers per episode. The Studio segment experienced a difficult quarter due to underperforming films and a tough year-over-year comparison against 2025's massive content licensing deals and hits like 'Minecraft'. Strategic diversification of the Studio into games, experiences, and consumer products is intended to mitigate the inherent 'hits and misses' nature of the theatrical business. Linear networks showed resilience through premium sports and news, with CNN viewership increasing 24% and TNT Sports achieving its highest-rated national championship basketball game. Management emphasized a shift toward internal content utilization, where self-created content is used across HBO Max and linear networks to internalize margins rather than selling exclusively to third parties. Management maintains a long-term target of $3 billion in adjusted EBITDA for the Studio segment, supported by a plan to increase film production from 14 titles in 2026 to 19 in 2027. The 2027 content slate is positioned as the company's strongest yet, featuring the return of 'White Lotus' and 'The Last of Us' alongside a 10-year commitment to a new 'Harry Potter' series. Streaming distribution growth is expected to remain in the double digits or low teens for the remainder of the year as the company laps related-party deals and expands international monetization. The company is betting heavily on 'tentpole' IP for 2027, including 'Lord of the Rings', 'Batman', and 'Superman', to balance out original content and drive theatrical recovery. Retention strategies for 2026 and 2027 rely on expanded bundling partnerships, such as the Disney bundle and new European agreements, which have shown meaningful improvements in churn. International advertising markets showed unexpected weakness in Q2 compared to Q1, with management citing geopolitical instability and consumer caution as primary headwinds. The absence of NBA broadcasting in certain periods acted as a negative driver for ad revenue but a positive driver for short-term profits due to reduced rights costs. Management explicitly reaffirmed confidence in the pending sale to Paramount Skydance, noting that the company is being managed to exceed the business plan presented during deal negotiations. The transition from broadcast-focused production to SVOD production at Warner Bros. TV is creating a temporary library replenishment gap that is expected to normalize as shows mature into licensing windows. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Gunnar Wiedenfels clarified that the $3 billion target is supported by a more robust 2027 film slate and the replenishment of the TV library as SVOD shows move into downstream licensing. The strategy involves increasing the volume of theatrical releases and better integrating consumer products and games, such as the upcoming 'Hogwarts Legacy' sequel. JB Perrette confirmed that bundles with Disney and international partners like RTL+ are delivering data-proven improvements in both acquisition and retention. Management expects 2026 to be the company's best year for retention due to these bundling efforts and a more consistent content release schedule. Management reported healthy demand for library content, even for decade-old shows, which provides high-margin revenue to offset theatrical volatility. While more content is being kept for HBO Max, The company continues to strategically license its library content to third-party platforms to maximize asset value and generate healthy margins. David Zaslav stated that the company is focused on delivering a high-performing asset to Paramount Skydance and that employee morale remains high despite the deal's timeline. He emphasized that the current management team is operating the business as a standalone growth engine until the transaction's expected closure.

This article first appeared on GuruFocus. Streaming Segment Revenue: Exceeded $3 billion in Q2 2026, a first for the company. Streaming Subscriber-Related Revenue Growth: Accelerated 200 basis points sequentially to 10% ex-FX. Streaming Adjusted EBITDA: $512 million, a more than 60% improvement over Q2 2025. Streaming Adjusted EBITDA Margin: Nearly 17%. CNN Linear Viewership: Increased 24% year-over-year in Q2. CNN Platform Minutes Spent: Increased 19% year-over-year in Q2. Studio Segment Adjusted EBITDA Goal: Company continues to expect over $3 billion in the long term. Warning! GuruFocus has detected 6 Warning Signs with WBD. Is WBD fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Streaming segment achieved record quarterly revenue of over $3 billion, with subscriber-related revenue growth accelerating to 10% ex-FX. Streaming adjusted EBITDA surged over 60% year-over-year to $512 million, with margins improving to nearly 17%. Strong content pipeline with major titles like 'Harry Potter,' 'Lanterns,' and 'The White Lotus' expected to drive continued subscriber growth and engagement. Studio segment is diversifying with plans to ramp up film production from 14 films in 2026 to 19 in 2027, leveraging strong IP and talent relationships. Healthy demand for content licensing, with high-margin library revenues and a positive outlook for downstream licensing as SVOD shows return to the library. Bundling partnerships (e.g., with Disney, Verizon, and international distributors) are improving subscriber acquisition and reducing churn, contributing to record-low churn expectations for 2026. Linear advertising revenue declined nearly 30% in Q2, largely due to the loss of NBA rights and a weaker international ad market. Studio segment faced underperformance from recent films, with a lighter tentpole slate in 2026 compared to the prior year. International advertising trends worsened in Q2 compared to Q1, with consumer caution and geopolitical uncertainty impacting markets. The prolonged Paramount Skydance transaction is creating uncertainty and potential distraction, though management remains confident in closing. The company is still navigating the impact of the NBA loss on linear networks, with ad revenue headwinds expected to persist. Visibility into the advertising market for the rest of 2026 is limited, with mixed trends across regions and the World Cup crowding out ad spend. Q: Can you elaborate on the scripted show pipeline for HBO, particularly regarding returning shows in 2027 and big IP shows to drive global growth? Also, how can the Studio segment get back to its $3 billion EBITDA target given the lumpy film business? A: David Zaslav (CEO) highlighted the strength of the HBO pipeline, including upcoming titles like *Lanterns*, *The White Lotus*, *Gilded Age*, and the debut of *Harry Potter* on Christmas Day, which he has already seen the first three episodes of. JB Perrette (CEO, Global Streaming and Games) added that 2027 is arguably their best year yet, with returning hits like *The Pitt* and *The Last of Us*, and noted a return to double-digit distribution growth, which would be in the low teens excluding a related-party deal. Gunnar Wiedenfels (CFO) expressed zero doubts about the $3 billion studio EBITDA target, citing a diversified strategy, a stronger 2027 film slate with more tentpole IP, the replenishment of the library from SVOD shows, and growth in ancillary areas like consumer products and games. Q: How many films is the studio making this year and next, and how confident are you in maintaining that output? In a worst-case scenario where the Paramount deal doesn't close, how long would it take to effectuate a split of the company? A: Gunnar Wiedenfels (CFO) stated the studio is making 14 films this year, ramping up to 19 next year, and is very confident in maintaining that larger number due to a great creative team and an enormous amount of IP. David Zaslav (CEO) reiterated confidence that the transaction will close, emphasizing the company is performing at a high level and delivering a better company to Paramount Skydance than originally planned. He declined to speculate on a fallback scenario, focusing solely on closing the deal. Q: Can you comment on the underlying linear advertising market, excluding the NBA impact, and describe the demand environment for licensing from other streamers, including margins on the $5 billion of library revenue? A: Gunnar Wiedenfels (CFO) noted that excluding the NBA, US ad trends are consistent with Q1, with strong viewership in general entertainment, news, and sports. Internationally, Q2 was weaker than Q1 due to consumer caution in a difficult geopolitical environment, with mixed visibility into Q3. On licensing, he described the demand as "very healthy," even for decade-old shows, with great margins. He framed the Studios business as a library-driven content licensing business replenished with new creative, noting a shift to utilizing more content internally, which benefits consolidated profits. Q: Given the deal has been pushed out, how do you maintain focus and keep employees aligned? Also, is there any change in strategy for DC, and what are you seeing from bundling, specifically with Disney's Bundle of Joy? A: David Zaslav (CEO) praised the company's culture and work ethic, noting that nearly 40,000 employees are focused on delivering a stronger company to Paramount Skydance. He highlighted recent travels across Europe and the team's drive to tell great stories. On DC, he expressed excitement about *Man of Tomorrow* (James Gunn's project), *Batman* (Matt Reeves), *Clayface*, and *Lanterns*, stating the pipeline feels robust. JB Perrette (CEO, Global Streaming and Games) discussed the success of bundles, including the Disney programmer bundle in the US and distributor bundles like Verizon, Mercado Libre, and Sky in Europe. He noted bundles improve subscriber acquisition and meaningfully reduce churn, projecting 2026 to be their best year ever for retention. Q: Can you provide more detail on the strength of the streaming business, specifically regarding subscriber growth and the impact of local content? A: JB Perrette (CEO, Global Streaming and Games) highlighted that 2027 is arguably their best year yet for content, with returning hits like *The White Lotus*, *Knight of the Seven Kingdoms*, *The Pitt*, and *The Last of Us*. He noted real traction in international original content, which is contributing to a return to double-digit distribution growth. Excluding a related-party deal, distribution growth would have been in the low teens, and this trajectory looks solid for the remainder of the year, driven by subscriber growth, ad sales, and engagement. Q: How is the company managing the risk of a lighter film slate this year, and what is the strategy for balancing original content with big tentpole IP? A: David Zaslav (CEO) acknowledged the film slate is lighter on tentpoles this year, with titles like *Cat in the Hat* and *Practical Magic* coming, but emphasized the philosophy of releasing films when ready. He noted that next year's slate, including *Lord of the Rings*, *Batman*, *Superman*, and *Minecraft II*, is much stronger, and the company is taking advantage of big IP to balance original content. Gunnar Wiedenfels (CFO) added that the studio has been diversified to digest quarters like this, with investments in consumer products, retail, and tourism paying off, and a detailed three-to-five-year plan in place. Q: Can you elaborate on the performance of the linear networks, particularly in sports and news, and how they are countering the cyclical decline? A: David Zaslav (CEO) highlighted strong sports viewership, including the highest-rated national championship basketball game ever on TNT Sports, a 20% increase in MLB viewership, and a 50% increase in NHL playoff viewership. CNN linear viewership increased 24% year-over-year, with minutes spent across all platforms up 19%. He noted that the growth of HBO Max is outrunning the decline in linear in several markets, making it a critical growth engine. Gunnar Wiedenfels (CFO) added that the NBA loss is a negative driver on ad revenue but a positive driver on profits, and underlying US ad trends are consistent with Q1. Q: What are the key drivers of the streaming segment's financial progress, and how sustainable is this growth? A: David Zaslav (CEO) highlighted that the Streaming segment delivered over $3 billion in revenues for the first time ever, with subscriber-related revenue growth accelerating to 10% ex-FX. Streaming generated $512 million in adjusted EBITDA, a 60% improvement year-over-year, with a nearly 17% margin. He attributed this to the global recognition of HBO as the highest-quality streaming service, with shows like *The Pitt*, * For the complete transcript of the earnings call, please refer to the full earnings call transcript.