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Warner Bros. Discovery WBD reported a third-quarter 2025 loss of 6 cents per share, missing the Zacks Consensus Estimate of a loss of 4 cents. The company had reported earnings of 5cents per share in the year-ago quarter.
Revenues decreased 6% year over year to $9.05 billion, which missed the Zacks Consensus Estimate by 1.44%. Ex-forex revenues decreased 6% year over year.
Distribution revenues decreased 4% ex-forex, as dynamic underlying growth in global streaming subscribers was more than offset by continued domestic linear pay TV subscriber declines and the first full quarter impact of the HBO Max domestic distribution deal renewal with a former related party. Advertising revenues decreased 17% ex-forex, as ad-lite streaming subscriber growth was more than offset by domestic linear audience declines. Content revenues decreased 3% ex-forex, primarily driven by the sublicensing of Olympic sports rights to broadcast networks throughout Europe in the prior year, partially offset by the stronger performance of theatrical releases in the current year quarter. Content revenues excluding the impact of the 2024 Olympics in Europe increased 23% ex-forex. Other revenues declined 7% ex-forex year over year.
Warner Bros. Discovery, Inc. price-consensus-eps-surprise-chart | Warner Bros. Discovery, Inc. Quote
WBD ended the third quarter of 2025 with 128 million global Max, HBO Max, HBO and Discovery+ subscribers, which increased 2.3 million sequentially. Domestic average revenue per user fell to $10.40, primarily driven by the first full quarter impact of the domestic distribution deal renewal with a former related party, while international ARPU came in at $3.7.
Post third quarter 2025 results, WBD's subscriber base of 128 million continues to show strong momentum with consistent quarterly growth. WBD reported an increase of 2.3 million subscribers sequentially in the third quarter and remains on track to reach at least 150 million streaming subscribers by the end of 2026.
The company reported revenues of $2.6 billion for streaming, flat year over year and $3.3 billion for studios, up 23% ex-forex year over year. Global Linear Networks' revenues decreased 23% ex-forex year over year to $3.9 billion. Excluding the impact of the 2024 Olympics in Europe, Global Linear Networks' revenues decreased 12% ex-forex.
Under the Streaming segment, subscriber-related revenues grew 1% ex-forex year over year to $2.6 billion. Distribution revenue was flat, as a 16% increase in subscribers was offset by the first full quarter impact of the domestic distribution deal renewal and a negative adjustment related to an international legal ruling. Advertising revenues increased 14% ex-forex, primarily driven by an increase in ad-lite subscribers, partially offset by domestic pricing pressures. Content revenues decreased 27% ex-forex to $79 million, driven by the launch of HBO Max in new international markets, which resulted in lower third-party licensing. Streaming posted a profit of $345 million against a profit of $289 million a year ago.
Under the Studios segment, profits came in at $695 million, up from a profit of $308 million a year ago, due to strong performance. Content revenues increased 26% ex-forex year over year to $3.11 billion. Theatrical revenue increased 74% ex-forex, driven by strong box office performance from Superman, The Conjuring: Last Rites and Weapons, as well as carryover from F1 released in the previous quarter. TV revenue decreased 13% ex-forex, primarily driven by lower initial telecast deliveries. Games revenue decreased 23% ex-forex, primarily driven by lower carryover in the current year quarter.
Under the Global Linear Networks segment, distribution revenues decreased 8% ex-forex year over year to $2.39 billion, while advertising revenues declined 21% ex-forex year over year to $1.19 billion. Content revenues plunged 74% ex-forex year over year to $217 million, primarily due to the sublicensing of Olympic sports rights to broadcast networks throughout Europe in the prior year, which totalled $578 million. Other revenues increased 3% ex-forex year over year to $93 million.
In the third quarter of 2025, adjusted EBITDA was $2.5 billion, up 2% ex-forex year over year.
The company repaid $1.2 billion of debt during the quarter, including $1 billion of the bridge loan facility. Warner Bros. Discovery ended the third quarter 2025 with $34.5 billion of gross debt and 3.3x net leverage.
As of Sept. 30, 2025, cash & cash equivalents were $4.29 billion compared with $4.88 billion as of June 30, 2025.
As of Sept. 30, 2025, the company's $4.0 billion revolving credit facility was undrawn.
The company had $4 billion drawn on its revolving receivables program, a $495 million decrease versus the previous quarter.
Third quarter 2025 cash provided by operating activities increased to $979 million from $847 million in the prior year quarter. Free cash flow increased to $701 million from $632 million, primarily driven by lower cash interest and timing of working capital, partially offset by higher cash taxes as a result of the debt tender transaction in the second quarter. Free cash flow was unfavorably impacted by approximately $500 million of separation-related items.
WBD is targeting at least 150 million streaming subscribers by the end of 2026 and anticipates the streaming segment will deliver a profit of approximately $1.3 billion in 2025.
For the Studios segment, Warner Bros. Discovery expects the segment to meaningfully exceed $2.4 billion in EBITDA in 2025 and is making strong progress toward its $3 billion EBITDA goal.
The Zacks Consensus Estimate for fourth-quarter 2025 loss is pegged at 4 cents per share, unchanged over the past 30 days. The figure indicates a 180% decline from the year-ago quarter’s reported figure.
Currently, Warner Bros. Discovery carries a Zacks Rank #3 (Hold).
Some better-ranked stocks that investors can consider in the broader Zacks Consumer Discretionary sector are Afya AFYA, Alliance Entertainment Holding Corporation AENT and Amer Sports AS.
Amer Sports currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Amer Sports is set to report third-quarter 2025 results on Nov. 18.
Afya currently carries a Zacks Rank #3 (Hold). Amer Sports is set to report its third-quarter 2025 results on Nov. 12.
Alliance Entertainment currently carries a Zacks Rank #3. Alliance Entertainment is set to report third-quarter 2025 results on Nov. 12.
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This article originally published on Zacks Investment Research (zacks.com).
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