By Helen Coster and Samrhitha Arunasalam
(Reuters) -Warner Bros Discovery posted a smaller loss for the second quarter on Thursday as the media conglomerate benefited from cost cuts, sending its shares up nearly 4% in premarket trading.
Media companies have been looking to strike the right balance between spending on content and boosting profitability. Under Chief Executive Officer David Zaslav, Warner Bros Discovery has been seeking to run its direct-to-consumer business, which includes the Max streaming service, more efficiently.
Net loss for the quarter came in at $1.24 billion, compared with a loss of $3.42 billion a year earlier. The company reported a drop of more than 16% in total costs and expenses in the quarter.
“Our Direct-to-Consumer business … in the wake of the successful launch of Max in the U.S., is tracking well ahead of our financial projections,” Zaslav said.
Warner Bros Discovery’s new Max streaming service, launched during the quarter in the United States, combined HBO Max’s scripted entertainment with Discovery’s reality shows.
The company forged by the union of WarnerMedia and Discovery Inc reported second-quarter revenue of $10.36 billion, missing analysts’ average estimate of $10.44 billion, according to Refinitiv data.
Free cash flow came in at $1.72 billion in the three months ended June, beating estimates of $987 million, according to Visible Alpha.
The direct-to-consumer unit posted revenue of $2.73 billion, beating analysts’ estimates of $2.48 billion, according to Visible Alpha. It lost 1.8 million subscribers, more than analysts’ estimates of 1.1 million, reporting 95.8 million total global subscribers for its HBO, Max and Discovery+ services.
The company last quarter said it expected a large portion of the 4 million overlapping subscribers between what was then HBO Max and Discovery+ to churn off Discovery+ in the first few months after the launch of Max.
(Reporting by Samrhitha Arunasalam in Bengaluru and Helen Coster in New York; Editing by Shounak Dasgupta and Mark Porter)
