Warner Bros. Discovery’s (WBD) the combined service is coming to market sooner than expected.
During the streaming giant’s third-quarter earnings call, WBD CEO David Zaslav said the platform’s target launch date had been moved from summer 2023 to spring 2023, adding that the company would “aggressively take on” an ad-supported streaming market that now includes Netflix (NFLX) and will soon include Disney (SAY).
“We anticipate a healthy inflection with the launch of our combined service and an expanded global footprint,” Zaslav told investors. “We have worked very hard. We can make the service available to consumers around the world and run the business at full capacity.”
Management has hinted that price increases are also expected to come to the platform in 2023.
“By 2023, HBO Max will not have increased its price since launch, which we believe is an opportunity,” noted JB Perrette, president of the company’s streaming division.
Zaslav revealed that the company has increased its merger synergy target to $3.5 billion from 3 billion dollarsin a bid to double down on its strong intellectual property, content offerings, and optionality.
“We rely on [content]“, said Zaslav during the call, explaining that WBD has spent more than ever on content – speaking recent headlines reduced production budgets, shutdown projects, as well as the removal of several titles from the HBO Max platform. He went on to say that “it took real courage” to restructure the company into a single unit.
The stock fell more than 5% in after-hours trading as investors digested the company’s third-quarter results, which missed expectations at all levels.
Rising restructuring charges, macroeconomic challenges such as exchange rate headwinds, further linear TV subscriber losses and a slowdown in advertising continued to weigh on earnings in the quarter.
Revenue fell 11% to $9.82 billion, while the company also posted a net loss of $2.3 billion after a loss of $3.4 billion in the second quarter.
And despite “House of the Dragon” record success, the company added just 2.8 million direct-to-consumer subscribers in the third quarter, compared to an expected 3.27 million. Management has guided a long-term goal of 130 million paid users by 2025.
Profitability remains a top concern for investors as confidence in streaming fundamentals wanes. WBD reiterated its 2022 adjusted EBITDA forecast of between $9 billion and $9.5 billion, down from a previous forecast of $10 billion.