What to expect amid rumored layoffs, HBO Max rebrand
Warner Bros. Discovery (WBD) is set to report its first quarterly since the $43 billion merger earnings as the company battles new reports about the future of streaming service HBO Max.
Here’s what Wall Street expects, according to Bloomberg consensus estimates:
Revenue: $11.91 billion expected
adj. earnings per share (EPS): $0.08 expected
Total DTC subscribers: 1.65 million net additions expected
Analysts anticipate a messy quarter for the streaming conglomerate as it works to integrate the two businesses, while also slashing costs to improve profitability.
Guidance calls for a $300 million profit hit in 2022, while macroeconomic headwinds could hurt advertising revenue — a long-term risk for media companies across the board.
Still, consensus estimates peg US ads rising 2.4% in the second quarter, aided by the Turner networks.
On the earnings call, investors will want greater clarity on the platform’s direct-to-consumer streaming strategy, in addition to the fate of HBO Max which, according to several reports, hangs in the balance.
The company plans to lay off 70% of its development business, according to The Wrap, which cited “multiple insiders.”
Sources told the outlet that CEO David Zaslav, known for his cost-cutting leadership style, will announce a major restructuring to both HBO Max and Discovery+ either during the earnings results or soon after.
The Wrap explained that the move “will result in a gutting of HBO Max, significant layoffs for its executives and staff to minimize redundancies with HBO and a combined streaming service with Discovery+.”
There will also be a harder line between scripted and non-scripted content, the source claims.
Warner Bros. Discovery previously said it expects to slash $3 billion worth of costs over the next two years, and distribute those savings into streaming content.
At the time, questions swirled over where those funds might come from — the layoffs could be the start of that endeavor, although critics were quick to point out the sky-high pay of CEO David Zaslav.
According to regulatory filings, Zaslav’s 2021 compensation package — which runs through the end of 2027 — jumped to a whopping $246 million, significantly higher compared to 2020 ($37.7 million) and 2019 ($45.8 million).
Earlier on Wednesday, the studio confirmed that two films slated for an HBO Max release — “Batgirl,” starring “In The Heights” star Leslie Grace, as well as “Scoob!: Holiday Haunt” — have been pulled.
Warner Bros. did not immediately respond to Yahoo Finance’s request for comment on the layoff reports or its decision to withdraw those two movies, but did provide a statement to CNN, which it owns.
“The decision to not release ‘Batgirl’ reflects our leadership’s strategic shift as it relates to the DC universe and HBO Max,” a Warner Bros. spokesperson told the network.
“Leslie Grace is an incredibly talented actor and this decision is not a reflection of her performance,” the statement continued. “We are incredibly grateful to the filmmakers of ‘Batgirl’ and ‘Scoob! Holiday Haunt’ and their respective casts and we hope to collaborate with everyone again in the near future.”
The DC Comics film was nearly complete and cost the studio a reported $70 million to 90 million to produce.
Prior to Thursday’s earnings results, the stock was trading to the upside, up 4% in midday trading.
Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter Replying to @alliecanal8193 and email her at email@example.com
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