By Dawn Chmielewski and Harshita Mary Varghese
(Reuters) -Warner Bros Discovery CEO David Zaslav anticipates a friendlier environment for deal-making under the incoming Trump administration, opening the door to industry consolidation, he said on Thursday.
“That would provide a real positive and accelerated impact on this industry that’s needed,” Zaslav said on an earnings call with investors.
Zaslav’s optimism about the new administration comes as the studio reported a surprise quarterly profit on Thursday as cost controls and an Olympics-driven record jump in streaming subscribers helped make up for a lack of major box office hits from its studio.
The company’s shares rose 13.3% in early trading. The stock has lost about a quarter of its value so far this year.
The company’s Max streaming platform expanded into Europe weeks before the Olympic Games in Paris with exclusive rights to stream the showcase sporting event, boosting subscribers.
Max also benefited from bundling the platform with Disney+ and Hulu, as well as the strong first season of “The Penguin” – a crime drama series released in September and based on a popular DC Comics villain.
Warner Bros Discovery’s (WBD) streaming business, home to the Max and Discovery+ services, added 7.2 million direct-to-consumer subscribers in the third quarter, beating estimates for 6.28 million additions, according to data compiled by Visible Alpha.
Max delivered its strongest quarterly subscriber gain since the platform’s launch, Zaslav said, calling it “a meaningful moment” that had capped two years of building the service and reversing millions of dollars in losses.
The streaming unit’s adjusted earnings before interest, taxes, depreciation and amortization more than doubled from a year earlier to $289 million, aided by lower content expenses.
WBD also made progress in its efforts to control costs, with expenses falling 5.5% in the quarter ended Sept. 30. That helped it report a surprise profit of 5 cents per share. Analysts had expected a loss of 9 cents, according to data compiled by LSEG.
Revenue at the TV networks division, which includes Discovery Channel, Animal Planet and Food Network, rose 3% to $5.01 billion, driven by sub-licensing of Olympic sports rights to regional broadcast networks throughout Europe.
Revenue at WBD’s studio segment fell 17%, pulling total revenue of $9.62 billion below estimates of $9.80 billion.
With releases such as “Beetlejuice Beetlejuice” in the July-September quarter, WBD’s studio division has struggled to repeat last year’s success of “Barbie”, the highest grossing film of 2023.
TRUMP SPURS CONSOLIDATION HOPES
Like its rivals, WBD has been grappling with a decline in cable TV – a long-time profit engine – as more subscribers shift to streaming. The downturn has pressured companies to seek alternatives for the business.
Last week, Comcast said it was considering spinning off its cable networks that include CNBC into a separate company.
The industry needs to “meaningfully consolidate”, Zaslav said on Thursday, adding that the upcoming Trump administration could “bring a pace of change and opportunity for consolidation”.
Strict antitrust policies under the Biden administration have weighed on deal-making across industries over the past few years.
(Reporting by Harshita Mary Varghese in Bengaluru and Dawn Chmielewski in Los Angeles; Editing by Devika Syamnath and Mark Potter)
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