Warner Bros. Discovery reported a 63% constant-currency surge in Streaming Adjusted EBITDA to $512 million during the second quarter, driven by international HBO Max expansion and strict cost controls, even as the platform absorbed the loss of NBA programming, according to company financial disclosures.
Streaming Profitability Soars Despite Sports Loss
The streaming business posted stark financial gains for the quarter. Streaming Adjusted EBITDA climbed to $512 million on a constant-currency basis, marking a 63% year-over-year increase, according to Warner Bros. Discovery data. Total streaming revenue rose 10% ex-FX to reach $3.079 billion.
Subscriber-related revenue matched that 10% growth rate to hit nearly $3 billion. Distribution revenue grew 11% ex-FX, fueled by strength in established markets, international HBO Max rollouts, and newly secured distribution deals.
Did you know? Streaming advertising revenue increased 8% ex-FX to $306 million during the quarter, propelled primarily by expansion in global ad-lite subscriber tiers.
Cost Discipline Outpaces Revenue Gains
Profitability expansion outpaced top-line growth because expenses remained largely contained. Streaming operating expenses increased just 3% ex-FX to $2.567 billion, while costs of revenue stayed relatively flat, according to the company’s reporting.
While Warner Bros. Discovery increased international content spending to support new HBO Max launches, those investments were offset by ongoing shifts in the overall programming mix.
Impact of the NBA Departure on Advertising
The loss of live NBA broadcasts created measurable headwinds for the media conglomerate’s advertising divisions. Warner Bros. Discovery stated that the absence of NBA programming reduced the year-over-year streaming advertising growth rate by 16 percentage points.
The broader portfolio felt an even sharper impact. Companywide advertising revenue fell 22% ex-FX. Executives estimated that missing the NBA reduced companywide advertising growth by 20 percentage points.
Broader Portfolio Weakness and Cash Flow
Streaming gains helped cushion declines in other divisions. Total companywide revenue dropped 12% ex-FX to $8.7 billion, while total Adjusted EBITDA decreased 6% ex-FX to $1.9 billion. Those drops stemmed from weakness in Studios and Global Linear Networks.
Despite portfolio-wide revenue pressures, the company generated $572 million in free cash flow during the quarter. That cash generation came despite approximately $350 million in separation and transaction-related items. Additionally, Warner Bros. Discovery refinanced its $15 billion bridge facility during the period, executing a $13 billion Term Loan B and a €1.7 billion Term Loan B.
Frequently Asked Questions
How much did Warner Bros. Discovery streaming Adjusted EBITDA grow?
Streaming Adjusted EBITDA increased 63% on a constant-currency basis to reach $512 million, according to company reports.
What caused the decline in companywide advertising revenue?
Companywide advertising revenue fell 22% ex-FX, with Warner Bros. Discovery attributing a 20-percentage-point reduction in the growth rate to the absence of NBA programming.
How did the company manage streaming profitability?
Profitability outpaced revenue growth because streaming operating expenses increased only 3% ex-FX to $2.567 billion, and costs of revenue remained relatively flat.
What was the free cash flow for the quarter?
Warner Bros. Discovery generated $572 million in free cash flow, factoring in approximately $350 million of separation and transaction-related items.
Want to stay ahead of the latest intelligence on capital markets, deal flow, and media industry finance? Click here to subscribe to the Pulse 2.0 Newsletter for daily updates designed for leaders and decision-makers.
Related reading