What Management Said
Read the full Q2 2025 transcript ↗Reconciliations of these non-GAAP financial measures to the closest can be found in our earnings release and in our trending schedules, which can be found in the Investor Relations section of our website. TV led all studios in nominations, and HBO set a new record with 142 nominations. As a result, our studio's business is now on track to deliver at least $2.4 billion in Adjusted EBITDA in 2025, with our sights set on our $3 billion goal. We have transformed HBO Max and have our streaming business on track to exceed $1.3 billion in Adjusted EBITDA in 2025 and reach over 150 million subscribers by the end of 2026.
It's really a decision to fight for asset value and growth rather than near-term value. Gunnar, now that you're becoming the CEO of Global Networks, it's a segment that's obviously been challenged from just the secular challenges. Can you talk about what you see as the underappreciated opportunity for growth in this business? I've known many of these people for years, and it's a team that has a track record of fighting to win.
We announced he will be the COO of our new business, and we think that's a real growth opportunity for us. You saw it with Superman, the way Bruce and the team deployed Superman across all the merchandising elements. That's what we wanted to call it out because it's going to have a meaningful impact on our revenue growth for a 12-month period until we lapse this deal. It's also important to note that we expect a re-acceleration not only once we lapse this deal, but also from the various market launches that we have in the pipeline beginning Q1 of 2026.
What went well
- Warner Bros. became the first studio ever to open five consecutive films with more than $45 million in domestic box office, with strong critical and fan response to Superman launching a new era for DC Studios.
- At the Emmys, Warner Bros. TV led all studios in nominations and HBO set a new record with 142 nominations.
- HBO Max added more than 3.4 million subscribers in Q2 as it continued launching in markets around the world.
- The studio business is on track to deliver at least $2.4 billion in adjusted EBITDA in 2025, with sights set on the $3 billion goal.
- The balance sheet was dramatically delevered from over five times net leverage to 3.3 times, the lowest since the merger closed.
What went wrong
- A restructured legacy U.S. HBO Max distribution deal with a former affiliated party reset rates lower, creating a meaningful negative impact on revenue growth for a roughly 12-month period until it laps.
- Streaming ARPU saw more dilution through the year, driven by the ad-supported SKU ramp and the distribution deal reset.
- Networks content licensing faces tougher comparisons, as 2024 had unusually high numbers ($580 million in second-half 2024 networks content sales versus a normalized run rate of roughly $200 million a quarter).
- The shift from external to internal content sales has put pressure on near-term financial results, parking a ten-digit figure of intercompany profits on the balance sheet.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Studio adjusted EBITDA | FY2025 | At least $2.4 billion, with sights on $3 billion goal |
| Streaming adjusted EBITDA | FY2025 | Exceed $1.3 billion |
| Total subscribers | End of 2026 | Over 150 million |
| Net leverage | Q2 2025 | 3.3 times, lowest since merger close |
| Streaming revenue growth | H2 2025 / 2026 | Dampened in H2 2025 by deal reset; re-acceleration globally in Q1 2026 and U.S. in H2 2026 |
| Q4 sports cost benefit | Q4 2025 | Roughly $100 million from NBA, with hundreds of millions net benefit in 2026 |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| HBO Max subscribers | Added more than 3.4 million in Q2 | Continued international market launches and strong content slate. |
| Net leverage | From over five times to 3.3 times | Dramatic deleveraging since the merger; lowest level since merger close. |
| Streaming ARPU | More dilution through the year | Ad-supported SKU ramp lowering blended ARPU plus the legacy U.S. distribution deal rate reset. |
| Upfront advertising pricing | Up across all categories | Market held up well despite macro/geopolitical concerns; sports pricing stronger than general entertainment, with maintained digital price premium. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Content licensing strategy | Higher external library monetization | Deliberately selling significantly less externally to differentiate HBO Max, shifting to internal sales and parking a ten-digit intercompany profit figure on the balance sheet | — |
| Franchise/IP monetization | Earned about $0.22 for every dollar Disney makes circulating IP | Up to about $0.30, with untapped value in experiences, parks (Harry Potter Leavesden/Japan/Abu Dhabi), and DC merchandising | — |
| Company separation | Combined Warner Bros. Discovery | Splitting into two independent public companies in 2026, with U.S. sports, discovery+, and Bleacher Report moving to Discovery Global | — |
| Bundling / better together | Standalone DTC | Disney bundle outperforming expectations with churn cut in half and LTV doubled; active international bundle discussions ahead of European launches | — |
Q&A Summary
On content licensing strategy, would you be more open to licensing Warner Bros. and HBO content to third parties, and what is the approach to sports rights licensing including potential sub-licensing to ESPN?
Zaslav said WBD has opted to sell significantly less than it could into streaming and traditional markets to differentiate HBO Max and fight for asset value and growth over near-term value. Gunnar added the mix shift from external to internal content sales has pressured near-term results but parked a ten-digit intercompany profit figure on the balance sheet to flow back over coming years. On sports, he said WBD loves its portfolio, finds sub-licensing unlikely (having actually taken on more, like college football playoffs), and is building a standalone DTC sports product that can also bundle with HBO Max, Discovery+, and third parties.
What other future franchises do you see and their halo effect, and what is the underappreciated growth opportunity in the challenged Global Networks business?
Zaslav cited big tentpoles (Batman, Superman, Wonder Woman, Lord of the Rings, Harry Potter) and smaller tentpoles (Fugitive, Goonies, Gremlins), with a four-studio structure (DC, Warner Bros., New Line horror, Animation) balancing known IP with new stories like Sinners, noting underused IP. Gunnar said Global Networks excites him most because of the team, the international free-to-air footprint with different secular trends than the U.S., and the focus that comes from a standalone structure with U.S. sports, discovery+, and Bleacher Report, identifying significant pockets of growth despite ongoing secular trends.
What is the nature of the HBO Max U.S. distribution deal restructuring and what drives re-acceleration after the first half of 2026, and is there an opportunity in DC theme parks and live events?
Gunnar explained a legacy deal with a former affiliated party was renewed at adjusted (lower) rates, with a meaningful 12-month revenue impact until it laps, and re-acceleration coming from both lapping the deal and new market launches beginning Q1 2026; J.B. added U.S. growth re-accelerates in H2 2026. On parks, Zaslav said there is tremendous untapped value (up from $0.22 to $0.30 per Disney-equivalent dollar), with rights recovered from Six Flags, DC freed up, and a model favoring licensing/partial ownership (Harry Potter Leavesden, Japan, Abu Dhabi) rather than building parks itself.
What are the underlying drivers of ARPU and the pricing power of Max, and what is the revenue/profitability color around lapping the NBA contract in Q4?
Zaslav said the priority was establishing HBO Max as the premier highest-quality platform, with strategy focused on adoption and curbing account sharing before raising price, while seeing big long-term upside to raise price on the highest-quality service. J.B. added the slate keeps strengthening (2026 stronger than 2025, 2027 better still). Gunnar explained NBA rights are largely monetized via affiliate revenue and are loss-making on an advertising-minus-content basis, so Q4 carries roughly a $100 million sports cost benefit, with a net benefit of hundreds of millions in 2026 from rights cost coming out against some offsetting revenue losses.
More on Warner Bros. Discovery, Inc.
Reported 2025-08-07 · figures from the Warner Bros. Discovery, Inc. Q2 2025 earnings call.
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