Warner Bros. Discovery’s David Zaslav foresees a more deal-friendly environment under the incoming Trump administration, opening the door for industry consolidation, he said Thursday.
“This would provide a real positive and accelerated impact on this industry that is needed,” Zaslav said on an earnings call with investors.
Zaslav’s optimism about the new administration comes after the studio and parent CNN reported a surprise quarterly profit on Thursday as cost controls and an Olympics-driven record increase in broadcast subscribers helped offset the studio’s lack of major hits. her.
The company’s shares rose 11% in midday 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 Paris Olympics with exclusive rights to broadcast the showpiece sporting event, boosting subscribers.
Max has also benefited from the platform’s merger with Disney+ and Hulu, as well as a strong first season of “The Penguin” – a crime drama series released in September and based on a popular DC Comics villain.
Warner Bros.’s streaming business Discovery ( WBD ), home of 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 capped two years of building the service and reversing millions of dollars in losses.
The broadcast unit’s adjusted earnings before interest, taxes, depreciation and amortization doubled from a year earlier to $289 million, helped by lower content expenses.
WBD also made progress in its efforts to control costs, with expenses falling 5.5% in the quarter ended September 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, boosted by the sub-licensing of Olympic sports rights to regional broadcast networks across Europe.
Revenue in WBD’s studio segment fell 17%, pulling in total revenue of $9.62 billion below estimates of $9.80 billion.
With shows such as “Beetlejuice Beetlejuice” in the July-September quarter, WBD’s studio division has struggled to repeat last year’s success of “Barbie,” the top-grossing film of 2023.
Trump stokes hopes for consolidation
Like its rivals, WBD has faced a decline in cable TV — long a profitable engine — as more subscribers switch to broadcast. The decline has put pressure on companies to look for business alternatives.
Last week, Comcast said it was considering spinning off its cable networks that include CNBC into a separate company.
The industry needs to “consolidate in a meaningful way,” Zaslav said Thursday, adding that the incoming Trump administration could “bring a pace of change and opportunities for consolidation.”
Strict antitrust policies under the Biden administration have affected dealmaking across industries in recent years.
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