Warner Bros. Discovery Streaming Unit Crosses $3 Billion in Revenue as Studios Segment Struggles
Media giant reports strongest-ever streaming quarter with 17% EBITDA margin, but theatrical film underperformance clouds near-term studio outlook.
Streaming Business Delivers Breakthrough Quarter
Warner Bros. Discovery reported its streaming segment surpassed $3 billion in quarterly revenue for the first time during its second quarter 2026 earnings call, marking a significant milestone in the company's transformation from a predominantly U.S.-focused HBO streaming service that lost "$2 billion plus in 2022" to what CEO David Zaslav described as "a global high-growth asset" (earnings call, 2026-08-06).
The streaming division generated $512 million in adjusted EBITDA, representing a more than 60% improvement over the same period in 2025 and delivering a nearly 17% EBITDA margin. Subscriber-related revenue growth accelerated 200 basis points sequentially to 10% excluding foreign exchange impacts.
JB Perrette, CEO of Global Streaming and Games, noted that excluding a previously disclosed related-party deal, "our distribution growth would actually have been in the low teens" (earnings call, 2026-08-06), indicating strengthening momentum in subscriber acquisition and monetization.
HBO Programming Drives Global Engagement
The company's investment in premium content is yielding measurable results. So far in 2026, four HBO series—The Pitt, Knight of the Seven Kingdoms, House of the Dragon, and Euphoria—have each averaged "at least 25 million global viewers per episode with several programs exceeding 30 million average viewers" (earnings call, 2026-08-06).
HBO Max led the industry with 122 Emmy nominations spanning 21 programs, including 26 for Season 2 of The Pitt. Warner Bros. Television garnered 52 Emmy nominations across 28 programs, including content produced for third-party platforms such as Shrinking and Abbott Elementary.
Looking ahead, the company has greenlit Harry Potter "for the next 10 consecutive years," with Zaslav confirming the first three episodes are "very strong" and will debut on Christmas Day (earnings call, 2026-08-06).
Studio Segment Faces Near-Term Headwinds
While streaming showed strength, the studios segment faced challenges as "a handful of recent films have underperformed expectations" (earnings call, 2026-08-06). CFO Gunnar Wiedenfels acknowledged the theatrical business would "have a harder time this year" compared to Q2 2025, which featured major content licensing deals and successful releases including Sinners and Minecraft.
Wiedenfels emphasized the company's diversification strategy, noting that Warner Bros. TV is "performing really well, more than 80 shows on air across every platform" (earnings call, 2026-08-06). The executive maintained confidence in the segment's long-term target of generating "over $3 billion in adjusted EBITDA," pointing to a stronger 2027 film slate and the upcoming return of SVOD shows to replenish the company's library.
Networks Show Resilience Amid Industry Pressures
The company's traditional networks demonstrated staying power despite continued industry headwinds. TNT Sports broadcast the highest-rated national championship basketball game ever, while MLB regular season viewership increased more than 20% and NHL playoff viewership rose 50%. CNN linear viewership increased 24% year-over-year in Q2, with minutes spent across all CNN platforms up 19%.
Discovery's Shark Week recorded its "highest year-over-year growth in more than a decade," with Discovery ranking as the number one cable network in primetime among the 25-54 demographic during the event's first three nights (earnings call, 2026-08-06).
Management declined to take questions regarding the proposed Paramount Skydance transaction, though Zaslav stated the company "remain[s] confident that our agreed upon sale to Paramount Skydance will be completed" (earnings call, 2026-08-06).
This article was generated by MarginX from the earnings call on 2026-08-06. It is not investment advice.