$WBD Earnings: In his long and arduous journey to post-merger stability, Zaslav still has so much to prove
While Warner Bros. Discovery certainly has the potential to be one of the biggest players in media and streaming, the post-merger road to stability is proving much harder and longer than many initially thought.
Even as WBD’s streaming services HBO, HBO Max and Discovery+ added 2.8 million global subscribers in Q3, Zaslav doesn't view streaming subscriber growth as the be-all and end-all for WBD. “Profitability, and not purely [streaming] sub count, is our benchmark for success,” Zaslav said on the call. Though the company has made efforts to pay down its massive debt load, WBD ended the last quarter with more than $50 billion in gross debt and 5.1x net leverage. To top that off, WBD reported free cash flow of negative $194 million as a result of consolidation of the WarnerMedia business.
Perhaps the biggest issue arising from the WBD’s struggles this year is that it provides a less than appealing example to other streamers looking to possibly merge with one another. While the final outcome of WBD’s story has yet to be written, the growing pains for the company could be a deterrent, as optics have painted a challenging and unpleasant outcome to say the least.
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