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#HBO grows to 76.8M subs, WarnerMedia profit slows due to CNN+

“HBO grows to 76.8M subs, WarnerMedia profit slows due to CNN+”

WarnerMedia’s HBO and HBO Max added 3 million users for a total of 76.8 million subscribers at the end of the first quarter — but steep investments in streaming services including the flopped CNN+ took a bite out of profits.

WarnerMedia’s subscriber bump — fueled by hits like “Succession,” “Game of Thrones” and “Euphoria” — comes days after streaming giant Netflix reported its first subscriber loss in over a decade, putting into question the growth potential of the streaming market.

Netflix has roughly 222 million paying households, but it estimated 100 million households are sharing passwords, and hinted it would crackdown on that in the near future.

On Thursday, AT&T disclosed WarnerMedia’s earnings for the last time, since spinning off the entertainment unit to Discovery to form Warner Bros. Discovery earlier this month.

Zendaya in "Eurphoria" season 2
“Euphoria,” starring Zendaya (pictured here), has become one of HBO Max’s biggest shows.
Eddy Chen/ HBO Max/ The Hollywoo

AT&T said with the $43 billion merger closing just after the end of the first quarter, revenue at WarnerMedia, which includes Warner Bros., the Turner networks and HBO, rose 2.5 percent in the first quarter to $8.7 billion, crediting higher subscription revenue and increased “content and other” revenue.

Advertising revenue, however, fell 3 percent to $1.7 billion, due in part to “tough” comparisons with strong political ad spending a year ago and fewer cable subscribers.

WarnerMedia’s operating income fell 32.7 percent to $1.3 billion on higher spending for the start of HBO Max in new international markets and the launch of CNN’s souped up streaming service CNN+, as well as steeper “programming, marketing and selling costs.”

Jeremy Strong in "Succession"
Shows like “Succession,” starring Jeremy Strong, have helped HBO/ HBO Max build up its subscriber base, but spending on content has also slowed profitability at parent company WarnerMedia.
Macall Polay

As previously reporter, David Zaslav, CEO of the new Warner Bros. Discovery, is looking to shore up over $3 billion in cost savings in 2023, and he has his sights set on CNN+, which launched on March 29. Already, CNN+ is being reviewed by Zaslav, who has suspended marketing spend for the service, which has roughly 150,000 subscribers, Axios reported.

The publication said CNN’s original plan to become profitable in four years by investing $1 billion in the service is being “knee-capped,” citing plans to eliminate high-level positions across WarnerMedia. This includes potentially replacing Chris Cuomo’s 9 p.m. ET primetime slot with a “live newscast, instead of personality-driven perspective programming.”

In this photo illustration, the HBO Max logo seen displayed on a smartphone along with a bowl of popcorn, headphones, and a tv remote.
New management for Warner Bros. Discovery plan on combining its various streaming services and building them around HBO Max.
SOPA Images/LightRocket via Gett

Cuomo was fired from CNN in February after being suspended for advising his brother, then-Gov. Andrew Cuomo, how to dodge his own sexual harassment accusations. The anchor has sued CNN for $125 million over his termination.

Looking ahead, Warner Bros. Discovery boss Zaslav said he plans to focus CNN more on hard news and less on personality-driven programming, and consolidate the company’s various streaming platforms into one service built around HBO Max.

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