Warner Bros. Discovery (WBD) Stock Up as Earnings Beat Offsets Revenue Miss

TLDR

• WBD reported Q2 revenue of $8.72 billion, missing estimates of $9.18-$9.29 billion, down 11.2% year on year
• EPS came in at $0.06, beating analyst estimates of a $0.10 loss
• Studio revenue dropped 39% as “Mortal Kombat II” and “Supergirl” underperformed
• Advertising revenue fell 22% due to the absence of NBA games
• Streaming remained a bright spot, with HBO Max revenue up 10%

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Warner Bros. Discovery reported Q2 2026 revenue of $8.72 billion, missing Wall Street expectations of $9.18-$9.29 billion. Revenue fell 11.2% year on year.

WARNER BROS. DISCOVERY $WBD Q2’26 EARNINGS HIGHLIGHTS

🔹 Revenue: $8.7B (Est. $9.29B) 🔴; -11% YoY
🔹 Adj. EPS: $0.06 (Est. -$0.14) 🟢; -90% YoY
🔹 Adjusted EBITDA: $1.9B (Est. $1.88B) 🟡; -4% YoY
🔹 Net Income: $149M; -91% YoY

Segment Net Revenue:
🔹 Streaming: $3.1B; +10%…

— Wall St Engine (@wallstengine) August 6, 2026

WBD stock was up around 1.5-1.9% on the day, despite the top-line miss.

Warner Bros. Discovery, Inc., WBD

The earnings per share figure told a different story. WBD posted a GAAP profit of $0.06 per share, well ahead of analyst estimates of a $0.13 loss. That surprise profit was driven largely by a 23% drop in operating expenses, tied to the absence of NBA rights costs and lower content spending.

Studio revenue was a weak spot. It fell 39% in the quarter, with “Mortal Kombat II” and “Supergirl” falling well short of last year’s hits like “A Minecraft Movie” and “Sinners.”

The company’s film slate is back-loaded this year. Major titles including “Digger” and “Dune: Part Three” are expected in the second half, which may help studio numbers recover.

Advertising Takes a Hit Without NBA

The loss of NBA broadcast rights hit hard. Advertising revenue dropped 22% in the quarter, with domestic linear TV audiences continuing to shrink.

Warner also flagged that the 2026 FIFA World Cup pulled viewers and ad dollars away in several markets during June and July.

The CNN-owned networks division saw revenue fall 17%, though the cost cuts helped offset some of that pressure at the operating level. Operating margin improved to 2.7%, up from negative 1.9% in the same period last year.

Adjusted EBITDA came in at $1.88 billion, just below the $1.90 billion estimate, for a margin of 21.6%.

Streaming Holds Up

HBO Max continued to perform well. Streaming revenue rose 10%, driven by international expansion and original content including “The Pitt.”

The streaming segment remains central to WBD’s longer-term strategy, particularly as the proposed merger with Paramount moves forward.

Britain’s Competition and Markets Authority cleared the $110 billion Warner-Paramount merger on Thursday, saying it was unlikely to harm competition in the UK.

However, the deal is still being challenged in U.S. courts. California and 11 other states are seeking to block it on antitrust grounds. Paramount has agreed to pause the deal until June 2027, and a federal trial is set for March 2027.

Seth Shafer, principal analyst at S&P Global Market Intelligence, noted that the CMA approval may help Paramount’s case in U.S. proceedings, but said the outcome will ultimately depend on arguments made in court.

Both CEOs expressed confidence on the post-earnings call that the deal will close.

Looking ahead, sell-side analysts expect WBD revenue to grow 3.8% over the next 12 months, below the sector average.

Free cash flow margin stood at 6.6%, roughly in line with the same quarter last year. Market cap sits at $65.1 billion.