Warner Bros. Discovery Q2 revenue misses estimates as NBA loss and weak films drag results, Paramount merger stuck in court

Earnings miss

Warner Bros. Discovery reported second-quarter revenue of $8.72 billion, an 11% decline from the year-earlier period, missing Wall Street estimates that ranged from $9.2 billion to $9.29 billion. Net income attributable to the company fell to $149 million from $1.58 billion a year earlier, according to the Wall Street Journal and Variety, while the Hollywood Reporter cited net income of $100 million. The decline was partly driven by $1.1 billion in pre-tax acquisition-related amortization of intangibles, content fair-value step-up, and restructuring expenses. Despite the revenue miss, the company posted diluted earnings of 6 cents per share, beating analyst expectations of a loss ranging from 10 to 13 cents per share.

Studio and advertising struggles

Studio revenue tumbled 39% to $2.3 billion, with EBITDA plummeting 89% to $96 million. Theatrical revenue dropped 46% from the comparable quarter, as releases including "Mortal Kombat II," "Supergirl," and "The Bride" failed to match the performance of Q2 2025 hits "A Minecraft Movie," "Sinners," and "Final Destination Bloodlines." Warner's film slate is weighted toward the second half of the year, with releases such as "Digger" and "Dune: Part Three" expected to improve box-office results. Advertising revenue fell 22% to $1.7 billion, driven by the absence of NBA game broadcasts after nearly 40 years of carrying the league. NBCUniversal has taken WBD's place as a primary NBA partner. The Global Linear Networks division saw revenue slide 17% to $3.99 billion, with adjusted EBITDA down 4% to $1.4 billion. TV distribution revenue also fell, partly due to a 10% decrease in subscribers to the company's networks.

Streaming growth

The streaming business remained a bright spot, with revenue rising 10% to $3.1 billion, surpassing $3 billion for the first time. Streaming EBITDA jumped 75% to $512 million. HBO Max's international expansion and original content including "Euphoria," "House of the Dragon," "The Pitt," and "Hacks" drove subscriber growth. Within streaming, distribution fees rose 11% and advertising revenue increased 8%. A 23% decline in operating expenses, tied to the absence of NBA rights costs and lower content spending, helped the company post its surprise quarterly profit.

Paramount merger in legal limbo

The earnings come as WBD's proposed merger with Paramount, valued at $110 billion to $111 billion depending on the source, remains tied up in court. A coalition of 12 state attorneys general and the Writers Guild of America has filed a lawsuit seeking to block the deal on antitrust grounds, with California among the states involved. A federal trial is scheduled for March 2027, and Paramount has agreed to pause the deal until June 2027. Beginning October 1, 2026, Paramount Skydance must pay a ticking fee of $7 million per day to WBD shareholders, payable only if the deal closes.

Paramount CEO David Ellison said he is "absolutely open" to discussing a potential settlement of the antitrust suit while also stating the company believes it "will win in court." Ellison has faced scrutiny over his potential oversight of CNN's editorial content, given his existing control of CBS News following Skydance's merger with Paramount Global. In a recent New York Times op-ed, Ellison addressed the concerns directly.

The issue is whether I can be trusted as a steward of Warner's CNN. There has been speculation about my politics, my loyalties, my intentions. Unfortunately, I can't give anyone a view into my heart and mind, but I can share this: I have regularly voted for candidates of both parties; I hold some views that would be called conservative and others that would be called liberal, just like most Americans; and when it comes to our news operations, I do not aspire to lead these companies to bend their newsrooms to my views. I believe that news should be based on facts and truth.