What to expect amid layoff rumors, HBO Max name change

Warner Bros. Discovery (WBD) is set to report its first quarterly results since the $43 billion merger as the company battles new reports about the future of streaming service HBO Max.

Here’s what Wall Street expects, according to Bloomberg’s consensus estimates:

  • Revenue: $11.91 billion expected

  • Adj. earnings per share (EPS): $0.08 expected

  • Total number of DTC subscribers: 1.65 million net adds expected

Analysts forecast a messy quarter for the streaming conglomerate as it strives to integrate the two businesses, while cutting costs to improve profitability.

Forecasts call for a profit of $300 million in 2022, while macroeconomic headwinds could hurt advertising revenue – a long-term risk for media companies at all levels.

Still, the consensus estimates that US ads grew 2.4% in the second quarter, helped by Turner Networks.

On the earnings call, investors will want more clarity on the platform’s direct-to-consumer streaming strategy, in addition to the fate of HBO Max, which multiple reports say hangs in the balance.

The company plans to lay off 70% of its development business, according to The Wrap, which cited “several insiders.”

Sources told the outlet that CEO David Zaslav, known for his cost-cutting leadership style, will announce a major restructuring of HBO Max and Discovery+ either during earnings results or shortly thereafter.

The Wrap explained that the move “will result in a gutting of HBO Max, significant layoffs for its executives and staff to minimize layoffs with HBO, and a combined streaming service with Discovery+.”

There will also be a harder line between scripted and unscripted content, depending on the source.

Warner Bros. Discovery has previously said it plans to cut costs by $3 billion over the next two years and distribute those savings across streaming content.

At the time, questions were swirling about where those funds came from – the layoffs could be the start of this venture, although critics were quick to point to CEO David Zaslav’s exorbitant salary.

According to regulatory filings, Zaslav’s 2021 compensation package — which runs through the end of 2027 — jumped to $246 million, significantly higher than in 2020 ($37.7 million) and 2019 ($45.8 million).

'Batgirl' discontinued by Warner Bros.  Discovery as company touts strategic shift for HBO Max

‘Batgirl’ discontinued by Warner Bros. Discovery as company touts strategic shift for HBO Max

Earlier Wednesday, the studio confirmed that two films slated for release on HBO Max — “Batgirl,” starring “In The Heights” star Leslie Grace, as well as “Scoob!: Holiday Haunt” — have been pulled.

Warner Bros. did not immediately respond to Yahoo Finance’s request for comment on the layoff reports or its decision to pull these two films, but provided a statement to CNN, which it owns.

“The decision not to release ‘Batgirl’ reflects the strategic shift in our leadership as it relates to the DC Universe and HBO Max,” a Warner Bros. spokesperson said. to the network.

“Leslie Grace is an incredibly talented actress and this decision does not reflect her performance,” the statement continued. “We are extremely grateful to the filmmakers of ‘Batgirl’ and ‘Scoob! Holiday Haunt’ and their respective cast and look forward to collaborating with everyone again in the near future.”

The DC Comics movie was nearing completion and cost the studio between $70 million and $90 million to produce.

Ahead of Thursday’s results, the stock was trading higher, up 4% by noon.

Alexandra is a senior entertainment and food reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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