Industry Insider: Warner Bros. Discovery Charts a Path Through Strategic Uncertainty and Studio Strength
Warner Bros. Discovery reported mixed results in the third quarter of 2025, reflecting both its creative resurgence and the uncertainty surrounding its corporate future. The company reported quarterly revenue of $9.0 billion, a 6% decrease from the previous year, though results were essentially flat when the impact of the 2024 European Olympics was excluded. Despite the top-line decline, adjusted EBITDA increased 2% to $2.47 billion, owing to strong performance in the Studios and Streaming segments.
The findings come amid a heightened strategic review by the company's board, which is considering options that could reshape the entertainment conglomerate's structure. This could include splitting the company into two entities: Warner Bros. (Streaming & Studios) and Discovery Global (Global Networks), as well as a full or partial sale. While management confirmed that the planned separation is still on track for mid-2026, the review indicates that nothing is off the table.
In the shareholder letter, the board confirmed that its review of strategic alternatives includes a wide range of possible outcomes, from proceeding with the separation to investigating merger or acquisition scenarios involving parts or all of the company. There is no set deadline, and executives have said they will not comment further unless a specific transaction is approved.
This move comes as Warner Bros. Discovery continues to face investor concerns about the long-term viability of combining legacy linear networks with a global streaming platform. Nonetheless, management emphasized its continued focus on operational discipline, noting that free cash flow reached $701 million, up 11% year on year, even after accounting for approximately $500 million in separation-related costs. The company also repaid $1.2 billion in debt during the quarter, leaving it with $4.3 billion in cash and 3.3x net leverage, demonstrating its commitment to financial stability.
The Studios division was a standout performer, demonstrating Warner Bros.' longstanding strength in theatrical storytelling. Segment revenue increased 23% year on year to $3.3 billion, with adjusted EBITDA rising to $695 million, more than doubling from $308 million in the same quarter last year.
The turnaround was fueled by major theatrical successes, such as Superman, The Conjuring: Last Rites, and Weapons, as well as strong carryover from the previous quarter's F1. In 2025, the studio became the first to surpass $4 billion in global box office revenue, doing so with only 11 releases, nearly half the output required in 2019 to reach a similar milestone.
This year, Warner Bros. dominated with nine number-one global openings and three of the top five domestic grossing films. CEO David Zaslav described it as a testament to "disciplined creativity," a model that prioritizes fewer, higher-quality releases backed by well-known IP and strong filmmaker partnerships.
Warner Bros. Television (WBTV), the company's television production arm, continued its successful run with more than 70 active series across 20 platforms, including Emmy-winning hits The Pitt and The Penguin. WBTV is increasingly focusing on streaming partners, with 2026 expected to be the first year in which it delivers more scripted episodes to streaming platforms than traditional networks.
One of the most significant developments for the company this year was the relaunch of DC Studios under James Gunn's creative direction. The success of Superman ushered in what executives described as a "new era" for the DC cinematic universe.
Upcoming projects include Lanterns for HBO Max in early 2026, Supergirl and Clayface theatrical releases next summer and fall, and Man of Tomorrow, Gunn’s sequel to Superman. WBD described the franchise as entering “a 10-year journey to rebuild fan connection through cohesive storytelling across film and television”.
The Streaming segment, encompassing HBO Max and Discovery+, reported $2.63 billion in revenue, flat year over year but improving profitability. Adjusted EBITDA rose 24% to $345 million, reflecting tighter cost controls and subscriber growth.
The platform added 2.3 million subscribers in the quarter, bringing the global total to 128 million, a 16% increase from the previous year. Management reiterated its goal of reaching at least 150 million subscribers by the end of 2026, citing recent launches in Asia Pacific and planned expansions into Italy, Germany, the United Kingdom, and Ireland.
Average revenue per user fell 16% year on year to $6.64, owing primarily to expansion in lower-cost international markets and a decrease in domestic ARPU to $10.40. Executives attributed the decline to pricing adjustments resulting from a renewed domestic distribution agreement and an international legal ruling affecting prior billings.
HBO Max maintained high engagement with both premium tentpoles and regional content. IT: Welcome to Derry premiered in late October to 15 million viewers in its first week, comparable to House of the Dragon and The Last of Us. Local hits, such as Chespirito in Mexico and The Eastern Gate in Poland, also drew record audiences in their respective markets. HBO Max also announced a co-production partnership with CJ ENM, bringing K-dramas and Korean entertainment to its platform and expanding its appeal in Asia and beyond.
While Streaming and Studios delivered growth, the Global Linear Networks segment continued to decline. Revenue fell 23% to $3.88 billion, largely due to the absence of Olympic coverage and ongoing pay TV subscriber losses.
However, WBD highlighted positive aspects of its news and sports assets. CNN launched CNN All Access, a $6.99 per month streaming service that provides centralized access to live and on-demand news content. Meanwhile, TNT Sports intends to launch its own streaming service in the United States, combining live sports coverage from its linear channels with digital content from Bleacher Report and House of Highlights.
The company said its advertising revenue fell 21% year on year, but it saw relative stability in international markets, particularly Europe, where its free-to-air channels achieved record viewership share. Executives anticipate improved advertising trends in Q4, fueled by MLB playoffs and new sports rights, such as Big 12 and Big East coverage.
Looking ahead, Warner Bros. Discovery intends to maintain free cash flow strength and further reduce debt while navigating the strategic review process. The company emphasized that its planned separation remains on track, but it may change depending on the outcome of the board's review.
Executives underscored their commitment to ensuring both Warner Bros. and Discovery Global are capitalized appropriately post-separation. “We are executing with discipline,” the shareholder letter stated, “while ensuring both entities are positioned for operational independence and long-term value creation”.
Despite the uncertainty, the report had a tone of quiet confidence. With box office leadership restored, streaming growth steady, and a healthier balance sheet, WBD appears ready to define its next act, whether as two companies or a reinvented media powerhouse.
