Warner Bros. Discovery adds 2.8 million DTC subscribers in 3Q 2022

Thursday, November 3rd, 2022 
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NEW YORK — Warner Bros. Discovery, Inc. (the “Company”) (Nasdaq: WBD) today reported financial results for the quarter ended September 30, 2022.

Direct-to-Consumer Segment

The debut of House of the Dragon was the largest series premiere in HBO’s history and also marked the largest series launch on HBO Max across the U.S., Latin America, and EMEA. All episodes of the series are averaging around 29 million viewers in the U.S.,(12) more than triple the average debut night audience, demonstrating strong catch-up viewing.

  • Total DTC subscribers* were 94.9 million, an increase of 2.8 million global subscribers since the end of Q2. Global DTC ARPU** was $7.52.
  • DTC reported revenues were $2,317 million. Revenues decreased 6% ex-FX compared to the prior year quarter, on a pro forma combined basis.
  • Advertising revenue more than doubled to $106 million ex-FX, primarily driven by subscriber growth on our DTC ad-supported tiers.
  • Distribution revenue decreased 6% ex-FX, as declines in wholesale revenues primarily due to the Amazon Channels expiration in September 2021 were partially offset by retail gains.
  • Content revenue decreased 25% ex-FX, primarily driven by licensing of HBO library content in September 2021.
  • DTC reported operating expenses were $2,951 million. Operating expenses increased 7% ex-FX compared to the prior year quarter, on a pro forma combined basis.
  • Costs of revenues increased 22% ex-FX, primarily driven by increased programming expenses and the impact of measurement period adjustments to the fair value of content assets acquired during the Merger, resulting in increased amortization.
  • SG&A decreased 18% ex-FX, primarily driven by more efficient marketing spend.
  • DTC reported Adjusted EBITDA was $(634) million.

DTC Subscribers

In millions, except ARPU  Q3 2022  Q2 2022  Q3 2021
------------------------  -------  -------  -------
 Total subscribers*          53.5     53.0     48.8
 ARPU**                    $10.66   $10.54
 Total subscribers*          41.4     39.1     31.1
 ARPU**                     $3.68    $3.69
------------------------  -------  -------  -------
Total DTC subscribers*       94.9     92.1     79.9
Global ARPU**               $7.52    $7.66

* Direct-to-Consumer (“DTC”) Subscriber: The Company defines a “DTC Subscription” as: (i) a retail subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue, whether directly or through a third party, from a direct-to-consumer platform; (ii) a wholesale subscription to discovery+, HBO, or HBO Max for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription; and (iii) a wholesale subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue on a per subscriber basis.

We may refer to the aggregate number of DTC Subscriptions as “subscribers.”

We define a Domestic subscriber as a subscription based either in the United States of America or Canada. We define an International subscriber as a subscription based outside of the United States of America or Canada.

The reported number of “subscribers” included herein and the definition of “DTC Subscription” as used herein excludes: (i) individuals who subscribe to DTC products, other than discovery+, HBO and HBO Max, that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) domestic and international Cinemax subscribers, and international basic HBO subscribers; and (iv) users on free trials.

** ARPU: The Company defines DTC Average Revenue Per User (“ARPU”) as total subscription revenue plus advertising revenue (net of advertising and programmatic commissions) for the period divided by the daily-average number of paying subscribers for the period. Where daily values are not available, the sum of beginning of period and end of period divided by two is used.

Links: Warner Bros. Discovery