Warner Bros Discovery (WBD) CEO David Zaslav told analysts he expected the Paramount merger to close and said DC Studios “feels very good” despite the Supergirl misfire in a Q2 earnings call.
“We’re confident this transaction will close,” Zaslav said on Thursday morning. “We’ve been trying to drive the value of the company to deliver to PSky [Paramount] and David [Ellison] the best company possible. The company is performing at a very high level [.]”
Zaslav praised WBD’s 40,000-strong global workforce during the call with analysts. “The overall culture and the work ethic at this company has been inspiring,” he said, adding. “It has been challenging.”
Early on Thursday, the UK antitrust watchdog cleared the merger. A number of WBD and Paramount staffers privately want the merger to fail, fearing the inevitable job losses that will come to duplicative roles.
Zaslav stands to receive a golden parachute of more than $550m should Paramount either settle or win its antitrust trial against 12 US attorneys general and Writers Guild of America next spring. He can also walk away from the transaction if it has stalled by June 4 2027 and WBD would collect a $7bn termination fee.
DC Studios
Zaslav also said that he was not looking to tinker with the DC Studios strategy after June release Supergirl flopped on $126m at the worldwide box office, the lowest-grossing DC release in more than two decades.
The executive noted that DC Studios co-head James Gunn’s upcoming Superman sequel Man Of Tomorrow (2027) and Matt Reeves’ The Batman: Part II (2028) were on track, and looked ahead to the imminent launch on HBO Max of the Lanterns series, and the horror feature Clayface in October. “DC feels very good and we have a robust pipeline,” he said.
Supergirl’s misfire was at the heart of a poor studios segment performance as revenues dropped 39% year-on-year to $2.3bn. Executives acknowledged Q2 was a “tough” comparison to the year-ago period, when box office soared with hits from A Minecraft Movie, Sinners, F1 (distributed on behalf of Apple), and New Line’s Final Destination: Bloodlines.
Ever the optimist, Zaslav looked ahead to the second half of the year’s runway featuring Practical Magic 2, Digger, Dune: Part Three, and The Cat In The Hat, the first from the rebooted Warner Bros. Pictures Animation (WBPA). Beyond that he highlighted Andy Serkis’s The Lord Of The Rings: The Hunt For Gollum and Man Of Tomorrow in 2027, and Matt Reeves’ The Batman: Part II starring Robert Pattinson in 2028.
CFO Gunnar Wiedenfels said the studio division was producing 14 features this year and will produce 19 in 2027 and expressed confidence that the studio could maintain that level. In April Paramount CEO Ellison told CinemaCon attendees a combined studio would generate a minimum 30 features a year, with minimum 45-day exclusive theatrical release windows.
That assurance is what prompted Regal Global Entertainment CEO Eduardo Acuna to come out in support of the merger this week when he asserted that a protracted fight over the merger would create uncertainty and damage to the industry. AMC head Adam Aron has previously said he wants the merger to close.
Meanwhile, the work goes on as Zaslav said, but the road ahead is bumpy. Warner Bros film heads Mike De Luca and Pam Abdy are racing to greenlight a sequel to 2023’s $1.4bn smash Barbie and unless Zaslav signs off on expensive new deals for stars Margot Robbie and Ryan Gosling and writer-director Greta Gerwig by December, the rights will revert to toy maker Mattel. The New York Times reported this week that Gosling’s current asking price is $20m.
Positive results in streaming
WBD’s streaming segment was a Q2 highlight for the period ended June 30 as revenues climbed 10% to reach $3.1bn, driven by the final season of Hacks and Season 3 of Euphoria, and Season 3 premiere of House Of The Dragon. Adjusted EBIDTA came to $512m, gaining more than 60% year-on-year.
Streaming subscriber-related revenues gained 10% to reach just shy of $3bn and distribution revenue gained 12% to $2.7bn.
The global linear networks segment showed ongoing decline, a pattern seen across the industry. Revenues fell 17% to $3.9bn, and advertising dropped by 27% to $1.4bn. Adjusted EBITDA fell 4% to $1.4bn.
Zaslav told analysts that Warner Bros Television has more than 80 shows on air with multiple platforms, while upcoming HBO Max highlights for 2027 include Season 2 of A The Knight Of The Seven Kingdoms, Season 3 of The Last Of Us, and Season 4 of The White Lotus.
Overall revenues fell 11% to $8.7bn primarily due to the end of WBD’s decades-long broadcast arrangement with the NBA. Adjusted EBITDA fell 4% to $1.9bn, and free cash flow dropped 19% to $572m for the period.
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