Benzinga - by Chris Katje, Benzinga Staff Writer.
Shares of Warner Bros. Discovery (NASDAQ:WBD) are falling Wednesday after the company reported third-quarter (Q3) financial results.
Could a boy wizard and a revival of a hit franchise help the company's future success?
What Happened: Warner Bros. Discovery reported revenue of $9.98 billion for Q3, up 2% year-over-year. The "Barbie" movie helped the quarter.
The company reported Studio segment revenue of $3.23 billion, up 4% year-over-year. Networks segment revenue was $4.87 billion in the third quarter, which was down 7% year-over-year. DTC revenue was $2.44 billion in the third quarter, which was up 5% year-over-year.
In Q3, the streaming platforms lost around 700,000 subscribers. It ended the quarter at 95.1 million subscribers for Max and Discovery Plus.
Warner Bros. Discovery CEO David Zaslav blamed the subscriber loss on having the "lightest original content" slate it's had in years, according to The Verge. The lower content output comes as the Hollywood strike continues to wage on.
Zaslav has also highlighted the company's "underused" franchises as a way to make bank.
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What's Next: Warner Bros. Discovery recently announced it would reboot the “Harry Potter” movie series as a TV show with a new cast. Each season could focus on one book in the franchise, according to reports.
The new show may not hit the Max streaming platform or HBO channel until 2025 or 2026.
"We haven't done anything with Harry Potter for more than a decade," Zaslav said at a recent Goldman Sachs conference. He seemingly ignored the "Fantastic Beasts" films, which don't feature the boy wizard.
Harry Potter is one of the key three franchises that Warner Bros. owns. The others include Lord of the Rings and DC.
Speaking at the conference, Zaslav referenced Harry Potter and the other key franchises as "one of the big differentiators of this company."
"When you put those franchises in, it's the best-performing studio in the world. We need to deploy our best capital, and we need to do it with the best creative people in the world."
"We think there's a lot of shareholder value in attaching a 10-year DC — a real plan around DC, bringing ‘Harry Potter' back to HBO for 10 consecutive years, doing multiple movies of ‘Lord of the Rings.'"
The company is working on a rebranding of DC Comics with a new slate of movies and television shows.
Its New Line Cinema unit helped produce the "Lord of the Rings: The Rings of Power" series for Amazon.com Inc (NASDAQ:AMZN). The series, set thousands of years before the events of "The Hobbit" and "Lord of the Rings," will premiere its second season in 2024.
While shareholders and potential investors have witnessed plans for the rebirth of DC Comics and the newest Lord of the Rings series, they have yet to see the concrete plans for Harry Potter's revival, a move that could provide optimism in the share price.
The company also has a "Game of Thrones" prequel in "House of the Dragon" that performed well on HBO and MAX and has a second season set for the summer of 2024.
If Warner Bros. Discovery can get all its franchises in order, it has the potential for original content in the Harry Potter, DC Comics, Lord of the Rings and Game of Thrones franchises all coincidentally, which could be just what the stock needs.
WBD Price Action: Warner Bros. Discovery shares are down 16% to $9.72 on Wednesday versus a 52-week trading range of $8.82 to $16.34.
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