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(Reuters) -Warner Bros Discovery (NASDAQ:WBD) missed market estimates for quarterly revenue on Thursday as a number of high-profile flops at the box office, including “The Flash,” overshadowed rising momentum for its streaming business after the launch of Max.
The company forged by the union of WarnerMedia and Discovery Inc reported second-quarter revenue of $10.36 billion, missing analysts’ average estimate of $10.44 billion, according to Refinitiv data.
Media companies have been looking to strike the right balance between spending on content and boosting profitability. Under Chief Executive David Zaslav, Warner Bros Discovery has been seeking to run its direct-to-consumer business more efficiently.
Its studio segment reported revenue of $2.58 billion, missing analysts’ estimates of $3.21 billion. In the quarter films such as “The Flash” underperformed at the box office, and the company also incurred marketing costs for its “Barbie” film, which it released to huge box office success in July.
The direct-to-consumer unit posted revenue of $2.73 billion, beating analysts’ estimates of $2.48 billion, according to Visible Alpha. It lost 1.8 million subscribers, more than analysts’ estimates of 1.1 million, reporting 95.8 million total global subscribers for its HBO, Max and Discovery+ services.
Warner Bros Discovery’s new Max streaming service, launched during the quarter in the United States, combined HBO Max’s scripted entertainment with Discovery’s reality shows.
“Our Direct-to-Consumer business … in the wake of the successful launch of Max in the U.S., is tracking well ahead of our financial projections,” Zaslav said.
In a call with investors Thursday, Chief Financial Officer Gunnar Wiedenfels said he’s confident the company will achieve $4 billion in total synergies much sooner than previously thought, and sees a “clear path” to the company achieving $5 billion or more in total synergies through 2024 and beyond.
He expects full-year free cash flow in the range of $4.5 billion to $5 billion.
Net loss for the quarter came in at $1.24 billion, compared with a loss of $3.42 billion a year earlier. The company reported a drop of more than 16% in total costs and expenses in the quarter.
Free cash flow came in at $1.72 billion in the three months ended June, beating estimates of $987 million, according to Visible Alpha.
Wiedenfels on Thursday said the company expects global networks advertising revenue to decrease in the high single-digit range during the second half of the year, meaningfully worse than the previous forecast.
Shares were down 3% in early trading.
