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Despite a sales boost from the blockbuster film, Superman, Warner Bros Discovery (Nasdaq: WBD) missed revenue estimates in the third quarter as the stock was moving lower Thursday.  

Revenue dropped year-over-year in Q3, but earnings beat estimates. There was also an update on the company’s split or potential sale.

• Revenue: $9.0B, down 6% year-over-year. This was short of analyst estimates of $9.2B.
• Net loss: $148M, down from net income of $135M in Q3 2024.
• Adjusted EBITDA: $2.47B, up 2% year-over-year. This beat estimates of $2.19B.
• Earnings: -$0.06 per share, down from $0.05 per share. This beat estimates of $0.03 per share.

The Streaming and Studios side of the house did well, generating $5.3 billion in revenue in the quarter, up 8% year-over-year. While streaming was flat, studios was the cash cow, generating revenue of $3.3 billion, a 24% gain. This was due to big box office hits in Q3 — Superman, The Conjuring: Last Rites, One Battle After Another, and Weapons – and strong carryover from F1 released in Q2.

“Importantly, with its first theatrical release Superman, DC Studios marked a new era and critical first step on its 10-year journey to deliver fans a fresh and cohesive storyline across film and television, while bringing new heroes and villains to the surface,” David Zaslav, Warner Bros Discovery President and CEO, said in a letter to shareholders.

It was a different story for the other side of the business, Global Linear Networks, which saw revenue fall 22% year-over-year to $3.9 billion. Distribution revenue decreased 8% due to a decrease in domestic linear pay TV subscribers, while advertising revenue dropped 21%. Further, content revenue decreased 74% due to the sublicensing of Olympic sports rights to networks in Europe in the prior year.

Active process underway

Warner Bros Discovery announced in June that it would be splitting into two separate companies – Warners Bros, which includes the streaming and movies businesses; and Discovery Global, which includes the linear TV networks like Discovery, TNT, CNN and others. It’s kind of like how the companies were before they merged in 2022.

The companies will split into two publicly traded companies when it is finalized sometime in 2026. However, since then, there have been rumors and reports of companies interested in buying part or all of Warners Bros Discovery. Potential suitors include Paramount Skydance, Netflix, and Comcast, among others.

On the earnings call, Zaslav provided an update on the potential sale or split but did not provide many details.

“The team is hard at work both on the separation transaction and on following the board’s direction to evaluate strategic alternatives. You’ve all seen media reports as to potential interested parties, and I won’t comment on anything specific. It is fair to say that we have an active process underway,” Zaslav said.

Warner Bros Discovery stock has been on tear since the split was announced, up almost 115% year-to-date to almost $23 per share. This is primarily due to investor sentiment that the company will either be sold outright or be sold in parts. Stay tuned.

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