‘Joker 2’ Was ‘Disappointing,’ Warner Bros. Discovery CEO Admits, as Execs Pressed On Possible Breakup

Two leading Wall Street analysts pressed executives at Warner Bros. Discovery about the possibility of breaking up the troubled media conglomerate as executives tried to defend their vision of operating the home of CNN, the Warner Bros. studio and the Max streaming service for the longer term.

“Your company is trading like a company that’s declining in earnings,” said Ben Swinburne, a media-industry analyst with Morgan Stanley during a call between Warner Bros. Discovery executives and investors on Thursday.

Forged out of the combination of unscripted media kingpin Discovery Communications and the remaining assets of the former Time Warner, Warner Bros. Discovery has been plagued by an immense amount of debt and issues pertaining to the health of its traditional studios and TV networks. The company is trying to fix these operations even as it tries to build a new venue to capture consumers who are increasingly migrating to viewing their content favorites on demand via broadband.

But it keeps meeting up with new distractions along the way.

During the call, executives acknowledged that the performance of the recent movie release “Joker 2” had disappointed and could weigh on performance in its next quarter. Warner Bros. Discovery also took a charge of more than $100 million tied to its games division, with executives noting that they would start to focus more intently on core franchises and cut back on the number of new releases.

“Inconsistency also remains an issue at our motion picture studio, as reinforced recently by the disappointing results of ‘Joker 2,” said Warner Bros. Discovery CEO David Zaslav during the call.

Warner Bros. Discovery said Thursday that net income came to $135 million, or 5 cents a share, narrowing from a loss of $417 million, or 17 cents a share, a year earlier. In comparison, Fox Corp., a smaller rival, ,posted net income in the most recent quarter of $827 million, boosted by political advertising tied to the 2024 election that was its local stations. Warner Bros. Discovery remains heavily invested in entertainment-focused cable networks, which are losing subscribers as they migrate to streaming. The company has no large broadcast assets in its portfolio.

The investor call was peppered with questions about the viability of maintaining the company in its current state, with Swinburne asking Warner CEO David Zaslav and Warner CFO Gunnar Wiedenfels about the value of keeping Warner Bros. Discovery’s current portfolio intact. “What are the benefits of owning all of these companies?” Swinburne asked, while Bank of America Securities analyst Jessica Reif Ehrlich queried the company’s operating team about the possibility of spinning off some assets or acquiring others.

“We see the benefits of running this company on an integrated basis every single day,” said Wiedenfels.

There is new pressure to consider other possibilities. Comcast last week said it would study the prospect of spinning off its cable networks, a maneuver that could include CNBC, MSNBC and Bravo, among others.

Even Zaslav acknowledged that Warner might have to face consolidation down the road. The media industry is reckoning with “generational disruption” in its traditional businesses, he said, even as consumers are being pushed to take subscriptions to too many apps and services. Such a dynamic “is not sustainable,” he said, adding that “this is an industry that really needs to meaningfully consolidate.”

He pointed to hopes for a looser regulatory environment under the incoming Trump administration in 2025. ” It’s too early to tell, but it may offer a pace of change and an opportunity for consolidation that may be quite different, that would provide a real positive and accelerated impact on this industry that’s needed.”