Warner Bros. Discovery reported its Q2 earnings Wednesday with a $9.1 billion non-cash impairment charge, or write-down, on its TV linear networks division. The company also saw an additional $2.1 billion in merger costs, for a combined $11.2 billion hit to its balance sheet.
Food Network, HGTV, Discovery, CNN, TNT, TBS, Cartoon Network and Adult Swim are among the company’s linear TV networks.
The goodwill impairment was in response to the difference in market capitalization and book value, uncertainty in the U.S. linear advertising market, and the affiliate and sports rights renewals related to the NBA.
On the streaming front, the company did see some minor gains with 103.3 million global subscribers for HBO, Max and Discovery+, including an additional 3.6 million subscribers during the quarter. Warner Bros. Discovery credited a portion of the growth to the global relaunch of Max.
Specifically, domestic streaming subscribers saw a slight drop from Q1, from 52.7 million to 52.4 million, while international subscribers increased from 46.9 million to 50.8 million. Streaming advertising revenue rose to $240 million, up 99% from $121 million during this time last year.
Despite the struggles of its linear TV networks, CEO David Zaslav instead pointed to the minor gains on the streaming TV and ad sales side.
“Ad sales had its biggest streaming quarter ever in Q2, in part driven by greater engagement, increased ad-lite subscribers and early international traction,” Zaslav said during the earnings call. “This contributed to a notable sequential reduction in total company advertising declines to 3% from 7% in Q1.
“While trends across our advertising business continue to reflect the bifurcation in the broader ad market, we remain encouraged by the healthy momentum and growing scale we see in streaming.”
This is the first earnings report since WBD lost its key NBA media rights, which led to WBD filing a lawsuit against the NBA over what it said was the league’s “unjustified rejection” of the company’s matching rights proposal.
In response to a question about the NBA media rights during the earnings call, the company did not provide much additional information, except to say they are currently in litigation and have handed it off to the lawyers, though they expressed “confidence” in their position.