Warner Bros. Discovery recently released its Form 10-Q for the quarter ended June 30, 2026. The company says it operates in three reportable segments: Streaming, Studios, and Global Linear Networks. Streaming includes HBO Max, discovery+, and premium pay-TV services; Studios handles film and television production, distribution, consumer products, themed experiences, and gaming; and Global Linear Networks covers domestic and international television networks, including news, lifestyle, and sports.
In Item 2, management says the discussion should be read alongside the consolidated financial statements and notes, and it uses the section to update investors on business conditions, results, cash flows, and financial condition. WBD also says its segment structure was renamed in the first quarter of 2025, with DTC becoming Streaming and Networks becoming Global Linear Networks.
The company’s business description in the filing emphasizes its content portfolio across television, film, streaming, gaming, publishing, themed experiences, and consumer products, with brands including Discovery Channel, HBO Max, CNN, DC Studios, TNT Sports, HBO, Food Network, TLC, TBS, Warner Bros. Motion Picture Group, Warner Bros. Television Group, Warner Bros. Games, Adult Swim, and Turner Classic Movies. WBD says it was incorporated in 2008 and is based in New York.
Management also flags industry pressure, citing continued declines in linear distribution and linear subscribers, softness in the U.S. linear advertising market, and rising competition from digital ad inventory. It says tariffs could raise production costs or reduce advertiser spending.
For the quarter, WBD reported revenue of $8.717 billion, down 11% from $9.812 billion a year earlier, or down 12% on an ex-FX basis. For the first six months, revenue fell 6% to $17.610 billion from $18.791 billion, or 7% ex-FX.
By line item, distribution revenue rose 1% in the quarter to $4.950 billion and was flat at $9.856 billion for six months. Advertising revenue fell 22% to $1.724 billion in the quarter and 15% to $3.571 billion for six months. Content revenue dropped 26% to $1.828 billion in the quarter and 14% to $3.715 billion for six months. Other revenue declined 10% to $215 million in the quarter and 4% to $468 million for six months.
Costs of revenues, excluding depreciation and amortization, fell 23% in the quarter to $4.621 billion and 17% for six months to $9.264 billion. Selling, general and administrative expense increased 4% in the quarter to $2.564 billion and 8% for six months to $5.039 billion. Depreciation and amortization fell 20% in both periods, to $1.159 billion in the quarter and $2.385 billion for six months.
WBD recorded a $2.800 billion Netflix termination fee in the first six months of 2026. That charge helped push total costs and expenses to $8.480 billion in the quarter and $19.842 billion for six months, compared with $9.997 billion and $19.013 billion a year earlier.
Operating income was $237 million in the quarter, versus an operating loss of $185 million a year earlier. For the first six months, operating loss widened to $2.232 billion from $222 million.
Interest expense, net was $511 million in the quarter and $1.092 billion for six months. The company had a $75 million loss on extinguishment of debt in the quarter, compared with a $2.958 billion gain a year earlier. WBD reported a $433 million income tax benefit in the quarter and a $647 million tax benefit for six months.
Net income was $162 million in the quarter, down from $1.588 billion a year earlier, and net loss was $2.744 billion for the first six months, versus net income of $1.139 billion a year earlier. Net income available to Warner Bros. Discovery, Inc. was $149 million in the quarter and a loss of $2.767 billion for six months.
The filing also details the PSKY merger agreement. Under the terms, each share of WBD common stock would be converted into $31.00 in cash, plus ticking consideration if closing occurs after September 30, 2026. Larry J. Ellison and an affiliated trust guaranteed certain PSKY payments, including $45.72 billion of the aggregate merger consideration.
WBD says stockholders approved the PSKY merger agreement on April 23, 2026. It also says lawsuits filed in July 2026 seek to block the deal, and defendants agreed not to complete the merger before the earlier of five days after a merits determination or June 1, 2027. The agreement includes a March 4, 2027 outside date, extendable to June 4, 2027 in certain cases, and termination fees of $3.0 billion payable by WBD or $7.0 billion payable by PSKY under specified circumstances. The market has reacted to these announcements by moving the company's shares 1.62% to a price of $26.39. Check out the company's full 10-Q submission here.
