July 23, 2020
Following the May 27 launch of HBO Max, observers have been on high alert for any subscriber data from the upstart subscription video-on-demand platform. They’ll have to keep waiting for now.
WarnerMedia July 23 disclosed it had 36.3 million combined U.S. subscribers to HBO Max and HBO, up from 34.6 million on Dec. 31, 2019. It isn’t clear whether the 1.7 million sub increase is related to Max exclusively or a combination of HBO, HBO Now and HBO Max. In the quarter, WarnerMedia announced it would shutter HBO Go, which enabled HBO pay-TV subs on-demand access to programming.
WarnerMedia is the company formed by AT&T’s acquisition of Time Warner, including Warner Bros., HBO and Turner.
Regardless, the coronavirus pandemic continues to negatively impact entertainment companies not named Netflix. WarnerMedia reported second-quarter operating income of $1.9 billion, which was down 18.4% from operating income of $2.32 billion during the previous-year period. Revenue plummeted 23% to $6.8 billion from $8.83 billion last year.
Warner revenue for the quarter dipped 3.9% to $3.3 billion from revenue of $3.43 billion in the previous-year period. The decline was driven by the absence of theatrical releases, lower video game and other revenue, partially offset by higher television revenue, including internal sales to HBO Max — WarnerMedia’s new subscription streaming video-on-demand platform.
Studio operating expenses totaled $2.6 billion, down 11.1% from $2.92 billion last year. The decline was primarily due to the production hiatus and lower marketing expenses partially offset by higher film and production costs associated with HBO Max sales.
HBO revenue dropped 5.2% to $1.6 billion from $1.68 billion, driven by lower subscription revenue due to domestic linear subscriber declines, partially offset by growth in digital and international, including HBO Latin America following WarnerMedia’s May acquisition of the remaining interest in this entity.
Content and other revenue also decreased as a result of lower content licensing. HBO operating expenses totaled $1.5 billion, up 32.5% versus the second quarter of 2019, driven by increased programming expenses related HBO Max.
Turner revenue for the second quarter dropped 12.4% to $3 billion from $3.42 billion, driven by lower advertising revenue primarily from the postponement of the NBA season. Subscription revenue declines were also down due to lower regional sports network revenues and unfavorable foreign exchange rates.
Operating expenses totaled $1.4 billion, down 37.2% from $2.23 billion last year, driven by the timing of sports costs associated primarily with the delayed NBA season.