Warner Bros. Discovery (WBD.US) reported a 11% year-over-year decline in Q2 revenue, as streaming growth could not offset the downturn in traditional business. The UK has approved the Paramount acquisition case.

Warner Bros. Discovery (WBD.US) saw a significant decline in revenue for the second quarter, primarily due to the loss of NBA broadcasting rights and poor box office performance. The group, which owns HBO, TNT, Cartoon Network, and CNN, disclosed on Thursday that its second-quarter revenue dropped 11% year-on-year to $8.7 billion, falling short of market expectations of $9.2 billion. Adjusted EBITDA decreased by 4% year-on-year to $1.88 billion, in line with market expectations; earnings per share were $0.06, better than market forecasts. Streaming growth failed to offset the downward trend in traditional business. Warner Bros. Discovery's largest segmenttelevision networkssaw revenue fall by 17% year-on-year to $3.99 billion. Advertising revenue plummeted by 27% due to the NBA's suspension of broadcasts and overall viewing declines. This segment's EBITDA dropped by 4% year-on-year to $1.45 billion. Revenue from film and TV production plunged by 39% year-on-year to $2.3 billion, partly due to decreased sales of TV shows and movie tickets. The segment's EBITDA collapsed by 89% to $96 million. Films like "Mortal Kombat 2" and "Supergirl" have not been able to replicate the box office success of last year's hit "The Minecraft Movie." Warners key films for this year are scheduled for release in the second half, with anticipated blockbusters like "Dune: Part Two" expected to boost box office performance. The streaming business remains a highlight, with revenue increasing by 10% year-on-year to $3.08 billion; its EBITDA rose by 75% year-on-year to $512 million. HBO Max's international expansion and original content like "The Pittsburgh Frontline," "Euphoria," and "House of the Dragon" have driven subscription growth. The streaming business is also central to the $11 billion merger deal between Warner Bros. and Paramount Global (PSKY.US). The integration of HBO Max and Paramount+ is expected to enhance competition against streaming giants Netflix and Walt Disney Company. The $11 billion merger deal remains pending. Following conditional approval from the EU last month, the deal received important regulatory progress again: the UK Competition and Markets Authority (CMA) approved the transaction on Thursday, deciding it would not harm competition in the UK market. The CMA stated, Current evidence indicates that post-transaction, Paramount will continue to face ample competition in the film production and distribution, childrens channel supply, and streaming service sectors. However, the deal faces legal hurdles in the U.S. A federal judge in California has scheduled a 12-day hearing starting March 2, 2027, to determine if the transaction violates antitrust laws. Twelve states, led by California Attorney General Rob Bonta, have filed a lawsuit claiming that the merger between Paramount and Warner Bros. would harm competition in the film and television production and distribution sectors. Paramount has agreed to pause the transaction until June 2027. If the deal is not completed by September 30, Paramount will pay $650 million in quarterly fines to Warner Bros. shareholders until the merger is finalized. If the acquisition falls through, Paramount will owe Warner Bros. a termination fee of $7 billion. This fee will be borne by Paramount CEO David Ellisons family, whose father is billionaire Larry Ellison. As of this writing, Warner Bros. Discovery rose 0.7% pre-market, while Paramount increased by 0.23%.