Warner Bros. Discovery’s Profits Crash 91% While Zaslav Tells Staff to Keep Grinding Through Merger Limbo

Warner Bros. Discovery reported second-quarter 2026 earnings showing profit plunging 91% to $149 million, or 6 cents per share, as overall revenue fell 11% to $8.7 billion. Streaming was the bright spot, with profit surging 75% to $512 million on HBO Max international growth, while linear network ad revenue dropped 27% largely due to losing NBA broadcasts, studio revenue plummeted 39% to $2.33 billion, and theatrical revenue tumbled 46% [1]. On the earnings call, CEO David Zaslav told Wall Street analysts that staffers are “working extremely hard” and staying focused despite uncertainty over the company’s pending $110 billion merger with Paramount Skydance, saying he was “inspired” by the work ethic he encountered during recent visits to WBD’s European offices and that he has “every expectation the transaction will close” [2].

The merger has cleared regulatory review from the U.S. Department of Justice, the UK, and the European Commission, but remains in legal limbo: it faces a lawsuit from a coalition of state attorneys general and a separate suit from the Writers Guild of America, which argues the combined company would become the industry’s largest buyer of scripts and largest employer of writers, giving it outsized power to suppress wages and cut job opportunities. A 12-day antitrust trial is scheduled for March 2027 [3].

Why It Sucks:

WBD Employees

• Told to feel inspired while profit collapses 91%. Staff are being praised for their “work ethic” and “drive to continue to put points on the board” in the same earnings cycle where company-wide profit cratered to $149 million, leaving workers cheerleading a company whose core financial picture is deteriorating around them [1, 2].
• Studio and theatrical jobs sit on shrinking ground. Studio revenue fell 39% and theatrical revenue tumbled 46% year over year, putting direct pressure on exactly the divisions where headcount is most exposed if the merger eventually forces consolidation [1].
• No end date to the uncertainty. With a 12-day antitrust trial not scheduled until March 2027, employees face at least another eight months of not knowing whether their jobs, teams, or entire divisions survive the merger, all while being told the answer is simply to work harder [1, 3].

WBD Shareholders

• Profit craters just as the deal needs to look clean. A 91% profit plunge and an 11% revenue decline arrive at the worst possible moment for investors trying to demonstrate the company’s standalone value heading into a contested merger trial [1].
• Ad revenue loss hits the reliable cash cow. Linear ad revenue fell 27% largely because WBD lost NBA broadcasts, stripping out a dependable revenue stream shareholders had counted on to steady the balance sheet during the merger fight [1].
• The trial delay stretches out their exposure. Shareholders overwhelmingly approved the Paramount deal for certainty and value, but a March 2027 trial date means they’re stuck riding out further quarters of theatrical and studio declines before any resolution [1, 3].

Writers Guild of America

• A “successful” merger is their nightmare scenario. The WGA is suing specifically because it believes a completed Paramount-WBD deal would create the industry’s largest buyer of film and TV scripts and largest employer of writers, handing one company outsized leverage over pay and hiring [3].
• Fewer buyers means worse deals for writers industry-wide. The Guild’s complaint argues the combined entity could suppress wages and reduce output regardless of how the merged company performs financially, since the harm comes from eliminating a competing buyer, not from any single quarter’s earnings [3].
• Zaslav’s confidence undercuts their case. While the WGA is fighting to use the legal uncertainty to kill the deal, Zaslav is publicly framing that same uncertainty as a testament to employee resilience and stating he expects the transaction to close anyway, signaling the company isn’t taking the Guild’s objections as a serious threat [2, 3].

Sources & Citations:

[1] TheWrap: Warner Bros. Discovery Q2 Profit Plunges 91% on Linear TV Challenges, Lower Theatrical Revenue
[2] Deadline: David Zaslav Says WBD Staffers Working “Extremely Hard” Despite Uncertainty
[3] Deadline: WGA Sues To Block Paramount-Warner Bros. Discovery Merger