Warner Bros. Discovery Weighs Free Ad-Supported Streaming Plan

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Warner Bros. Discovery Inc.

WBD 4.61%

is exploring launching a free, ad-supported streaming service, its chief executive said, the latest effort by a streaming giant to reach a broader audience as the competition for users intensifies.

The newly combined company, the result of Discovery’s merger with AT&T Inc.’s WarnerMedia earlier this year, will first focus on combining its two main streaming services, HBO Max and Discovery+, executives said during a call with investors following the company’s quarterly results. The combined subscription platform will initially be rolled out in the U.S. next summer, said JB Perrette, the company’s CEO of global streaming.

Once that service has been launched, “we see potential and are exploring a fast or free ad supported offering,” Chief Executive David Zaslav said.

As the number of streaming options has exploded in the past three years, many companies are looking to offer lower-cost versions to their services in an effort to boost their user base. The industry’s two biggest players, Netflix Inc. and

Walt Disney Co.

’s Disney+, are both working on launching lower-priced, ad-supported versions of their platforms.

In its first quarterly earnings report as a combined entity, Warner Bros. Discovery on Thursday said it had 92.1 million subscribers across its streaming platforms, up about 1.7 million from the first quarter.

The company on Thursday swung to a $3.42 billion loss in the second quarter, which it said was partly due to charges related to the merger.

Warner Bros. Discovery’s shares were down 12% in after-hours trading.

The company has moved aggressively to rein in spending since the merger was completed, pulling the plug on streaming service CNN+ just weeks after its launch and canceling movies and shows that had been approved by previous leadership. That included deciding not to release the superhero movie “Batgirl” despite the fact that it had already been filmed.

“We’re not going to put a movie out unless we believe in it,” Mr. Zaslav said during the call.

Mr. Zaslav said the company’s new approach was to put more emphasis on content quality. “It’s not about how much,” he said. “It’s about how good.”

(More to come.)

Write to Lillian Rizzo at [email protected]

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