WBD Q3: U.S. Ad Revenue Sinks 20%, Theatrical Soars 74%

 The report below is mostly national news: Local-direct still needs station growth! Philip Jay LeNoble, Ph.D.

WBD Q3: U.S. Ad Revenue Sinks 20%, Theatrical Soars 74%

• by Wayne Friedman , Yesterday

Third-quarter advertising for Warner Bros. Discovery for all its platforms took another double-digit percentage hit -- down 16% to $1.4 billion.

“Underlying U.S. linear advertising trends remain largely consistent with prior quarters as demand for sports continues to be healthy and demand for general entertainment is steady,” according to the company.

While the streaming ad business has seen growth, the company says, linear TV ad business continued to suffer. Advertising was up 14% to $235 million, with global linear TV networks sinking by a massive 20% to $1.19 billion.

WBD’s bigger distribution business declined 4% to $4.7 billion. While there was a slight decline in distribution global revenues ($2.317 billion versus $2.320 billion), domestic linear TV coming from declining pay TV subscribers pulled business down 8% to $2.39 billion.

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HBO Max added 2.3 million subscribers in the period -- to a total 128 million in the third quarter. The company estimates the streamer will reach 150 million subscribers by the end of 2026. U.S. domestic subscribers are now at 58 million -- up slightly from 57.8 million in the second quarter.

The best news for the company came with its theatrical revenue and content sales business.

Theatrical revenue was up 74% due to higher box office revenue -- primarily from “Superman,” “The Conjuring: Last Rites” and “Weapons.” Overall content sales (theatrical and program license fees to networks and platforms) grew 26% to $3.1 billion.

Warner Bros. is the first studio to surpass $4 billion in 2025 global box-office revenue -- coming from just 11 films. The last time the studio exceeded $4 billion was in the pre-pandemic era -- from 20 films in 2019.

Nine Warner Bros. films opened in the number one spot at the global box office. 

WBD’s stock was down 1% in mid-day Thursday trading to $22.56.

The company continues to examine possible merger deals. Prospective buyers include Paramount Skydance, Comcast Corp. and Netflix, according to reports.

 

Commentary

It's Not HBO Or Even TV - Got A Name for It?

• by Wayne Friedman , Staff Writer, November 6, 2025

“It’s not TV. It’s HBO.” 

That was a daring branding phrase that started in 1996, and immediately became a popular topic for media discussion among viewers, in this regard.

If it’s on TV -- but not TV -- then what is it?

For the most part, this iconic TV brand line kept its wild promise. It delivered major story contrasts between what was on linear TV networks -- for example, top-rated NBC in those years --  with edgy, spicy dialogue from “The Sopranos” or “Sex and the City” and later, “Game of Thrones.”

Of course, "TV" definitions are changing again. Older types may refer to current new technology as "streaming,” but a much younger generation may think of TV as a synonym for the bland word "video."

This includes any content out there, no matter where it plays, and growing social media including YouTube, TikTok, Instagram -- you name it.

A Deloitte survey examined this blurring of boundaries in terms of where video plays for young media consumers. The research showed that 60% of Gen Zers and 44% of millennials spend more time watching video on social media than on streaming services. 

Analysts might say Gen Z and millennial viewers hardly ever use the word "streaming." Going back a ways, you’ll never hear older viewers now say, for example "over-the-air TV."

Worse still for brands buying into streamers to reach Gen Z and Millennials, more than half of young media consumers agree that social media is "more relevant" to their lives, believing they feel closer to “creators” than “actors.” Well, we can see that. 

But video traditionalists shouldn’t give up just yet. Short-form video series -- so-called “micro-drama” or “micro-series” -- are now getting significant audiences from young media consumers -- with 45% watching more of this content vs. a year ago. Micro-drama episodes run between one and three minutes long.

This would go hand and hand with all those quick TikTok, Instagram, and other short social-media video, which may only last 21 to 34 seconds (although some may be as long as three minutes).

What about boomers and more mature adults? No worries. They are just a bit behind.

Remember -- they started out calling it TV for a long time up, in the 1950s through the early 1970s. That’s when "cable" arrived.

Just call it TV, and we’ll all be good.

 

forecasts

Pessimistic Consumers Keep Spending, Forecast to Surpass $1 Trillion

• by Sarah Mahoney , Yesterday

The National Retail Federation expects Americans to cross a milestone this season, with holiday sales topping $1 trillion for the first time.

In the new forecast, the trade association projects that November to December sales will rise between 3.7% and 4.2% from last year, reaching $1.01 trillion to $1.02 trillion. Executives underscored the outsized role of shoppers in the broader economy, noting consumer spending now accounts for about 68% of GDP — the highest share in roughly 15 years.

Even so, the outlook comes with caveats. NRF said retailers plan to hire 265,000 to 365,000 seasonal workers, down sharply from 442,000 last year — a sign of a cooler labor market. And with a federal government shutdown limiting fresh economic data, key forecasters have acknowledged they’re driving in a fog.

The NRF says it is relying on private gauges and modeling while official data is paused. Tariffs add another layer of uncertainty, with retailers trying to hold the line on prices while consumers grow more deal driven.

In a press call announcing the results, NRF leaders repeatedly emphasized the disconnect between dour attitudes and sturdy spending. “We are bullish about the holiday shopping season,” said president and CEO Matthew Shay, adding that consumers “plan for it, they prioritize it.” He called this year’s spending strength “somewhat of a surprise” given the backdrop of tariff noise, inflation and sentiment lows.

Purchase sentiments are so low, in fact, that — except for recent inflation-driven downturns — the mood of shoppers hasn’t been this bad since 1980.

Chief economist Mark Mathews described the consumer as “sentimentally weak, but fundamentally sound,” citing real wage gains outpacing inflation for more than two years, still-low unemployment, and balance sheets supported by housing and equities. He flagged stress points — notably rising auto-loan and student-loan delinquencies — but added: “As a whole, delinquency rates and debt service ratios remain manageable, and that allows the consumer to have the disposable income to continue to spend on the things that matter to them.” One persistent pattern, he said, is that shoppers “have shown the willingness to spend on family and loved ones” for gifting events.

Pricing will remain pivotal. Mathews expects a highly promotional season as retailers cater to price-sensitive shoppers, with some costs from tariffs likely offset by savings in other categories. Timing is in flux, too. While early deal events have pulled shopping forward in recent years, NRF’s latest survey shows more consumers planning to buy around Black Friday, reinforcing how deal-led the season has become.

Separate data from Circana drills down on those timing shifts. Its latest survey finds that 44% of consumers plan to start holiday shopping earlier than usual, signaling a return to pre-pandemic habits after last year’s lull. Nearly one in five still intend to make Black Friday their official kickoff, but early promotions are shaping behavior: more shoppers are buying discounted items and fewer are waiting until December. Notes Marshal Cohen, chief retail advisor for Circana, in the report: “Getting an earlier start gives them more control and choice.”

 

Meta Hit with Amended Complaint Over Alleged Ad Overcharges

• by Wendy Davis , Yesterday

Aiming to restore claims against Meta Platforms, the South Carolina gym Iron Tribe Fitness has filed an amended complaint alleging that Facebook overcharged advertisers around $4 billion between 2013 and 2017.

"For over four years, Facebook systematically overcharged advertisers, reaping billions of dollars in illicit profits," Iron Tribe alleged in a revised complaint filed this week with U.S. District Court Judge Charles Breyer in the Northern District of California.

"These overcharges were contrary to promises Facebook set forth in Facebook’s agreements with advertisers," Iron Tribe adds.

The new complaint comes in a dispute dating to April, when Iron Tribe sued Meta for allegedly failing to honor representations that its auction system for ads would protect companies from overbidding.

The allegations center on Facebook's system for charging advertisers that submit winning bids in auctions. The gym specifically alleged that starting in 2013, and continuing until at least 2017, Facebook purported to use a version of a “second price” auction system, but instead inadvertently used a “blended price” system.

In a “second price” auction, the company with the highest bid wins the auction, but isn't charged more than the company with the second highest bid. But in a “blended price” system, the winning bidder is charged a price between its bid and the bid that came in second.

The move to a “blended price” system was due to an error in a 2013 software update, according to the complaint.

Iron Tribe also alleged that Facebook learned of the error in 2017, but did not immediately correct the issue.

A former Facebook executive "quantified the impact of that 2013 coding change at '$1B a year,'" Iron Tribe alleges, adding that the total overcharges "amounted to roughly $4 billion in excess, illicit advertising revenues for Facebook, at the expense of its own customers."

Meta previously argued the complaint should be dismissed, contending that the claims fell outside California's four-year statute of limitations. The company also argued that Iron Tribe didn't actually allege in the complaint that it was overcharged.

Last month, Breyer directed Iron Tribe to amend its complaint and bring it again within 30 days, according to court records. Breyer reportedly dismissed the initial complaint at the time. He did not issue a written decision explaining the ruling.

Iron Tribe alleges in its amended complaint that it "regularly" advertised on Facebook during the time the company allegedly overcharged advertisers.

For instance, Iron Tribe alleged, it was billed around $162 for ads placed between July 30 and August 30, 2014.

"Rather than being charged the prices that would have resulted had Facebook’s advertising platform operated as intended as a second-price auction, Iron Tribe was overcharged the prices that resulted from Facebook’s operation of a blended-price auction," the complaint alleges.

The complaint also asserts that Iron Tribe's attorney -- referred to in the papers as "undersigned counsel" -- first learned of the alleged overcharges two years ago.

"In November 2023, undersigned counsel spoke with an individual with first-hand knowledge of the coding change and its impact on Facebook advertisers, learning for the first time about the misconduct complained of," the complaint states.

Meta has not responded to MediaPost's request for comment.

 

Commentary

Pinky Swear

• by Joe Mandese , 5 hours ago

Evil super villain comparisons aside, something interesting happened when I asked my favorite chatbots to generate an image of Elon Musk holding his pinky up to his mouth Dr. Evil style. They wouldn't or couldn't do it. This was both frustrating and heartening, because as much as we think AI is approaching super powers, it still is rudimentary in many ways and humans can still do jobs AIs cannot. At least for now.

If you couldn't tell by now, generating images is one of my personal favorite uses of AI chatbots, because I am a frustrated illustrator (just don't have those mechanical skills) and there are many stories I'd like to represent graphically.

But when I asked three bots -- ChatGPT, Gemini and Musk's own Grok -- to generate an image of Musk putting his pinky to his mouth, they all failed.

At first, I thought it was because bots all had policy limitations prohibiting them from rendering the pinky-to-mouth image, so I asked and they said, no it was a technical limitation and that for all their recent advances, they still cannot render certain hyperrealistic human anatomical references, including pinkies-to-mouth.

The best they could do was generate an image showing an index finger-to-mouth (see Gemini's below).

So I then tried a prompt asking if they could generate an image showing Musk flipping the bird with his middle finger, and all but one responded they could not due to policy -- not technical -- limitations. Here's how the one that could -- Musk's Grok -- rendered that.

Lastly, I asked the bots to estimate how long it would take before they had the technical ability to render a hyperrealistic human pinky-to-mouth image, and the answer was not a trillion years. Just a couple.

"If I had to make an informed guess, based on the rate of progress in this field, I would predict that AI image models will be capable of consistently and accurately rendering a specific pose like Elon Musk holding his pinky finger to his mouth within the next 1 to 2 years (by late 2026 or 2027)," Gemini replied, noting:

 Factors Driving This Prediction

The technical challenge you highlighted is actively being worked on by every major AI lab. Here is why the solution is likely close:

1. Specialized Control Mechanisms (The Fix for Hands):
   • The primary way AI models are overcoming hand and pose errors is through specialized techniques like ControlNet and similar architectural improvements that allow for greater spatial and structural control.
   • These tools essentially provide the model with a "skeleton" or a pose map before generating the image, which forces the output to adhere to precise anatomical and positional rules.
   • Currently, these methods are often used in separate workflows, but they are rapidly being integrated directly into the core image generation models (like DALL-E and Imagen), which will allow for fine-grained control via a simple text prompt.
2. Dataset Refinement:
   • AI companies are actively curating and annotating datasets with a stronger focus on the human body, especially hands, fingers, and complex articulation. This ensures the models learn the structure of the hand as a single, consistent unit, rather than just as a collection of features.
3. Competition and Iteration:
   • The problem of "AI hands" is a running joke, and it represents a high-priority, low-hanging fruit for developers. The company that solves it first and most elegantly will gain a major competitive advantage. This rapid, competitive iteration cycle means significant progress is made every few months, not every few years.

Once the underlying models better understand the 3D structure and mechanics of the human hand, applying that precision to a well-known public figure (which is already a strength of the models) will become trivial. Your request is an excellent benchmark that will soon be a relic of a bygone AI era!