In the June quarter, Max/HBO posted $293 million of adjusted EBITDA, a swing from a $107 million loss a year ago.
Global subscribers went up to 125.7 million, up 3.4 million sequentially thanks to growth in Australian market and Foxtel.
The average revenue per user can definitely rise, as evidence by $11.16 in the U.S./Canada and $7.14 globally. Management is still guiding to at least $1.3 billion of streaming EBITDA for 2025.
Next, The Studio Flywheel
Studios reported $863 million of adjusted EBITDA in the quarter not least due to A Minecraft Movie.
Interestingly, a healthy film and TV pipeline feeds every downstream window and then loops back to Max with must-watch windows that support price.
In other words, the content engine is financing the ecosystem again.
Balance Sheet Is Spooky
Warner Bros retired $17.7 billion of notes at a discount in Q2, booking roughly a $3.0 billion gain, and bridged it with a $17.0 billion facility priced off SOFR that will cost about $80 million more interest per quarter until it’s termed out.
There’s also a $725 million cash tax bill tied to those tender discounts landing in the second half, which are optically ugly line items but not structural in nature.
At quarter-end, WBD had $4.9 billion of cash sitting in reserves, $35.6 billion of gross debt and an average cost of debt of 5.9%, about 4.5% if you exclude the bridge.
Importantly, the bridge has no financial maintenance covenant, and the explicit plan is to refinance it as the separation progresses.
Stakes In The Ground To Split
A split by 2026 into a Warner Bros. vehicle and a Discovery Global vehicle is on the cards. They’ve begun naming leadership for the two entities, including a CFO for the post-split studios/streaming business, and they’ve executed the consent/tender program to get the debt stack into shape for two independent balance sheets.
The market rarely pays you in advance for this kind of plumbing, but the groundwork happening now is what unlocks higher multiples later.
Sports rights are where the anxiety lives, and it’s warranted. TNT loses U.S. national NBA rights starting with the 2025–26 season. That dings ratings, leverage with distributors, and a marquee brand.
But the portfolio post-NBA includes TNT Sports that still holds MLB through 2028, NHL through 2028, and March Madness through 2032, has secured a decade of Roland-Garros starting with the 2025 tournament. Plus, it begins carrying College Football Playoff inventory in 2026 under a sublicense with ESPN that expands to include one semifinal per year from 2026–28. Networks are in runoff, but they aren’t zero, and those assets still matter in both ad pricing and affiliate negotiations.
Deals Galore
Management finished renewals with all six major U.S. pay-TV providers and is guiding to low-single-digit affiliate-rate increases.
Advertising has been “steady”, firmer in sports and premium streaming inventory, softer on legacy entertainment, while EMEA remains healthier than the U.S. That setup lowers left-tail risk as the split and refinancing advance.
Brand Still Counts In This Game
Max/HBO is having a brand moment. The platform led the 2025 Emmy nominations with a record 142 nods across 20 originals. That cultural relevance is the gift that lets you raise price without getting cute, and it makes the September launch of paid password-sharing feel more like monetization than a tax.
The new “extra member” add-on arrives at $7.99 per month; peers have already proven that crackdowns lift ARPU with manageable churn.
Now stitch the pieces together. As of today, the equity is roughly a $29 billion market cap on about $30.7 billion of net debt, call it a $59–61 billion enterprise on $9.2 billion of trailing adjusted EBITDA. That’s ~6½× EV/EBITDA for a portfolio where: (1) streaming is profitable and scaling, (2) studios are back to throwing off cash, (3) networks are managed for cash with enough rights to hold the line, and (4) the balance sheet is being actively re-cut ahead of a pragmatic split.
If the company simply hits its own 2025 targets, streaming ≥$1.3 billion, studios ≥$2.4 billion, while demonstrating credible progress on terming out the bridge, a 7½–8½× multiple on today’s EBITDA supports something like $16–$18 a share over the next 6–12 months.
If the password-sharing rollout lifts ARPU faster, the slate over-earns into year-end, and rates stop working against you, $20–$21 isn’t a stretch.
On the downside, if linear ad trends worsen materially or the refinancing/split timeline slips, you’re probably looking at around today’s 6½×, roughly $11–$12. That’s the asymmetry with a muted left tail and a visible right tail that doesn’t require perfection.
Real Execution Risks
One weak slate can dent studio EBITDA and Max momentum. The NBA exit will hurt, and if the make-goods don’t hold audience, the networks piece can surprise to the downside. And until the bridge becomes boring term paper, you are paying a carry cost. But this is exactly the sort of transition the market misprices, a cash-generative core with visible, near-term catalysts that don’t rely on macro miracles.
If I were running it Duquesne-style, I’d keep a core long sized to a re-rating to 7½–8½× and look to add on any second-half weakness tied to the monthly bridge interest or that $725 million cash-tax outflow, so long as the refinancing updates and separation milestones remain on track.
A distribution story crack or the refi delay in a material way means I’d cut rather than rationalize. The beauty here is you don’t need to be first, you just need to be early enough that the re-rating does the work.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.