Raphael Stevens

Warner Bros. Discovery reported second-quarter results Thursday that fell below Wall Street expectations across the board.
Global direct-to-consumer streaming subscribers at the end of the period were 95.8 million, below Wall Street expectations and a decrease of nearly 2 million from the end of the first quarter.
Still, the company announced a tender offer aimed to pay down up to $2.7 billion in debt.

Kevin Mazur | Getty Images Entertainment | Getty Images

Warner Bros. Discovery reported second-quarter results Thursday that fell below Wall Street expectations across the board and revealed subscriber totals that were down from the previous quarter.
Global direct-to-consumer streaming subscribers at the end of the period were 95.8 million, below the 96.7 million subscribers analysts were expecting according to StreetAccount, and a decrease of nearly 2 million from the end of the first quarter.

The company launched its combined Max streaming service during the second quarter, merging HBO content with unscripted hits from the Discovery networks into one platform.
Customers dropping their Discovery+ subscriptions for Max was likely to blame for the drop in subscribers. Data provider Antenna estimated that Discovery+ cancellations were up about 68% compared to June 2022 due to the switchover to Max.
Still, the company said it had repaid $1.6 billion in debt during the quarter and announced a tender offer aimed to pay down up to $2.7 billion more.
It follows a tender offer from June, which also drove the stock. Paying down its heavy debt load stemming from the 2022 merger of Warner Bros. and Discovery has been a focus as the company looks to return to investment grade status by the end of the year.
The company ended the second quarter with $47.8 billion in debt and $3.1 billion in cash on hand.

Here’s what the company reported for the quarter ended June 30, versus analysts’ estimates, according to Refinitiv:

Loss per share: 51 cents vs. 38 cents expected
Revenue: $10.36 billion vs. $10.44 billion expected

Warner Bros. Discovery reported a net loss of $1.24 billion, or 51 cents per share, a sharp improvement from a net loss of $3.42 billion, or $1.50 per share, a year earlier.
Revenue of $10.36 billion was 5% higher year over year on an actual basis, but 4% lower when taking into account the impact of foreign currency and the merger, which closed in early last year.
Similar to its peers, Warner Bros. Discovery has been working to make its streaming business profitable. 
The company’s direct-to-consumer streaming segment turned a profit for the first time during the first quarter of this year, but posted a loss of $3 million for the second quarter. Company executives had warned of that reversal, citing costs associated with the Max launch.
Executives had been planning to combine the two streamers for more than a year as part of the rationale for the merger between Warner Bros. and Discovery. The pricing for subscribers has so far remained the same – $9.99 a month with commercials and $15.99 a month without ads. 
Warner Bros. Discovery’s studios dragged down earnings, with total revenue for the segment down 8% to $2.58 billion compared to last year, when the company had a stronger film slate that included “The Batman.”
This past quarter “The Flash” was released in theaters, a flop that barely topped $100 million at domestic box office.
Meanwhile the networks segment was essentially flat at $5.76 billion, as advertising revenue dropped for the segment due to the falling number of traditional cable TV subscribers and the soft ad market.
The weak ad market, due to the uncertain macroeconomic environment, has been weighing on Warner Bros. Discovery and its media peers in recent quarters. The rate of cord cutting has also accelerated.
Company executives have previously said they are sticking with the goal of lowering its debt-to-EBITDA leverage to below four times. Any meaningful cash generation will likely go toward repaying its debt, CNBC previously reported. 
Cost cutting initiatives including layoffs and content-spending reductions, as well as licensing out more content, has driven adjusted EBITDA — which was up almost 30% to $2.15 billion during the quarter — and cash generation. More

Shares of Moderna rose Thursday after the biotech company hiked its full-year outlook for its Covid vaccine, its only marketable product, despite reporting a quarterly loss and sharp drop in revenue. 
The Massachusetts-based company expects $6 billion to $8 billion in sales for its Covid shot this year, driven by potential U.S. demand for 50 million to 100 million doses in the fall.
Moderna and its rivals Pfizer and Novavax have all seen a steep drop in Covid-related sales as the world moves on from the pandemic.  

Artur Widak | Nurphoto | Getty Images

Shares of Moderna rose Thursday after the biotech company hiked its full-year outlook for its Covid vaccine, its only marketable product, despite reporting a quarterly loss and sharp drop in revenue. 
Here are Moderna’s results:

Loss per share: $3.62 (That may not be comparable to the $4.04 expected by analysts surveyed by Refinitiv)
Revenue: $344 million (That may not be comparable to the $319.6 million expected by analysts surveyed by Refinitiv)

The biotech company generated second-quarter sales of $344 million, largely due to a 94% drop in sales of its Covid shot. Total revenue plunged from the $4.75 billion it recorded in the same period a year ago, when Covid cases still trended higher in the U.S. 
Moderna posted a net loss of $1.38 billion, or $3.62 per share, for the quarter. That compares with $2.20 billion in net income, or $5.24 per share, reported during the same quarter last year.
But Moderna hopes to end the sales slump on strong demand for its updated Covid vaccine targeting the omicron subvariant XBB.1.5. The company is slated to roll the shot out this fall in the U.S. commercial market, but is still waiting for the Food and Drug Administration to approve the jab.
Moderna expects $6 billion to $8 billion in sales for its Covid shot this year, up from its previous forecast of $5 billion. 
The “biggest factor” that will determine whether sales are within that range is vaccination rates in the U.S. from September to December, Moderna’s chief commercial officer, Arpa Garay, said during an earnings call.

She noted that the company expects U.S. demand of 50 million to 100 million doses this fall, but acknowledged that it’s “difficult to accurately predict market volumes and predict how many Americans will come in this fall for their shots.”
The new sales forecast includes around $4 billion in previously announced Covid vaccine purchase agreements and $2 billion to $4 billion in “signed and anticipated” contracts in the U.S. and other markets like Japan and the European Union. 
The company is in talks with other purchasers in the U.S., EU and other parts of the world for more potential orders. However, Moderna said $1 billion in previously anticipated 2023 sales from signed government contracts was pushed to 2024.
Moderna shares rose 1% in premarket trading. The Massachusetts-based company’s shares have dropped more than 38% this year, putting its market value at around $42 billion. 
Costs of sales for the quarter came in at $731 million. That included a $464 million write-off for vaccines that have exceeded their shelf life and a $135 million charge from unused manufacturing capacity, among other expenses.
The charges were primarily driven by a shift in product demand to the monovalent XBB.1.5 shot, which rendered the remaining inventory of Moderna’s previous bivalent vaccine obsolete. Bivalent means the shot targeted two strains of the virus, while a monovalent jab only targets one. 
Moderna, Pfizer and Novavax have all seen sales of their Covid-related products plummet as much of the world moves on from the pandemic and depends less on protective vaccines and treatments. 
But people are still dying from Covid every day and the virus isn’t fully going away anytime soon, so the drugmakers are investing in new products to fight it. 
This fall will be an important milestone for Moderna and its rivals.
The U.S. government will shift Covid products to the commercial market, which means drugmakers will start selling vaccines and treatments directly to health care providers rather than to the government.
Pfizer on Tuesday warned that Covid shot sales in the commercial market are uncertain, adding that vaccination rates will help the company better predict sales for 2023 and beyond.

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Pfizer, Moderna and Novavax haven’t disclosed when they expect their new shots to be available to the public.
But new CDC Director Mandy Cohen told NPR on Monday that the new vaccines could be available by the “early October time frame.”
Moderna will hold an earnings call with investors at 8 a.m. ET, which will likely provide more updates on its upcoming Covid vaccine rollout and drug pipeline.
The company has said it hopes to offer a new set of lifesaving vaccines targeting cancer, heart disease and other conditions by 2030.
That lineup includes Moderna’s experimental vaccine that targets respiratory syncytial virus. The company expects to file for full approval of the shot for adults ages 60 and older this quarter. 
The pipeline also includes Moderna’s personalized cancer vaccine, a highly anticipated mRNA shot being developed with Merck to target different tumor types, along with a flu vaccine.  More

Travelers are increasingly opting for destinations abroad at the expense of dometic trips.
That’s driving up international airfares and room rates, while domestic growth lags.
The shift is good news for passengers who want to stay closer to home — but bad news for airlines that have U.S.-heavy schedules.

Women pose for a photo while holding an ice cream at Trevi fountain during hot weather as a heat wave hits Europe in Rome, Italy, July 19, 2022. 
Guglielmo Mangiapane | Reuters

The competition for travel dollars is heating up, and the U.S. is losing out.
Airlines and hotel chains in recent weeks have reported a surge in bookings for international trips — along with rising prices.

That’s a boon to companies with global offerings, but a new challenge for airlines, theme parks and hotels that are more focused within the U.S. as travelers increasingly opt for locations abroad at the expense of domestic destinations.
International airfare is averaging $962, up 10% from last year and 26% from 2019, according to fare-tracking company Hopper. Domestic airfare, meanwhile, is falling. Roundtrips within the U.S. are down 11% from last year and 12% from 2019 at an average price of $249.
The shift is being felt at hotels too: Room rates for Europe hotels averaged $148.88 in the first half of the year, up nearly 14% from last year, while U.S. hotel rates rose just 6% from the same period a year earlier to $154.45, according to data from CoStar, the parent company of hotel-industry analysis firm STR.
Nightly rates at luxury hotels in Paris, for example, rose more than 22% in the first half of the year from a year earlier, while luxury hotel rates in Orlando, Florida, rose just 0.2%, CoStar data show.
Marriott International on Tuesday said second-quarter revenue per available room rose 6% year over year in the U.S. and Canada. The growth in international markets was more than 39%.

Nightly rates for Marriott luxury properties, like JW Marriott, The Ritz-Carlton and Edition in the U.S. and Canada ticked 1% down year over year.

Arrows pointing outwards

Marriott finance chief Kathleen Oberg said the trend started more than a year ago, and noted that customers now have more options for places to go.
“That’s clear that when you look at the travel patterns this year that there is a big exodus of Americans going over to Europe and other places in the world,” she said on the company’s second-quarter earnings call on Tuesday.
Jesse Inman is one of those travelers opting for trips abroad. The 29-year-old, who left a software sales job earlier this year to build a farm with his father in North Carolina, is in the middle of a weekslong trip to Israel, the U.K., Austria and France.

Inman said he spent $1,839 on his two flights between the U.S. and Europe. He said he would have expected that kind of trip to cost a third of that total based on what he used to pay before the pandemic.
“The fact that I’m spending a month in Europe is going to stop me from taking some domestic trips in the near future,” Inman said. Some trips he had been considering — but could forgo — include visiting friends in Atlanta, the Denver area, and Austin and San Antonio in Texas. He also said he might cut back on skiing this winter.
Investors are starting to hear from amusement park operators on the outlook for their businesses. Cedar Fair on Thursday reported a decline in attendance for the second quarter but an increase in profit. Six Flags Entertainment reports next week.
Last week, Comcast said theme park revenue rose 22% from a year ago to more than $2.2 billion in the most recent quarter, though it registered a slowdown at its Universal parks in Orlando. The company blamed that on tougher comparisons.
“In Orlando, it really compares very well to pre-pandemic. We’re obviously down on attendance, which was kind of unprecedented […] coming off of Covid,” Comcast President Michael Cavanagh said on an earnings call last week. “So not surprised by that softening. That said, we’re at levels of attendance and per caps being better so that overall, we feel good about what we’re seeing in Orlando.”

Home turf disadvantage

The rise in international travel is good news for passengers who are looking for deals closer to home — but bad news for airlines that have U.S.-heavy schedules.
JetBlue Airways on Tuesday cut its guidance for the current quarter and 2023, citing a surge in international long-haul travel that’s hurting the carrier, whose network is largely focused on the U.S. market, the Caribbean and parts of Latin America (though it has offers service to London, Paris and Amsterdam).
“We’ve seen a greater-than-expected geographic shift in pent-up Covid demand as the strength in demand for long international travel this summer has pressured demand for shorter-haul travel,” JetBlue CEO Robin Hayes said on the company’s earnings call earlier this week.
Budget airline Frontier said the return of international long-haul travel would take a 3-point bite out of its margins, though CEO Barry Biffle said the trend could soon moderate. The carrier’s second-quarter revenue from fares per passenger fell 26% to $47.59 year over year.
Southwest Airlines also disappointed investors with its outlook last week. And Alaska Airlines, which is also focused on the U.S. market, noted a shift toward international destinations from domestic this year.
“We believe pent-up international demand has had the effect of a larger pool from would be domestic travelers than has historically been the case,” Alaska’s chief commercial officer Andrew Harrison, said on an earnings call last week.
Meanwhile, airlines like Delta Air Lines and United Airlines have been ramping up their international service to capitalize on strong demand for trips abroad that executives expect to continue into the fall, with international revenue growth far outpacing domestic revenue growth.
“Our international system is just performing outstandingly,” Andrew Nocella, United’s chief commercial officer, said on an earnings call last month. “There’s not like a single part of the globe, a single part of the network that’s not working.”
Airline stocks have declined from recent highs this earnings season as executives detail a shift in consumer preferences.
The NYSE Arca Airline index is down roughly 10% so far this quarter, while the S&P 500 is up about 1.5%.
— CNBC’s Gabriel Cortes contributed to this report.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. More