By Dawn Chmielewski and Chavi Mehta

(Reuters) -Warner Bros Discovery (NASDAQ:) posted a quarterly loss on Thursday that missed Wall Street targets due to restructuring of the combined media company, but investor concerns were tempered by news that HBO's fantasy series "House of the Dragon" became the most-watched series premiere in the network's history.

Recession-wary brands have taken the axe to marketing budgets as consumer spending on discretionary products and services dips. Warner also missed expectations on revenue, helping send shares down 4.8% after hours.

The newly combined company has been cutting projects it considered weak and reorienting its business, including a re-embrace of sending movies to theaters, but costs have been high.

“We're spending more money this year than we've ever spent historically,” Warner Bros Chief Executive David Zaslav told a conference call. He touted the new creative team leading the company's DC Studios and promoted a coming lineup of films worthy of the big screen, including “The Flash,” “Wonka” and “The Color Purple.”

Former leadership had sent many movies straight to HBO.

“Launching a two-hour or an hour-and-40-minute movie direct-to-streaming has done almost nothing for HBO Max in terms of viewership, retention or love of the service,” Zaslav said.

Warner Bros posted a third-quarter loss of $2.3 billion, or 95 cents a share, which includes $1.5 billion in pre-tax restructuring charges. That's more than the 21 cents a share loss that analysts had anticipated, according to Refinitiv data.

Quarterly revenue fell to $9.82 billion, lagging Wall Street targets, hurt by cuts in advertising budgets at businesses struggling to cope with decades-high inflation.

The wider rout in the ad market has led companies including Google parent Alphabet (NASDAQ:) and Warner Bros peers Paramount Global and Comcast Corp (NASDAQ:) to warn about continuing weakness in the advertising landscape.

Warner Bros Discovery, home to hit franchises such as "Batman" and "Euphoria," added 2.8 million new streaming subscribers in the third quarter, bringing its total to 94.9 million. It aims to reach about 130 million global subscribers by 2025.

Zaslav said changes to the service, such as offering recommendations to viewers after they finish watching a show and adding reality shows, helped increase viewer engagement. A merger of HBO Max and Discovery+ will debut on an accelerated timetable, in spring of 2023.

Analysts also called out the success of "House of the Dragon" as proving the importance of developing franchises such as "Game of Thrones.”

"In light of their underwhelming Q3 results, the success of 'The House of the Dragon' should be a source of relief," said Max Willens, senior analyst at eMarketer.

The company's studio segment reported revenues of $3.1 billion, down 5% from a year earlier. The company had fewer movie releases than a year ago. Its networks segment, which includes TBS, Discovery Channel and Food Network, reported revenue of $5.2 billion, down 8% compared with a year ago.

The streaming business, which combined HBO Max and Discovery+, saw revenue fall 6% to $2.3 billion, reflecting an end to HBO Max’s distribution on Amazon (NASDAQ:) Channels a year ago.