Warner Bros. Discovery reported first-quarter results that fell short of analyst expectations, both in terms of revenue and loss per share. Despite this, the company’s stock experienced a 3% gain on Thursday. The company, which owns streaming service Max, cable TV networks such as TNT and Discovery, and a film studio, reported a 7% decline in revenue to $9.96 billion compared to the same quarter last year. The net loss attributable to the company was $966 million, or 40 cents per share, an improvement from the previous year.
During the first quarter, Warner Bros. Discovery added 2 million direct-to-consumer streaming subscribers, bringing the total to 99.6 million. The streaming segment earned an adjusted $86 million, an improvement of $36 million from the previous year. Advertising revenue for streaming saw a significant increase of 70%, driven by higher engagement on Max in the U.S. This growth was attributed to subscriber growth in the streaming service’s ad-lite tier and the launch of sports content on the app.
Warner Bros. Discovery made headlines by announcing a partnership with Disney to bundle their streaming services, including Max, Disney+, and Hulu, for consumers this summer. This move marks the first time two major media companies have collaborated on a streaming bundle, aimed at reducing subscriber churn. Warner Bros. Discovery CEO, David Zaslav, emphasized the importance of bundling to combat customer churn and reduce subscription cancellations. The company also announced a sports streaming joint venture with Disney and Fox Corp. slated to launch later this year.
In terms of sports rights, negotiations with the NBA, a long-standing partner of TNT, are ongoing. Warner Bros. Discovery is hopeful to reach an agreement that benefits both parties. NBCUniversal has also expressed interest in acquiring NBA media rights, but Warner Bros. Discovery retains the right to match any offers before the league makes a decision. The company is expanding its Max streaming service globally and plans to enter more European markets ahead of the Summer Olympics in Paris.
While advertising revenue for streaming was strong, Warner Bros. Discovery’s TV networks struggled, with revenue declining by 8% and advertising revenue falling by 11%. The studio segment also faced challenges, with revenue down 12% due to underperformance of certain releases and the impact of industry strikes. Despite these setbacks, the company is committed to revitalizing its film studio and announced plans for a new Lord of the Rings installment expected in 2026. Warner Bros. Discovery also noted an improvement in its cash position, with free cash flow increasing by $1.3 billion compared to the previous year.
Warner Bros. Discovery has been focused on reducing its substantial debt load, which currently stands at $43.2 billion, a result of the merger between Warner Bros. and Discovery in 2022. During the first quarter, the company repaid $1.1 billion in debt and launched a $1.75 billion cash tender offer to further decrease its debt. This strategic financial move aims to strengthen the company’s financial position and enhance its ability to invest in growth initiatives and content creation.
