Warner Bros. Discovery Streaming Profits Surge 29% as Subscribers Exceed 140 Million

Warner Bros. Discovery (WBD) reported a widened net loss of $2.92 billion in the first quarter, with revenue falling 1% to $8.89 billion. The net loss included $1.3 billion in pre-tax acquisition-related expenses, such as amortization of intangibles, content fair value step-up, and restructuring costs. The company also incurred a $2.8 billion termination fee paid to Netflix, which is refundable to Paramount Skydance if a superior proposal emerges or interim operating covenants are violated.

Shares of the media giant declined 0.6% in after-hours trading following the results.

Streaming Segment Drives Growth

Streaming revenue grew 9% to $2.9 billion, with profits jumping 29% to $438 million. The growth was driven by an increase in ad-lite subscribers and HBO Max’s ongoing international expansion. However, content revenue declined 27% due to the timing of third-party licensing deals, the absence of the NBA, and the renewal of a domestic distribution deal in the prior year.

WBD, like Netflix and Disney, no longer breaks out subscriber numbers quarterly but confirmed it exceeded 140 million subscribers during the quarter. The company remains on track to surpass 150 million subscribers by year-end.

Studios and Linear Networks Show Mixed Results

Studios revenue increased 35% to $3.13 billion, with profits rising 156% to $775 million. This growth was fueled by higher TV and theatrical revenues from increased intercompany and third-party content licensing, as well as HBO Max’s international expansion. The games unit, however, saw a 30% decline in revenue due to lower library revenue.

Global linear networks continued to underperform, with revenue falling 8% to $4.38 billion and profits tumbling 9% to $1.63 billion. The decline was attributed to a 10% decrease in domestic linear pay TV subscribers, offset partially by a 2% increase in affiliate rates, the absence of the NBA, and the timing of third-party licensing deals.

Paramount Merger Remains on Track for September Closing

The $110 billion Paramount merger secured shareholder approval but remains subject to regulatory clearance. Key developments include:

• U.K. regulators are preparing to review the deal, with the public comment period closing recently.
• Paramount has requested FCC approval for foreign investment in the deal, which accounts for 49.5% of the combined company’s equity. The company states there are “no statutory impediments” following the Department of Justice’s Hart-Scott-Rodino review period, though the regulator retains the authority to intervene.
• A group of U.S. state attorneys general, led by California’s Rob Bonta, are also reviewing the deal and considering legal action.