In this photo illustration, the Warner Bros. Discovery logo is displayed on a smartphone screen.
Rafael Henrique | SOPA images | Light rocket | Getty Images
Warner Bros. Discovery reported first-quarter results on Thursday, falling in need of analysts’ expectations in each revenue and profit despite the strength of its streaming unit.
The company’s shares fell nearly 4% in premarket trading.
Here’s how Warner Bros. Discovery performedin comparison with estimates from analysts surveyed by LSEG:
- Loss per share: 40 cents versus 24 cents loss expected
- Revenue: $9.96 billion versus expected $10.231 billion
Warner Bros. Discovery – which owns streaming service Max, a portfolio of cable TV networks equivalent to TNT and Discovery, and a movie studio – said revenue fell 7% to $9.96 billion in comparison with the identical quarter last yr.
Warner Bros. Discovery reported a net loss attributable to the corporate of $966 million, or 40 cents per share, an improvement from the year-earlier quarter when the corporate reported a lack of $1.07 billion, or 44 cents per share.
The company said its first-quarter adjusted earnings before interest, taxes, depreciation and amortization fell about 20% to $2.1 billion, noting that the video game “Suicide Squad: Kill the Justice League” generated significantly lower sales.
Streaming growth
Warner Bros. Discovery said Thursday that it added 2 million direct-to-consumer streaming subscribers in the course of the quarter, bringing its total to 99.6 million.
This segment earned an adjusted $86 million within the quarter, an improvement of $36 million from the year-ago quarter, the corporate said. Sales also rose “modestly” to $2.46 billion in comparison with the identical quarter last yr.
A shiny spot was streaming promoting revenue, which rose 70%, driven by higher engagement on Max within the US, driven partly by subscriber growth within the streaming service’s Ad Lite tier and the introduction of sports was attributable to the app.
The earnings release follows this week’s announcement that Warner Bros. would bundle its streaming services with those of Discovery Disney — linking Max, Disney+ and Hulu — and offering it to consumers this summer, a throwback to the normal pay-TV package. The price has not yet been announced, but it is going to be offered at a reduction, CNBC reported.
It’s the primary time two media giants have joined forces to supply a streaming package, as efforts to make streaming profitable proceed. While television networks have long been a money cow for media corporations, the package continues to bleed subscribers.
“As you know, I’m a big proponent of bundling,” CEO David Zaslav said on Thursday’s earnings call. He identified that subscribers must stick to the package with a purpose to profit from the lower cost offer, which should then reduce so-called churn, i.e. the cancellation of subscriptions.
The entertainment streaming package marks the second partnership with Warner Bros. Discovery and Disney in recent months. The corporations, along with Fox Corp., had previously announced a sports streaming three way partnership that may launch this fall.
Sports rights
On the sports front, Zaslav said Thursday that media rights negotiations with the NBA – long a fixture of cable network TNT – were ongoing and he was “confident of reaching an agreement that makes sense for both sides.”
NBCUniversal recently made a suggestion to own the rights again, CNBC previously reported. Zaslav noted that while the corporate has strategies for various outcomes, its contract with the NBA includes the best to match all other offers before the league decides.
Last fall, Warner Bros. Discovery began offering NBA games on Max.
The company has launched Max all over the world, and Zaslav announced Thursday that it is going to expand into more European markets ahead of the Summer Olympics in Paris. While NBCUniversal owns the U.S. rights to the Olympics and can air the games on its television networks and streaming service Peacock, Warner Bros. Discovery’s Max will likely be the streaming home in Europe.
Weaknesses on television and within the studios
Although ad revenue was strong in streaming, it remained weak at Warner Bros. Discovery’s TV networks and across the segment.
Television network revenue fell 8% to $5.13 billion, with promoting revenue falling 11%. While the promoting market has been weak for a while, recent quarterly results show that digital and streaming have improved while traditional television has lagged.
Meanwhile, revenue at Warner Bros. Discovery’s studio segment fell 12% to $2.82 billion in comparison with the identical quarter last yr. The segment was weighed down by the lackluster release of the most recent installment of “Suicide Squad” and the continued impact of last yr’s strikes by Hollywood writers and actors.
On Thursday, Zaslav said the corporate was committed to “restoring the shine” to its film studio. In this regard, he announced that work is underway on the most recent a part of “Lord of the Rings”, scheduled for release in 2026.
The company’s liquidity position improved, with free money flow increasing to $390 million, an improvement of $1.3 billion from the year-ago quarter, the corporate noted.
Warner Bros. Discovery has been working to scale back its debt load, which now stands at $43.2 billion resulting from the 2022 merger of Warner Bros. and Discovery. On Thursday, the corporate said it repaid $1.1 billion in debt in the course of the quarter and announced a $1.75 billion money offer to further reduce its debt.
Disclosure: Comcast NBCUniversal is the parent company of CNBC.
This story is developing. Please check back for updates.
