Warner Bros. Discovery recently reported their first-quarter results, falling short of analyst expectations despite strong performance in their streaming unit. The company’s stock rose by 3% following the report. They reported a loss per share of 40 cents, missing the expected 24 cents loss, and revenue of $9.96 billion, lower than the expected $10.231 billion. Their revenue fell by 7% compared to the same quarter last year, but the net loss improved from the previous year.
Warner Bros. Discovery’s streaming segment added 2 million subscribers in the first quarter, bringing the total to 99.6 million. The segment earned $86 million adjusted during the quarter, with a revenue increase to $2.46 billion. Advertising revenue for streaming saw a significant increase of 70%, attributed to higher engagement on Max in the U.S. due to subscriber growth and the launch of sports on the platform. The company also announced bundling their streaming services with Disney to offer a package deal to consumers, aiming to reduce customer churn.
Warner Bros. Discovery is currently in negotiations with the NBA for media rights, hoping to reach an agreement that benefits both parties. They have strategies in place for various outcomes, as other offers have been made for the rights. The company has been expanding Max globally and plans to enter more European markets ahead of the Summer Olympics in Paris. While NBCUniversal holds U.S. rights for the Olympics, Warner Bros. Discovery’s Max will serve as the streaming home in Europe.
Despite strong advertising revenue in streaming, Warner Bros. Discovery’s TV networks struggled, with an 8% revenue decrease and an 11% drop in advertising revenue. The overall TV segment saw weakness, while the studio segment revenue also fell by 12%. The lackluster release of the latest Suicide Squad film and the lingering effects of Hollywood strikes impacted the studio segment. The company is working to revitalize its film studio by focusing on upcoming projects like Lord of the Rings.
Warner Bros. Discovery has been working to improve its cash position and reduce its debt load, which currently stands at $43.2 billion. They repaid $1.1 billion in debt during the quarter and announced a $1.75 billion cash tender to further reduce debt. The company has made efforts to strengthen its financial position after the merger of Warner Bros. and Discovery in 2022. Comcast NBCUniversal is the parent company of CNBC and a co-owner of Hulu, with Warner Bros. Discovery partnering with Disney to offer a streaming bundle.
