Warner Bros. Discovery reported more red numbers on Thursday, saying it narrowed its first-quarter loss by 10% to $966 million, with a profit of $9. 96 billion. Its effects were impacted by a 70% year-over-year drop in profits. in its research department and an 8% drop in profits in its works segment.
WBD shares, first, fell 6. 5% in premarket trading, after failing to meet Wall Street’s expectations, but turned positive once the market opened.
Key findings include:
Net loss: $966 million, up 10% from a loss of $1. 07 billion last year.
Consistent Percentage Gains: A loss of 40 cents consistent with the consistent percentage, with a loss of 24 cents consistent with the expected consistent percentage through analysts surveyed through Zacks Investment Research
Revenue: $9. 96 billion, down 7% year-over-year versus Zacks’ expectation of $10. 29 billion.
Adjusted EBITDA: $2. 1 billion, down 19% year-over-year
Subscribers: 2 million subscribers were added for a total of 99. 6 million worldwide.
WBD executives have been framing the effects in a challenging media environment for the company, which has struggled to recover since its inception after AT.
“Today’s media landscape is becoming more dynamic,” CEO David Zaslav told analysts on Thursday. “And in response, we had to make difficult and often unpopular decisions. But we do what it takes to position the company for the future. While the luck of the transformation is not easily measured in months or even short-term quarters, but we are very confident in the strength of our assets. We will see strategic and monetary developments in the coming quarters.
During the quarter, the media giant, which owns Warner Bros. , HBO, CNN and streaming service Max, posted a further drop in TV advertising that offset the benefit from its streaming business. The company said the two moves in Hollywood had again reduced its The fact that TV was paid and that its games had returned negatively impacted the quarter’s overall results.
Zaslav highlighted the company’s use of AI for its “consumer offerings” and creating more efficiencies, calling it one of the company’s “top priorities. “Much of the discussion with analysts centered on questions about a streaming package announced Wednesday through Disney and WBD. which will be offered by Max, Hulu and Disney starting this summer.
WBD’s direct-to-consumer division, which includes classic cable subscriptions from HBO and Max and Discovery streaming services, reported a profit of $86 million, a 72% year-over-year increase. DTC segment cash was flat at $2. 46 billion. million subscribers in the U. S. 46. 9 million internationally.
Distribution revenue increased 1% year-over-year to $2. 19 billion, driven primarily by the expansion of foreign subscribers and value increases in the U. S. and Canada. in the U. S. and Latin America in the previous year. The expansion was partially offset by lower subscriber expansion in the U. S. As a result of a continued linear decline in the number of wholesale subscribers.
Ad revenue increased 70% to $175 million, driven primarily by an increase consistent with Max share in the U. S. and $175 million. In the U. S. , due in part to the launch of B/R Sports on Max in October and the expansion of Ad-lite subscribers. Content revenue fell 46% to $99 million, primarily due to declining volume of foreign component third-party licensing deals. The average profit consistent with the user is $11. 72 domestically, $3. 75 overseas, and $7. 83 globally.
On Wednesday, Disney and WBD announced they would be offering a bundle of Disney, Hulu and Max. Warner is also partnering with Disney and Fox on a sports streaming joint venture set to launch this fall. Later this year, Max will begin cracking down. on password sharing, with wider rollout in 2025.
“We hope this product will help increase retention and reduce churn and therefore increase lifetime values for customers,” Zaslav said of the offering.
Zaslav warned that the expansion of subscribers in the U. S. UU. se would be affected by some seasonality in the second quarter, similar to sports, but said WBD is on track for “solid and continued overseas expansion” as it launches Max in 29 countries across Europe. The second quarter will be impacted by the timing of launch agreements renewed last year and content availability.
“Despite heavy initial investments, I remain completely confident on our path towards our EBIT target of more than $1 billion by 2025 and our subsequent expansion ambitions,” said Gunnar Wiedenfels, Chief Financial Officer of WBD.
In the networks segment, overall profit fell 8% to $5. 13 billion, while adjusted EBITDA fell 8% year-over-year to $2. 12 billion.
Distribution revenue fell 7% year-over-year to $2. 79 billion, primarily due to declining U. S. pay-TV subscribers. This was partially offset by higher contractual partnership rates in the U. S. and the inflationary effects in Argentina.
TV advertising revenue fell 11 percent year-over-year to $1. 99 billion, primarily due to declining viewership for national entertainment and news networks in general, as well as weakness in the linear advertising market in the U. S. and Latin America. This (EMEA) partially compensated for the decline. The company’s departure from AT
Content revenue increased 8% to $264 million, driven by increased cross-industry content licenses granted to DTC.
In the studios segment, earnings declined 13% year-over-year to $2. 82 billion, while adjusted EBITDA fell 70% to $184 million. Distribution revenue was up 67% year-over-year to $5 million, advertising revenue was up 33% year-over-year to $4 million, and content revenue was down 13% to $2. 62 billion.
The game’s earnings declined particularly due to the good fortune of “Hogwarts Legacy” in the prior-year quarter, while the release of “Suicide Squad: Kill the Justice League” in the first quarter led to a significant decrease in earnings, resulting in $200 million. will have an effect on EBITDA for the quarter.
Television revenues declined particularly as production delays resulting from moves through WGA and SAG-AFTRA led WBD to deliver fewer episodes in the first quarter, as well as the timing of licensing deals and content availability.
Theater earnings rose particularly due to “Dune: Part Two” and the transfer of a top name in the fourth quarter of 2023 to last year. “Wonka” and “Aquaman and the Lost Kingdom” drove a significant expansion in home entertainment earnings.
Warner generated $390 million in loose cash flow, an improvement of $1. 3 billion year-over-year, and money from operating activities expanded to $585 million. It paid down $1. 1 billion in debt during the quarter and announced a $1. 75 billion cash tender offer for additional debt rehair.
The company ended the quarter with $3. 4 billion in cash, $43. 2 billion in gross debt and 4. 1 times leverage.
“We now see a way to specifically exceed the remaining cost savings of more than $1 billion that we had previously anticipated, adding to the more than $4 billion we have already achieved through the end of 2023,” Wiedenfels said.
He noted that the company sees “other tangible benefits” in consolidating its real estate services and a dozen content workflow systems.
WBD shares are down 33% year-to-date, 41% year-to-date, and 68% since the 2022 merger.