This illustrated photo shows the Warner Bros. Discovery logo displayed on a smartphone screen.
Rafael Enrique | SOPA Images | Light Rocket | Getty Images
warner bros discovery announced its first-quarter results on Thursday, but despite strong performance in its streaming division, both revenue and bottom line fell short of analysts’ expectations.
The company’s shares rose 3% on Thursday.
Below, see how Warner Bros. Discovery’s performance compares to estimates from analysts surveyed by LSEG.
Loss per share: 40 cents versus expected loss of 24 cents Earnings: $9.96 billion versus expected $10.231 billion
Warner Bros. Discovery, which owns the streaming service Max, a portfolio of cable television networks including TNT and Discovery, and movie studios, said revenue fell 7% from a year earlier to $9.96 billion.
Warner Bros. Discovery reported an attributable net loss of $966 million, or 40 cents per share, an improvement from the year-ago period in which it reported a loss of $1.07 billion, or 44 cents per share. did.
The company noted a significant decline in revenue from the video game “Suicide Squad: Kill the Justice League,” with total adjusted earnings before interest, taxes, depreciation, and amortization falling in the first quarter. It was announced that sales decreased by approximately 20% to $2.1 billion.
The growth of streaming
Warner Bros. Discovery on Thursday said it added 2 million direct-to-consumer streaming subscribers during the quarter, for a total of 99.6 million.
The company said its segment’s adjusted profit was $86 million, an improvement of $36 million from the year-ago period. Sales also increased “moderately” from the same period last year to $2.46 billion.
Streaming ad revenue proved to be a bright spot, increasing by 70%. This was driven by increased engagement on Max in the US, driven by subscriber growth in the streaming service’s ad-light tier and the launch of sports on the app.
The earnings release follows this week’s announcement that Warner Bros. Discovery will bundle its streaming services with the company’s streaming services. disney — will combine Max, Disney+ and Hulu to offer consumers this summer as a callback to traditional pay TV packages. The price has not yet been disclosed, but it will be offered at a discount, CNBC reported.
As efforts to monetize streaming continue, this is the first time two media giants have teamed up to offer a streaming bundle. Television networks have long been cash cows for media companies, but the bundling continues to drain subscribers.
“As you know, I’m a big proponent of bundling,” Warner Bros. Discovery CEO David Zaslav said on an earnings call Thursday. He noted that subscribers should stick with the bundle to take advantage of cheaper pricing, which should reduce so-called cancellations, referring to people who stop signing up.
“Customer churn is the biggest factor in this business, and we’ve been focusing on that,” Zaslav said, adding that bundling has been a big help in reducing customer loss. “We need to do this in attack mode.”
This entertainment streaming bundle marks the second partnership with Warner Bros. Discovery and Disney in recent months. Companies also fox companypreviously announced it would launch a sports streaming joint venture this fall.
sports rights
New York Knicks uniform numbers go to the basket during Game 1 of Game 2 of the 2024 NBA Playoffs against the Indiana Pacers on May 6, 2024 at Madison Square Garden in New York City, New York. No. 11 Jalen Brunson.
Nathaniel S. Butler | National Basketball Association | Getty Images
On the sports side, Zaslav said Thursday that media rights negotiations with the NBA, long a staple of cable channel TNT, are still ongoing and “we hope to reach an agreement that makes sense for both sides.”
NBCUniversal recently offered to own the rights again, CNBC previously reported. Zaslav noted that the company is strategizing for a variety of outcomes, but that its contract with the NBA includes the right to match other offers before the league makes a decision.
Last fall, Warner Bros. Discovery began offering NBA games on Max.
The company is rolling out Max around the world, and Zaslav said Thursday it will enter more European markets ahead of the Paris Summer Olympics. NBCUniversal holds the rights to the Olympics in the United States and will air the games on its own TV network and Peacock streaming service, while in Europe, Warner Bros. Discovery’s Max will be the streaming home.
Weaknesses of TV and studios
Elijah Wood plays Frodo in the Lord of the Rings trilogy.
Provided by: New Line Cinema
Advertising revenue in streaming was strong, but continued to be weak for Warner Bros. Discovery’s television networks and the division as a whole.
Television network revenue fell 8% to $5.13 billion, with advertising revenue down 11%. The advertising market has been weak for some time, but recent quarterly results show that digital and streaming are improving while traditional TV is lagging.
Meanwhile, Warner Bros. Discovery’s studio division revenue fell 12% year over year to $2.82 billion. The sector was weighed down by the lackluster release of the latest Suicide Squad movie and the lingering effects of last year’s Hollywood writers’ and actors’ strike.
Zaslav said Thursday that the company is working to “bring the shine back” to the movie studio. As part of this, he announced that a new Lord of the Rings movie is in the works and is scheduled for release in 2026.
The company’s cash position improved, with free cash flow increasing to $390 million, an improvement of $1.3 billion from the same period last year, the company said.
Warner Bros. Discovery is working to reduce its current $43.2 billion debt burden through the Warner Bros.-Discovery merger in 2022. The company announced Thursday that it paid down $1.1 billion in debt during the quarter. announced a $1.75 billion cash bid to further reduce debt.
Disclosure: Comcast NBCUniversal is the parent company of CNBC and co-owner of Hulu.
