Warner Bros. Discovery Reports Q1 Loss with Declining Ads and Mixed Streaming Results
Warner Bros. Discovery reported a net loss of $966 million in the first quarter of 2024, a 10% improvement year over year, though revenue fell by 7% to $9.96 billion, missing Wall Street's expectations. The media conglomerate's studios division experienced a 70% profit drop, attributed in part to a gaming slump, including the underperformance of "Suicide Squad: Kill the Justice League" and a significant portion of "Dune: Part Two" box office revenue going to co-studio Legendary. The networks segment also saw an 8% decline in profits, with overall TV ad sales dropping by 12%.
On a positive note, the direct-to-consumer division, including HBO, Max, and Discovery+ streaming services, reported a 72% increase in profit, amounting to $86 million. The company also added 2 million subscribers, reaching a total of 99.6 million, and boasted an increase in free cash flow to $390 million. However, overall content revenue declined by 46% to $99 million, largely due to fewer third-party international licensing deals. The average revenue per user was $11.72 domestically and $7.83 globally.
Despite these mixed results, Warner Bros. Discovery announced plans to bundle Disney+, Hulu, and Max, aiming to start this summer, while also pursuing a strategy to reduce its substantial gross debt, now at $43.2 billion. Furthermore, the company is considering strategic moves, including a potential acquisition of Paramount and expanding its Max streaming service into international markets.