Warner Bros. Discovery reports $86m streaming profit, offset by TV & studios losses

The Last of Us (Source: Warner Bros. Discovery)

Warner Bros. Discovery (WBD) has reported $86m in DTC streaming profit in its Q1 2024 financial results, though saw a 7% drop in topline revenue compared to the same time last year.

The media giant added two million subscribers to its streaming services, including Max and Discovery+, to reach a total of 99.6 million by the end of the quarter. The $86m profit was an improvement of $36m on the prior-year quarter, while DTC revenues were also up to $2.46bn from $2.45bn at the same point last year.

WBD’s total Q1 revenues were $9.96bn, down 7% from $10.7bn in 2023, with a net loss of $966m, which was a 10% improvement on the $1.07bn reported 12 months ago.

The company attributed gains on Max to its launch in Latin America and highlighted the streamer’s The Last Of Us and House Of The Dragon as big draws for the DTC segment, alongside ID’s “breakout” series Quiet On Set: The Dark Side Of Kids TV, which it said was the third best launch on Max and HBO Max behind those two shows.

Advertising revenue for the segment increased by a notable 70%, which WBD said was driven primarily by higher engagement on Max in the US and the launch of B/R Sports on Max in October 2023, and ad-lite subscriber growth.

Content revenue decreased by 46%, however, mainly due to the lower volume of third-party international licensing deals.

David Zaslav (Source: Warner Bros. Discovery)

Network & studio losses

The picture was less rosy on the networks side, which includes Discovery, TBS, CNN, TNT, Food Network and others. The segment’s revenue for the quarter dropped 8% to $5.12bn from $5.58bn in Q1 2023, with WBD pointing to the negative impact of the AT&T SportsNet exit.

Unlike in the DTC segment, advertising revenue was down here, dropping 11% to $1.99bn from $2.24bn in the prior-year quarter. Content revenue was up by 8% to $264m, however, which WBD said was driven by higher inter-segment content licensing to DTC.

Studios revenue also took a 12% hit, down to $2.82bn from $3.21bn in the prior year quarter. WBD said that while theatrical revenue “increased significantly” due to the launch of sci-fi sequel Dune: Part Two, this was offset by the poor reception of gaming release Suicide Squad: Kill The Justice League.

TV revenue in the studios segment also “declined meaningfully” due to production delays leading to fewer episodes delivered during Q1, as a lingering after-effect of the 2023 Hollywood strikes.

Nevertheless, CEO David Zaslav said the company is “pleased” with the Q1 results, commenting: “We delivered meaningful growth in our streaming business with a nice acceleration in ad sales, generating nearly $90 million in positive EBITDA for the quarter.”

He added: “We will soon be rolling out Max to 29 countries across Europe, and the content lineup for Max over the coming year is one of our strongest ever.”