Q1 Loss for Warner Bros. Discovery


Even as its direct-to-consumer segment swung to a profit in the first quarter, Warner Bros. Discovery reported a Q1 loss of $1.1 billion, citing acquisition-related amortization costs and restructuring expenses, on revenues that were down 5 percent to $10.7 billion.

“It is an important time for Warner Bros. Discovery,” said David Zaslav, president and CEO. “We’ve come through some major restructurings and have repositioned our businesses with greater precision and focus. And we see a number of positive proof points emerging, with DTC perhaps the most prominent. We made a meaningful turn this quarter with $50 million in segment EBITDA and 1.6 million net adds, and we feel great about the trajectory we are on. In fact, we now expect our U.S. DTC business to be profitable for 2023—a year ahead of our guidance. Even in today’s challenging marketplace, we are positioned to drive free cash flow and deleverage our balance sheet, and we remain confident in our strategy and ability to achieve our financial targets.

In the studios segment, revenues fell to $3.2 billion, with content revenues down 8 percent to $3 billion as improved gaming revenue, thanks to Hogwarts Legacy, was offset by lower TV licensing, theatrical film rental and home entertainment revenues. Segment EBITA was $607 million.

The company’s networks delivered revenues of $5.6 billion, a 10-percent decline. Distribution revenues slipped by 3 percent to $3 billion, largely as a result of a fall in U.S. pay-TV subs. Ad revenues were down 14 percent to $2.2 billion. Content revenues fell by 51 percent to $245 million, with the company noting that Q1 2022 included revenues from the sublicensing of Olympic sports rights to European broadcast networks.

Direct-to-consumer revenues were $2.45 billion, with the company reporting 97.6 million subs, an increase of 1.6 million global subscribers since the end of Q4, including 55.3 million in the U.S. and 42.3 million internationally. Distribution revenues were mostly stable at $2.2 billion, while ad revenues were up 29 percent to $103 million and content revenues fell 16 percent to $185 million, primarily driven by lower third-party licensing of HBO content. From the year-ago EBITDA loss of $227 million, the streaming segment this quarter swung to a profit of $50 million.