WarnerMedia Reports Lower Q1 Revenues

ADVERTISEMENT

WarnerMedia’s first-quarter revenues fell by 12.2 percent to $7.4 billion as a result of lower ad revenues at Turner and declines at Warner Bros.

At Turner, revenues fell by 8.2 percent to $3.2 billion. Subscription revenues were up due to higher domestic affiliate rates, partially offset by a decline in international subscription revenues. Ad revenues were down, primarily due to the cancellation of the NCAA Division I Men’s Basketball Tournament. The segment reported a 10.9 percent gain in operating income to $1.4 billion as costs were down by 19 percent with lower marketing and programming costs.

HBO’s revenues were down 0.9 percent to $1.5 billion, with subscriber revenues relatively stable as digital and international gains made up for a reduction in U.S. linear customers. Lower content licensing resulted in reduced content and other revenues. With an increase in costs related to the upcoming launch of HBO Max, operating income was down 25.4 percent to $423 million.

Revenues at Warner Bros. fell by 7.9 percent to $3.2 billion due to declines in theatrical revenues, partially offset by higher television revenues. Operating income dropped 54.5 percent to $249 million.

Operating income at WarnerMedia was down 24.3 percent to $1.7 billion.

At AT&T’s Entertainment Group, revenues fell by 7.2 percent to $10.5 billion due to declines in premium and OTT TV subscribers and legacy services. The company lost 897,000 premium subs (DirecTV, U-verse and AT&T TV), while AT&T TV Now shed 138,000 subs.

Total AT&T revenues fell by 4.6 percent to $42.8 billion. About $600 million in revenues were impacted by COVID-19, the bulk of which ($400 million) were from the WarnerMedia segment.

“The COVID pandemic had a 5 cents per share impact on our first quarter,” said Randall Stephenson, AT&T Chairman and CEO. “Without it, the quarter was about what we expected—strong wireless numbers that covered the HBO Max investment, and produced stable EBITDA and EBITDA margins. We have a strong cash position, a strong balance sheet, and our core businesses are solid and continue to generate good free cash flow—even in today’s environment. In light of the pandemic’s economic impact, we’ve already adjusted our capital allocation plans and suspended all share retirements. As a result, we’re able to continue investing in critical growth areas like 5G, broadband and HBO Max, while maintaining our dividend commitment and paying down debt.”