Warner Bros Discovery's streaming unit reported a stronger-than-anticipated revenue growth in the first quarter, fueled by the global expansion of HBO Max. The company ended March with over 140 million streaming subscribers.
Despite this positive news, Warner Bros experienced a substantial net loss of $2.92 billion for the quarter. This figure includes a hefty $2.8 billion termination fee related to its merger with Paramount Skydance.
The merger is expected to create a powerhouse streaming entity with over 220 million subscribers, enhancing competition against heavyweights like Netflix and Disney.
CEO David Zaslav emphasized HBO Max's vital role in the company's growth strategy. He expressed confidence that the platform would significantly benefit Paramount post-merger.
The streaming unit's revenue reached $2.89 billion, marking a 9 percent increase, surpassing the 7.6 percent growth analysts had forecasted.
However, total advertising revenue fell by 7 percent, driven down by the absence of NBA content and ongoing declines in domestic linear TV viewership.
Looking ahead, the company anticipates a 16 percent constant-currency hit to streaming advertising revenue due to the lack of NBA content.
If the Paramount takeover goes as planned, PSKY-WBD will boast the strongest US sports offering outside of Disney, which could pull ad dollars back.
Ross Benes, eMarketer analyst
Overall, Warner Bros Discovery reported first-quarter revenue of $8.89 billion, aligning closely with analyst estimates of $8.9 billion.