WBD sees streaming growth but revenue decline

Warner Bros. Discovery has turned in a distinctly mixed first quarter, with streaming subscribers growing at a clip but streaming revenue flat and content and studios revenues taking a hit.

David Zaslav (Source: Discovery)

Global direct-to-consumer subscribers numbered  99.6 million at the end of Q1, an increase of two million subscribers on December.

However, despite the impressive growth in subs, streaming revenues were essentially flat, reaching  US$2.46 billion.

While streaming distribution revenues – the lion’s share of the segment – were flat, a 70% lift in advertising revenues offset a decline in content licensing revenues within the D2C unit.

During the quarter, WBD successfully launched Max and migrated subscribers to the new platform across Latin America.

WBD’s Q1 total revenues were US$9.958 billion, down 7% year-on-year.

Q1 total Adjusted EBITDA was US$2.102 billion, a 20% decrease compared to the prior year quarter.

The company said the EBITDA dip was mostly down to the success of Hogwarts Legacy in the prior year quarter while Suicide Squad: Kill the Justice League generated significantly lower revenues in the current year quarter.

Studios revenues were down by 13% to US`$2.821 billion, due to the prior year success of Hogwarts Legacy.

Networks revenues decreased 8% to US$5.125 billion. WBD said its sale of regional sports network AT&T SportsNet had a significant negative impact on revenues year-on-year.

“We are pleased with our progress in the first quarter as evidenced by strong results in important KPIs. 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,” said CEO David Zaslav.

“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. Warner Bros. Pictures also had a strong start to the year as the first studio to reach US$1 billion in both overseas and global box office, and they have a great slate in the works. Importantly, we once again delivered strong free cash flow, even in our seasonally weakest FCF quarter. We continue to make bold moves to transform our company for the future as we position ourselves to take full advantage of the opportunities ahead.”