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Warner Bros. Discovery reported a giant quarterly loss whilst its U.S. direct-to-consumer segment turned a profit for the primary time ever.
The corporate also expects the DTC, or streaming, business to be profitable for 2023 within the U.S., a yr ahead of its expectations, CEO David Zaslav said in an earnings release Friday morning.
First-quarter revenue was $10.7 billion, roughly in step with analysts’ estimates. The corporate reported a net lack of $1.1 billion and adjusted EBITDA of $2.6 billion.
Here’s what the corporate reported, versus analysts’ estimates, in response to Refinitiv:
- Revenue:Â $10.7 billion vs. $10.78 billion expected
- Loss per share:Â 44 cents vs. earnings of 1 cent expected
Warner Bros. Discovery’s stock rose 3% after falling about 5% in early trading.
Like all major media corporations, Warner Bros. Discovery is pivoting to streaming video as thousands and thousands of Americans cancel traditional pay TV annually. The corporate ended the quarter with 97.6 million streaming subscribers, up 1.6 million from last quarter.
The U.S. direct-to-consumer segment turned a profit of $50 million for the quarter, a $704 million year-over-year improvement on a professional forma combined basis. Internationally, streaming still lost money, Warner Bros. Discovery’s head of streaming, JB Perrette, said on an earnings conference call.
Warner Bros. Discovery is adding Discovery+ content to HBO Max and relaunching the service as Max within the U.S. later this month. Zaslav had previously promised its streaming business will probably be break-even by 2024 and profitable by 2025. He has aggressively in the reduction of on content spending, including eliminating shows and films from Max, to jump-start efforts to make the business profitable.
“We now have an amazing product that is going to be profitable for the yr now,” Zaslav said on the decision. He noted the corporate also has news and sports that it hasn’t yet added to Max. Warner Bros. Discovery will probably be “disciplined” in its talks to renew National Basketball Association rights, Zaslav added.
David Zaslav, President and CEO of Warner Bros. Discovery talks to the media as he arrives on the Sun Valley Resort for the Allen & Company Sun Valley Conference on July 05, 2022 in Sun Valley, Idaho.
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“We now have an amazing diversity of assets,” Zaslav said. “We have restructured this company now and are really tight. The environment is challenged, challenged, challenged, but as things start to select up, you are going to see a really quick turn at this company.”
Warner Bros. Discovery lost $930 million in free money flow within the quarter, largely because of interest and sports media rights payments.
The corporate ended the fourth quarter with $49.5 billion in debt on its balance sheet, and $2.6 billion in money readily available. Warner Bros. Discovery is attempting to spice up free money flow by cutting back on spending, including shedding hundreds of employees last yr, to scale back its hefty debt load.
The corporate’s cable networks segment brought in $5.6 billion within the quarter, down 10% yr over yr. Distribution revenue fell 3%, ex-foreign exchange, as more customers canceled cable. Promoting revenue dropped 14% within the quarter.
Warner Bros. studio revenue was $3.2 billion, a decline of seven% ex-FX.
WATCH: Warner Bros. Discovery CEO David Zaslav speaks to CNBC about 1st quarter earnings
