May 6 - Warner Bros. Discovery reported on Wednesday that its streaming division delivered quarterly revenue growth that exceeded market expectations, driven in part by an aggressive international expansion of HBO Max.
The company posted a larger first-quarter net loss of $2.92 billion. That figure includes a $2.8 billion termination fee paid to Netflix. The termination fee was paid by Paramount Skydance under the companies' $110 billion merger deal, but was recorded by Warner Bros. Discovery as an obligation under the agreement.
Executives are anticipating that the combined company will ultimately fold HBO Max and Paramount+ into a single offering after the merger, creating a larger streaming footprint intended to enhance the merged entity's ability to compete with major rivals such as Netflix and Disney.
Warner Bros. Discovery has pushed HBO Max into new international markets, leveraging its library of HBO originals and other global entertainment franchises. The rollout most recently included launches in the U.K. and Ireland, initiatives that the company said helped lift subscriber engagement and growth.
The streaming segment saw subscriber-related revenue rise by 10%, and the unit reported overall revenue of $2.89 billion for the quarter - a 9% increase versus the prior period. That result topped analyst expectations of 7.6% growth.
At the same time, total advertising revenue slipped 7%, a decline the company attributed to the lack of NBA content and ongoing decreases in domestic linear TV viewership. Despite the mixed trends across its businesses, Warner Bros. Discovery reported total first-quarter revenue of $8.89 billion, roughly in line with estimates of $8.9 billion compiled by LSEG.
Context and implications
The company's strategy centers on using its well-known content library and brand portfolio to accelerate international subscriber growth for HBO Max. The reported gains in subscriber-related revenue and the streaming unit's outperformance versus consensus show that international expansion has had a measurable effect on top-line streaming results in the most recent quarter.
However, the widened net loss - which incorporates a sizeable termination payment recorded under merger-related obligations - underscores a distinct near-term financial drag. Advertising trends also point to continued headwinds in ad-supported video and legacy linear TV businesses.
Financial snapshot
- First-quarter net loss: $2.92 billion (includes $2.8 billion termination fee)
- Streaming unit revenue: $2.89 billion, up 9% (versus 7.6% expected)
- Subscriber-related revenue at streaming: up 10%
- Total advertising revenue: down 7%
- Total company revenue: $8.89 billion (roughly in line with $8.9 billion estimate compiled by LSEG)
The company did not provide additional forward guidance in the information released with these results.