Key Highlights :
Warner Bros Discovery (WBD) CEO David Zaslav has announced that the company's U.S. streaming operation is "no longer bleeding" after posting a $50M profit for Q1 this year. The news comes after WBD posted several quarters of streaming losses, and is a positive sign that the company is on the right track as it gears up to launch its HBO Max/Discovery+ hybrid service Max this year.
U.S. streaming subscribers were up 1.6 million to 97.6 million overall, and WBD CEO and President of Global Streaming JB Perrette provided some insight into how the Burbank-based company will quantify success for Max after its launch on May 23. Perrette stated that in the near term, the key metric will be the migration of HBO Max customers over to Max, and that brand awareness, customer satisfaction and engagement will be further metrics by which WBD will assess Max's performance.
Zaslav also confirmed that WBD is "actively" looking to add news and sport to Max, although both genres have proven difficult for streaming services. On the international front, the Max roll out will follow the U.S. launch but WBD remains targeted in how it approaches individual territories. The company has struck major content licensing agreements in Canada with Crave and India with Viacom18, and output agreements with the likes of Sky in the UK remain in place.
WBD posted total Q1 revenues of $10.7B, 5% down compared with 12 months earlier and a net loss of $1.07B included $1.81B of pre-tax amortization costs from “acquisition-related intangible assets” and a $95M pre-tax restructuring charge. Zaslav said it was “an important time for Warner Bros. Discovery,” adding, “We’ve come through some major restructurings and have repositioned our businesses with greater precision and focus, and we see a number of positive proof points emerging, with DTC perhaps the most prominent. We made a meaningful turn this quarter with $50 million in segment EBITDA and 1.6 million net adds, and we feel great about the trajectory we are on.”
The $43B merger of WarnerMedia and Discovery closed last year, with former Warner Media owner AT&T remaining a large stakeholder. The company has promised investors $4B in cost savings from the combination, up from an initial forecast of $3B. With the U.S. streaming operation now "no longer bleeding," WBD is on track to reach its financial targets and achieve long-term free cash flow growth.