WBD Q1 Streaming, Studios Up, but $2.8B Reserve Spurs Loss
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- Warner Bros. Discovery posted a Q1 loss because the company must hold $2.8 billion in reserve following termination of its prior acquisition deal with Netflix; Paramount paid that fee on Warner's behalf, but it is refundable if Warner terminates for a superior proposal.
- Overall revenue fell 3%, with advertising down 8% after the NBA's absence from Warner's TV schedule following last year's split over league fees.
- Streaming revenue rose 7% to nearly $2.9 billion, with distribution fees up 7% and ad revenue up 19%.
- Studios revenue increased 31% to about $3.13 billion, partially offsetting weakness elsewhere.
- Traditional TV revenue fell 9% to about $4.38 billion, with ad revenue off 12% and U.S. TV audiences down 8% as the cord-cutting shift persisted.
- CEO David Zaslav raised Warner's streaming subscriber forecast during the investor call, now projecting more than 150 million HBO Max subscribers by the end of 2026.
Why it matters: The $2.8 billion reserve — refundable to Paramount if a superior bid emerges — keeps Warner's deal architecture exposed while traditional TV revenue declines 9% and ad revenue drops 12%, making the streaming and studios growth the only meaningful offset to a deteriorating linear business.
