Warner Bros. Discovery has reported a hefty £2.3 billion net loss for the first quarter, blaming the figure on one-off expenses from a collapsed transaction and internal overhauls.
The deficit marks a sharp deterioration from the £359 million loss in the year-ago period. It stems partly from £1.03 billion in pre-tax charges related to amortising acquired intangibles, adjusting content values, and restructuring outlays. A major factor was the £2.2 billion termination fee owed to Netflix after their proposed asset purchase fell apart in February.
Netflix withdrew when Paramount Skydance lodged a higher bid, paving the way for its full takeover of Warner Bros. Discovery. Although Paramount committed to paying the Netflix penalty, the cost remains on Warner Bros. Discovery’s books until the deal closes. The fee is refundable to Paramount in scenarios such as pursuing a superior offer.
Shareholders backed the Paramount acquisition in April, and regulatory reviews are underway. In Monday’s earnings, Paramount announced it has “made significant progress” and expects completion in the third quarter.
Revenues dipped 1 per cent to £7.04 billion, but adjusted EBITDA climbed 5 per cent to £1.74 billion, with gross debt at £26.46 billion.
Streaming offered relief, as revenues rose 9 per cent to £2.29 billion. HBO Max’s global rollout drove subscriber income, while ad revenues soared 20 per cent from ad-tier growth. The company beat its 140 million global subscriber target and eyes 150 million by year-end, aligning with Nielsen data showing streaming’s U.S. viewing share at 38 per cent in April.
Cable networks like CNN, TBS, and Discovery Channel saw revenues drop 8 per cent to £3.47 billion. Linear ads fell 11 per cent, hit by the absence of NBA rights post-2024 settlement.
Studios revenues jumped 35 per cent to £2.48 billion on hit films and licensing.
CEO David Zaslav highlighted cost savings and £2 billion in expected synergies. Analysts at Barclays see the merger reshaping media, pending approvals.