Warner Bros. Discovery Reports Quarterly Loss Despite Profit from DTC Segment

Warner Bros. Discovery Reports Quarterly Loss Despite Profit from DTC Segment

Warner Bros. Discovery, like other major media companies, is shifting its focus to streaming video as an increasing number of Americans cancel their traditional pay TV subscriptions. The company, however, reported a big quarterly loss despite its U.S. direct-to-consumer (DTC) segment turning a profit for the first time ever.

Details of the Earnings Report

According to its earnings release on Friday morning, the company reported a net loss of $1.1 billion and adjusted EBITDA of $2.6 billion. The first-quarter revenue of $10.7 billion was in line with analysts’ estimates. The direct-to-consumer segment turned a profit of $50 million for the quarter, and the company expects the streaming business to be profitable in the U.S. by 2023, a year ahead of schedule.

Status of the Stock and Subscriber Numbers

Warner Bros. Discovery’s stock fell more than 4% in premarket trading after dropping nearly 4% on Thursday. The company ended the quarter with 97.6 million streaming subscribers, up 1.6 million from the previous quarter.

Company Strategy and Debt Reduction

To make the business profitable, CEO David Zaslav has aggressively cut back on content spending, including eliminating shows and movies from Max. The company is attempting to boost free cash flow by cutting back on spending and reducing its hefty debt load, which was $49.5 billion at the end of the fourth quarter of 2020. Zaslav had previously promised that its streaming business would break even by 2024 and be profitable by 2025.

Despite the quarterly loss, Warner Bros. Discovery remains optimistic about the future profitability of its direct-to-consumer segment. With the addition of Discovery+ content to HBO Max and the relaunch of the service as Max in the U.S. later this month, the company is hoping to see a quick turnaround.


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