Warner Bros. Discovery disappointed investors despite subscriber growth

WBD announced results for the first quarter of this year on Thursday. It took in nearly ten billion dollars, seven percent less than last year and slightly less than the market expected. The conglomerate reduced its loss by ten percent to 966 million dollars (22.4 billion crowns). It has successfully attracted another two million people to its streaming platforms, and in total it serves, for example, the latest blockbuster Dune 2 to less than a hundred million viewers.

“We are pleased with the development in the first quarter, which is reflected in the strong results. We achieved meaningful growth in streaming and accelerated sales of advertising space. It generated almost nine million dollars of EBITDA,” said WBD director David Zaslav. The store of quality film content that the company will offer on streaming platforms is said to be “stronger than ever”.

However, the company’s shares reacted to the announced results with a drop of several percent, thus continuing the free fall of recent months. Over the past year, they have written off more than forty percent of their value. “The results were disappointing. Both sales and net loss did not meet market estimates. In addition, the strikes in Hollywood caused a decrease in sales from television production,” comments Tomáš Cverna, an analyst at broker XTB.

The year-on-year decline in sales is also attributed to the fact that the game Suicide Squad: Kill the Justice League was not as successful as the previous Hogwarts Legacy. On the other hand, the results of the media giant were positively influenced by the success of the aforementioned Dune in cinemas, and according to Cverna, the improvement in cash flow and the reduction of debt can also be perceived positively. However, he does not see an interesting investment opportunity in the current WBD: “Currently, I look at shares as a falling knife that is very dangerous to catch. In my opinion, a more significant improvement in the company’s situation is not in sight.”

“Warners”, like virtually all traditional big players in Hollywood – Paramount or Walt Disney – are facing the onset of strong competition from purely streaming services, such as the best-known Netflix. As a result of the fierce fight for subscribers from dozens of world markets, austerity measures are being forced, which WBD must also adhere to.

The head of the company, David Zaslav, was one of the first directors of large traditional media companies to decide on cuts. For example, he canceled the online streaming service and news channel CNN+, which only lasted thirty days. But the savings should be much more.

As reported by the Bloomberg agency with reference to its informed sources, WBD wants to cross out additional savings in the amount of hundreds of millions of dollars. He intends to find them mainly in the marketing and technology departments of the streaming division. Over the past year alone, more than two thousand people have left the company, and more will probably follow.

The fat loss cure has saved more than thirteen billion dollars in the last two years. Nevertheless, WBD still has plenty of reasons to save. When the then WarnerMedia merged with Discovery in 2022, a giant was created with more than fifty billion in debt. And this at a time when cable television, still the group’s biggest business, has been losing viewers and advertising dollars for a long time.

Among other things, the saved cash is mainly directed towards building a strong streaming division with a rich film portfolio. The success of its newly built MAX streaming service, which is supposed to combine the best of the HBO MAX and Discovery Plus offerings, is therefore key for WBD. Czech viewers will also feel the changes: instead of the existing HBO MAX, they will be able to watch “simple” MAX from May 21. But with an extra charge.

WBD, like almost the entire group of competitors, is raising prices. For the cheapest version, the user in the Czech Republic will pay 219 crowns per month, for which he will receive, for example, movies such as Barbie, Aquaman or Wonka. He will be able to use the service on two devices in full HD resolution or download up to thirty movies or series episodes per month. The standard subscription will also include broadcasts from the Summer Olympics in France.