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Warner Bros. Discovery posted a first-quarter profit of $86 million for its Direct-to-Consumer (DTC) unit, which includes its streaming and premium pay-TV services, compared with a $50 million year-ago profit, after turning a full-year 2023 profit earlier this year.

The company, led by CEO David Zaslav, said Thursday that it ended March with 99.6 million global streaming subscribers, compared with 97.7 million as of the end of 2023 and ahead of Wall Street expectations. Segment revenue grew, helped by subscriber price increases and higher advertising revenue, driven by Max U.S. ad-lite subscriber gains.

TD Cowen analyst Doug Creutz had recently forecast the mixed first-quarter results in this key unit. “In DTC, we expect WBD to finish the quarter with 98.8 million OTT subs (52.2 million domestic,
and 46.6 million international), with sequential total sub growth of 1.2 million quarter over quarter,” he wrote in a preview report. “We estimate segment revenue of $2.64 billion (+8 percent year-over-year) and an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $96 million.”

With Netflix profitable and being seen by some observers as the king of streaming, Wall Street has been looking for Hollywood conglomerates to make their streaming business units profitable after an initial focus on subscriber growth. Most sector giants ended 2023 with a ways to go. But their streaming units are not directly comparable though as they sometimes don’t include all streaming operations of a company or include additional business. WBD’s DTC segment, for example, consists of its streaming and premium pay-TV services, meaning HBO is part of it.

WBD’s quarterly earnings report on Thursday showed weakness at its studios and networks segments though.

Studios results were hit by fewer TV shows delivered than in the year-ago period due to the Hollywood strikes’ fallout, as well as a weaker performance in video gaming. In the first quarter of 2023, the video game Hogwarts Legacy did very well, making for a tough comparison, while in the latest quarter, Suicide Squad didn’t do well, hitting gaming revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA).

WBD’s networks unit was hit by continued weakness in the linear business and an advertising revenue miss, which were only partially offset by cost management.


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