Hollywood
Warner Bros. Discovery records $8.9 billion revenue for Q1
Studios and streaming gains are eclipsed by a $2.9 billion first-quarter deficit
CALIFORNIA: Warner Bros. Discovery released its first-quarter 2026 financial results, revealing a complex performance where significant growth in film and streaming was offset by heavy merger-related costs and a declining linear television market. While the company saw a surge in its digital and studio divisions, it ultimately reported a substantial net loss for the period.
The streaming segment showed strong momentum, with revenues increasing 7 per cent to $2.9 billion. This growth was primarily fuelled by an 8 per cent rise in subscriber-related revenues and a 19 per cent jump in advertising, driven by an increase in global ad-lite subscribers.
Despite this, the company’s bottom line was heavily impacted by a $2.8 billion termination fee paid to Netflix. This fee was paid by Paramount Skydance Corporation (PSKY) on WBD’s behalf as part of their ongoing merger agreement.
The Studios segment was the quarter’s strongest performer, with total revenues rising 31 per cent to $3.1 billion. The segment’s Adjusted EBITDA saw a massive 156 per cent increase to $775 million.
- TV revenue: Increased 58 per cent, largely due to intercompany content licensing for international HBO Max launches.
- Theatrical revenue: Grew by 21 per cent, also supported by the global expansion of streaming platforms.
- Games revenue: Declined 30 per cent due to lower library sales compared to the previous year.
The Global Linear Networks division continues to face headwinds. Revenues fell 9 per cent to $4.4 billion, driven by a 10 per cent drop in domestic pay-TV subscribers.
Furthermore, the absence of NBA programming significantly impacted the segment, contributing to a 12 per cent decrease in advertising revenue.
Despite the operational growth in several sectors, the company’s total reported revenue dipped slightly, and free cash flow turned negative.
Total revenues for the first quarter of 2026 stood at $8.9 billion, reflecting a decline of 3 per cent year-on-year on an ex-foreign exchange basis. The company reported a net loss of $2.9 billion, compared to a loss of $453 million in the same period last year. Adjusted EBITDA remained relatively unchanged at $2.2 billion during the quarter.
Free cash flow turned negative at $(476) million, compared to an inflow of $302 million a year earlier.
The company concluded the quarter with $30.1 billion in net debt and a leverage ratio of 3.4x. As WBD moves toward completing its proposed transaction with PSKY, it remains focused on managing its $33.4 billion gross debt while navigating the transition from traditional cable to global streaming.
