Warner Bros Revenue Falls

Warner Bros. Discovery’s revenue fell in the first quarter and the media company posted a steep loss amid continued softness in the advertising market.

The Wall Street Journal reports the company, formed last year as a result of Discovery’s merger with AT&T’s WarnerMedia, posted revenue of $10.70 billion, below analysts’ expectations of $10.75 billion. Adjusted to reflect year-ago results that account for the merger, revenue fell 6% from a year ago.

In the company’s cable-networks business, revenue fell 12% to $5.58 billion, dragged down by a 15% drop in ad sales. The company said the U.S. audience for entertainment networks and news channels continued to shrink and advertising markets were soft.

David Zaslav

The company owns many ad-supported cable networks including CNN, TNT, TBS, Discovery and TLC. It also has an ad-supported version of its direct-to-consumer streaming services HBO Max and Discovery+.

Chief Executive David Zaslav said the company’s unit that houses its streaming platforms, the direct-to-consumer segment, will be profitable this year, a year earlier than the company had previously forecast. Media companies have broadly been refocusing their streaming businesses on reaching profitability amid mounting losses throughout the sector.

Warner Bros’ direct-to-consumer unit added 1.6 million subscribers during the first three months of the year and posted its first adjusted quarterly profit. The direct-to-consumer segment, which includes HBO, HBO Max and Discovery+, ended the quarter with 97.6 million subscribers.

Revenue from the direct-to-consumer business fell 2% while adjusted earnings, stripping out interest, taxes, depreciation and amortization, came to $50 million, compared with a loss of $654 million a year ago.