Warner Bros. Discovery (WBD) delivered an impressive earnings update, reporting a 10% rise in annual streaming profits and outlining an ambitious strategy to double profitability in the segment by 2025. This strong digital performance sent WBD shares soaring over 10% in early trading, even as traditional television struggles continued.
Streaming Success Drives Growth
WBD’s streaming platforms, Max and Discovery+, outperformed expectations, adding 6.4 million subscribers in Q4—well above the anticipated 4.9 million. The division’s revenue increased 5% to $2.65 billion, while adjusted EBITDA surged to $409 million, a significant improvement from last year’s $55 million loss. WBD now forecasts streaming EBITDA to reach $1.3 billion in 2025, with long-term profit margins exceeding 20%.
CEO David Zaslav remains confident in streaming’s future, stating, “In this generational media disruption, only the global streamers will survive and prosper, and Max is just that.”
Max Expands Into New Markets
A key factor in WBD’s strategy is the international expansion of Max. The platform is set to launch in Australia by March, followed by Germany, Italy, and the UK in 2025. While Max has already expanded across 70 countries, WBD estimates it has only reached 40% of its potential global market.
Despite WBD’s 116.9 million total subscribers lagging behind Netflix’s 302 million and Disney+’s 124.6 million, analysts see strong growth potential. Industry experts believe an upcoming crackdown on password sharing could further drive paid subscriptions.
Legacy TV Declines, Studios Rebound
While streaming thrives, WBD’s traditional television business continues to decline. Revenue in this segment, which includes CNN and Discovery Channel, fell 5%, while advertising revenue dropped 17%, reflecting the industry-wide shift from cable to digital platforms.
Conversely, WBD’s studio division reported a 15% revenue increase, fueled by strong content licensing and a recovery from Hollywood’s 2023 production slowdowns. Zaslav reaffirmed WBD’s focus on reclaiming dominance in film and television production.
Strategic Restructuring and Market Positioning
WBD’s recent earnings call followed its announcement to separate cable TV networks from its streaming and studio businesses—a move that could lead to a sale or spinoff of its traditional TV assets.
Although overall revenue dipped 2% to $10.03 billion—missing analyst expectations—the market remains optimistic. Despite a reported loss of 20 cents per share, WBD’s streaming success overshadowed setbacks, reinforcing investor confidence.
Changes in Sports and News Content
WBD also announced updates to its Max platform. B/R Sports and CNN content will remain free for premium subscribers but will no longer be available in the ad-supported tier starting March 30.
While WBD retains key sports deals, including the French Open and Major League Baseball, it will not aggressively pursue new sports rights. Meanwhile, CNN struggled, as anticipated election-year ratings boosts failed to materialize.
With streaming at the core of its growth, WBD is positioning itself for a digital-first future, navigating industry challenges while capitalizing on emerging opportunities.
