Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Warner Bros. Discovery Inc (WBD, Financial) gained over 5 million subscribers in Q1 2025, contributing to a total of more than 22 million new subscribers over the last 12 months.
• The company delivered $339 million in EBITDA for the quarter and is on track to achieve at least $1.3 billion in EBITDA in 2025, an 85% increase from 2024.
• WBD's commitment to high-quality storytelling is driving cultural influence and financial success, with standout content like The White Lotus and The Last of Us.
• The company's global streaming service is growing, with plans to surpass 150 million subscribers by the end of next year.
• WBD's strategy of leveraging IP-based blockbusters and new originals is gaining traction, as evidenced by the success of A Minecraft Movie and Sinners.

Negative Points

• There is uncertainty around the leverage ratio that global linear networks can handle, which could impact future capital structures.
• The company faces challenges in finding a profitable business model for streaming premium sports rights.
• WBD's traditional business side is experiencing a decline, which is not yet fully offset by the growth in streaming and ad revenue in the US.
• The company anticipates a $300 million cost increase in 2025 due to overlap between outgoing and incoming sports rights.
• There is macroeconomic uncertainty affecting advertising channels, which could impact future financial performance.

Q & A Highlights

Q: Can you provide insights into the capital structure for Warner Bros. Discovery's global linear networks and the potential leverage ratio? Also, how significant is the opportunity for Max in the US with extra members? A: Gunnar Wiedenfels, CFO, stated that while he cannot speculate on capital structures for hypothetical parts of the company, the recent reorganization has provided transparency and optionality. David Zaslav, CEO, emphasized that the restructuring allows for visibility and flexibility in operations. Jean-Briac Perrette, CEO of Global Streaming and Games, noted that the extra member opportunity is still in its early stages, with benefits expected to increase over the next 12 to 18 months as it rolls out globally.

Q: What is Warner Bros. Discovery's strategy for sports content on Max, and are there opportunities to license new IPs? A: David Zaslav, CEO, explained that the strategy varies globally, with sports being part of Max in some markets and an add-on in others. Jean-Briac Perrette highlighted the disciplined approach to experimenting with different models, noting the challenges of making premium sports rights profitable in streaming. The focus remains on leveraging existing sports rights while exploring new opportunities.

Q: How does HBO consistently produce standout hits, and how is Max resonating with different demographics, particularly younger consumers? A: David Zaslav credited HBO's success to its creative team led by Casey Bloys, emphasizing quality over quantity. Jean-Briac Perrette noted that Max performs well with younger demographics due to its topical content and cultural relevance. Engagement is highest in Latin America, with the US and Europe following, while Asia Pacific has lower engagement due to its content mix.

Q: How is Warner Bros. Discovery addressing macroeconomic challenges, particularly in advertising, and what are the drivers for corporate EBITDA improvement? A: Gunnar Wiedenfels reported no material impact from macroeconomic conditions so far, with advertising tracking in line with expectations. He highlighted the diversified portfolio and strong scatter market as offsets to potential risks. Corporate costs are expected to decrease year-over-year, with some one-time items contributing to the improvement.

Q: What are the key drivers for Warner Bros. Discovery's streaming and studio businesses, and how do you plan to achieve the $3 billion EBITDA target for the studio? A: Jean-Briac Perrette outlined several growth levers for streaming, including globalization, penetration growth, ARPU growth, content slate, and product enhancements. David Zaslav emphasized the strategic focus on bundling and quality content. Gunnar Wiedenfels noted opportunities across the studio landscape, with a focus on franchise management and content monetization, supported by moderate content and CapEx investments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.