Warner Bros. Discovery reports big overall loss even as streaming turns a profit

Warner Bros. Discovery reported a big quarterly loss even as its direct-to-consumer segment turned a profit for the first time ever.

The company also expects the DTC, or streaming, business to be profitable for 2023, a year ahead of its expectations, CEO David Zaslav said in an earnings release Friday morning.

First-quarter revenue was $10.7 billion, roughly in line with analysts’ estimates. The company reported a net loss of $1.1 billion and adjusted EBITDA of $2.6 billion.

Here’s what the company reported, versus analysts’ estimates, according to Refinitiv:

• Revenue: $10.7 billion vs. $10.78 billion expected
• Loss per share: 44 cents vs. earnings of 1 cent expected

Warner Bros. Discovery’s stock fell 7% in premarket trading after dropping nearly 4% on Thursday.

Like all major media companies, Warner Bros. Discovery is pivoting to streaming video as millions of Americans cancel traditional pay TV each year. The company ended the quarter with 97.6 million streaming subscribers, up 1.6 million from last quarter.

The direct-to-consumer segment turned a profit of $50 million for the quarter.

Warner Bros. Discovery is adding Discovery+ content to HBO Max and relaunching the service as Max in the U.S. later this month. Zaslav had previously promised its streaming business will be break-even by 2024 and profitable by 2025. Zaslav has aggressively cut back on content spending, including eliminating shows and movies from Max, to jump-start efforts to make the business profitable.

Warner Bros. Discovery lost $930 million in free cash flow in the quarter, largely due to interest and sports media rights payments.

The company ended the fourth quarter with $49.5 billion in debt on its balance sheet, and $2.6 billion in cash on hand. Warner Bros. Discovery is attempting to boost free cash flow by cutting back on spending, including laying off thousands of employees last year, to reduce its hefty debt load.

This is a developing story. Check back for updates.

WATCH: Warner Bros. Discovery CEO David Zaslav speaks to CNBC after unveiling ‘Max’