WBD Q1 Earnings Call: Management Highlights Streaming Growth Amid Revenue Decline

Global entertainment and media company Warner Bros. Discovery (NASDAQ:WBD) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 9.8% year on year to $8.98 billion. Its non-GAAP profit of $0.01 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

Warner Bros. Discovery’s first quarter results were shaped by ongoing shifts in the entertainment landscape, particularly the company’s continued focus on premium content and strategic reorganization. CEO David Zaslav attributed performance to the strength of high-profile franchises and original programming, noting that, “Our commitment to high-quality storytelling, powered by the most exceptional creative talent in front of and behind the camera, continues to be the engine that powers Warner Bros. Discovery.” Management pointed to strong subscriber gains in streaming, driven by flagship titles from HBO and successful international content, as well as cost control and a restructured operating model. However, they remained mindful of industry headwinds and evolving consumer behaviors impacting legacy businesses.

Looking ahead, Warner Bros. Discovery’s leadership emphasized several growth levers for the remainder of the year, including further international expansion, password sharing initiatives, and the launch of new content across their major franchises. CFO Gunnar Wiedenfels stated, “We are firmly on track to deliver at least $1.3 billion of EBITDA in 2025, up 85% versus 2024,” highlighting confidence in operational improvements and a robust content slate. Management acknowledged that success will depend on the ability to execute across multiple fronts—ranging from subscriber growth and ARPU expansion to continued discipline in content investment and evolving partnership models. They also identified potential risks tied to advertising markets, sports rights costs, and macroeconomic uncertainty.

Key Insights from Management’s Remarks

Management attributed Q1 performance to strong streaming subscriber growth, disciplined content curation, and the completion of a major organizational restructuring, while also citing ongoing pressure on traditional businesses and sports rights costs.

• Streaming subscriber momentum: Warner Bros. Discovery reported over 5 million net new streaming subscribers in the quarter, crediting original series like The White Lotus and The Last of Us, as well as international titles, for driving engagement and gains across key markets.
• Organizational restructuring completed: Leadership emphasized the benefits of a new, two-division structure—streaming and studios—which aims to enhance transparency, operational focus, and optionality for future strategic moves, including potential partnerships or asset combinations.
• Sports strategy adjustments: Management discussed a disciplined approach to sports rights, noting a shift away from heavy dependence on premium sports as a “rental business,” and instead prioritizing owned intellectual property (IP) such as DC, Harry Potter, and Game of Thrones franchises for long-term value creation.
• Content investment discipline: The company reiterated its “quality over quantity” approach, reallocating content spend toward flagship franchises and original programming while reducing volume in legacy and unscripted segments. This is expected to support both profitability and brand strength.
• International growth and bundling: Executives highlighted growth in international streaming markets, especially in Europe and Latin America, and identified bundling—such as the partnership with Disney in the U.S.—as a strategic lever to reduce churn and improve customer experience.

Drivers of Future Performance

Management expects future performance to be driven by international streaming expansion, ARPU enhancement initiatives, and operational efficiencies, while remaining vigilant about risks from sports rights costs and macroeconomic factors.

• Global streaming expansion: Warner Bros. Discovery is prioritizing rollout in major new markets, including Germany, the U.K., and Italy, with plans to leverage local content, sports, and established franchises. Management believes this will significantly grow the subscriber base and engagement.
• ARPU and monetization levers: The company is focused on raising average revenue per user (ARPU) through ad-supported streaming, password sharing crackdowns, and targeted price adjustments. Initiatives such as the “extra member” add-on and sports upsells in select markets are expected to provide incremental revenue.
• Cost discipline and portfolio optimization: Management underscored ongoing efforts to control corporate and content costs, signaling a moderate increase in content investment tied to strategic priorities. The exit from NBA rights is projected to reduce sports-related expenses in 2026, supporting margin improvements and freeing up capital for core content and technology investments.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will focus on (1) progress in expanding Max into new international markets and ramping subscriber growth, (2) execution of ARPU initiatives such as password-sharing enforcement and ad-supported tiers, and (3) the impact of cost controls and sports rights portfolio changes on margins. Additionally, the performance of upcoming franchise releases and further strategic partnerships will be key indicators of Warner Bros. Discovery’s ability to drive sustainable growth.

Warner Bros. Discovery currently trades at a forward P/E ratio of 178.5×. At this valuation, is it a buy or sell post earnings? The answer lies in our full research report (it’s free).

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