On Friday, Warner Bros. Discovery, the $43 billion media merger of WarnerMedia and Discovery, announced that its streaming business will turn a profit in 2023, which is a year ahead of its previous prediction. The company previously said it expected to break even by 2024 and become profitable in 2025.
The announcement marks a significant milestone for Warner Bros. Discovery, which has been working to cut costs and deal with its massive debt since the merger. HBO has reduced content spending, removed many shows and movies from HBO Max, and laid off hundreds of employees.
“It is an important time for Warner Bros. Discovery. We’ve come through some major restructurings and have repositioned our businesses with greater precision and focus,” CEO David Zaslav said in a statement. “In fact, we now expect our U.S. DTC business to be profitable for 2023 – a year ahead of our guidance. Even in today’s challenging marketplace, we are positioned to drive free cash flow and deleverage our balance sheet, and we remain confident in our strategy and ability to achieve our financial targets.”
Despite these obstacles, the streaming division added 1.6 million subscribers and generated $50 million in adjusted EBITDA in the first quarter. The direct-to-consumer segment ended the quarter with 97.6 million global subscribers across HBO, HBO Max, and Discovery+, up from 96.1 million in Q4 2022.
The success of HBO’s video game adaptation series “The Last of Us,” which currently has an average of 32 million viewers per episode in the United States, contributed to HBO Max’s subscriber growth. It is also the most-watched show in HBO Max history in Europe and Latin America.
On May 23, Warner Bros. Discovery will launch Max, which will combine Discovery+ and HBO Max content. The move is expected to increase the company’s subscriber base and revenue.
Overall revenue for Warner Bros. Discovery was $10.7 billion, which was in line with analyst expectations. However, the company also reported a $1.07 billion net loss.
The announcement that the streaming business will be profitable soon is a good sign for Warner Bros. Discovery, which has faced significant challenges since the merger. The company has been working to streamline its operations so that it can focus on its core businesses, which include streaming.