Warner Bros. Discovery (WBD) earnings Q1 2024

Warner Bros. Discovery reported first-quarter results on Thursday, missing analyst expectations on both the top and bottom lines despite strength in its streaming unit.

The company’s stock gained 3% Thursday.

Here is how Warner Bros. Discovery performed, compared with estimates from analysts surveyed by LSEG:

• Loss per share: 40 cents vs. 24 cents loss expected
• Revenue: $9.96 billion vs. $10.231 billion expected

Warner Bros. Discovery — which owns streaming service Max, a portfolio of cable TV networks including TNT and Discovery, and a film studio — said revenue fell 7% to $9.96 billion compared with the same quarter last year.

Warner Bros. Discovery posted a net loss attributable to the company of $966 million, or 40 cents per share, an improvement from the year-ago quarter when it reported a loss of $1.07 billion, or 44 cents per share.

The company said total adjusted earnings before interest, taxes, depreciation and amortization were down roughly 20% during the first quarter to $2.1 billion, noting its Suicide Squad: Kill the Justice League video game generated significantly lower revenue.

Warner Bros. Discovery said Thursday it added 2 million direct-to-consumer streaming subscribers during the quarter, bringing its total to 99.6 million.

That segment earned an adjusted $86 million during the quarter, an improvement of $36 million from the prior-year quarter, the company said. It also saw revenue increase “modestly” to $2.46 billion from the prior-year quarter.

Advertising revenue for streaming proved to be a bright spot, increasing 70%, boosted by higher engagement on Max in the U.S. due in part to subscriber growth in the streaming service’s ad-lite tier and the launch of sports on the app.

The earnings release follows an announcement this week that Warner Bros. Discovery would bundle its streaming services with those of Disney — tying together Max, Disney+ and Hulu — and offer it to consumers this summer, a callback to the traditional pay TV package. Pricing has yet to be disclosed, but it will be offered at a discount, CNBC reported.

It marks the first time two media giants are joining forces to offer a streaming bundle as the push to make streaming profitable continues. While TV networks have long been a cash cow for media companies, the bundle continues to bleed subscribers.

“As you know, I’ve been a big proponent of bundling,” Warner Bros. Discovery CEO David Zaslav said on Thursday’s earnings call. He noted subscribers will have to stick with the bundle to take advantage of the cheaper pricing offering, which should then reduce so-called churn, referring to people dropping their subscriptions.

“The churn is the killer in this business and we’ve been hyper focused on it,” Zaslav said, adding bundling has been a big helper to decrease the loss of customers. “We need to…