Warner Bros. Discovery Makes Streaming History: A Year of Profit and Strategic Plans

WBD makes history, the first Hollywood conglomerate with a full-year streaming profit.
2023: Streaming unit profit $103 million, reversing $2.1 billion loss.
Q4: Streaming unit loss reduced to $55 million from $217 million.
Segment revenue grows with subscriber price hikes and higher ad revenue.
Steady improvement across quarters: Q1 – $50 million profit.
Q2: Streaming loss narrows to $3 million.
Q3: $111 million streaming profit.
WBD aims for a profitable year, swinging from a $1.85 billion loss.
Global streaming subscribers: 97.7 million by the end of 2023.
Q4 streaming revenue up 3% to over $2.5 billion.
Full-year DTC unit revenue climbs 5% to nearly $10.2 billion.
Operating expenses in the streaming segment dropped 3% in Q4.
Selling, general, and administrative expenses declined 8%.
Despite challenges in advertising, the CFO notes improving ad situation.
Studios segment faces challenges, Q4 earnings miss.
WBD shares were down more than 5% in premarket trading.
CEO Zaslav is confident in the 2024 strategic plan, and international Max rollout.
2023 achievements: $6.2 billion free cash flow, $5.4 billion debt reduction.
Wall Street looks for Hollywood to make the streaming business profitable.
Units not directly comparable, WBD’s DTC includes streaming and pay-TV.
Free cash flow for Q4 exceeds guidance targets.
The year-end goal for debt reduction was achieved with a net leverage ratio of 3.9.
Challenges in a weaker advertising market in Q4.
Positive outlook: CFO indicates improving ad situation in the current quarter.
Studios unit reports earnings miss, impacted by Hollywood strikes.
Difficult year-over-year comparisons, increased movie releases in Q4.
Content revenue declines by 20% within the studio unit.
Theatrical revenue increases due to a larger release slate.
Games revenue increases significantly with Hogwarts Legacy’s performance.
Other revenue rose 12% in Q4, helped by Warner Bros. Studio Tour Tokyo.
Fourth-quarter network unit revenue drops 8% to $5 billion.
Adjusted EBITDA fell 11% to $2.2 billion in Q4.
Distribution revenue decreases 3% in Q4.
Advertising revenue decreases 14% in Q4.
Domestic ad sales pacing better, capturing benefits of upfront deals.
CEO Zaslav expresses confidence in the 2024 attack plan.
The strategic plan for 2024 includes Max rollout and creative pipeline expansion.
WBD is positioned for growth with a $6.2 billion free cash flow.
CEO Zaslav: “Clear pathway to growth” after achieving financial goals.

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