Merger costs add up as Warner Bros. Discovery posts $2.9-billion quarterly loss

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The potential sale of Warner Bros. Discovery is causing concern in Hollywood, especially as the expenses associated with the deal become clearer.

The media company, headquartered in New York, reported a $2.9 billion loss for the first quarter. This figure includes $1.3 billion in costs related to restructuring, such as lowered estimates for the value of its traditional cable TV networks, which are losing viewers.

A $2.8 billion fee paid to Netflix in February contributed to Warner’s net loss. This fee was related to Warner choosing to be acquired by Paramount Skydance instead of Netflix. While Paramount Skydance is currently covering the fee, Warner is still responsible for it financially. If the deal with Paramount Skydance fails, Warner would have to pay Paramount back.

Warner Bros. Discovery spent an additional $100 million on costs related to the auction and getting ready for the deal, as stated in their official filings.

Warner Bros. Discovery leaders told shareholders on Wednesday that their main goals moving forward are to expand HBO Max internationally, re-establish their production studios as leaders in the industry, and improve the performance of their traditional TV networks.

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After Netflix finalized the purchase of Warner Bros., the Ellisons and their colleagues immediately started planning how to regain their position.

Warner’s revenue was $8.9 billion, which was 3% lower than in the same quarter last year, if you don’t factor in changes in exchange rates.

The company’s streaming services, like HBO Max, performed well this quarter, bringing in $2.9 billion in revenue – a 9% increase. They also expanded HBO Max to Germany, Italy, the UK, and Ireland.

Advertising revenue for streaming was up 20% compared to the first quarter of 2025.

The company’s streaming service earned $438 million in adjusted earnings, a 17% increase compared to the previous period.

Warner’s studios, primarily its TV business, had a strong quarter.

Studios revenue rose 31% to $3.1 billion, compared to the prior year quarter.

TV revenue jumped 58% (when exchange rates are set aside) thanks to higher fees for licensing our programs as we launched HBO Max in new countries. These international launches also helped our movie studio, which saw revenue grow by 21%.

Video games revenue declined 30% because of lower library revenues.

Studio earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for certain items, increased by $516 million, or 158%, reaching $775 million for the quarter, up from the same quarter last year.

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What the Paramount-Warner Bros. Discovery deal means for the cable network CNN.

The company’s traditional TV networks brought in $4.4 billion in revenue, a 9% decrease from the same time last year.

TV revenue fell by 8%, mainly because fewer people are subscribing to traditional cable and satellite TV – subscriptions dropped by 10% in the US.

The company was also hurt by losing the rights to broadcast NBA games on its TNT channel, as those rights went to NBC instead. This contributed to a 12% drop in advertising revenue. Warner Bros. Discovery explained that not having the NBA affected their growth compared to the previous year.

As the costs of the merger with Paramount come into clearer focus, the opposition has grown louder.

Over 4,000 people working in the entertainment industry – including well-known names like Bryan Cranston, Noah Wyle, Kristen Stewart, and Jane Fonda – have signed a letter raising concerns about the proposed merger with Paramount. The letter warns that the deal would give even more power to a few large media companies, decreasing competition at a time when audiences and creators need diverse options the most.

This will lead to fewer chances for artists and creators, job losses in the entertainment industry, increased prices, and less variety for viewers both in the US and internationally.

The television networks’ adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased by 10% to $1.6 billion compared to the same quarter last year.

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David Ellison, the head of Paramount, has been trying to acquire Warner Bros. for several months and expressed satisfaction that Warner Bros.’s board agreed their offer was the better one.

Warner ended the quarter with $3.3 billion in cash on hand and $33.4 billion of gross debt.

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2026-05-07 00:01