Warner Bros. Discovery Posts $2.9B Net Loss on Paramount Deal Costs
CNBC reported Wednesday that Warner Bros. Discovery recorded a first-quarter net loss of $2.9 billion, a dramatic widening from the $453 million loss posted in the same period a year earlier. The company attributed the outsized figure to acquisition-related charges and a multibillion-dollar fee connected to its pending sale to Paramount Skydance.
The Netflix Fee Explained
The single largest driver of the quarterly loss was a $2.8 billion termination fee originally owed to Netflix. Netflix had proposed acquiring WBD’s assets before Paramount Skydance entered with a superior offer, causing Netflix to walk away from the table in February. Paramount agreed to absorb the termination fee as part of its broader acquisition agreement, but accounting rules require the liability to sit on WBD’s balance sheet until the transaction closes. WBD also recorded $1.3 billion in pre-tax charges covering amortization, content valuation adjustments, and restructuring expenses.
Background on the Paramount Acquisition
WBD shareholders approved Paramount’s proposed purchase in April, and the deal is now under regulatory review. Paramount said in its own earnings release Monday that it has advanced meaningfully toward completing the transaction, with a targeted close in the third quarter of 2026. The termination fee structure contains a conditional clause: if WBD were to accept a competing higher offer and exit the Paramount agreement, the fee obligation would revert to WBD rather than Paramount.
Streaming Gains Offset Linear Drag
Away from deal-related noise, WBD’s operating picture was mixed. Total revenue slipped 1% year over year to $8.89 billion, while adjusted EBITDA climbed 5% to $2.2 billion. Streaming remained the clearest bright spot, with total streaming revenue rising 9% to roughly $2.89 billion. International expansion of HBO Max lifted subscriber revenue, and advertising revenue for the streaming unit jumped 20% as more customers opted for the ad-supported tier. The company said it surpassed its guidance of 140 million global streaming customers and expects to exceed 150 million by year-end.
Linear TV and Film Tell Different Stories
WBD’s pay TV networks, which include CNN, TBS, and Discovery Channel, continued to lose ground. The linear segment generated $4.38 billion in revenue, down 8% year over year, with advertising revenue off 11% partly because the company no longer holds NBA media rights. The film studio division told a sharply different story, posting a 35% revenue increase to $3.13 billion. WBD ended the quarter carrying $33.4 billion in gross debt as it navigates one of the more complex media mergers in recent memory.
Read Next: Paramount Reports Earnings, Says Merger With WBD on Track for Q3 Close
