Warner Bros. Discovery, Inc. Series A ((WBD)) has held its Q4 earnings call. Read on for the main highlights of the call.
Warner Bros. Discovery’s recent earnings call paints an optimistic picture, highlighting robust growth in its direct-to-consumer subscriptions and successful affiliate agreements. However, the company is navigating challenges in its linear television segment and advertising sales, which tempers the overall positive sentiment.
Strong Growth in Direct-to-Consumer Business
Warner Bros. Discovery’s direct-to-consumer segment has seen impressive growth, ending 2024 with approximately 117 million subscribers. The company added 6.5 million subscribers in the fourth quarter alone and nearly 20 million over the year. This segment has significantly contributed to the company’s financial health, with an EBITDA of nearly $700 million, marking a $3 billion improvement over the past two years.
Successful Affiliate Agreements
The company has secured multi-year renewal agreements with five of the six largest pay TV providers in America. These agreements include rate increases, providing much-needed stability to Warner Bros. Discovery’s linear business amidst the industry’s ongoing transformation.
International Expansion Plans
Looking ahead, Warner Bros. Discovery is setting its sights on international markets, with plans to launch in key regions such as the U.K., Italy, Germany, and Australia. The company aims to expand its subscriber base to at least 150 million by the end of 2026, reflecting its ambitious growth strategy.
Linear Television Pressures
Despite the positive momentum in other areas, Warner Bros. Discovery faces pressures in its linear television segment. The shift towards direct-to-consumer options and packaging flexibility is expected to result in slower rate increases in the domestic affiliate business, posing a challenge in the near term.
Challenges in Ad Sales
The earnings call revealed weaker-than-expected ad sales in the fourth quarter, with CNN not capitalizing on the election period as anticipated. While there are some mild positive signals from the ad market, no significant changes are expected in the immediate future.
Forward-Looking Guidance
Warner Bros. Discovery’s forward-looking guidance is optimistic, with the company targeting at least 150 million subscribers by the end of 2026. The direct-to-consumer business is expected to continue its upward trajectory, with plans to nearly double EBITDA in 2025. The studio business is also poised for growth, targeting $3 billion or more in EBITDA, driven by strong performance in television and film sectors. Despite challenges, the company remains focused on enhancing shareholder value and transforming its business model.
In summary, Warner Bros. Discovery’s earnings call reflects a company on a positive growth path, particularly in its direct-to-consumer business and international expansion plans. While challenges in linear television and ad sales persist, the company’s strategic initiatives and forward-looking guidance suggest a promising future.