NEW YORK—As Warner Bros. Discovery prepares to launch its combined streaming service on May 23, the company reported Q1, 2023 earnings that showed the heavily indebted firm is making progress on its plans to cut streaming costs and reduce losses while continuing to retain and attract new direct-to-consumer subscribers.
Based on those positive trends, the company also said that it now expects its U.S. direct-to-consumer (DTC) segment to be profitable in 2023, a year ahead of its previous guidance.
In the Q1, total DTC subscribers around the world were 97.6 million, an increase of 1.6 million global subscribers since the end of Q4 while DTC operating expenses were $2,405 million, down 24% (excluding currency fluctuations) compared to the prior year quarter.
Overall, DTC adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $50 million, a $704 million year-over-year improvement on a pro forma combined basis.
In the U.S. DTC subs for HBO, HBO Max and Discovery+ increased to 55.3 million in Q1 from 54.6 million in Q4, 2022 and 53.4 million in Q1, 2022.
We’ve come through some major restructurings and have repositioned our businesses with greater precision and focus,” said David Zaslav, president & CEO in a statement announcing the earnings. “And we see a number of positive proof points emerging, with DTC perhaps the most prominent. We made a meaningful turn this quarter with $50 million in segment EBITDA and 1.6 million net adds, and we feel great about the trajectory we are on. In fact, we now expect our U.S. DTC business to be profitable for 2023 – a year ahead of our guidance.”
