Warner Bros Discovery (WBD) earnings report 1Q23

Warner Bros. Discovery reported a big quarterly loss, although its direct-to-consumer segment turned a profit for the first time ever.

The company also expects its DTC, or streaming, business to be profitable by 2023, a year ahead of expectations, CEO David Zaslav said in an earnings call Friday morning.

First-quarter revenue was $10.7 billion, roughly in line with analysts’ estimates. The company reported a net loss of $1.1 billion and adjusted EBITDA of $2.6 billion.

Here’s what the company reported, versus analysts’ estimates, according to Refinitiv:

• Income: 10.7 billion dollars against the expected 10.78 billion dollars
• Loss per share: 44 cents vs. expected income of 1 cent

Warner Bros. Discovery’s stock fell 6% in premarket trading after falling nearly 4% on Thursday.

Like all major media companies, Warner Bros. Discovery on streaming video as millions of Americans ditch traditional pay TV each year. The company ended the quarter with 97.6 million streaming subscribers, up 1.6 million from the previous quarter.

The direct-to-consumer segment generated a profit of 50 million dollars in the quarter.

Warner Bros. Discovery is adding Discovery+ content to HBO Max and relaunching the service as Max in the US later this month. Zaslav had previously promised that the streaming business will be break-even by 2024 and profitable by 2025. Zaslav has aggressively cut back on content spending, including eliminating series and movies from Max, to begin efforts to make the business profitable.

Warner Bros. Discovery lost $930 million in free cash flow in the quarter, mainly due to interest and rights payments for sports media,

The company ended the fourth quarter with $49.5 billion in debt on its balance sheet and $2.6 billion in cash. Warner Bros. Discovery is trying to increase free cash flow by cutting expenses, including laying off thousands of employees last year, to reduce its heavy debt load.

This is a development story. Check back for updates.

WATCH: Warner Bros. Discovery CEO David Zaslav talks to CNBC after unveiling ‘Max’