Warner Bros. Discovery, led by CEO David Zaslav, reported on Thursday that it ended 2024 with 116.9 million global streaming subscribers, compared with 110.5 million as of the end of September. The figures include subs for Max and Discovery+.
Streaming subs grew both in the U.S. and in international markets in the fourth quarter. In a shareholder newsletter published with the earnings update, Warner Bros. Discovery (WBD) outlined a path to 150 million subscribers by the end of 2026.
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Total direct-to-consumer (DTC) segment revenue in the quarter increased driven by the user growth, helped by Max's availability in bundles. During the latest period, WBD posted a quarterly profit of $409 million for its DTC unit, which includes its streaming and premium pay-TV services, compared with a $55 million year-ago loss.
For the full-year 2024, WBD's DTC business turned a profit of $677 million, compared to a 2023 profit of $103 million.
With Netflix profitable and being seen by some observers as the king of streaming , Wall Street has been looking for legacy Hollywood studios to make their streaming business units sustainably profitable.
WBD previously said it was targeting $1 billion or more in DTC earnings before interest, taxes, depreciation and amortization (EBITDA) in 2025. Zaslav, however, more recently told Wall Street that the conglomerate was now expecting to meaningfully exceed that, touting "clear results" of the firm's focus, investment and patience on Max.
"We expect strong DTC subscriber growth to continue throughout 2025. And we now have a clear path to reach at least 150 million global subscribers by the end of 2026, with corresponding strong DTC revenue and adjusted EBITDA growth," WBD said in its shareholder letter on Thursday.
"Max continues to grow at a powerful pace, and we expect it to continue throughout 2025 and beyond. In this generational media disruption, only the global streamers will survive and prosper, and Max is just that," CEO Zaslav told analysts during a morning call as he delivered prepared remarks.
WBD reported a full-year 2024 loss of $11.3 billion, "which includes $7.5 billion of pre-tax
acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses and a $9.1 billion non-cash goodwill impairment charge in the networks segment," the company said.
For the fourth quarter, WBD disclosed $286 million in "restructuring and other charges" and $191 million in "impairments and loss on dispositions." In the fourth quarter of 2023, the firm disclosed such charges of $75 million and $16 million, respectively.
WBD executives told MIP London on Wednesday that the conglomerate was striving to be a top 3 streamer with Max in the markets where it is available. The company has also focused on improving the performance of its studio business. "Even in an industry of hits and misses, we must acknowledge that our studios business must deliver more consistency," Zaslav said late last year.
On a morning analyst call, CEO Zaslav also discussed an on-going reorganization at the studio. "This restructure creates real visibility to the strength of our studio and library and global streaming business. We'll be better able to respond to this generational disruption," he said. WBD recently announced a restructuring of its games business to focus around four tentpole franchises: Harry Potter, Game of Thrones, Mortal Kombat and DC.
WBD execs also discussed pulling plans to charge Max ad-free subscribers extra for sports and news content. "We're openly continuing to experiment as to what the right model is and what the best way is to both drive engagement and first views or acquisition through that powerful content, but at the same time we're figuring out a business model that works. And we're going to continue to experiment and see what works," JB Perrette, CEO and president of global streaming and games for WBD, said.
Perrette also discussed WBD and rival studios continuing with content bundling strategies to deal with unprecedented industry change. "The industry has gone from a model in the 2010 to 2020 period of everybody trying to do everything, and frankly a glut of content and an overspend, to a much more rational spend where we've all got back to doing what we're really good at and providing consumers access to all the goodness through the bundles. That's a commercial path to getting a lot of the value," he told analysts.
On the linear TV side, Gunnar Wiedenfels, CFO at WBD, pointed to increasing improvements in international markets, compared to the domestic U.S. market, but declined to make forecasts about future performance. "In the current geopolitical environment, we have to acknowledge that there's some uncertainty there as well. So that's the reason why we're not out here with a firm, hard number for that business or the company in the aggregate," he said.
Zaslav also addressed live TV sport rights, which remain costly. "We like sports, but we're very disciplined and we're opportunistic," he argued, as rival streaming platforms increasingly look to live TV sports to drive audience growth and engagement, which has only driven up pricing for rights.
And despite Venu, the former sports-focused streaming service proposed by The Walt Disney Co, WBD and Fox Corp., before being abandoned, Zaslav argued the continuing appeal of sports content bundles will be driven by potential value and convenience for consumers. "There will be an aggregation in a meaningful way behind a couple of the bigger global players, because consumers at some point are going to say, this is too cumbersome and too challenging and I just want to put the TV on, or I want to go to my phne, or whatever device I go to and be able to see the content I love, without having to come in and out of products and without googling where things are," he told analysts.
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