Warner Bros Discovery (WBD) Earnings Date & Reports
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WBD is expected to report earnings to fall 87.92% to -14 cents per share on July 30
Warner Bros. Discovery (WBD) First Quarter 2026 Earnings Recap: Streaming Strength Offsets Linear Declines
Key Takeaways
- Total revenues of $8.9 billion, down 1% year-over-year, roughly in line with consensus estimates of $8.95 billion.
- GAAP diluted EPS of -$1.17, significantly missing consensus of around -$0.09 to -$0.11, impacted by a $2.8 billion Netflix termination fee.
- Adjusted EBITDA rose 5% to $2.2 billion, with Streaming up 29% to $438 million and Studios surging 156% to $775 million.
- Global Linear Networks revenues fell 9%, reflecting ongoing cord-cutting and ad softness despite some underlying improvements.
- Streaming showed robust growth: subscriber-related revenue up 8% ex-FX (foreign exchange), ad-supported tier at 50% of gross adds.
- Free cash flow was negative $476 million, affected by content investments and $100 million in transaction costs.
Earnings Context and Why It Matters
Warner Bros. Discovery's First Quarter 2026 results, for the period ended March 31, 2026, highlight the media giant's pivot toward streaming amid declining linear TV revenues. This earnings report is pivotal as investors assess progress in the DTC (direct-to-consumer) segment, including Max (formerly HBO Max), against legacy cable headwinds. Recent international launches in the U.K., Ireland, Germany, and Italy boosted subscriber momentum, exceeding 140 million globally. With $30.1 billion in net debt and 3.4x leverage, profitability in high-growth areas like streaming and studios is crucial for deleveraging and funding content. Broader industry shifts, including NBA rights loss and ad market volatility, amplify the stakes for WBD's strategic execution.
Warner Bros. Discovery reported total revenues of $8,893 million for Q1 2026, a 1% decline from $8,979 million in Q1 2025 and aligning closely with consensus estimates of $8.95 billion. DTC/Streaming revenues grew 9% to $2,887 million, driven by 7% ex-FX distribution growth and 19% ad revenue increase, though impacted by NBA absence. Global Linear Networks revenues dropped 9% to $4,377 million, with advertising down 12%. Studios revenues surged 37% to $3,125 million, fueled by intercompany licensing for international streaming launches.
GAAP net loss widened to $2,916 million from $453 million, yielding diluted EPS of -$1.17 versus consensus around -$0.10, largely due to a one-time $2.8 billion Netflix termination fee and $1.3 billion in amortization/restructuring costs. Adjusted EBITDA increased 5% to $2,203 million, flat ex-FX: Streaming +29% ($438 million), Studios +156% ($775 million), offset by Networks -9% ($1,634 million). Cash from operations was -$208 million; free cash flow -$476 million. Streaming exceeded 140 million subscribers, on track for 150 million by year-end.
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Market Reaction and Investor Sentiment
Following the after-market release on May 6, 2026, WBD shares showed muted reaction, trading around $27 with minor declines noted in early after-hours. Investors focused positively on streaming acceleration and Adjusted EBITDA resilience, tempering concerns over the GAAP EPS miss from one-offs. Sentiment remains cautiously optimistic, buoyed by content hits like The Pitt (20M viewers/episode) and international expansion, though legacy TV declines and debt levels cap enthusiasm. Options implied ~8-10% volatility, consistent with historical post-earnings moves.
Forward Outlook and Key Factors to Monitor
Warner Bros. Discovery anticipates 2026 Adjusted EBITDA relatively in line with 2025 levels, supported by streaming momentum and studios output. Watch for continued DTC subscriber growth toward 150 million, with Q2 facing NBA absence headwinds (~16% ex-FX ad revenue impact) but offset by NCAA benefits and price hikes showing low churn.
In studios, expect at least $3 billion annual Adjusted EBITDA, with theatrical ramping to 14 releases in 2026 from 11 in 2025. Global Linear Networks should see high-single-digit operating expense cuts, with international outperformance versus U.S. trends.
Key monitors include free cash flow conversion (target 33-50% underlying), net leverage reduction from 3.4x, and transaction costs tied to potential Paramount merger (close Q3 2026). Content slate like Euphoria S3, House of the Dragon S3, and Olympics coverage will signal demand. Margin pressures from content spend and ad cycles remain focal points amid industry consolidation.
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