May 6 (Reuters) – Warner Bros Discovery’s streaming unit posted better-than-expected quarterly revenue growth on Wednesday, as HBO Max’s expansion overseas boosted subscriber growth and engagement.
The company’s first-quarter net loss widened to $2.92 billion, including a $2.8 billion termination fee paid to Netflix. The fee was paid by Paramount Skydance under the companies’ $110 billion merger deal, but was recorded by Warner Bros as an obligation under the agreement.
The merger is expected to bring together HBO Max and Paramount+ streaming services, adding scale to help the merged company compete better with Netflix and Disney.
The combined company would have more than 220 million streaming subscribers based on current figures, with Warner Bros Discovery ending March with more than 140 million subscribers, the majority on HBO Max, while Paramount+ had 79.6 million.
Warner Bros has aggressively expanded HBO Max internationally by leveraging its library of HBO originals and global entertainment brands, most recently launching the service in the UK and Ireland. The strategy helped drive a 10% rise in subscriber-related revenue in its streaming segment.
The company said it was on track to surpass 150 million global subscribers by the end of this year.
Overall, the streaming unit recorded 9% revenue growth to $2.89 billion, compared with 7.6% growth expected by analysts, according to data compiled by LSEG.
Total advertising revenue fell 7%, hurt by the absence of National Basketball Association content and continued declines in domestic linear TV audiences.
The company reported revenue of $8.89 billion in the first quarter, largely in line with estimates of $8.9 billion.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Sriraj Kalluvila and Matthew Lewis)
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