Warner Bros. Discovery experienced an unexpected widening of its fourth-quarter losses. The media and entertainment behemoth reported a net loss of $0.20 per share for the December quarter, up from a loss of $0.16 per share the previous year. These figures surpassed market expectations, which had anticipated a loss of only $0.03 per share.
Revenue for the quarter fell 2% year-on-year, totaling $10.03 billion, which also fell short of Wall Street predictions of $10.18 billion. Despite these financial challenges, Warner Bros., known for its Max streaming service, reported a promising trajectory in its direct-to-consumer revenue, which grew by 5% year-on-year to reach $2.65 billion.
Additionally, revenue associated with subscribers grew by 10%, amounting to $2.55 billion when excluding fluctuations caused by foreign exchange. Most notably, the company’s global subscriber base surged to 116.9 million, a significant increase from 97.7 million last year and up from 110.5 million in the preceding quarter. During a conference call held Thursday, CEO David Zaslav conveyed optimism regarding future growth.
'Our direct-to-consumer business ended 2024 with about 117 million subscribers across more than 70 countries,' he said. 'We still have nearly half the world to go, with many key markets including the UK, Italy, Germany, and Australia coming online over the next few years.' The company has high hopes for continued subscriber growth throughout this year, projecting a clear path to achieve at least 150 million global subscribers by the end of 2026.
This growth is expected to accompany strong direct-to-consumer revenue and adjusted earnings before interest, taxes, depreciation, and amortization, as outlined in a recent shareholder letter. Following the announcement, the company's shares experienced an 8% spike during Thursday's trading session. In terms of studio performance, revenue increased by 15% to $3.66 billion, somewhat mitigating earlier disappointments in theatrical releases and gaming.
A notable 64% increase in television revenue (excluding foreign exchange impacts) played a crucial role in offsetting these declines, benefitting from enhanced inter-segment content licensing and initial telecast deliveries. Contrastingly, Warner Bros.' networks division saw a revenue dip of 5%, settling at $4.77 billion, despite an impressive 73% surge in content revenue.
This drop was largely driven by the dwindling number of domestic linear pay-TV subscribers and a 17% decrease in advertising revenue, a trend attributed to audience declines and an ongoing slump in advertising markets. In December, Warner Bros. revealed plans to overhaul its corporate structure, aiming to consolidate into just two main divisions: global linear networks and streaming and studios.
This organizational change is slated to be completed by the middle of this year. The company expressed confidence in its future prospects, stating, 'In 2025, we expect that the work we have done to return our overall studio to a place of industry leadership will begin to bear fruit and contribute positively to our financial results.' The letter also indicated that as this transformation unfolds, the company anticipates a substantial increase in value and improved returns for its shareholders..