Warner Bros. Discovery (WBD) experienced an 8% decrease in advertising revenues in Q1 2026, primarily attributed to the loss of NBA broadcasting rights and ongoing declines in domestic linear audiences. The absence of the NBA negatively impacted the year-over-year growth rate by 7%. Total revenues for the quarter were $8.9 billion, a 3% decrease from the prior year. This decline was partially offset by growth in ad-lite streaming subscribers.
The company reported a net loss of $2.9 billion for the first quarter, which included a $1.3 billion pre-tax charge for acquisition-related amortization, content fair value step-up, and restructuring expenses. Additionally, the net loss included a significant $2.8 billion termination fee paid to Netflix. Cash provided by operating activities was negative, at $(208) million, with free cash flow unfavorably impacted by approximately $100 million in separation and transaction-related items.
In the second quarter, WBD recorded a substantial $9.1 billion non-cash goodwill charge related to a reassessment of its TV network assets' value following the merger of WarnerMedia and Discovery. This write-down contributed to a $10 billion net loss for the quarter. Analysts, such as Michael Ashley Schulman, chief investment officer of Running Point Capital, noted that strong streaming subscriber growth was insufficient to counteract weakening fundamentals, the NBA loss, advertising weaknesses, and misses across free cash flow, revenue, EBITDA, and earnings. Warner Bros. Discovery had projected a $1.1 billion loss in TV advertising in 2026, or 23% of its total, due to the NBA's absence.
Despite the challenges, Warner executives expressed some optimism regarding upfront sales, with CFO Gunnar Wiedenfels stating that the market held up well and prices were up across categories, particularly in sports. However, the company declined to provide specifics on the volume of deals secured. The ongoing legal dispute with the NBA further compounds the uncertainty for WBD's TV business.
Analysts have revised their forecasts, with Needham cutting its 2025 linear networks EBITDA forecast by $350 million due to tougher year-over-year comparisons and slowing streaming distribution revenue growth. The 2026 adjusted EBITDA forecast was also reduced. These financial results and the associated write-downs highlight the significant impact of the NBA rights loss and broader industry shifts on Warner Bros. Discovery.
