Warner Bros. Discovery reported a 3% decrease in overall revenue for the first quarter of 2026, largely attributed to an 8% slump in advertising revenue. This decline was primarily due to the company's decision to cut ties with the NBA, which had previously represented a substantial portion of its large-audience programming. Distribution revenues remained relatively flat.
Despite the overall revenue decline, the company saw growth in its streaming and production studio segments. Streaming revenue increased by 7% to nearly $2.9 billion, with distribution fees up 7% and advertising revenue up 19%. Revenue from production studios rose significantly by 31% to approximately $3.13 billion.
However, the shift of consumers towards streaming continued to negatively impact Warner's traditional television operations. TV revenue fell 9% to about $4.38 billion, with advertising revenue decreasing by 12% and U.S. TV audiences down 8%. This erosion in the large TV business offset the gains made in streaming and studios.
During an investor call, Warner CEO David Zaslav announced an increased prediction for streaming subscribers, now expecting over 150 million HBO Max subscribers by the end of 2026. The company also faces a $2.8 billion reserve obligation related to the termination of a previous acquisition deal with Netflix, a fee which Paramount initially paid on behalf of Warner but is refundable under certain conditions.
