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Warner Bros Discovery's (WBD.O) streaming unit posted a better-than-expected quarterly revenue growth on Wednesday, as HBO Max's expansion overseas boosted subscriber growth and engagement.
The company reported a bigger first-quarter net loss of $2.92 billion, including a $2.8 billion termination fee paid to Netflix (NFLX.O). The fee was paid by Paramount Skydance (PSKY.O) under the companies' $110 billion merger deal, but was recorded by Warner Bros as an obligation under the agreement.
The combined company is expected to integrate HBO Max and Paramount+ streaming services after the merger, adding scale to help the merged company compete better with Netflix and Disney (DIS.N).
Warner Bros has leveraged its vast library of HBO originals and global entertainment brands to aggressively expand HBO Max internationally, most recently launching the service in the U.K. and Ireland. This helped drive a 10% rise in subscriber-related revenue at its streaming segment.
The streaming unit recorded a 9% revenue growth to $2.89 billion, compared with a 7.6% growth expected by analysts.
Total advertising revenue fell 7%, hurt by the absence of NBA 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, according to data compiled by LSEG.
