Warner Bros. Discovery Posts $2.9 Billion Q1 Loss Amid Netflix Breakup Fee and Ongoing Paramount Merger

Warner Bros. Discovery (WBD) posted a net loss of $2.9 billion for the quarter ended March 2026, far above the $453 million loss a year earlier. The loss comprises $1.3 billion of pre-tax acquisition-related amortization and a $2.8 billion termination fee tied to the collapsed Netflix deal. Revenue slipped to $8.89 billion (down 1 % YoY), while adjusted EBITDA held at $2.2 billion. The company ended the quarter with $33.4 billion of gross debt.

CNBC

In February, Netflix walked away from a signed agreement to buy WBD’s streaming and studio assets. Paramount Skydance entered with a higher offer, agreeing to assume the $2.8 billion breakup fee on WBD’s books. Shareholders approved the $110 billion Paramount merger in April; the transaction now awaits regulatory clearance in the United Kingdom, the U.S. Federal Communications Commission, and a coalition of state attorneys general led by California’s Rob Bonta. Paramount has signaled “significant progress” and expects the deal to close in the third quarter.

CNBC

Streaming revenue rose to $2.89 billion, up 7-9 % quarter-over-quarter, and HBO Max surpassed 140 million global subscribers, on track to exceed 150 million by year-end. Advertising in the ad-supported tier grew 19-20 %. The studio division generated $3.13 billion in revenue (up 31-35 %) and $775 million in profit, driven by higher theatrical and licensing income. CEO David Zaslav said the company now expects “more than 150 million subscribers for HBO Max by the end of 2026.”

The Wrap

Linear networks delivered $4.38-$4.4 billion in revenue, down 8-9 % YoY. Advertising revenue fell 11-12 % after the loss of NBA media rights, which had been a cornerstone of Turner Sports’ ad inventory. U.S. TV audiences declined 8 %, and affiliate rates rose only modestly.

CNBC

• David Zaslav, CEO: Described HBO Max as a “global high growth asset” and a “huge benefit” to Paramount post-merger. He added that “how content is made, how it’s distributed and how it’s consumed is evolving with increasing velocity.”

The Wrap

• David Ellison, Paramount CEO: Confirmed the merger is “on track to close in the third quarter.”

The Wrap

• Gunnar Wiedenfels, CFO: Stated the company is focused on “efficiency management” and expects AI to become a “more meaningful contributor” to cost control.

The Wrap

• Regulators: The UK competition review is open for comment; the FCC has received Paramount’s foreign-investment filing; state AGs have signaled intent to scrutinize the deal.

The Wrap

California Attorney General Rob Bonta warned that “red flags are everywhere when you have a merger of this type.” The UK, FCC, and state reviews remain pending, and a failure to close by Sept. 30 would trigger a $0.25-per-share “ticking fee.” Analysts also note the $33.4 billion debt load and a swing to negative free-cash-flow of $208 million as additional risk factors.

The Wrap

• Net loss: $2.9 billion (CNBC, Deadline, TheStreamable) vs. $2.92 billion (TheWrap).

Deadline Hollywood

• Overall revenue decline: 1 % (CNBC, TheWrap) vs. 3 % (Variety).

The Wrap

• Streaming revenue growth: 7 % (Deadline) vs. 9 % (CNBC, TheWrap, Variety).

The Wrap

• Linear-ad revenue decline: 8 % (Variety), 11 % (CNBC), 12 % (Deadline).

CNBC

• Linear TV revenue: $4.38 billion (CNBC, Variety) vs. $4.4 billion (Deadline).

Deadline Hollywood

• “How content is made, how it’s distributed and how it’s consumed is evolving with increasing velocity,” Zaslav told analysts on Wednesday.” — David Zaslav, CEO, Warner Bros. Discovery

The Wrap

• “When you look across Warner Brothers Discovery today in studios, streaming and global linear networks, each segment of our business is demonstrably more nimble and better positioned for future success than when Warner Brothers Discovery was formed.” — David Zaslav, CEO, Warner Bros. Discovery

The Wrap

• “We’ve said consistently we’re living through a period of historic disruption in media and entertainment.” — David Zaslav, CEO, Warner Bros. Discovery

The Wrap

• “efficiency management” — Gunnar Wiedenfels, CFO, Warner Bros. Discovery

The Wrap

• “red flags are everywhere when you have a merger of this type” — Rob Bonta, California Attorney General

The Wrap

The merger must clear UK, FCC, and state-level reviews before a projected Q3 closing. If the deal stalls, shareholders receive a $0.25-per-share quarterly “ticking fee,” and Paramount would owe a $7 billion termination penalty. Management expects the NBA-related ad-revenue hit to depress Q2 ad sales by roughly 20 %, but anticipates subscriber-related revenue to accelerate as HBO Max completes its international rollout. Ongoing focus on cost efficiency and AI-driven operations aims to improve cash flow while the company carries elevated debt.

Deadline Hollywood