• by Wayne Friedman , May 9, 2024

While pressure to cut costs at Warner Bros. Discovery continues, the big entertainment company witnessed further declines in advertising revenue at its networks -- down 11% to $1.99 billion.

The company said this was primarily driven by audience declines at entertainment and news networks, as well as the soft linear TV advertising market in the U.S. and Latin America.

In addition, there was also a 7% drop in distribution fees to $2.8 billion -- partly due to cord-cutting of U.S. pay TV subscribers and the shutting down of its regional sport network, AT&T SportsNet.

In more positive news, there were financial gains from the company's direct-to-consumer (D2C) business, including its high-profile Max streamer.

It added two million more global subscribers to now total 99.6 million --  and saw its adjusted cash flow inch up by 72% to a nominal $86 million.

Overall direct-to-consumer (D2C) streaming platform revenues were flat at $2.5 billion. Advertising revenue grew 70% to $175 million. This was partly due to the launch of B/R Sports on Max, which began in October 2023.

A Bloomberg report says, citing sources, that the company will be looking to eliminate around 2,000 jobs.

In addition, it will raise prices for Max -- currently at $15.99 a month for its lowest priced ad-free advertising option.

Total company-wide revenue declined 7% to $9.96 billion. Warner Bros. Discovery also posted a net loss of $966 million -- a slight 10% improvement from a quarterly net loss from a year ago.

The company's positive adjusted cash flow EBITDA (earnings before interest, taxes, depreciation and amortization) was at $2.1 billion, a decline of 19% versus the first quarter of 2023. 

Free cash flow came in at $390 million (a reverse from a loss of $930 million in the year-ago period) “primarily driven by a more disciplined approach to content investment and the timing of production,” according to the company.

Adjusted EBITDA removes one-time, irregular, and non-recurring items that distort EBITDA. This includes free cash flow is the cash on hand after accounting for cash that supports operations and maintaining capital assets.