The $2.9 billion loss is the headline. Most of it is a fee from a Netflix deal that fell apart.
And Paramount Skydance is the one on the hook to pay it.
WBD lost $2.9 billion in Q1. A year ago, it lost $453 million.
Most of the loss is a $2.8 billion fee. WBD owed it to Netflix when the streaming firm walked away.
Netflix had a deal in place to buy WBD's parts. It dropped out in February when Paramount Skydance came in with a higher bid.
Paramount said it will pay the fee as part of buying all of WBD. But the cost still sits on WBD's books for now.
The fee could swing back to WBD if Paramount takes a higher bid. The other $1.3 billion in losses came from deal-related write-offs and restart costs.
Streaming sales rose 9% to $2.89 billion. HBO Max kept signing up users abroad.
Ad sales on the cheap tier were up 20%. The firm crossed 140 million streaming users in Q1, beating its own guide.
It's on track to top 150 million by year-end. The film studio also had a strong quarter.
Sales jumped 35% to $3.13 billion. That's the best growth line in the report.
Adjusted earnings rose 5% to $2.2 billion. The streaming part is now the firm's main engine.
The push abroad for HBO Max is a big swing. Each new country adds users to the base, which is why ad sales on the cheap tier grew faster than the platform.
Pay TV is still the drag. WBD's TV networks include CNN, TBS, and the Discovery Channel.
They posted $4.38 billion in sales, down 8%. Ad sales fell 11%, mostly because WBD lost NBA rights.
Total sales for the firm slipped 1% to $8.89 billion. Gross debt sat at $33.4 billion.
That's a big number going into a deal close. The pay TV story isn't unique to WBD.
Cable users have been falling for years. Ad budgets follow them out the door.
Live sports are the last big draw on cable. Losing the NBA was a hit to that pitch.
That puts more weight on streaming and film. Both grew double digits in Q1.
Adjusted profit for the firm still went up. The pay TV decline is now baked into the plan.
That's why the Paramount deal matters so much. It will reset the cost base.
Paramount said this week it has made big progress on closing the WBD deal. WBD's owners said yes back in April.
The deal is now in the regulatory review phase. That step is the last big gate before the close.
Paramount sees the deal closing in Q3. That's when the $2.8 billion fee comes off WBD's books for good.
For now, WBD is in a strange spot. It is reporting earnings as a stand-alone firm.
But its core deal terms are tied to a buyer that has not yet closed the deal. That makes some line items hard to read.
Streaming and film growth give a clean view of the core. The pay TV drag and deal noise muddy the rest.
Once the Paramount deal closes, the WBD ticker goes away. The new firm takes over.
