Warner Bros. Discovery, Inc. (WBD) Q4 2024 Earnings Summary

Executive Summary

Q4 total revenues were $10.0B, down 2% reported (1% ex-FX); Adjusted EBITDA rose to $2.7B (+10% reported, +11% ex-FX), driven by DTC and Studios; net loss was $(0.5)B due to $1.9B pre-tax acquisition-related amortization, content step-up, and restructuring .
DTC subscribers reached 116.9M (+6.4M sequential), DTC Adjusted EBITDA was $409M (vs. $(55)M) with 5% ex-FX decline in global ARPU to $7.44 as mix shifted toward international and ad tiers .
Management guided to approximately $1.3B of DTC Adjusted EBITDA in 2025 and “at least 150M” global subscribers by end of 2026; 2025 sports rights costs will weigh on EBITDA but reverse in 2026 by “several hundred million” in expense savings .
No consolidated revenue/EPS guidance; Networks saw domestic audience declines and softness in linear advertising; multi-year affiliate renewals secured rate increases, though future rate growth moderates to low-single-digits; near-term catalysts are global Max launches, hard bundles, the DC slate (Superman in July 2025), and Mattel/DC multi-year licensing .

What Went Well and What Went Wrong

What Went Well
- DTC scale and profitability: subscribers +6.4M q/q to 116.9M; DTC Adjusted EBITDA $409M (+$464M y/y), supported by ad-lite growth and international expansion .
- Studios strength: Studios revenues +16% ex-FX to $3.657B; Adjusted EBITDA $950M (+78% ex-FX), with TV revenue +64% ex-FX and lower theatrical marketing costs .
- Strategic distribution progress: multi-year renewals with five of six largest U.S. pay-TV providers; overall affiliate rate increases and hybrid structures to support ecosystem longevity .
- Notable quote: “Max is one of the world’s very few global and profitable streaming services… we expect direct-to-consumer EBITDA to nearly double in 2025.” – David Zaslav .
What Went Wrong
- Networks headwinds: revenues −4% ex-FX; advertising −16% ex-FX on 28% domestic audience declines; sports costs (e.g., CFP) lifted cost of revenues .
- ARPU pressure: Global DTC ARPU fell 5% ex-FX to $7.44; management expects near-term ARPU deterioration with international expansion, ad tiers, and hard bundles .
- Cash conversion softness this quarter: Q4 FCF $2.429B vs $3.310B y/y (−27%), impacted by higher net content investment (prior year strikes lowered investment) .
- Games business impairments: Q4 games content expense included $50M impairments; full-year games impairments $384M; 2024 games performance was disappointing .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Billions)	$10.284	$9.623	$10.027
Operating Income ($USD Billions)	$(0.182)	$0.281	$0.162
Net Income ($USD Billions)	$(0.400)	$0.135	$(0.494)
Diluted EPS ($USD)	$(0.16)	$0.05	$(0.20)
Adjusted EBITDA ($USD Billions)	$2.471	$2.413	$2.722
Adjusted EBITDA Margin (%)	24.0%	25.1%	27.1%
Operating Margin (%)	−1.8%	2.9%	1.6%

Segment Performance

Segment	Q4 2023 Revenues ($MM)	Q3 2024 Revenues ($MM)	Q4 2024 Revenues ($MM)	Q4 2023 Adj. EBITDA ($MM)	Q3 2024 Adj. EBITDA ($MM)	Q4 2024 Adj. EBITDA ($MM)
Studios	$3,173	$2,680	$3,657	$543	$308	$950
Networks	$5,037	$5,010	$4,768	$2,208	$2,115	$1,917
Direct-to-Consumer	$2,529	$2,634	$2,651	$(55)	$289	$409
Corporate	N/A	N/A	N/A	$(314)	$(296)	$(333)

KPIs (DTC)

KPI	Q4 2023	Q3 2024	Q4 2024
Domestic Subscribers (MM)	52.0	52.6	57.1
Domestic ARPU ($)	11.65	11.99	11.77
International Subscribers (MM)	45.6	57.9	59.8
International ARPU ($)	3.88	4.05	3.74
Global Subscribers (MM)	97.7	110.5	116.9
Global ARPU ($)	7.94	7.84	7.44

Free Cash Flow and Leverage

Metric	Q4 2023	Q4 2024
Cash from Operations ($MM)	$3,578	$2,715
Free Cash Flow ($MM)	$3,310	$2,429
Cash ($B)	$3.8	$5.4
Gross Debt ($B)	$40.7 (Q3 ref)	$40.0
Net Leverage (x)	4.2x (Q3)	3.8x (Q4)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
DTC Adjusted EBITDA	FY 2025	“Segment profitability in H2 2024 and into 2025” (directional)	Approx. $1.3B	Raised/quantified
Global Subscribers	End of 2026	Not previously quantified	“At least 150M”	New target
Affiliate Rates (U.S.)	FY 2025+	~5% increase realized in Q3 domestic affiliate rates	Future increases “low-single-digit” vs prior mid-single-digit	Moderation
Sports Rights Costs	FY 2025 vs FY 2026	N/A	2025 elevated costs; “several hundred million” of expense to come out in 2026	Lower costs in 2026
DTC ARPU Trajectory	Next 12–18 months	Global ARPU +1% ex-FX in Q3	Near-term ARPU deterioration before normalizing and returning to growth	Deteriorate then improve
Leverage Target	Ongoing	2.5–3.0x gross leverage target	Maintained	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
DTC profitability/margins	DTC profitability expected in H2 2024; Max launched across Europe; ad-lite expansion	DTC Adj. EBITDA $289M; strongest quarterly net adds; Charter bundling	DTC Adj. EBITDA $409M; 2025 target ~$1.3B; profitable global streamer	Improving
ARPU trajectory	Global ARPU +4% ex-FX; ad-lite ramp	Global ARPU +1% ex-FX; mix shift	Global ARPU −5% ex-FX; near-term pressure expected	Mixed/near-term pressure
Networks linear/affiliates	Distribution −8% ex-FX; AT&T SportsNet exit impact; sports costs allocated	Distribution −7% ex-FX; Olympics effects; affiliate rates +5%	Distribution −4% ex-FX; rate increases +6% in Q4; renewals ahead of schedule	Stabilizing via renewals, ads weak
Sports rights strategy	Expanded U.S. portfolio (French Open, CFP)	Olympics boosted content revenue; ad impact modest	2025 costs elevated; “few hundred million” expense reduction in 2026; disciplined on rights	Cost headwinds near-term; tailwind 2026
Bundling/aggregation	Pursuing new bundling to reduce CAC	Charter/Spectrum bundles including Max	Hard/soft bundles globally; partners with carriage commitments (e.g., Sky)	Expanding
Games business	Weak title performance (Suicide Squad); segment down	Games impairments ($122M) in Q3	Restructuring to focus on four tentpoles; expect profit in 2025	Restructuring; outlook improving
Studios slate/DC	Theatrical/home entertainment mix; Dune carryover	TV deliveries rebounded post strikes	DC reboot with Superman (July 11, 2025); balanced slate	Building momentum
FCF/deleveraging	FCF $0.976B in Q2; tender offer reduced debt	FCF $0.632B; net leverage 4.2x	FCF $2.429B; net leverage 3.8x; priority remains debt paydown	Improving leverage

Management Commentary

“Max is one of the world’s very few global and profitable streaming services… we expect direct-to-consumer EBITDA to nearly double in 2025.” – David Zaslav .
“We added about 6.5 million subscribers in the fourth quarter and nearly 20 million subscribers in less than a year.” – David Zaslav .
“We are targeting substantive completion [of the corporate reorganization] in early Q2… and plan to provide incremental guidance to create more clarity on global linear networks vs streaming and Studios.” – Gunnar Wiedenfels .
“We now have a clear path to reach at least 150 million global subscribers by the end of 2026… Max rolls out to over 40% of the addressable global market where it is not yet available.” – Shareholder Letter .
“We will see several hundred millions of dollars of sports expense come out in 2026… a few hundred million dollar improvement in 2026 over ’25.” – Gunnar Wiedenfels .

Q&A Highlights

DTC scale and diversity: management emphasized a unique global offering with premium franchises and local content; experimentation with sports/news distribution models across regions .
Bundling/aggregation: rising momentum for consumer-friendly bundles with global and regional partners; hard bundles can include carriage/penetration commitments (e.g., Sky) .
Networks trajectory: renewals achieved, but future affiliate rate increases slow; ad market shows “mild positive signals” though linear ratings need work; more efficient use of HBO/WB libraries to support networks .
Sports rights: disciplined approach; no need to add rights unless ROI is compelling; 2025 cost overlap (NBA half-season plus new rights) reverses in 2026 .
Free cash flow/leverage: continued deleveraging focus; ~$19B debt repaid since merger; working capital expected strong in 2025; capex up modestly for production capacity .

Estimates Context

Wall Street consensus estimates (S&P Global) for Q4 2024 EPS, revenue, and EBITDA were unavailable due to data access limitations at the time of query. As a result, we cannot provide beat/miss analysis versus consensus for this quarter [GetEstimates error: “Daily Request Limit Exceeded”].
Based on company-reported results, DTC and Studios outperformed y/y while Networks faced ad softness; estimate revisions may skew toward higher DTC profitability trajectory and 2026 margin expansion as sports costs fall .

Key Takeaways for Investors

DTC inflection is real: profitability and scale now drive the narrative; 2025 DTC Adjusted EBITDA target of ~$1.3B underpins medium-term value creation .
Near-term ARPU pressure is strategic: mix shift to international, ad tiers, and wholesale bundles should expand reach and LTV, with ARPU normalizing over time .
Studios EBITDA rebound: stronger TV deliveries post strikes and a rebalanced slate (including DC’s Superman) improve 2025 Studios outlook .
Networks stabilized by renewals: affiliate deals provide rate increases and visibility, but linear ad weakness persists; expect moderated rate growth ahead .
2025 sports cost headwinds should flip to tailwinds in 2026 as NBA expense rolls off, lifting segment EBITDA by “a few hundred million” .
FCF and deleveraging continue: Q4 FCF $2.429B; net leverage 3.8x; management prioritizes debt reduction with target gross leverage of 2.5–3.0x .
Strategic partnerships and licensing (e.g., Sky bundles; Mattel/DC multi-year deal from 2H26) augment monetization and franchise value across platforms .

Additional Relevant Press Releases (Q4 context)

Mattel awarded global multi-year DC licensing from 2H26, reinforcing DC’s revitalization and consumer products opportunities tied to upcoming DC slate .

Prior Two Quarters’ Earnings Reference (for trend analysis)

Q3 2024: revenue $9.623B; Adjusted EBITDA $2.413B; DTC subs 110.5M; FCF $0.632B; affiliate rates +~5% domestically; Olympics effects observed in Networks .
Q2 2024: revenue $9.713B; Adjusted EBITDA $1.795B (impacted by $9.1B Networks goodwill impairment); DTC subs 103.3M; ad-lite expansion; strategic bundling to reduce CAC .

Citations: .

Warner Bros. Discovery, Inc. (WBD) Q4 2024 Earnings Summary

Executive Summary

What Went Well and What Went Wrong

Financial Results

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

Q&A Highlights

Estimates Context

Key Takeaways for Investors

Additional Relevant Press Releases (Q4 context)

Prior Two Quarters’ Earnings Reference (for trend analysis)

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