• Warner Bros. Discovery reported revenue of $8.89 on loss of $1.17 per share, in line with Wall Street revenue estimates but wider than an expected loss of 9 cents per share, per Yahoo Finance.
• The $110 billion Paramount merger secured shareholder approval and remains on track to close by the third quarter.
• Shares of the media giant fell 0.6% in after-hours trading following the results.

Warner Bros. Discovery posted a widened net loss of $2.92 billion in its first quarter as revenue fell 1% to $8.89 billion.

The net loss included $1.3 billion in “pre-tax acquisition- related amortization of intangibles, content fair value step-up, and restructuring expenses.” It also reflected the $2.8 billion termination fee paid to Netflix, which is refundable to Paramount Skydance in the event of a superior proposal or the violation of interim operating covenants.

Streaming was a bright spot, with revenue growing 9% to $2.9 billion, while profit jumped 29% to $438 million. The results were driven by an increase in ad-lite subscribers and HBO Max’s ongoing international expansion. Weighing on the segment’s results was a 27% decline in content revenue due to the timing of third-party licensing deals. It was also impacted by the absence of the NBA and a domestic distribution deal renewal in the prior year period.

WBD has joined Netflix and Disney in no longer breaking out subscribers on a quarterly basis, but noted that it exceeded 140 million subscribers during the quarter. It remains on track to exceed 150 million subscribers by year end.

Studios also grew revenue 35% to $3.13 billion and profit 156% to $775 million, driven by higher TV and theatrical revenues from increased intercompany and third party content licensing and HBO Max’s international expansion. Weighing the segment’s results down was the games unit, which saw its total revenue decline 30% as a result of lower library revenue.

Global linear networks continued to be a drag, with revenue falling 8% to $4.38 billion, while profits tumbled 9% to $1.63 billion. The results were driven by a 10% decrease in domestic linear pay TV subscribers, offset by a 2% increase in affiliate rates, the absence of the NBA and the timing of third party licensing deals.

Paramount merger on track for September closing

While the $110 billion Paramount merger has secured shareholder approval, it still remains subject to regulatory approval.

Regulators in the U.K. are gearing up to begin their review of the deal, with its deadline for public comments closing just last week. Paramount has also asked the FCC to approve its foreign investment in the deal, with those investors accounting for 49.5% of the equity of the combined company, and says there’s “no statutory impediments” remaining after the Department of Justice’s Hart-Scott-Rodino review period expired, though the regulator can still get involved at anytime in the process.

In addition to federal and international regulators, a group of U.S. state attorneys general led by California’s Rob Bonta are also reviewing the deal and weighing whether to take legal action against the merger. Bonta previously told TheWrap that “red flags are everywhere when you have a merger of this type” and that the states are prepared to “act timely,” but declined to provide a specific timeline for when a decision could be made.

If the deal is not closed by Sept. 30, WBD shareholders will receive a 25 cent per share “ticking fee” for each quarter until closing. In the event that the deal does not close at all due to regulatory matters, Paramount will pay WBD a $7 billion termination fee.

More to come…