Warner Bros. Discovery Q4 Earnings Miss Estimates, Revenues Fall Y/Y

Warner Bros. Discovery WBD reported a fourth-quarter 2025 loss of 10 cents per share, missing the Zacks Consensus Estimate of earnings of 2 cents. The company had reported a loss of 20 cents per share in the year-ago quarter. 

Revenues decreased 6% year over year to $9.46 billion, missing the Zacks Consensus Estimate by 0.04%.

Distribution revenues decreased 3% ex-forex year over year, as growth in global streaming subscribers was more than offset by continued domestic linear pay TV subscriber declines and the impact of the HBO Max domestic distribution deal renewal with a former related party. Advertising revenues decreased 9% ex-forex, as ad-lite streaming subscriber growth was more than offset by domestic linear audience declines; the absence of the NBA in the current year negatively impacted the year-over-year growth rate by approximately 4% ex-forex. Content revenues decreased 10% ex-forex, primarily driven by lower content sales due to the timing of renewals at the Studios and Global Linear Networks segments.

Warner Bros. Discovery, Inc. Price, Consensus and EPS Surprise

Warner Bros. Discovery, Inc. price-consensus-eps-surprise-chart | Warner Bros. Discovery, Inc. Quote

WBD's Subscriber Base Increases in Q4

WBD ended the fourth quarter of 2025 with 131.6 million global streaming subscribers, an increase of 3.5 million sequentially. Domestic subscribers stood at 59.2 million while international subscribers reached 72.4 million. Domestic average revenue per user came in at $10.45, while international ARPU was $4, with global ARPU declining 9% ex-forex year over year to $6.8, primarily reflecting a domestic ARPU decrease driven by the impact of the distribution deal renewal with a former related party.

WBD's Fourth Quarter 2025 Details

The Streaming segment reported revenues of $2.79 billion, up 4% ex-forex year over year. Distribution revenues rose 2% ex-forex, reflecting a 13% increase in subscribers from the continued global expansion of HBO Max and new distribution deals, partially offset by the domestic distribution deal renewal. Advertising revenues increased 17% ex-forex, driven by growth in ad-lite subscribers, partially offset by the absence of the NBA. Streaming Adjusted EBITDA decreased 7% ex-forex to $393 million from $409 million in the year-ago quarter, as higher content and marketing costs weighed on margins.

The Studios segment reported revenues of $3.18 billion, down 14% ex-forex year over year, with theatrical revenues down 11% ex-forex due to lower content sales and no new releases in the quarter, TV revenues down 18% ex-forex on timing of intersegment renewals and games revenues declining 34% ex-forex. Studios Adjusted EBITDA decreased 27% ex-forex to $728 million from $950 million in the prior year period. On a full-year basis, Studios Adjusted EBITDA reached $2.55 billion, up 52% ex-forex, surpassing guidance and reflecting meaningful progress toward the company's target of at least $3 billion.

The Global Linear Networks segment reported revenues of $4.20 billion, down 13% ex-forex year over year. Distribution revenue declined 8% ex-forex on a 10% decrease in domestic linear pay TV subscribers, partially offset by a 3% increase in domestic affiliate rates, while advertising revenue fell 14% ex-forex on domestic audience declines of 22% and the absence of NBA programming. Global Linear Networks Adjusted EBITDA decreased 27% ex-forex to $1.41 billion from $1.92 billion in the year-ago quarter.

Total Adjusted EBITDA for the fourth quarter of 2025 was $2.22 billion, a 20% ex-forex decrease year over year, primarily driven by the decline in the Global Linear Networks segment.

WBD's Balance Sheet and Cash Flow

The company repaid $1 billion of the bridge loan facility during the quarter. 

Warner Bros. Discovery ended the fourth quarter of 2025 with $33.5 billion of gross debt and 3.3x net leverage. 

As of Dec. 31, 2025, cash and cash equivalents were $4.57 billion compared with $4.29 billion as of Sept. 30, 2025. As of Dec. 31, 2025, the company's $4.0 billion revolving credit facility was undrawn. WBD had $3.7 billion drawn on its revolving receivables program, a $304 million decrease versus the previous quarter.

Fourth-quarter 2025 cash provided by operating activities decreased to $1.8 billion from $2.72 billion in the prior-year quarter. Free cash flow decreased to $1.38 billion from $2.43 billion, primarily driven by approximately $600 million of separation and transaction-related items, lower Adjusted EBITDA and the timing of working capital, partially offset by the timing of net content investment.

Guidance

WBD expects to exceed 140 million streaming subscribers by the end of the first quarter of 2026 and remains on track to surpass 150 million global subscribers by year-end 2026. 

For the Global Linear Networks segment, the company anticipates a 7% ex-FX and 20% ex-FX headwind to advertising revenue from the absence of the NBA in the first and second quarters of 2026, respectively, expected to be more than offset by an associated improvement in operating expenses. 

The Studios segment 2026 Adjusted EBITDA is expected to be relatively in line with 2025.

WBD’s Zacks Rank & Stocks to Consider

WBD currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Consumer Discretionary sector are Sonos SONO, Carter’s CRI and Roku ROKU.

Sonos, Carter’s and Roku each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sonos shares have appreciated 10.4% in the past six months. The Zacks Consensus Estimate for Sonos’ loss for the to be reported quarter is pegged at 4 cents per share, indicating a year-over-year increase of 77.78%.

Carter’s shares have appreciated 48.5% in the past six months. The Zacks Consensus Estimate for Carter’s EPS for the to be reported quarter is pegged at $1.7, indicating a year-over-year decline of 28.87%.

Roku’s shares have declined 4.1% in the past six months. The Zacks Consensus Estimate for Roku’s to be reported quarter’s EPS is pegged at 34 cents per share, indicating a year-over-year increase of 278.95%.

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