On the heels of Q4 and 2024 earnings last week, Warner Bros. Discovery CEO David Zaslav on Tuesday suggested he doesn’t think Wall Street has been valuing the media company fairly or giving credit for its global presence and work to build a profitable streaming business that has growth opportunity ahead.
Last week the company reported just under 117 million DTC customers as of the end of 2024, adding 6.4 million in the period and representing around 19.2 million more than it had at the end of 2023. The DTC unit, which includes the flagship SVOD Max, generated a Q4 profit of $677 million in 2024, including $409 million in Q4. The company expects the DTC segment to deliver approximately $1.3 billion of Adjusted EBTIDA in 2025.
Still, its linear business continues to decline. The segment posted Q4 and full-year revenue declines, on the back of drops in advertising and distribution revenue driven by continued contractions in the domestic linear pay TV space, as well as double-digit percentage profitability declines. Linear networks drove $1.9 billion in Q4 Adjusted EBITDA, down 13% yoy and the segment’s full-year 2024 adjusted declined 10% yoy to $8.1 billion. In total, WBD posted a Q4 net loss of $494 million and full-year net losses of $11.3 billion – the latter which includes a $9.1 billion write-down on the linear networks business in Q2.
Following the Q2 impairment charge, in December WBD split its business into two operating divisions, one housing its global linear networks and the other comprised of streaming, studio and gaming efforts.
Speaking at a Morgan Stanley investor conference Tuesday, Zaslav acknowledged the company’s traditional linear business is in a bit of defense mode, including against free cash flow and growth pressures that he expects to continue. However, by the end of Q1 the company will have paid back $19 billion in debt and on the other streaming, studios and gaming side of the house, it has what he categorized as the biggest TV library in the world, is a major creator of TV and film – and has a unique product and a meaningful global streaming business that had a big year in 2024 with global rollouts of Max.
“We don’t think we’re getting real credit for that or value for that, and so we want real transparency on both of those businesses,” he during a webcast of the conference for investors. “Take a good look at what we have globally,” in terms of both its linear networks, global infrastructure and streaming and studios businesses, he urged.
In countering the apparent lack of confidence by some, Zaslav emphasized the global nature of WBD’s business and quality of content it produces. He said splitting the different businesses into two segments provides strategic clarity across the company and positions WBD to respond to changes in the market as needed.
“It will give us an opportunity at the right time if we make a determination to go on offense or defense in different ways, because we’re already structured that way” he commented.
Responding to those market changes is also part of the so-called generational disruption that the CEO sees currently underway – one where Zaslav cited opportunity to improve the TV entertainment experience and expects a certain amount of consolidation in what’s become a crowded space. He suggested the current fragmented TV entertainment landscape, with an abundance of apps and services to choose from, is neither conducive for a positive consumer experience nor a sustainably profitable business model for all.
Global rollout, on track for 150M subscribers
One of the biggest differentiators for WBD, per Zaslav, is the global footprint of its streaming business, which features premium content from HBO as well as local content and sports.
So far Max has rolled out to about 50% of markets globally, including launching in more than 70 countries in 2024 – an effort that added 19 million DTC subscribers to its tally within nine months. WBD has set a target of exceeding 150 million subscribers by the end of 2026, which “is a big deal for us.”
International markets accounted for 1.9 million subscriber additions in Q4 and WBD ended 2024 with an international DTC base of 59.8 million.
WBD hasn’t been able to launch in certain markets where its product was already licensed but in 2026 will debut in the UK, Ireland, Germany and Italy – some markets where Zaslav said viewers have been used to consuming WBD content via Sky. In the UK and Ireland it struck a non-exclusive agreement to launch on Sky, which will bring Max to about 10 million of the operator’s current subscribers by the end of Q2 2026 and will also allow it to reach consumers through other distributors.
According to Zaslav, WBD has been in some of these international markets for 20 years and Max offers a “different menu” for consumers at a time where there are many regional but “very few truly global” streaming products. And it’s not only consumers in the marketplace saying they love the streaming service, he contends, but strong demand from distributors that want to participate in some way with WBD.
“When we look around in these markets, we don’t really see anybody else,” he commented. “We got a ways to go and a lot to prove, but we’re seeing real demand for the product.”
A Max rollout is also teed up for Australia at the end of this month, followed by Turkey next quarter.
“That extra 50% that we see internationally, we really have a growth business and we have something that I think is really unique for consumers,” Zaslav continued.
Solving consumer experience challenge with bundles, consolidation
WBD also thinks it can solve for consumer experience problems, in part through bundling and eventually potentially consolidation.
Zaslav cited a broken marketplace for consumers where there are some 20 or so services or apps that one can or must hop between to land on different pieces of content, with content too shifting from platform to platform.
“It’s a very challenging consumer experience, which is great opportunity” to create value by improving it, he said.
That includes through the Disney+, Hulu, Max bundle that launched in the U.S. last year, where Zaslav cited churn as “less than half.” Rather than just an economic opportunity for consumers, he said it’s also about consumers experience, where viewers don’t want to have to switch in and out of apps to get to the content they want (to be clear, while offered together at a discount, the Disney-WBD bundle is still distinct apps).
“You need that once you get on that bundle that you can move between all of the content without coming in and out. You don’t want to have to leave Hulu to go to Max. You don’t want to have to leave Max to go to Hulu,” he commented. “We’re not there yet, but eventually you’re going to see that.”
Based on his comments at the investor conference, it wasn’t entirely clear if Zaslav was speaking about actual plans for deeper integration among WBD and Disney apps themselves or the need for merging of streaming apps in general.
But when it comes to unifying the experience for consumers, the company will continue both to pursue bundles – which when done with a distributor quickens time to market and consumer feedback, per Zaslav – as well as potential M&A.
When it comes to the right economics or dynamics WBD “will look at having others come into us” he said, adding that days of big spending for many is instead turning into questions for regional players where the economics aren’t working about how to be part of something sustainable – and therefore calls to WBD. He also urged for a regulatory-lite environment to allow media consolidation, while calling out WBD as a producer of local content in markets it operates, including Europe.
“When you have a challenging consumer experience there’s almost always value creation as you create a better consumer experience,” he said. “We believe you have to be global in order to have real, sustainable growth in the future and there’s only going to be a few global players…And you will see, I believe, consolidation that will restructure those 20 choices.”
But again, for WBD the “strategy is not how much, it’s how good.”
Content slate, utilizing more of the library
After a somewhat lackluster content slate in 2024, Zaslav said HBO has one of its strongest lineups over the next 24 months including ongoing seasons of White Lotus and The Pitt, with hits like The Last of Us, Euphoria and House of the Dragon in the pipeline.
In 2025 WBD is returning 15 series that previously ranked among the company’s top 20 TV shows. (Side note, for an interesting read on why media companies need to focus on TV with mainstream appeal and not just critical acclaim, see here for perspective from TVREV’s Alan Wolk).
WBD's studios business in 2024 generated $1.6 billion in Adjusted EBITDA, down 23% yoy, and Zaslav acknowledged it “wasn’t a good year for a series of reasons.”
Part of that stems from the fact that a lot of revenue is generated from licensing and selling content to others. Zaslav said this aspect of the studio business is lumpy and not a lot came up last year. But in 2025 and 2026 it has “some big slugs coming up” and is focused on maximizing monetization of the library.
It also has franchise plans, including a 10-year plan to revive the DC franchise with the Superman film in the pipe for theatrical release this July and a 6-7-year plan for animation. On the animation front Zaslav cited good performance of animation in theaters for others and acknowledged “not being in that game was a big miss for us”
Tentpole IP the company owns is key with WBD touting other favorites like Lord of the Rings and Harry Potter, which also bring merchandizing opportunities - and the CEO called out Amazon’s recent reported $1 billion deal to control the James Bond franchise as illustrative.
As for how its linear business plays in, he suggested teams are almost operating like studios themselves in terms of thinking holistically about the company about how to program and where shows are best placed - be it on the linear channel, available on Max globally or to license.
While a once lucrative and currently declining business, linear networks are still a material revenue contributor for WBD, generating $4.7 billion in Q4 revenue (down 4% yoy) and about $20 billion (down 4% yoy) for the full year in 2024. It has 29 linear cable networks, including HGTV, ID, Food Network, TNT and TBS, among others, and has carriage deals with five of the six largest U.S. distributors (including Comcast in December) locked for the next several years. Zaslav said these come with fee increases including per-subscriber fee increases across the board, adding “we’ve never been this stable” and that it gives visibility down the line to help analysts model and forecast its linear networks business.
“We’re not going to be able to fight against this [linear] decline,” he commented, but can help and monetize effectively by using more of its large library and being measured on what and how much content it produces, including more content that also works on the Max streaming service.