Warner Bros Discovery said it expects streaming profits to double this year, predicting at least 150 million subscribers will be projected for the business by 2026, setting bold goals to benefit Max's global deployment and tight cost control.
The company's shares rose more than 9% on Thursday to $11.49, with investors losing their surprising fourth quarter losses as the traditional television business continued decline and advertising sales fell.
The results are the first since in December they decided to separate the cable television business from streaming and studio operations, laying the foundation for potential sales or spinoffs of the television business.
The split will allow WBD to take advantage of “a wider market opportunity,” CEO David Zaslav told analysts.
“You know, we hope that in this confusion.”
The move has put the spotlight on streaming businesses, including Max and Discovery+.
WBD is planning to bring Max Services to Australia at the end of March, with launches in Germany, Italy and the UK planned for next year.
The service was deployed in more than 70 countries in Europe and Asia last year.
According to Visible Alpha, the content slate, which featured the first season of “Dune: Prophecy,” helped add 6.4 million streaming subscribers in the fourth quarter.
“An important runway”
The total WBD subscriber now reaches nearly 117 million, much lower than Disney+'s industry leader Netflix, 303 million and 124.6 million.
The company did not offer subscriber targets this year, but its 2026 forecast exceeded estimates of 135.8 million subscribers.
“Our global expansion still has a significant runway as Max is deployed in more than 40% of the addressable global market that is not yet available,” WBD said in a letter to shareholders, adding that it is confident that it will achieve an adjusted profit margin of over 20% over time.
Max's WBD goal is “realistic,” said Ross Benes, an analyst at Emarketer, adding that “we will get a boost the next year as we reduce password sharing.”
The unit expects to report adjusted earnings in 2025, prior to interest, tax, depreciation and amortization (EBITDA), compared to last year's $677 million.
In the fourth quarter, the unit posted a $409 million adjusted EBITDA, surpassing its $299 million forecast, according to data compiled by LSEG. Unit revenues increased by 5%.
The TV network segment, including CNN, Discovery Channel and Animal Planet, saw a 5% drop in revenue and ad sales fell 17% as marketers left cable television.
The studio's business recorded a 15% jump in revenue as it benefited from higher content licensing fees due to the impact of the 2023 dual Hollywood strike by writers and actors.
Overall, revenue was $1.03 billion, under $1.019 billion. The company lost 20 cents per share, but analysts were hoping for a profit of 1 cents.
