Two weeks after Warner Bros. Discovery (WBD) shareholders voted to approve the US media company’s sale to Paramount Skydance, WBD set out its global ambitions during yesterday’s Q1 earnings call, with the rollout of HBO Max fuelling its international strategy.
The company’s CEO David Zaslav told investors that the combination of HBO Max with Paramount’s streaming services “will create an even more robust and compelling consumer experience” in the face of mounting choice, competition and complexity in the streaming business.
“When you put your TV set on and you see in any market around the world 15 to 20 choices of apps that you come in and out of, and when you’re talking about what you want to watch, you’ve got three people on a couch googling where it is and how to get in and out – it’s just not a good consumer experience,” said Zaslav. “For four years, we’ve been saying that the consumer experience is going to get restructured, and that there’ll be a lot of value creation in those that can be one of the emerging leaders, and more importantly, for consumers to have a better experience.”
A major part of this strategy is bundling HBO Max in international markets through partnerships with local distributors. WBD’s streaming chief JB Perrette said its bundled offering with Disney+ and Hulu in the US, its partnership with RTL+ in Germany, and its package with Viu in Southeast Asia, were key to driving lifetime value (LTV) and reducing churn.
Perrette noted that WBD had gone from having no subscribers from bundles with other programmers three years ago, to its highest-LTV subscribers now coming from those packages. “It’s beneficial to marketing expense, it’s obviously hugely beneficial to churn,” he added.
“A long way to go”
The executives also touted the benefits of global scale for its ads business, with domestic content now being monetised on HBO Max around the world. Zaslav said WBD was generating “significant incremental value” by reselling content from its US channels on the AVOD service.
“As TikTok and Instagram and Facebook together with Amazon and Netflix and HBO Max and Disney start to become more global and have the ability to advertise content around the globe in that way, and see what works and then restructure that content in different ways to create more value, it becomes harder and harder to be a regional player,” said Zaslav.
Asked whether they see a risk of engagement stagnating on HBO Max, as witnessed on larger streaming services such as Netflix, Perette pointed to the relative nascency of WBD’s international rollout and global ads business.
“We don’t see that moment coming anytime soon,” he said. “I understand the question of some of the leaders in the space who’ve been at this for 15 to 20 years, maybe seeing some maturation. That is a very different situation for us that we’ve been at this for five or six [years] … There’s still a long way to go in terms of penetration in some markets, including very nascent markets that obviously we’ve just recently launched in that we’re still in the very early days of that growth trajectory.”
“Between that and then also the ad sales benefits continue to improve the product, which is also where we are in the early innings versus others who are much more sophisticated, because they’ve been at it longer,” he added. “All those ingredients would lend you to believe that we’ve still got years to go in terms of getting more and more high operating leverage from this business as we continue to grow across those different levers.”
A day of losses
On the earnings side, total revenues reached $8.9 billion during Q1, down 3 percent ex-FX from Q1 2025, with ad revenues down 8 percent YoY. The company also incurred a $2.9 billion loss, almost entirely due to the $2.8 billion termination fee it paid to Netflix after cancelling its original deal to sell its film and TV studios business to the streaming giant.
Clearly WBD sees its new deal with Paramount to be worth the hefty payout to Netflix, and Perette said “no event was more significant in Q1” than reaching the agreement at a critical time for the media business.
“We’ve said consistently that we’re living through a period of historic disruption in media and entertainment,” said Perette. “How content is made, how it’s distributed, and how it’s consumed is evolving with increasing velocity. When you look across Warner Bros. Discovery today, in studios, streaming, and global linear networks, each segment of our business is demonstrably more nimble and better positioned for future success than when Warner Bros. Discovery was formed.”
The evolution of the media giant was highlighted by the death of Ted Turner, which was reported on the same day as the call. Zaslav paid tribute to the media mogul who founded CNN in 1980, and sold the network to WBD’s precursor Time Warner in 1996.
“The words giant and visionary get tossed around loosely in our industry, but Ted Turner truly embodied both,” said Zaslav. “Ted was a generational entrepreneur, someone who believed deeply in the power of ideas and in telling stories and building platforms that could inform, connect and inspire people around the globe. His global vision for our industry was way before its time and presciently powerful … He changed the world. He was a great American, and I loved him. May his memory be a blessing.”
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