Warner Bros. Discovery said it expects streaming profits to double this year and forecast at least 150 million subscribers for the business by 2026, setting a bold target as it benefits from the global rollout of Max and tight cost controls.
Shares of the company rose more than 9% to $11.49 on Thursday as investors shrugged off a surprise loss for the fourth quarter due to ongoing declines in its traditional television business and weaker ad sales.
The results are the first since the company decided in December to separate its cable TV businesses from streaming and studio operations, laying the groundwork for a potential sale or spinoff of its TV business.
The split will allow WBD to take advantage of “broader market opportunities” as they arise, CEO David Zaslav told analysts.
“You know, in this disruption, we expect there will be.”
The move has put the spotlight on its streaming business, which includes Max and Discovery+.
WBD plans to bring the Max service to Australia at the end of March, with launches in Germany, Italy and the UK planned for next year.
The service was rolled out in more than 70 countries across Europe and Asia last year.
The global expansion and a content slate that featured the first season of “Dune: Prophecy” helped the company add 6.4 million streaming subscribers in the fourth quarter, compared with 4.9 million estimated by analysts, according to Visible Alpha.
‘Significant runway’
WBD’s total subscribers now stand at nearly 117 million, much lower than industry leader Netflix’s 302 million and 124.6 million for Disney+.
The company did not give a subscriber target for this year, although its 2026 forecast was ahead of estimates of 135.8 million subscribers.
“Our global expansion still has significant runway as Max rolls out to over 40% of the addressable global market where it is not yet available,” WBD said in a letter to shareholders, adding that it was confident of hitting adjusted profit margins of more than 20% in the streaming business over time.
WBD’s goals for Max “are realistic,” eMarketer analyst Ross Benes said, adding that the company will “cutback password sharing, which will give them a boost in the following year.”
It expects the unit to report adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of about $1.3 billion in 2025, compared with $677 million last year.
In the fourth quarter, the unit posted an adjusted EBITDA of $409 million, exceeding expectations for $289.1 million, according to data compiled by LSEG. Revenue at the unit rose 5%.
The TV networks segment, which includes CNN, Discovery Channel and Animal Planet, saw a 5% decline in revenue, with ad sales declining 17% as marketers stayed away from cable TV.
The studios business posted a 15% jump in revenue as it benefited from higher content licensing fees as the impact of 2023’s dual Hollywood strikes by writers and actors petered out.
Overall, revenue came in at $10.03 billion, below estimates of $10.19 billion. The company lost 20 cents per share, while analysts expected a profit of 1 cent.
