Warner Bros. Discovery Inc. closed the year with stronger streaming momentum but softer linear advertising and studio trends, as investors focused less on quarterly volatility and more on escalating deal intrigue involving Paramount Global and Netflix.
HBO Max subscribers rose to 131.6 million in the fourth quarter, up 3.5 million sequentially, helping streaming revenue advance 4% to $2.8 billion. Advertising in the segment increased 17%, driven by growth in ad-supported tiers, partially offset by a 3% hit from the absence of the NBA.
The broader picture was more mixed. Fourth-quarter revenue declined 6% to $9.46 billion, while adjusted Ebitda fell 19% to $2.2 billion. Net losses narrowed to $252 million from $494 million a year earlier, reflecting $1.3 billion in restructuring and transaction-related charges.
Deal Drama Overshadows Results
Wall Street’s attention remains fixed on the shifting M&A landscape. The company, led by Chief Executive Officer David Zaslav, agreed in December to sell its studio and streaming assets to Netflix. But Paramount has since entered discussions, potentially complicating the transaction.
If Warner Bros. Discovery determines Paramount’s proposal is superior, Netflix would have four business days to match it. Executives from Paramount offered no update on their earnings call Wednesday, and further clarity is expected when Warner Bros. Discovery hosts analysts.
The renewed maneuvering has re-energized speculation over the company’s long-term structure, including a planned spinoff of its Discovery Global assets — a strategy that could be reassessed depending on the outcome of negotiations. The company ended the year with $4.6 billion in cash, $33.5 billion in gross debt and net leverage of 3.3 times.
Studios Slow in Q4, Up for the Year
The studio division posted a quieter fourth quarter, reflecting a light theatrical slate. Theatrical revenue fell 11% in the period. Overall studio revenue dropped 13% to $3.2 billion, and profit declined 23% to $728 million.
For the full year, however, studio profit rose 54% to $2.5 billion, buoyed by a string of high-performing releases including Sinners, A Minecraft Movie, Superman, Weapons, The Conjuring: Last Rights and Final Destination: Bloodlines. The company is targeting $3 billion in annual studio profit.
Early 2026 releases have extended that momentum. Wuthering Heights opened to $83 million globally, marking the ninth consecutive No. 1 debut for the studio. Upcoming titles include Supergirl, Dune: Messiah, Evil Dead Burn and The Cat in the Hat from Warner Bros. Animation.
Television revenue fell 18% in the quarter, reflecting the timing of intersegment renewals, while games revenue declined 34%. Total studio revenue rose 9% to $12.6 billion for the year.
Streaming Growth Offsets Linear Erosion
Streaming profit slipped 7% in the quarter to $393 million but surged 115% for the full year to $1.3 billion. Content revenue rose 18% excluding foreign exchange, driven by the timing of domestic third-party sales.
The company cited a strong start to 2026, with the return of Industry and The Pitt lifting season-over-season viewership by 30% and 50%, respectively. A Knight of the Seven Kingdoms, a spinoff of Game of Thrones, is averaging more than 24 million viewers per episode globally.
HBO Max has expanded into Germany, Italy and other European markets, with a U.K. and Ireland launch slated for March 26. Management said it has a “clear line of sight” to surpass 140 million subscribers by the end of the first quarter and 150 million by year-end 2026.
Linear Headwinds Persist
The Global Networks division continues to face structural pressure. Quarterly revenue fell 12% to $4.2 billion, while profit declined 27% to $1.4 billion. Domestic linear pay-TV subscribers dropped 10%.
Advertising revenue in the segment fell 14%, reflecting a 22% decline in domestic audiences and the loss of NBA rights, which shaved four percentage points off year-over-year growth. The company noted sequential improvement from the third quarter.
For the full year, linear profit declined 21% on a 13% revenue drop.
In a shareholder letter, Warner Bros. Discovery emphasized the enduring value of its global networks footprint, European free-to-air assets and CNN, describing the news brand as “a highly valuable asset.” A standalone TNT Sports app — designed as a centralized U.S. sports hub — remains on track to launch this year, both independently and through distribution partnerships.
For now, subscriber growth and streaming profitability are providing a counterweight to legacy-TV erosion. But with Paramount and Netflix circling, the company’s strategic direction may soon hinge less on quarterly metrics than on the outcome of its deal drama.
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