• by Wayne Friedman , February 27, 2025

Warner Bros. Discovery advertising declines steepened in the last three months of 2024 -- down 12% to $1.8 billion -- as linear TV networks' declines overwhelmed small growth at its direct-to-consumer (D2C) businesses. In the previous three-month period, it was down 8% to $1.7 billion.

Most recently, fourth-quarter linear TV network advertising revenues accelerated to a 17% drop (to $1.6 billion) -- versus a 13% drop in the third quarter. D2C rose 26% to $235 million in the fourth quarter; it was up 49% in the third to $205 million.

WBD says the linear TV advertising drop came from a massive 28% plunge in audience viewing.

Fourth-quarter distribution revenues faired better but with similar trends for D2C and linear TV business: Growing D2C subscription revenue was up 7% to $2.32 billion, with linear TV affiliate/subscription revenue down 5% to $2.6 billion.

Overall distribution revenue rose 2% to $4.92 billion.

For many analysts, the divergent trending sides of the company continue to get closer. Can both survive -- perhaps on their own? Yes, but both need some help.

Robert Fishman, media analyst for MoffettNathanson Research, says: “For the linear networks side of the house, that could mean pursuing outside equity partners or consolidation with other cable network portfolios. For DTC, it could mean greater partnerships with other platforms.” “

Even then, streaming businesses would need a lot more.

Theatrical/studio operations would be a good partner, especially with positive cash flow of $950 million in the fourth quarter, and management saying it believes that reaching its goal of $3 billion is possible. 

“DTC+Studio should be big enough contributors to largely offset the declines at networks over the next couple of years," Fishman said.

Better news for WBD comes from improvement in global subscribers, with an addition of 6.4 million in the period to 116.9 million -- mostly from its Max premium streaming service. The company now forecasts global subs will rise to 150 million by the end of 2026.

For Max, specifically, there’s good and bad programming issues -- as it regards its high profile HBO brand franchise.

Parrot Analytics says HBO accounts for 31.4% of Max’s subscriber revenue in the most recently reported quarter. That’s a great result since HBO’s “supply share” on Max --essentially measuring total content hourly supply in a given media platform -- is 15%.

“This dominance underscores both the strength of the HBO brand and the challenge of expanding Max’s reach beyond its core audience.”

Total D2C revenue were up 5% to $2.65 billion, with the unit now in solid profitable position -- posting adjusted cash flow (earnings before interest, taxes, depreciation and amortization) of $409 million, reversing a $55 billion loss in the year ago period. For all of 2024, it amassed net profits of $677 million.

WBD’s stock price was up 11% on Thursday mid-day trading to $11.69.