The financial outlook for major studios appears to be mixed, based on the details in their Q1 results that were reported this week.
For Warner Bros. Discovery, the most positive news came from its streaming division, which posted a $50M profit for the quarter. This marked the first time that any major studio has posted a quarterly profit from its streaming division.
CEO David Zaslav has been on a mission to turn a profit from streaming, which requires a complicated balance of achieving subscriber and revenue growth while containing costs. Zaslav said, “Our U.S. streaming business is no longer a bleeder. It is hard to run a business when you have a big bleeder.”
Despite its success in streaming, WBD reported an overall loss for the entire organization, in large part due to charges related to its spinoff from AT&T and merger with Discovery. The Hollywood writers’ strike is a looming concern for Zaslav, as it has the potential to interrupt the upcoming pipeline of new content, including the highly popular streaming series WHITE LOTUS and SUCCESSION.
Zaslav is hopeful that the writer’s “love for work” will motivate them to come to an acceptable resolution in the near future. The situation at Paramount appears to be more challenging, as its streaming division suffered higher losses this year than it did in the first quarter one year ago. CEO Bob Bakish explained that he expects 2023 to be the “peak investment” period for Paramount+.
It is also carrying out a number of cost-saving measures such as selling its BET and VH1 networks to book publisher Simon & Schuster and reducing dividends to shareholders. Dividends were slashed by 80% from $0.24/share to $0.05/share, an unprecedented step that drove the company’s share price down 30% on the day it was announced.