Warner’s Profit-First, No-Growth Streaming Strategy

Investors interested in the video-streaming segment can’t complain they don’t have choices. If they want to buy into a company that’s singularly focused on turning a profit in streaming, instead of trying to balance profits and growth, they can check out Warner Bros. Discovery. The parent of HBO Max and Discovery+ reported Thursday that the loss from its streaming division dropped to just $217 million (excluding depreciation and amortization and restructuring charges) in the fourth quarter, about a third of what it lost in the third quarter. It’s also a fraction of what rivals such as Disney, NBCUniversal and Paramount Global are losing in streaming. Yippee!

There’s just one wrinkle: Warner’s streaming subscribers barely grew all year, finishing December with 96.1 million global streaming subscribers, up 6% since the end of the first quarter, roughly when Warner was formed from the combination of Discovery and WarnerMedia. In comparison, Disney’s streaming subscribers grew 14% in the same period to a total of 234.7 million, while Paramount Global’s grew 24% to 77 million. Warner’s streaming revenue, meanwhile, was basically flat since the first quarter. Yet in his presentation to analysts tonight, Warner’s CFO was glowing in his description of the streaming segment’s “strong financial performance” in the quarter.