*Courtesy of Photo: Leon Bennett/WireImage (Getty Images).*

Warner Bros. Discovery reported a $494 million loss in the fourth quarter, attributed to $1.9 billion in charges and restructuring costs, despite adding 4.6 million new subscribers to its streaming platforms.

The company is contending with the challenges of a shifting media landscape, marked by a decline in linear TV viewership, which traditionally has been easier to monetize. Warner's total revenue decreased by 2% to $10 billion, with distribution revenue also down by 2% and advertising sales dropping 11%, reflecting ongoing weakness in traditional advertising markets.

Warner expressed concern over the faster-than-anticipated deterioration of the U.S. linear TV advertising market, a trend that has become more apparent over recent quarters, according to a shareholder communication.

Despite these challenges, Warner is optimistic about its streaming future, predicting that its Max streaming service will reach at least 150 million subscribers by 2026 due to global expansion efforts. The company expects its streaming segment to generate approximately $1.3 billion in adjusted earnings by 2025, a significant increase from $677 million the previous year.

The company's loss widened by 24% from $400 million in the same period last year. However, studio operations revenue increased by 15% to nearly $3.66 billion, benefiting from heightened production activity that rebounded from previous Hollywood labor disruptions. TV network revenue fell 5% to $4.77 billion, with a notable 28% drop in U.S. network audiences.

Direct-to-consumer services were a bright spot, with a 6.4 million subscriber increase globally, bringing the total to 116.9 million. Direct-to-consumer revenue rose by 5% to $2.65 billion.

Amidst these changes, Warner Bros. also announced the cancellation of its Wonder Woman video game, initially revealed in 2021. The company will instead concentrate on enhancing major franchises like Harry Potter, Mortal Kombat, DC, and Game of Thrones. Additionally, three of Warner's game studios—Monolith Productions, Player First Games, and Warner Bros. Games San Diego—will close. Monolith Productions had been working on the Wonder Woman game.

“Our hope was to give players and fans the highest quality experience possible for the iconic character, and unfortunately this is no longer possible within our strategic priorities,” a Warner Bros. spokesperson said. “This is another tough decision, as we recognize Monolith’s storied history of delivering epic fan experiences through amazing games.”

“This is a strategic change in direction and not a reflection of these teams or the talent that consists within them,” the spokesperson continued. “We greatly admire the passion of the three teams and thank every employee for their contributions. As difficult as today is, we remain focused on and excited about getting back to producing high-quality games for our passionate fans and developed by our world class studios and getting our Games business back to profitability and growth in 2025 and beyond.”

Warner has prioritized video game development, especially using its extensive intellectual property portfolio, including DC Comics characters. Unlike other companies that focus on licensing for IP-based games, Warner has maintained a strategy of in-house development, though the recent restructuring indicates a shift towards potentially less internal development moving forward.

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