It has been about a month since the last earnings report for Warner Bros. Discovery (WBD Quick QuoteWBD - Free Report) . Shares have lost about 0.4% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Warner Bros. Discovery due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.

Warner Bros. Discovery Q1 Loss Wider Than Expected, Revenues Fall Y/Y

Warner Bros. Discovery reported a first-quarter 2026 loss of $1.17 per share, missing the Zacks Consensus Estimate of a loss of 10 cents. The company had reported a loss of 18 cents per share in the year-ago quarter. The quarter's reported GAAP loss was substantially inflated by a $2.8 billion termination fee paid to Netflix in connection with the pending merger with Paramount Skydance Corporation, as well as $1.3 billion in pre-tax acquisition-related amortization and restructuring charges.

Revenues decreased 1% year over year to $8.89 billion, missing the Zacks Consensus Estimate by 0.41%.

Distribution revenues were down 1% ex-forex to $4.91 billion, as underlying growth in global streaming subscribers was offset by continued domestic linear pay TV subscriber declines and the impact of the HBO Max domestic distribution deal renewal with a former related party. Advertising revenues decreased 8% ex-forex year over year to $1.85 billion, as ad-lite streaming subscriber growth was more than offset by the absence of the NBA and continued domestic linear audience declines; the absence of the NBA negatively impacted the year-over-year growth rate by 7% ex-forex. Content revenues were relatively unchanged year over year at $1.89 billion, as higher intercompany content revenues at the Studios segment were offset by higher intercompany eliminations.

WBD ended the first quarter of 2026 with more than 140 million global streaming subscribers, meaningfully exceeding its own guidance threshold and up 14% year over year. Beginning with first-quarter 2026, WBD no longer reports granular subscriber metrics or ARPU on a quarterly basis.

WBD's Q1 2026 Details

The Streaming segment reported revenues of $2.89 billion, up 7% ex-forex year over year. Distribution revenues rose 7% ex-forex, driven by continued subscriber growth in existing markets and the global expansion of HBO Max through new distribution deals, partially offset by the domestic distribution deal renewal with a former related party. Advertising revenues increased 19% ex-forex, primarily reflecting growth in global ad-lite subscribers, despite a 5% ex-forex headwind from the absence of the NBA. Streaming Adjusted EBITDA increased 17% ex-forex to $438 million from $339 million in the year-ago quarter, driven by robust topline growth that more than offset higher marketing and content investment tied to HBO Max's international launches.

The Studios segment reported revenues of $3.13 billion, up 31% ex-forex year over year. Content revenues rose 33% ex-forex, with TV revenues increasing 58% ex-forex, primarily driven by higher intercompany content licensing to support HBO Max's international rollout and higher third-party licensing, while theatrical revenues advanced 21% ex-forex on a similar dynamic. Games revenues decreased 30% ex-forex on lower library revenues. Studios Adjusted EBITDA increased 156% ex-forex to $775 million from $259 million in the prior-year quarter, reflecting the step-change benefit of accelerated intercompany content licensing. On a full-year 2026 basis, Studios Adjusted EBITDA is expected to be roughly in line with 2025.

The Global Linear Networks segment reported revenues of $4.38 billion, down 9% ex-forex year over year. Distribution revenues declined 8% ex-forex, primarily driven by a 10% decrease in domestic linear pay TV subscribers, partially offset by a 2% increase in domestic affiliate rates. Advertising revenues fell 12% ex-forex, with the absence of the NBA accounting for 7% of that decline alongside 8% domestic audience declines; underlying advertising trends nevertheless improved 200 basis points sequentially. Global Linear Networks Adjusted EBITDA decreased 10% ex-forex to $1.63 billion from $1.79 billion in the year-ago quarter, though cost discipline helped partially cushion the impact as operating expenses declined 9% ex-forex.

Total Adjusted EBITDA for the first quarter of 2026 was $2.20 billion, roughly flat ex-forex year over year, as gains in the Streaming and Studios segments were offset by the decline in the Global Linear Networks segment.

WBD's Balance Sheet & Cash Flow

Warner Bros. Discovery ended the first quarter of 2026 with cash and cash equivalents of $3.26 billion, compared with $4.57 billion as of Dec. 31, 2025. As of March 31, 2026, the company's $4 billion revolving credit facility remained undrawn. WBD had $3.85 billion drawn on its revolving receivables program, a $150 million increase versus the fourth quarter of 2025. Gross debt stood at $33.4 billion with net leverage of 3.4x compared with 3.3x at the end of the fourth quarter of 2025.

First-quarter 2026 operating activities used $208 million in cash, compared with cash provided of $553 million in the prior-year quarter. Free cash flow decreased to negative $476 million from $302 million a year ago, primarily driven by higher net content investment across the Streaming and Studios segments, higher tax payments and working capital timing, partially offset by lower cash interest payments. Free cash flow was unfavorably impacted by approximately $100 million of separation and transaction-related items. WBD repaid $123 million of Senior Notes during the quarter.

Q2 & 2026 Guidance by WBD

WBD remains on track to surpass 150 million global streaming subscribers by the end of 2026.

For the second quarter, the absence of the NBA is expected to represent a 20% ex-forex headwind to advertising revenues in the Global Linear Networks segment, partially offset by a net 400 basis point benefit from the NCAA March Madness Final Four and Championship broadcast.

The previously disclosed domestic distribution deal renewal, which has weighed on distribution revenue growth, is expected to be lapped by the end of May 2026.

For Studios, the second quarter will face a difficult comparison against A Minecraft Movie, Sinners and Final Destination: Bloodlines from the prior-year period.

The pending acquisition of WBD by Paramount Skydance Corporation received shareholder approval on April 23, 2026 and is expected to close during the third quarter of 2026. WBD expects to incur additional transaction-related cash costs through the close of the transaction.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -88.1% due to these changes.

VGM Scores

Currently, Warner Bros. Discovery has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Warner Bros. Discovery has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Warner Bros. Discovery is part of the Zacks Broadcast Radio and Television industry. Over the past month, Sirius XM (SIRI Quick QuoteSIRI - Free Report) , a stock from the same industry, has gained 3.9%. The company reported its results for the quarter ended March 2026 more than a month ago.

Sirius XM reported revenues of $2.09 billion in the last reported quarter, representing a year-over-year change of +1.1%. EPS of $0.72 for the same period compares with $0.59 a year ago.

For the current quarter, Sirius XM is expected to post earnings of $0.78 per share, indicating a change of +36.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Sirius XM. Also, the stock has a VGM Score of A.