Warner Bros Revenue Falls 6% As Streaming Grows, Deal Clock Ticks

Quarterly Revenue Slips As Streaming Adds Subscribers And The Deal Clock Ticks

Warner Bros Discovery reported results on February 26, 2026, with quarterly revenue down 6% to nearly $9.5 billion, a Warner Bros revenue fall that came as traditional television and studio activity softened. Streaming grows in scale at the same time, keeping investors focused on whether operating momentum can support valuation while an active sale process tightens timelines.

HBO Max added 3.5 million subscribers in the quarter, lifting its worldwide base to 131.6 million. That HBO Max subscriber growth matters for markets because a larger subscriber base can support higher advertising inventory, higher pricing tolerance, and a broader content amortization base if churn stays contained.

Streaming Revenue Nears $2.8 Billion, But Profitability Slips

The streaming segment’s revenue rose 5% to nearly $2.8 billion, helped by series including “Heated Rivalry” and “It: Welcome to Derry.” Adjusted earnings fell 4% to $393 million because an unspecified distribution deal ended, a reminder that wholesale arrangements and platform fees can swing profits even when subscriber counts rise.

The near-term question for equities is whether the segment can return to earnings growth without relying on one-off distribution economics. If management leans on price increases, churn becomes the key risk; if it leans on promotions to keep subscriber growth, margin expansion can be delayed into the second half of 2026.

Studios And Linear Networks Post The Heaviest Drag

Adjusted income at the film and television studio group fell 23% to $728 million. The film unit had no major theatrical releases in the holiday quarter, after releasing nine movies that opened at the top of the box office in 2025, and the television studio’s revenue slid 18% due to the timing of content renewals.

The Discovery Linear Networks decline continued, and the segment posted revenue falling 12% to $4.2 billion as pay TV subscribers declined across the industry. Adjusted income dropped 27% to $1.4 billion, reducing the legacy cash cushion that historically supported content spend and balance-sheet flexibility as streaming scales.

Two Cash Offers Set The Framework Into March 20

The operating update comes during a high-stakes bidding contest that is defining near-term price action. Paramount Skydance has put forward a $31 per share bid in cash for the full company, and increased the regulatory termination fee it would pay if approval fails to $7 billion from $5.8 billion. It also offered a 25-cent per share quarterly ticking fee for every quarter beyond September 30 that a deal does not close, while signaling additional equity support if financing concerns emerge.

Netflix’s competing $27.75 per share offer is an all-cash proposal for the movie and television studios, the content catalog and HBO Max, valuing the transaction at $82.7 billion including net debt. Under that structure, Warner Bros would spin off cable television assets into a separately traded entity called Discovery Global, which the board has estimated could be worth $1.33 to $6.86 per share depending on leverage and market pricing.

The board has said it has not determined whether the revised Paramount proposal is superior, and will engage further. If a superior deal is identified, Netflix has four business days to revise its offer, and shareholders are scheduled to vote on the Netflix transaction on March 20, creating a tight catalyst window where headlines can move the stock quickly.

Market Channels: Equities, Credit Spreads, Rates, And Volatility

For equities, the key mechanism is optionality. A $31 cash path reduces uncertainty about separation value, while a partial-asset purchase plus a spinoff shifts value to the market’s future pricing of Discovery Global, where linear revenue falls and earnings are declining. That difference can widen dispersion across U.S. media peers as investors reprice exposure to linear advertising versus subscription growth.

For credit, structure matters because net debt allocation and stand-alone cash flow profiles drive spreads. A whole-company cash purchase raises financing and rating questions for the buyer; a spinoff can leave more leverage tied to a business with a 12% revenue slide, which can push higher risk premia. In a higher-rate backdrop, the cost of carrying uncertainty increases, and implied volatility tends to rise as the March 20 deadline approaches.

Base Case, Upside Scenario, Downside Scenario

Base case: the company remains in a competitive process into early March, with trading anchored to the $31 headline and the March 20 vote date. The trigger is whether streaming earnings stabilize above $393 million as linear income trends near $1.4 billion.

Upside scenario: one party improves price or certainty, either by lifting the cash-per-share level above $31 or by narrowing valuation ambiguity around Discovery Global with clearer debt terms. The trigger is a formal revision inside the four-business-day matching window, plus evidence that streaming can grow profit despite the distribution contract ending.

Downside scenario: deal certainty weakens, regulatory risks rise, or shareholder support becomes less predictable, forcing valuation back toward standalone fundamentals where studio results are lumpy and linear revenue continues to fall. The trigger is any delay that makes the post-September 30 ticking fee relevant alongside softer subscriber momentum after the 3.5 million net adds, per Tredu.