Warner Bros. Discovery adds 1.1 million DTC subscribers in 4Q 2022

Thursday, February 23rd, 2023 
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NEW YORK — Warner Bros. Discovery, Inc. (the “Company”) (Nasdaq: WBD) today reported financial results for the quarter and year ended December 31, 2022. Global DTC subscribers increased 1.1 million to 96.1 million at the end of Q4 versus 95.0 million subscribers at the end of Q3, helped in part by the re-launch of HBO Max on Amazon Channels in December 2022.

Direct-to-Consumer Segment

Q4 2022 Highlights

  • Total DTC subscribers were 96.1 million, an increase of 1.1 million global subscribers since the end of Q3. Global DTC ARPU was $7.58.
  • DTC revenues were $2,451 million. Revenues increased 6% ex-FX compared to the prior year quarter, on a pro forma combined basis.
  • Advertising revenue increased 75% ex-FX, primarily driven by subscriber growth on our DTC ad-supported tiers.
  • Distribution revenue increased 2% ex-FX, as global retail subscriber gains were partially offset by a decline in wholesale revenues.
  • Content revenue increased 28% ex-FX, primarily driven by higher third party licensing of HBO content.
  • DTC operating expenses were $2,668 million. Operating expenses decreased 12% ex-FX compared to the prior year quarter, on a pro forma
    combined basis.
  • Costs of revenues increased 6% ex-FX, primarily driven by increased content expense.
  • SG&A decreased 42% ex-FX, primarily driven by lower marketing spend.
  • DTC Adjusted EBITDA was $(217) million, a $511 million year-over-year improvement in losses on a pro forma combined basis.

DTC Subscribers (in millions, except ARPU)

                      Q4 2022  Q3 2022  Q4 2021
                      -------  -------  -------
Domestic
 Total subscribers*      54.6     53.6     51.2
 ARPU**                $10.83   $10.66
International
 Total subscribers*      41.5     41.4     34.9
 ARPU**                 $3.71    $3.68
Total DTC subscribers*   96.1     95.0     86.2
Global ARPU**           $7.58    $7.52

Note: Domestic includes the U.S. and Canada. Prior year subscribers have been recast to reflect the Company’s harmonized definition.

* Direct-to-Consumer (“DTC”) Subscriber: The Company defines a “DTC Subscription” as: (i) a retail subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue, whether directly or through a third party, from a direct-to-consumer platform;(ii) a wholesale subscription to discovery+, HBO, or HBO Max for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription; (iii) a wholesale subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue on a per subscriber basis; and (iv) users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.

We may refer to the aggregate number of DTC Subscriptions as “subscribers.”

We define a Domestic subscriber as a subscription based either in the United States of America or Canada. We define an International subscriber as a subscription based outside of the United States of America or Canada.

The reported number of “subscribers” included herein and the definition of “DTC Subscription” as used herein excludes: (i) individuals who subscribe to DTC products, other than discovery+, HBO and HBO Max, that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) domestic and international Cinemax subscribers, and international basic HBO subscribers; and (iv) users on free trials except for those users on free trial that convert to a DTC Subscription within the first seven days of the next month as noted above.

** ARPU: The Company defines DTC Average Revenue Per User (“ARPU”) as total subscription revenue plus net advertising revenue for the period divided by the daily-average number of paying subscribers for the period. Where daily values are not available, the sum of beginning of period and end of period divided by two is used.

Excluded from the ARPU calculation are: (i) HBO Max/HBO Hotel and Bulk Institution subscription revenue and subscribers (i.e., subscribers billed on a bulk basis); (ii) Cinemax subscription revenue and subscribers; (iii) HBO Basic subscription revenue and subscribers (Internationalonly); (iv) Non-discovery+ DTC revenue and subscribers; and (v) Non-Core discovery+ revenue and subscribers, and (vi) users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month.

Links: Warner Bros. Discovery