Warner Bros. Discovery is under financial pressure after posting a massive first quarter loss tied to deal fallout, restructuring charges, and acquisition-related costs, even as its streaming business continues to surge and offset parts of the decline.

The media giant reported a net loss of $2.9 billion, a dramatic jump from a $453 million loss in the same quarter a year earlier. The steep drop underscores the financial strain of ongoing corporate restructuring and high-stakes merger activity reshaping the company.

Deal Fallout and Restructuring Drive Multi-Billion Dollar Loss

A major portion of the loss stemmed from heavy accounting and transaction costs, including $1.3 billion of “pre-tax acquisition-related amortization of intangibles, content fair value step-up and restructuring expenses” along with a $2.8 billion termination fee tied to a failed transaction involving Netflix.

Netflix exited a proposed deal to acquire Warner Bros. Discovery assets after Paramount Skydance entered with a higher competing offer. That shift triggered the termination fee obligation, which Paramount agreed to absorb as part of its broader agreement to acquire Warner Bros. Discovery in full.

However, the cost remains on Warner Bros. Discovery’s books until the deal officially closes. The structure of the agreement also leaves room for adjustments, meaning the obligation could shift back under certain conditions if deal terms change or higher bids emerge.

Paramount’s acquisition proposal was approved by shareholders in April and is now undergoing regulatory review. On Monday, Paramount said in its earnings report that it “made significant progress” toward closing the deal and still expects completion in the third quarter.

Revenue Slides Slightly, But Profit Metrics Improve

Despite the headline loss, Warner Bros. Discovery showed some operational strength. First quarter revenue fell just 1 percent year over year to $8.89 billion.

Adjusted earnings before interest, taxes, depreciation and amortization rose 5 percent to $2.2 billion, signaling improved underlying profitability even as one time charges weighed heavily on results. The company also reported $33.4 billion in gross debt at quarter end, highlighting continued balance sheet pressure.

Streaming Growth Becomes Bright Spot in Portfolio

Streaming remained the strongest growth engine for Warner Bros. Discovery.

Total streaming revenue climbed 9 percent to approximately $2.89 billion, fueled by rising subscriber income from international expansion of HBO Max, the company’s flagship platform. Advertising revenue for the streaming segment jumped 20 percent, driven by growth in the ad supported tier.

The company said it exceeded expectations, surpassing 140 million global streaming customers at the end of the quarter and remains on track to top 150 million subscribers by year end.

Traditional TV Weakness Continues to Drag Results

Legacy television operations continued to decline. Revenue from linear networks, which include CNN, TBS, and the Discovery Channel, fell 8 percent to $4.38 billion.

Advertising revenue in the segment dropped 11 percent, largely due to the absence of NBA media rights, which had previously supported higher ad sales.

Film Studio Delivers Strong Growth Surge

One of the strongest bright spots came from the film division, which posted a sharp 35 percent revenue increase to $3.13 billion year over year. The gains helped offset weakness in traditional television and broader restructuring pressures.

High Stakes Merger and Debt Pressure Define Outlook

With a pending Paramount acquisition under regulatory review, Warner Bros. Discovery remains in the middle of a transformative period. Investors are now watching whether the deal can close in the third quarter as planned and whether streaming momentum can continue to offset declines in legacy businesses.

For now, the company sits at the center of a high stakes media shakeup, balancing rising streaming success against billions in restructuring costs, deal uncertainty, and a heavy debt load.