3 Trillion Won Penalty and Shift to Loss.. Warner Bros. Facing Paramount Big Deal

Warner Bros. Discovery, Inc. (WBD) reported first-quarter 2026 revenue of $8.9 billion, down 1% year-over-year, and posted a net loss of $2.9 billion. The loss was driven in large part by one-time charges—most notably a $2.8 billion termination fee tied to the abandoned merger agreement with Netflix.

Although both its streaming and studio businesses showed growth, weakness in its global linear-TV division kept overall revenue essentially flat. Adjusted EBITDA edged up slightly, but both operating cash flow and free cash flow turned negative.

As of March 31, 2026, the company carried total debt of $33.4 billion, net debt of $30.1 billion, and maintained net leverage of roughly 3.4 times. In anticipation of its planned merger with Paramount Skydance, Warner Bros. Discovery has begun soliciting noteholder consent to amend covenants on certain subsidiary senior notes. At the same time, it has entered into a new employment agreement with Chief Financial Officer Gunnar Wiedenfels to reset his term and compensation structure.

Separately, on April 23, Warner Bros. Discovery shareholders approved the approximately $110 billion acquisition by Paramount Skydance. The transaction remains subject to regulatory review in the U.S., Europe and elsewhere, with closing targeted for the third quarter of 2026.

Paramount Skydance has outlined plans to forge a next-generation global media and entertainment company by combining Warner Bros.’ film and television library with its own streaming, sports and news assets.

Headquartered in the United States, Warner Bros. Discovery is a fully integrated media and entertainment company encompassing Warner Bros. film studios; streaming services such as HBO Max and Discovery+; and pay-TV networks including CNN and the Discovery Channel.

Faced with subscriber churn, intensifying streaming competition and advertising-market volatility, traditional Hollywood studios and cable networks are under pressure to protect profitability. As a result, the industry continues to pursue large-scale M&A, spin-offs and strategic combinations to achieve economies of scale and better integrate content with distribution platforms.