Warner Bros. Discovery Revenue Drops Amid Paramount Merger Hurdles

The Warner Bros. Discovery Inc. reported an 11% decline in revenue to $8.7 billion, missing Wall Street's $9.2 billion expectation. The loss was primarily driven by a 27% plunge in advertising revenue following the loss of National Basketball Association rights and a weaker film slate compared to the previous year's success of A Minecraft Movie. While the company's streaming unit saw a 10% revenue increase and a 75% rise in EBITDA, these gains were offset by declines in traditional television and film studio segments.

Simultaneously, the company's $110 billion acquisition by Paramount Skydance Corp. continues to face regulatory and legal obstacles. The United Kingdom's Competition and Markets Authority and Secretary of State for Culture, Media and Sport Lisa Nandy have cleared the deal, concluding that it does not raise competition concerns regarding streaming, children's channels, or film production. The transaction also previously received conditional approval from the European Union.

Despite international clearance, the merger remains stalled. The Writers Guild of America and 12 U.S. states, led by California Attorney General Rob Bonta, have filed legal challenges. A U.S. antitrust trial is scheduled to begin March 2, 2027. If the merger is not completed by September 30, Paramount will pay quarterly ticking fees, and a $7 billion termination fee will be triggered if the deal fails.