Warner Faces Billions in Penalties from Netflix, Accelerates Debt and Financial Restructuring Ahead of Merger

Warner Bros. Discovery (Nasdaq: WBD) reported first-quarter 2026 revenue of US$8.9 billion (approximately KRW 12 trillion), down 1% year-over-year, and a net loss of US$2.9 billion (about KRW 4 trillion), driven largely by roughly US$2.8 billion in termination fees following the Netflix contract cancellation. While the streaming and studio segments posted growth, a weak performance in the global linear TV networks division offset those gains. Adjusted EBITDA edged up slightly to US$2.2 billion, but both operating cash flow and free cash flow turned negative. At quarter-end, total debt stood at about US$33.4 billion (KRW 45 trillion), net debt at US$30.1 billion (KRW 41 trillion), and net leverage at 3.4x.

With an eye toward merging with Paramount Skydance, the company in mid-May began soliciting consents to amend the timing and terms for issuing exchangeable notes under its existing debt indenture. On June 4, it secured a new senior secured credit facility arranged by J.P. Morgan, establishing a collateralized lending line that supports multi-currency loans and letters of credit.

On April 23, Warner Bros. Discovery shareholders approved the approximately US$110 billion merger with Paramount Skydance. Paramount Skydance formally filed for merger review with the European Commission in early June as part of the regulatory approval process. ()

WBD’s global streaming subscriber base—including Max and HBO—exceeded 140 million in the previous quarter. The company aims to expand this figure to over 150 million by year-end. ()

Formed in 2022 through the merger of AT&T’s WarnerMedia and Discovery, Warner Bros. Discovery is a major U.S. media and entertainment group. Its diverse brand portfolio includes Warner Bros. film and TV studios, HBO, CNN, Discovery Channel, and the streaming platform Max. As cable viewership and advertising decline and the industry shifts toward streaming, leading Hollywood studios are pursuing cost reductions, large-scale M&A, and debt restructurings to achieve economies of scale and strengthen their content investment capacity.