Warner Bros. Discovery reported a significant net loss for the first quarter on Wednesday, though the company provided a detailed explanation for the figures.

The company recorded a net loss of $2.9 billion, a substantial increase compared to the net loss of $453 million reported during the same period last year.

This figure includes $1.3 billion in "pre-tax acquisition-related intangible asset amortization, content fair value adjustments, and restructuring expenses." Additionally, it encompasses a $2.8 billion termination fee owed by Warner Bros. Discovery to Netflix after a proposed deal between the companies fell through in February.

Netflix abandoned the proposed transaction to acquire assets from Warner Bros. Discovery after Paramount's Skydance presented a superior offer. As part of the agreement for Paramount to acquire all of Warner Bros. Discovery's assets, Paramount agreed to cover this termination fee. However, the liability remains on Warner Bros. Discovery's books until the transaction is finalized.

This obligation will be transferred to Warner Bros. Discovery because, under certain conditions—such as if Paramount terminates its deal with Warner Bros. Discovery after receiving a higher offer—the fee amount would need to be reimbursed to Paramount.

The acquisition proposal from Paramount received approval from Warner Bros. Discovery shareholders in April and is currently undergoing regulatory review. On Monday, Paramount stated in its earnings report that it had made "significant progress" toward completing the transaction and anticipates it will close in the third quarter.

Warner Bros. Discovery also reported on Wednesday that its first-quarter revenue decreased by 1% year-over-year to $8.89 billion. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 5%, reaching $2.2 billion. Warner Bros. Discovery ended the quarter with a total debt of $33.4 billion.

The streaming business continued to be a strong performer for the company.

Total streaming revenue grew by 9% to approximately $2.89 billion. This growth was driven by an increase in subscription revenue, fueled by the international expansion of its flagship streaming platform, HBO Max. Advertising revenue within the streaming division rose by 20%, attributed to a growing number of subscribers opting for ad-supported plans.

In a letter to shareholders, the company stated that it ended the first quarter with over 140 million global streaming customers, exceeding expectations. It is also on track to surpass 150 million global subscribers by the end of the year.

Warner Bros. Discovery's portfolio of pay-TV networks, which includes CNN, TBS, and Discovery Channel, continued to negatively impact performance. Revenue from its linear television networks was $4.38 billion, an 8% decline compared to the previous year. The company indicated that linear advertising revenue fell by 11%, primarily due to the loss of NBA media rights within its portfolio.

Conversely, the film studio division experienced a notable improvement, with revenue increasing by 35% year-over-year to $3.13 billion.