Warner Bros. Discovery has posted a massive US$2.9 billion (A$4.5 billion) quarterly loss after being hit with a hefty breakup fee linked to its abandoned Netflix takeover deal, as the media giant pushes ahead with its planned merger with Paramount Skydance.

The company reported first-quarter revenue of US$8.9 billion, broadly in line with Wall Street expectations, but investors reacted negatively to the scale of the loss and weak cash flow performance.

At the centre of the result was a US$2.8 billion termination payment owed to Netflix after Warner Bros. Discovery walked away from a proposed asset sale earlier this year.

Paramount Skydance, which is now set to acquire WBD in a deal reportedly worth around US$111 billion, agreed to cover the fee as part of the merger arrangement.

Despite the headline loss, the company’s streaming and studio businesses delivered strong growth. Streaming revenue climbed 9% to nearly US$2.9 billion, driven by the global expansion of HBO Max and rising uptake of ad-supported subscriptions. Warner Bros. Discovery also revealed it has now surpassed 140 million streaming subscribers globally.

Studio revenue surged 35% to US$3.13 billion, boosted by theatrical releases and international content licensing.

But traditional television operations continued to drag on results. Revenue from linear TV networks including CNN, Discovery Channel and TBS fell 8% to US$4.4 billion as audiences declined and the company felt the impact of losing NBA broadcast rights.

Free cash flow also turned negative during the quarter, while gross debt remained high at more than US$33 billion.

The Paramount Skydance acquisition is currently under regulatory review, with both companies expecting the deal to close in the third quarter of 2026.