Warner Bros. Discovery added 1.8 million subscribers and narrowed its streaming loss by 75% year over year to $55 million during the fourth quarter of 2023 as lower content spend and cost-cutting helped offset a 12% decline in linear advertising revenue.

Here are the top-line results:

Net loss: $400 million

Earnings Per Share: Loss of 16 cents per share, compared to a loss of 11 cents per share expected by analysts surveyed by Zacks Investment Research

Revenue: $10.28 billion in revenue, compared to $10.23 billion expected by analysts surveyed by Zacks Investment Research

Subscribers: 97.7 million

“After executing against our strategic plan to reposition the company, we are now on solid footing with a clear pathway to growth,” Warner Bros. Discovery CEO David Zaslav said in a statement. “We have an attack plan for 2024 that includes the roll-out of Max in key international markets, a more robust creative pipeline across our film and TV studios, and further progress against our long-range financial goals and are confident in our ability to drive sustained operating momentum and enhanced shareholder value.”

Shares of WBD fell 7.4% in pre-market trading following the earnings announcement.

The direct-to-consumer division, which includes traditional HBO cable subscriptions and the Max and Discovery+ streaming services, added 1.8 million subscribers during the quarter for a total of 97.7 million globally, including 54.6 million domestic subscribers and 42.3 million international subscribers. The total included 1.3 million subscribers from the company’s acquisition of BluTV.

Revenue for the DTC segment grew 3% year over year to $2.53 billion. Average revenue per user came in at $11.65 domestically, $3.88 internationally and $7.94 globally.

Advertising revenue jumped 51% to $186 million, driven by higher U.S. Max engagement and ad-lite subscriber growth, while content revenue fell 30% to $171 million, driven by the timing of third-party licensing.

Distribution revenue in the segment climbed 4% to 2.16 billion, primarily attributable to “new partnership launches, price increases price increases in the U.S. and certain international markets, favorable mix shifts from wholesale to retail, and the transfer of TNT Sports Chile to DTC from Networks.”

The segment posted an adjusted EBITDA loss of $55 million for the quarter, compared to a year-ago loss of $217 million. But for full year 2023, it posted a profit of $103 million, compared to a loss of nearly $1.2 billion.

Studios revenue fell 17% year over year to $3.17 billion. Adjusted EBITDA for the segment fell 30% to $543 million.

Content revenue fell 19% year over year to $2.93 billion. TV revenue declined significantly primarily due to the impact of the WGA and SAG-AFTRA strikes and certain large licensing deals in the prior year.

Theatrical revenue increased due to the larger release slate in the current year quarter, which included “Wonka,” “Aquaman and the Lost Kingdom,” and “The Color Purple.” Games revenue increased due to the continued performance of Hogwarts Legacy, including its launch on the Nintendo Switch during the quarter.

Networks revenue fell 9% to $5.03 billion. Adjusted EBITDA fell 11% to $2.21 billion.

Distribution revenue fell 4% year over year to $2.75 billion, primarily driven by declines in U.S. pay-TV subscribers, exiting the AT&T SportsNet business, and the transfer of TNT Sports Chile from Networks to DTC, partially offset by increases in U.S. contractual affiliate rates and inflationary impacts in Argentina.

Advertising revenue fell 12% to $1.95 billion, driven by audience declines in domestic general entertainment and news networks and soft linear advertising markets mainly in the U.S. and, to a lesser extent, certain international markets, as well as exiting the AT&T SportsNet business.

Content revenue fell 15% to $261 million, primarily driven by lower international sports sublicensing, as well as lower third-party and intersegment content licensing.

Warner generated $3.3 billion in free cash flow and ended the quarter with $4.3 billion of cash on hand, $44.2 billion of gross debt and 3.9 times net leverage.

The impact of the strikes contributed roughly $1 billion to free cash flow, while negatively impacting total EBITDA of $2.47 billion for the quarter by a few 100 million dollars.

Looking ahead, Warner expects the DTC segment to be profitable in full year 2024 and is targeting $1 billion of streaming EBITDA in 2025. It also expects a “very meaningful improvement” in free cash flow year over year versus the negative $930 million incurred last year.