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What changed in Warner Bros. Discovery's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Warner Bros. Discovery's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+405 added−414 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Warner Bros. Discovery's 2023 10-K

405 paragraphs added · 414 removed · 304 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

48 edited+15 added−11 removed41 unchanged
Biggest changeThe ability to secure distribution agreements is dependent upon the production, acquisition and packaging of original content, viewership, the marketing and advertising support and incentives provided to distributors, the product offering across a series of networks within a region, and the prices charged for carriage. 1 We define a “DTC Subscription” as: (i) a retail subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue, whether directly or through a third party, from a direct-to-consumer platform; (ii) a wholesale subscription to discovery+, HBO, or HBO Max for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription; (iii) a wholesale subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue on a per subscriber basis; and (iv) users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.
Biggest changeThe ability to secure distribution agreements is dependent upon the production, acquisition and packaging of content, viewership, the marketing and advertising support and incentives provided to distributors, the product offering across a series of networks within a region, and the prices charged for carriage. 1 Direct-to-Consumer subscriber - We define a “Core DTC Subscription” as: (i) a retail subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product (defined below) for which we have recognized subscription revenue, whether directly or through a third party, from a direct-to-consumer platform; (ii) a wholesale subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription; (iii) a wholesale subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue on a per subscriber basis; (iv) a retail or wholesale subscription to an independently-branded, regional product sold on a stand-alone basis that includes discovery+, HBO, HBO Max, Max, and/or a Premium Sports Product, for which we have recognized subscription revenue (as per (i)-(iii) above); and (v) users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.
Highlights include: • local medical, dental, and vision plans in many countries around the world to support our employees with access to health care, supplementing any state-provided health care; • on-site wellness centers in our New York, Los Angeles, Atlanta and London offices, a fully-equipped fitness center in our New York, Los Angeles and Atlanta offices, and access to virtual fitness classes and wellbeing programs; • family support programs, including on-site childcare in certain offices, childcare locator services, back-up childcare, maternity/paternity leave, adoption assistance and elder care; • tools and resources to support the mental wellbeing of our employees and their families, including mental health counselors in our on-site wellness centers and a confidential, dedicated line for employees to contact and speak with a counselor in the event they need mental health support; 11 • products and services to support employees’ financial wellbeing, including life, accident, and disability insurance plans, discount benefits, financial planning tools, a 401(k) savings plan in the U.S. and retirement/pension plans in over 20 countries, with competitive contributions from the Company for employees at all levels; • offering an employee stock purchase plan, which allows certain employees globally (where legislation permits) an opportunity to buy WBD common stock at a discounted price through convenient after-tax payroll deductions with no commission charges; and • flexible working arrangements around the globe to enable our employees to better balance work and personal commitments.
Highlights include: • local medical, dental, and vision plans in many countries around the world to support our employees with access to health care, supplementing any state-provided health care; • on-site wellness centers in our New York, Los Angeles, Atlanta and Chiswick (London) offices, a fully-equipped fitness center in our New York, Los Angeles and Atlanta offices, and access to virtual fitness classes and wellbeing programs; • family support programs, including on-site childcare in certain offices, childcare locator services, back-up childcare, maternity/paternity leave, adoption assistance and elder care; • tools and resources to support the mental wellbeing of our employees and their families, including mental health counselors in our on-site wellness centers and a confidential, dedicated line for employees to contact and speak with a counselor in the event they need mental health support; 11 • products and services to support employees’ financial wellbeing, including life, accident, and disability insurance plans, discount benefits, financial planning tools, a 401(k) savings plan in the U.S. and retirement/pension plans in over 20 countries, with competitive contributions from the Company for employees at all levels; • offering an employee stock purchase plan, which allows certain employees globally (where legislation permits) an opportunity to buy WBD common stock at a discounted price through convenient after-tax payroll deductions with no commission charges; and • flexible working arrangements around the globe to enable our employees to better balance work and personal commitments.
The Act also gives broadcasters the choice of opting out of must-carry and invoking the right to retransmission consent, which refers to a broadcaster’s right to require MVPDs, such as cable and satellite operators, to obtain the broadcaster’s consent before distributing the broadcaster’s signal to the MVPDs’ subscribers, often at a substantial cost that reduces the content funds available for independent programmers not affiliated with broadcasters, such as us.
The Act also gives certain broadcasters the choice of opting out of must-carry and invoking the right to retransmission consent, which refers to a broadcaster’s right to require MVPDs, such as cable and satellite operators, to obtain the broadcaster’s consent before distributing the broadcaster’s signal to the MVPDs’ subscribers, often at a substantial cost that reduces the content funds available for independent programmers not affiliated with broadcasters, such as us.
(See Note 3 and Note 4 to the accompanying consolidated financial statements). Prior to the Merger, WarnerMedia Holdings, Inc. distributed $40.5 billion to AT&T (subject to working capital and other adjustments) in a combination of cash, debt securities, and WM's retention of certain debt. Discovery transferred purchase consideration of $42.4 billion in equity to AT&T shareholders in the Merger.
(See Note 3 and Note 4 to the accompanying consolidated financial statements). Prior to the Merger, WarnerMedia Holdings, Inc. (“WMH”) distributed $40.5 billion to AT&T (subject to working capital and other adjustments) in a combination of cash, debt securities, and WM’s retention of certain debt. Discovery transferred purchase consideration of $42.4 billion in equity to AT&T shareholders in the Merger.
Regulation of Digital Services We operate a variety of free, advertising-based and subscription-based digital products and streaming services providing information and entertainment to consumers in the U.S. and international markets via web, mobile and connected TV platforms.
Regulation of Digital Products and Services We operate a variety of free, advertising-based and subscription-based digital products and streaming services providing news, information and entertainment to consumers in the U.S. and international markets via web, mobile and connected TV platforms.
As of December 31, 2022, we classified our operations in three reportable segments: • Studios - Our Studios segment primarily consists of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/DTC services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming. • Networks - Our Networks segment primarily consists of our domestic and international television networks. • DTC - Our DTC segment primarily consists of our premium pay-TV and streaming services.
Segments As of December 31, 2023, we classified our operations in three reportable segments: • Studios - Our Studios segment primarily consists of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to our networks/DTC services as well as third parties, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming. • Networks - Our Networks segment primarily consists of our domestic and international television networks. • DTC - Our DTC segment primarily consists of our premium pay-TV and streaming services.
Program Access The Communications Act (the “Act”) and the FCC’s program access rules prevent a satellite-delivered content vendor in which a cable operator has an “attributable” ownership interest from discriminating against unaffiliated multichannel video programming distributors (“MVPDs”), such as cable and DBS operators, in the rates, terms and conditions for the sale or delivery of content networks, on the basis of the non-affiliation.
Program Access The Communications Act (the “Act”) and the FCC’s program access rules prevent a content vendor in which a cable operator has an “attributable” ownership interest from discriminating against unaffiliated multichannel video programming distributors (“MVPDs”), such as cable and DBS operators, in the rates, terms and conditions for the sale or delivery of the vendor’s content networks, on the basis of the non-affiliation.
Commercials embedded in our networks’ television content stream also must adhere to certain standards for ensuring that those commercials are not transmitted at louder volumes than our program material. Obscenity Restrictions Network distributors are prohibited from transmitting obscene content, and our distribution agreements generally require us to refrain from including such content on our networks.
Commercials embedded in our networks’ television content stream also must adhere to certain standards for ensuring that those commercials are not transmitted at louder volumes than our program material. Obscenity Restrictions MVPDs are prohibited from transmitting obscene content, and our distribution agreements generally require us to refrain from including such content on our networks.
We have made and will continue to make investments in developing technology platforms to support our digital products and DTC offerings, including HBO Max and discovery+, and consider these platforms to be intellectual property assets as well. We are a global media and entertainment company and the protection of our content and brands is of primary importance.
We have made and will continue to make investments in developing technology platforms to support our digital products and streaming services, including Max, HBO Max, and discovery+, and consider these platforms to be intellectual property assets as well. We are a global media and entertainment company and the protection of our content and brands is of primary importance.
Diversity, Equity and Inclusion (“DE&I”) Our DE&I objective is to seek out diversity, remove barriers, and create space for all to share ideas and be heard. DE&I at WBD is overseen by our Chief Global Diversity, Equity & Inclusion Officer.
Diversity, Equity and Inclusion (“DE&I”) Our DE&I objective is to promote diversity, remove barriers, and create space for all to share ideas and be heard. DE&I at WBD is overseen by our Chief Global Diversity, Equity & Inclusion Officer.
Our content networks intended primarily for children 12 years of age and under must comply with certain limits on the amount and type of permissible advertising, and certain regulations extend to our digital products when they are referenced by web address in our content networks. We may not include emergency alert tones or signals in our content.
Our television programming intended primarily for children 12 years of age and under must comply with certain limits on the amount and type of permissible advertising, and certain regulations extend to our digital products when they are referenced by web address in our television programming. We may not include actual or simulated emergency alert tones or signals in our content.
Our networks and streaming services also compete for their target audiences with all forms of content and other media provided to viewers, including broadcast, cable and local networks, streaming services, pay-per-view and VOD services, online activities and other forms of news, information and media entertainment.
Our networks and streaming services also compete for their target audiences with all forms of content and other media provided to viewers, including broadcast, cable and local networks, streaming services, pay-per-view and video-on-demand (“VOD”) services, online activities and other forms of news, information and media entertainment.
We may refer to the aggregate number of DTC Subscriptions as “subscribers.” The reported number of “subscribers” included herein and the definition of “DTC Subscription” as used herein excludes: (i) individuals who subscribe to DTC products, other than discovery+, HBO and HBO Max, that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) domestic and international Cinemax subscribers, and international basic HBO subscribers; and (iv) users on free trials except for those users on free trial that convert to a DTC Subscription within the first seven days of the next month as noted above. 8 Our networks and streaming services, which include HBO Max and discovery+ compete for the sale of advertising with other television networks, including broadcast, cable, local networks, and other content distribution outlets for their target audiences and the sale of advertising.
The reported number of “subscribers” included herein and the definition of “DTC Subscription” as used herein excludes: (i) individuals who subscribe to DTC products, other than discovery+, HBO, HBO Max, Max, a Premium Sports Product, and independently-branded, regional products (currently consisting of TVN/Player and BluTV) that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) domestic and international Cinemax subscribers, and international basic HBO subscribers; and (iv) users on free trials except for those users on free trial that convert to a DTC Subscription within the first seven days of the next month as noted above. 8 Our networks and streaming services, which include Max, HBO Max, and discovery+, compete for the sale of advertising with other television networks, including broadcast, cable, local networks, and other content distribution outlets for their target audiences and the sale of advertising.
Our streaming services are available on most mobile and connected TV devices. As of December 31, 2022, we had 96.1 million DTC subscribers 1 . HBO is one of the most respected and innovative entertainment brands in the world, serving iconic, award-winning programming through the HBO linear channels and our DTC streaming platform, HBO Max.
Our streaming services are available on most mobile and connected TV devices. As of December 31, 2023, we had 97.7 million DTC subscribers 1 . HBO is one of the most respected and innovative entertainment brands in the world, serving iconic, award-winning programming through the HBO linear channels and our DTC streaming service, Max.
Accordingly, the financial results of the Company as of and for any periods prior to April 8, 2022 do not include the financial results of the WM Business and current and future results will not be comparable to historical results. Description of Business Warner Bros.
Accordingly, the financial results of the Company as of and for any periods prior to April 8, 2022 do not include the financial results of the WM Business and current and future results will not be comparable to results prior to the Merger.
In August 2022, the Company and AT&T finalized the post-closing working capital settlement process, pursuant to section 1.3 of the Separation and Distribution Agreement, which resulted in the Company receiving a $1.2 billion payment from AT&T in the third quarter of 2022 in lieu of adjusting the equity issued as consideration in the Merger.
In August 2022, the Company and AT&T finalized the post-closing working capital settlement process, which resulted in the Company receiving a $1.2 billion payment from AT&T in the third quarter of 2022 in lieu of adjusting the equity issued as consideration in the Merger.
Television, the Company’s flagship television production unit for live-action scripted programming, as well as Warner Bros. Unscripted Television , which produces unscripted and alternative programming through its four production units: Warner Horizon Unscripted Television, Telepictures , Warner Bros. International Television Production and Shed Media . WBTVG also includes Warner Bros. Animation, Cartoon Network Studios, and Hanna-Barbera Studios Europe .
Television, the Company’s flagship television production unit for live-action scripted programming, as well as Warner Bros. Unscripted Television , which produces unscripted and alternative programming through its four production units – Warner Horizon Unscripted Television, Telepictures , Warner Bros. International Television Production, and Shed Media . WBTVG also includes Warner Bros.
These laws and their public and private enforcement are continually evolving, with several comprehensive U.S. state privacy laws effective in 2023, many more introduced and expected to pass in the coming year, and novel litigation theories related to privacy advancing in the courts.
These laws and their public and private enforcement are continually evolving, with several comprehensive U.S. state privacy laws that took effect in 2023, or that will take effect in 2024, and many more introduced and expected to pass in the coming year, and novel litigation theories related to privacy advancing in the courts.
WBD Sports is a global leader in premium sports content across multiple platforms, engaging fans in the U.S. and internationally. WBD Sports’ U.S. portfolio includes the National Basketball Association (“NBA”), Major League Baseball (“MLB”), National Collegiate Athletic Association (“NCAA”), National Hockey League (“NHL”), and United States Soccer Federation (“USSF”).
WBD Sports (rebranded in January 2024 as TNT Sports) is a global leader in premium sports content across multiple platforms, engaging fans in the U.S. and internationally. TNT Sports’ U.S. sports rights include the National Basketball Association (“NBA”), Major League Baseball (“MLB”), National Collegiate Athletic Association (“NCAA”), National Hockey League (“NHL”), and United States Soccer Federation (“USSF”).
For the year ended December 31, 2022, advertising, distribution, content, and other revenues were 43%, 50%, 6%, and 1%, respectively, of total revenues for this segment. 7 DTC WBD’s DTC business includes our streaming services, such as HBO Max and discovery+ , and premium pay-TV services, such as HBO.
For the year ended December 31, 2023, distribution, advertising, content, and other revenues were 54%, 39%, 5%, and 2%, respectively, of total revenues for this segment. 7 DTC WBD’s DTC business includes our streaming services, such as Max, HBO Max, and discovery+ , and premium pay-TV services, such as HBO.
Our segment presentation aligns with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments. Prior periods have been recast to conform to the current period presentation.
Our segment presentation aligns with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments.
These rules permit the unaffiliated MVPD to initiate a complaint to the FCC against content networks if it believes this rule has been violated. 9 Program Carriage The Act and the FCC’s program carriage rules prohibit distributors from favoring their affiliated content networks over unaffiliated, similarly situated content networks in the rates, terms and conditions of carriage agreements between content networks and cable operators or other MVPDs.
These rules permit the unaffiliated MVPD to initiate a complaint to the FCC against the content vendor and content networks if it believes this rule has been violated. 9 Program Carriage The Act and the FCC’s program carriage rules prohibit MVPDs from favoring their affiliated content networks over unaffiliated, similarly situated content networks in the rates, terms and conditions of their carriage agreements in a manner that unreasonably restrains the ability of the unaffiliated content network to compete fairly.
Studios WBD’s Studios business includes the Warner Bros. Pictures Group (“WBPG”), DC Studios, Warner Bros. Television Group (“WBTVG”), Global Brands and Experiences (“GBE”) (consumer products, themed entertainment, brand licensing, and publisher DC Comics), content licensing, home entertainment, studio operations, and interactive gaming. WBPG is comprised of Warner Bros. Pictures, New Line Cinema and Warner Animation Group .
Studios WBD’s Studios business includes the Warner Bros. Motion Picture Group (“WBMPG”), DC Studios, Warner Bros. Television Group (“WBTVG”), Consumer Products, Themed Entertainment and Brand Licensing, DC Comics Publishing, Content Licensing, Home Entertainment, Studio Operations, and Interactive Gaming. WBMPG is comprised of Warner Bros. Pictures, New Line Cinema, and Warner Bros. Pictures Animation .
WBPG partners with inspiring storytellers to create filmed entertainment for a global audience. The recently launched DC Studios, tasked with developing properties licensed from DC Comics for film and television, continues the tradition of high-quality storytelling for the DC Universe across all audio-visual media, while building a sustainable growth business out of the iconic franchise. WBTVG consists of Warner Bros.
WBMPG partners with captivating storytellers to create filmed entertainment for a global audience. DC Studios, tasked with developing properties licensed from DC Comics for film, television and animation, continues the tradition of high-quality storytelling within the DC Universe, while building a sustainable growth business out of the iconic characters. WBTVG consists of Warner Bros.
It represents the full entertainment eco-system, and the ability to serve consumers across the entire spectrum of offerings from domestic and international networks, premium pay-TV, streaming, production and release of feature films and original series, related consumer products and themed experience licensing, and interactive gaming. 5 We generate revenue from the sale of advertising on our networks and digital platforms (advertising revenue); fees charged to distributors that carry our network brands and programming, including cable, direct-to-home (“DTH”) satellite, telecommunication and digital service providers, as well as through direct-to-consumer (“DTC”) subscription services (distribution revenue); the release of feature films for initial exhibition in theaters, the licensing of feature films and television programs to various television, subscription video on demand (“SVOD”) and other digital markets, distribution of feature films and television programs in the physical and digital home entertainment market, sales of console games and mobile in-game content, sublicensing of sports rights, and licensing of intellectual property such as characters and brands (content revenue); and other sources such as studio tours and production services (other revenue).
We generate revenue from the sale of advertising on our networks and digital platforms (advertising revenue); fees charged to distributors that carry our network brands and programming, including cable, direct-to-home (“DTH”) satellite, telecommunication and digital service providers, as well as through direct-to-consumer (“DTC”) subscription services (distribution revenue); the release of feature films for initial exhibition in theaters, the licensing of feature films and television programs to various television, subscription video on demand (“SVOD”) and other digital markets, distribution of feature films and television programs in the physical and digital home entertainment markets, sales of console games and mobile in-game content, sublicensing of sports rights, and licensing of intellectual property such as characters and brands (content revenue); and other sources such as studio tours and production services (other revenue).
We implement our DE&I initiatives and pipeline programs through global, regional and corporate councils that partner with internal and external stakeholders across our brands, business units and regions. We have also established a Creative Diversity Council to address DE&I in our content production businesses.
We implement our DE&I initiatives and pipeline programs through our global and regional DE&I team that partners with internal and external stakeholders across our brands, business units and regions. We have established a Business and Creative Council, made up of our most senior leaders, to address and champion DE&I in our corporate and content production businesses.
Department of Justice periodically consider proposals to implement additional accessibility requirements, some of which would increase our obligations substantially.
Department of Justice periodically consider proposals to implement additional accessibility requirements, and are considering a number of such proposals now, some of which would increase our obligations substantially.
Pictures Group, Warner Bros. Television Group, DC, HBO, HBO Max, Discovery Channel, discovery+, CNN, HGTV, Food Network, TNT, TBS, TLC, OWN, Warner Bros. Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings.
Television Group, DC, HBO, HBO Max, Max, discovery+, CNN, Discovery Channel, HGTV, Food Network, TNT Sports, TBS, TLC, OWN, Warner Bros. Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings. We are home to powerful creative engines and one of the largest collections of owned content in the world.
Studio Tour London – The Making of Harry Potter and Warner Bros. Studio Tour Hollywood attract visitors from around the world, giving fans the opportunity to get closer to the entertainment they love. In addition, Warner Bros. Studio Tour Tokyo – The Making of Harry Potter is set to open later in 2023.
Part of the Worldwide Studio Operations group , Warner Bros. Studio Tour London – The Making of Harry Potter and Warner Bros. Studio Tour Hollywood attract visitors from around the world, giving fans the opportunity to get closer to the entertainment they love. In June of 2023, the Worldwide Studios Operations group opened the Warner Bros.
In addition to the global networks described above, we operate networks internationally. TVN operates a portfolio of free-to-air and pay-TV lifestyle, entertainment, and news networks in Poland.
In 2023, WBD exited its regional sports business (“AT&T SportsNets”) in the U.S. In addition to the global networks described above, we operate networks internationally. TVN operates a portfolio of free-to-air and pay-TV lifestyle, entertainment, and news networks in Poland.
Some examples of our human resources programs and initiatives are described below. Compensation Our compensation philosophy is to pay for performance, encourage excellence and reward employees who innovate and deliver high-quality results.
We also provide opportunities for our employees to make an impact in their communities through social good initiatives around the world. Some examples of our human resources programs and initiatives are described below. Compensation Our compensation philosophy is to pay for performance, encourage excellence and reward employees who innovate and deliver high-quality results.
Impact of COVID-19 We continue to closely monitor the ongoing impact of COVID-19 on all aspects of our business and geographies; however, the nature and full extent of COVID-19’s effects on our operations and results are not yet known and will depend on future developments, which are highly uncertain and cannot be predicted.
We continue to closely monitor the ongoing impact of industry trends to our business; however, the full effects on our operations and results will depend on future developments, which are highly uncertain and cannot be predicted. 5 Description of Business Warner Bros.
GBE operates Global Consumer Products, Themed Entertainment and Brand Licensing, and world-renowned comic and publishing powerhouse DC Comics . Global distribution of most of WBD’s award-winning content is handled by Content Sales , which provides content for viewers across streaming, cable, satellite and broadcast networks, local television stations, and airlines. Warner Bros.
Global distribution of most of WBD’s content is handled by Content Sales , which provides content for viewers across streaming, cable, satellite and broadcast networks, local television stations, and airlines. Warner Bros.
There is competition from other production studios, other television networks, and online-based content providers for the acquisition of content and creative talent such as writers, producers and directors. Our ability to produce and acquire popular content is an important competitive factor for the distribution of our content, attracting viewers and the sale of advertising.
We experience competition for the development and acquisition of content, distribution of our content, sale of commercial time on our networks and viewership. There is competition from other production studios, other television networks, and online-based content providers for the acquisition of content and creative talent such as writers, producers and directors.
Discovery is a premier global media and entertainment company that combines the WarnerMedia Business’s premium entertainment, sports and news assets with Discovery’s leading non-fiction and international entertainment and sports businesses, thus offering audiences a differentiated portfolio of content, brands and franchises across television, film, streaming and gaming. Some of our iconic brands and franchises include Warner Bros.
Discovery is a premier global media and entertainment company that provides audiences with a differentiated portfolio of content, brands and franchises across television, film, streaming, and gaming. Some of our iconic brands and franchises include Warner Bros. Motion Picture Group, Warner Bros.
Irrespective of their validity, such claims may also result in substantial costs and diversion of resources which could have an adverse effect on our operations.
Third parties may challenge the validity or scope of our intellectual property from time to time, and the success of any such challenges could result in the limitation or loss of intellectual property rights. Irrespective of their validity, such claims may also result in substantial costs and diversion of resources which could have an adverse effect on our operations.
We have a team dedicated to disrupting and curbing piracy and other forms of intellectual property infringement and use external vendors to detect and remove infringements. We also engage with intermediaries that facilitate piracy, leverage our membership in a range of industry groups, and initiate enforcement actions, including litigation, to address piracy issues.
We also engage with intermediaries that facilitate piracy, leverage our membership in a range of industry groups, and initiate enforcement actions, including litigation, to address piracy issues. In general, policing unauthorized use of our products and services and related intellectual property is difficult and costly.
HUMAN CAPITAL As of December 31, 2022, we had approximately 37,500 employees, including full-time and part-time employees of our wholly-owned subsidiaries and consolidated ventures. Our employees are located in 54 different countries, with 56% located in the U.S. and 44% located outside of the U.S.
HUMAN CAPITAL As of December 31, 2023, we had approximately 35,300 employees, including full-time and part-time employees of our wholly-owned subsidiaries and consolidated ventures, with 53% located in the U.S. and 47% located outside of the U.S. We are a talent-driven business, aiming to attract, develop, and motivate top talent throughout our company.
Currently available in over 60 countries across the U.S., Latin America, and Europe, HBO Max began its global rollout launching in markets across Latin America and the Caribbean in the summer of 2021, followed by European launches in the Nordics, Iberia, the Netherlands and Central and Eastern Europe regions. discovery+ is WBD’s non-fiction, real-life subscription streaming service. discovery+ features a wide range of exclusive, original series across popular passion verticals, including lifestyle and relationships; home and food; true crime; paranormal; adventure and natural history; science, tech, and the environment; and a slate of high-quality documentaries.
Max initially launched in the U.S. and will roll out in international territories, starting in Latin America and the Caribbean in the first quarter of 2024, with more markets in EMEA and APAC to follow later in the year. discovery+ is WBD’s non-fiction, real-life subscription-based streaming service. discovery+ features a wide range of exclusive, original series across popular passion verticals, including lifestyle and relationships; home and food; true crime; paranormal; adventure and natural history; science, tech, and the environment; and a slate of high-quality documentaries.
We are home to a powerful creative engine and one of the largest collections of owned content in the world and have one of the strongest hands in the industry in terms of the completeness and quality of assets and intellectual property across sports, news, lifestyle, and entertainment in virtually every region of the globe and in most languages.
WBD has one of the strongest hands in the industry in terms of the completeness and quality of assets and intellectual property across sports, news, lifestyle, and entertainment in virtually every region of the globe and in most languages. We serve audiences and consumers around the world with content that informs, entertains, and, when at its best, inspires.
For the year ended December 31, 2022, advertising, distribution, and content revenues are 5%, 88%, and 7%, respectively, of total revenues for this segment. COMPETITION Providing content across various distribution platforms is a highly competitive business worldwide. We experience competition for the development and acquisition of content, distribution of our content, sale of commercial time on our networks and viewership.
Max, HBO Max, and discovery+ currently feature both ad-free and ad-lite versions. For the year ended December 31, 2023, distribution, advertising, and content revenues are 86%, 5%, and 9%, respectively, of total revenues for this segment. COMPETITION Providing content across various distribution platforms is a highly competitive business worldwide.
Games , a worldwide publisher, developer, licensor, and distributor of content for the interactive space across all platforms, including console, handheld, mobile, and PC-based gaming for both internal and third-party game titles. There are currently 11 wholly owned game development studios under the Warner Bros. Games umbrella. Part of the Worldwide Studio Operations group , Warner Bros.
Games , a worldwide publisher, developer, licensor, and distributor of content for the interactive space across all platforms, including console, handheld, mobile, and PC-based gaming for both internal and third-party game titles. Based on the Wizarding World of Harry Potter franchise, Warner Bros. Games launched Hogwarts Legacy in 2023, which became the #1 game of the year globally.
Beyond its production operations, the Studios segment includes various businesses that facilitate consumer interaction with the intellectual property it creates. 6 GBE is the global division that drives opportunities for consumers to engage with leading entertainment brands and franchises. Through its strategic franchise development group and global commercial businesses, GBE creates lasting connections to WBD’s iconic characters, talent, and storytelling.
Beyond its production operations, the Studios segment includes various businesses that facilitate consumer interaction with the intellectual property it creates. Global Consumer Products, Themed Entertainment and Brand Licensing, and world-renowned comic and publishing powerhouse DC Comics, all drive opportunities for consumers to engage with WBD’s leading entertainment brands and franchises.
We also strive to enhance our culture through efforts aimed at making our workplace diverse, engaging and inclusive, and to develop our talent to prepare them for critical roles and leadership positions for the future. We also provide opportunities for our employees to make an impact in their communities through social good initiatives around the world.
To support these objectives, our human resources programs are designed to provide competitive, locally-relevant benefits, performance-based pay, and nonfinancial support and incentives. We also strive to enhance our culture through efforts aimed at making our workplace diverse, engaging and inclusive, and to develop our talent to prepare them for critical roles and leadership positions for the future.
General entertainment networks in the U.S. include TNT , cable’s #1 entertainment network; TBS , a top-rated destination for television among young adults; and Turner Classic Movies (TCM) , which presents classic films, uncut and commercial-free. WBD’s other entertainment networks include OWN, Discovery Channel, Cartoon Network, Adult Swim, and truTV among many others.
Networks WBD’s linear network operations include general entertainment, lifestyle, and news networks in the U.S., as well as a host of international media networks and global sports networks. General entertainment networks in the U.S. include TNT , cable’s #1 entertainment network; TBS , a top-rated destination for television among young adults; and Turner Classic Movies .
Additionally, we serve audiences and consumers around the world with content that informs, entertains, and, when at its best, inspires. Our asset mix positions us to drive a balanced approach to creating long-term value for shareholders.
Our asset mix positions us to drive a balanced approach to creating long-term value for shareholders.
Recent regulatory changes and court decisions make it more difficult for us to challenge a distributor’s decision to decline to carry one of our content networks or discriminate against one of our content networks.
These rules permit the unaffiliated content network to initiate a complaint to the FCC against the MVPD if it believes these rules have been violated, but court decisions interpreting the regulations have made it difficult for us to challenge a distributor’s decision to decline to carry one of our content networks or discriminate against one of our content networks.
WBD Sports Europe features Eurosport, a leading sport destination and the home of the Olympic Games in Europe, as well as the Global Cycling Network (“GCN”), and Global Mountain Bike Network (“GMBN”). In 2022, Eurosport UK combined with BT Sport to create an extensive collection of live sports coverage for fans in the UK and Ireland.
WBD Sports Europe features Eurosport, a leading sport destination and the home of the Olympic Games in Europe, as well as the Global Cycling Network (“GCN”), and Global Mountain Bike Network (“GMBN”). TNT Sports’ owned-and-operated platforms include Bleacher Report, Eurosport.com, House of Highlights, HighlightHER, and a full suite of digital and social brands.
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Certain key sources of revenue for the Studios segment, including theatrical revenues, original television productions, studio operations, and themed entertainment, have been adversely impacted by governmentally imposed shutdowns and related labor interruptions and constraints on consumer activity, particularly in the context of public entertainment venues, such as cinemas and theme parks.
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Industry Trends The WGA and SAG-AFTRA went on strike in May and July 2023, respectively, following the expiration of their respective collective bargaining agreements with the Alliance of Motion Picture and Television Producers (“AMPTP”). The WGA strike ended on September 27, 2023, and a new collective bargaining agreement was ratified on October 9, 2023.
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Segments In connection with the Merger, the Company reevaluated and changed its segment presentation during 2022.
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The SAG-AFTRA strike ended on November 9, 2023, and a new collective bargaining agreement was ratified on December 5, 2023. The strikes had a material impact on the operations and results of the Company, including a pause on certain theatrical and television productions.
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Among the Studios’ content highlights for 2022 are The Batman , Elvis , Fantastic Beasts: The Secrets of Dumbledore and Black Adam on the film side and TV titles such as Abbott Elementary , Ted Lasso , The Sandman , The Flight Attendant , Y oung Sheldon , The Voice, The Bachelor franchise, The Jennifer Hudson Show, and Batwheels.
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Effects included a positive impact on cash flow from operations attributed to delayed production spend, and a negative impact on the results of operations attributed to timing and performance of the 2023 film slate, as well as the Company’s ability to produce, license, and deliver content.
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For the year ended December 31, 2022, content and other revenues were 94% and 6%, respectively, of total revenues for this segment. Networks WBD’s linear network operations include 30 U.S. general entertainment, lifestyle, and news networks, as well as a host of international networks and global and regional sports networks.
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Other headwinds in the industry, such as continued pressures on linear distribution and soft advertising markets in the U.S., have had, and are expected to continue to have, a material impact on the operations and results of the Company, including a negative impact on the results of operations attributed to declines in linear advertising revenue.
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Additional lifestyle networks include Travel Channel, Science Channel, TLC, and Hogar de HGTV among many others. CNN has been the #1 English-language news brand globally in multiplatform reach since at least 2018. In 2022, CNN had more unique digital visitors than any other news source in the U.S. and globally.
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It represents the full entertainment ecosystem, and the ability to serve consumers across the entire spectrum of offerings from domestic and international networks, premium pay-TV, streaming, production and release of feature films and original series, related consumer products and themed experience licensing, and interactive gaming.
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WBD Sports’ owned-and-operated platforms include Bleacher Report, Eurosport.com, House of Highlights, HighlightHER, and a full suite of digital and social brands. TNT Sports is WBD’s sports content brand in Argentina, Brazil, Chile and Mexico. Several regional sports networks, serving fans live sports in select U.S. markets, are also owned and/or operated by WBD Sports in the U.S.
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Animation, Cartoon Network Studios, and Hanna-Barbera Studios Europe . 6 Among the Studios segment’s content highlights for 2023 were Barbie, the #1 movie of the year globally based on worldwide gross revenue , Wonka, Aquaman and the Lost Kingdom, and The Nun II on the film side and award-winning TV titles including Abbott Elementary , Ted Lasso , Night Court, Shrinking, Genndy Tartakovsky’s Primal, The Golden Bachelor, and The Voice.
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HBO Max is a streaming platform that offers best in class quality entertainment, delivering an array of series, movies, and specials from the iconic brands of HBO, Warner Bros., and DC, as well as third-party series and blockbuster films. The platform launched in the U.S. in May 2020 and introduced a lower priced, advertising-supported tier in June 2021.
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Studio Tour Tokyo – The Making of Harry Potter, a new experience that was the first Warner Bros. Studio Tour to open in Asia. For the year ended December 31, 2023, content and other revenues were 93% and 7%, respectively, of total revenues for this segment.
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HBO Max and discovery+ currently feature both ad-free and ad-lite versions. We expect to rebrand and relaunch the HBO Max product in the U.S. during the first half of 2023 with an expanded content offering, including some of the content available on discovery+. A rollout of this expanded product is expected to follow in Latin America later in the year.
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WBD’s other entertainment networks include OWN, Discovery Channel, Cartoon Network, Adult Swim, and truTV among many others.
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European markets are planned to follow in 2024, with additional launches in key Asia-Pacific territories and some new European markets anticipated later in 2024. We expect to have both an ad-lite and an ad-free version of the expanded product in many markets. The company also intends to continue offering the standalone discovery+ service in the U.S. and international markets.
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Additional lifestyle networks include Travel Channel, Science Channel, TLC, and Hogar de HGTV among many others. In 2023, CNN , our global news brand, launched CNN Max in the U.S., giving audiences the ability to access a combination of on-air CNN content and exclusive programming on WBD’s streaming service, Max.
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In general, policing unauthorized use of our products and services and related intellectual property is difficult and costly. Third parties may challenge the validity or scope of our intellectual property from time to time, and the success of any such challenges could result in the limitation or loss of intellectual property rights.
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In May 2023, WBD launched Max , creating a new destination for HBO Originals, Warner Bros. films, Max Originals, the DC universe, the Wizarding World of Harry Potter, CNN, an expansive offering of kids’ content, and among the best programming across food, home, reality, lifestyle and documentaries from leading brands like HGTV, Food Network, Discovery Channel, TLC, ID and more.
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We are a talent-driven business, aiming to attract, develop, and motivate top talent throughout our company. To support these objectives, our human resources programs are designed to provide competitive, locally-relevant benefits, performance-based pay, and nonfinancial support and incentives.
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In addition, the composition of our competitors has evolved with the entrance of new market participants, including companies in adjacent sectors with significant financial, marketing, and other resources, greater efficiencies of scale, fewer regulatory burdens and more competitive pricing.
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Our ability to produce and acquire popular content is an important competitive factor for the distribution of our content, attracting viewers and the sale of advertising.
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The Company defines a “Premium Sports Product” as a strategically prioritized, sports-focused product sold on a stand-alone basis and made available directly to consumers. The current “independently-branded, regional products” referred to in (iv) above consist of TVN/Player and BluTV. We may refer to the aggregate number of DTC Subscriptions as “subscribers”.
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We have a team dedicated to disrupting and curbing piracy and other forms of intellectual property infringement and use external vendors to detect and remove infringements, whether digital in nature or on physical goods.
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Further, new technologies such as generative AI and their impact on our intellectual property rights remain uncertain, and development of the law in this area could impact our ability to protect against infringing uses or result in infringement claims against us.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSpecifically, the following issues, among others, must be addressed in combining the Discovery Business and the WarnerMedia Business in order to realize the anticipated benefits of the Merger: • integrating the Discovery Business and the WarnerMedia Business in the time frame currently anticipated; • maintaining existing agreements with customers, distributors, providers, talent and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers, talent and vendors; • integrating the businesses’ administrative, accounting and information technology infrastructure; • integrating employees and attracting and retaining key personnel, including talent; 13 • managing the expanded operations of a significantly larger and more complex company, particularly in light of the Discovery Business’s limited prior experience in running a studio or producing scripted content; • aligning the businesses’ DTC streaming services for global customers; and • resolving potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the Merger.
Biggest changeSpecifically, the following issues, among others, must be addressed in order to realize the anticipated benefits of the Merger: • continuing and finalizing the integration of the Discovery Business and the WarnerMedia Business in the time frame currently anticipated; • integrating the businesses’ administrative, accounting and information technology infrastructure; • continuing to align and expand the geographic footprint of the DTC products for global customers; and • resolving potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the integration of the Discovery Business and the WarnerMedia Business.
If we are not able to access our targeted audience with appealing category-specific content and adapt to new technologies, distribution methods and platforms and business models, we may experience a decline in viewership and ultimately a decline in the demand for our programming, which could lead to lower distribution and advertising revenues, materially and adversely affecting our business, financial condition and results of operations.
If we are not able to access our targeted audience with appealing category-specific content and adapt to new technologies, distribution methods, platforms and business models, we may experience a decline in viewership and ultimately a decline in the demand for our programming, which could lead to lower distribution and advertising revenues, materially and adversely affecting our business, financial condition and results of operations.
A reduction in the license fees that we receive or in the number of subscribers for which we are paid, including as a result of a loss or reduction in carriage for our networks or a reduction in distributor penetration, including as a result of changes in consumer habits, could adversely affect our distribution revenue.
A reduction in the license fees that we receive or in the number of subscribers for which we are paid, including as a result of a loss or reduction in carriage for our networks or a reduction in distributor penetration, or as a result of changes in consumer habits, could adversely affect our distribution revenue.
The ability of our operating subsidiaries, including WarnerMedia Holdings, Inc., Scripps Networks Interactive, Inc., and Discovery Communications, LLC to pay dividends or to make other payments or advances to us will depend on their individual operating results and any statutory, regulatory or contractual restrictions, including restrictions under our credit facilities, to which they may be or may become subject.
The ability of our subsidiaries, including WarnerMedia Holdings, Inc., Scripps Networks Interactive, Inc., and Discovery Communications, LLC to pay dividends or to make other payments or advances to us will depend on their individual operating results and any statutory, regulatory or contractual restrictions, including restrictions under our credit facilities, to which they may be or may become subject.
These provisions include the following: • authorizing the issuance of “blank check” preferred stock without stockholder approval, which could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; • classifying our board of directors with staggered three-year terms until the election of directors at our 2025 annual meeting of stockholders, which may lengthen the time required to gain control of our board of directors; • limiting who may call special meetings of stockholders; • prohibiting stockholder action by written consent, thereby requiring stockholder action to be taken at a meeting of the stockholders; 23 • establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; • the existence of authorized and unissued stock which would allow our board of directors to issue shares to persons friendly to current management, thereby protecting the continuity of our management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us.
These provisions include the following: • authorizing the issuance of “blank check” preferred stock without stockholder approval, which could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; • classifying our board of directors with staggered three-year terms until the election of directors at our 2025 annual meeting of stockholders, which may lengthen the time required to gain control of our board of directors; • limiting who may call special meetings of stockholders; • prohibiting stockholder action by written consent, thereby requiring stockholder action to be taken at a meeting of the stockholders; • establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; • the existence of authorized and unissued stock which would allow our board of directors to issue shares to persons friendly to current management, thereby protecting the continuity of our management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us.
There can be no assurance that we will be able to compete successfully in the future against existing or new competitors to obtain licenses to recurring sports events, or that increasing competition for programming licenses and regulatory review from competition authorities will not have a material adverse effect on our business, financial condition or results of operations.
There can be no assurance that we will be able to compete successfully in the future against existing or new competitors to obtain and/or maintain licenses to recurring sports events, or that increasing competition for programming licenses and regulatory review from competition authorities will not have a material adverse effect on our business, financial condition or results of operations.
Our success may depend on opportunities to buy other businesses or technologies that could complement, enhance or expand our current business or products or that might otherwise offer us growth opportunities. Such transactions may result in dilutive issuances of our equity securities, use of our cash resources, and incurrence of debt and amortization expenses related to intangible assets.
Our success may depend on opportunities to buy other businesses or technologies that could complement, enhance or expand our current business or products or that might otherwise offer us growth opportunities. Such transactions may result in dilutive issuances of our equity securities, use of our cash resources, and incurrence of significant debt and amortization expenses related to intangible assets.
We face significant competition to acquire licenses to sports programming, which leads to significant expenditure of funds and resources. As a result of an increasing number of market entrants in the programming space, we have seen upward pressure on programming costs in recent years, particularly in connection with the licensing and acquisition of sports content from third parties.
We face significant competition to acquire and maintain licenses to sports programming, which leads to significant expenditure of funds and resources. As a result of an increasing number of market entrants in the programming space, we have seen upward pressure on programming costs in recent years, particularly in connection with the licensing and acquisition of sports content from third parties.
Such consolidation gives these distributors leverage in negotiating their distribution agreements with us which could subject our affiliate fee revenue to reduction or discounts, which could have an adverse effect on our financial condition. 18 In addition, content distribution and license agreements are complex and individually negotiated.
Such consolidation gives these distributors leverage in negotiating their distribution agreements with us which could subject our affiliate fee revenue to reduction or discounts, which could have an adverse effect on our financial condition. In addition, content distribution and license agreements are complex and individually negotiated.
We are also permitted, subject to certain restrictions under our existing debt agreements, to obtain additional long-term debt and working capital lines of credit to meet future financing needs. This would have the effect of further increasing our leverage.
We are also permitted, subject to certain restrictions under our existing debt agreements, to obtain additional long-term debt and working capital lines of credit to meet future financing needs. This would have the effect of further increasing our leverage ratio.
Failing to gain the level of audience acceptance we expect for our content may negatively impact our business, financial condition and results of operations. The commercial success of our content also depends upon the quality and acceptance of competing content available in the applicable marketplace.
Failing to gain the level of audience acceptance we expect for our content may negatively impact our business, financial condition and results of operations. 14 The commercial success of our content also depends upon the quality and acceptance of competing content available in the applicable marketplace.
This exposure to exchange rate fluctuations could have an adverse effect on our reported results of operations and net asset balances. Increasing complexity of global tax policy and regulations could increase our tax liability and adversely impact our business and results of operations.
This exposure to exchange rate fluctuations could have an adverse effect on our reported results of operations and net asset balances. 20 Increasing complexity of global tax policy and regulations could increase our tax liability and adversely impact our business and results of operations.
The appeal, success and performance of our content with consumers, as well as with third-party licensees and other distribution partners, are also critical factors that can affect the revenue that we receive with respect to our content-related business.
The appeal, success and performance of our content with consumers, as well as with third-party licensees and other distribution partners, are critical factors that can affect the revenue that we receive with respect to our content-related business.
We may also incur unanticipated expenses, fail to realize anticipated benefits, have difficulty integrating the acquired businesses, disrupt relationships with current and new employees, subscribers, affiliates and vendors, incur significant debt, or have to delay or not proceed with announced transactions. Additionally, regulatory agencies, such as the FCC or U.S.
We may also incur unanticipated expenses, fail to realize anticipated benefits, have difficulty integrating the acquired businesses, disrupt relationships with current and new employees, subscribers, affiliates and vendors, or have to delay or not proceed with announced transactions. Additionally, regulatory agencies, such as the FCC or U.S.
Bribery Act that impose stringent requirements on how we conduct our foreign operations and changes in these laws and regulations; • sanction laws and regulations such as those administered by the Office of Foreign Assets Control that restrict our dealings with certain sanctioned countries, territories, individuals and entities; these laws and regulations are complex, frequently changing, and increasing in number, and may impose additional prohibitions or compliance obligations on our dealings in certain countries and territories, including sanctions imposed on Russia and certain Ukrainian territories as well as sanctions imposed on China; • challenges implementing effective controls to monitor business activities across our expanded international operations; • foreign privacy and data protection laws and regulations and changes in these laws and regulations; and • shifting consumer preferences regarding the viewing of video programming.
Bribery Act that impose stringent requirements on how we conduct our foreign operations and changes in these laws and regulations; • sanction laws and regulations such as those administered by the Office of Foreign Assets Control that restrict our dealings with certain sanctioned countries, territories, individuals and entities; these laws and regulations are complex, frequently changing, and increasing in number, and may impose additional prohibitions or compliance obligations on our dealings in certain countries and territories, including sanctions imposed on Russia and certain Ukrainian territories as well as sanctions imposed on China; • challenges implementing effective controls to monitor business activities across our expanded international operations; • foreign privacy and data protection laws and regulations and changes in these laws and regulations; and • shifting consumer preferences regarding the viewing of video programming and consumption of entertainment content overall.
Our participation in multiemployer defined benefit pension plans could subject us to liabilities that could adversely affect our business, financial condition and results of operations. We contribute to various multiemployer defined benefit pension plans (the “multiemployer plans”) under the terms of collective bargaining agreements that cover certain of our union-represented employees.
Our participation in multiemployer defined benefit pension plans could subject us to liabilities that could adversely affect our business, financial condition and results of operations. We contribute to various multiemployer defined benefit pension plans (the “multiemployer plans”) under the terms of collective bargaining agreements that cover certain of our union-represented employees which could subject us to liabilities in certain circumstances.
Our board of directors also currently includes one other person who is currently a member of the board of directors of Liberty Media, one other person who is currently a member of the board of directors of Liberty Global, and one person who is a currently a member of the board of directors of LLA.
Our board of directors also currently includes one other person who is currently a member of the board of directors of Liberty Global, and a member of the board of directors of LLA.
Our future success depends, in part, upon our ability to manage this expanded business, which could pose substantial challenges for management, including challenges related to the management and monitoring of new, complex operations and associated increased costs. All of these factors could materially adversely affect our stock price, business, financial condition, results of operations or cash flows.
Our future success depends, in part, upon our ability to continue to manage this expanded business, which could pose substantial challenges for management, including challenges related to the management and monitoring of diverse, complex operations and associated increased costs. All of these factors could materially adversely affect our stock price, business, financial condition, results of operations or cash flows.
In particular, decreases in consumer discretionary spending where our DTC products are offered may reduce our ability to attract and retain subscribers to our services, which could have a negative impact on our business.
In particular, decreases in consumer discretionary spending in the markets where our DTC products are offered may reduce our ability to attract and retain subscribers to our services, which could have a negative impact on our business.
We rely on platforms owned by third parties, some of which compete directly with us or have investments in competing streaming products, to make our content available to our subscribers and viewers.
We rely on platforms owned by third parties, some of which compete directly with us or have investments in competing streaming services, to make our content available to our subscribers and viewers.
In addition, our insurance may not be adequate to protect us from all material expenses related to pending and future claims and our current levels of insurance may not be available in the future at commercially reasonable prices. Any of these factors could materially adversely affect our business, financial condition and results of operations. ITEM 1B. Unresolved Staff Comments. None.
In addition, our insurance may not be adequate to protect us from all significant expenses related to pending and future claims and our current levels of insurance may not be available in the future at commercially reasonable prices. Any of these factors could adversely affect our business, financial condition and results of operations. 26 ITEM 1B. Unresolved Staff Comments. None.
If our distributors have to pay higher rates to holders of sports broadcasting rights, it might be difficult for us to negotiate higher rates for distribution of our networks.
If our distributors have to pay higher rates to other holders of sports broadcasting rights, it might be difficult for us to negotiate higher rates for the distribution of our networks.
Our substantial leverage could have significant negative consequences on our financial condition and results of operations, including: • impairing our ability to meet one or more of the financial ratio covenants contained in our term loan and revolving credit facility or to generate cash sufficient to pay the interest or principal, which could result in an acceleration of some or all of our outstanding debt in the event that an uncured default occurs; • increasing our vulnerability to general adverse economic and market conditions; • limiting our ability to obtain additional debt or equity financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our debt, thereby reducing the amount of cash flow available for other purposes such as capital expenditures, share repurchases, investments, and mergers and acquisitions; • requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations; • limiting our flexibility in planning for, or reacting to, changes in our business and the markets in which we compete; and • placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.
If we are unable to effectively reduce and sustain our leverage ratio, it could have significant negative consequences on our financial condition and results of operations, including: • impairing our ability to meet one or more of the financial ratio covenants contained in our revolving credit facility or to generate cash sufficient to pay the interest or principal, which could result in an acceleration of some or all of our outstanding debt in the event that an uncured default occurs; • increasing our vulnerability to adverse economic and market conditions; • limiting our ability to obtain additional debt or equity financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our debt, thereby reducing the amount of cash flow available for other purposes such as capital expenditures, investments, share repurchases, and mergers and acquisitions; 21 • requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations; • limiting our flexibility in planning for, or reacting to, changes in our business and the markets in which we compete; and • placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.
The success of our business depends on the acceptance of our content and brands by our U.S. and foreign viewers, which may be unpredictable and volatile .
The success of our business depends on the acceptance of our content and brands by our U.S. and international viewers, which may be unpredictable and volatile .
As a result of our increased indebtedness, our corporate or debt-specific credit rating could be downgraded, which may increase our borrowing costs or subject us to more restrictive covenants when we incur new debt in the future, which could reduce profitability and diminish operational flexibility.
In addition, as a result of our significant indebtedness, our corporate or debt-specific credit rating could be downgraded, which may increase our borrowing costs or subject us to even more restrictive covenants when we incur new debt in the future, which could reduce profitability and diminish operational flexibility.
We have recognized, and could continue to recognize impairment charges, related to goodwill and other intangible assets. The Merger added a significant amount of goodwill and other intangible assets to our consolidated balance sheet. In accordance with U.S. GAAP, management periodically assesses these assets to determine if they are impaired.
We have recognized, and could continue to recognize, impairment charges related to goodwill and other intangible assets . We have a significant amount of goodwill and other intangible assets on our consolidated balance sheet. In accordance with U.S. GAAP, management periodically assesses these assets to determine if they are impaired.
If existing subscribers, including those who receive subscriptions through wireless and broadband bundling arrangements with third parties, cancel or discontinue their subscriptions for any reason, including as a result of selecting an alternative wireless or broadband plan that does not bundle our products, or due to the availability of competing offerings that are perceived to offer greater value compared to our DTC products, our business may be adversely affected.
If existing subscribers, including those who receive subscriptions through wireless and broadband bundling arrangements with third parties or through wholesale arrangements with MVPDs, cancel or discontinue their subscriptions for any reason, including as a result of selecting an alternative wireless or broadband plan that does not bundle our products, canceling or discontinuing their MVPD subscription, or due to the availability of competing offerings that are perceived to offer greater value compared to our DTC products, our business may be adversely affected.
Malone beneficially owns: shares of Liberty Media representing approximately 48% of the aggregate voting power of its outstanding stock, shares representing approximately 30% of the aggregate voting power of Liberty Global, shares representing approximately 7% of the aggregate voting power of Qurate Retail, shares representing approximately 47% of the aggregate voting power of Liberty Broadband and shares representing less than 1% of our outstanding common stock.
Malone beneficially owns: shares of Liberty Media representing approximately 48% of the aggregate voting power of its outstanding stock, shares representing approximately 30% of the aggregate voting power of Liberty Global, shares representing approximately 6% of the aggregate voting power of Qurate Retail, shares representing approximately 48% of the aggregate voting power of Liberty Broadband and shares representing less than 1% of our outstanding common stock.
Financial instability or a general decline in economic conditions in the U.S. and other countries where our content is distributed could adversely affect the businesses of our partners who might reduce their spending on advertising, which could result in a decrease in advertising rates and volume and our advertising revenues.
Financial instability or a general decline in economic conditions in the U.S. and other countries where our content is distributed could adversely affect the spending priorities of our advertising partners who might reduce their spending, which could result in a decrease in advertising rates and volume and in our overall advertising revenues.
If our information security systems or data are compromised in a material way, such compromises could result in a disruption of services or a reduction of the revenues we are able to generate from such services, damage to our brands and reputation, a loss of confidence in the security of our offerings and services, and significant legal and financial exposure, each of which could potentially have an adverse effect on our business.
If our or our service providers’ information security systems or data are compromised, such compromises could result in a disruption of services or a reduction of the revenues we are able to generate from such services, damage to our brands and reputation, a loss of confidence in the security of our offerings and services, and significant legal, regulatory and financial exposure, each of which could potentially have an adverse effect on our business.
We are engaged in legal proceedings related to the Merger and could be subject to additional legal proceedings related to the Merger, the outcomes of which are uncertain and could negatively impact our business, financial condition and results of operations.
We have been engaged in legal proceedings and disputes related to the Merger and could be subject to additional legal proceedings and disputes related to the Merger, the outcomes of which are uncertain and could negatively impact our business, financial condition and results of operations.
These risks include: • laws and policies affecting trade and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws; • local regulatory requirements (and any changes to such requirements), including restrictions on content, censorship, imposition of local content quotas, local production levies and investment obligations, and restrictions or prohibitions on foreign ownership, outsourcing, consumer protection, targeted advertising, intellectual property and related rights, including copyright and rightsholder rights and remuneration; • our ability to obtain the appropriate licenses and other regulatory approvals we need to distribute content in foreign countries as well as regulatory intervention on how we currently operate, including how we license and distribute content; • differing degrees of protection for intellectual property and varying attitudes towards the piracy of intellectual property; • significant fluctuations in foreign currency value; • capital, currency exchange and central banking controls; • the instability of foreign economies and governments; • the potential for political, social, or economic unrest, terrorism, hostilities, cyber-attacks or war, including the war between Russia and Ukraine; • anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K.
These risks include: • laws and policies affecting trade and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws; • local regulatory requirements (and any changes to such requirements), including restrictions on content, censorship, imposition of local content quotas, local production levies and investment obligations, and restrictions or prohibitions on foreign ownership, outsourcing, consumer protection, targeted advertising, intellectual property and related rights, including copyright and rightsholder rights and remuneration; • our ability to obtain the appropriate licenses and other regulatory approvals we need to distribute content in foreign countries as well as regulatory intervention on how we currently operate, including how we license and distribute content; • differing degrees of protection for intellectual property and varying attitudes towards the piracy of intellectual property; • foreign exchange regulations, or significant fluctuations in foreign currency value and foreign exchange rates, as further described below in this Item 1A; • capital, currency exchange and central banking controls; • the instability of foreign economies and governments; • the potential for political, social, or economic unrest, terrorism, hostilities, cyber-attacks or war, including the ongoing conflicts in Europe and the Middle East; • anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K.
These security attacks can originate from a wide variety of sources/malicious actors, including, but not limited to, persons who constitute an insider threat, who are involved with organized crime, or who may be linked to terrorist organizations or hostile foreign governments.
Cybersecurity threats originate from a wide variety of sources/malicious actors, including, but not limited to, persons who constitute an insider threat, who are involved with organized crime, or who may be linked to terrorist organizations or hostile foreign governments.
Providers of debt and equity financing may also consider our ESG performance and external ESG ratings (which we have limited ability to influence) in their decision involving our Company, which could impact our cost of capital and adversely affect our business. Foreign exchange rate fluctuations may adversely affect our operating results and financial conditions.
Providers of debt and equity financing may also consider our performance in these areas and the ratings of external firms (which we have limited ability to influence) in their decisions involving our Company, which could impact our cost of capital and adversely affect our business. Foreign exchange rate fluctuations may adversely affect our operating results and financial conditions.
Congress, the FCC, the Federal Trade Commission (“FTC”), U.S. state legislatures, and the courts currently have under consideration, and may adopt or interpret in the future, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operations of our U.S. media properties or modify the terms under which we offer our services and operate. 19 Following the Merger, our operations through which we distribute programming outside the U.S. have increased significantly.
Congress, the FCC, the Federal Trade Commission (“FTC”), U.S. state legislatures, and the courts currently have under consideration, and may adopt or interpret in the future, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operations of our U.S. media properties or modify the terms under which we offer our services and operate.
Similar developments could, directly or indirectly, affect the future operations of our Polish media properties and/or modify the terms under which we offer our services and operate in that market in the future.
Such regulatory pressure on TVN and/or similar developments could, directly or indirectly, affect the future operations of our Polish media properties and/or modify the terms under which we offer our services and operate in that market in the future.
Because our content and pay-TV networks are licensed to and distributed through third parties, such as theatrical exhibitors (and in certain international territories, local theater distributors), traditional television and pay-TV broadcasters (such as cable and satellite operators) and operators of digital platforms, which in turn make such content available, directly and indirectly, to consumers, we are dependent upon the maintenance of such licensing and distribution agreements with such third parties.
Because our content and pay-TV networks are licensed to and distributed through third parties, such as traditional television and pay-TV broadcasters (such as cable and satellite operators) and operators of digital platforms, which in turn make such content available, directly and indirectly, to consumers, we are dependent upon the maintenance of such licensing and distribution agreements with such third parties.
If we are not able to successfully integrate the WarnerMedia Business with the Discovery Business, the anticipated benefits of the Merger may not be realized fully, if at all, or may take longer than expected to be realized.
If we are not able to successfully complete the integration of the Discovery Business and the WarnerMedia Business, the anticipated benefits of the Merger may not be realized fully, if at all, or may take longer than expected to be realized.
If we were to disagree with one of the counterparties on the interpretation of a content distribution and license agreement, it could materially adversely impact our business, financial condition and results of operations as well as damage our relationship with that counterparty. We rely on platforms owned by our competitors for digital and linear distribution of our content .
If we were to disagree with one of the counterparties on the interpretation of a content distribution and license agreement, it could damage our relationship with that counterparty as well as materially adversely impact our business, financial condition and results of operations.
These covenants and requirements could limit our ability to take various actions, including incurring additional debt, guaranteeing indebtedness and engaging in various types of transactions, including mergers, acquisitions and sales of assets, or taking advantage of other opportunities, which could have an adverse effect on our business. In addition, credit ratings actions could impact the terms of our loan agreements.
These covenants and requirements could limit our ability to take various actions, including incurring additional debt, guaranteeing indebtedness and engaging in various types of transactions, including mergers, acquisitions and sales of assets, or to take advantage of other opportunities, which could have an adverse effect on our business.
Even if the Discovery Business and the WarnerMedia Business are integrated successfully, the full benefits of the Merger may not be achieved within the anticipated time frame or at all. Further, following the Merger, the size and complexity of the business of the combined Company increased significantly.
Even if the integration is completed successfully, the full benefits of the Merger may not be achieved within the anticipated time frame or at all. Further, following the Merger, the size and complexity of the business of the combined Company increased significantly.
If, as a result of their assessment of our ESG performance, certain investors are unsatisfied with our actions or progress, they may reconsider their investment in our Company.
If, as a result of their assessment of our performance on environmental, social, and governance matters, certain investors are unsatisfied with our actions or progress, they may reconsider their investment in our Company.
Consequently, reduced public acceptance of our television programs, feature films, sports and news content or negative publicity regarding individuals or operations associated with our content or brands may decrease our audience share and customer/viewer reach and adversely affect our business, financial condition and results of operations. 16 If our DTC products fail to attract and retain subscribers, our business, financial condition and results of operations may be adversely impacted.
Consequently, reduced public acceptance of our television programs, feature films, sports and news content or negative publicity regarding individuals or operations associated with our content or brands may decrease our audience share and customer/viewer reach and adversely affect our business, financial condition and results of operations.
The market price of our common stock has fluctuated, and may continue to fluctuate, widely, due to many factors, some of which may be beyond our control.
The market price of our common stock has been highly volatile and may continue to be volatile due, in part, to circumstances beyond our control. The market price of our common stock has fluctuated, and may continue to fluctuate, due to many factors, some of which may be beyond our control.
Our integration efforts could result in a loss of key Discovery Business or WarnerMedia Business employees, loss of customers, disruption of either or both of the Discovery Business’s or the WarnerMedia Business’s ongoing businesses or unexpected issues, higher than expected costs and an overall post-completion process that takes longer than originally anticipated.
Our integration efforts could result in a loss of key employees, loss of customers, business disruption or unexpected issues, higher than expected costs and an overall process that takes longer than originally anticipated.
Changes in distribution strategy and variations on traditional theatrical distribution and other licensing models, such as shortening traditional windows or making simultaneous the availability of certain films theatrically and on-demand, and other hybrids, may also drive changes in the licensee fees that theatrical exhibitors and distributors and other downstream licensees in the value chain may be willing to pay for content, which may in turn negatively affect our content revenue.
Changes in distribution strategy and variations on traditional theatrical distribution and other licensing models, such as shortening traditional windows, may also drive changes in the license fees that distributors and other downstream licensees in the value chain may be willing to pay for content, which may in turn negatively affect our revenue.
As a result, our business is, and may increasingly be, subject to certain risks inherent in international business, many of which are beyond our control.
In addition, we distribute programming outside the U.S. As a result, our business is, and may increasingly be, subject to certain risks inherent in international business, many of which are beyond our control.
In the past, said risk has manifested itself in draft legislation, now abandoned, which would have precluded non-EEA ownership of Polish national broadcasters, and in delays in renewing broadcast licenses. Such delays continue as well as regulatory pressure on some of TVN’s journalism.
In the past, said risk has manifested itself in draft legislation, now abandoned, which would have precluded non-EEA ownership of Polish national broadcasters, and in delays in renewing broadcast licenses.
See the discussion above in “Business – Regulatory Matters”. These evolving privacy, security, and data protection laws may require us to expend significant resources to implement additional data protection measures, and our actual or alleged failure to comply with such laws could result in legal claims, regulatory enforcement actions and significant fines and penalties.
These evolving privacy, security, and data protection laws may require us to expend significant resources to implement additional data protection measures, and our actual or alleged failure to comply with such laws could result in legal claims, regulatory enforcement actions and significant fines and penalties. Environmental, social and governance laws and regulations may adversely impact our businesses.
These ownership interests and/or business positions could create conflicts of interest or the appearance of conflicts of interest when these individuals are faced with decisions that could have different implications for us, Advance/Newhouse and/or the Liberty Entities.
Our other directors who are also directors of the Liberty Entities hold stock and stock-based compensation in the Liberty Entities and hold our stock and stock-based compensation. 22 These ownership interests and/or business positions could create conflicts of interest or the appearance of conflicts of interest when these individuals are faced with decisions that could have different implications for us, Advance/Newhouse and/or the Liberty Entities.
The loan agreements for our term loan and revolving credit facility contain restrictive covenants, as well as requirements to comply with certain leverage and other financial maintenance tests.
Our loan agreements contain restrictive covenants, as well as requirements to comply with certain leverage ratio and other financial maintenance tests.
We and our partners rely on various technology systems in connection with the production, distribution and broadcast of our programming, and our on-line, mobile and app offerings, as well as our internal systems, involve the storage and transmission of personal and proprietary information. Consistently, cyber criminals and other malicious actors target us and our service providers.
We and our partners rely on various technology systems in connection with the production, distribution and broadcast of our programming, and our online, mobile and app offerings, as well as our internal systems, involve the storage and transmission of personal and proprietary information.
Other global events in the future may impact our ability to distribute content or our viewership, which could negatively impact our business. 17 We invest significant resources to acquire licenses to produce sports programming and there can be no assurance that we will continue to be successful in our efforts to obtain licenses to recurring sports events or recoup our investment when the content is distributed.
We invest significant resources to acquire and maintain licenses to produce sports programming and there can be no assurance that we will continue to be successful in our efforts to obtain or maintain licenses to recurring sports events or recoup our investment when the content is distributed.
The evolving regulatory environment in international markets may also impact strategy, costs and results of operations, including with respect to local programming levies and investment obligations, satisfaction of local content quotas, access to local production incentive schemes, and direct and indirect digital taxes or levies on internet-based programming services. 20 We are subject to domestic and international privacy and data protection laws, which impact our ability to collect, manage, and use personal information.
The evolving regulatory environment in international markets may also impact strategy, costs and results of operations, including with respect to local programming levies and investment obligations, satisfaction of local content quotas, access to local production incentive schemes, and direct and indirect digital taxes or levies on internet-based programming services.
If we are unable to meet our ESG goals or evolving stakeholder expectations and industry standards, or if we are perceived by consumers, stockholders or employees to have not responded appropriately to the growing concern for ESG issues, our reputation, and therefore our ability to sell our products and services, could be negatively impacted.
If we are unable to meet our enterprise objectives, or live up to evolving stakeholder expectations and industry standards for environmental, social and governance issues, or if we are perceived by consumers, stockholders or employees to have not responded appropriately with respect to these issues, our reputation, and therefore our ability to sell our products and services, could be negatively impacted.
Additional risks and uncertainties not presently known to us or that we currently believe not to be material may also adversely impact our business, results of operations, financial position and cash flows. Risks Related to Our Acquisition of the WarnerMedia Business We have incurred and expect to continue to incur significant costs following the Merger.
Additional risks and uncertainties not presently known to us or that we currently believe not to be material may also adversely impact our business, results of operations, financial position and cash flows.
In addition, we have the ability to draw down on a $6.0 billion revolving credit facility in the ordinary course, which would have the effect of further increasing our debt to the extent drawn.
Our consolidated indebtedness as of December 31, 2023 was $41,889 million, of which $1,780 million is current. In addition, we have the ability to draw down on a $6.0 billion revolving credit facility in the ordinary course, which would have the effect of further increasing our debt to the extent drawn.
From time to time, we may disagree with our joint venture partners on the strategy or management of a joint venture business, but may be constrained in our ability to make decisions unilaterally as a result of legal or contractual obligations to our joint venture partners, which could adversely affect our business, financial condition and results of operations. 22 We have directors that are also related persons of Advance/Newhouse Programming Partnership (“Advance/Newhouse”) and that overlap with those of Liberty Media Corporation (“Liberty Media”), Liberty Global plc (“Liberty Global”), Qurate Retail Group f/k/a Liberty Interactive Corporation (“Qurate Retail”), Liberty Broadband Corporation (“Liberty Broadband”), and Liberty Latin America Ltd (“LLA”), which may lead to conflicting interests for those directors or result in the diversion of business opportunities or other potential conflicts.
We have directors that are also related persons of Advance/Newhouse Programming Partnership (“Advance/Newhouse”) and that overlap with those of Liberty Media Corporation (“Liberty Media”), Liberty Global plc (“Liberty Global”), Qurate Retail Group f/k/a Liberty Interactive Corporation (“Qurate Retail”), Liberty Broadband Corporation (“Liberty Broadband”), and Liberty Latin America Ltd (“LLA”), which may lead to conflicting interests for those directors or result in the diversion of business opportunities or other potential conflicts.
From time to time, we may be involved in a number of legal claims, regulatory investigations, litigation actions (asserted individually and/or on behalf of a class), and arbitration proceedings.
Our business, financial condition and results of operations may be negatively impacted by the outcome of uncertainties related to litigation. From time to time, we may be involved in a number of legal claims, regulatory investigations, litigation actions (asserted individually and/or on behalf of a class), and arbitration proceedings.
Significant negative industry or economic trends, including the ongoing effects of the COVID-19 pandemic, disruptions to our business, inability to effectively integrate acquired businesses, underperformance of the WarnerMedia Business as compared to management's initial expectations, unexpected significant changes or planned changes in use of the assets, including in connection with our ongoing restructuring initiatives, divestitures and market capitalization declines may impair goodwill and other intangible assets.
Significant negative industry or economic trends, including the continued decline of traditional linear television viewership and linear ad revenues, disruptions to our business, inability to effectively integrate acquired businesses, underperformance of our content, unexpected significant changes or planned changes in use of the assets, including in connection with restructuring initiatives, divestitures and market capitalization declines may impair goodwill and other intangible assets.
Our efforts to comply with such laws, which are continually evolving, could impose costly obligations on us and generate additional regulatory and litigation risk. We are subject to domestic and international laws associated with the acquisition, storage, disclosure, use and protection of personal data, including under the E.U.
We are subject to domestic and international privacy and data protection laws, which impact our ability to collect, manage, and use personal information. Our efforts to comply with such laws, which are continually evolving, could impose costly obligations on us and generate additional regulatory and litigation risk.
Since the closing of the Merger, multiple putative class action lawsuits relating to the Merger have been filed on behalf of stockholders of the Company against the Company and/or certain of our directors and executive officers seeking damages and other relief.
In connection with the Merger, multiple putative class action lawsuits relating to the Merger were filed on behalf of stockholders of the Company against the Company and/or certain of our directors and executive officers seeking damages and other relief, and we have been engaged in other disputes arising out of definitive agreements entered into in connection with the Merger.
The outcomes of Merger-related lawsuits are uncertain and even if we ultimately prevail in a lawsuit, defending against the claim could be time-consuming and costly and divert our management’s attention and resources away from our business, which could negatively and materially impact our business, financial condition and results of operations.
Even if we ultimately prevail in a lawsuit or dispute, defending against the claim or resolving the dispute could be time-consuming and costly and divert our management’s attention and resources away from our business, which could negatively and materially impact our business, financial condition and results of operations. 18 Risks Related to Domestic and Foreign Laws and Regulations; Other Risks Related to International Operations Changes in domestic and foreign laws and regulations and other risks related to international operations could adversely impact our business, financial condition and results of operations.
From time to time, third parties may also challenge the validity or scope of our intellectual property and may assert infringement claims against us, and the success of any such challenges could result in the limitation or loss of intellectual property rights.
For example, in certain countries, including China, laws and regulations limit the number of foreign films exhibited in such countries in a calendar year. 24 From time to time, third parties may also challenge the validity or scope of our intellectual property and may assert infringement claims against us, and the success of any such challenges could result in the limitation or loss of intellectual property rights.
There can be no assurance, however, that consumers and advertisers will embrace our offerings or that subscribers will activate or renew a subscription, particularly given the increase in DTC products in the marketplace.
There can be no assurance, however, that consumers and advertisers will embrace our offerings, that subscribers will activate or renew a subscription, particularly given the significant number of streaming services in the marketplace, or that our DTC business will be as successful or as profitable as our traditional linear television business.
A ratings downgrade may increase our borrowing costs, which could diminish operational flexibility and reduce profitability. We could be unable to obtain cash in amounts sufficient to meet our financial obligations or other commitments. Our ability to meet our financial obligations and other contractual commitments will depend upon our ability to access cash.
We could be unable to obtain cash in amounts sufficient to meet our financial obligations or other commitments. Our ability to meet our financial obligations and other contractual commitments will depend upon our ability to access cash.
In light of the Ukraine war and other geopolitical events and dynamics, including ongoing tensions with Russia, China, North Korea, Iran and other states, state-sponsored parties or their supporters may launch retaliatory cyberattacks, and may attempt to cause supply chain disruptions, or carry out other geopolitically motivated retaliatory actions that may adversely disrupt or degrade our operations and may result in data compromise.
State-sponsored parties or their supporters may launch retaliatory cyberattacks, and may attempt to cause supply chain disruptions, or carry out other geopolitically motivated retaliatory actions that may adversely disrupt or degrade our operations and may result in data compromise.
Other factors, including the availability of alternative forms of entertainment and leisure time activities, our ability to maintain or develop strong brand awareness and target key audiences, general economic conditions, piracy, and growing competition for consumer discretionary spending, time and attention may also affect the audience for our content.
Other factors, including the availability of alternative forms of entertainment and leisure time activities, piracy, and our ability to develop strong brand awareness may also affect the audience demand for our content.
If negotiations to renew expiring collective bargaining agreements are not successful or become unproductive, the affected unions could take actions such as strikes, work slowdowns or work stoppages. Strikes, work slowdowns, work stoppages or the possibility of such actions could result in delays in the production of our television programs, feature films and interactive entertainment.
If negotiations to renew expiring collective bargaining agreements are not successful or become unproductive, the affected unions could take, and have taken, actions such as strikes, work slowdowns or work stoppages.
As a global company, we are subject to laws in the U.S. and abroad, as well as trade agreements which may limit our ability to exploit our intellectual property. For example, in certain countries, including China, laws and regulations limit the number of foreign films exhibited in such countries in a calendar year.
As a global company, we are subject to laws in the U.S. and abroad, as well as trade agreements which may limit our ability to exploit our intellectual property.
We could also incur higher costs from such actions, enter into new collective bargaining agreements or renew collective bargaining agreements on less favorable terms. Many of the collective bargaining agreements that cover individuals providing services to the Company are industry-wide agreements, and we may lack practical control over the negotiations and terms of these agreements.
Many of the collective bargaining agreements that cover individuals providing services to the Company are industry-wide agreements, and we may lack practical control over the negotiations and terms of these agreements.
The Discovery Business and the WarnerMedia Business previously operated independently, and there can be no assurances that our businesses can be combined in a manner that allows for the achievement of any or all anticipated financial or other benefits.
Prior to the Merger, the Discovery Business and the WarnerMedia Business operated independently, and while we have spent the last 23 months since the closing of the Merger on integration activities, there can be no assurances that our businesses will ultimately be combined in a manner that allows for the achievement of any or all anticipated financial, strategic or other benefits.
General Risks We face cybersecurity and similar risks, which could result in the disclosure of confidential information, disruption of our programming services, damage to our brands and reputation, legal exposure and financial losses.
Any future exercise of registration rights or sale of large amounts of our common stock in the public market could materially and adversely affect the market price of our common stock. 23 General Risks We face cybersecurity and similar risks, which could result in the disclosure of confidential information, disruption of our programming services, damage to our brands and reputation, legal exposure and financial losses.
In addition, many foreign jurisdictions have increased scrutiny and have either changed, or plan to change, their international tax systems due to the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations. These recommendations include, among other things, profit reallocation rules and a 15% global minimum corporate income tax rate.
Other changes in tax laws and the interpretations thereof could have a material impact on our tax liability. In addition, many foreign jurisdictions have increased scrutiny and have either changed, or plan to change, their international tax systems due to the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations.
We incurred significant costs in connection with the signing and closing of the Merger, and expect to continue to incur approximately $1.0 - $1.5 billion of cash costs relating to organization restructuring, facility consolidation activities and other contract termination costs, which costs we believe will be necessary to realize the anticipated cost synergies from the Merger.
We incurred significant costs following the closing of the Merger, including costs relating to organization restructuring, facility consolidation activities and other contract termination costs, which costs we believe were necessary to realize the anticipated cost synergies from the Merger.
Additional lawsuits relating to the Merger, or disputes arising out of definitive agreements entered into in connection with the Merger, could arise in the future.
Additional lawsuits relating to the Merger, or disputes arising out of definitive agreements entered into in connection with the Merger, could arise in the future. The outcomes of Merger-related lawsuits and disputes are uncertain and could negatively and materially impact our business, financial condition and results of operations.
Such recommendations, if implemented, could have a material effect on our income tax liability. Additional complexity has also arisen with respect to state aid: i.e., state resources used to provide recipients an advantage on a selective basis that has or could distort competition and affect trade between European member states.
Additional complexity has also arisen with respect to state aid; i.e., state resources used to provide recipients an advantage on a selective basis that has or could distort competition and affect trade between European member states. In recent years the European Commission has increased their scrutiny of state aid and has deviated from historical E.U. state aid practices.
Those same parties may also attempt to fraudulently induce employees, customers, or other users of our systems to disclose sensitive information in order to gain access to our data or that of our customers or clients through social engineering, phishing, mobile phone malware, and other methods. 24 Theft of our intellectual property and unauthorized duplication, distribution and exhibitions of our intellectual property may decrease revenues and adversely affect our business, financial condition, and results of operations.
Those same parties may also attempt to fraudulently induce employees, customers, or other users of our systems to disclose sensitive information in order to gain access to our data systems or that of our service providers, customers or clients through social engineering, phishing, mobile phone malware, account takeovers, SIM card swapping, or similar methods.
If we fail to retain or attract key individuals or if our talent loses their current audience base or suffer negative publicity, our business, financial condition and results of operations could be materially adversely affected. The market price of our common stock has been highly volatile and may continue to be volatile due to circumstances beyond our control.
If we fail to retain or attract key individuals or if our talent loses their current audience base or suffer negative publicity, our business, financial condition and results of operations could be materially adversely affected. Global economic conditions and other global events may have an adverse effect on our business.
Additional unanticipated costs may also be incurred in connection with the integration of the legacy business, operations and activities of Discovery prior to the Merger (the “Discovery Business”) and the WarnerMedia Business. No assurances of the timing or amount of synergies able to be captured, or the timing or amount of costs necessary to achieve those synergies, can be provided.
Additional unanticipated costs may also be incurred in connection with the continued integration of the legacy business, operations and activities of Discovery prior to the Merger (the “Discovery Business”) and the WarnerMedia Business, including due to the resources required for integration.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeBuenos Aires, Argentina 599 & 533 Defensa St. Studios, Networks, DTC, & Corporate 129,000 Owned. London, England Old Street Studios, Networks, DTC, & Corporate 116,000 Leased; Lease expires in 2034. Paris, France LaMiral Zac Forum Seine Networks, DTC, & Corporate 116,000 Leased; Lease expires in 2031. Seattle, WA 1099 Stewart Street DTC 112,000 Leased; Lease expires in 2025.
Biggest changeLondon, England 98 Theobalds Road Networks, DTC, and Corporate 135,000 Leased; expires in 2034. 28 Location Principal Use Approximate Square Footage Type of Ownership; Expiration Date of Lease Buenos Aires, Argentina 599 and 533 Defensa Street Studios, Networks, DTC, and Corporate 129,000 Owned. London, UK 160 Old Street Studios, Networks, DTC, and Corporate 116,000 Leased; expires in 2034.
ITEM 2. Properties. The Company’s headquarters are located in New York City at 230 Park Ave. South. The Company owns and leases approximately 21 million square feet of offices; studios; technical, production and warehouse spaces; communications facilities; and other properties in numerous locations in the U.S. and around the world for its businesses.
ITEM 2. Properties. The Company’s headquarters are located in New York City at 230 Park Ave. South. The Company owns and leases approximately 23 million square feet of offices; studios; technical, production and warehouse spaces; and other properties in numerous locations in the U.S. and around the world for its businesses.
The following table sets forth information as of December 31, 2022 with respect to the Company’s principal properties: Location Principal Use Approximate Square Footage Type of Ownership; Expiration Date of Lease New York, NY 230 Park Ave South Studios, Networks, DTC, & Corporate 360,000 Leased; Lease expires in 2037.
The following table sets forth information as of December 31, 2023 with respect to the Company’s principal properties: Location Principal Use Approximate Square Footage Type of Ownership; Expiration Date of Lease Burbank, CA 4000 Warner Blvd. Studios 2,600,000 Owned. New York, NY 30 Hudson Yards Studios, Networks, DTC, and Corporate 1,500,000 Leased; expires in 2034.
New York, NY 30 Hudson Yards Studios, Networks, DTC, & Corporate 1,500,000 Leased; Lease expires in 2034. Burbank, CA The Warner Bros. Studios Studios 2,600,000 Owned. Leavesden, UK Leavesden Studios Studios 1,300,000 Owned. Atlanta, GA 1050 Techwood Dr. Studios, Networks, DTC, & Corporate 1,170,000 Owned. Atlanta, GA One CNN Center Studios, Networks, & Corporate 1,150,000 Leased; Lease expires in 2024.
Leavesden, UK Warner Drive (Studios); Studio Tour Drive (Studio Tour); 5 and 6 Hercules Way (Leavesden Park) Studios 1,300,000 Owned. Atlanta, GA 1050 Techwood Drive Studios, Networks, DTC, and Corporate 1,170,000 Owned. Atlanta, GA One CNN Center Studios, Networks, and Corporate 1,150,000 Leased; expires in 2024. Burbank, CA 3000 West Alameda Avenue Studios 860,000 Owned.
London, England Chiswick Park, Bldg. 2 Networks, DTC, & Corporate 102,000 Leased; Lease expires in 2034. Washington, DC 820 First St. Studios & Networks 71,000 Leased; Lease expires in 2031. Auckland, New Zealand 2 & 3 Flower St. Studios, Networks, DTC, & Corporate 57,000 Leased; Lease expires in 2025. Sterling, VA 45580 Terminal Dr. Studios, Networks, & DTC 54,000 Owned.
Hyderabad, India Block A, International Tech Park Corporate 89,000 Leased; expires in 2028. Paris, France L’Amiral, ZAC Forum Seine Networks, DTC, and Corporate 81,000 Leased; expires in 2031. Auckland, New Zealand 2 and 3 Flower Street Studios, Networks, DTC, and Corporate 57,000 Leased; expires in 2025. Sterling, VA 45580 Terminal Drive Studios, Networks, DTC, and Corporate 54,000 Owned.
Burbank, CA Second Century Tower 1 & 2 Studios & Corporate 800,000 Leased; Tower 1 lease expires in 2037 & Tower 2 lease expires in 2039. 27 Location Principal Use Approximate Square Footage Type of Ownership; Expiration Date of Lease Santiago, Chile Pedro Montt 2354 Studios & Networks 610,000 Owned.
Burbank, CA 100 and 200 South California Street Studios and Corporate 811,000 Leased; Tower 1 expires in 2037 and Tower 2 expires in 2039. Santiago, Chile Pedro Montt 2354 Studios and Networks 610,000 Owned. Tokyo, Japan 1-1625-1, Kasuga-cho, Nerima-ku Studios 527,000 Leased; expires in 2052. Atlanta, GA 3755 Atlanta Industrial Pkwy. Studios 409,000 Leased; expires in 2024.
Removed
Knoxville, TN Knoxville Office & Tech Center Studios, Networks, DTC, & Corporate 344,000 Owned. Culver City, CA Ivy Station Networks & DTC 244,000 Leased; Lease expires in 2036. Warsaw, Poland TVN Warsaw HQ Studios, Networks, DTC, & Corporate 198,000 Owned. London, England Warner House Networks, DTC, & Corporate 135,000 Leased; Lease expires in 2034.
Added
New York, NY 230 Park Ave. South Headquarters, Studios, Networks, DTC, and Corporate 360,000 Leased; expires in 2037. Warsaw, Poland Wiertnicza 166 Studios, Networks, DTC, and Corporate 247,000 Owned. Culver City, CA 8900 Venice Boulevard Networks and DTC 244,000 Leased; expires in 2036. Cardington, Bedfordshire, UK Cardington Airfield, Shed 1 Studios 220,000 Leased; expires in 2027.
Removed
Silver Spring, MD 8403 Colesville Rd. Networks & Corporate 47,000 Leased; Lease expires in 2030. Tokyo, Japan 1-2-9, Nishi-Shinbashi Networks & DTC 47,000 Leased; Lease expires in 2028. Singapore, Singapore 1 Fusionopolis Walk Networks & DTC 40,000 Leased; Lease expires in 2026.
Added
Radlett, UK Ventura Park, Old Parkbury Lane Studios 198,000 Leased; expires in 2028 and 2034. Atlanta, GA 3700 Atlanta Industrial Pkwy. Studios 177,000 Leased; expires in 2024. Krakow, Poland Plk. Dadka 2 Studios and Networks 151,000 Leased; expires in 2026.
Added
London, UK Chiswick Park, Bldg. 2 Studios, Networks, DTC, and Corporate 115,000 Leased; expires in 2034. Seattle, WA 1099 Stewart Street DTC 112,000 Leased; expires in 2025. Washington, DC 820 First Street Studios and Networks 109,000 Leased; expires in 2031. Richmond, Canada 13480 Crestwood Place Studios 108,000 Leased; expires in 2030.
Added
Silver Spring, MD 8403 Colesville Road Networks and Corporate 47,000 Leased; expires in 2030. Many of the listed locations are occupied by multiple segments; the most critical (or the principal) occupiers are listed here.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, a determination as to the amount of the accrual required for such contingencies is highly subjective and requires judgments about future events.
Biggest changeHowever, a determination as to the amount of the accrual required for such contingencies is highly subjective and requires judgment about future events. The Company may not currently be able to estimate the reasonably possible loss or range of loss for such matters until developments in such matters have provided sufficient information to support an assessment of such loss.
Although the outcome of these matters cannot be predicted with certainty and the impact of the final resolution of these matters on the Company's results of operations in a particular subsequent reporting period is not known, management does not believe that the resolution of these matters will have a material adverse effect on our consolidated financial position, future results of operations, or cash flows.
Although the outcome of these matters cannot be predicted with certainty and the impact of the final resolution of these matters on the Company’s results of operations in a particular subsequent reporting period is not known, management does not currently believe that the resolution of these matters will have a material adverse effect on the Company’s future consolidated financial position, future results of operations, or cash flows.
Between September 23, 2022 and October 24, 2022, two purported class action lawsuits ( Collinsville Police Pension Board v. Discovery, Inc., et al ., Case No. 1:22-cv-08171; Todorovski v. Discovery, Inc., et a ., Case No. 1:22-cv-09125) were filed in the United States District Court for the Southern District of New York. The complaints name Warner Bros.
Between September 23, 2022 and October 24, 2022, two purported class action lawsuits (Collinsville Police Pension Board v. Discovery, Inc., et al., Case No. 1:22-cv-08171; Todorovski v. Discovery, Inc., et al., Case No. 1:22-cv-09125) were filed in the United States District Court for the Southern District of New York. The complaints named Warner Bros.
Discovery, Inc., Discovery, Inc., David Zaslav, and Gunnar Wiedenfels as defendants. The complaints generally allege that the defendants made false and misleading statements in SEC filings and in certain public statements relating to the Merger, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. The complaints seek damages and other relief.
Discovery, Inc., Discovery, Inc., David Zaslav, and Gunnar Wiedenfels as defendants. The complaints generally alleged that the defendants made false and misleading statements in SEC filings and in certain public statements relating to the Merger, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, and sought damages and other relief.
ITEM 3. Legal Proceedings. From time to time, in the normal course of its operations, the Company is subject to various litigation matters and claims, including claims related to employees, stockholders, vendors, other business partners or intellectual property.
From time to time, in the normal course of its operations, the Company is subject to various litigation matters and claims, including claims related to employees, stockholders, vendors, other business partners, government regulations, or intellectual property, as well as disputes and matters involving counterparties to contractual agreements, such as disputes arising out of definitive agreements entered into in connection with the Merger.
On November 4, 2022, the court consolidated the Collinsville and Todorovski complaints under case number 1:22-CV-8171, and on December 12, 2022, the court appointed a lead plaintiff and lead counsel.
On November 4, 2022, the court consolidated the Collinsville and Todorovski complaints under case number 1:22-CV-8171, and on December 12, 2022, the court appointed lead plaintiffs and lead counsel. On February 15, 2023, the lead plaintiffs filed an amended complaint adding Advance/Newhouse Partnership, Advance/Newhouse Programming Partnership, Steven A. Miron, Robert J. Miron, and Steven O. Newhouse as defendants.
Removed
The Company intends to vigorously defend these litigations. 28 On December 2, 2022, a purported class action and derivative lawsuit ( Monroe County Employees’ Retirement System, Plumbers Local Union No. 519 Pension Trust Fund, and Davant Scarborough v. David M. Zaslav, et al. , Case No. 2022-1115-JTL) was filed in the Delaware Court of Chancery (the “Monroe County Action”).
Added
In the absence of sufficient information to support an assessment of the reasonably possible loss or range of loss, no accrual for such contingencies is made and no loss or range of loss is disclosed.
Removed
The Monroe County Action names certain of the Company’s directors and officers, Advance/Newhouse Partnership and Advance/Newhouse Programming Partnership (collectively, “Advance/Newhouse”), and AT&T as defendants. The Monroe County Action generally alleges that former directors and officers of Discovery and Advance/Newhouse breached their fiduciary duties in connection with the Merger, and that AT&T aided and abetted these alleged breaches of fiduciary duties.
Added
The amended complaint asserted violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, and sought damages and other relief. On February 5, 2024, the court dismissed the amended complaint with prejudice.
Removed
The Monroe County Action seeks damages and other relief. Also on December 2, 2022, a separate purported class action lawsuit ( Bricklayers Pension Fund of Western Pennsylvania v. Advance/Newhouse Partnership , Case No. 2022-1114-JTL) was filed in the Delaware Court of Chancery (the “Bricklayers Action”).
Removed
The complaint in the Bricklayers Action names Advance/Newhouse and certain of the Company’s current and former directors as defendants and generally alleges that former directors of Discovery and Advance/Newhouse breached their fiduciary duties in connection with the Merger, and that Advance/Newhouse aided and abetted these alleged breaches of fiduciary duties. The Bricklayers Action seeks damages and other relief.
Removed
On January 11, 2023, the Delaware Court of Chancery consolidated the Monroe County Action and the Bricklayers Action under the caption In re Warner Bros. Discovery, Inc. Stockholders Litigation , Consolidated Case No. 2022-1114-JTL. The Company intends to vigorously defend these litigations.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

10 edited+0 added−2 removed5 unchanged
Biggest changePerrette served as Discovery’s Chief Digital Officer from October 2011 to February 2014. 30 Adria Alpert Romm, Chief People and Culture Officer Age: 67 Executive Officer since 2008 Ms. Romm has served as our Chief People and Culture Officer since the closing of the Merger on April 8, 2022. Prior to the closing, Ms.
Biggest changeAdria Alpert Romm, Chief People and Culture Officer Age: 68 Executive Officer since 2008 Ms. Romm has served as our Chief People and Culture Officer since the closing of the Merger on April 8, 2022. Prior to the closing, Ms. Romm served as Discovery’s Chief People and Culture Officer from April 2019 to April 2022. Prior to that, Ms.
Sims served as Discovery’s Executive Vice President and Deputy General Counsel from December 2014 to April 2017 and Discovery’s Senior Vice President, Litigation and Intellectual Property from August 2011 to December 2014. Gerhard Zeiler, President, International Age: 67 Executive Officer since 2022 Mr. Zeiler has served as our President, International since the closing of the Merger on April 8, 2022.
Sims served as Discovery’s Executive Vice President and Deputy General Counsel from December 2014 to April 2017 and Discovery’s Senior Vice President, Litigation and Intellectual Property from August 2011 to December 2014. Gerhard Zeiler, President, International Age: 68 Executive Officer since 2022 Mr. Zeiler has served as our President, International since the closing of the Merger on April 8, 2022.
Zaslav served as Discovery’s President and Chief Executive Officer from January 2007 until April 2022 and a common stock director of Discovery from September 2008 until April 2022. Gunnar Wiedenfels, Chief Financial Officer Age: 45 Executive Officer since 2017 Mr. Wiedenfels has served as our Chief Financial Officer since the closing of the Merger on April 8, 2022.
Zaslav served as Discovery’s President and Chief Executive Officer from January 2007 until April 2022 and a common stock director of Discovery from September 2008 until April 2022. Gunnar Wiedenfels, Chief Financial Officer Age: 46 Executive Officer since 2017 Mr. Wiedenfels has served as our Chief Financial Officer since the closing of the Merger on April 8, 2022.
Locke served as Vice President, Corporate Controller and Principal Accounting Officer for Gannett Co., Inc., a media company, from June 2015 to May 2019. Jean-Briac Perrette, CEO and President, Global Streaming and Games Age: 51 Executive Officer since 2014 Mr.
Locke served as Vice President, Corporate Controller and Principal Accounting Officer for Gannett Co., Inc., a media company, from June 2015 to May 2019. Jean-Briac Perrette, CEO and President, Global Streaming and Games Age: 52 Executive Officer since 2014 Mr.
Prior to the closing, Mr. Wiedenfels served as Discovery, Inc.’s Chief Financial Officer from April 2017 until April 2022. Bruce L. Campbell, Chief Revenue and Strategy Officer Age: 55 Executive Officer since 2008 Mr. Campbell has served as our Chief Revenue and Strategy Officer since the closing of the Merger on April 8, 2022.
Prior to the closing, Mr. Wiedenfels served as Discovery, Inc.’s Chief Financial Officer from April 2017 until April 2022. Bruce L. Campbell, Chief Revenue and Strategy Officer Age: 56 Executive Officer since 2008 Mr. Campbell has served as our Chief Revenue and Strategy Officer since the closing of the Merger on April 8, 2022.
Lori Locke, Chief Accounting Officer Age: 59 Executive Officer since 2019 Ms. Locke has served as our Chief Accounting Officer since the closing of the Merger on April 8, 2022. Prior to the closing, Ms. Locke served as Discovery’s Chief Accounting Officer from June 2019 to April 2022. Prior to joining Discovery, Ms.
Lori Locke, Chief Accounting Officer Age: 60 Executive Officer since 2019 Ms. Locke has served as our Chief Accounting Officer since the closing of the Merger on April 8, 2022. Prior to the closing, Ms. Locke served as Discovery’s Chief Accounting Officer from June 2019 to April 2022. Prior to joining Discovery, Ms.
ITEM 4. Mine Safety Disclosures. Not applicable. 29 Executive Officers of Warner Bros. Discovery, Inc. As of February 24, 2023, the following individuals are the executive officers of the Company. David M. Zaslav, President, Chief Executive Officer, and a director Age: 63 Executive Officer since 2007 Mr.
ITEM 4. Mine Safety Disclosures. Not applicable. 29 Executive Officers of Warner Bros. Discovery, Inc. As of February 23, 2024, the following individuals are the executive officers of the Company. David M. Zaslav, President, Chief Executive Officer, and a director Age: 64 Executive Officer since 2007 Mr.
Prior to the closing, he served as President and CEO of Discovery International (formerly referred to as Discovery Networks International) from June 2016 until April 2022, and served as President of Discovery Networks International from March 2014 to June 2016. Prior to that, Mr.
Prior to the closing, he served as President and CEO of Discovery International (formerly referred to as Discovery Networks International) from June 2016 until April 2022, and served as President of Discovery Networks International from March 2014 to June 2016. Prior to that, Mr. Perrette served as Discovery’s Chief Digital Officer from October 2011 to February 2014.
Sims, Executive Vice President and General Counsel Age: 52 Executive Officer since 2017 Ms. Sims has served as Executive Vice President and General Counsel since the closing of the Merger on April 8, 2022. Prior to the closing, Ms. Sims served as Discovery’s Executive Vice President and General Counsel from April 2017 until April 2022. Prior to that, Ms.
Sims has served as our Chief Legal Officer since October 2023 and was previously Executive Vice President and General Counsel from the closing of the Merger on April 8, 2022 to October 2023. Prior to the closing, Ms. Sims served as Discovery’s Executive Vice President and General Counsel from April 2017 until April 2022. Prior to that, Ms.
Romm served as Discovery’s Chief People and Culture Officer from April 2019 to April 2022. Prior to that, Ms. Romm served as Discovery’s Chief Human Resources and Diversity Officer from March 2014 to March 2019 and Discovery’s Senior Executive Vice President of Human Resources from March 2007 to February 2014. Savalle C.
Romm served as Discovery’s Chief Human Resources and Diversity Officer from March 2014 to March 2019 and Discovery’s Senior Executive Vice President of Human Resources from March 2007 to February 2014. 30 Savalle C. Sims, Chief Legal Officer Age: 53 Executive Officer since 2017 Ms.
Removed
David Leavy, Chief Corporate Affairs Officer Age: 53 Executive Officer since 2014 Mr. Leavy has served as our Chief Corporate Affairs Officer since the closing of the Merger on April 8, 2022.
Removed
Prior to the closing, he served as Discovery’s Chief Corporate Operating Officer from June 2019 to April 2022 and prior to that, its Chief Corporate Operations and Communications Officer from March 2016 to June 2019. Mr. Leavy has served in several other senior executive roles since joining in March 2000.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−3 removed1 unchanged
Biggest changeNOTE: Index Data: Copyright Standard and Poor’s, Inc. Used with permission. All rights reserved. NOTE: Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2023.
Biggest changeNote that historic stock price performance is not necessarily indicative of future stock price performance. Note: Peer group indices use beginning of period market capitalization weighting. Note: Index Data: Copyright Standard and Poor’s, Inc. Used with permission. All rights reserved. Note: Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2024.
Payment of cash dividends, if any, will be determined by our board of directors after consideration of our earnings, financial condition and other relevant factors such as our credit facility's restrictions on our ability to declare dividends in certain situations. 31 Stock Performance Graph The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for (a) WBD common stock (which began trading on April 11, 2022) and Discovery Series A common stock, Series B convertible common stock, and Series C common stock (which ceased trading on April 8, 2022), (b) the Standard and Poor's 500 Stock Index (“S&P 500 Index”), (c) the Standard & Poor’s 500 Media and Entertainment Industry Group Index (“S&P 500 Media & Entertainment Index”), and (d) a peer group of companies (the “Prior Peer Group”) for the five years ended December 31, 2022.
Payment of cash dividends, if any, will be determined by our board of directors after consideration of our earnings, financial condition and other relevant factors such as our credit facility’s restrictions on our ability to declare dividends in certain situations. 31 Stock Performance Graph The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for (a) WBD common stock (which began trading on April 11, 2022) and Discovery Series A common stock, Series B convertible common stock, and Series C common stock (which ceased trading on April 8, 2022), (b) the Standard and Poor's 500 Stock Index (“S&P 500 Index”), and (c) the Standard & Poor’s 500 Media and Entertainment Industry Group Index (“S&P 500 Media & Entertainment Index”) for the five years ended December 31, 2023.
The graph assumes $100 was invested in each of Discovery Series A common stock, Series B convertible common stock, and Series C common stock, the S&P 500 Index, the S&P 500 Media & Entertainment Index, and the stocks of the Prior Peer Group on December 31, 2017, and that $100 was invested in WBD common stock on April 11, 2022, the date on which it began trading.
The graph assumes $100 was invested in each of Discovery Series A common stock, Series B convertible common stock, and Series C common stock, the S&P 500 Index, and the S&P 500 Media & Entertainment Index on December 31, 2018, and that $100 was invested in WBD common stock on April 11, 2022, the date on which it began trading.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. WBD common stock is listed and traded on Nasdaq under the symbol “WBD”. As of February 9, 2023, there were approximately 715,364 record holders of WBD common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. WBD common stock is listed and traded on Nasdaq under the symbol “WBD”. As of February 8, 2024, there were approximately 689,822 record holders of WBD common stock.
Removed
The Prior Peer Group is comprised of The Walt Disney Company common stock, Paramount Global Class B common stock, Fox Corporation Class A common stock, and AMC Networks Inc. Class A common stock.
Added
December 31, April 11, December 31, 2018 2019 2020 2021 2022 2022 2023 WBD $ 100.00 $ 38.26 $ 45.92 DISCA $ 100.00 $ 132.34 $ 121.63 $ 95.15 $ 98.75 $ — $ — DISCB $ 100.00 $ 108.24 $ 96.72 $ 88.81 $ 72.99 $ — $ — DISCK $ 100.00 $ 132.11 $ 113.48 $ 99.22 $ 105.81 $ — $ — S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 186.24 $ 164.08 $ 207.21 S&P 500 Media & Entertainment Index $ 100.00 $ 134.15 $ 176.47 $ 224.01 $ 184.31 $ 125.65 $ 208.66 ITEM 6. [Reserved].
Removed
Note that historic stock price performance is not necessarily indicative of future stock price performance . The change from our Prior Peer Group to the S&P 500 Media & Entertainment Index was made to better reflect our business subsequent to the Merger. NOTE: Peer group indices use beginning of period market capitalization weighting.
Removed
December 31, April 8, December 31, 2017 2018 2019 2020 2021 2022 2022 WBD $ 100.00 $ 38.80 DISCA $ 100.00 $ 110.55 $ 146.30 $ 134.46 $ 105.19 $ 109.17 $ — DISCB $ 100.00 $ 135.08 $ 146.21 $ 130.65 $ 119.96 $ 98.59 $ — DISCK $ 100.00 $ 109.02 $ 144.03 $ 123.71 $ 108.17 $ 115.35 $ — S&P 500 $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 181.13 $ 156.88 S&P 500 Media & Entertainment Index $ 100.00 $ 90.25 $ 121.08 $ 159.27 $ 202.18 $ 170.27 $ 113.40 Prior Peer Group $ 100.00 $ 100.13 $ 129.45 $ 153.94 $ 134.50 $ 119.40 $ 77.93 ITEM 6. [Reserved]. 32

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

117 edited+28 added−42 removed72 unchanged
Biggest changeYear Ended December 31, 2022 2021 % Change Actual Pro Forma Adjustments Pro Forma Combined Actual (a) Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Combined (Actual) Pro Forma Combined (ex-FX) Revenues: Advertising $ 15 $ 9 $ 24 $ — $ 123 $ 123 NM (80) % (80) % Distribution 12 6 18 — 14 14 NM 29 % 29 % Content 9,156 3,898 13,054 20 14,336 14,356 NM (9) % (7) % Other 548 154 702 — 516 516 NM 36 % 36 % Total revenues 9,731 4,067 13,798 20 14,989 15,009 NM (8) % (6) % Costs of revenues, excluding depreciation and amortization 6,310 2,392 8,702 3 9,589 9,592 NM (9) % (7) % Selling, general and administrative 1,649 698 2,347 3 2,769 2,772 NM (15) % (13) % Adjusted EBITDA 1,772 977 2,749 14 2,631 2,645 NM 4 % 8 % Depreciation and amortization 501 39 540 — 691 691 Employee share-based compensation 1 26 27 — 85 85 Restructuring 1,050 (38) 1,012 — 38 38 Transaction and integration costs 9 — 9 — — — Inter-segment eliminations 5 — 5 — — — Impairment and loss on disposition and disposal groups 30 — 30 — — — Amortization of fair value step-up for content 1,370 (785) 585 — 1,588 1,588 Operating (loss) income $ (1,194) $ 1,735 $ 541 $ 14 $ 229 $ 243 (a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast.
Biggest changeYear Ended December 31, 2023 2022 % Change Actual Actual Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Combined (Actual) Pro Forma Combined (ex-FX) Revenues: Distribution $ 17 $ 12 $ 6 $ 18 42 % (6) % (6) % Advertising 15 15 9 24 — % (38) % (38) % Content 11,358 9,156 3,898 13,054 24 % (13) % (13) % Other 802 548 154 702 46 % 14 % 13 % Total revenues 12,192 9,731 4,067 13,798 25 % (12) % (12) % Costs of revenues, excluding depreciation and amortization 7,296 6,310 2,392 8,702 16 % (16) % (16) % Selling, general and administrative 2,713 1,649 698 2,347 65 % 16 % 16 % Adjusted EBITDA 2,183 1,772 977 2,749 23 % (21) % (21) % Depreciation and amortization 667 501 39 540 Employee share-based compensation — 1 26 27 Restructuring and other charges 225 1,050 (38) 1,012 Transaction and integration costs 7 9 — 9 Amortization of fair value step-up for content 995 1,370 (785) 585 Amortization of capitalized interest for content 46 — — — Inter-segment eliminations 31 5 — 5 Impairments and loss on dispositions 1 30 — 30 Operating income (loss) $ 211 $ (1,194) $ 1,735 $ 541 The discussion below reflects the results for the year ended December 31, 2022 on a pro forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenue, selling, general and administrative expenses and Adjusted EBITDA are substantially attributable to the Merger.
Production and licensing contracts generally require: purchase of a specified number of episodes; payments during production or over the term of a license; and include both programs that have been delivered and are available for airing and programs that have not yet been produced or sporting events that have not yet taken place.
Production and licensing contracts generally require the purchase of a specified number of episodes and payments during production or over the term of a license, and include both programs that have been delivered and are available for airing and programs that have not yet been produced or sporting events that have not yet taken place.
For a film or television program that is predominantly monetized on its own but also monetized with other films and/or programs (such as our DTC or linear services), we make a reasonable estimate of the value attributable to the film or program’s exploitation while monetized with other films/programs, based on relative market rates, and expense such costs as the film or television program is exhibited.
For a film or television program that is predominantly monetized on its own but also monetized with other films and/or programs (such as on our DTC or linear services), we make a reasonable estimate of the value attributable to the film or program’s exploitation while monetized with other films/programs, based on relative market rates, and expense such costs as the film or television program is exhibited.
A discussion of our results of operations and liquidity for the fiscal year ended December 31, 2021 compared to the fiscal year ended December 31, 2020 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on February 24, 2022, which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at ir.wbd.com.
A discussion of our results of operations and liquidity for the fiscal year ended December 31, 2022 compared to the fiscal year ended December 31, 2021 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on February 24, 2022, which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at ir.wbd.com.
We believe the following accounting estimates are critical to our business operations and the understanding of our results of operations and involve the more significant judgments and estimates used in the preparation of our consolidated financial statements. Uncertain Tax Positions We are subject to income taxes in numerous U.S. and foreign jurisdictions.
We believe the following accounting estimates are critical to our business operations and the understanding of our results of operations and involve the more significant judgments and estimates used in the preparation of our consolidated financial statements. 49 Uncertain Tax Positions We are subject to income taxes in numerous U.S. and foreign jurisdictions.
For programs monetized as a group, including licensed programming, amortization expense for network programs is generally based on projected usage, generally resulting in an accelerated or straight-line amortization pattern. Adjustments to projected usage are applied prospectively in the period of the change.
For programs monetized as a group, including licensed programming, amortization expense for network programs is generally based on projected usage, generally resulting in an accelerated or straight-line amortization pattern. Adjustments for projected usage are applied prospectively in the period of the change.
We determine the fair value of our reporting units by using a combination of the income approach, which incorporates the use of the discounted cash flow (“DCF”) method and the market multiple approach, which incorporates the use of EBITDA multiples based on market data.
We determine the fair value of our reporting units by using a combination of the income approach, which incorporates the use of the discounted cash flow (“DCF”) method and the market multiple approach, which incorporates the use of EBITDA and revenue multiples based on market data.
In making this determination, we evaluate whether we or another party involved with the VIE (1) has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) has the obligation to absorb losses of or receive benefits from the VIE that could be significant to the VIE. 53 If it is concluded that an entity is not a VIE, we consider our proportional voting interests in the entity and consolidate majority-owned subsidiaries in which a controlling financial interest is maintained.
In making this determination, we evaluate whether we or another party involved with the VIE (1) has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) has the obligation to absorb losses of or receive benefits from the VIE that could be significant to the VIE. 51 If it is concluded that an entity is not a VIE, we consider our proportional voting interests in the entity and consolidate majority-owned subsidiaries in which a controlling financial interest is maintained.
(See Note 19 to the accompanying consolidated financial statements.) Noncontrolling Interest The Food Network and Cooking Channel are operated and organized under the terms of the TV Food Network Partnership (the “Partnership”). We hold interests in the Partnership, along with another noncontrolling owner. The Partnership agreement specifies a dissolution date of December 31, 2023.
(See Note 19 to the accompanying consolidated financial statements.) Noncontrolling Interest The Food Network and Cooking Channel are operated and organized under the terms of the TV Food Network Partnership (the “Partnership”). We hold interests in the Partnership, along with another noncontrolling owner. The Partnership agreement specifies a dissolution date of December 31, 2024.
(1,680) Additional information regarding the changes in our outstanding indebtedness and the significant terms and provisions of our revolving credit facility and outstanding indebtedness is discussed in Note 11 to the accompanying consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
(1,447) Additional information regarding the changes in our outstanding indebtedness and the significant terms and provisions of our revolving credit facility and outstanding indebtedness is discussed in Note 11 to the accompanying consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Based on our evaluation of the current facts and circumstances surrounding the Guaranteed Obligations and the Subordinated Indemnity Agreement, we are unable to predict the loss, if any, that may be incurred under the Guaranteed Obligations, and no liability for the arrangements has been recognized as of December 31, 2022.
Based on our evaluation of the current facts and circumstances surrounding the Guaranteed Obligations and the Subordinated Indemnity Agreement, we are unable to predict the loss, if any, that may be incurred under the Guaranteed Obligations, and no liability for the arrangements has been recognized as of December 31, 2023.
NEW ACCOUNTING AND REPORTING PRONOUNCEMENTS We adopted certain accounting and reporting standards during 2022. Information regarding our adoption of new accounting and reporting standards is discussed in Note 2 to the accompanying consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
NEW ACCOUNTING AND REPORTING PRONOUNCEMENTS We adopted certain accounting and reporting standards during 2023. Information regarding our adoption of new accounting and reporting standards is discussed in Note 2 to the accompanying consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
(See Note 10 to the accompanying consolidated financial statements.) Other Income, net The table below presents the details of other income, net (in millions).
(See Note 10 to the accompanying consolidated financial statements.) Other (Expense) Income, net The table below presents the details of other (expense) income, net (in millions).
Put Rights We have granted put rights to certain consolidated subsidiaries, but we are unable to reasonably predict the ultimate amount or timing of any payment. We recorded the carrying value of the noncontrolling interest in the equity associated with the put rights as a component of redeemable noncontrolling interest in the amount of $318 million.
Put Rights We have granted put rights to certain consolidated subsidiaries, but we are unable to reasonably predict the ultimate amount or timing of any payment. We recorded the carrying value of the noncontrolling interest in the equity associated with the put rights as a component of redeemable noncontrolling interest in the amount of $165 million.
Ownership interests in unconsolidated entities for which we have significant influence are accounted for as equity method. We evaluated reconsideration events during the year ended December 31, 2022 and concluded there were no changes to our consolidation assessments.
Ownership interests in unconsolidated entities for which we have significant influence are accounted for as equity method. We evaluated reconsideration events during the year ended December 31, 2023 and concluded there were no changes to our consolidation assessments.
The aggregate gross undiscounted estimated future cash flow requirements covered by the Six Flags Guarantee over the remaining term (through 2028) are $544 million. To date, no payments have been made by us pursuant to the Six Flags Guarantee.
The aggregate gross undiscounted estimated future cash flow requirements covered by the Six Flags Guarantee over the remaining term (through 2028) are $521 million. To date, no payments have been made by us pursuant to the Six Flags Guarantee.
From time to time, renewals of multi-year carriage agreements include significant year one market adjustments to re-set subscriber rates, which then increase at rates lower than the initial increase in the following years. In some cases, we have provided distributors launch incentives, in the form of cash payments or free periods, to carry our networks.
From time to time, renewals of multi-year carriage agreements include significant year one market adjustments to reset subscriber rates, which then increase at rates lower than the initial increase in the following years. In some cases, we have provided distributors launch incentives, in the form of cash payments or free periods, to carry our networks.
Note Guarantees issued by Scripps Networks, DCL or WarnerMedia Holdings, Inc., or any subsidiary of the Parent that in the future issues a Note Guarantee (each, a “Subsidiary Guarantor”) may be released and discharged (i) concurrently with any direct or indirect sale or disposition of such Subsidiary Guarantor or any interest therein, (ii) at any time that such Subsidiary Guarantor is released from all of its obligations under its guarantee of payment, (iii) upon the merger or consolidation of any Subsidiary Guarantor with and into DCL, WarnerMedia Holdings, Inc. or the Parent or another Subsidiary Guarantor, as applicable, or upon the liquidation of such Subsidiary Guarantor and (iv) other customary events constituting a discharge of the Obligors’ obligations. 50 Summarized Financial Information The Company has included the accompanying summarized combined financial information of the Obligors after the elimination of intercompany transactions and balances among the Obligors and the elimination of equity in earnings from and investments in any subsidiary of the Parent that is a non-guarantor (in millions).
Note Guarantees issued by Scripps Networks, DCL or WMH, or any subsidiary of the Parent that in the future issues a Note Guarantee (each, a “Subsidiary Guarantor”) may be released and discharged (i) concurrently with any direct or indirect sale or disposition of such Subsidiary Guarantor or any interest therein, (ii) at any time that such Subsidiary Guarantor is released from all of its obligations under its guarantee of payment, (iii) upon the merger or consolidation of any Subsidiary Guarantor with and into DCL, WMH or the Parent or another Subsidiary Guarantor, as applicable, or upon the liquidation of such Subsidiary Guarantor and (iv) other customary events constituting a discharge of the Obligors’ obligations. 48 Summarized Financial Information The Company has included the accompanying summarized combined financial information of the Obligors after the elimination of intercompany transactions and balances among the Obligors and the elimination of equity in earnings from and investments in any subsidiary of the Parent that is a non-guarantor (in millions).
Management believes reviewing our combined operating results in addition to actual operating results is useful in identifying trends in, or reaching conclusions regarding, the overall operating performance of our businesses.
Management believes reviewing our pro forma combined operating results in addition to actual operating results is useful in identifying trends in, or reaching conclusions regarding, the overall operating performance of our businesses.
As of December 31, 2022, we had $3.7 billion of cash and cash equivalents on hand. We are a well-known seasoned issuer and have the ability to conduct registered offerings of securities, including debt securities, common stock and preferred stock, on short notice, subject to market conditions. Access to sufficient capital from the public market is not assured.
As of December 31, 2023, we had $3.8 billion of cash and cash equivalents on hand. We are a well-known seasoned issuer and have the ability to conduct registered offerings of securities, including debt securities, common stock and preferred stock, on short notice, subject to market conditions. Access to sufficient capital from the public market is not assured.
The content amortization expense related to the inter-segment profit is also eliminated on the separate “Eliminations” line when presenting our summary of segment results. 44 LIQUIDITY AND CAPITAL RESOURCES Liquidity Sources of Cash Historically, we have generated a significant amount of cash from operations. During 2022, we funded our working capital needs primarily through cash flows from operations.
The content amortization expense related to the inter-segment profit is also eliminated on the separate “Eliminations” line when presenting our summary of segment results. 42 LIQUIDITY AND CAPITAL RESOURCES Liquidity Sources of Cash Historically, we have generated a significant amount of cash from operations. During 2023, we funded our working capital needs primarily through cash flows from operations.
Judgment is required to determine the useful lives and amortization patterns of our content assets that are predominately monetized as a group.
Judgment is required to determine the useful lives and amortization patterns of our content assets that are predominantly monetized as a group.
(See Note 19 to the accompanying consolidated financial statements.) Distributions to noncontrolling interests and redeemable noncontrolling interests totaled $300 million and $251 million in 2022 and 2021, respectively. • Common Stock Repurchases Historically, we have funded our stock repurchases through a combination of cash on hand, cash generated by operations and the issuance of debt.
(See Note 19 to the accompanying consolidated financial statements.) Distributions to noncontrolling interests and redeemable noncontrolling interests totaled $301 million and $300 million in 2023 and 2022, respectively. • Common Stock Repurchases Historically, we have funded our stock repurchases through a combination of cash on hand, cash generated by operations and the issuance of debt.
Content Rights We capitalize the costs to produce or acquire feature films and television programs, and we amortize costs and test for impairment based on whether the content is predominately monetized individually, or as a group. 52 For films and television programs predominantly monetized individually, the amount of capitalized film and television production costs amortized and the amount of participations and residuals to be recognized as expense in a particular period are determined using the individual film forecast method.
Content Rights We capitalize the costs to produce or acquire feature films and television programs, and we amortize costs and test for impairment based on whether the content is predominantly monetized individually, or as a group. 50 For films and television programs predominantly monetized individually, the amount of capitalized film and television production costs (net of incentives) amortized and the amount of participations and residuals to be recognized as expense in a particular period are determined using the individual film forecast method.
Critical assumptions include: (i) the grouping of content with similar characteristics, (ii) the application of a quantitative revenue forecast model or historical viewership model based on the adequacy of historical data, (iii) determining the appropriate historical periods to utilize and the relative weighting of those historical periods in the forecast model, and (iv) incorporating secondary revenue streams.
Critical assumptions include: (i) the grouping of content with similar characteristics, (ii) the application of a quantitative revenue forecast model or historical viewership model based on the adequacy of historical data, and (iii) determining the appropriate historical periods to utilize and the relative weighting of those historical periods in the forecast model.
The ex-FX change is calculated as the difference between the current year amounts translated at a baseline rate, which is a spot rate for each of our currencies determined early in the fiscal year as part of our forecasting process (the “2022 Baseline Rate”), and the prior year amounts translated at the same 2022 Baseline Rate.
The ex-FX change is calculated as the difference between the current year amounts translated at a baseline rate, which is a spot rate for each of our currencies determined early in the fiscal year as part of our forecasting process (the “2023 Baseline Rate”), and the prior year amounts translated at the same 2023 Baseline Rate.
Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies. 35 Consolidated Results of Operations – 2022 vs. 2021 Our consolidated results of operations for 2022 and 2021 were as follows (in millions).
Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies. 34 Consolidated Results of Operations – 2023 vs. 2022 Our consolidated results of operations for 2023 and 2022 were as follows (in millions).
(See Note 11 and Note 13 to the accompanying consolidated financial statements.) Loss from Equity Investees, net Actual losses from our equity method investees were $160 million and $18 million in 2022 and 2021, respectively. The changes are attributable to the Company's share of earnings and losses from its equity investees.
(See Note 11 and Note 13 to the accompanying consolidated financial statements.) Loss from Equity Investees, net Actual losses from our equity method investees were $82 million and $160 million in 2023 and 2022, respectively. The changes are attributable to the Company’s share of earnings and losses from its equity investees.
(See Note 3 to the accompanying consolidated financial statements.) There were no common stock repurchases during 2022 or 2021. 46 • Income Taxes and Interest We expect to continue to make payments for income taxes and interest on our outstanding senior notes.
(See Note 3 to the accompanying consolidated financial statements.) There were no common stock repurchases during 2023 or 2022. 44 • Income Taxes and Interest We expect to continue to make payments for income taxes and interest on our outstanding senior notes.
As of December 31, 2022, we classified our operations in three reportable segments: • Studios, consisting primarily of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/DTC services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming; • Networks, consisting principally of our domestic and international television networks; and • DTC, consisting primarily of our premium pay-TV and streaming services.
As of December 31, 2023, we classified our operations in three reportable segments: • Studios - Our Studios segment primarily consists of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to our networks/DTC services as well as third parties, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming. • Networks - Our Networks segment primarily consists of our domestic and international television networks. • DTC - Our DTC segment primarily consists of our premium pay-TV and streaming services.
Additional information regarding contractual commitments to acquire content is set forth in “Material Cash Requirements from Known Contractual and Other Obligations” in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” • Debt Term Loan During the year ended December 31, 2022, we repaid $6.0 billion of aggregate principal amount outstanding of our term loans prior to the due dates of October 2023 and April 2025.
Additional information regarding contractual commitments to acquire content is set forth in “Material Cash Requirements from Known Contractual and Other Obligations” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” • Debt Term Loan During the year ended December 31, 2023, we repaid $4.0 billion of aggregate principal amount outstanding of our term loan prior to the due date of April 2025.
Unrecognized Tax Benefits We are unable to reasonably predict the ultimate amount or timing of settlement of our unrecognized tax benefits because, until formal resolutions are reached, reasonable estimates of the amount and timing of cash settlements with the respective taxing authorities are not practicable. Our unrecognized tax benefits totaled $1,929 million as of December 31, 2022.
Unrecognized Tax Benefits We are unable to reasonably predict the ultimate amount or timing of settlement of our unrecognized tax benefits because, until formal resolutions are reached, reasonable estimates of the amount and timing of cash settlements with the respective taxing authorities are not practicable. Our unrecognized tax benefits totaled $2,147 million as of December 31, 2023.
At December 31, 2022, the reserve for uncertain tax positions was $1,929 million, and it is reasonably possible that the total amount of unrecognized tax benefits related to certain of our uncertain tax positions could decrease by as much as $316 million within the next twelve months as a result of ongoing audits, foreign judicial proceedings, lapses of statutes of limitations or regulatory developments.
At December 31, 2023, the reserve for uncertain tax positions was $2,147 million, and it is reasonably possible that the total amount of unrecognized tax benefits related to certain of our uncertain tax positions could decrease by as much as $84 million within the next twelve months as a result of ongoing audits, foreign judicial proceedings, lapses of statutes of limitations or regulatory developments.
As customers pay their balances, the Company’s available capacity under this revolving agreement increases and typically the Company transfers additional receivables into the program. In some cases, the Company may have collections that have not yet been remitted to the bank, resulting in a liability.
As customers pay their balances, our available capacity under this revolving agreement increases and typically we transfer additional receivables into the program. In some cases, we may have collections that have not yet been remitted to the bank, resulting in a liability.
Our senior notes outstanding as of December 31, 2022 had interest rates that ranged from 1.900% to 9.150% and will mature between 2023 and 2062. We expect that our cash balance, cash generated from operations and availability under the Credit Agreement will be sufficient to fund our cash needs for both the short-term and the long-term.
Our senior notes outstanding as of December 31, 2023 had interest rates that ranged from 1.90% to 8.30% and will mature between 2024 and 2062. We expect that our cash balance, cash generated from operations, and availability under the Credit Agreement will be sufficient to fund our cash needs for both the short-term and the long-term.
Discovery Receivables Funding, LLC, to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. The Company services the sold receivables for the financial institution for a fee and pays fees to the financial institution in connection with this revolving agreement.
Discovery Receivables Funding, LLC, to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. We service the sold receivables for the financial institution for a fee and pay fees to the financial institution in connection with this revolving agreement.
Other Contingent Commitments Other contingent commitments primarily include contingent payments for post-production term advance obligations on certain co-financing arrangements, as well as operating lease commitment guarantees, letters of credit, bank guarantees, and surety bonds, which generally support performance and payments for a wide range of global contingent and firm obligations, including insurance, litigation appeals, real estate leases, and other operational needs. 49 The Company's other contingent commitments at December 31, 2022 were $283 million, with $279 million estimated to be due in 2026.
Other Contingent Commitments Other contingent commitments primarily include contingent payments for post-production term advance obligations on a certain co-financing arrangement, as well as operating lease commitment guarantees, letters of credit, bank guarantees, and surety bonds, which generally support performance and payments for a wide range of global contingent and firm obligations, including insurance, litigation appeals, real estate leases, and other operational needs. 47 The Company’s other contingent commitments at December 31, 2023 were $395 million, with $367 million estimated to be due in 2024.
Under the commercial paper program, the Company may issue up to $1.5 billion, including up to $500 million of euro-denominated borrowings. Borrowing capacity under the Credit Facility is reduced by any outstanding borrowings under the commercial paper program.
Additionally, our commercial paper program is supported by the Credit Facility. Under the commercial paper program, we may issue up to $1.5 billion, including up to $500 million of euro-denominated borrowings. Borrowing capacity under the Credit Facility is effectively reduced by any outstanding borrowings under the commercial paper program.
As of December 31, 2022, the current portion of the liability for cash-settled share-based compensation awards was $4 million.
As of December 31, 2023, the current portion of the liability for cash-settled share-based compensation awards was $10 million.
Selling, General and Administrative Selling, general and administrative expenses decreased 5% in 2022, primarily attributable to lower personnel and marketing expenses. Adjusted EBITDA Adjusted EBITDA decreased 7% in 2022. 41 DTC Segment The following table presents, for our DTC segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).
Selling, General and Administrative Selling, general and administrative expenses decreased 4% in 2023, primarily attributable to lower marketing and personnel expenses. Adjusted EBITDA Adjusted EBITDA decreased 9% in 2023. 40 DTC Segment The following table presents, for our DTC segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).
Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. 2022 Impairment Analysis As of October 1, 2022, we performed a quantitative goodwill impairment assessment for all reporting units consistent with our accounting policy.
Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. 2023 Impairment Analysis As of October 1, 2023, the Company performed a quantitative goodwill impairment assessment for all reporting units.
The outstanding portfolio of receivables derecognized from our consolidated balance sheets was $5,366 million as of December 31, 2022. • Accounts Receivable Factoring The Company has a factoring agreement to sell certain of its non-U.S. trade accounts receivable on a non-recourse basis to a third-party financial institution.
The outstanding portfolio of receivables derecognized from our consolidated balance sheets was $5,200 million as of December 31, 2023. • Accounts Receivable Factoring We have a factoring agreement to sell certain of our non-U.S. trade accounts receivable on a limited recourse basis to a third-party financial institution.
Uses of Cash Our primary uses of cash include the creation and acquisition of new content, business acquisitions, income taxes, personnel costs, costs to develop and market HBO Max and discovery+, principal and interest payments on our outstanding senior notes, funding for various equity method and other investments, and repurchases of our capital stock. • Content Acquisition We plan to continue to invest significantly in the creation and acquisition of new content, as well as certain sports rights.
(See Note 13 to the accompanying consolidated financial statements.) Uses of Cash Our primary uses of cash include the creation and acquisition of new content, business acquisitions, income taxes, personnel costs, costs to develop and market our streaming service Max, principal and interest payments on our outstanding senior notes and term loan, funding for various equity method and other investments, and repurchases of our capital stock. 43 • Content Acquisition We plan to continue to invest significantly in the creation and acquisition of new content, as well as certain sports rights.
Pictures Group, Warner Bros. Television Group, DC, HBO, HBO Max, Discovery Channel, discovery+, CNN, HGTV, Food Network, TNT, TBS, TLC, OWN, Warner Bros. Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings.
Some of our iconic brands and franchises include Warner Bros. Motion Picture Group, Warner Bros. Television Group, DC, HBO, HBO Max, Max, discovery+, CNN, Discovery Channel, HGTV, Food Network, TNT Sports, TBS, TLC, OWN, Warner Bros. Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings.
Our segment presentation was aligned with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments. Prior periods have been recast to conform to the current period presentation.
Our segment presentation was aligned with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments.
Principal payments on finance lease obligations reflect amounts due under our finance lease agreements. Interest payments on our outstanding finance lease obligations are based on the stated or implied rate in our finance lease agreements. (See Note 12 to the accompanying consolidated financial statements.) Operating Lease Obligations We obtain office space and equipment under multi-year lease arrangements.
Interest payments on our outstanding finance lease obligations are based on the stated or implied rate in our finance lease agreements. (See Note 12 to the accompanying consolidated financial statements.) Operating Lease Obligations We obtain office space and equipment under multi-year lease arrangements. Most operating leases are not cancellable prior to their expiration.
The increase in cash provided by operating activities was primarily attributable to an increase in net income, excluding non-cash items, and working capital initiatives, partially offset by other negative fluctuations in working capital activity. Investing Activities Cash provided by (used in) investing activities was $3,524 million and $(56) million in 2022 and 2021, respectively.
The increase in cash provided by operating activities was primarily attributable to an increase in net income, excluding non-cash items, partially offset by a negative fluctuation in working capital activity. Investing Activities Cash (used in) provided by investing activities was $(1,259) million and $3,524 million in 2023 and 2022, respectively.
As of December 31, 2022 and 2021, the Company had no outstanding borrowings under the Credit Facility or the commercial paper program. • Revolving Receivables Program The Company has a revolving agreement to transfer up to $5.7 billion of certain receivables through its bankruptcy-remote subsidiary, Warner Bros.
As of December 31, 2023 and 2022, the Company had no outstanding borrowings under the Credit Facility or the commercial paper program. • Revolving Receivables Program We have a revolving agreement to transfer up to $5,500 million of certain receivables through our bankruptcy-remote subsidiary, Warner Bros.
(See Note 4 to the accompanying consolidated financial statements.) Interest Expense, net Actual interest expense, net increased $1,144 million in 2022, primarily attributable to debt assumed as a result of the Merger.
(See Note 18 to the accompanying consolidated financial statements.) 36 Interest Expense, net Actual interest expense, net increased $444 million in 2023, primarily attributable to debt assumed as a result of the Merger.
Adjusted EBITDA Adjusted EBITDA increased 8% in 2022. 40 Networks Segment The table below presents, for our Networks segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).
Adjusted EBITDA Adjusted EBITDA decreased 21% in 2023. 39 Networks Segment The table below presents, for our Networks segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).
(See Note 3 to the accompanying consolidated financial statements.) 43 Inter-segment Eliminations The following table presents our inter-segment eliminations by revenue and expense, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions): Year Ended December 31, 2022 2021 % Change Actual Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Combined (Actual) Pro Forma Combined (ex-FX) Inter-segment revenue eliminations $ (2,566) $ (1,065) $ (3,631) $ — $ (3,219) $ (3,219) NM (13) % (13) % Inter-segment expense eliminations (2,583) (1,038) (3,621) — (3,229) (3,229) NM (12) % (12) % Adjusted EBITDA 17 (27) (10) — 10 10 NM NM NM Restructuring (42) — (42) — — — Amortization of fair value step-up for content 583 — 583 — — — Operating (loss) income $ (524) $ (27) $ (551) $ — $ 10 $ 10 Inter-segment revenue and expense eliminations primarily represent inter-segment content transactions and marketing and promotion activity between reportable segments.
Inter-segment Eliminations The following table presents our inter-segment eliminations by revenue and expense, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions): Year Ended December 31, 2023 2022 % Change Actual Actual Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Combined (Actual) Pro Forma Combined (ex-FX) Inter-segment revenue eliminations $ (2,269) $ (2,566) $ (1,065) $ (3,631) 12 % 38 % 38 % Inter-segment expense eliminations (2,362) (2,583) (1,038) (3,621) 9 % 35 % 35 % Adjusted EBITDA 93 17 (27) (10) NM NM NM Restructuring and other charges (2) (42) — (42) Amortization of fair value step-up for content 451 583 — 583 Operating loss $ (356) $ (524) $ (27) $ (551) Inter-segment revenue and expense eliminations primarily represent inter-segment content transactions and marketing and promotion activity between reportable segments.
This section provides additional information regarding our businesses, current developments, results of operations, cash flows, financial condition, contractual commitments, critical accounting policies, and estimates that require significant judgment and thus have the most significant potential impact on our consolidated financial statements. This discussion and analysis is intended to better allow investors to view the company from management's perspective.
This section provides additional information regarding our businesses, current developments, results of operations, cash flows, financial condition, contractual commitments, critical accounting policies, and estimates that require significant judgment and thus have the most significant potential impact on our consolidated financial statements.
Advertising revenue is dependent upon a number of factors, including the number of subscribers to our channels, viewership demographics, the popularity of our content, our ability to sell commercial time over a group of channels, the stage of development of television markets, and the popularity of FTA television.
Advertising contracts generally have a term of one year or less. Advertising revenue is dependent upon a number of factors, including the number of subscribers to our channels, viewership demographics, the popularity of our content, our ability to sell commercial time over a group of channels, the stage of development of television markets, and the popularity of free-to-air television.
Year Ended December 31, 2022 2021 Cash, cash equivalents, and restricted cash, beginning of period $ 3,905 $ 2,122 Cash provided by operating activities 4,304 2,798 Cash provided by (used in) investing activities 3,524 (56) Cash used in financing activities (7,742) (853) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (61) (106) Net change in cash, cash equivalents, and restricted cash 25 1,783 Cash, cash equivalents, and restricted cash, end of period $ 3,930 $ 3,905 Operating Activities Cash provided by operating activities was $4,304 million and $2,798 million in 2022 and 2021, respectively.
Year Ended December 31, 2023 2022 Cash, cash equivalents, and restricted cash, beginning of period $ 3,930 $ 3,905 Cash provided by operating activities 7,477 4,304 Cash (used in) provided by investing activities (1,259) 3,524 Cash used in financing activities (5,837) (7,742) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 8 (61) Net change in cash, cash equivalents, and restricted cash 389 25 Cash, cash equivalents, and restricted cash, end of period $ 4,319 $ 3,930 Operating Activities Cash provided by operating activities was $7,477 million and $4,304 million in 2023 and 2022, respectively.
Payments for the SERP have been estimated over a ten-year period. While benefit payments under these plans are expected to continue beyond 2031, we believe it is not practicable to estimate payments beyond this period. We are unable to reasonably predict the ultimate amount of any payments due to cash-settled share-based compensation awards.
While benefit payments under the Pension Plans are expected to continue beyond 2033, we believe it is not practicable to estimate payments beyond this period. We are unable to reasonably predict the ultimate amount of any payments due to cash-settled share-based compensation awards.
Of the total expected pre-tax restructuring charges, we expect total cash expenditures to be $1.0 - $ 1.5 billion. We incurred $3.8 billion of pre-tax restructuring charges during the year ended December 31, 2022. While our restructuring efforts are ongoing, the restructuring program is expected to be substantially completed by the end of 2024.
We incurred $0.5 billion of pre-tax restructuring charges during the year ended December 31, 2023 related to this plan. While our restructuring efforts are ongoing, the restructuring program is expected to be substantially completed by the end of 2024.
Due to declining levels of global GDP growth and execution risk associated with anticipated growth in the Company’s DTC reporting unit, which is the DTC segment, the Company will continue to monitor its reporting units for changes that could impact recoverability.
Due to declining levels of global GDP growth, soft advertising markets in the U.S. associated with the Company’s Networks reporting unit, content licensing trends in our Studios reporting unit, and execution risk associated with anticipated growth in the Company’s DTC reporting unit, the Company will continue to monitor its reporting units for changes that could impact recoverability.
Total trade accounts receivable sold under the Company’s factoring arrangements was $477 million as of December 31, 2022. • Derivatives We received investing proceeds of $752 million during the year ended December 31, 2022 from the unwind and settlement of derivative instruments.
For the year ended December 31, 2023, total trade accounts receivable sold under our factoring arrangement was $383 million. • Derivatives We received investing proceeds of $121 million during the year ended December 31, 2023 from the unwind and settlement of derivative instruments.
Year Ended December 31, 2022 2021 % Change Studios $ 1,772 $ 14 NM Networks 8,725 5,533 58 % DTC (1,596) (1,345) (19) % Corporate (1,200) (385) NM Inter-segment eliminations 17 — NM 39 Studios Segment The following table presents, for our Studios segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating (loss) income (in millions).
Year Ended December 31, 2023 2022 % Change Studios $ 2,183 $ 1,772 23 % Networks 9,063 8,725 4 % DTC 103 (1,596) NM Corporate (1,242) (1,200) (4) % Inter-segment eliminations 93 17 NM 38 Studios Segment The following table presents, for our Studios segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (loss) (in millions).
NM - Not meaningful Unless otherwise indicated, the discussion through operating (loss) income below is on a pro-forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenues, and selling, general and administrative expenses are substantially attributable to the Merger.
Discovery, Inc. $ (3,126) $ (7,371) $ 2,012 $ (5,359) NM - Not meaningful Unless otherwise indicated, the discussion below through operating loss reflects the results for the year ended December 31, 2022 on a pro-forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenues, and selling, general and administrative expenses are substantially attributable to the Merger.
(the “Parent”), Scripps Networks, DCL, and WarnerMedia Holdings, Inc. (collectively, the “Obligors”). All guarantees of DCL and WarnerMedia Holdings, Inc.'s senior notes (the “Note Guarantees”) are full and unconditional, joint and several and unsecured, and cover all payment obligations arising under the senior notes.
All guarantees of DCL and WMH’s senior notes (the “Note Guarantees”) are full and unconditional, joint and several and unsecured, and cover all payment obligations arising under the senior notes.
Year Ended December 31, 2022 2021 Pre-tax income at U.S. federal statutory income tax rate $ (1,881) 21 % $ 301 21 % State and local income taxes, net of federal tax benefit (218) 3 % 108 7 % Effect of foreign operations 246 (3) % 25 2 % Preferred stock conversion premium charge 166 (2) % — — % UK Finance Act legislative change — — % (155) (11) % Noncontrolling interest adjustment (17) — % (40) (3) % Other, net 41 — % (3) — % Income tax (benefit) expense $ (1,663) 19 % $ 236 16 % Income tax (benefit) expense was $(1,663) million and $236 million, and the Company’s effective tax rate was 19% and 16% for 2022 and 2021, respectively.
Year Ended December 31, 2023 2022 Pre-tax income at U.S. federal statutory income tax rate $ (811) 21 % $ (1,881) 21 % State and local income taxes, net of federal tax benefit (388) 10 % (218) 3 % Effect of foreign operations 342 (9) % 246 (3) % Preferred stock conversion premium charge — — % 166 (2) % Noncontrolling interest adjustment (9) — % (17) — % Other, net 82 (2) % 41 — % Income tax benefit $ (784) 20 % $ (1,663) 19 % Income tax benefit was $(784) million and $(1,663) million, and the Company’s effective tax rate was 20% and 19% for 2023 and 2022, respectively.
The Company excludes employee share-based compensation, restructuring, certain impairment charges, gains and losses on business and asset dispositions, and transaction and integration costs from the calculation of Adjusted EBITDA due to their impact on comparability between periods.
The Company excludes employee share-based compensation, restructuring, certain impairment charges, gains and losses on business and asset dispositions, and transaction and integration costs from the calculation of Adjusted EBITDA due to their impact on comparability between periods. Integration costs include transformative system implementations and integrations, such as Enterprise Resource Planning systems, and may take several years to complete.
Year Ended December 31, 2022 2021 Foreign currency (losses) gains, net $ (150) $ 93 Gains (losses) on derivative instruments, net 475 (33) Gain on sale of investment with readily determinable fair value — 15 Change in the value of investments with readily determinable fair value (105) (6) Change in fair value of equity investments without readily determinable fair value (142) (13) Gain on sale of equity method investments 195 4 Loss on extinguishment of debt — (10) Other income, net 74 22 Total other income, net $ 347 $ 72 Income Taxes The following table reconciles our effective income tax rate to the U.S. federal statutory income tax rate.
Year Ended December 31, 2023 2022 Foreign currency losses, net $ (173) $ (150) Gains on derivative instruments, net 28 475 Change in the value of investments with readily determinable fair value 37 (105) Change in the value of equity investments without readily determinable fair value (73) (142) Gain on sale of equity method investments — 195 Gain on extinguishment of debt 17 — Interest income 179 67 Other (expense) income, net (27) 7 Total other (expense) income, net $ (12) $ 347 Income Taxes The following table reconciles our effective income tax rate to the U.S. federal statutory income tax rate.
During 2022 and 2021, we made cash payments of $1,027 million and $643 million for income taxes and $1,539 million and $664 million for interest on our outstanding debt, respectively. Cash required for interest payments has increased significantly as a result of the Merger. Cash Flows The following table presents changes in cash and cash equivalents (in millions).
During 2023 and 2022, we made cash payments of $1,440 million and $1,027 million for income taxes and $2,237 million and $1,539 million for interest on our outstanding debt, respectively. Cash Flows The following table presents changes in cash and cash equivalents (in millions).
Some of these contracts do not require the purchase of fixed or minimum quantities and generally may be terminated with a 30-day to 60-day advance notice without penalty, and are not included in the table above past the 30-day to 60-day advance notice period. 48 Finance Lease Obligations We acquire satellite transponders and other equipment through multi-year finance lease arrangements.
Some of these contracts do not require the purchase of fixed or minimum quantities and generally may be terminated with a 30-day to 60-day advance notice without penalty, and are not included in the table above past the 30-day to 60-day advance notice period. Other purchase obligations also include future funding commitments to equity method investees.
(See Note 4 to the accompanying consolidated financial statements.) • Redeemable Noncontrolling Interest and Noncontrolling Interest Due to business combinations, we also had redeemable equity balances of $318 million at December 31, 2022 which may require the use of cash in the event holders of noncontrolling interests put their interests to us.
In December 2023, we acquired the remaining 65% of BluTV for $50 million. • Redeemable Noncontrolling Interest and Noncontrolling Interest Due to business combinations, we also had redeemable equity balances of $165 million at December 31, 2023, which may require the use of cash in the event holders of noncontrolling interests put their interests to us.
Summarized Guarantor Financial Information Basis of Presentation As of December 31, 2022 and December 31, 2021, all of the Company’s outstanding $13.8 billion registered senior notes have been issued by DCL, a wholly owned subsidiary of the Company, and guaranteed by the Company, Scripps Networks, and WarnerMedia Holdings, Inc.
Summarized Guarantor Financial Information Basis of Presentation As of December 31, 2023, the Company has outstanding senior notes issued by DCL, a wholly owned subsidiary of the Company, and guaranteed by the Company, Scripps Networks Interactive, Inc.
The costs of producing a content asset and bringing that asset to market consist of production costs, participation costs, and exploitation costs.
Content expense includes television/digital series, specials, films, and sporting events. The costs of producing a content asset and bringing that asset to market consist of production costs, participation costs, and exploitation costs.
The increase in cash provided by investing activities was primarily attributable to proceeds received from cash acquired during the Merger and the post-closing working capital settlement process and cash received from the unwind and settlement of derivative instruments, partially offset by increased purchases of property and equipment and a reduction in cash received from the sales and maturities of investments during the year ended December 31, 2022.
The decrease in cash provided by investing activities was primarily attributable to cash acquired from the Merger in the prior year, less proceeds received from the unwind and settlement of derivative instruments and sale of investments, and increased purchases of property and equipment during the year ended December 31, 2023.
December 31, 2022 Total Capacity Outstanding Indebtedness Unused Capacity Cash and cash equivalents $ 3,731 $ — $ 3,731 Revolving credit facility and commercial paper program 6,000 — 6,000 Term loans 4,000 4,000 — Senior notes (a) 45,276 45,276 — Total $ 59,007 $ 49,276 $ 9,731 (a) Interest on senior notes is paid annually or semi-annually.
December 31, 2023 Total Capacity Outstanding Indebtedness Unused Capacity Cash and cash equivalents $ 3,780 $ — $ 3,780 Revolving credit facility and commercial paper program 6,000 — 6,000 Senior notes (a) 43,955 43,955 — Total $ 53,735 $ 43,955 $ 9,780 (a) Interest on senior notes is paid annually, semi-annually, or quarterly.
(See Note 11 to the accompanying consolidated financial statements.) Purchase Obligations Content purchase obligations include commitments and liabilities associated with third-party producers and sports associations for content that airs on our television networks and DTC services.
As of December 31, 2023, we had no outstanding borrowings under the Credit Facility or the commercial paper program. (See Note 11 to the accompanying consolidated financial statements.) Purchase Obligations Content purchase obligations include commitments associated with third-party producers and sports associations for content that airs on our television networks and DTC services.
Corporate The following table presents our Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions): Year Ended December 31, 2022 2021 % Change Actual Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Combined (Actual) Pro Forma Combined (ex-FX) Adjusted EBITDA $ (1,200) $ (353) $ (1,553) $ (385) $ (966) $ (1,351) NM (15) % (17) % Employee share-based compensation 410 (11) 399 167 177 344 Depreciation and amortization 272 (40) 232 95 175 270 Restructuring 195 (44) 151 — 44 44 Transaction and integration costs 1,182 (564) 618 90 1,138 1,228 Impairment and loss on disposition and disposal groups 50 — 50 — 224 224 Inter-segment eliminations (31) — (31) — — — Operating loss $ (3,278) $ 306 $ (2,972) $ (737) $ (2,724) $ (3,461) Corporate operations primarily consist of executive management and administrative support services, which are recorded in selling, general and administrative expense, as well as substantially all of our share-based compensation and third-party transaction and integration costs.
Adjusted EBITDA Adjusted EBITDA increased $2,150 million in 2023. 41 Corporate The following table presents our Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions): Year Ended December 31, 2023 2022 % Change Actual Actual Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Combined (Actual) Pro Forma Combined (ex-FX) Adjusted EBITDA $ (1,242) $ (1,200) $ (353) $ (1,553) (4) % 20 % 20 % Employee share-based compensation 488 410 (11) 399 Depreciation and amortization 294 272 (40) 232 Restructuring and other charges 95 195 (44) 151 Transaction and integration costs 148 1,182 (564) 618 Impairments and loss on dispositions 60 50 — 50 Facility consolidation costs 32 — — — Amortization of fair value step-up for content (6) — — — Inter-segment eliminations (193) (31) — (31) Operating loss $ (2,160) $ (3,278) $ 306 $ (2,972) Corporate operations primarily consist of executive management and administrative support services, which are recorded in selling, general and administrative expense, as well as substantially all of our share-based compensation and third-party transaction and integration costs.
Adjusted EBITDA decreased 17% for 2022, primarily attributable to increased securitization costs from higher interest rates, partially offset by lower personnel costs. As reported transaction and integration costs for 2022 included the impact of the issuance of additional shares of WBD common stock to Advance/Newhouse Programming Partnership of $789 million upon the closing of the Merger.
As reported transaction and integration costs for 2022 included the impact of the issuance of additional shares of WBD common stock to Advance/Newhouse Programming Partnership of $789 million upon the closing of the Merger.
We do not expect these actions to have a material effect on our consolidated financial statements. 33 For further discussion of financial information for our segments and the geographical areas in which we do business, our content development activities, and revenues, see our business overview set forth in Item 1, “Business” and Note 23 to the consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
For further discussion of financial information for our segments and the geographical areas in which we do business, our content development activities, and revenues, see our business overview set forth in Item 1, “Business” and Note 23 to the consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. 33 RESULTS OF OPERATIONS The discussion below compares our actual results for the year ended December 31, 2023 to our pro forma combined results for the year ended December 31, 2022, as if the Merger occurred on January 1, 2021.
We have contracts with distributors representing most cable and satellite service providers around the world, including the largest operators in the U.S. and major international distributors.
The largest component of distribution revenue is comprised of linear distribution rights to our networks from cable, DTH satellite, and telecommunication service providers. We have contracts with distributors representing most cable and satellite service providers around the world, including the largest operators in the U.S. and major international distributors.
In addition, we expect to continue to incur significant costs to develop and market our combined streaming service in the future. • Investments and Business Combinations Our uses of cash have included investments in equity method investments and equity investments without readily determinable fair value.
In addition, we expect to continue to incur significant costs to develop and market Max. • Investments and Business Combinations Our uses of cash have included investments in equity method investments and equity investments without readily determinable fair value. (See Note 10 to the accompanying consolidated financial statements.) We also provide funding to our investees from time to time.
Financing Activities Cash used in financing activities was $7,742 million and $853 million in 2022 and 2021, respectively. The increase in cash used in financing activities was primarily attributable to principal repayments made on our term loans during the year ended December 31, 2022. Capital Resources As of December 31, 2022, capital resources were comprised of the following (in millions).
Financing Activities Cash used in financing activities was $5,837 million and $7,742 million in 2023 and 2022, respectively. The decrease in cash used in financing activities was primarily attributable to less net debt activity during the year ended December 31, 2023. Capital Resources As of December 31, 2023, capital resources were comprised of the following (in millions).
(See Note 11 to the accompanying consolidated financial statements.) DCL primarily includes the Discovery Channel and TLC networks in the U.S. DCL is a wholly owned subsidiary of the Company. Scripps Networks is also wholly owned by the Company. The tables below present the summarized financial information as combined for Warner Bros. Discovery, Inc.
DCL is a wholly owned subsidiary of the Company. Scripps Networks is also wholly owned by the Company. The tables below present the summarized financial information as combined for Warner Bros. Discovery, Inc. (the “Parent”), Scripps Networks, DCL, and WMH (collectively, the “Obligors”).
Year Ended December 31, 2022 2021 % Change Actual Pro Forma Adjustments Pro Forma Combined Actual (a) Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Combined (Actual) Combined (ex-FX) Revenues: Advertising $ 8,524 $ 1,412 $ 9,936 $ 6,194 $ 4,395 $ 10,589 38 % (6) % (4) % Distribution 16,142 4,339 20,481 5,202 15,579 20,781 NM (1) % — % Content 8,360 3,297 11,657 737 12,455 13,192 NM (12) % (9) % Other 791 230 1,021 58 706 764 NM 34 % 36 % Total revenues 33,817 9,278 43,095 12,191 33,135 45,326 NM (5) % (3) % Costs of revenues, excluding depreciation and amortization 20,442 5,125 25,567 4,620 21,353 25,973 NM (2) % 1 % Selling, general and administrative 9,678 1,745 11,423 4,016 8,987 13,003 NM (12) % (10) % Depreciation and amortization 7,193 34 7,227 1,582 6,774 8,356 NM (14) % (13) % Restructuring 3,757 (90) 3,667 32 90 122 NM NM NM Impairment and loss (gain) on disposition and disposal groups 117 — 117 (71) 223 152 NM (23) % (23) % Total costs and expenses 41,187 6,814 48,001 10,179 37,427 47,606 NM 1 % 3 % Operating (loss) income (7,370) 2,464 (4,906) 2,012 (4,292) (2,280) NM NM NM Interest expense, net (1,777) (515) (2,292) (633) (2,026) (2,659) Loss from equity investees, net (160) (20) (180) (18) 14 (4) Other income, net 347 139 486 72 100 172 (Loss) income before income taxes (8,960) 2,068 (6,892) 1,433 (6,204) (4,771) Income tax benefit (expense) 1,663 (56) 1,607 (236) 1,448 1,212 Net (loss) income (7,297) 2,012 (5,285) 1,197 (4,756) (3,559) Net income attributable to noncontrolling interests (68) — (68) (138) — (138) Net income attributable to redeemable noncontrolling interests (6) — (6) (53) — (53) Net (loss) income available to Warner Bros.
Year Ended December 31, 2023 2022 % Change Actual Actual Pro Forma Adjustments Pro Forma Combined Actual Pro Forma Combined (Actual) Pro Forma Combined (ex-FX) Revenues: Distribution $ 20,237 $ 16,142 $ 4,339 $ 20,481 25 % (1) % — % Advertising 8,700 8,524 1,412 9,936 2 % (12) % (13) % Content 11,203 8,360 3,297 11,657 34 % (4) % (4) % Other 1,181 791 230 1,021 49 % 16 % 14 % Total revenues 41,321 33,817 9,278 43,095 22 % (4) % (4) % Costs of revenues, excluding depreciation and amortization 24,526 20,442 5,125 25,567 20 % (4) % (4) % Selling, general and administrative 9,696 9,678 1,745 11,423 — % (15) % (15) % Depreciation and amortization 7,985 7,193 34 7,227 11 % 10 % 10 % Restructuring and other charges 585 3,757 (90) 3,667 (84) % (84) % (84) % Impairment and loss on dispositions 77 117 — 117 (34) % (34) % (37) % Total costs and expenses 42,869 41,187 6,814 48,001 4 % (11) % (11) % Operating loss (1,548) (7,370) 2,464 (4,906) 79 % 68 % 70 % Interest expense, net (2,221) (1,777) (515) (2,292) Loss from equity investees, net (82) (160) (20) (180) Other (expense) income, net (12) 347 139 486 Loss before income taxes (3,863) (8,960) 2,068 (6,892) Income tax benefit 784 1,663 (56) 1,607 Net loss (3,079) (7,297) 2,012 (5,285) Net income attributable to noncontrolling interests (38) (68) — (68) Net income attributable to redeemable noncontrolling interests (9) (6) — (6) Net loss available to Warner Bros.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDuring the year ended December 31, 2022, we had access to a $6.0 billion multicurrency revolving credit facility. We had no outstanding borrowings as of December 31, 2022. We also have access to a commercial paper program, which had no outstanding borrowings as of December 31, 2022.
Biggest changeDuring the year ended December 31, 2023, we had access to a $6.0 billion multicurrency revolving credit facility. We had no outstanding borrowings as of December 31, 2023. We also have access to a commercial paper program, which had no outstanding borrowings as of December 31, 2023.
Most of our non-functional currency risks related to our revenue, operating expenses and capital expenditures were not hedged as of December 31, 2022. We generally do not hedge against the risk that we may incur non-cash losses upon the translation of the financial statements of our subsidiaries and affiliates into U.S. dollars.
Most of our non-functional currency risks related to our revenue, operating expenses and capital expenditures were not hedged as of December 31, 2023. We generally do not hedge against the risk that we may incur non-cash losses upon the translation of the financial statements of our subsidiaries and affiliates into U.S. dollars.
Liabilities carried at fair value, such as deferred compensation, may experience capital gains that result in increased liabilities and expenses as the capital gains occur. We may enter into derivative financial instruments to hedge the risk of these market value changes. (See Note 13 to the accompanying consolidated financial statements.) 56
Liabilities carried at fair value, such as deferred compensation, may experience capital gains that result in increased liabilities and expenses as the capital gains occur. We may enter into derivative financial instruments to hedge the risk of these market value changes. (See Note 13 to the accompanying consolidated financial statements.) 54
(See Note 13 to the accompanying consolidated financial statements.) 55 Market Values of Investments and Liabilities In addition to derivatives, we had investments in entities accounted for as equity method investments, equity investments, and other highly liquid instruments, such as money market funds and mutual funds, that are accounted for at fair value.
(See Note 13 to the accompanying consolidated financial statements.) 53 Market Values of Investments and Liabilities In addition to derivatives, we had investments in entities accounted for as equity method investments, equity investments, and other highly liquid instruments, such as money market funds and mutual funds, that are accounted for at fair value.
The potential change in fair value of these senior notes from a 100 basis-point increase in quoted interest rates across all maturities, often referred to as a parallel shift in the yield curve, would be a decrease in fair value of approximately $2.6 billion as of December 31, 2022.
The potential change in fair value of these senior notes from a 100 basis-point increase in quoted interest rates across all maturities, often referred to as a parallel shift in the yield curve, would be a decrease in fair value of approximately $2.9 billion as of December 31, 2023.
(See Note 13 to the accompanying consolidated financial statements.) As of December 31, 2022, the fair value of our outstanding senior notes, including accrued interest, was $38.0 billion. The fair value of our long-term debt may vary as a result of market conditions and other factors.
(See Note 13 to the accompanying consolidated financial statements.) 52 As of December 31, 2023, the fair value of our outstanding senior notes, including accrued interest, was $40.5 billion. The fair value of our long-term debt may vary as a result of market conditions and other factors.
As of December 31, 2022, we had $44.8 billion of fixed-rate senior notes, at par value. 54 Our current objectives in managing exposure to interest rate changes are to limit the impact of interest rates on earnings and cash flows.
As of December 31, 2023, we had $43.9 billion of fixed-rate senior notes, at par value. Our current objectives in managing exposure to interest rate changes are to limit the impact of interest rates on earnings and cash flows.

Other WBD 10-K year-over-year comparisons