Warner Bros. Discovery (WBD) 10-K risk factor changes: FY2021 vs FY2020

In addition to the other information contained in this [removed: report,] [added: Annual Report on Form 10-K,] you should consider the following risk factors before investing in our securities.

The ability of our businesses to compete successfully depends on a number of factors, including our ability to consistently supply high quality and popular content, access our [removed: niche viewership] [added: targeted audience] with appealing category-specific content, adapt to new [removed: technologies and] [added: technologies,] distribution platforms and [added: business models and] achieve widespread distribution.

Other factors, including the availability of alternative forms of entertainment and leisure time activities, [added: our ability to maintain or develop strong brand awareness and target key audiences,] general economic conditions, piracy, and growing competition for consumer discretionary [removed: spending] [added: spending, time and attention] may also affect the audience for our content.

Audience sizes for our media networks are critical factors affecting both the volume and pricing of advertising revenue that we [removed: receive,] [added: receive with respect to advertising-supported services,] and the extent of distribution and [added: penetration and] the license fees we receive under agreements with our [removed: distributors.][added: distributors with respect to subscription-based services.]

Consequently, reduced public acceptance of our entertainment content may decrease our audience share and [added: customer/viewer reach and] adversely affect our results of operations.

Technology and business models in our industry continue to evolve [removed: rapidly.][added: rapidly in an environment of fast-paced changes in consumer behavior as well as innovation.]

Changes to these business models include (a) [added: consumers’ increasing demand to consume video content on their own terms, including on] the [added: screen of their choice, at the time of their choice, and with enhanced functionality; (b) the] presence of streaming services, which are increasing in number and some of which have a significant and growing subscriber [removed: base,] [added: base; (c) the proliferation of high speed internet connections] and [removed: (b)] the [added: expansion of 5G networks able to support high-quality streaming video within increasingly interactive and interconnected digital environments; and (d) the] increased video consumption through subscription [removed: steaming] [added: streaming] services and time-delayed or time-shifted viewing of television programming through on-demand services and [removed: DVRs.][added: DVRs as well as the availability of video content through other distribution outlets, including digital home entertainment (such as electronic sell-through and transaction video-on-demand).]

Consumer behavior related to [added: these] changes in content [removed: distribution] [added: distribution, viewership] and technological innovation [removed: affect our economic model and viewership in ways that] are not entirely [removed: predictable.][added: predictable but remain key factors in our economic model; such changes may accordingly materially adversely affect our business, financial condition and results of operations.]

Consumers are increasingly viewing content on a time-delayed or on-demand basis from traditional distributors and from streaming services, [removed: connected] apps and websites and on a wide variety of screens, such as televisions, tablets, mobile phones and other devices.

Additionally, devices that allow users to view television programs on a time-shifted basis and technologies that enable users to fast-forward or skip programming, including commercials, such as DVRs and portable digital devices and systems that enable users to store or make portable copies of content may affect the attractiveness of our offerings to advertisers and could therefore adversely affect our [added: advertising] revenues.

[removed: There] [added: In addition, there] is increased demand for short-form, user-generated and interactive content, which have different economic models than our traditional content offerings.

Likewise, distributors are [removed: offering] [added: seeking to offer] smaller programming packages known as “skinny bundles,” which are delivered at a lower cost than traditional offerings and sometimes allow consumers to create a customized package of networks, that are gaining popularity among consumers.

In [removed: 2020,] [added: 2021,] total U.S. Networks portfolio subscribers declined [removed: 5%] [added: 8%] while subscribers to our fully distributed networks declined [removed: 3%.][added: 4%.]

In order to respond to [added: subscription declines and] changes in content distribution models in our industry, we have invested in, developed and launched DTC products including [removed: dplay, JOYN, MotorTrend and] our [removed: new] discovery+ product.

If our [removed: new subscription streaming] [added: DTC] product, discovery+, fails to attract and retain subscribers, our [removed: business] [added: business, financial condition and results of operations] may be adversely impacted.

[added: In January 2021, Discovery launched an aggregated DTC product, discovery+, in the U.S.] We have incurred and will likely continue to incur significant costs to develop and market discovery+ and there can be no assurance that consumers and advertisers will embrace our offering or that subscribers will activate or renew a subscription.

[removed: The subscription-based streaming service marketplace is crowded and competitive, and our] [added: Its] success will also be largely dependent on our ability to initially attract, and [removed: to] ultimately retain, subscribers.

Competitors to discovery+ include traditional linear programming networks, including our own linear channels, [added: competing subscription video-on-demand services,] and other [removed: subscription-based streaming services] [added: digital entertainment platforms] and [removed: DTC offerings.][added: offerings all vying for consumer time, attention and discretionary spending.]

[removed: Our] [added: The] ability to attract and retain subscribers [removed: to discovery+] will also depend in part on our ability to provide compelling content choices that are differentiated from that of our competitors and that are more attractive than other sources of entertainment that consumers could choose in their free time.

Consolidation among [removed: cable] [added: pay-TV programming] and satellite providers, both domestically and internationally, could have an adverse effect on our [removed: revenue] [added: business, financial condition] and [removed: profitability.][added: results of operations.]

[removed: In] [added: For] the [removed: U.S., approximately 95%] [added: U.S. Networks segment, 84%] of our distribution [removed: revenues come] [added: revenue comes] from the top 10 distributors.

We currently have agreements in place with the [removed: major] [added: 10 largest] cable and satellite operators [removed: in] [added: at] U.S. Networks [removed: and International Networks which] [added: that] expire at various times [added: from 2022] through [removed: 2023.][added: 2025.]

These distribution agreements generally provide for the level of carriage our networks will receive, such as channel placement and programming package inclusion (widely distributed, broader programming packages compared to lesser distributed, specialized programming packages) and for payment of a license fee to us based on the number of subscribers that receive our [removed: networks.][added: networks or other factors.]

While the number of subscribers associated with our networks impacts our ability to generate advertising revenue, [removed: these per subscriber payments] [added: subscription-based revenue] also [removed: represent] [added: represents] a significant portion of our revenue.

Our distribution agreements generally have a limited term which varies by [removed: market] [added: territory] and distributor, and there can be no assurance that these distribution agreements will be renewed in the future or that they will be renewed on terms that are favorable to us.

A reduction in the license fees that we receive [removed: per subscriber] or in the number of subscribers for which we are paid, including as a result of a loss or reduction in carriage for our [removed: networks,] [added: networks or a reduction in distributor penetration, including as a result of changes in consumer habits,] could adversely affect our distribution revenue.

[removed: From time to time, hackers target Discovery and our service providers, and our service providers’] [added: These] systems may [added: continue to] be breached [added: in the future] due to employee error, malicious code, hacking and phishing attacks, or otherwise.

[removed: Any such breach] [added: If our information security systems] or [removed: unauthorized access] [added: data are compromised in a material way, such compromises] could result in a [removed: loss of our proprietary information, which may include user data, a] disruption of [removed: our] 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.

[removed: In addition, we] [added: We also] face regulatory risk associated with the acquisition, storage, disclosure, use and protection of personal data, including under the E.U. GDPR, the CCPA, and various other domestic and international privacy and data security laws and regulations, which are continually evolving.

The COVID-19 pandemic has caused substantial disruption in [added: television production,] financial markets and economies worldwide, both of which could result in adverse effects on our business, operations, stock price and ability to raise capital.

The COVID-19 pandemic has negatively impacted the global economy and [removed: created] [added: continues to create] significant volatility and disruption in the credit and financial markets, and while some economic disruption may ease from time to time, such disruption is expected to continue and may worsen for an undetermined period of time.

There is a significant degree of uncertainty and lack of visibility as to the extent and duration of [removed: such slowdown or recession;] [added: the global economic disruption caused by COVID-19;] however, a prolonged [added: disruption,] slowdown or recession [removed: may] [added: could materially] adversely affect our credit ratings, stock price, ability to access capital on favorable terms and ability to meet our liquidity needs.

- [removed: changes in] local regulatory [removed: requirements,] [added: requirements (and any changes to such requirements),] including restrictions on content, [added: censorship,] imposition of local content [removed: quotas] [added: quotas, local production levies] and restrictions [added: or prohibitions] on foreign [removed: ownership;][added: ownership, outsourcing, consumer protection, intellectual property and related rights, including copyright and rightsholder rights and remuneration;]

- anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery [removed: Act] [added: Act, and programs administered by the Office of Foreign Assets Control,] that impose stringent requirements on how we conduct our foreign operations and changes in these laws and regulations;

Acts of terrorism, hostilities, [added: imposition of sanctions,] or financial, political, economic or other uncertainties could lead to a reduction in revenue or loss of investment, which could adversely affect our results of operations.

Our business is significantly affected by prevailing economic [removed: conditions] [added: conditions, including inflation] and [added: fluctuations in interest rates, and] by disruptions to financial markets.

Financial instability or a general decline in economic conditions in the U.S. and other countries where our networks are distributed could adversely affect [removed: advertising rates and volume, resulting] [added: the businesses of our partners who might reduce their spending on advertising, which could result] in a decrease in [added: advertising rates and volume and] our advertising revenues.

[removed: A] [added: Relatedly, a] decrease in [removed: the number of] [added: viewing] subscribers [removed: receiving] [added: on] our [removed: programming] [added: advertising-supported offering of discovery+] could [added: also] have a negative impact on [removed: our distribution revenues and] the rates we are able to charge [added: advertisers] for [removed: advertising.][added: advertising-supported services.]

Many foreign jurisdictions are contemplating additional taxes and/or levies on [removed: media advertising, including the recently announced proposed levy on] [added: over-the-top services, as well as] media [removed: companies under consideration by the Polish government.][added: advertising.]

As of December 31, [removed: 2020,] [added: 2021,] we had approximately [removed: $15.4] [added: $15.2] billion of consolidated debt, of which [removed: $335] [added: $339] million is current.

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.

Risk Factors Related to the Combination of Discovery and AT&T’s WarnerMedia Business

On May 17, 2021, the Company, our wholly owned subsidiary Drake Subsidiary, Inc., AT&T Inc. (“AT&T”) and AT&T’s wholly owned subsidiary Magallanes, Inc. entered into definitive agreements pursuant to which and subject to the terms and conditions therein (1) AT&T will transfer the business, operations and activities that constitute the WarnerMedia segment of AT&T, subject to certain exceptions (the “WarnerMedia Business”) to Magallanes, Inc. (such transfer, the “Separation”), (2) AT&T will distribute to its stockholders the issued and outstanding shares of common stock of Magallanes, Inc. held by AT&T (such distribution, the “Distribution”) and (3) Drake Subsidiary, Inc. will merge with and into Magallanes, Inc. with Magallanes, Inc. as the surviving entity and wholly owned subsidiary of the Company (such merger, the “Merger” and the Separation, Distribution and Merger collectively, the “Combination”).

The pendency of the proposed Combination may cause disruption in our business.

The definitive agreement and plan of merger (the “Merger Agreement”) related to the Combination restricts us from taking specified actions without AT&T’s consent until the Combination is completed or the Merger Agreement is terminated, including making certain significant acquisitions or investments, entering into certain new lines of business, incurring certain indebtedness in excess of certain thresholds, making non-ordinary course capital expenditures, amending or modifying certain material contracts, divesting certain assets (including certain intellectual property rights), and making certain non-ordinary course changes to personnel and employee compensation.

These restrictions and others more fully described in the Merger Agreement may affect our ability to execute our business strategies and attain our financial and other goals and may impact our financial condition, results of operations and cash flows.

The pendency of the proposed Combination could cause disruptions to our business or business relationships, which could have an adverse impact on our results of operations.

Parties with which we have business relationships, including distributors, advertisers and content providers, may be uncertain as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us.

Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.

The pursuit of the Combination and the preparation for the integration of the WarnerMedia Business is expected to place a significant burden on our management and internal resources.

The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect our financial results.

We have incurred and will continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the Combination.

The substantial majority of these costs will be nonrecurring expenses relating to the Combination, and many of these costs are payable regardless of whether or not the Combination is consummated.

We are also subject to litigation related to the proposed Combination, which could prevent or delay the consummation of the Combination and result in significant costs and expenses.

Failure to complete the Combination in a timely manner or at all could negatively impact the market price of our common stock, as well as our future business and our financial condition, results of operations and cash flows.

We currently anticipate the Combination will be completed in the second quarter of 2022, but the Combination cannot be completed until conditions to closing are satisfied or (if permissible under applicable law) waived.

The Combination is subject to numerous closing conditions, including approval by Discovery’s stockholders, receipt of certain regulatory approvals from governmental authorities and AT&T's receipt of a special cash payment in accordance with the terms of the Separation and Distribution Agreement by and among Discovery, AT&T and Magallanes, Inc. Governmental authorities may not approve the Combination, may impose conditions to the approval of the Combination, or may require changes to the terms of the Combination.

Any such conditions or changes could have the effect of delaying completion of the Combination, imposing costs on or limiting the revenues of the combined company following the Combination, or otherwise reducing the anticipated benefits of the Combination.

We can provide no assurance that these conditions, terms, obligations or restrictions will not result in the abandonment of the Combination.

The satisfaction of the required closing conditions could delay the completion of the Combination for a significant period of time or prevent it from occurring.

Further, there can be no assurance that the conditions to the closing of the Combination will be satisfied or waived or that the Combination will be completed.

If the Combination is not completed in a timely manner or at all, our ongoing business may be adversely affected as follows:

- we may experience negative reactions from the financial markets, and our stock price could decline to the extent that the current market price reflects an assumption that the Combination will be completed;

- we may experience negative reactions from employees, customers, suppliers or other third parties;

- we may be subject to litigation, which could result in significant costs and expenses;

- management’s focus may have been diverted from day-to-day business operations and pursuing other opportunities that could have been beneficial to Discovery; and

- our costs of pursuing the Combination may be higher than anticipated.

In addition to the above risks, we may be required, under certain circumstances, to pay AT&T a termination fee equal to $720 million and/or to reimburse or indemnify AT&T for certain of its expenses.

If the Combination is not consummated, there can be no assurance that these risks will not materialize and will not materially adversely affect our stock price, business, financial condition, results of operations or cash flows.

Although we expect that the Combination will result in synergies and other benefits to us, we may not realize those benefits because of difficulties related to integration, the achievement of such synergies, and other challenges.

Discovery and the WarnerMedia Business have operated and, until completion of the Combination, will continue to operate, independently, and there can be no assurances that our businesses can be combined in a manner that allows for the achievement of any financial or other benefits.

If we are not able to successfully integrate the WarnerMedia Business with ours or pursue our direct-to-consumer strategy successfully, including coordinating our streaming services for global customers, the anticipated benefits, including synergies, of the Combination may not be realized fully, if at all, or may take longer than expected to be realized.

Specifically, the following issues, among others, must be addressed in combining the operations of Discovery and the WarnerMedia Business in order to realize the anticipated benefits of the Combination:

- combining the businesses of Discovery 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;

- combining certain of the businesses’ corporate functions;

- determining whether and how to address possible differences in corporate cultures and management philosophies;

- integrating the businesses’ administrative, accounting and information technology infrastructure;

- integrating employees and attracting and retaining key personnel, including talent;

- managing the expanded operations of a significantly larger and more complex company, including with Discovery’s limited prior experience in running a studio or scripted content;

Our businesses operate in highly competitive industries.

We face increased competition from subscription based streaming services and DTC offerings, including our recently launched discovery+ product, and we also compete for viewers with other forms of media entertainment, such as home video, movies, periodicals, on-line and mobile activities.

In particular, websites and search engines have seen significant advertising growth, a portion of which has moved from traditional cable network and satellite advertisers.

In January 2021, Discovery launched an aggregated DTC product, discovery+.

Our discovery+ offering is a subscription-based streaming product.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures, notwithstanding our ongoing efforts to develop and implement robust data security tools, practices, and protocols.

We may not have adequate insurance coverage to compensate us for losses associated with cybersecurity and privacy events.

The ongoing COVID-19 pandemic has disrupted, and is expected to continue to disrupt our business operations and poses risks to our business, results of operations and financial position, the nature and extent of which are highly uncertain, rapidly changing and unpredictable.

The continuing global spread of the coronavirus disease 2019, commonly called “COVID-19,” has created significant worldwide operational volatility, uncertainty and disruption.

Countries throughout the world have imposed stringent restrictions on social and commercial activity in an effort to slow the spread of the illness.

These restrictions vary by location and have had a significant adverse impact upon many sectors, including the media industry in which we operate.

The extent of the impact to our business, customers, employees, vendors, and our distribution, advertising and production partners will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and the extent of future surges of COVID-19 and the actions to contain the virus or treat its impact, among others.

Any negative effect on these third parties could materially adversely impact us.

In particular, our advertising revenues, which represented 52% of our consolidated revenues in 2020, may decrease significantly if our advertising partners in certain sectors (such as travel) continue to reduce their advertising spending, or if we are limited in our ability to create and air new content due to prolonged production shutdowns and delays.

The COVID-19 pandemic has caused some of our advertisers to reduce their spending, and future declines in the economic prospects of advertisers or the economy in general due to COVID-19 could continue to negatively impact their advertising expenditures in the future.

We may continue to experience decreases in advertising revenues related to live sporting events, which have been cancelled or postponed due to the pandemic.

For example, the International Olympic Committee and the Tokyo 2020 Organizing Committee agreed to postpone the 2020 Olympic Games to 2021.

The postponement of the Olympic Games has delayed our expected Olympic-related revenue.

Further, a prolonged, global recession due to COVID-19 may put pressure on household budgets and cause a decrease in consumer discretionary spending, which may decrease our subscriber numbers, distribution revenues and the rates we are able to charge for advertising.

In addition, we continue to implement remote work arrangements in various geographic locations.

While these arrangements have not materially affected our ability to maintain our business operations to date, these arrangements may adversely impact our business operations in the future.

The extent to which COVID-19 will adversely impact our business, financial condition and results of operations will depend on numerous evolving factors, which are highly uncertain, rapidly changing and cannot be predicted, including:

- the duration and scope of the outbreak, including the extent of future surges of the disease, vaccine distribution and other actions to contain the virus or treat its impact;

- governmental, business and individual actions that have been and continue to be taken in response to the outbreak, including travel restrictions, quarantines, social distancing, work-at-home, stay-at-home and shelter-in-place orders and shut-downs;

- the impact of the outbreak on the financial markets and economic activity generally;

- the effect of the outbreak on our investments, customers, vendors and production partners;

- the impact of the outbreak on the health, well-being and productivity of our employees and the potential for disruption to our ability to conduct our operations; and

- the ability of our customers to pay for our services during and following the outbreak.

The pandemic and continued spread of COVID-19 has caused a global recession.

Risks Related to our International Operations

We are subject to risks related to our international operations.

Economic conditions affect a number of aspects of our businesses worldwide and impact the businesses of our partners who purchase advertising on our networks and might reduce their spending on advertising.

As a company that has operations in the United Kingdom, the United Kingdom’s withdrawal from the E.U. could have an adverse impact on our business, results of operations and financial position.

On January 31, 2020, the United Kingdom (“U.K.”) formally withdrew from the E.U., commonly referred to as “Brexit.” The transition period, during which the pre-Brexit rights and obligations on trade, travel and business for the U.K. and the E.U. continued to apply, ended on December 31, 2020.

As of January 1, 2021, the relationship between the U.K. and the E.U. is governed by the EU-UK Trade and Co-operation Agreement (“TCA”), which is effective provisionally pending ratification by the European Parliament.

As a result of Brexit, the single market and country of origin principles which have facilitated our cross-border activities from the U.K. into the E.U. have ceased, which could have an adverse impact on our operations and business activities.

We have incurred, and may continue to incur, costs, including due to reestablishment of broadcasting entities from the U.K. into the E.U., staff relocations and business travel, to minimize disruption to our businesses in the E.U. There remains potential legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace and/or replicate.

The announcement and implementation of Brexit has caused significant volatility in global stock markets and currency exchange rate fluctuations.

With the expansion of our international operations, our exposure to currency exchange rate fluctuation has increased.

This increase in exposure could have an adverse effect on our results of operations and net asset balances, due, in part, to currency fluctuations impacting the British pound and the Euro.

This section provides additional information regarding our businesses, current developments, results of operations, cash flows, financial condition, contractual [removed: commitments and] [added: commitments,] critical accounting [removed: policies.][added: policies, and estimates that require significant judgment and thus have the most significant potential impact on our consolidated financial statements.]

A discussion of our [removed: results] [added: result] of operations and liquidity for [added: the] fiscal [removed: 2019] [added: year ended December 31, 2020] compared to [added: the] fiscal [removed: 2018] [added: year ended December 31, 2019] can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2019,] [added: 2020,] filed on February [removed: 27, 2020,] [added: 22, 2021,] which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at ir.corporate.discovery.com.

Our strategy is to maximize the distribution, ratings and profit potential of each of our branded [removed: networks.][added: networks and discovery+.]

Audience [removed: ratings] [added: ratings, audience engagement and channel packaging] are [removed: a] key [removed: driver] [added: drivers] in generating advertising revenue and creating demand on the part of cable television operators, DTH satellite operators, telecommunication service providers, and other content distributors who deliver our content to their customers.

On March 11, 2020, the World Health Organization declared the [removed: COVID-19] [added: coronavirus disease 2019 (“COVID-19”)] outbreak to be a global pandemic.

COVID-19 [removed: continues] [added: has continued] to spread throughout the world, and the duration and severity of its effects and associated economic disruption remain uncertain.

Additionally, certain sporting events that we have rights to were cancelled or postponed, thereby eliminating or deferring the related revenues and expenses, including the Tokyo 2020 Olympic Games, which [removed: were postponed to] [added: occurred in July and August] 2021.

The postponement of the [added: 2020] Olympic Games deferred both Olympic-related revenues and significant expenses from fiscal year 2020 to fiscal year 2021.

In response to the impact of the pandemic, we employed [removed: and continue to employ] innovative production and programming strategies, including producing content filmed by our on-air talent and seeking viewer feedback on which content to air.

We [removed: continue to pursue] [added: pursued] a number of cost savings [removed: initiatives] [added: initiatives,] which began during the third [removed: and fourth quarters] [added: quarter] of 2020 [removed: and believe will offset a portion of anticipated revenue losses and deferrals,] through the implementation of travel, marketing, production and other operating cost reductions, including personnel reductions, restructurings and resource reallocations to align our expense structure to ongoing changes within the industry.

[removed: We recorded] [added: There was no impairment of] goodwill and other intangible assets [removed: impairment charges of] [added: in 2021 compared to] $124 million [removed: for our Asia-Pacific reporting unit during] [added: in] 2020.

The [removed: nature and] [added: full] extent of COVID-19’s effects on our operations and results [added: is not yet known and] will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and the extent of future surges of COVID-19, vaccine distribution and other actions to contain the virus or treat its impact, among others.

[removed: Our] [added: The] consolidated financial statements [added: set forth in this Annual Report on Form 10-K] reflect management’s latest estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented.

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 [removed: “2020] [added: “2021] Baseline Rate”), and the prior year amounts translated at the same [removed: 2020] [added: 2021] Baseline Rate.

Consolidated Results of Operations – [removed: 2020] [added: 2021] vs. [removed: 2019][added: 2020]

Our consolidated results of operations for [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] were as follows (in millions).

| | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | % Change | | | | | | % Change (ex-FX) | | |

| Advertising | | | | | | $ | [removed: 5,583] [added: 6,215] | | | | | $ | [removed: 6,044] [added: 5,583] | | | | | [removed: (8)] [added: 11] | | % | | | | [removed: (7)] [added: 10] | | % |

| Distribution | | | | | | [removed: 4,866] [added: 5,409] | | | | | | [removed: 4,835] [added: 4,866] | | | | | | [removed: 1] [added: 11] | | % | | | | [removed: 1] [added: 11] | | % |

| Other | | | | | | [removed: 222] [added: 567] | | | | | | [removed: 265] [added: 222] | | | | | | [removed: (16)] [added: NM] | | [removed: %] | | | | [removed: (17)] [added: NM] | | [removed: %] |

| Total revenues | | | | | | [removed: 10,671] [added: 12,191] | | | | | | [removed: 11,144] [added: 10,671] | | | | | | [removed: (4)] [added: 14] | | % | | | | [removed: (4)] [added: 14] | | % |

| Costs of revenues, excluding depreciation and amortization | | | | | | [removed: 3,860] [added: 4,620] | | | | | | [removed: 3,819] [added: 3,860] | | | | | | [removed: 1] [added: 20] | | % | | | | [removed: 1] [added: 18] | | % |

| Selling, general and administrative | | | | | | [removed: 2,722] [added: 4,016] | | | | | | [removed: 2,788] [added: 2,722] | | | | | | [removed: (2)] [added: 48] | | % | | | | [removed: (1)] [added: 46] | | % |

| Depreciation and amortization | | | | | | [removed: 1,359] [added: 1,582] | | | | | | [removed: 1,347] [added: 1,359] | | | | | | [removed: 1] [added: 16] | | % | | | | [removed: 1] [added: 15] | | % |

| Impairment of goodwill and other intangible assets | | | | | | [removed: 124] [added: —] | | | | | | [removed: 155] [added: 124] | | | | | | [removed: (20)] [added: NM] | | [removed: %] | | | | [removed: (21)] [added: NM] | | [removed: %] |

| Restructuring and other charges | | | | | | [removed: 91] [added: 32] | | | | | | [removed: 26] [added: 91] | | | | | | [removed: NM] [added: (65)] | | [added: %] | | | | [removed: NM] [added: (64)] | | [added: %] |

| Total costs and expenses | | | | | | [removed: 8,156] [added: 10,179] | | | | | | [removed: 8,135] [added: 8,156] | | | | | | [removed: —] [added: 25] | | % | | | | [removed: —] [added: 23] | | % |

| Operating income | | | | | | [removed: 2,515] [added: 2,012] | | | | | | [removed: 3,009] [added: 2,515] | | | | | | [removed: (16)] [added: (20)] | | % | | | | [removed: (15)] [added: (18)] | | % |

| Interest expense, net | | | | | | [removed: (648)] [added: (633)] | | | | | | [removed: (677)] [added: (648)] | | | | | | [removed: (4)] [added: (2)] | | % | | | | | | |

| Loss on extinguishment of debt | | | | | | [removed: (76)] [added: (10)] | | | | | | [removed: (28)] [added: (76)] | | | | | | [removed: NM] [added: (87)] | | [added: %] | | | | | | |

| Loss from equity investees, net | | | | | | [removed: (105)] [added: (18)] | | | | | | [removed: (2)] [added: (105)] | | | | | | [removed: NM] [added: (83)] | | [added: %] | | | | | | |

| Other [removed: income (expense),] [added: (income) expense,] net | | | | | | [removed: 42 | | | | | | (8)] [added: (82)] | | | | | | [removed: NM] [added: (42)] | | | | | | [added: 95] | | [added: %] |

| Income before income taxes | | | | | | [removed: 1,728] [added: 1,433] | | | | | | [removed: 2,294] [added: 1,728] | | | | | | [removed: (25)] [added: (17)] | | % | | | | | | |

| Income tax expense | | | | | | [removed: (373)] [added: (236)] | | | | | | [removed: (81)] [added: (373)] | | | | | | [removed: NM] [added: (37)] | | [added: %] | | | | | | |

| Net income | | | | | | [removed: 1,355] [added: 1,197] | | | | | | [removed: 2,213] [added: 1,355] | | | | | | [removed: (39)] [added: (12)] | | % | | | | | | |

| Net income attributable to noncontrolling interests | | | | | | [removed: (124)] [added: (138)] | | | | | | [removed: (128)] [added: (124)] | | | | | | [removed: (3)] [added: 11] | | % | | | | | | |

| Net income attributable to redeemable noncontrolling interests | | | | | | [removed: (12)] [added: (53)] | | | | | | [removed: (16)] [added: (12)] | | | | | | [removed: (25)] [added: NM] | | [removed: %] | | | | | | |

| Net income available to Discovery, Inc. | | | | | | $ | [removed: 1,219] [added: 1,006] | | | | | $ | [removed: 2,069] [added: 1,219] | | | | | [removed: (41)] [added: (17)] | | % | | | | | | |

Excluding the impact of foreign currency fluctuations, advertising revenue [removed: decreased 7%.][added: increased 10%.]

Distribution revenue consists principally of fees from affiliates for distributing our linear networks, supplemented by revenue earned from SVOD content [removed: licensing] [added: licensing, DTC subscription services,] and other emerging forms of digital distribution.

This discussion and analysis is intended to better allow investors to view the company from management's perspective.

This section provides an analysis of our financial results for the fiscal year ended December 31, 2021 compared to the fiscal year ended December 31, 2020.

The information contained on our website is not part of this Annual Report on Form 10-K and is not incorporated by reference herein.

Our goal is to reach consumers wherever and whenever they are consuming content, as well as reaching new audiences including broadband only, cord cutters and cord nevers, while continuing to serve our linear network subscribers.

These economic disruptions and the resulting effect on us eased

during the second half of 2020.

The pandemic did not have a significant impact on demand during fiscal year 2021.

| Gain on disposition | | | | | | (71) | | | | | | — | | | | | | NM | | | | | | NM | | |

Advertising revenue increased 11% in 2021.

The increase was primarily attributable to improved overall performance at International Networks as advertising markets recovered from the COVID-19 pandemic, as well as the broadcast of the Summer Olympics throughout Europe in the third quarter of 2021.

Other revenue increased $345 million in 2021.

Excluding the impact of foreign currency fluctuations, the increases were primarily attributable to sublicensing of Olympics sports rights to broadcast networks throughout Europe.

Costs of revenues increased 20% in 2021.

The increase was primarily attributable to the Olympics and to a lesser extent, European sporting events and leagues

returning to a more normalized schedule, and higher content investment related to discovery+ at U.S. Networks and International Networks.

The increase was primarily attributable to higher marketing related expenses to drive the growth of discovery+ at U.S. Networks and International Networks.

Depreciation and amortization increased 16% in 2021.

The increase was primarily attributable to a change in amortization method from the straight-line method to the sum of the years digits method effective October 1, 2021 for acquired customer relationships, and to a lesser extent, assets placed in service related to the launch of discovery+.

(See Note 7 to the accompanying consolidated financial statements.)

(See Note 17 to the accompanying consolidated financial statements.)

*Gain on Disposition*

Gain on disposition was $71 million for 2021, and was primarily attributable to the sale of our Great American Country network.

(See Note 3 to the accompanying consolidated financial statements.)

(See Note 8 and Note 10 to the accompanying consolidated financial statements.)

Losses on extinguishment of debt were $10 million and $76 million in 2021 and 2020, respectively.

(See Note 8 to the accompanying consolidated financial statements.)

| | | | | | | 2021 | | | | | | 2020 | | |

| (Losses) gains on derivative instruments, net | | | | | | (33) | | | | | | 29 | | |

| Change in the value of equity investments without readily determinable fair value | | | | | | (13) | | | | | | — | | |

| | | | | | | 2021 | | | | | | | | | | | | 2020 | | | | | | | | |

| UK Finance Act legislative change | | | | | | (155) | | | | | | (11) | | % | | | | (51) | | | | | | (3) | | % |

The decrease in income tax expense for the year ended December 31, 2021 was primarily attributable to a decrease in pre-tax book income and an increase in the deferred tax benefit from the UK Finance Act 2021 that was enacted in June 2021.

Those decreases were partially offset by an increase in the state and local income tax expense recorded in 2021.

| (Gain) loss on disposition | | | | | | (71) | | | | | | 2 | | | | | | NM | | |

| Adjusted OIBDA | | | | | | $ | 3,817 | | | | | $ | 4,196 | | | | | (9) | | % |

| Adjusted OIBDA | | | | | | $ | 3,817 | | | | | $ | 4,196 | | | | | (9) | | % |

| Other | | | | | | 177 | | | | | | 85 | | | | | | NM | | |

| Gain on disposition | | | | | | (77) | | | | | | — | | | | | | | | |

| Transactions and integration costs | | | | | | 1 | | | | | | — | | | | | | | | |

Excluding the impact of the sale of our Great American Country linear network, total subscribers to our linear networks at December 31, 2021 were 5% lower than at December 31, 2020.

Restrictions on social and commercial activity in an effort to contain the virus have had, and are expected to continue to have, a significant adverse impact upon many sectors of the U.S. and global economy, including the media industry.

These economic disruptions and the resulting effect on the Company slightly eased during the second half of 2020, but the pandemic continued to impact demand through the end of 2020 and this decreased demand is expected to continue into 2021.

We also implemented remote work arrangements effective mid-March 2020 and, to date, these arrangements have not materially affected our ability to operate our business.

In addition, we implemented several measures to preserve sufficient liquidity in the near term.

During March 2020, we drew down $500 million under our $2.5 billion revolving credit facility to increase our cash position and maximize flexibility in light of the current uncertainty surrounding the impact of COVID-19.

In addition, in April 2020, we entered into an amendment to our revolving credit facility, which increased flexibility under our financial covenants and issued $1.0 billion aggregate principal amount of senior notes due May 2030 and $1.0 billion aggregate principal amount of Senior Notes due May 2050.

The proceeds from the notes were used to fund a tender offer for $1.5 billion of certain Senior Notes with maturities ranging from 2021 through 2023 and to repay the $500 million outstanding under our revolving credit facility.

In light of the impact of COVID-19, we assessed goodwill, other intangibles, deferred tax assets, programming assets, and accounts receivable for recoverability based upon latest estimates and judgments with respect to expected future operating results, ultimate usage of content and latest expectations with respect to expected credit losses.

Adjustments to reflect increased expected credit losses were not material.

Further, hedged transactions were assessed and we have concluded such transactions remain probable of occurrence.

Due to significant uncertainty surrounding the impact of COVID-19, management’s judgments could change in the future.

The effects of the pandemic may have further negative impacts on our financial position, results of operations, and cash flows.

However, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably and fully estimated at this time.

In the United States, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020, and the Consolidated Appropriations Act, 2021 was enacted on December 27, 2020.

As of December 31, 2020, we do not expect the CARES Act or the Consolidated Appropriations Act, 2021 to have a material effect on our financial position and results of operations.

We continue to monitor other relief measures taken by the U.S. and other governments around the world.

Advertising revenue decreased 8% in 2020.

The decrease was primarily attributable to a decline in demand stemming from the COVID-19 pandemic at both U.S. and International Networks.

Other revenue decreased 16% in 2020.

As reported and excluding the impact of foreign currency fluctuations, costs of revenues increased 1% in 2020 primarily attributable to increases in content amortization from investments to support our next generation initiatives at U.S. Networks.

The increase was primarily attributable to an increase in capital expenditures.

The decrease was primarily attributable to a lower average debt balance in 2020, a more favorable interest rate profile on our outstanding senior notes, and incremental interest income related to the change in fair value of our cross-currency swaps.

The loss included $67 million of net premiums to par value and $9 million of other charges.

| | | | | | | 2020 | | | | | | 2019 | | |

| Gains (losses) on derivatives not designated as hedges | | | | | | 29 | | | | | | (52) | | |

| Gain on sale of equity method investments | | | | | | 2 | | | | | | 13 | | |

| Remeasurement gain on previously held equity interest | | | | | | — | | | | | | 14 | | |

| | | | | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |

| Non-deductible compensation | | | | | | 17 | | | | | | 1 | | % | | | | 22 | | | | | | 1 | | % |

| Legal entity restructuring, deferred tax impact | | | | | | — | | | | | | — | | % | | | | (445) | | | | | | (19) | | % |

| Renewable energy investments tax credits | | | | | | — | | | | | | — | | % | | | | (1) | | | | | | — | | % |

The increase in income tax expense in 2020 was primarily attributable to the discrete, one-time, non-cash deferred tax benefit of $445 million from legal entity restructurings that was recorded in 2019.

Additionally, the increase in income tax expense in 2020 was attributable to an increase in provision for uncertain tax positions and an increase in the effect of foreign operations.

Those increases were partially offset by a decrease in pre-tax book income, a tax benefit from a favorable multi-year state resolution, and a favorable deferred tax adjustment in the U.S. that was recorded in 2020.

| Settlement of a withholding tax claim | | | | | | — | | | | | | (29) | | | | | | NM | | |

| Other | | | | | | 85 | | | | | | 108 | | | | | | (21) | | % |

Other revenue decreased $23 million in 2020.

Costs of revenues increased 2% in 2020 primarily attributable to increases in content amortization from investments to support our next generation initiatives, partially offset by a reduction in production projects as a result of COVID-19 and a non-recurring reserve release established in purchase accounting.

Selling, general and administrative expenses decreased 4% in 2020 primarily attributable to a reduction in travel costs as a result of COVID-19 and lower marketing-related expenses, partially offset by an increase in personnel costs to support our next generation platforms, including discovery+.

| Impairment of goodwill and other intangible assets | | | | | | 124 | | | | | | 155 | | | | | | | | | | | | | | |

During the year ended December 31, [removed: 2020,] [added: 2021,] we [removed: had access to] [added: entered into] a [added: new] $2.5 billion [added: multicurrency] revolving credit facility, [removed: which had no outstanding borrowings as of December 31, 2020.][added: replacing the existing $2.5 billion credit agreement.]

We also have access to a commercial paper program, which had no outstanding borrowings as of December 31, [removed: 2020.][added: 2021.]

The revolving credit facility matures in [removed: August 2022] [added: June 2026] and the option for up to two additional 364-day renewal periods.

As of December 31, [removed: 2020,] [added: 2021,] we had outstanding debt with a book value of [removed: $15.8] [added: $15.2] billion under various public senior notes with fixed interest rates.

To achieve these objectives, we may enter into variable interest rate [removed: swaps,] [added: swaps or swaptions,] effectively converting fixed rate borrowings to variable rate borrowings indexed to LIBOR in order to reduce the amount of interest paid.

As of December 31, [removed: 2020,] [added: 2021,] we had entered into forward starting interest rate swap agreements with a notional value of $2 billion for the future issuances of fixed rate [removed: debt.][added: debt and a combination of swaption collars, purchase payer swaptions and interest rate swaps with a combined notional value of $15 billion for the expected issuances of debt associated with the upcoming WarnerMedia merger.]

As of December 31, [removed: 2020,] [added: 2021,] the fair value of our outstanding public senior notes was [removed: $18.7] [added: $17.2] billion.

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 [removed: $1.7] [added: $1.5] billion as of December 31, [removed: 2020.][added: 2021.]

The risk of loss can be assessed from the perspective of adverse changes in fair values, cash [removed: flows] [added: flows,] and future earnings.

Our International Networks segment operates from hubs in EMEA, Latin America and [removed: Asia.][added: Asia with net earnings reinvested locally and working capital requirements met from existing liquid funds.]

Such transactions include affiliate and ad sales arrangements, content arrangements, equipment and other vendor [removed: purchases] [added: purchases,] and intercompany transactions.

Accordingly, we may experience a negative impact on our net [removed: income (loss),] [added: income,] other comprehensive income (loss) and equity with respect to our holdings solely as a result of changes in foreign currency.

We may enter into spot, forward and option contracts that change in value as foreign currency exchange rates change to hedge certain exposures associated with affiliate revenue, the cost for producing or acquiring content, certain intercompany [removed: transactions] [added: transactions,] or in connection with forecasted business combinations.

Most of our non-functional currency risks related to our revenue, operating expenses and capital expenditures were not hedged as of December 31, [removed: 2020.][added: 2021.]

While derivatives are used to mitigate cash flow risk and the risk of declines in fair value, they also limit potential economic benefits to our business in the event of positive shifts in foreign currency exchange rates, interest [removed: rates] [added: rates,] and market values.

In addition to derivatives, we had investments in entities accounted [added: for] as equity method investments, equity investments, and other highly liquid instruments, such as money market and mutual funds, that are accounted for at fair value.

We have the capacity to initially borrow up to $2.5 billion, and upon the closing of the proposed combination transaction with WarnerMedia and subject to certain conditions, the available commitments will increase by $3.5 billion, to an aggregate amount not to exceed $6 billion.

We had no outstanding borrowings as of December 31, 2021.

The interest rate on borrowings under the revolving credit facility is based on a floating rate based on the applicable currency of the borrowing plus a margin.

(See Note 10 to the accompanying consolidated financial statements.)

(See Note 10 to the accompanying consolidated financial statements.)

The interest rate on borrowings under the revolving credit facility is variable based on an underlying index and DCL's then-current credit rating for its publicly traded debt.

Cash is primarily managed from five global locations with net earnings reinvested locally and working capital requirements met from existing liquid funds.

The net fair market value of our foreign currency derivative instruments intended to hedge future cash flows held at December 31, 2020 was a liability value of $24 million.

COVID-19 [removed: continues] [added: has continued] to spread throughout the world, and the duration and severity of its effects and associated economic disruption remain uncertain.

Additionally, certain sporting events that we have rights to were cancelled or postponed, thereby eliminating or deferring the related revenues and expenses, including the Tokyo 2020 Olympic Games, which [removed: were postponed to] [added: occurred in July and August] 2021.

The postponement of the [added: 2020] Olympic Games deferred both Olympic-related revenues and significant expenses from fiscal year 2020 to fiscal year 2021.

In response to the impact of the pandemic, we employed [removed: and continue to employ] innovative production and programming strategies, including producing content filmed by our on-air talent and seeking viewer feedback on which content to air.

The [removed: nature and] [added: full] extent of COVID-19’s effects on our operations and results [added: is not yet known and] will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and the extent of future surges of COVID-19, vaccine distribution and other actions to contain the virus or treat its impact, among others.

As one of the world’s largest pay-TV programmers, we provide original and purchased content and live events to approximately [removed: 3.7] [added: 3.5] billion cumulative subscribers and viewers worldwide through networks that we wholly or partially own.

We distribute customized content in the U.S. and over 220 other countries and territories in [removed: nearly] [added: over] 50 languages.

Our global portfolio of networks includes prominent nonfiction television brands such as Discovery Channel, our most widely distributed global brand, HGTV, Food Network, TLC, Animal Planet, Investigation Discovery, Travel Channel, Science, and MotorTrend (previously known as Velocity domestically and currently known as Turbo in most international [added: distribution] countries).

[removed: Our] [added: Beyond sports, our] international portfolio [removed: also] includes [removed: Eurosport, a leading sports entertainment provider and broadcaster of the Olympic Games (the "Olympics") across Europe (excluding Russia),] TVN, a Polish media company, as well as Discovery Kids, a leading children's entertainment brand in Latin America.

We participate in joint ventures including Magnolia, the [removed: recently formed] multi-platform venture with Chip and Joanna Gaines, and Group Nine [removed: Media ("Group Nine"),] [added: Media,] a digital media holding company home to [removed: top] digital brands including NowThis News, the Dodo, Thrillist, PopSugar, and Seeker.

(See Note [removed: 3] [added: 10] to the accompanying consolidated financial statements.)

In [removed: January] 2021, we launched [removed: discovery+] [added: discovery+, our aggregated DTC product,] in the U.S. across several streaming platforms and entered into a partnership with [removed: Verizon, which is offering access to discovery+ for up to 12 months to certain of its customers.][added: Verizon.]

The service is available with ads or on an ad-free tier, providing [removed: Discovery] [added: us] with dual revenue streams.

Other [added: revenue-generating] transactions include affiliate and advertising sales representation services, production studios content development and services content licenses, [added: and] the licensing of our brands for consumer [removed: products, and in 2018, curriculum-based products and services.][added: products.]

During [removed: 2020,] [added: 2021,] advertising, distribution and other revenues were [removed: 52%, 46%] [added: 51%, 44%] and [removed: 2%,] [added: 5%,] respectively, of consolidated revenues.

We [added: aim to] invest in high-quality content for our networks and brands with the objective of building viewership, optimizing distribution revenue, capturing advertising revenue, and creating or repositioning branded channels and business to sustain long-term growth and occupy a desired content niche with strong consumer appeal.

Our strategy is to maximize the distribution, ratings and profit potential of each of our [added: linear] branded [removed: networks.][added: networks and genres, as well as our DTC products.]

In addition to growing distribution and advertising revenues for our branded networks, we have extended content distribution across new platforms, including brand-aligned websites, online streaming, mobile devices, [removed: video on demand (“VOD”),] [added: VOD,] and broadband channels, which provide promotional platforms for our television content and serve as additional outlets for advertising and distribution revenue.

Audience [removed: ratings] [added: ratings, audience engagement and channel packaging] are [removed: a] key [removed: driver] [added: drivers] in generating advertising revenue and creating demand on the part of cable television operators, DTH satellite operators, telecommunication service providers, [added: device partners] and other content distributors who deliver our content to their customers.

[removed: ][added: ]

- Discovery Channel had approximately [removed: 86] [added: 81] million subscribers in the U.S. as of December 31, [removed: 2020.][added: 2021.]

Discovery Channel [removed: and the Discovery HD Showcase brand] had approximately [removed: 277] [added: 266] million cumulative subscribers and viewers in international markets as of December 31, [removed: 2020.][added: 2021.]

- Target viewers are adults [removed: aged] [added: in the] 25 to [removed: 54,] [added: 54 age range,] particularly men.

[removed: ][added: ]

- HGTV had approximately [removed: 87] [added: 82] million subscribers in the U.S. and approximately [removed: 166] [added: 176] million subscribers and viewers in international markets as of December 31, [removed: 2020.][added: 2021.]

- Content on HGTV includes: [removed: *Property Brothers*, *Brother vs. Brother*, *Celebrity IOU*, *Flip] [added: *Home Town, Home Town Takeover, Flip] or [removed: Flop*, *Christina] [added: Flop, Christina] on the [removed: Coast*, *Flipping 101] [added: Coast, Flipping 101, Love It or List It, Tough Love] with [removed: Tarek El Moussa*, *Home Town*, *Good Bones*, *Rock the Block*, *Design Star,] [added: Hilary Farr, Celebrity IOU, Property Brothers: Forever Home, Fixer to Fabulous,] House [removed: Hunters*,] [added: Hunters, My Lottery Dream Home, Good Bones, Unsellable Houses,*] and [removed: *House Hunters International.*][added: *Rock the Block.*]

- Target viewers are [removed: women] [added: adults] with higher incomes in the 25 to 54 age [removed: range.][added: range, particularly women.]

[removed: ][added: ]

- [removed: The] [added: Our] most widely distributed ad-supported cable network in the U.S., Food Network had approximately [removed: 87] [added: 82] million subscribers in the U.S. and approximately [removed: 113] [added: 112] million subscribers and viewers in international markets as of December 31, [removed: 2020.][added: 2021.]

- Content on Food Network includes primetime series *Beat Bobby [removed: Flay*, *Chopped*, *Diners, Drive-ins] [added: Flay, BBQ Brawl, Chef Boot Camp, Chopped, Diners, Drive-Ins] and [removed: Dives*, *The Great* *Food] [added: Dives, The Great Food] Truck Race, Guy’s Grocery [removed: Games*, *Worst] [added: Games, Restaurant: Impossible, Worst] Cooks in America*, and several seasonal baking [removed: championships,] [added: championships such] as [added: *Christmas Cookie Challenge, Halloween Baking Championship, Halloween Wars, Holiday Baking Championship, Holiday Wars, Spring Baking Championship* and more, as] well as daytime series *Barefoot [removed: Contessa*, *Giada Entertains*, *Girl] [added: Contessa, Delicious Miss Brown, Girl] Meets [removed: Farm*, *Guy's] [added: Farm, Guy's] Ranch [removed: Kitchen*, *The Kitchen*, *The* *Pioneer] [added: Kitchen, The Kitchen, The Pioneer] Woman, [added: Simply Giada,] Trisha’s Southern [removed: Kitchen*] [added: Kitchen, Tournament of Champions,*] and *Valerie's Home Cooking*.

[removed: ][added: ]

- TLC had approximately [removed: 85] [added: 80] million subscribers in the U.S. and 5 million subscribers in Canada that are included in the U.S. Networks segment as of December 31, [removed: 2020.][added: 2021.]

TLC content had approximately [removed: 356] [added: 357] million cumulative subscribers and viewers in international markets as of December 31, [removed: 2020] [added: 2021] including the Home & [removed: Health, Real Time,] [added: Health] and [removed: Living] [added: Real Time] brands.

- In the U.S., TLC audiences can enjoy their favorite programming anytime, anywhere through the Discovery GO app, which features live and on-demand [removed: access][added: access.]

- Target viewers are adults [removed: aged] [added: in the] 25 to [removed: 54,] [added: 54 age range,] particularly women.

[removed: ][added: ]

- Animal Planet had approximately [removed: 84] [added: 79] million subscribers in the U.S. and approximately [removed: 187] [added: 178] million subscribers and viewers in international markets as of December 31, [removed: 2020.][added: 2021.]

- Animal Planet is dedicated to creating high quality content [removed: with global appeal delivering on its mission to keep] [added: that keeps] the childhood joy and wonder of animals alive by [removed: bringing] [added: showcasing their stories and the] people [removed: up close in every way.][added: that work with them.]

It's the [removed: Irwins*, *The Zoo*, *The] [added: Irwins, The Zoo, Mysterious Creatures with Forrest Galante, The] Zoo: San [removed: Diego*, *Pit] [added: Diego, Pit] Bulls & Parolees, Dr. Jeff: Rocky Mountain Vet, [removed: The Aquarium*] [added: North Woods Law] and [removed: *Puppy Bowl.*][added: Lone Star Law*.]

- Target viewers are adults [removed: aged] [added: in the] 25 to [removed: 54.][added: 54 age range.]

WarnerMedia

In May 2021, the Company entered into an agreement with AT&T Inc. to combine with WarnerMedia’s ("WarnerMedia") entertainment, sports and news assets to create a standalone, global entertainment company.

The proposed combination transaction will be executed through a Reverse Morris Trust type transaction, under which WarnerMedia will be distributed to AT&T’s shareholders via a pro rata distribution (i.e., a spin off).

In connection with the combination transaction, AT&T will receive approximately $43 billion (subject to working capital and other adjustments) in a combination of cash, debt securities and WarnerMedia’s retention of certain debt.

The Company has concluded that it will be considered the accounting acquirer.

The Company established an interest rate derivative program to mitigate interest rate risk associated with the anticipated issuance of future fixed-rate debt by WarnerMedia, which is expected to be guaranteed by the Company and certain subsidiaries of the Company upon closing of the transaction.

Immediately prior to closing, all shares of Series A, Series B, and Series C common stock and Series A-1 and Series C-1 convertible preferred stock will be reclassified and converted to one class of the Company's common stock.

AT&T’s shareholders that receive WarnerMedia stock in the distribution will receive stock representing 71% of the combined company and the

Company's shareholders will continue to own 29% of the combined company, in each case on a fully diluted basis.

The Boards of Directors of both AT&T and the Company have approved the transaction.

The transaction is anticipated to close in the second quarter of 2022, subject to approval by the Company's shareholders and the satisfaction of customary closing conditions, including receipt of regulatory approvals.

On December 22, 2021, the transaction received unconditional antitrust clearance from the European Commission (“EC”) pursuant to the EC Merger Regulation, and on December 28, 2021, AT&T received a favorable Private Letter Ruling from the Internal Revenue Service regarding the qualification of the transactions for their intended tax-free treatments.

On February 9, 2022, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, statutory waiting period has expired or otherwise been terminated, and any agreement not to consummate the transaction between the parties and the Federal Trade Commission or the Antitrust Division of the United States Department of Justice or any other applicable governmental entity, has also expired or otherwise been terminated.

Discovery and AT&T are in the process of obtaining other required regulatory approvals.

Agreements are in place with Dr. John Malone and Advance/Newhouse Programming Partnership to vote in favor of the transaction, representing approximately 43% of the aggregate voting power of the shares of Discovery voting stock.

The transaction requires, among other things, the consent of Advance/Newhouse Programming Partnership under the Company's certificate of incorporation as the sole holder of the Series A-1 Preferred Stock, which consent was given pursuant to a consent agreement.

In connection with Advance/Newhouse Programming Partnership’s entry into the consent agreement and related forfeiture of the significant rights attached to the Series A-1 Preferred Stock in the reclassification of the shares of Series A-1 Preferred Stock into common stock, it will receive an increase to the number of shares of common stock of the Company into which the Series A-1 Preferred Stock would be converted.

Upon the closing, the impact of the issuance of such additional shares of common stock of the Company will be recorded as a transaction expense.

No vote by AT&T shareholders is required.

The merger agreement contains certain customary termination rights for Discovery and AT&T, including, without limitation, a right for either party to terminate if the transaction is not completed on or before July 15, 2023.

Termination under specified circumstances will require Discovery to pay AT&T a termination fee of $720 million or AT&T to pay Discovery a termination fee of $1.8 billion.

In anticipation of this combination, in June 2021, Magallanes, Inc., a wholly owned subsidiary of AT&T Inc., entered into a $10 billion term loan that will be guaranteed by the Company and certain material subsidiaries of the Company upon closing of the transaction.

These economic disruptions and the resulting effect on us eased during the second half of 2020.

The pandemic did not have a significant impact on demand during fiscal year 2021.

We pursued a number of cost savings initiatives, which began during the third quarter of 2020 through the implementation of travel, marketing, production and other operating cost reductions, including personnel reductions, restructurings and resource reallocations to align our expense structure to ongoing changes within the industry.

The consolidated financial statements set forth in this Annual Report on Form 10-K reflect management’s latest estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented.

Actual results may differ significantly from these estimates and assumptions.

Discovery Sports oversees our international portfolio of sports businesses, brands, channels and platforms.

This includes Eurosport, a leading multi-sports entertainment destination and broadcaster of the Olympic Games (the "Olympics") across Europe (excluding Russia), live and on-demand sports streaming, including Eurosport’s content, on discovery+; Global Cycling Network and Global Mountain Bike Network, part of the cycling media group; Golf Digest, a premier golf destination; and Discovery Sports Events, a global sports promoter.

We also operate production studios.

Since then, discovery+ has expanded internationally, including the UK, Canada, the Philippines, Brazil, Italy and India.

As of December 31, 2021, we had 22 million total paid DTC subscribers.1 discovery+ currently has an extensive content library, including original series and documentaries.

1 We define a DTC subscription as (i) a subscription to a direct-to-consumer product for which we have recognized subscription revenue from a direct-to-consumer platform; (ii) a subscription received through wholesale arrangements for which we receive a fee for the distribution of our direct-to-consumer platforms, as well as subscriptions provided directly or through third-party platforms; and (iii) a subscription recognized by certain joint venture partners and affiliated parties.

We may refer to the aggregate number of subscriptions across our direct-to-consumer services as subscribers.

A subscription is only counted if it is on a paying status, and excludes users on free trials.

At the end of each quarter, the subscription count includes the actual number of users that rolled to pay up to seven days immediately following quarter end.

We have grown distribution and advertising revenues for our linear branded networks and discovery+.

Our goal is to reach consumers wherever and whenever they are consuming content, as well as reaching new audiences including broadband only, cord cutters and cord nevers, while continuing to serve our linear network subscribers.

- Discovery Channel content is led by numerous franchises such as *Gold Rush, Street Outlaws, Deadliest Catch, Moonshiners, Expedition Unknown, BattleBots,* and *Naked & Afraid*.

It is also known for its blue-chip and natural history specials such as *Serengeti*, and is home to *Shark Week*, the network's long-running annual summer TV event.

On March 6, 2018, the Company acquired Scripps Networks Interactive, Inc. ("Scripps Networks") and changed its name from "Discovery Communications, Inc." to "Discovery, Inc." (See Note 3 to the accompanying consolidated financial statements.)

Restrictions on social and commercial activity in an effort to contain the virus have had, and are expected to continue to have, a significant adverse impact upon many sectors of the U.S. and global economy, including the media industry.

These economic disruptions and the resulting effect on the Company slightly eased during the second half of 2020, but the pandemic continued to impact demand through the end of 2020 and this decreased demand is expected to continue into 2021.

We also implemented remote work arrangements effective mid-March 2020 and, to date, these arrangements have not materially affected our ability to operate our business.

The effects of the pandemic may have further negative impacts on our financial position, results of operations, and cash flows.

However, we are unable to predict the ongoing impact that COVID-19 will have on our financial position, operating results, and cash flows due to numerous uncertainties.

We operate production studios, and prior to the sale of our Education Business in April 2018, we sold curriculum-based education products and services.

During the fourth quarter of 2020, we announced the global launch of our aggregated DTC product, discovery+, a non-fiction, real life subscription service.

The global rollout of discovery+ across more than 25 markets has already begun with the U.K. and Ireland, where we have partnered with Sky, and India.

We also have a partnership with Vodafone, which will provide discovery+ to existing Vodafone TV and mobile customers in 12 markets across Europe.

Upon launch in the U.S., discovery+ included an extensive content library comprised of more than 55,000 episodes and features a wide array of exclusive, original series from the Discovery portfolio of brands that have a strong leadership position.

No individual customer represented more than 10% of our total consolidated revenues for 2020, 2019 or 2018.

- Discovery Channel content includes *Gold Rush*, *Naked and Afraid*, *Deadliest Catch*, *Fast N' Loud, Street Outlaws, Alaskan Bush People,* *Expedition Unknown*, *BattleBots*, *Undercover Billionaire* and *Serengeti.* Discovery Channel is also home to *Shark Week*, the network's long-running annual summer TV event.

- Content on TLC includes the *90 Day Fiancé* franchise, *Little People, Big World, I Am Jazz* and *Outdaughtered.*

- Content on Travel Channel includes *Ghost Adventures*, *The Osbournes Want to Believe*, *Expedition Bigfoot* and *Ghost Nation*.

The MotorTrend App is available on media players and streaming devices including Amazon FireTV, Apple TV, Roku, Google Chromecast and on the web, as well as across iPhone, iPad, and Android mobile devices.

- Target viewers are African-American women aged 25 to 54.

TVN was acquired in March 2018, as part of our acquisition of Scripps Networks Interactive, Inc. (the "Scripps Acquisition").

During 2020, we completed the acquisition of a German free-to-air general entertainment TV channel and completed an acquisition of an independent free-to-air commercial broadcaster in New Zealand.

Eurosport will be an official broadcaster of the Olympics in France and the U.K. for Tokyo 2020.

In Germany, we have partnered with ProSiebenSat.1 to launch the streaming service, Joyn, which offers a collection of free-TV content, with programming and live streams from more than 70 channels.

In Poland, we have partnered with Cyfrow Polsat to create a video streaming platform that, when launched, following regulatory clearance, will give viewers a single destination to access Polish content including movies, series, documentaries, sports and entertainment.

- Eurosport is a household name for live sports entertainment, reaching fans across Europe and Asia via Eurosport 1, Eurosport 2, the network's DTC streaming service, Eurosport Player, and Eurosport.com.

- In the summer of 2021, Discovery expects to present our first Olympic Summer Games, Tokyo 2020, in 50 markets and 19 languages across Europe.

discovery+ will be the exclusive streaming home of the Olympic Games, while Eurosport Player will be the destination in markets where discovery+ has not launched.

Discovery channels and platforms, such as our free-to-air networks in a selection of the Nordic markets, will also showcase the Olympics and contribute to bringing the Olympic Summer Games to more people in Europe.

- Eurosport Events is the Eurosport Group’s event management division and global promoter of the Fédération Internationale de l'Automobile (“FIA”) World Touring Car Cup and FIA European Rally Championship together with the sport’s governing body, the FIA.

It is also a promoter of the new PURE ETCR series, the world’s first all-electric touring car championship that is set to debut in 2021.

In March 2020, Eurosport Events signed a long-term agreement with the UCI, the international federation for cycling, to launch and promote a new world league for Track Cycling – the UCI Track Champions League.

Expected to debut in November 2021, the series and cycling will benefit from Discovery’s global scale, media platforms and promotion expertise to help grow cycling around the world.

| Discovery en Español (b) | | | | | | 7 | | |

| Fine Living Network | | | | | | 6 | | |

| Discovery Familia (b) | | | | | | 6 | | |

| (b) U.S. domestic subscribers data from Nielsen Media Research. | | | | | | | | |

In June 2016, the U.K. held a referendum in which voters approved an exit from the European Union (“E.U.”), commonly referred to as “Brexit.” E.U. law provides for a departing member state to have a two-year notice period to negotiate a term of exit, which the U.K. triggered in March 2017 and subsequently extended.

In October 2019, a revised draft withdrawal agreement was published detailing the framework of the future relationship between the U.K. and the E.U. This agreement was ratified by the U.K. and European Parliaments and on January 31, 2020, the U.K. formally left the E.U. Brexit may have an adverse impact on advertising, subscribers, distributors and employees, as described in Item 1A, Risk Factors, below.

The withdrawal agreement included a transitional period until December 2020.

Discovery, like many international media businesses, sought to mitigate this risk by applying for broadcast licenses in remaining E.U. member states, thereby allowing us continued access to the E.U. single market.

We have been operating our E.U. pay-TV channels under Dutch jurisdiction since March 2019.

Most of our E.U. free to air channels which were previously operating under the U.K. authority, Ofcom, are operating under German jurisdiction as of January 1, 2021.

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 [removed: liquidity.][added: cash flows.]

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, vendors, other business partners or patent issues.

As of February 1, 2022, eight lawsuits have been filed by alleged Discovery stockholders against Discovery and the Discovery Board related to the proposed transaction to combine with WarnerMedia.

A complaint captioned Rahman v.

Discovery Inc. et al., Case No. 1:21-cv-09785 (the “Rahman Complaint”), was filed in the United States District Court for the Southern District of New York on November 23, 2021.

A complaint captioned Chiao v.

Discovery Inc. et al., Case No. 1:21-cv-10409, was filed in the United States District Court for the Southern District of New York on December 6, 2021.

A complaint captioned Whitfield v.

Discovery Inc. et al., Case No. 1:21-cv-10514 (the “Whitfield Complaint”), was filed by Matthew Whitfield in the United States District Court for the Southern District of New York on December 8, 2021.

A complaint captioned Solakian v.

Discovery Inc. et al., Case No. 1:21-cv-06806, was filed in the United States District Court for the Eastern District of New York on December 8, 2021.

A complaint captioned Finger v.

Discovery Inc. et al., Case No. 2:21-cv-09799, was filed in the United States District Court for the Central District of California on December 20, 2021.

A complaint captioned Ciccotelli v.

Discovery Inc. et al., Case No. 2:21-cv-05566, was filed in the United States District Court for the Eastern District of Pennsylvania on December 21, 2021.

A complaint captioned Kent v.

Discovery Inc. et al., Case No. 1:22-cv-00033-UNA, was filed by Michael Kent in the United States District Court for the District of Delaware on January 7, 2022.

A complaint captioned Jones v.

Discovery Inc. et al., Case No. 1:22-cv-00204, was filed by Brian Jones in the United States District Court for the Southern District of New York on January 10, 2022.

Each of the above complaints name as defendants Discovery and members of the Discovery Board.

The Whitfield Complaint and the Rahman Complaint also name as defendants AT&T and Merger Sub.

The Whitfield Complaint names Spinco as an additional defendant.

Each of the complaints alleges violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 14a-9 promulgated thereunder.

The complaints generally allege that the respective defendants filed a materially incomplete and misleading preliminary proxy statement with the SEC.

Each of the complaints seeks injunctive relief preventing the consummation of the proposed transaction to combine with WarnerMedia, damages and other relief.

The Company is party to various lawsuits and claims in the ordinary course of business.

For the fiscal year ended December 31, [removed: 2020][added: 2021]

[removed: ][added: ]

| Large accelerated filer | | | | | | ý | | | | | | Accelerated filer | | | | | | [removed: ¨] [added: ☐] | | |

| Non-accelerated filer | | | | | | [removed: ¨] [added: ☐] | | | | | | Smaller reporting company | | | | | | ☐ | | |

The aggregate market value of voting and non-voting common stock held by non-affiliates of the Registrant computed by reference to the last sales price of such stock, as of the last business day of the Registrant’s most recently completed second fiscal quarter, which was June 30, [removed: 2020,] [added: 2021,] was approximately [removed: $10] [added: $14] billion.

Total number of shares outstanding of each class of the Registrant’s common stock as of February [removed: 8, 2021] [added: 10, 2022] was:

| Series [removed: A] [added: B] Common Stock, par value $0.01 per share | | | [removed: 162,490,752] [added: 6,511,917] | | |

| Series [removed: B] [added: A] Common Stock, par value $0.01 per share | | | [removed: 6,512,378] [added: 169,580,151] | | |

| Series C Common Stock, par value $0.01 per share | | | [removed: 318,331,065] [added: 330,153,753] | | |

Certain information required in Item 10 through Item 14 of Part III of this Annual Report on Form 10-K is incorporated herein by reference to the Registrant’s definitive Proxy Statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders, which shall be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as [removed: amended, within 120 days of the Registrant’s fiscal year end.][added: amended.]

| [ITEM 1. [removed: Business.](#i31c2ada4f12b44fe9716bb0c9b772e30_13)] [added: Business.](#ifb6f7f0391304704bde96ba6f2c3bef1_13)] | | | [removed: [5](#i31c2ada4f12b44fe9716bb0c9b772e30_13)] [added: [5](#ifb6f7f0391304704bde96ba6f2c3bef1_13)] | | |

| [ITEM 1A. Risk [removed: Factors.](#i31c2ada4f12b44fe9716bb0c9b772e30_16)] [added: Factors.](#ifb6f7f0391304704bde96ba6f2c3bef1_16)] | | | [removed: [21](#i31c2ada4f12b44fe9716bb0c9b772e30_16)] [added: [21](#ifb6f7f0391304704bde96ba6f2c3bef1_16)] | | |

| [ITEM 1B. Unresolved Staff [removed: Comments.](#i31c2ada4f12b44fe9716bb0c9b772e30_19)] [added: Comments.](#ifb6f7f0391304704bde96ba6f2c3bef1_19)] | | | [removed: [32](#i31c2ada4f12b44fe9716bb0c9b772e30_19)] [added: [36](#ifb6f7f0391304704bde96ba6f2c3bef1_19)] | | |

| [ITEM 2. [removed: Properties.](#i31c2ada4f12b44fe9716bb0c9b772e30_22)] [added: Properties.](#ifb6f7f0391304704bde96ba6f2c3bef1_22)] | | | [removed: [33](#i31c2ada4f12b44fe9716bb0c9b772e30_22)] [added: [36](#ifb6f7f0391304704bde96ba6f2c3bef1_22)] | | |

| [ITEM 3. Legal [removed: Proceedings.](#i31c2ada4f12b44fe9716bb0c9b772e30_25)] [added: Proceedings.](#ifb6f7f0391304704bde96ba6f2c3bef1_25)] | | | [removed: [33](#i31c2ada4f12b44fe9716bb0c9b772e30_25)] [added: [37](#ifb6f7f0391304704bde96ba6f2c3bef1_25)] | | |

| [ITEM 4. Mine Safety [removed: Disclosures.](#i31c2ada4f12b44fe9716bb0c9b772e30_28)] [added: Disclosures.](#ifb6f7f0391304704bde96ba6f2c3bef1_28)] | | | [removed: [33](#i31c2ada4f12b44fe9716bb0c9b772e30_28)] [added: [37](#ifb6f7f0391304704bde96ba6f2c3bef1_28)] | | |

| [ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities.](#i31c2ada4f12b44fe9716bb0c9b772e30_34)] [added: Securities.](#ifb6f7f0391304704bde96ba6f2c3bef1_34)] | | | [removed: [36](#i31c2ada4f12b44fe9716bb0c9b772e30_34)] [added: [40](#ifb6f7f0391304704bde96ba6f2c3bef1_34)] | | |

| [ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations.](#i31c2ada4f12b44fe9716bb0c9b772e30_43)] [added: Operations.](#ifb6f7f0391304704bde96ba6f2c3bef1_43)] | | | [removed: [38](#i31c2ada4f12b44fe9716bb0c9b772e30_43)] [added: [41](#ifb6f7f0391304704bde96ba6f2c3bef1_43)] | | |

| [ITEM 7A. Quantitative and Qualitative Disclosures about Market [removed: Risk.](#i31c2ada4f12b44fe9716bb0c9b772e30_61)] [added: Risk.](#ifb6f7f0391304704bde96ba6f2c3bef1_85)] | | | [removed: [57](#i31c2ada4f12b44fe9716bb0c9b772e30_61)] [added: [58](#ifb6f7f0391304704bde96ba6f2c3bef1_85)] | | |

| [ITEM 8. Financial Statements and Supplementary [removed: Data.](#i31c2ada4f12b44fe9716bb0c9b772e30_64)] [added: Data.](#ifb6f7f0391304704bde96ba6f2c3bef1_88)] | | | [removed: [59](#i31c2ada4f12b44fe9716bb0c9b772e30_64)] [added: [61](#ifb6f7f0391304704bde96ba6f2c3bef1_88)] | | |

| [ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure.](#i31c2ada4f12b44fe9716bb0c9b772e30_253)] [added: Disclosure.](#ifb6f7f0391304704bde96ba6f2c3bef1_253)] | | | [removed: [123](#i31c2ada4f12b44fe9716bb0c9b772e30_253)] [added: [118](#ifb6f7f0391304704bde96ba6f2c3bef1_253)] | | |

| [ITEM 9A. Controls and [removed: Procedures.](#i31c2ada4f12b44fe9716bb0c9b772e30_256)] [added: Procedures.](#ifb6f7f0391304704bde96ba6f2c3bef1_256)] | | | [removed: [123](#i31c2ada4f12b44fe9716bb0c9b772e30_256)] [added: [118](#ifb6f7f0391304704bde96ba6f2c3bef1_256)] | | |

| [ITEM 9B. Other [removed: Information.](#i31c2ada4f12b44fe9716bb0c9b772e30_259)] [added: Information.](#ifb6f7f0391304704bde96ba6f2c3bef1_259)] | | | [removed: [123](#i31c2ada4f12b44fe9716bb0c9b772e30_259)] [added: [118](#ifb6f7f0391304704bde96ba6f2c3bef1_259)] | | |

| [PART [removed: III](#i31c2ada4f12b44fe9716bb0c9b772e30_262)] [added: III](#ifb6f7f0391304704bde96ba6f2c3bef1_262)] | | | [removed: [123](#i31c2ada4f12b44fe9716bb0c9b772e30_262)] [added: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_262)] | | |

| [ITEM 10. Directors, Executive Officers and Corporate [removed: Governance.](#i31c2ada4f12b44fe9716bb0c9b772e30_265)] [added: Governance.](#ifb6f7f0391304704bde96ba6f2c3bef1_265)] | | | [removed: [123](#i31c2ada4f12b44fe9716bb0c9b772e30_265)] [added: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_265)] | | |

| [ITEM 11. Executive [removed: Compensation.](#i31c2ada4f12b44fe9716bb0c9b772e30_268)] [added: Compensation.](#ifb6f7f0391304704bde96ba6f2c3bef1_268)] | | | [removed: [124](#i31c2ada4f12b44fe9716bb0c9b772e30_268)] [added: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_268)] | | |

| [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters.](#i31c2ada4f12b44fe9716bb0c9b772e30_271)] [added: Matters.](#ifb6f7f0391304704bde96ba6f2c3bef1_271)] | | | [removed: [124](#i31c2ada4f12b44fe9716bb0c9b772e30_271)] [added: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_271)] | | |

| [ITEM 13. Certain Relationships and Related Transactions, and Director [removed: Independence.](#i31c2ada4f12b44fe9716bb0c9b772e30_274)] [added: Independence.](#ifb6f7f0391304704bde96ba6f2c3bef1_274)] | | | [removed: [124](#i31c2ada4f12b44fe9716bb0c9b772e30_274)] [added: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_274)] | | |

| [ITEM 14. Principal Accountant Fees and [removed: Services.](#i31c2ada4f12b44fe9716bb0c9b772e30_277)] [added: Services.](#ifb6f7f0391304704bde96ba6f2c3bef1_277)] | | | [removed: [124](#i31c2ada4f12b44fe9716bb0c9b772e30_277)] [added: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_277)] | | |

| [ITEM 15. Exhibits and Financial Statement [removed: Schedules.](#i31c2ada4f12b44fe9716bb0c9b772e30_283)] [added: Schedules.](#ifb6f7f0391304704bde96ba6f2c3bef1_283)] | | | [removed: [125](#i31c2ada4f12b44fe9716bb0c9b772e30_283)] [added: [121](#ifb6f7f0391304704bde96ba6f2c3bef1_283)] | | |

| [ITEM 16. Form 10-K [removed: Summary.](#i31c2ada4f12b44fe9716bb0c9b772e30_289)] [added: Summary.](#ifb6f7f0391304704bde96ba6f2c3bef1_289)] | | | [removed: [132](#i31c2ada4f12b44fe9716bb0c9b772e30_289)] [added: [128](#ifb6f7f0391304704bde96ba6f2c3bef1_289)] | | |

Certain statements in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, marketing and operating strategies, integration of acquired businesses, new service offerings, financial prospects, [removed: and] anticipated sources and uses of [removed: capital.][added: capital and our proposed transaction to combine our business with AT&T’s WarnerMedia business.]

- changes in the distribution and viewing of television programming, including the [added: continuing] expanded deployment of personal video recorders, subscription video on demand, internet protocol television, mobile personal [removed: devices and] [added: devices,] personal tablets and [added: user-generated content and] their impact on television advertising revenue;

- fluctuations in foreign currency exchange rates, political unrest and regulatory changes in international [added: markets, including any proposed or adopted regulatory changes that impact the operations of our international media properties and/or modify the terms under which we offer our services and operate in international] markets;

- our ability to complete, integrate, maintain and obtain the anticipated benefits and synergies from our proposed business combinations and acquisitions, [added: including our proposed transaction to combine with WarnerMedia,] on a timely basis or at all;

- uncertainties associated with product and service development and market acceptance, including the development and provision of programming for new television and telecommunications technologies, and the success of our [removed: new] discovery+ streaming product;

- changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission [removed: ("FCC")] and [added: similar authorities internationally and] data privacy regulations and adverse outcomes from regulatory proceedings;

- threatened [removed: or actual cyber or] terrorist attacks and military action;

[removed: For additional risk factors, refer to Item 1A, “Risk Factors.”] These forward-looking statements and such risks, uncertainties, and other factors speak only as of the date of this Annual Report on Form 10-K, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.

| 230 Park Avenue South | | | | | | | | | 10003 | | |

| New York, New York | | | | | | | | | (Zip Code) | | |

(212) 548-5555

| [PART I](#ifb6f7f0391304704bde96ba6f2c3bef1_10) | | | | | |

| [PART II](#ifb6f7f0391304704bde96ba6f2c3bef1_31) | | | [40](#ifb6f7f0391304704bde96ba6f2c3bef1_31) | | |

| [ITEM 6. \[Reserved](#ifb6f7f0391304704bde96ba6f2c3bef1_40)[.](#ifb6f7f0391304704bde96ba6f2c3bef1_40)[\]](#ifb6f7f0391304704bde96ba6f2c3bef1_40) | | | [41](#ifb6f7f0391304704bde96ba6f2c3bef1_40) | | |

| [ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.](#ifb6f7f0391304704bde96ba6f2c3bef1_10445360466625) | | | [119](#ifb6f7f0391304704bde96ba6f2c3bef1_10445360466625) | | |

| [PART IV](#ifb6f7f0391304704bde96ba6f2c3bef1_280) | | | [121](#ifb6f7f0391304704bde96ba6f2c3bef1_280) | | |

| [SIGNATURES](#ifb6f7f0391304704bde96ba6f2c3bef1_292) | | | [129](#ifb6f7f0391304704bde96ba6f2c3bef1_292) | | |

- the occurrence of any event, change or other circumstance that could give rise to the termination of, or prevent or delay our ability to consummate, our proposed transaction to combine with WarnerMedia;

- the effects of the announcement, pendency or completion of our proposed transaction to combine with WarnerMedia on our ongoing business operations;

- realizing direct-to-consumer subscriber goals;

- the outcome of any pending or threatened or potential litigation, including any litigation that has been or may be instituted against us relating to our proposed transaction to combine with WarnerMedia;

- availability of qualified personnel and recruiting, motivating and retaining talent;

- threatened or actual cyber-attacks and cybersecurity breaches;

For additional risk factors, refer to Item 1A, “Risk Factors” of this Annual Report on Form 10-K.

| 8403 Colesville Road | | | | | | | | | 20910 | | |

| Silver Spring, | | | Maryland | | | | | | (Zip Code) | | |

(240) 662-2000

| [PART I](#i31c2ada4f12b44fe9716bb0c9b772e30_10) | | | | | |

| [PART II](#i31c2ada4f12b44fe9716bb0c9b772e30_31) | | | [36](#i31c2ada4f12b44fe9716bb0c9b772e30_31) | | |

| [PART IV](#i31c2ada4f12b44fe9716bb0c9b772e30_280) | | | [124](#i31c2ada4f12b44fe9716bb0c9b772e30_280) | | |

| [SIGNATURES](#i31c2ada4f12b44fe9716bb0c9b772e30_292) | | | [133](#i31c2ada4f12b44fe9716bb0c9b772e30_292) | | |

- uncertainties inherent in the development of new business lines and business strategies;

- our ability to achieve the efficiencies, savings and other benefits anticipated from our cost-reduction initiatives;

- the outcome of any pending or threatened litigation;

- availability of qualified personnel;

- the possibility or duration of an industry-wide strike or other job action affecting a major entertainment industry union;

We own and lease approximately [removed: 3.33] [added: 2.94] million square feet of building space in [removed: 120] [added: 116] locations around the world.

In the U.S., we [removed: have 29] [added: own and lease approximately 1.46 million square feet of building space at 27] locations [removed: including 405] [added: representing 398] thousand square feet of owned space and [removed: 1.37] [added: 1.06] million square feet that we lease.

[removed: (i)] [added: -] a [removed: planned] Global [removed: headquarters] [added: Headquarters] in New York, New [removed: York; once completed it will house] [added: York, primarily used for general office space by] various business units including [removed: Direct-to-Consumer, Corporate functions, U.S.] Ad Sales, U.S. [removed: Networks] [added: Networks, DTC, Corporate functions] and Discovery Digital [removed: Studios,][added: Studios and production space used for U.S. Networks;]

[removed: (iii) three] [added: - two] owned offices in Knoxville, Tennessee, used for general office [removed: space,] [added: space and for] technology support and content production (including studios and production [removed: support),] [added: support space), respectively,] and [added: one leased] warehouse [removed: space, respectively,][added: space;]

[removed: (iv)] [added: -] two leased offices in Los Angeles, California, used for general office space by our U.S. Networks, U.S. Ad [removed: Sales and] [added: Sales,] Corporate [added: Operations] functions, and by our U.S. [removed: Networks and] [added: Networks,] content production functions (including production [removed: support), respectively,][added: support space), respectively;]

[removed: (v)] [added: - a] leased [removed: general] office [removed: space] in Miami, Florida, primarily used [added: for general office space] by our International Networks [removed: segment, where work is underway to reduce our real estate footprint in 2021, and][added: segment;]

[removed: (vi)] [added: -] an owned technical facility in Sterling, Virginia, used to manage all technical aspects of [removed: the majority] [added: most] of our global linear and digital businesses.

We also own and lease approximately [removed: 1.56] [added: 1.48] million square feet of building space at [removed: 91] [added: 89] locations outside of the [removed: U.S.] [added: U.S., representing 299 thousand square feet of owned space in Poland] and [removed: are rationalizing our overall real estate footprint as individual leases expire.][added: 1.18 million square feet that we lease.]

In Poland, our TVN business unit has [removed: 34] [added: 31] locations including 299 thousand square feet of owned space and [removed: 392] [added: 390] thousand square feet that we lease.

We have undertaken consolidations across [removed: our] [added: the] global [removed: real estate] portfolio, resulting in a reduction of approximately [removed: 196] [added: 391] thousand square [removed: feet.][added: feet, primarily through consolidation of offices in New York City and we are rationalizing our overall real estate footprint as individual leases expire.]

Each property is considered to be in good condition, adequate for its purpose, and suitably utilized according to the individual nature and requirements of the relevant [removed: operations.][added: operations housed within.]

Our policy is to improve and replace property as considered [removed: appropriate] [added: appropriate,] to [added: efficiently] meet the needs of the individual [removed: operation.][added: operations.]

Our facility management response to COVID-19 [removed: was immediate] [added: is dynamic] and [added: ongoing, with regular adjustments made to ensure] our site teams continue to follow guidelines issued by local, [removed: national] [added: national,] and regional public and government health authorities.

- a planned new office in Bellevue, Washington that will house the DTC business unit once fully completed;

Our enhanced cleaning and disinfection programs have remained in place since the beginning of the pandemic and we have assessed environmental and building infrastructural components such as air quality, ventilation, and filtration for all of our locations, with remedial actions undertaken where necessary.

(ii) two leased offices across New York, New York, collectively used to support Corporate functions, U.S. Ad Sales, U.S. Networks, Direct-to-Consumer and Discovery Digital Studios, which will be consolidated into the Global Headquarters after their leases expire in 2021,

Our enhanced cleaning and disinfecting programs were proactive and are ongoing and we are addressing environmental and building infrastructural components such as air quality, ventilation and filtration.

Pursuant to General Instruction G(3) to Form 10-K, the information regarding our executive officers required by Item 401(b) of Regulation S-K is hereby included in Part I of this [removed: report.][added: Annual Report on Form 10-K.]

The following table sets forth the name and date of birth of each of our executive officers and the office held by such officer as of February [removed: 22, 2021.][added: 24, 2022.]

| David M. Zaslav Born January 15, 1960 | | | | | | President, Chief Executive Officer and a common stock director. Mr. Zaslav has served as our President and Chief Executive Officer since January 2007 and a common stock director since September 2008. Mr. Zaslav served as President, Cable & Domestic Television and New Media Distribution of NBC Universal, Inc. ("NBC"), a media and entertainment company, from May 2006 to December 2006. Mr. Zaslav served as Executive Vice President of NBC, and President of NBC Cable, a division of NBC, from October 1999 to May 2006. Mr. Zaslav is a member of the [removed: board] [added: boards] of Sirius XM Radio [removed: Inc.,] [added: Inc. and] Grupo Televisa [removed: S.A.B and LionsGate Entertainment Corp.] [added: S.A.B.] | | |

Executive Officers of Discovery, Inc.

Information about our Executive Officers

As of February [removed: 8, 2021,] [added: 10, 2022,] there were approximately [removed: 1,106, 64] [added: 1,030, 57] and [removed: 1,629] [added: 1,525] record holders of our Series A common stock, Series B common stock and Series C common stock, respectively.

The graph assumes $100 originally invested on December 31, [removed: 2015] [added: 2016] in [removed: each of] our Series A common stock, Series B common stock and Series C common stock, the S&P 500 Index, and the stocks of the Peer Group, including reinvestment of dividends, for the years ended December 31, [removed: 2016,] 2017, 2018, [removed: 2019] [added: 2019, 2020] and [removed: 2020.][added: 2021.]

[removed: ][added: ]

| | | | | | | [removed: December 31, 2015] [added: 2016] | | | | | | [removed: December 31, 2016] [added: 2017] | | | | | | [removed: December 31, 2017] [added: 2018] | | | | | | [removed: December 31, 2018] [added: 2019] | | | | | | [removed: December 31, 2019] [added: 2020] | | | | | | [removed: December 31, 2020] [added: 2021] | | |

NOTE: Prepared by Zacks Investment Research, Inc. Used with permission.

All rights reserved.

Copyright 1980-2022.

NOTE: Index Data: Copyright Standard and Poor’s, Inc. Used with permission.

All rights reserved.

| | | | | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| DISCA | | | | | | $ | 100.00 | | | | | $ | 81.65 | | | | | $ | 90.26 | | | | | $ | 119.46 | | | | | $ | 109.79 | | | | | $ | 85.89 | |

| DISCB | | | | | | $ | 100.00 | | | | | $ | 85.08 | | | | | $ | 114.93 | | | | | $ | 124.40 | | | | | $ | 111.15 | | | | | $ | 102.06 | |

| DISCK | | | | | | $ | 100.00 | | | | | $ | 79.05 | | | | | $ | 86.18 | | | | | $ | 113.85 | | | | | $ | 97.80 | | | | | $ | 85.51 | |

| S&P 500 | | | | | | $ | 100.00 | | | | | $ | 121.83 | | | | | $ | 116.49 | | | | | $ | 153.17 | | | | | $ | 181.35 | | | | | $ | 233.41 | |

| Peer Group | | | | | | $ | 100.00 | | | | | $ | 103.28 | | | | | $ | 103.43 | | | | | $ | 133.73 | | | | | $ | 159.05 | | | | | $ | 138.99 | |

| DISCA | | | | | | $ | 100.00 | | | | | $ | 102.74 | | | | | $ | 83.89 | | | | | $ | 92.74 | | | | | $ | 122.73 | | | | | $ | 112.79 | |

| DISCB | | | | | | $ | 100.00 | | | | | $ | 107.84 | | | | | $ | 91.75 | | | | | $ | 123.94 | | | | | $ | 134.15 | | | | | $ | 119.87 | |

| DISCK | | | | | | $ | 100.00 | | | | | $ | 106.19 | | | | | $ | 83.94 | | | | | $ | 91.51 | | | | | $ | 120.90 | | | | | $ | 103.85 | |

| S&P 500 | | | | | | $ | 100.00 | | | | | $ | 111.96 | | | | | $ | 136.40 | | | | | $ | 130.42 | | | | | $ | 171.49 | | | | | $ | 203.04 | |

| Peer Group | | | | | | $ | 100.00 | | | | | $ | 103.66 | | | | | $ | 107.06 | | | | | $ | 107.22 | | | | | $ | 138.63 | | | | | $ | 164.87 | |

Recent Sales of Unregistered Securities

On December 21, 2020, we issued 1,340,954 shares of our Series A common stock in a private transaction exempt from registration under Section 4(a)(2) of the Securities Act to Harpo, Inc. (“Harpo”) in exchange for a portion of Harpo’s equity interest in our consolidated subsidiary OWN LLC (“OWN LLC”), a joint venture between Harpo and our wholly-owned indirect subsidiary, Discovery Communications LLC.

We received aggregate consideration valued at approximately $35 million in the form of a portion of Harpo’s equity in OWN LLC.

Purchases of Equity Securities

The following table presents information about our repurchases of common stock that were made through open market transactions during the three months ended December 31, 2020 (in millions, except per share amounts).

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period | | | | | | Total Number of Series C Shares Purchased | | | | | | Average Price Paid per Share: Series C (a) | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | |

| October 1, 2020 - October 31, 2020 | | | | | | 7,116,503 | | | | | | $ | 19.01 | | | | | 7,116,503 | | | | | | $ | 1,477,152,160 | |

| November 1, 2020 - November 30, 2020 | | | | | | 3,808,891 | | | | | | $ | 20.41 | | | | | 3,808,891 | | | | | | $ | 1,399,423,245 | |

| December 1, 2020 - December 31, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 1,399,423,245 | |

| Total | | | | | | 10,925,394 | | | | | | | | | | | | 10,925,394 | | | | | | | | |

(a) The amounts do not give effect to any fees, commissions or other costs associated with repurchases of shares.

| [Management’s Report on Internal Control Over Financial [removed: Reporting.](#i31c2ada4f12b44fe9716bb0c9b772e30_67)] [added: Reporting.](#ifb6f7f0391304704bde96ba6f2c3bef1_91)] | | | [removed: [60](#i31c2ada4f12b44fe9716bb0c9b772e30_67)] [added: [62](#ifb6f7f0391304704bde96ba6f2c3bef1_91)] | | |

| [Report of Independent Registered Public Accounting [removed: Firm.](#i31c2ada4f12b44fe9716bb0c9b772e30_70)] [added: Firm](#ifb6f7f0391304704bde96ba6f2c3bef1_94). (PCAOB ID 238)] | | | [removed: [61](#i31c2ada4f12b44fe9716bb0c9b772e30_70)] [added: [63](#ifb6f7f0391304704bde96ba6f2c3bef1_94)] | | |

| [Consolidated Financial Statements of Discovery, [removed: Inc.:](#i31c2ada4f12b44fe9716bb0c9b772e30_73)] [added: Inc.:](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] | | | [removed: [64](#i31c2ada4f12b44fe9716bb0c9b772e30_73)] [added: [65](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] | | |

| [Consolidated Balance [removed: Sheets](#i31c2ada4f12b44fe9716bb0c9b772e30_73).] [added: Sheets](#ifb6f7f0391304704bde96ba6f2c3bef1_97).] | | | [removed: [64](#i31c2ada4f12b44fe9716bb0c9b772e30_73)] [added: [65](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] | | |

| [Consolidated Statements of [removed: Operations](#i31c2ada4f12b44fe9716bb0c9b772e30_79).] [added: Operations](#ifb6f7f0391304704bde96ba6f2c3bef1_100).] | | | [removed: [65](#i31c2ada4f12b44fe9716bb0c9b772e30_79)] [added: [66](#ifb6f7f0391304704bde96ba6f2c3bef1_100)] | | |

| [Consolidated Statements of Comprehensive Income [removed: (Loss)](#i31c2ada4f12b44fe9716bb0c9b772e30_82).] [added: (Loss)](#ifb6f7f0391304704bde96ba6f2c3bef1_103).] | | | [removed: [66](#i31c2ada4f12b44fe9716bb0c9b772e30_82)] [added: [67](#ifb6f7f0391304704bde96ba6f2c3bef1_103)] | | |

| [Consolidated Statements of Cash [removed: Flows](#i31c2ada4f12b44fe9716bb0c9b772e30_85).] [added: Flows](#ifb6f7f0391304704bde96ba6f2c3bef1_106).] | | | [removed: [67](#i31c2ada4f12b44fe9716bb0c9b772e30_85)] [added: [68](#ifb6f7f0391304704bde96ba6f2c3bef1_106)] | | |

| [Consolidated Statements of [removed: Equity](#i31c2ada4f12b44fe9716bb0c9b772e30_88).] [added: Equity](#ifb6f7f0391304704bde96ba6f2c3bef1_109).] | | | [removed: [68](#i31c2ada4f12b44fe9716bb0c9b772e30_88)] [added: [69](#ifb6f7f0391304704bde96ba6f2c3bef1_109)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i31c2ada4f12b44fe9716bb0c9b772e30_91).] [added: Statements](#ifb6f7f0391304704bde96ba6f2c3bef1_112).] | | | [removed: [69](#i31c2ada4f12b44fe9716bb0c9b772e30_91)] [added: [70](#ifb6f7f0391304704bde96ba6f2c3bef1_112)] | | |

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s system of internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] based on the framework set forth in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on its evaluation, management concluded that, as of December 31, [removed: 2020,] [added: 2021,] the Company’s internal control over financial reporting was effective at a reasonable assurance level based on the specified criteria.

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report in Item 8 of Part II of this Annual Report on Form 10-K under the caption “Report of Independent Registered Public Accounting Firm.”

We have audited the accompanying consolidated balance sheets of Discovery, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the related consolidated statements of operations, of comprehensive income (loss), of equity and of cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, [removed: 2020] [added: 2021] appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020] [added: 2021] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for goodwill impairment and content in 2020, [removed: the manner in which it accounts for leases in 2019,] and the manner in which it accounts for [removed: revenue from contracts with customers] [added: leases] in [removed: 2018.][added: 2019.]

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current period audit of the consolidated financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that (i) [removed: relate] [added: relates] to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of [added: a] critical audit [removed: matters] [added: matter] does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matters] [added: matter] below, providing separate opinions on the critical audit [removed: matters] [added: matter] or on the accounts or disclosures to which [removed: they relate.][added: it relates.]

As described in Notes 2 and 18 to the consolidated financial statements, the Company’s reserves for uncertain tax positions were [removed: $348] [added: $420] million as of December 31, [removed: 2020.][added: 2021.]

These procedures also included, among others (i) testing the information used in the determination of certain reserves for uncertain tax positions, including international and federal filing positions and the related final tax returns; (ii) testing the calculation of [added: the] liability for certain reserves for uncertain tax positions by jurisdiction, including evaluating management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained, as well as the likelihood of the possible estimated outcome; (iii) [added: for certain uncertain tax positions,] testing the completeness of management’s assessment [removed: of uncertain tax positions] and possible [removed: outcomes of certain tax positions,] [added: outcomes,] and (iv) evaluating the status and results of income tax audits with the relevant tax authorities.

The Company evaluates goodwill [added: and other indefinite-lived intangible assets] for impairment annually as of October [removed: 1] [added: 1,] or earlier if an event or other circumstance indicates that [removed: they] [added: it] may not recover the carrying value of the asset.

Significant judgments and assumptions [removed: by management in the DCF model specific to the Europe reporting unit included] [added: for all quantitative goodwill tests performed include] the amount and timing of [removed: expected] future cash flows, including revenue growth rates, long-term growth [removed: rates] [added: rates,] and discount rates.

| | | | | | | [added: 2021 | | | | | |] 2020 | | | | | | 2019 | | |

| Cash and cash equivalents | | | | | | $ | [removed: 2,091] [added: 3,905] | | | | | $ | [removed: 1,552] [added: 2,091] | |

| Receivables, net | | | | | | [removed: 2,537] [added: 2,446] | | | | | | [removed: 2,633] [added: 2,537] | | |

| Content rights and prepaid license fees, net | | | | | | [removed: 532] [added: 245] | | | | | | [removed: 579] [added: 532] | | |

| Prepaid expenses and other current assets | | | | | | [removed: 970] [added: 668] | | | | | | [removed: 453] [added: 970] | | |

| Total current assets | | | | | | [removed: 6,130] [added: 7,264] | | | | | | [removed: 5,217] [added: 6,130] | | |

| Noncurrent content rights, net | | | | | | [removed: 3,439] [added: 3,832] | | | | | | [removed: 3,129] [added: 3,439] | | |

| Property and equipment, net | | | | | | [removed: 1,206] [added: 1,336] | | | | | | [removed: 951] [added: 1,206] | | |

| Goodwill | | | | | | [removed: 13,070] [added: 12,912] | | | | | | [removed: 13,050] [added: 13,070] | | |

| Intangible assets, net | | | | | | [removed: 7,640] [added: 6,317] | | | | | | [removed: 8,667] [added: 7,640] | | |

| Equity method investments | | | | | | [removed: 507] [added: 543] | | | | | | [removed: 568] [added: 507] | | |

| Other noncurrent assets | | | | | | [removed: 2,095] [added: 2,223] | | | | | | [removed: 2,153] [added: 2,095] | | |

| Total assets | | | | | | $ | [removed: 34,087] [added: 34,427] | | | | | $ | [removed: 33,735] [added: 34,087] | |

| Accounts payable | | | | | | $ | [removed: 397] [added: 412] | | | | | $ | [removed: 463] [added: 397] | |

| Accrued liabilities | | | | | | [removed: 1,793] [added: 2,230] | | | | | | [removed: 1,678] [added: 1,793] | | |

| Deferred revenues | | | | | | [removed: 557] [added: 478] | | | | | | [removed: 489] [added: 557] | | |

| Current portion of debt | | | | | | [removed: 335] [added: 339] | | | | | | [removed: 609] [added: 335] | | |

Washington, District of Columbia

February 24, 2022

| Net income | | | | | | $ | 1,197 | | | | | $ | 1,355 | | | | | $ | 2,213 | |

| Depreciation and amortization | | | | | | 1,582 | | | | | | 1,359 | | | | | | 1,347 | | |

| Impairment of goodwill and other intangible assets | | | | | | — | | | | | | 124 | | | | | | 155 | | |

| Preferred stock conversion | | | | | | (1) | | | | | | — | | | | | | 11 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

| December 31, 2021 | | | | | | 12 | | | | | | $ | — | | | | | 736 | | | | | | $ | 7 | | | | | $ | 11,086 | | | | | $ | (8,244) | | | | | $ | 9,580 | | | | | $ | (830) | | | | | $ | 11,599 | | | | | $ | 1,434 | | | | | $ | 13,033 | |

In January 2021, the Company launched discovery+, its aggregated DTC product, in the U.S. across several streaming platforms.

The pandemic did not have a significant impact on demand during fiscal year 2021.

Premiums paid for these instruments and associated settlements are reflected as components of investing cash flows.

The guidance is for March 12, 2020 through December 31, 2022 and may not be applied to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022.

The Company will apply the relevant provisions of the guidance to its existing hedge relationships.

Business Combinations

In October 2021, the Financial Standards Accounting Board ("FASB") issued guidance that requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination as if it had originated the contracts.

The guidance is effective for interim and annual periods beginning after December 15, 2022, and may be early adopted.

The Company early adopted this guidance during the third quarter of 2021.

The adoption of this guidance did not have a material impact on the Company's consolidated financial statements for prior acquisitions in the current annual period, and the impact in future periods will be dependent on the contract assets and contract liabilities acquired in future business combinations.

WarnerMedia

In May 2021, the Company entered into an agreement with AT&T Inc. to combine with WarnerMedia’s ("WarnerMedia") entertainment, sports and news assets to create a standalone, global entertainment company.

The proposed combination transaction will be executed through a Reverse Morris Trust type transaction, under which WarnerMedia will be distributed to AT&T’s shareholders via a pro rata distribution (i.e., a spin off).

In connection with the combination transaction, AT&T will receive approximately $43 billion (subject to working capital and other adjustments) in a combination of cash, debt securities and WarnerMedia’s retention of certain debt.

The Company has concluded that it will be considered the accounting acquirer.

The Company established an interest rate derivative program to mitigate interest rate risk associated with the anticipated issuance of future fixed-rate debt by WarnerMedia, which is expected to be guaranteed by the Company and certain subsidiaries of the Company upon closing of the transaction.

Immediately prior to closing, all shares of Series A, Series B, and Series C common stock and Series A-1 and Series C-1 convertible preferred stock will be reclassified and converted to one class of the Company's common stock.

AT&T’s shareholders that receive WarnerMedia stock in the distribution will receive stock representing 71% of the combined company and the Company's shareholders will continue to own 29% of the combined company, in each case on a fully diluted basis.

The Boards of Directors of both AT&T and the Company have approved the transaction.

The transaction is anticipated to close in the second quarter of 2022, subject to approval by the Company's shareholders and the satisfaction of customary closing conditions, including receipt of regulatory approvals.

On December 22, 2021, the transaction received unconditional antitrust clearance from the European Commission (“EC”) pursuant to the EC Merger Regulation, and on December 28, 2021, AT&T received a favorable Private Letter Ruling from the Internal Revenue Service regarding the qualification of the transactions for their intended tax-free treatments.

On February 9, 2022, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, statutory waiting period has expired or otherwise been terminated, and any agreement not to consummate the transaction between the parties and the Federal Trade Commission or the Antitrust Division of the United States Department of Justice or any other applicable governmental entity, has also expired or otherwise been terminated.

Discovery and AT&T are in the process of obtaining other required regulatory approvals.

Agreements are in place with Dr. John Malone and Advance/Newhouse Programming Partnership to vote in favor of the transaction, representing approximately 43% of the aggregate voting power of the shares of Discovery voting stock.

The transaction requires, among other things, the consent of Advance/Newhouse Programming Partnership under the Company's certificate of incorporation as the sole holder of the Series A-1 Preferred Stock, which consent was given pursuant to a consent agreement.

In connection with Advance/Newhouse Programming Partnership’s entry into the consent agreement and related forfeiture of the significant rights attached to the Series A-1 Preferred Stock in the reclassification of the shares of Series A-1 Preferred Stock into common stock, it will receive an increase to the number of shares of common stock of the Company into which the Series A-1 Preferred Stock would be converted.

Upon the closing, the impact of the issuance of such additional shares of common stock of the Company will be recorded as a transaction expense.

No vote by AT&T shareholders is required.

The merger agreement contains certain customary termination rights for Discovery and AT&T, including, without limitation, a right for either party to terminate if the transaction is not completed on or before July 15, 2023.

Termination under specified circumstances will require Discovery to pay AT&T a termination fee of $720 million or AT&T to pay Discovery a termination fee of $1.8 billion.

In anticipation of this combination, in June 2021, Magallanes, Inc., a wholly owned subsidiary of AT&T Inc., entered into a $10 billion term loan that will be guaranteed by the Company and certain material subsidiaries of the Company upon closing of the transaction.

The joint venture replaced and rebranded the DIY Network in January 2022.

Great American Country

| | | | | | |

| --- | --- | --- | --- | --- | --- |

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

*Goodwill Quantitative Impairment Assessments for the Europe Reporting Unit*

As described in Notes 2 and 7 to the consolidated financial statements, the Company’s consolidated goodwill balance was $13.1 billion as of December 31, 2020, and the goodwill associated with the Europe reporting unit was $1.9 billion.

Management concluded that the continued impacts of COVID-19 on the operating results of the Europe reporting unit represented a triggering event in the second quarter of 2020.

If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, an impairment charge is recorded for the amount by which the carrying amount exceeds the fair value, not to exceed the amount of goodwill recorded for that reporting unit.

Management performed quantitative goodwill impairment analyses during the second and fourth quarters of 2020 for the Europe reporting unit using a discounted cash flow (“DCF”) model.

The principal considerations for our determination that performing procedures relating to the goodwill quantitative impairment assessments for the Europe reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value measurements of the reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s assumptions related to revenue growth rates, long-term growth rates, and discount rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

These procedures included testing the effectiveness of controls relating to management’s goodwill quantitative impairment assessments, including controls over the valuation of the Company’s reporting units.

These procedures also included, among others, testing management’s process for developing the fair value measurements of the Europe reporting unit, evaluating the appropriateness of the discounted cash flow model, testing the completeness and accuracy of underlying data used in the model and evaluating the significant assumptions used by management related to revenue growth rates, long-term growth rates, and discount rates.

Evaluating management’s assumptions related to revenue growth rates and long-term growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the discount rates and long-term growth rates.

McLean, Virginia

February 22, 2021

DISCOVERY, INC.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Remeasurement gain on previously held equity interests | | | | | | — | | | | | | (14) | | | | | | — | | |

| Proceeds from dispositions, net of cash disposed | | | | | | — | | | | | | — | | | | | | 107 | | |

| Borrowings under term loan facilities | | | | | | — | | | | | | — | | | | | | 2,000 | | |

| Principal repayments of term loans | | | | | | — | | | | | | — | | | | | | (2,000) | | |

| December 31, 2017 | | | | | | 14 | | | | | | $ | — | | | | | 547 | | | | | | $ | 5 | | | | | $ | 7,295 | | | | | $ | (6,737) | | | | | $ | 4,632 | | | | | $ | (585) | | | | | $ | 4,610 | | | | | $ | — | | | | | $ | 4,610 | |

| Issuance of stock and noncontrolling interest in connection with the acquisition of Scripps Networks Interactive, Inc. ("Scripps Networks") | | | | | | — | | | | | | — | | | | | | 139 | | | | | | 1 | | | | | | 3,217 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,218 | | | | | | 1,700 | | | | | | 4,918 | | |

| Cumulative effect of an accounting change (See Note 2) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2 | | | | | | — | | | | | | 2 | | | | | | — | | | | | | 2 | | |

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restrictions on social and commercial activity in an effort to contain the virus have had, and are expected to continue to have, a significant adverse impact upon many sectors of the U.S. and global economy, including the media industry.

The Company also implemented remote work arrangements effective mid-March 2020 and, to date, these arrangements have not materially affected the Company's ability to operate its business.

In addition, the Company implemented several measures to preserve sufficient liquidity in the near term.

As described further in Note 8, during March 2020, the Company drew down $500 million under its $2.5 billion revolving credit facility to increase its cash position and maximize flexibility in light of the current uncertainty surrounding the impact of COVID-19.

In addition, in April 2020, the Company entered into an amendment to its revolving credit facility, which increased flexibility under its financial covenants and issued $1.0 billion aggregate principal amount of Senior Notes due May 2030 and $1.0 billion aggregate principal amount of Senior Notes due May 2050.

The proceeds from the notes were used to fund a tender offer for $1.5 billion of certain senior notes with maturities ranging from 2021 through 2023 and to repay the $500 million outstanding under its revolving credit facility.

In light of the impact of COVID-19, the Company assessed goodwill, other intangibles, deferred tax assets, programming assets, and accounts receivable for recoverability based upon latest estimates and judgments with respect to expected future operating results, ultimate usage of content and latest expectations with respect to expected credit losses.

(See Note 7.) Adjustments to reflect increased expected credit losses were not material.

Further, hedged transactions were assessed and the Company has concluded such transactions remain probable of occurrence.

Due to significant uncertainty surrounding the impact of COVID-19, management’s judgments could change in the future.

The effects of the pandemic may have further negative impacts on the Company’s financial position, results of operations, and cash flows.

However, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably and fully estimated at this time.

In the United States, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020, and the Consolidated Appropriations Act, 2021 was enacted on December 27, 2020.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, [removed: 2020.][added: 2021.]

Based on the evaluation of our disclosure controls and procedures as of December 31, [removed: 2020,] [added: 2021,] our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

During the three months ended December 31, [removed: 2020,] [added: 2021,] there were no changes in our internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

[removed: Certain information required in Item 10 through Item 14 of Part III] [added: The time and location] of [removed: this] [added: the 2022] Annual [removed: Report on Form 10-K is incorporated herein by reference to] [added: Meeting will be specified in] our definitive Proxy Statement for [removed: our 2021] [added: the 2022] Annual [removed: Meeting of Stockholders (“2021 Proxy Statement”),] [added: Meeting,] which [removed: shall] [added: will] be filed with the SEC pursuant to Regulation 14A of the Exchange Act within 120 days of our fiscal year end.

We currently anticipate that our 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”) will be held on April 8, 2022.

Because the date of the 2022 Annual Meeting represents a change of more than 30 days from the anniversary of our 2021 Annual Meeting of Stockholders, in accordance with Rule 14a-5(f) under the Exchange Act, we are informing our stockholders of this change.

Pursuant to Rule 14a-8 under the Exchange Act, a stockholder intending to present a proposal to be included in the Proxy Statement for the 2022 Annual Meeting must deliver a proposal in writing to our principal executive offices no later than a reasonable time before we begin to print and mail the proxy materials for the 2022 Annual Meeting.

Such proposal must also comply with the applicable requirements as to form and substance established by the SEC if those proposals are to be included in the proxy statement and form of proxy.

Because the date of the 2022 Annual Meeting is more than 30 days earlier than the anniversary of our 2021 Annual Meeting of Stockholders and the previously disclosed deadline of December 31, 2021 for the submission of such proposals has expired, we have determined that the December 31, 2021 deadline constitutes a reasonable time for the submission of such proposals and that no change is needed to the deadline.

Our bylaws set forth advance notice procedures with regard to other stockholder proposals, including nominations for the election of directors and business proposals to be brought before an annual meeting of stockholders by any stockholder (other than matters included in our proxy materials in accordance with Rule 14a-8 under the Exchange Act).

With respect to the 2022 Annual Meeting, such notice will be considered timely if we receive notice of such proposed director nomination or the proposal of other business at our principal executive offices not later than the close of business on March 7, 2022.

None.

PART III

Not applicable.

PART III

Certain information required in Item 10 through Item 14 of Part III of this Annual Report on Form 10-K is incorporated herein by reference to our definitive Proxy Statement for our 2022 Annual Meeting of Stockholders (“2022 Proxy Statement”), which shall be filed with the SEC pursuant to Regulation 14A of the Exchange Act within 120 days of our fiscal year end.

Information regarding our directors, compliance with Section 16(a) of the Exchange Act, and our Audit Committee, including committee members and its financial expert, will be set forth in our [removed: 2021] [added: 2022] Proxy Statement under the captions “Proposal One: Election of Directors,” “Delinquent Section 16(a) Reports,” if applicable, and “Corporate Governance – Board Meetings and Committees – Audit Committee,” respectively, which are incorporated herein by reference.

A copy of the Code and any amendments or waivers that would be required to be disclosed under applicable SEC rules are available free of charge at [removed: the investor relations section of] our [removed: website, https://corporate.discovery.com.][added: Investor Relations website at ir.corporate.discovery.com.]

In addition, we will provide a printed copy of the Code, free of charge, upon written request to: Investor Relations, Discovery, Inc., [removed: 8403 Colesville Road, Silver Spring, MD 20910.][added: 230 Park Avenue South, New York, NY 10003.]

The information contained on our website is not part of this Annual Report on Form 10-K and is not incorporated by reference herein.

Information regarding executive compensation will be set forth in our [removed: 2021] [added: 2022] Proxy Statement under the captions “Executive Compensation – Compensation Discussion and Analysis” and “Executive Compensation – Executive Compensation Tables,” which are incorporated herein by reference.

Information regarding compensation policies and practices as they relate to our risk management, director compensation, and compensation committee interlocks and insider participation will be set forth in our [removed: 2021] [added: 2022] Proxy Statement under the captions “Executive Compensation – Compensation Discussion and Analysis – Other [removed: Compensation Related] [added: Compensation-Related] Matters – Risk Considerations in our Compensation Programs,” “Corporate Governance – Director Compensation,” and “Corporate Governance – Board Meetings and Committees – Compensation Committee,” respectively, which are incorporated herein by reference.

Information regarding the compensation committee report will be set forth in our [removed: 2021] [added: 2022] Proxy Statement under the caption “Executive Compensation – Compensation Committee Report” which is incorporated herein by reference.

Information regarding securities authorized for issuance under equity compensation plans will be set forth in our [removed: 2021] [added: 2022] Proxy Statement under the caption “Securities Authorized for Issuance Under Equity Compensation Plans,” which is incorporated herein by reference.

Information regarding security ownership of certain beneficial owners and management will be set forth in our [removed: 2021] [added: 2022] Proxy Statement under the captions “Security Ownership [removed: Information] of Certain Beneficial Owners and Management – Security Ownership of Certain Beneficial Owners” and “Security Ownership [removed: Information] of Certain Beneficial Owners and [removed: Management–] [added: Management –] Security Ownership of Management,” which are incorporated herein by reference.

Information regarding certain relationships and related transactions, and director independence will be set forth in our [removed: 2021] [added: 2022] Proxy Statement under the captions “Corporate Governance – Transactions with Related Persons” and “Corporate Governance – Director Independence,” respectively, which are incorporated herein by reference.

Information regarding principal accountant fees and services will be set forth in our [removed: 2021] [added: 2022] Proxy Statement under the captions “Audit Matters – Audit Firm Fees and Services” and “Audit Matters – Audit Committee Pre-Approval Policy,” which are incorporated herein by reference.

| [Consolidated Balance [removed: Sheets.](#i31c2ada4f12b44fe9716bb0c9b772e30_73)] [added: Sheets.](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] | | | [removed: [64](#i31c2ada4f12b44fe9716bb0c9b772e30_73)] [added: [65](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] | | |

| [Consolidated Statements of [removed: Operations.](#i31c2ada4f12b44fe9716bb0c9b772e30_79)] [added: Operations.](#ifb6f7f0391304704bde96ba6f2c3bef1_100)] | | | [removed: [65](#i31c2ada4f12b44fe9716bb0c9b772e30_79)] [added: [66](#ifb6f7f0391304704bde96ba6f2c3bef1_100)] | | |

| [Consolidated Statements of Comprehensive Income [removed: (Loss).](#i31c2ada4f12b44fe9716bb0c9b772e30_82)] [added: (Loss).](#ifb6f7f0391304704bde96ba6f2c3bef1_103)] | | | [removed: [66](#i31c2ada4f12b44fe9716bb0c9b772e30_82)] [added: [67](#ifb6f7f0391304704bde96ba6f2c3bef1_103)] | | |

| [Consolidated Statements of Cash [removed: Flows.](#i31c2ada4f12b44fe9716bb0c9b772e30_85)] [added: Flows.](#ifb6f7f0391304704bde96ba6f2c3bef1_106)] | | | [removed: [67](#i31c2ada4f12b44fe9716bb0c9b772e30_85)] [added: [68](#ifb6f7f0391304704bde96ba6f2c3bef1_106)] | | |

| [Consolidated Statements of [removed: Equity.](#i31c2ada4f12b44fe9716bb0c9b772e30_88)] [added: Equity.](#ifb6f7f0391304704bde96ba6f2c3bef1_109)] | | | [removed: [68](#i31c2ada4f12b44fe9716bb0c9b772e30_88)] [added: [69](#ifb6f7f0391304704bde96ba6f2c3bef1_109)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i31c2ada4f12b44fe9716bb0c9b772e30_91)] [added: Statements](#ifb6f7f0391304704bde96ba6f2c3bef1_112)] | | | [removed: [69](#i31c2ada4f12b44fe9716bb0c9b772e30_91)] [added: [70](#ifb6f7f0391304704bde96ba6f2c3bef1_112)] | | |

| | | | | | | Beginning of Year | | | | | | Additions | | | | | | Other (a) | | | | | | Write-offs | | | | | | [added: | | | | | |] End of Year | | | | | |

| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | |]

| Allowance for credit losses | | | | | | $ | [removed: 54] [added: 59] | | | | | [removed: 30] [added: 21] | | | | | | [removed: (2)] [added: —] | | | | | | [removed: (23)] [added: (26)] | | | | | | [added: | | | | | |] $ | [removed: 59] [added: 54] | | | | |

| Deferred tax valuation allowance | | | | | | $ | 307 | | | | | 51 | | | | | | — | | | | | | (101) | | | | | | [added: | | | | | |] $ | 257 | | | | |

| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | |]

| Allowance for credit losses | | | | | | $ | [removed: 46] [added: 54] | | | | | [removed: 15] [added: 30] | | | | | | [removed: —] [added: (2)] | | | | | | [removed: (7)] [added: (23)] | | | | | | [added: | | | | | |] $ | [removed: 54] [added: 59] | | | | |

| Deferred tax valuation allowance | | | | | | $ | 336 | | | | | 37 | | | | | | — | | | | | | (66) | | | | | | [added: | | | | | |] $ | 307 | | | | |

| Allowance for credit losses | | | | | | $ | [removed: 55] [added: 46] | | | | | [removed: 6] [added: 15] | | | | | | — | | | | | | [removed: (15)] [added: (7)] | | | | | | [added: | | | | | |] $ | [removed: 46] [added: 54] | | | | |

| Deferred tax valuation allowance [removed: (b)] | | | | | | $ | [removed: 105] [added: 257] | | | | | [removed: 283] [added: 80] | | | | | | — | | | | | | [removed: (52)] [added: (32)] | | | | | | [added: | | | | | |] $ | [removed: 336] [added: 305] | | | | |

| (a) Amount relates to the impact of the adjustment recorded for adoption of ASU 2016-13. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | |]

| 3.1 | | | | | | [Restated Certificate of [removed: Incorporation (filed herewith)](https://www.sec.gov/Archives/edgar/data/1437107/000143710721000018/a20201231-exhibit31.htm)] [added: Incorporation, dated as of September 17, 2008 (incorporated by reference to Exhibit 3.1 to the Form 10-K filed on February 22, 2021 (SEC File No. 001-34177))](https://www.sec.gov/Archives/edgar/data/1437107/000143710721000018/a20201231-exhibit31.htm)] | | |

| 3.3 | | | | | | [Amended and [removed: Restated](https://www.sec.gov/Archives/edgar/data/1437107/000143710720000093/amendedandrestatedbylaws.htm) [Bylaws] [added: Restated Bylaws] of Discovery, Inc., effective as of November 10, 2020 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on November 13, 2020](https://www.sec.gov/Archives/edgar/data/1437107/000143710720000093/amendedandrestatedbylaws.htm) [](https://www.sec.gov/Archives/edgar/data/1437107/000143710720000093/amendedandrestatedbylaws.htm)[(SEC File No. 001-34177))](https://www.sec.gov/Archives/edgar/data/1437107/000143710720000093/amendedandrestatedbylaws.htm) | | |

| 4.4 | | | | | | [Form of Registration Rights Agreement, by and between Discovery Communications, Inc. and [removed: Advance/Newhouse content Partnership] [added: Advance/Newhouse](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm) [Programming](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm) [Partnership] (incorporated by reference to Exhibit 4.4 to the Registration Statement [removed: (SEC 333-151586))](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm)] [added: (SEC](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm) [File](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm) [](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm)[N](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm)[o.](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm) [333-151586))](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w4.htm)] | | |

| [removed: 4.6] [added: 4.16] | | | | | | [removed: [Registration Rights Agreement,] [added: [Fourteenth Supplemental Indenture,] dated as of April [removed: 3,] [added: 2,] 2018, [removed: by and between] [added: among] Discovery Communications, LLC, Discovery, [added: Inc., Scripps Networks Interactive,] Inc. and [removed: Goldman Sachs & Co. LLC] [added: U.S. Bank National Association, as Trustee] (incorporated by reference to Exhibit [removed: 4.2] [added: 4.3] to the Form 8-K filed [added: on] April 4, 2018 (SEC File No. [removed: 001-34177))](http://www.sec.gov/Archives/edgar/data/1437107/000143710718000051/exhibit42-20180403.htm)] [added: 001-34177))](http://www.sec.gov/Archives/edgar/data/1437107/000143710718000051/exhibit43-20180403.htm)] | | |

| [removed: 4.7] [added: 10.16] | | | | | | [removed: [Form of Rights Agreement, by and] [added: [Employment Agreement] between Discovery Communications, Inc. and [removed: Computershare Trust Company, N.A., as rights agent] [added: David Zaslav dated January 2, 2014] (incorporated by reference to Exhibit [removed: 4.5] [added: 10.44] to the [removed: Registration Statement] [added: Form 10-K filed on February 20, 2014] (SEC File No. [removed: 333-151586))](http://www.sec.gov/Archives/edgar/data/1437107/000103570408000272/d54193exv4w5.htm)] [added: 001-34177))*](http://www.sec.gov/Archives/edgar/data/1437107/000143710714000016/a20131231-exhibit1044.htm)] | | |

| [removed: 4.8] [added: 10.22] | | | | | | [Amendment [removed: No. 1] to [removed: Rights Agreement] [added: Employment Agreement, dated September 24, 2015,] between [added: Bruce Campbell and] Discovery Communications, [removed: Inc. and Computershare Trust Company, N.A. dated December 10, 2008] [added: LLC] (incorporated by reference to Exhibit [removed: 4.1] [added: 10.1] to the Form [removed: 8-K] [added: 10-Q] filed on [removed: December 11, 2008] [added: November 3, 2015] (SEC File No. [removed: 001-34177))](http://www.sec.gov/Archives/edgar/data/1437107/000129993308005847/exhibit1.htm)] [added: 001-34177))*](http://www.sec.gov/Archives/edgar/data/1437107/000143710715000052/a20150930-exhibit101.htm)] | | |