Warner Bros. Discovery (WBD) 10-K risk factor changes: FY2022 vs FY2021

[removed: Although we expect that the Combination will result in synergies and other benefits to us, we] [added: We] may not realize [removed: those] [added: the anticipated] benefits [added: of the Merger] because of difficulties related to integration, the achievement of such synergies, and other [removed: challenges.][added: challenges faced by the combined Company.]

[added: The] Discovery [added: Business] and the WarnerMedia Business [removed: have] [added: previously] operated [removed: 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 [added: or all anticipated] financial or other benefits.

If we are not able to successfully integrate the WarnerMedia Business with [removed: ours or pursue our direct-to-consumer strategy successfully, including coordinating our streaming services for global customers,] the [added: Discovery Business, the] anticipated [removed: benefits, including synergies,] [added: benefits] of the [removed: Combination] [added: Merger] 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 [removed: operations of] Discovery [added: Business] and the WarnerMedia Business in order to realize the anticipated benefits of the [removed: Combination:][added: Merger:]

- [removed: combining] [added: integrating] the [removed: businesses of] Discovery [added: Business] and the WarnerMedia Business in the time frame currently anticipated;

- managing the expanded operations of a significantly larger and more complex company, [removed: including with Discovery’s] [added: particularly in light of the Discovery Business’s] limited prior experience in running a studio or [added: producing] scripted content;

- [removed: coordinating] [added: aligning] the businesses’ [removed: direct-to-consumer] [added: DTC] streaming services for global customers; and

- resolving potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the [removed: Combination.][added: Merger.]

Even if the [removed: operations of our business] [added: Discovery Business] and the [removed: business of the] WarnerMedia Business are integrated successfully, the full benefits of the [removed: Combination] [added: Merger] may not be [removed: realized, including, among others,] [added: achieved within] the [removed: synergies that are expected.][added: anticipated time frame or at all.]

Additional unanticipated costs may also be incurred in [added: connection with] the integration of [removed: our business and] the [removed: business] [added: legacy business, operations and activities] of [added: Discovery prior to] the [added: Merger (the “Discovery Business”) and the] WarnerMedia Business.

[removed: Further, it is possible that there] [added: Our integration efforts] could [removed: be] [added: result in a] loss of key Discovery [added: Business] or WarnerMedia Business employees, loss of customers, disruption of either or both of [removed: Discovery’s] [added: the Discovery Business’s] or [added: the] WarnerMedia [removed: Business’] [added: Business’s] ongoing businesses or unexpected issues, higher than expected costs and an overall post-completion process that takes longer than originally anticipated.

Our consolidated indebtedness [removed: will increase] [added: increased] substantially following completion of the [removed: Combination.][added: Merger.]

[removed: If] [added: As] a [removed: ratings downgrade occurs, we may need to refinance existing debt] [added: result of our increased indebtedness, our corporate] or [added: debt-specific credit rating could] be [removed: subject to higher] [added: downgraded, which may increase our] borrowing costs [removed: and] [added: or subject us to] more restrictive covenants when we incur new debt in the future, which could reduce profitability and diminish operational flexibility.

Risks Related to Our [added: Business and] Industry

Our businesses operate in highly competitive [removed: industries,] [added: industries] and if we are unable to compete effectively, our business, financial condition and results of operations could suffer.

The [removed: entertainment and] media [removed: programming] [added: and entertainment] industries in which we [removed: operate] [added: compete for viewers, distribution and advertising] are highly competitive.

[removed: Businesses,] [added: In addition, businesses,] including ours, that offer multiple services, or that may be vertically integrated and offer both video distribution and programming content, may face closer regulatory review from the competition authorities in the countries in which we currently have operations.

As a result of an increasing number of market entrants in the programming space, we have seen upward pressure on programming costs in recent years, [removed: including] [added: particularly] in connection with the licensing and acquisition of [removed: entertainment and] sports content from third [removed: parties, as well as with the commissioning of original production.][added: parties.]

We may also be impacted by such upward pressures driven by increasing investment [added: in programming] by competitors.

There can be no assurance that we will be able to compete successfully in the future against existing or new [removed: competitors,] [added: competitors to obtain licenses to recurring sports events,] or that increasing competition [added: for programming licenses and regulatory review from competition authorities] will not have a material adverse effect on our business, financial condition or results of operations.

The success of our business depends on the acceptance of our [removed: entertainment and sports] content [added: and brands] by our U.S. and foreign viewers, which may be unpredictable and volatile.

The production and distribution of [removed: entertainment and] [added: television programs, feature films,] sports [added: and news] content are inherently risky businesses because the revenue we derive and our ability to distribute our content depend primarily on consumer tastes and preferences that often change in unpredictable ways.

[removed: As] [added: For example, as] the home of the Olympic Games in Europe [removed: until 2024,] [added: through 2032,] we have been developing and innovating new forms of content in connection with the Olympic Games.

If viewers do not find our Olympic Games content acceptable, we could see low viewership, which could lead to low distribution and advertising [removed: revenues.][added: revenues and adversely affect our business, financial condition and results of operations.]

Failing to gain the level of audience acceptance we expect for [removed: the PGA Tour] [added: our] content may negatively impact our [removed: distribution] [added: business, financial condition] and [removed: advertising revenues over the period] [added: results] of [removed: the partnership.][added: operations.]

Consequently, reduced public acceptance of our [removed: entertainment] [added: television programs, feature films, sports and news] content [added: or negative publicity regarding individuals or operations associated with our content or brands] may decrease our audience share and customer/viewer reach and adversely affect our [added: business, financial condition and] results of operations.

In order to respond to [added: changing consumer behavior, increasing preferences to watch on demand,] subscription declines and changes in content distribution models in our industry, we have invested in, developed and launched DTC products including our [added: HBO Max and] discovery+ [removed: product.][added: products.]

There can be no assurance, however, that [removed: our viewers] [added: consumers and advertisers] will [removed: respond to] [added: embrace] our [removed: DTC products] [added: offerings] or that [removed: our DTC strategy] [added: subscribers] will [removed: be successful,] [added: activate or renew a subscription,] particularly given the increase in DTC products [removed: on] [added: in] the [removed: market.][added: marketplace.]

Lockdowns during the pandemic, for example, [removed: encouraged] [added: enabled] households to experiment with digital offerings including subscription video-on-demand or to stack [added: multiple streaming] subscriptions.

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

Our [added: HBO Max and] discovery+ [removed: offering is a] [added: offerings are] subscription-based streaming [removed: product] [added: products] and [removed: is] [added: are] among many such services in a crowded and competitive landscape.

[removed: Its] [added: Their] success will [removed: also] be largely dependent on our ability to initially attract, and ultimately retain, subscribers.

If we are unable to effectively market [removed: discovery+] [added: our DTC products] or if consumers do not perceive the pricing and related features of [removed: discovery+] [added: our DTC products] to be of value versus our competitors, we may not be able to attract and retain subscribers.

In particular, decreases in consumer discretionary spending where [removed: discovery+ is] [added: our DTC products are] offered may reduce our ability to attract and retain subscribers to [removed: discovery+,] [added: our services,] which could have a negative impact on our business.

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

If we are unable to attract and retain subscribers [added: and offset the losses of subscribers who cancel or discontinue their subscriptions] to [removed: discovery+,] our [removed: business] [added: DTC products, our business, financial condition and results of operations] could be adversely affected.

Failure to renew, renewal with less favorable terms, or termination of our [added: content licenses and similar] distribution agreements may cause a decline in our revenue.

Because our [added: content and pay-TV] networks are licensed [removed: on a wholesale basis] to [removed: distributors,] [added: and distributed through third parties,] such as [added: theatrical exhibitors (and in certain international territories, local theater distributors), traditional television and pay-TV broadcasters (such as] cable and satellite [removed: operators,] [added: operators) and operators of digital platforms,] which in turn [removed: distribute them] [added: make such content available, directly and indirectly,] to consumers, we are dependent upon the maintenance of [added: such licensing and] distribution agreements with [removed: these operators.][added: such third parties.]

These [removed: distribution] agreements generally provide for the [added: scope of licensed rights, including geographic territory, exploitation rights, holdbacks and/or other restrictions, including exclusivity or non-exclusivity, window(s) of exploitation (including first and second pay-TV and free to air broadcast), 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 [removed: packages)] [added: packages),] and for payment of a license fee to us based on [removed: the] [added: a] number of [removed: subscribers that receive our networks] [added: factors, including the scope of the rights granted, the popularity of the content (as measured in the case of films, for example, by box office performance for certain downstream exploitation) and the date of its first theatrical] or [removed: other factors.][added: pay-TV exhibition.]

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

Risks Related to Our Acquisition of the WarnerMedia Business

We have incurred and expect to continue to incur significant costs following the Merger.

On April 8, 2022, we completed the Merger in which we acquired the business, operations and activities that constitute the WarnerMedia Business from AT&T.

We incurred significant costs in connection with the signing and closing of the Merger, and expect to continue to incur approximately $1.0 - $1.5 billion of cash costs relating to organization restructuring, facility consolidation activities and other contract termination costs, which costs we believe will be necessary to realize the anticipated cost synergies from the Merger.

No assurances of the timing or amount of synergies able to be captured, or the timing or amount of costs necessary to achieve those synergies, can be provided.

Some of the factors affecting the costs associated with the integration phase of the Merger include the resources required in integrating the WarnerMedia Business with the Discovery Business and the length of time during which transition services are provided to us by AT&T.

The amount and timing of any such charges could materially adversely affect our business, financial condition and results of operations.

If the results of operations of the WarnerMedia Business following the Merger continue to be below management’s expectations, we may not achieve the increases in revenues and net earnings that management expects as a result of the Merger.

In connection with our comprehensive business and strategic review which commenced following the Merger, we determined that certain WarnerMedia Business budget projections that were made available to us prior to the closing of the Merger varied from what we now view as the WarnerMedia Business’s baseline post-closing.

Because we derive a majority of our revenues and net earnings from the WarnerMedia Business, if the results of operations of the WarnerMedia Business continue to be below management’s expectations, we may not achieve the increases in revenue and net earnings expected as a result of the Merger.

Significant factors that could negatively impact the results of operations of the WarnerMedia Business, and therefore harm our results of operations, include:

- more intense competitive pressure from existing or new competitors;

- fluctuations in the exchange rates in the jurisdictions in which the WarnerMedia Business operates;

- increases in promotional and operating costs for the WarnerMedia Business;

- a decline in the viewership or consumption of content provided by the WarnerMedia Business; and

- additional material variations in the results of operations of the WarnerMedia Business from expectations or projections of such results of operations, any or all of which may prove to be incorrect or inaccurate.

Further, following the Merger, the size and complexity of the business of the combined Company increased significantly.

Our future success depends, in part, upon our ability to manage this expanded business, which could pose substantial challenges for management, including challenges related to the management and monitoring of new, complex operations and associated increased costs.

Our consolidated indebtedness as of December 31, 2022 was approximately $49.3 billion, of which $363 million is current.

We had outstanding debt prior to the Merger and upon completion of the Merger, we became responsible for approximately $41.5 billion of additional debt (at par value), including debt that was issued by WarnerMedia Holdings, Inc. in connection with its separation from AT&T as well as preexisting debt of the WarnerMedia Business.

We have recognized, and could continue to recognize impairment charges, related to goodwill and other intangible assets.

The Merger added a significant amount of goodwill and other intangible assets to our consolidated balance sheet.

In accordance with U.S. GAAP, management periodically assesses these assets to determine if they are impaired.

Significant negative industry or economic trends, including the ongoing effects of the COVID-19 pandemic, disruptions to our business, inability to effectively integrate acquired businesses, underperformance of the WarnerMedia Business as compared to management's initial expectations, unexpected significant changes or planned changes in use of the assets, including in connection with our ongoing restructuring initiatives, divestitures and market capitalization declines may impair goodwill and other intangible assets.

Any charges relating to such impairments could materially adversely affect our results of operations in the periods recognized.

We may be unable to provide (or obtain from third parties) the same types and level of services to the WarnerMedia Business that historically have been provided (or obtained from third parties) by AT&T or may be unable to provide (or obtain) them at the same cost.

Prior to the Merger, as part of a separate reporting segment of AT&T, the WarnerMedia Business was able to receive services from AT&T and was able to receive benefits from being a part of AT&T, including benefiting from AT&T’s financial strength, extensive business relationships and purchasing power in negotiating third party services.

Following the Merger, the WarnerMedia Business is not able to leverage AT&T’s financial strength, does not have access to AT&T’s extensive business relationships and may not have purchasing power similar to what it had benefited from by being a part of AT&T prior to the Merger.

Following the Merger, we have had to replace the services previously provided, or obtained from third parties, by AT&T by either providing them internally or obtaining them from unaffiliated third parties, including AT&T.

These services include AT&T bundling HBO Max with some of its wireless and broadband offerings, and certain administrative and operating functions of which effective and appropriate performance is critical to the operations of the WarnerMedia Business and the Company as a whole following the Merger.

AT&T is providing certain services on a transitional basis pursuant to a Transition Services Agreement (the “TSA”) with us.

The duration of such services is subject to a limited term set out in the Services Schedule to the TSA.

We may have difficulty enforcing the terms of the agreements governing the provision of these services or be unable to replace these services in a timely manner or on terms and conditions as favorable as those the WarnerMedia Business currently receives from AT&T under the TSA or from third party contracts that were obtained by AT&T prior to the Merger for the WarnerMedia Business.

The costs for these services, or the costs associated with replacing these services, could in the aggregate be higher than the combination of our historical costs and those reflected in the historical financial statements of the WarnerMedia Business.

If we are unable to replace the services provided by AT&T or obtained from third parties by AT&T or are unable to replace them at the same cost or are delayed in replacing the services provided by AT&T or obtained from third parties by AT&T, our business, financial condition, and results of operations may be materially adversely impacted by increasing costs or decreasing revenues.

We are engaged in legal proceedings related to the Merger and could be subject to additional legal proceedings related to the Merger, the outcomes of which are uncertain and could negatively impact our business, financial condition and results of operations.

Since the closing of the Merger, multiple putative class action lawsuits relating to the Merger have been filed on behalf of stockholders of the Company against the Company and/or certain of our directors and executive officers seeking damages and other relief.

Additional lawsuits relating to the Merger, or disputes arising out of definitive agreements entered into in connection with the Merger, could arise in the future.

The outcomes of Merger-related lawsuits are uncertain and even if we ultimately prevail in a lawsuit, defending against the claim could be time-consuming and costly and divert our management’s attention and resources away from our business, which could negatively and materially impact our business, financial condition and results of operations.

We compete with other media and entertainment companies to attract creative talent and produce high-quality content and to make our content available to audiences on a variety of platforms.

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.

- combining certain of the businesses’ corporate functions;

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

These benefits may not be achieved within the anticipated time frame or at all.

This increased level of indebtedness could adversely affect us, including by decreasing our business flexibility.

Our consolidated indebtedness as of December 31, 2021 was approximately $15.2 billion.

Upon completion of the Combination, we will become responsible for up to approximately $43.0 billion of additional debt, including existing debt of the existing WarnerMedia Business, and debt that may be issued by Magallanes, Inc. to fund the transactions, with the ultimate amount of such debt to be issued subject to certain adjustments, including for net working capital.

In addition, subject to certain conditions, availability under our revolving credit facility will increase from $2.5 billion to $6.0 billion.

The increased indebtedness could have the effect of, among other things, reducing our flexibility to respond to changing business and economic conditions, increasing our vulnerability to general adverse economic and industry conditions and limiting our ability to obtain additional financing in the future.

In addition, the amount of cash required to pay interest on our indebtedness levels will increase following completion of the Combination, and thus the demands on our cash resources will be greater than prior to the Combination.

The increased levels of indebtedness following completion of the Combination could also reduce funds available for capital expenditures, share repurchases, investments, mergers and acquisitions, and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels.

Following consummation of the Combination, our corporate or debt-specific credit rating could be downgraded, which may increase our borrowing costs or give rise to a need to refinance existing indebtedness.

We compete with other programming networks for distribution, viewers and advertising.

This section provides an analysis of our financial results for the fiscal year ended December 31, [removed: 2021] [added: 2022] compared to the fiscal year ended December 31, [removed: 2020.][added: 2021.]

A discussion of our [removed: result] [added: results] of operations and liquidity for the fiscal year ended December 31, [removed: 2020] [added: 2021] compared to the fiscal year ended December 31, [removed: 2019] [added: 2020] can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2020,] [added: 2021,] filed on February [removed: 22, 2021,] [added: 24, 2022,] which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at [removed: ir.corporate.discovery.com.][added: ir.wbd.com.]

[removed: We are] [added: On April 8, 2022, Discovery,] a global media company that provides content across multiple distribution platforms, including [removed: linear platforms such as pay-TV, FTA] [added: linear, free-to-air,] and broadcast television, [removed: our] authenticated GO applications, digital distribution arrangements, content licensing [removed: arrangements] [added: arrangements,] and DTC subscription [removed: products.][added: products, completed its Merger with the WM Business of AT&T and changed its name from “Discovery, Inc.” to “Warner Bros.]

For a discussion of our global portfolio [removed: of networks and joint ventures] see our business overview set forth in Item 1, “Business” in this Annual Report on Form 10-K.

Our segment presentation [removed: aligns] [added: was aligned] with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments.

For further discussion of financial information for our segments and the geographical areas in which we do business, our content development activities, and [removed: revenues] [added: revenues,] see our business overview set forth in Item 1, “Business” and Note 23 to the consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

[removed: The] [added: We continue to closely monitor the ongoing impact of COVID-19 on all aspects of our business and geographies; however, the nature and] full extent of COVID-19’s effects on our operations and results [removed: is] [added: are] not yet known and will depend on future developments, which are highly uncertain and cannot be [removed: 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.][added: predicted.]

[removed: Items Impacting Comparability][added: - other items impacting comparability.]

[removed: The] [added: In addition to the Merger, the] impact of exchange rates on our business is an important factor in understanding period-to-period comparisons of our results.

We believe the presentation of results on a constant currency basis [removed: (ex-FX),] [added: (“ex-FX”),] in addition to results reported in accordance with [added: U.S.] GAAP provides useful information about our operating performance because the presentation ex-FX excludes the effects of foreign currency volatility and highlights our core operating results.

The presentation of results on a constant currency basis should be considered in addition to, but not a substitute for, measures of financial performance reported in accordance with [added: U.S.] GAAP.

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: “2021] [added: “2022] Baseline Rate”), and the prior year amounts translated at the same [removed: 2021] [added: 2022] Baseline Rate.

Consolidated Results of Operations – [removed: 2021] [added: 2022] vs. [removed: 2020][added: 2021]

Our consolidated results of operations for [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] were as follows (in millions).

| | | | | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | |]

| | | | | | | [added: 2022 | | | | | | | | | | | |] 2021 | | | | | | [removed: 2020] | | | | | | [added: | | |] % Change | | | | | | [removed: % Change (ex-FX)] | | |

| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | |]

| Costs of revenues, excluding depreciation and amortization | | | | | | [added: 20,442 | | | 5,125 | | | 25,567 | | | | | |] 4,620 | | | [added: 21,353] | | | [removed: 3,860] [added: 25,973] | | | | | | [removed: 20] | | [removed: %] | [added: NM] | | | [removed: 18] [added: (2)] | | % | [added: 1 | | % |]

[removed: | Selling, general] [added: *Selling, General,] and [removed: administrative | | | | | | 4,016 | | | | | | 2,722 | | | | | | 48 | | % | | | | 46 | | % |][added: Administrative Expenses*]

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

| Total costs and expenses | | | | | | [added: 41,187 | | | 6,814 | | | 48,001 | | | | | |] 10,179 | | | [added: 37,427] | | | [removed: 8,156] [added: 47,606] | | | | | | [removed: 25] | | [removed: %] | [added: NM] | | | [removed: 23] [added: 1] | | % | [added: 3 | | % |]

| Interest expense, net | | | | | | [added: (1,777) | | | (515) | | | (2,292) | | | | | |] (633) | | | [added: (2,026)] | | | [removed: (648)] [added: (2,659)] | | | | | | [removed: (2)] | | [removed: %] | | | | | | | [added: | | |]

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

| Loss from equity investees, net | | | | | | [added: (160) | | | (20) | | | (180) | | | | | |] (18) | | | [added: 14] | | | [removed: (105)] [added: (4)] | | | | | | [removed: (83)] | | [removed: %] | | | | | | | [added: | | |]

| Other income, net | | | | | | [removed: 82 | | | | | | 42] [added: 74] | | | | | | [removed: 95] [added: 22] | | [removed: %] | | | | | | |

| Income tax [added: (benefit)] expense | | | | | | [removed: (236)] [added: $] | [added: (1,663)] | | | | | [removed: (373)] [added: 19] | | [added: %] | | | | [removed: (37)] [added: $] | [added: 236] | [removed: %] | | | | [added: 16] | | [added: %] |

| Net income attributable to noncontrolling interests | | | | | | [added: (68) | | | — | | | (68) | | | | | |] (138) | | | [added: —] | | | [removed: (124)] [added: (138)] | | | | | | [removed: 11] | | [removed: %] | | | | | | | [added: | | |]

| Net income attributable to redeemable noncontrolling interests | | | | | | [added: (6) | | | — | | | (6) | | | | | |] (53) | | | [added: —] | | | [removed: (12)] [added: (53)] | | | | | | [removed: NM] | | | | | | | | | [added: | | |]

| Net [removed: income] [added: loss] available to Discovery, Inc. | | | | | | [removed: $ | 1,006 | | | | | $ | 1,219 | | | | | (17)] [added: (1,680)] | | [removed: %] | | | | | | |

[removed: Our advertising revenue is] [added: Advertising revenues are principally] generated [removed: across multiple] [added: from the sale of commercial time on linear (television networks and authenticated TVE applications) and digital] platforms [added: (DTC subscription services] and [removed: consists of consumer advertising, which is] [added: websites), and] sold primarily on a national basis in the U.S. and on a pan-regional or local-language feed basis outside the U.S. Advertising contracts generally have a term of one year or less.

Advertising revenue is dependent upon a number of factors, including the [removed: stage of development of television markets, the popularity of FTA television, the] number of subscribers to our channels, viewership demographics, the popularity of our [removed: content and] [added: content,] our ability to sell commercial time over a group of [removed: channels.][added: channels, the stage of development of television markets, and the popularity of FTA television.]

We also generate revenue from the sale of advertising through our digital [removed: products] [added: platforms] on a stand-alone basis and as part of advertising packages with our television networks.

The largest component of distribution revenue is comprised of linear distribution [removed: services for] rights to our networks from cable, DTH satellite and telecommunication service providers.

Distribution revenues are largely dependent on the rates negotiated in the agreements, the number of subscribers that receive our [removed: networks or content,] [added: networks,] the number of platforms covered in the distribution agreement, and the market demand for the content that we provide.

Content expense includes [removed: television] [added: television/digital] series, [removed: television] specials, films, [removed: sporting events] and [removed: digital products.][added: sporting events.]

The costs of producing a content asset and bringing that asset to market consist of [removed: film] [added: production] costs, participation costs, [removed: exploitation costs] and [removed: manufacturing] [added: exploitation] costs.

[removed: Costs] [added: *Costs] of [removed: revenues increased 20% in 2021.][added: Revenues*]

Selling, general and administrative expenses consist principally of employee costs, marketing costs, research costs, [removed: occupancy] [added: occupancy,] and back office support fees.

(See Note [removed: 7] [added: 6] to the accompanying consolidated financial statements.)

(See Note [removed: 17] [added: 4] to the accompanying consolidated financial statements.)

Discovery, Inc.” On April 11, 2022, our shares started trading on Nasdaq under the trading symbol WBD.

Warner Bros.

Discovery is a premier global media and entertainment company that combines the WarnerMedia Business’s premium entertainment, sports and news assets with Discovery’s leading non-fiction and international entertainment and sports businesses, thus offering audiences a differentiated portfolio of content, brands and franchises across television, film, streaming and gaming.

Some of our iconic brands and franchises include Warner Bros.

Pictures Group, Warner Bros.

Television Group, DC, HBO, HBO Max, Discovery Channel, discovery+, CNN, HGTV, Food Network, TNT, TBS, TLC, OWN, Warner Bros.

Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings.

In connection with the Merger, we have announced and taken actions to implement projects to achieve cost synergies for the Company.

We finalized the framework supporting our ongoing restructuring and transformation initiatives during 2022, which include, among other things, strategic content programming assessments, organization restructuring, facility consolidation activities, and other contract termination costs.

We expect that we will incur approximately $4.1 - $5.3 billion in pre-tax restructuring charges.

Of the total expected pre-tax restructuring charges, we expect total cash expenditures to be $1.0 - $ 1.5 billion.

We incurred $3.8 billion of pre-tax restructuring charges during the year ended December 31, 2022.

While our restructuring efforts are ongoing, the restructuring program is expected to be substantially completed by the end of 2024.

In connection with the Merger, we reevaluated and changed our segment presentation and reportable segments during 2022.

As of December 31, 2022, we classified our operations in three reportable segments:

- Studios, consisting primarily of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/DTC services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming;

- Networks, consisting principally of our domestic and international television networks; and

- DTC, consisting primarily of our premium pay-TV and streaming services.

Prior periods have been recast to conform to the current period presentation.

During 2022, we exited our operations in Russia and removed all of our channels and services from the market.

We do not expect these actions to have a material effect on our consolidated financial statements.

Certain key sources of revenue for the Studios segment, including theatrical revenues, original television productions, studio operations, and themed entertainment, have been adversely impacted by governmentally imposed shutdowns and related labor interruptions and constraints on consumer activity, particularly in the context of public entertainment venues, such as cinemas and theme parks.

The discussion below compares our actual and pro forma combined results, as if the Merger occurred on January 1, 2021, for the year ended December 31, 2022 to the year ended December 31, 2021.

Management believes reviewing our combined operating results in addition to actual operating results is useful in identifying trends in, or reaching conclusions regarding, the overall operating performance of our businesses.

Our Studios, Networks, DTC, Corporate, and inter-segment eliminations information is based on the historical operating results of the respective segments and include, where applicable, adjustments for (i) additional costs of revenues from the fair value step-up of film and television library, (ii) additional amortization expense related to acquired intangible assets, (iii) additional depreciation expense from the fair value of property and equipment, (iv) transaction costs and other one-time non-recurring costs, (v) additional interest expense for borrowings related to the Merger and amortization associated with fair value adjustments of debt assumed, (vi) changes to align accounting policies, (vii) elimination of intercompany activity, and (viii) associated tax-related impacts of adjustments.

Adjustments do not include costs related to integration activities, cost savings or synergies that have been or may be achieved by the combined businesses.

Pro forma amounts are not necessarily indicative of what our results would have been had we operated the combined businesses since January 1, 2021 and should not be taken as indicative of the Company’s future consolidated results of operations.

Actual amounts for the year ended December 31, 2022 include results of operations for Discovery for the entire period and WM for the period subsequent to the completion of the Merger on April 8, 2022.

Foreign Exchange Impacting Comparability

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

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

| | | | | | | Actual | | | Pro Forma Adjustments | | | Pro Forma Combined | | | | | | Actual (a) | | | Pro Forma Adjustments | | | Pro Forma Combined | | | | | | | | | Actual | | | Pro Forma Combined (Actual) | | | Combined (ex-FX) | | |

| Advertising | | | | | | $ | 8,524 | | $ | 1,412 | | $ | 9,936 | | | | | $ | 6,194 | | $ | 4,395 | | $ | 10,589 | | | | | | | | 38 | | % | (6) | | % | (4) | | % |

| Distribution | | | | | | 16,142 | | | 4,339 | | | 20,481 | | | | | | 5,202 | | | 15,579 | | | 20,781 | | | | | | | | | NM | | | (1) | | % | — | | % |

| Content | | | | | | 8,360 | | | 3,297 | | | 11,657 | | | | | | 737 | | | 12,455 | | | 13,192 | | | | | | | | | NM | | | (12) | | % | (9) | | % |

| Other | | | | | | 791 | | | 230 | | | 1,021 | | | | | | 58 | | | 706 | | | 764 | | | | | | | | | NM | | | 34 | | % | 36 | | % |

| Total revenues | | | | | | 33,817 | | | 9,278 | | | 43,095 | | | | | | 12,191 | | | 33,135 | | | 45,326 | | | | | | | | | NM | | | (5) | | % | (3) | | % |

| Selling, general and administrative | | | | | | 9,678 | | | 1,745 | | | 11,423 | | | | | | 4,016 | | | 8,987 | | | 13,003 | | | | | | | | | NM | | | (12) | | % | (10) | | % |

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

| Restructuring | | | | | | 3,757 | | | (90) | | | 3,667 | | | | | | 32 | | | 90 | | | 122 | | | | | | | | | NM | | | NM | | | NM | | |

Our content spans genres including survival, natural history, exploration, sports, general entertainment, home, food, travel, heroes, adventure, crime and investigation, health and kids.

We have an extensive library of content and own most rights to our content and footage, which enables us to leverage our library to quickly launch brands and services into new markets and on new platforms.

Our content can be re-edited and updated in a cost-effective manner to provide topical versions of subject matter that can be utilized around the world on a variety of platforms.

We 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 branded networks and discovery+.

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, VOD, and broadband channels, which provide promotional platforms for our television content and serve as additional outlets for advertising and distribution revenue.

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.

Audience ratings, audience engagement and channel packaging are key 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.

Although we utilize certain brands and content globally, we classify our operations in two reportable segments: U.S. Networks, consisting principally of domestic television networks and digital content services, and International Networks, consisting primarily of international television networks and digital content services.

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

COVID-19 has continued to spread throughout the world, and the duration and severity of its effects and associated economic disruption remain uncertain.

We continue to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including the impact on our customers, employees, suppliers, vendors, distribution and advertising partners, production facilities, and various other third parties.

Beginning in the second quarter of 2020, demand for our advertising products and services decreased due to economic disruptions from limitations on social and commercial activity.

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.

Many of our third-party production partners that were shut down during most of the second quarter of 2020 due to COVID-19 restrictions came back online in the third quarter of 2020 and, as a result, we have incurred additional costs to comply with various governmental regulations and implement certain safety measures for our employees, talent, and partners.

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 occurred in July and August 2021.

The postponement of the 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 innovative production and programming strategies, including producing content filmed by our on-air talent and seeking viewer feedback on which content to air.

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.

We will continue to monitor COVID-19 and its impact on our business results and financial condition.

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.

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

| Advertising | | | | | | $ | 6,215 | | | | | $ | 5,583 | | | | | 11 | | % | | | | 10 | | % |

| Distribution | | | | | | 5,409 | | | | | | 4,866 | | | | | | 11 | | % | | | | 11 | | % |

| Other | | | | | | 567 | | | | | | 222 | | | | | | NM | | | | | | NM | | |

| Total revenues | | | | | | 12,191 | | | | | | 10,671 | | | | | | 14 | | % | | | | 14 | | % |

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

| Restructuring and other charges | | | | | | 32 | | | | | | 91 | | | | | | (65) | | % | | | | (64) | | % |

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

| Operating income | | | | | | 2,012 | | | | | | 2,515 | | | | | | (20) | | % | | | | (18) | | % |

| Income before income taxes | | | | | | 1,433 | | | | | | 1,728 | | | | | | (17) | | % | | | | | | |

| Net income | | | | | | 1,197 | | | | | | 1,355 | | | | | | (12) | | % | | | | | | |

Advertising revenue increased 11% in 2021.

Excluding the impact of foreign currency fluctuations, advertising revenue increased 10%.

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.

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

Distribution revenue also includes fees charged for bulk content arrangements and other subscription services for episodic content.

We had no outstanding borrowings as of December 31, [removed: 2021.][added: 2022.]

We also have access to a commercial paper program, which had no outstanding borrowings as of December 31, [removed: 2021.][added: 2022.]

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

To achieve these objectives, we may enter into [removed: variable interest rate swaps or swaptions,] [added: derivative instruments,] effectively converting fixed rate borrowings to variable rate borrowings indexed to [removed: LIBOR] [added: benchmark interest rates] in order to reduce the amount of interest [removed: paid.][added: paid, or to limit the impact of volatility in interest rates on future issuances of fixed rate debt.]

As of December 31, [removed: 2021,] [added: 2022,] the fair value of our outstanding [removed: public] senior [removed: notes] [added: notes, including accrued interest,] was [removed: $17.2] [added: $38.0] 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: $1.5] [added: $2.6] billion as of December 31, [removed: 2021.][added: 2022.]

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

To the extent such funds are not sufficient to meet working capital requirements, drawdowns in the appropriate local currency are available from intercompany borrowings or [removed: drawdowns] from our revolving credit facility.

Moreover, we will experience fluctuations in our [removed: revenues, costs] [added: revenues] and expenses solely as a result of changes in foreign currency exchange rates.

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

The majority of our foreign currency exposure is [added: tied] to [removed: the Euro, Polish zloty,] [added: Europe] and [removed: the British Pound.][added: Latin America.]

We may enter into [removed: spot, forward and option contracts] [added: derivative instruments] that change in value as foreign currency exchange rates change to hedge certain exposures associated with affiliate revenue, the cost [removed: for] [added: of] producing or acquiring content, certain intercompany 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: 2021.][added: 2022.]

(See Note [removed: 10] [added: 13] to the accompanying consolidated financial statements.)

We may use derivative financial instruments to modify our exposure to exogenous events and market risks from changes in foreign currency exchange [removed: rates, interest rates,] [added: rates] and [removed: the fair value of investments with readily determinable fair values.][added: interest rates.]

We do not use [removed: derivative financial instruments] [added: derivatives] unless there is an underlying exposure.

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 [removed: rates, interest rates,] [added: rates] and [removed: market values.][added: interest rates.]

Market Values of [removed: Investments][added: Investments and Liabilities]

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

[removed: (See Note 4 and Note 5 to the accompanying consolidated financial statements.)] Investments in mutual funds include both [removed: fixed rate] [added: fixed-] and [removed: floating rate] [added: floating-rate] interest earning securities that carry a degree of interest rate risk.

[removed: Fixed rate] [added: Fixed-rate] securities may have their fair market value adversely impacted [removed: due to] [added: by] a rise in interest rates, while [removed: floating rate] [added: floating-rate] securities may produce less income than predicted if interest rates fall.

During the year ended December 31, 2022, we had access to a $6.0 billion multicurrency revolving credit facility.

As of December 31, 2022, we had $44.8 billion of fixed-rate senior notes, at par value.

(See Note 13 to the accompanying consolidated financial statements.)

(See Note 13 to the accompanying consolidated financial statements.)

We also have liabilities, such as deferred compensation, that are accounted for at fair value (See Note 10 and Note 14 to the accompanying consolidated financial statements).

Liabilities carried at fair value, such as deferred compensation, may experience capital gains that result in increased liabilities and expenses as the capital gains occur.

We may enter into derivative financial instruments to hedge the risk of these market value changes.

(See Note 13 to the accompanying consolidated financial statements.)

During the year ended December 31, 2021, we entered into a new $2.5 billion multicurrency revolving credit facility, replacing the existing $2.5 billion credit agreement.

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.

As of December 31, 2021, we had outstanding debt with a book value of $15.2 billion under various public senior notes with fixed interest rates.

We may also enter into fixed rate forward starting swaps to limit the impact of volatility in interest rates for future issuances of fixed rate debt.

As of December 31, 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 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.

[removed: For convenience, the terms “Discovery,” the “Company,” “we,” “us” or “our” are used in this Annual Report on Form 10-K to refer to both] Discovery, Inc. and [removed: collectively to Discovery, Inc. and] one or more of its consolidated subsidiaries, unless the context otherwise requires.

The [removed: proposed combination transaction will be] [added: Merger was] executed through a Reverse Morris Trust type transaction, under which [removed: WarnerMedia will be] [added: WM was] distributed to AT&T’s shareholders via a pro rata [removed: distribution (i.e., a spin off).][added: distribution, and immediately thereafter, combined with Discovery.]

[removed: In connection with] [added: Prior to] the [removed: combination transaction, AT&T will receive approximately $43] [added: Merger, WarnerMedia Holdings, Inc. distributed $40.5] billion [added: to AT&T] (subject to working capital and other adjustments) in a combination of cash, debt [removed: securities] [added: securities,] and [removed: WarnerMedia’s] [added: WM's] retention of certain debt.

(See Note [removed: 10] [added: 3 and Note 4] to the accompanying consolidated financial [removed: statements.)][added: statements).]

[added: AT&T shareholders received shares of WBD Series A common stock (“WBD common stock”) in the Merger representing 71% of the combined Company and the] Company's [added: pre-Merger] shareholders [removed: will continue] [added: continued] to own 29% of the combined [removed: company,] [added: Company,] in each case on a fully diluted basis.

[removed: The] [added: We continue to closely monitor the ongoing impact of COVID-19 on all aspects of our business and geographies; however, the nature and] full extent of COVID-19’s effects on our operations and results [removed: is] [added: are] not yet known and will depend on future developments, which are highly uncertain and cannot be [removed: 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.][added: predicted.]

We may refer to the aggregate number of [removed: subscriptions across our direct-to-consumer services] [added: DTC Subscriptions] as [removed: subscribers.][added: “subscribers.”]

[removed: U.S. NETWORKS][added: Networks]

[added: - Networks -] Our [removed: U.S.] Networks segment [removed: principally] [added: primarily] consists of [removed: national] [added: our domestic and international] television networks.

[removed: During 2021,] [added: For the year ended December 31, 2022,] advertising, [removed: distribution] [added: distribution, content,] and other revenues were [removed: 55%,] 43%, [added: 50%, 6%,] and [removed: 2%,] [added: 1%,] respectively, of total [removed: net] revenues for this segment.

In addition to the global networks described [removed: in the overview section] above, we operate networks [removed: internationally that utilize the following brands:][added: internationally.]

Our networks and [removed: digital products,] [added: streaming services,] which include [removed: discovery+] [added: HBO Max] and [removed: other DTC subscription products,] [added: discovery+] compete for the sale of advertising with other television networks, including broadcast, cable, local networks, and other content distribution outlets for their target audiences and the sale of advertising.

Our networks and [removed: digital products] [added: streaming services] also compete for their target audiences with all forms of content and other media provided to viewers, including broadcast, cable and local networks, streaming services, pay-per-view and VOD services, online activities and other forms of news, information and media entertainment.

Our intellectual property assets include copyrights in [removed: content,] [added: films, television programs, software, comic books and mobile apps;] trademarks in [removed: brands, names] [added: names, logos] and [removed: logos,] [added: characters;] patents [removed: protecting novel inventions, technology platforms, websites,] [added: or patent applications for inventions related to products] and [added: services; websites; and] licenses of intellectual property rights [added: of various kinds] from third parties.

We are [removed: fundamentally] a [removed: content] [added: global media and entertainment] company and the protection of our [removed: brands and] content [added: and brands] is of primary importance.

We have [removed: also] made and will continue to make investments in developing technology platforms to support our digital products and DTC offerings, including [added: HBO Max and] discovery+, and consider these platforms to be [removed: one of our] intellectual property [removed: assets.][added: assets as well.]

To protect our intellectual property assets, we rely upon a combination of copyright, trademark, patent, unfair competition, [removed: trade secret] and [removed: Internet/domain] [added: internet/domain] name statutes and laws, and contract provisions.

Moreover, effective intellectual property protection may be either unavailable or limited in certain foreign [removed: territories.][added: territories, and new legislative or regulatory initiatives could impact our operations.]

[removed: Policing] [added: In general, policing] unauthorized use of our products and services and related intellectual property is difficult and costly.

Irrespective of their validity, such claims may [added: also] result in substantial costs and diversion of resources which could have an adverse effect on our operations.

[removed: In addition, piracy,] [added: Piracy,] which encompasses the theft of our [removed: signal,] [added: signals,] and [added: the] unauthorized use of our [removed: content,] [added: intellectual property] in the digital [removed: environment] [added: environment,] continues to present a threat to revenues from products and services based on our intellectual property.

Content networks, such as those owned by us, are regulated [added: in certain limited respects] by the [removed: FCC] [added: Federal Communications Commission (“FCC”),] including some regulations that only apply to content networks affiliated with a cable television operator.

The [added: Communications Act (the “Act”) and the] FCC’s program access rules prevent a satellite-delivered content vendor in which a cable operator has an “attributable” ownership interest from discriminating against unaffiliated multichannel video programming distributors (“MVPDs”), such as cable and DBS operators, in the rates, terms and conditions for the sale or delivery of [removed: content.][added: content networks, on the basis of the non-affiliation.]

The [removed: FCC's] [added: Act and the FCC’s] program carriage rules prohibit distributors from favoring their affiliated content networks over [removed: unaffiliated] [added: unaffiliated,] similarly situated content networks in the rates, terms and conditions of carriage agreements between content networks and cable operators or other MVPDs.

The [removed: Communications] Act [removed: (the “Act”)] imposes “must-carry” regulations on cable systems, requiring them to carry the signals of most local broadcast television stations in their [removed: market.][added: market if they elect mandatory carriage.]

Certain of our content networks and some of our IP-delivered video content must provide closed-captioning and audio description of some of their programming and comply with other regulations designed to make our content more [removed: accessible.][added: accessible to persons with disabilities.]

Our content networks [removed: and digital products] intended primarily for children 12 years of age and under must comply with certain limits on the amount and type of permissible [removed: advertising.][added: advertising, and certain regulations extend to our digital products when they are referenced by web address in our content networks.]

Commercials embedded in our networks’ [added: television] content stream also must adhere to certain standards for ensuring that those commercials are not transmitted at louder volumes than our program material.

We operate a variety of free, advertising-based and subscription-based digital products and [added: streaming] services providing information and entertainment to consumers in the U.S. and international markets via web, mobile and connected TV platforms.

Our digital [added: products and] services are subject to federal and state regulation in the U.S. relating to the privacy and security of personal information collected from our users, including laws pertaining to the acquisition of personal information from children under [removed: 13, such as the federal Children's Online Privacy Protection Act and the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act, and that impose data security and security breach obligations on the Company.][added: 16.]

Additional federal and state laws and regulations [added: apply or] may be adopted with respect to our digital [added: products and] services, covering such issues as data privacy and security, child safety, oversight of user-generated content, advertising, [added: competition,] pricing, content, copyrights and trademarks, access by persons with disabilities, distribution, taxation and characteristics and quality of products and services.

[removed: Our] [added: By way of example, our] digital [removed: products and services] [added: offerings] available to consumers in international [removed: markets] [added: jurisdictions] are [removed: also] subject to [removed: the] laws and regulations [removed: of foreign jurisdictions, including,] [added: relating to,] without limitation, consumer protection, data privacy and security, advertising, [added: competition,] intellectual property, and content limitations.

The foreign jurisdictions in which our [removed: networks] [added: products and services] are offered have, in varying degrees, laws and regulations governing our [removed: businesses.][added: businesses, including relating to the production, monetization and distribution of content.]

As of December 31, [removed: 2021,] [added: 2022,] we had approximately [removed: 11,000] [added: 37,500] employees, including full-time and part-time employees of our wholly-owned subsidiaries and consolidated ventures.

Our employees are located in [removed: 35] [added: 54] different countries, with [removed: 34%] [added: 56%] located in the [removed: United States] [added: U.S.] and [removed: 66%] [added: 44%] located outside of the [removed: United States.][added: U.S.]

- [removed: incenting] [added: incentivizing] our employees to deliver on our short- and long-term objectives.

- on-site wellness centers in our New York, [removed: Silver Spring, Knoxville] [added: Los Angeles, Atlanta] and London offices, a fully-equipped fitness center in our [removed: Knoxville office,] [added: New York, Los Angeles] and [added: Atlanta offices, and] access to virtual fitness classes and wellbeing programs;

- family support programs, including on-site childcare in [removed: our Knoxville office,] [added: certain offices,] childcare locator services, back-up childcare, maternity/paternity leave, adoption assistance and elder care;

- products and services to support employees’ financial wellbeing, including life, accident, and disability insurance plans, discount benefits, financial planning tools, a 401(k) savings plan in the U.S. and retirement/pension plans in [removed: another] [added: over] 20 countries, with competitive contributions from [removed: Discovery] [added: the Company] for employees at all levels;

- offering an employee stock purchase plan, which allows [added: certain] employees globally (where legislation permits) an opportunity to buy [removed: Discovery, Inc.] [added: WBD common] stock at a discounted price through convenient after-tax payroll deductions with no commission charges; and

For convenience, the terms “Warner Bros.

Discovery”, “WBD”, the “Company,” “we,” “us” or “our” are used in this Annual Report on Form 10-K to refer to both Warner Bros.

Discovery, Inc. and collectively to Warner Bros.

Merger with the WarnerMedia Business of AT&T

On April 8, 2022 (the “Closing Date”), Discovery, Inc. (“Discovery”) completed its merger (the “Merger”) with the WarnerMedia business (the “WarnerMedia Business”, “WM Business” or “WM”) of AT&T Inc. (“AT&T”) and changed its name to Warner Bros.

Discovery, Inc. On April 11, 2022, the Company’s shares started trading on the Nasdaq Global Select Market (“Nasdaq”) under the trading symbol WBD.

Discovery transferred purchase consideration of $42.4 billion in equity to AT&T shareholders in the Merger.

In August 2022, the Company and AT&T finalized the post-closing working capital settlement process, pursuant to section 1.3 of the Separation and Distribution Agreement, which resulted in the Company receiving a $1.2 billion payment from AT&T in the third quarter of 2022 in lieu of adjusting the equity issued as consideration in the Merger.

Discovery was deemed to be the accounting acquirer of the WM Business for accounting purposes under U.S. generally accepted accounting principles (“U.S. GAAP”); therefore, Discovery is considered the Company’s predecessor and the historical financial statements of Discovery prior to April 8, 2022, are reflected in this Annual Report on Form 10-K as the Company’s historical financial statements.

Accordingly, the financial results of the Company as of and for any periods prior to April 8, 2022 do not include the financial results of the WM Business and current and future results will not be comparable to historical results.

Description of Business

Warner Bros.

Discovery is a premier global media and entertainment company that combines the WarnerMedia Business’s premium entertainment, sports and news assets with Discovery’s leading non-fiction and international entertainment and sports businesses, thus offering audiences a differentiated portfolio of content, brands and franchises across television, film, streaming and gaming.

Some of our iconic brands and franchises include Warner Bros.

Pictures Group, Warner Bros.

Television Group, DC, HBO, HBO Max, Discovery Channel, discovery+, CNN, HGTV, Food Network, TNT, TBS, TLC, OWN, Warner Bros.

Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings.

We are home to a powerful creative engine and one of the largest collections of owned content in the world and have one of the strongest hands in the industry in terms of the completeness and quality of assets and intellectual property across sports, news, lifestyle, and entertainment in virtually every region of the globe and in most languages.

Additionally, we serve audiences and consumers around the world with content that informs, entertains, and, when at its best, inspires.

Our asset mix positions us to drive a balanced approach to creating long-term value for shareholders.

It represents the full entertainment eco-system, and the ability to serve consumers across the entire spectrum of offerings from domestic and international networks, premium pay-TV, streaming, production and release of feature films and original series, related consumer products and themed experience licensing, and interactive gaming.

We generate revenue from the sale of advertising on our networks and digital platforms (advertising revenue); fees charged to distributors that carry our network brands and programming, including cable, direct-to-home (“DTH”) satellite, telecommunication and digital service providers, as well as through direct-to-consumer (“DTC”) subscription services (distribution revenue); the release of feature films for initial exhibition in theaters, the licensing of feature films and television programs to various television, subscription video on demand (“SVOD”) and other digital markets, distribution of feature films and television programs in the physical and digital home entertainment market, sales of console games and mobile in-game content, sublicensing of sports rights, and licensing of intellectual property such as characters and brands (content revenue); and other sources such as studio tours and production services (other revenue).

Certain key sources of revenue for the Studios segment, including theatrical revenues, original television productions, studio operations, and themed entertainment, have been adversely impacted by governmentally imposed shutdowns and related labor interruptions and constraints on consumer activity, particularly in the context of public entertainment venues, such as cinemas and theme parks.

Segments

In connection with the Merger, the Company reevaluated and changed its segment presentation during 2022.

As of December 31, 2022, we classified our operations in three reportable segments:

- Studios - Our Studios segment primarily consists of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/DTC services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming.

- DTC \- Our DTC segment primarily consists of our premium pay-TV and streaming services.

Prior periods have been recast to conform to the current period presentation.

Studios

WBD’s Studios business includes the Warner Bros.

Pictures Group (“WBPG”), DC Studios, Warner Bros.

Television Group (“WBTVG”), Global Brands and Experiences (“GBE”) (consumer products, themed entertainment, brand licensing, and publisher DC Comics), content licensing, home entertainment, studio operations, and interactive gaming.

WBPG is comprised of Warner Bros.

Pictures, New Line Cinema and Warner Animation Group.

WBPG partners with inspiring storytellers to create filmed entertainment for a global audience.

The recently launched DC Studios, tasked with developing properties licensed from DC Comics for film and television, continues the tradition of high-quality storytelling for the DC Universe across all audio-visual media, while building a sustainable growth business out of the iconic franchise.

WBTVG consists of Warner Bros.

Television, the Company’s flagship television production unit for live-action scripted programming, as well as Warner Bros.

Unscripted Television, which produces unscripted and alternative programming through its four production units: Warner Horizon Unscripted Television, Telepictures, Warner Bros.

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 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

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.

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

COVID-19 has continued to spread throughout the world, and the duration and severity of its effects and associated economic disruption remain uncertain.

We continue to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including the impact on our customers, employees, suppliers, vendors, distribution and advertising partners, production facilities, and various other third parties.

Beginning in the second quarter of 2020, demand for our advertising products and services decreased due to economic disruptions from limitations on social and commercial activity.

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.

Many of our third-party production partners that were shut down during most of the second quarter of 2020 due to COVID-19 restrictions came back online in the third quarter of 2020 and, as a result, we have incurred additional costs to comply with various governmental regulations and implement certain safety measures for our employees, talent, and partners.

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 occurred in July and August 2021.

The postponement of the 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 innovative production and programming strategies, including producing content filmed by our on-air talent and seeking viewer feedback on which content to air.

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.

We will continue to monitor COVID-19 and its impact on our business results and financial condition.

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.

OVERVIEW

We are a global media company that provides content across multiple distribution platforms, including linear platforms such as pay-television ("pay-TV"), free-to-air ("FTA") and broadcast television, authenticated GO applications, digital distribution arrangements, content licensing arrangements and direct-to-consumer ("DTC") subscription products.

As one of the world’s largest pay-TV programmers, we provide original and purchased content and live events to approximately 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 over 50 languages.

We have an extensive library of content and own most rights to our content and footage, which enables us to leverage our library to quickly launch brands and services into new markets and on new platforms.

Our content can be re-edited and updated in a cost-effective manner to provide topical versions of subject matter that can be utilized around the world on a variety of platforms.

Our content spans genres including survival, natural history, exploration, sports, general entertainment, home, food, travel, heroes, adventure, crime and investigation, health, and kids.

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, [added: stockholders,] vendors, other business partners or [removed: patent issues.][added: intellectual property.]

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 [removed: operations] [added: operations,] or cash flows.

[removed: Discovery Inc.] [added: Discovery, Inc.,] et [removed: al.,] [added: a*.,] Case No. [removed: 1:21-cv-09785 (the “Rahman Complaint”), was] [added: 1:22-cv-09125) were] filed in the United States District Court for the Southern District of New [removed: York on November 23, 2021.][added: York.]

Between September 23, 2022 and October 24, 2022, two purported class action lawsuits (*Collinsville Police Pension Board v.

Discovery, Inc., et al*., Case No. 1:22-cv-08171; *Todorovski v.

The complaints name Warner Bros.

Discovery, Inc., Discovery, Inc., David Zaslav, and Gunnar Wiedenfels as defendants.

The complaints generally allege that the defendants made false and misleading statements in SEC filings and in certain public statements relating to the Merger, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933.

The complaints seek damages and other relief.

On November 4, 2022, the court consolidated the *Collinsville* and *Todorovski* complaints under case number 1:22-CV-8171, and on December 12, 2022, the court appointed a lead plaintiff and lead counsel.

The Company intends to vigorously defend these litigations.

On December 2, 2022, a purported class action and derivative lawsuit (*Monroe County Employees’ Retirement System, Plumbers Local Union No. 519 Pension Trust Fund, and Davant Scarborough v.

David M.

Zaslav, et al.*, Case No. 2022-1115-JTL) was filed in the Delaware Court of Chancery (the “Monroe County Action”).

The Monroe County Action names certain of the Company’s directors and officers, Advance/Newhouse Partnership and Advance/Newhouse Programming Partnership (collectively, “Advance/Newhouse”), and AT&T as defendants.

The Monroe County Action generally alleges that former directors and officers of Discovery and Advance/Newhouse breached their fiduciary duties in connection with the Merger, and that AT&T aided and abetted these alleged breaches of fiduciary duties.

The Monroe County Action seeks damages and other relief.

Also on December 2, 2022, a separate purported class action lawsuit (*Bricklayers Pension Fund of Western Pennsylvania v.

Advance/Newhouse Partnership*, Case No. 2022-1114-JTL) was filed in the Delaware Court of Chancery (the “Bricklayers Action”).

The complaint in the Bricklayers Action names Advance/Newhouse and certain of the Company’s current and former directors as defendants and generally alleges that former directors of Discovery and Advance/Newhouse breached their fiduciary duties in connection with the Merger, and that Advance/Newhouse aided and abetted these alleged breaches of fiduciary duties.

The Bricklayers Action seeks damages and other relief.

On January 11, 2023, the Delaware Court of Chancery consolidated the Monroe County Action and the Bricklayers Action under the caption *In re Warner Bros.

Discovery, Inc. Stockholders Litigation*, Consolidated Case No. 2022-1114-JTL.

The Company intends to vigorously defend these litigations.

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.

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.

For the fiscal year ended December 31, [removed: 2021][added: 2022]

[removed: ][added: ]

[removed: Discovery,] [added: Discovery,] Inc.

| Series A Common [removed: Stock, par value $0.01 per share] [added: Stock] | | | [removed: DISCA] [added: WBD] | | | The Nasdaq Global Select Market | | |

| Series [removed: B] [added: A] Common Stock, par value $0.01 per share | | | [removed: DISCB | | | The Nasdaq Global Select Market] [added: 2,430,029,982] | | |

See the definitions of “large accelerated filer,” “accelerated [removed: filer”] [added: filer,”] “smaller reporting [removed: company”] [added: company,”] and [removed: "emerging] [added: “emerging] growth [removed: company"] [added: company”] in Rule 12b-2 of the Exchange [removed: Act.:][added: Act.]

[removed: |] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [removed: ¨ | | | | | | | | | | | | | | | | | | | | |]

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: 2021,] [added: 2022,] was approximately [removed: $14] [added: $32] billion.

Total number of shares outstanding of each class of the Registrant’s common stock as of February [removed: 10, 2022] [added: 9, 2023] was:

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: 2022] [added: 2023] 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 amended.

| [ITEM 1. [removed: Business.](#ifb6f7f0391304704bde96ba6f2c3bef1_13)] [added: Business.](#i1321522a81954b41bd1a0227ee3ad30e_13)] | | | [removed: [5](#ifb6f7f0391304704bde96ba6f2c3bef1_13)] [added: [5](#i1321522a81954b41bd1a0227ee3ad30e_13)] | | |

| [ITEM 1A. Risk [removed: Factors.](#ifb6f7f0391304704bde96ba6f2c3bef1_16)] [added: Factors.](#i1321522a81954b41bd1a0227ee3ad30e_16)] | | | [removed: [21](#ifb6f7f0391304704bde96ba6f2c3bef1_16)] [added: [13](#i1321522a81954b41bd1a0227ee3ad30e_16)] | | |

| [ITEM 1B. Unresolved Staff [removed: Comments.](#ifb6f7f0391304704bde96ba6f2c3bef1_19)] [added: Comments.](#i1321522a81954b41bd1a0227ee3ad30e_19)] | | | [removed: [36](#ifb6f7f0391304704bde96ba6f2c3bef1_19)] [added: [27](#i1321522a81954b41bd1a0227ee3ad30e_19)] | | |

| [ITEM 2. [removed: Properties.](#ifb6f7f0391304704bde96ba6f2c3bef1_22)] [added: Properties.](#i1321522a81954b41bd1a0227ee3ad30e_22)] | | | [removed: [36](#ifb6f7f0391304704bde96ba6f2c3bef1_22)] [added: [27](#i1321522a81954b41bd1a0227ee3ad30e_22)] | | |

| [ITEM 3. Legal [removed: Proceedings.](#ifb6f7f0391304704bde96ba6f2c3bef1_25)] [added: Proceedings.](#i1321522a81954b41bd1a0227ee3ad30e_25)] | | | [removed: [37](#ifb6f7f0391304704bde96ba6f2c3bef1_25)] [added: [28](#i1321522a81954b41bd1a0227ee3ad30e_25)] | | |

| [ITEM 4. Mine Safety [removed: Disclosures.](#ifb6f7f0391304704bde96ba6f2c3bef1_28)] [added: Disclosures.](#i1321522a81954b41bd1a0227ee3ad30e_28)] | | | [removed: [37](#ifb6f7f0391304704bde96ba6f2c3bef1_28)] [added: [29](#i1321522a81954b41bd1a0227ee3ad30e_28)] | | |

| [ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities.](#ifb6f7f0391304704bde96ba6f2c3bef1_34)] [added: Securities.](#i1321522a81954b41bd1a0227ee3ad30e_34)] | | | [removed: [40](#ifb6f7f0391304704bde96ba6f2c3bef1_34)] [added: [31](#i1321522a81954b41bd1a0227ee3ad30e_34)] | | |

| [ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations.](#ifb6f7f0391304704bde96ba6f2c3bef1_43)] [added: Operations.](#i1321522a81954b41bd1a0227ee3ad30e_43)] | | | [removed: [41](#ifb6f7f0391304704bde96ba6f2c3bef1_43)] [added: [33](#i1321522a81954b41bd1a0227ee3ad30e_43)] | | |

| [ITEM 7A. Quantitative and Qualitative Disclosures about Market [removed: Risk.](#ifb6f7f0391304704bde96ba6f2c3bef1_85)] [added: Risk.](#i1321522a81954b41bd1a0227ee3ad30e_100)] | | | [removed: [58](#ifb6f7f0391304704bde96ba6f2c3bef1_85)] [added: [54](#i1321522a81954b41bd1a0227ee3ad30e_100)] | | |

| [ITEM 8. Financial Statements and Supplementary [removed: Data.](#ifb6f7f0391304704bde96ba6f2c3bef1_88)] [added: Data.](#i1321522a81954b41bd1a0227ee3ad30e_103)] | | | [removed: [61](#ifb6f7f0391304704bde96ba6f2c3bef1_88)] [added: [57](#i1321522a81954b41bd1a0227ee3ad30e_103)] | | |

| [ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure.](#ifb6f7f0391304704bde96ba6f2c3bef1_253)] [added: Disclosure.](#i1321522a81954b41bd1a0227ee3ad30e_271)] | | | [removed: [118](#ifb6f7f0391304704bde96ba6f2c3bef1_253)] [added: [124](#i1321522a81954b41bd1a0227ee3ad30e_271)] | | |

| [ITEM 9A. Controls and [removed: Procedures.](#ifb6f7f0391304704bde96ba6f2c3bef1_256)] [added: Procedures.](#i1321522a81954b41bd1a0227ee3ad30e_274)] | | | [removed: [118](#ifb6f7f0391304704bde96ba6f2c3bef1_256)] [added: [124](#i1321522a81954b41bd1a0227ee3ad30e_274)] | | |

| [ITEM 9B. Other [removed: Information.](#ifb6f7f0391304704bde96ba6f2c3bef1_259)] [added: Information.](#i1321522a81954b41bd1a0227ee3ad30e_277)] | | | [removed: [118](#ifb6f7f0391304704bde96ba6f2c3bef1_259)] [added: [124](#i1321522a81954b41bd1a0227ee3ad30e_277)] | | |

| [ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections.](#ifb6f7f0391304704bde96ba6f2c3bef1_10445360466625)] [added: Inspections.](#i1321522a81954b41bd1a0227ee3ad30e_280)] | | | [removed: [119](#ifb6f7f0391304704bde96ba6f2c3bef1_10445360466625)] [added: [124](#i1321522a81954b41bd1a0227ee3ad30e_280)] | | |

| [ITEM 10. Directors, Executive Officers and Corporate [removed: Governance.](#ifb6f7f0391304704bde96ba6f2c3bef1_265)] [added: Governance.](#i1321522a81954b41bd1a0227ee3ad30e_286)] | | | [removed: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_265)] [added: [125](#i1321522a81954b41bd1a0227ee3ad30e_286)] | | |

| [ITEM 11. Executive [removed: Compensation.](#ifb6f7f0391304704bde96ba6f2c3bef1_268)] [added: Compensation.](#i1321522a81954b41bd1a0227ee3ad30e_289)] | | | [removed: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_268)] [added: [125](#i1321522a81954b41bd1a0227ee3ad30e_289)] | | |

| [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters.](#ifb6f7f0391304704bde96ba6f2c3bef1_271)] [added: Matters.](#i1321522a81954b41bd1a0227ee3ad30e_292)] | | | [removed: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_271)] [added: [125](#i1321522a81954b41bd1a0227ee3ad30e_292)] | | |

| [ITEM 13. Certain Relationships and Related Transactions, and Director [removed: Independence.](#ifb6f7f0391304704bde96ba6f2c3bef1_274)] [added: Independence.](#i1321522a81954b41bd1a0227ee3ad30e_295)] | | | [removed: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_274)] [added: [125](#i1321522a81954b41bd1a0227ee3ad30e_295)] | | |

| [ITEM 14. Principal Accountant Fees and [removed: Services.](#ifb6f7f0391304704bde96ba6f2c3bef1_277)] [added: Services.](#i1321522a81954b41bd1a0227ee3ad30e_298)] | | | [removed: [120](#ifb6f7f0391304704bde96ba6f2c3bef1_277)] [added: [125](#i1321522a81954b41bd1a0227ee3ad30e_298)] | | |

| [ITEM 15. Exhibits and Financial Statement [removed: Schedules.](#ifb6f7f0391304704bde96ba6f2c3bef1_283)] [added: Schedules.](#i1321522a81954b41bd1a0227ee3ad30e_304)] | | | [removed: [121](#ifb6f7f0391304704bde96ba6f2c3bef1_283)] [added: [126](#i1321522a81954b41bd1a0227ee3ad30e_304)] | | |

| [ITEM 16. Form 10-K [removed: Summary.](#ifb6f7f0391304704bde96ba6f2c3bef1_289)] [added: Summary.](#i1321522a81954b41bd1a0227ee3ad30e_310)] | | | [removed: [128](#ifb6f7f0391304704bde96ba6f2c3bef1_289)] [added: [135](#i1321522a81954b41bd1a0227ee3ad30e_310)] | | |

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 [removed: prospects,] [added: prospects and] anticipated sources and uses of [removed: capital and our proposed transaction to combine our business with AT&T’s WarnerMedia business.][added: capital.]

- general economic and business conditions, including the impact of the ongoing COVID-19 [removed: pandemic;][added: pandemic, fluctuations in foreign currency exchange rates, and political unrest in the international markets in which we operate;]

- industry trends, including the timing of, and spending on, [added: sports programming,] feature film, television and television commercial production;

- disagreements with our distributors or other business [removed: partners over contract interpretation;][added: partners;]

- 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 [added: HBO Max and] discovery+ streaming [removed: product;][added: products;]

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

- threatened or actual cyber-attacks and cybersecurity breaches; [added: and]

Additionally, many of these risks are [removed: currently] amplified by and may, in the future, continue to be amplified by the prolonged impact of the COVID-19 pandemic.

Warner Bros.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

WARNER BROS.

DISCOVERY, INC.

| [PART I](#i1321522a81954b41bd1a0227ee3ad30e_10) | | | | | |

| [PART II](#i1321522a81954b41bd1a0227ee3ad30e_31) | | | [31](#i1321522a81954b41bd1a0227ee3ad30e_31) | | |

| [ITEM 6. \[Reserved.\]](#i1321522a81954b41bd1a0227ee3ad30e_40) | | | [32](#i1321522a81954b41bd1a0227ee3ad30e_40) | | |

| [PART III](#i1321522a81954b41bd1a0227ee3ad30e_283) | | | [125](#i1321522a81954b41bd1a0227ee3ad30e_283) | | |

| [PART IV](#i1321522a81954b41bd1a0227ee3ad30e_301) | | | [126](#i1321522a81954b41bd1a0227ee3ad30e_301) | | |

| | | | | | |

| [SIGNATURES](#i1321522a81954b41bd1a0227ee3ad30e_313) | | | [136](#i1321522a81954b41bd1a0227ee3ad30e_313) | | |

- potential unknown liabilities, adverse consequences or unforeseen increased expenses associated with the WarnerMedia Business or our efforts to integrate the WarnerMedia Business;

- inherent uncertainties involved in the estimates and assumptions used in the preparation of financial forecasts;

- our level of debt, including the significant indebtedness incurred in connection with the acquisition of the WarnerMedia Business, and our future compliance with debt covenants;

- more intense competitive pressure from existing or new competitors in the industries in which we operate;

- reduced spending on domestic and foreign television advertising, due to macroeconomic trends, industry trends or unexpected reductions in our number of subscribers;

- negative publicity or damage to our brands, reputation or talent;

- the possibility or duration of an industry-wide strike, player lock-outs or other job action affecting a major entertainment industry union, athletes or others involved in the development and production of our sports programming, television programming, feature films and interactive entertainment (e.g., games) who are covered by collective bargaining agreements;

- theft of our content and unauthorized duplication, distribution and exhibition of such content;

Forward-looking statements are subject to various risks and uncertainties which change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results.

Management’s expectations and assumptions, and the continued validity of any forward-looking statements we make, cannot be foreseen with certainty and are subject to change due to a broad range of factors affecting the U.S. and global economies and regulatory environment, factors specific to Warner Bros.

Discovery and other factors described below under Item 1A, “Risk Factors” and elsewhere in this Annual Report on Form 10-K, including under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Actual outcomes and results may differ materially from what is expressed in our forward-looking statements and from our historical financial results due to the factors discussed in this section and elsewhere in this Annual Report on Form 10-K or disclosed in our other SEC filings.

| Series C Common Stock, par value $0.01 per share | | | DISCK | | | The Nasdaq Global Select Market | | |

| Series A Common Stock, par value $0.01 per share | | | 169,580,151 | | |

| Series B Common Stock, par value $0.01 per share | | | 6,511,917 | | |

| Series C Common Stock, par value $0.01 per share | | | 330,153,753 | | |

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

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

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

| [PART III](#ifb6f7f0391304704bde96ba6f2c3bef1_262) | | | [120](#ifb6f7f0391304704bde96ba6f2c3bef1_262) | | |

| [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;

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

- a failure to secure affiliate agreements or the renewal of such agreements on less favorable terms;

- rapid technological changes;

- the inability of advertisers or affiliates to remit payment to us in a timely manner or at all;

- spending on domestic and foreign television advertising;

- fluctuations in foreign currency exchange rates, political unrest and regulatory changes in international 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;

- the regulatory and competitive environment of the industries in which we, and the entities in which we have interests, operate;

- uncertainties regarding the financial performance of our investments in unconsolidated entities;

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

- future financial performance, including availability, terms, and deployment of capital;

- the ability of suppliers and vendors to deliver products, equipment, software, and services;

- 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;

- changes in income taxes due to regulatory changes or changes in our corporate structure;

- changes in the nature of key strategic relationships with partners, distributors and equity method investee partners;

- competitor responses to our products and services and the products and services of the entities in which we have interests;

- threatened terrorist attacks and military action;

- our level of debt;

- reduced access to capital markets or significant increases in costs to borrow; and

- a reduction of advertising revenue associated with unexpected reductions in the number of subscribers.

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

The Company’s headquarters are located in New York City at 230 Park Ave.

South.

The Company owns and leases approximately 21 million square feet of offices; studios; technical, production and warehouse spaces; communications facilities; and other properties in numerous locations in the U.S. and around the world for its businesses.

The following table sets forth information as of December 31, 2022 with respect to the Company’s principal properties:

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

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

| Location | | | | | | Principal Use | | | | | | Approximate Square Footage | | | | | | Type of Ownership; Expiration Date of Lease | | |

| New York, NY 230 Park Ave South | | | | | | Studios, Networks, DTC, & Corporate | | | | | | 360,000 | | | | | | Leased; Lease expires in 2037. | | |

| New York, NY 30 Hudson Yards | | | | | | Studios, Networks, DTC, & Corporate | | | | | | 1,500,000 | | | | | | Leased; Lease expires in 2034. | | |

| Burbank, CA The Warner Bros. Studios | | | | | | Studios | | | | | | 2,600,000 | | | | | | Owned. | | |

| Leavesden, UK Leavesden Studios | | | | | | Studios | | | | | | 1,300,000 | | | | | | Owned. | | |

| Atlanta, GA 1050 Techwood Dr. | | | | | | Studios, Networks, DTC, & Corporate | | | | | | 1,170,000 | | | | | | Owned. | | |

| Atlanta, GA One CNN Center | | | | | | Studios, Networks, & Corporate | | | | | | 1,150,000 | | | | | | Leased; Lease expires in 2024. | | |

| Burbank, CA Second Century Tower 1 & 2 | | | | | | Studios & Corporate | | | | | | 800,000 | | | | | | Leased; Tower 1 lease expires in 2037 & Tower 2 lease expires in 2039. | | |

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

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

| Location | | | | | | Principal Use | | | | | | Approximate Square Footage | | | | | | Type of Ownership; Expiration Date of Lease | | |

| Santiago, Chile Pedro Montt 2354 | | | | | | Studios & Networks | | | | | | 610,000 | | | | | | Owned. | | |

| Knoxville, TN Knoxville Office & Tech Center | | | | | | Studios, Networks, DTC, & Corporate | | | | | | 344,000 | | | | | | Owned. | | |

| Culver City, CA Ivy Station | | | | | | Networks & DTC | | | | | | 244,000 | | | | | | Leased; Lease expires in 2036. | | |

| Warsaw, Poland TVN Warsaw HQ | | | | | | Studios, Networks, DTC, & Corporate | | | | | | 198,000 | | | | | | Owned. | | |

| London, England Warner House | | | | | | Networks, DTC, & Corporate | | | | | | 135,000 | | | | | | Leased; Lease expires in 2034. | | |

| Buenos Aires, Argentina 599 & 533 Defensa St. | | | | | | Studios, Networks, DTC, & Corporate | | | | | | 129,000 | | | | | | Owned. | | |

| London, England Old Street | | | | | | Studios, Networks, DTC, & Corporate | | | | | | 116,000 | | | | | | Leased; Lease expires in 2034. | | |

| Paris, France LaMiral Zac Forum Seine | | | | | | Networks, DTC, & Corporate | | | | | | 116,000 | | | | | | Leased; Lease expires in 2031. | | |

| Seattle, WA 1099 Stewart Street | | | | | | DTC | | | | | | 112,000 | | | | | | Leased; Lease expires in 2025. | | |

| London, England Chiswick Park, Bldg. 2 | | | | | | Networks, DTC, & Corporate | | | | | | 102,000 | | | | | | Leased; Lease expires in 2034. | | |

| Washington, DC 820 First St. | | | | | | Studios & Networks | | | | | | 71,000 | | | | | | Leased; Lease expires in 2031. | | |

| Auckland, New Zealand 2 & 3 Flower St. | | | | | | Studios, Networks, DTC, & Corporate | | | | | | 57,000 | | | | | | Leased; Lease expires in 2025. | | |

| Sterling, VA 45580 Terminal Dr. | | | | | | Studios, Networks, & DTC | | | | | | 54,000 | | | | | | Owned. | | |

| Silver Spring, MD 8403 Colesville Rd. | | | | | | Networks & Corporate | | | | | | 47,000 | | | | | | Leased; Lease expires in 2030. | | |

| Tokyo, Japan 1-2-9, Nishi-Shinbashi | | | | | | Networks & DTC | | | | | | 47,000 | | | | | | Leased; Lease expires in 2028. | | |

| Singapore, Singapore 1 Fusionopolis Walk | | | | | | Networks & DTC | | | | | | 40,000 | | | | | | Leased; Lease expires in 2026. | | |

We own and lease approximately 2.94 million square feet of building space in 116 locations around the world.

In the U.S., we own and lease approximately 1.46 million square feet of building space at 27 locations representing 398 thousand square feet of owned space and 1.06 million square feet that we lease.

Principal locations in the U.S. include:

- a Global Headquarters in New York, New York, primarily used for general office space by various business units including Ad Sales, U.S. Networks, DTC, Corporate functions and Discovery Digital Studios and production space used for U.S. Networks;

- two owned offices in Knoxville, Tennessee, used for general office space and for technology support and content production (including studios and production support space), respectively, and one leased warehouse space;

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

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

- an owned technical facility in Sterling, Virginia, used to manage all technical aspects of most of our global linear and digital businesses.

- a leased office in Miami, Florida, primarily used for general office space by our International Networks segment;

We also own and lease approximately 1.48 million square feet of building space at 89 locations outside of the U.S., representing 299 thousand square feet of owned space in Poland and 1.18 million square feet that we lease.

In Poland, our TVN business unit has 31 locations including 299 thousand square feet of owned space and 390 thousand square feet that we lease.

The TVN office locations are used for linear and digital news and entertainment content production, including studios, warehouse, production, technology, broadcasting and supporting office space, and are located primarily in Warsaw and Krakow.

Other principal locations outside of the U.S. include the Office, Production and Playout space in the U.K. and France, and Office and Production space in New Zealand, Denmark, Norway, Germany, and Italy.

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

Our policy is to improve and replace property as considered appropriate, to efficiently meet the needs of the individual operations.

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

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.

[removed: Executive Officers of] Discovery, Inc.

[removed: | Adria Alpert Romm Born March 2, 1955 | | | | | | Chief People and Culture Officer since April 2019.] [added: Prior to that,] Ms. Romm served as [removed: our] [added: Discovery’s] Chief Human Resources and Diversity Officer from March 2014 to March [removed: 2019. Prior to that, Ms. Romm served as our] [added: 2019 and Discovery’s] Senior Executive Vice President of Human Resources from March 2007 to February 2014. [removed: Ms. Romm served as Senior Vice President of Human Resources of NBC from 2004 to 2007. Prior to 2004, Ms. Romm served as a Vice President in Human Resources for the NBC TV network and NBC staff functions. | | |]

[removed: | Bruce L. Campbell Born November 26, 1967 | | | | | | Chief Development, Distribution & Legal Officer.] Mr. Campbell [removed: became our] [added: has served in several senior executive roles at Discovery, including as] Chief Distribution Officer [removed: in] [added: from] October [removed: 2015,] [added: 2015 to April 2022,] Chief Development Officer [removed: in] [added: from] August 2010 [removed: and served as our] [added: to April 2022,] General Counsel from December 2010 to April [removed: 2017. Mr. Campbell served as] [added: 2017,] Digital Media Officer from August 2014 [removed: through October 2015. Prior] to [removed: that, Mr. Campbell served as our] [added: October 2015 and] President, Digital Media & Corporate Development from March 2007 [removed: through] [added: to] August 2010. [removed: Mr. Campbell also served as our corporate secretary from December 2010 to February 2012. Mr. Campbell served as Executive Vice President, Business Development of NBC from December 2005 to March 2007, and Senior Vice President, Business Development of NBC from January 2003 to November 2005. | | |]

[removed: | Lori Locke Born August 23, 1963 | | | | | | Chief Accounting Officer. Ms. Locke joined Discovery as our Chief Accounting Officer in June 2019.] Prior to joining Discovery, Ms. Locke served as Vice President, Corporate Controller and Principal Accounting Officer for Gannett Co., [removed: Inc. (“Gannett”),] [added: Inc.,] a media company, from June 2015 to May 2019. [removed: Before joining Gannett, Ms. Locke was Vice President and Corporate Assistant Controller for Leidos, Inc. (formerly SAIC, Inc.), a science, engineering and information technology company, from February 2013 to May 2015. | | |]

[removed: | Savalle C. Sims Born May 21, 1970 | | | | | | Executive Vice President and General Counsel. Ms. Sims became Executive Vice President and General Counsel in April 2017.] [added: Prior to that,] Ms. Sims served as [removed: our] [added: Discovery’s] Executive Vice President and Deputy General Counsel from December 2014 to April [removed: 2017. Prior to that, Ms. Sims served as our] [added: 2017 and Discovery’s] Senior Vice President, Litigation and Intellectual Property from August 2011 [removed: through] [added: to] December 2014. [removed: Prior to joining Discovery, Ms. Sims was a partner at the law firm of Arent Fox LLP. | | |]

Executive Officers of Warner Bros.

As of February 24, 2023, the following individuals are the executive officers of the Company.

David M.

Zaslav, President, Chief Executive Officer, and a director

Age: 63

Executive Officer since 2007

Mr. Zaslav has served as our President and Chief Executive Officer and a member of our board of directors since the closing of the Merger on April 8, 2022.

Prior to the closing, Mr. Zaslav served as Discovery’s President and Chief Executive Officer from January 2007 until April 2022 and a common stock director of Discovery from September 2008 until April 2022.

Gunnar Wiedenfels, Chief Financial Officer

Age: 45

Executive Officer since 2017

Mr. Wiedenfels has served as our Chief Financial Officer since the closing of the Merger on April 8, 2022.

Prior to the closing, Mr. Wiedenfels served as Discovery, Inc.’s Chief Financial Officer from April 2017 until April 2022.

Bruce L.

Campbell, Chief Revenue and Strategy Officer

Age: 55

Executive Officer since 2008

Mr. Campbell has served as our Chief Revenue and Strategy Officer since the closing of the Merger on April 8, 2022.

Prior to the closing, he served as Discovery’s Chief Development, Distribution and Legal Officer.

David Leavy, Chief Corporate Affairs Officer

Age: 53

Executive Officer since 2014

Mr. Leavy has served as our Chief Corporate Affairs Officer since the closing of the Merger on April 8, 2022.

Prior to the closing, he served as Discovery’s Chief Corporate Operating Officer from June 2019 to April 2022 and prior to that, its Chief Corporate Operations and Communications Officer from March 2016 to June 2019.

Mr. Leavy has served in several other senior executive roles since joining in March 2000.

Lori Locke, Chief Accounting Officer

Age: 59

Executive Officer since 2019

Ms. Locke has served as our Chief Accounting Officer since the closing of the Merger on April 8, 2022.

Prior to the closing, Ms. Locke served as Discovery’s Chief Accounting Officer from June 2019 to April 2022.

Jean-Briac Perrette, CEO and President, Global Streaming and Games

Age: 51

Executive Officer since 2014

Mr. Perrette has served as our CEO and President of Global Streaming and Games since the closing of the Merger on April 8, 2022.

Prior to the closing, he served as President and CEO of Discovery International (formerly referred to as Discovery Networks International) from June 2016 until April 2022, and served as President of Discovery Networks International from March 2014 to June 2016.

Prior to that, Mr. Perrette served as Discovery’s Chief Digital Officer from October 2011 to February 2014.

Adria Alpert Romm, Chief People and Culture Officer

Age: 67

Executive Officer since 2008

Ms. Romm has served as our Chief People and Culture Officer since the closing of the Merger on April 8, 2022.

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 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 24, 2022.

| | | | | | | | | |

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

| Name | | | | | | Position | | |

| 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 boards of Sirius XM Radio Inc. and Grupo Televisa S.A.B. | | |

| Gunnar Wiedenfels Born September 6, 1977 | | | | | | Chief Financial Officer. Mr. Wiedenfels has served as our Chief Financial Officer since April 2017. Prior to joining Discovery, Mr. Wiedenfels served as Chief Financial Officer of ProSiebenSat.1 Media SE ("ProSieben") starting in 2015. Prior to that, he served as ProSieben's Deputy Chief Financial Officer from 2014 to 2015 and served as Chief Group Controller from 2013 to 2015. Previously, he served as ProSieben's Deputy Group Controller, responsible for group-wide budget planning, budget controlling, and management reporting and as Chief Financial Officer, National, where he had commercial responsibility for the group's German- speaking free TV segment. Before this, he worked as a management consultant and engagement manager at McKinsey & Company. In May 2019, Mr. Wiedenfels joined the supervisory board of SAP SE and serves as chairman of their audit committee. | | |

| Jean-Briac Perrette Born April 30, 1971 | | | | | | President and CEO of Discovery International. Mr. Perrette became CEO of Discovery International (formerly referred to as Discovery Networks International) in June 2016 and President of Discovery Networks International in March 2014. Prior to that, Mr. Perrette served as our Chief Digital Officer from October 2011 to February 2014. Mr. Perrette served in a number of roles at NBC Universal from March 2000 to October 2011, with the last being President of Digital and Affiliate Distribution. | | |

| David Leavy Born December 24, 1969 | | | | | | Chief Corporate Operating Officer. Mr. Leavy served as our Chief Corporate Operations and Communications Officer from March 2016 to June 2019 and became our Chief Corporate Operating Officer in July 2019. Prior to that, Mr. Leavy served as our Chief Communications Officer and Senior Executive Vice President, Corporate Marketing and Business Operations from August 2015 to March 2016. From December 2011 to August 2015, Mr. Leavy served as our Chief Communications Officer and Senior Executive Vice President, Corporate Marketing and Affairs. Prior to that, Mr. Leavy served as our Executive Vice President, Communications and Corporate Affairs and has served in a number of other roles at Discovery since joining in March 2000. | | |

[removed: These amounts do] [added: This amount does] not include the number of shareholders whose shares are held of record by banks, brokerage houses or other institutions, but [removed: include] [added: includes] each such institution as one shareholder.

We have not paid any cash dividends on [removed: our Series A common stock, Series B] [added: WBD] common stock [removed: or Series C common stock,] and we have no present intention to do so.

The [added: Prior] Peer Group is comprised of The Walt Disney [removed: Company, ViacomCBS, Inc.] [added: Company common stock, Paramount Global] Class B common stock, Fox Corporation Class A common [removed: stock] [added: stock,] and AMC Networks Inc. Class A common stock.

[removed: ][added: ]

Copyright [removed: 1980-2022.][added: 1980-2023.]

| | | | | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: April 8,] | | | [added: | | | December 31, | | |]

| | | | | | | [removed: 2016] [added: 2017] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2021] [added: 2022] | | | [added: | | | 2022 | | |]

WBD common stock is listed and traded on Nasdaq under the symbol “WBD”.

As of February 9, 2023, there were approximately 715,364 record holders of WBD common stock.

The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for (a) WBD common stock (which began trading on April 11, 2022) and Discovery Series A common stock, Series B convertible common stock, and Series C common stock (which ceased trading on April 8, 2022), (b) the Standard and Poor's 500 Stock Index (“S&P 500 Index”), (c) the Standard & Poor’s 500 Media and Entertainment Industry Group Index (“S&P 500 Media & Entertainment Index”), and (d) a peer group of companies (the “Prior Peer Group”) for the five years ended December 31, 2022.

The graph assumes $100 was invested in each of Discovery Series A common stock, Series B convertible common stock, and Series C common stock, the S&P 500 Index, the S&P 500 Media & Entertainment Index, and the stocks of the Prior Peer Group on December 31, 2017, and that $100 was invested in WBD common stock on April 11, 2022, the date on which it began trading.

Note that historic stock price performance is not necessarily indicative of future stock price performance*.* The change from our Prior Peer Group to the S&P 500 Media & Entertainment Index was made to better reflect our business subsequent to the Merger.

NOTE: Peer group indices use beginning of period market capitalization weighting.

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

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

| WBD | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 100.00 | | | | | $ | 38.80 | |

| DISCA | | | | | | $ | 100.00 | | | | | $ | 110.55 | | | | | $ | 146.30 | | | | | $ | 134.46 | | | | | $ | 105.19 | | | | | $ | 109.17 | | | | | $ | — | |

| DISCB | | | | | | $ | 100.00 | | | | | $ | 135.08 | | | | | $ | 146.21 | | | | | $ | 130.65 | | | | | $ | 119.96 | | | | | $ | 98.59 | | | | | $ | — | |

| DISCK | | | | | | $ | 100.00 | | | | | $ | 109.02 | | | | | $ | 144.03 | | | | | $ | 123.71 | | | | | $ | 108.17 | | | | | $ | 115.35 | | | | | $ | — | |

| S&P 500 | | | | | | $ | 100.00 | | | | | $ | 95.62 | | | | | $ | 125.72 | | | | | $ | 148.85 | | | | | $ | 191.58 | | | | | $ | 181.13 | | | | | $ | 156.88 | |

| S&P 500 Media & Entertainment Index | | | | | | $ | 100.00 | | | | | $ | 90.25 | | | | | $ | 121.08 | | | | | $ | 159.27 | | | | | $ | 202.18 | | | | | $ | 170.27 | | | | | $ | 113.40 | |

| Prior Peer Group | | | | | | $ | 100.00 | | | | | $ | 100.13 | | | | | $ | 129.45 | | | | | $ | 153.94 | | | | | $ | 134.50 | | | | | $ | 119.40 | | | | | $ | 77.93 | |

Our Series A common stock, Series B common stock and Series C common stock are listed and traded on The Nasdaq Global Select Market (“NASDAQ”) under the symbols “DISCA,” “DISCB” and “DISCK,” respectively.

As of February 10, 2022, there were approximately 1,030, 57 and 1,525 record holders of our Series A common stock, Series B common stock and Series C common stock, respectively.

The following graph sets forth the cumulative total shareholder return on our Series A common stock, Series B common stock and Series C common stock as compared with the cumulative total return of the companies listed in the Standard and Poor's 500 Stock Index ("S&P 500 Index") and a peer group of companies (the "Peer Group").

The graph assumes $100 originally invested on December 31, 2016 in 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, 2017, 2018, 2019, 2020 and 2021.

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

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

| 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 | |

| [Management’s Report on Internal Control Over Financial [removed: Reporting.](#ifb6f7f0391304704bde96ba6f2c3bef1_91)] [added: Reporting.](#i1321522a81954b41bd1a0227ee3ad30e_106)] | | | [removed: [62](#ifb6f7f0391304704bde96ba6f2c3bef1_91)] [added: [58](#i1321522a81954b41bd1a0227ee3ad30e_106)] | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#ifb6f7f0391304704bde96ba6f2c3bef1_94).] [added: Firm](#i1321522a81954b41bd1a0227ee3ad30e_109).] (PCAOB ID 238) | | | [removed: [63](#ifb6f7f0391304704bde96ba6f2c3bef1_94)] [added: [59](#i1321522a81954b41bd1a0227ee3ad30e_109)] | | |

| [Consolidated Financial Statements of [added: Warner Bros.] Discovery, [removed: Inc.:](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] [added: Inc.](#i1321522a81954b41bd1a0227ee3ad30e_115)] | | | [removed: [65](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] [added: [62](#i1321522a81954b41bd1a0227ee3ad30e_115)] | | |

| [Consolidated Statements of [removed: Operations](#ifb6f7f0391304704bde96ba6f2c3bef1_100).] [added: Operations](#i1321522a81954b41bd1a0227ee3ad30e_115).] | | | [removed: [66](#ifb6f7f0391304704bde96ba6f2c3bef1_100)] [added: [62](#i1321522a81954b41bd1a0227ee3ad30e_115)] | | |

[removed: | [Consolidated Statements of Comprehensive Income (Loss)](#ifb6f7f0391304704bde96ba6f2c3bef1_103). | | | [67](#ifb6f7f0391304704bde96ba6f2c3bef1_103) | | |][added: CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME]

| [Consolidated Statements of Cash [removed: Flows](#ifb6f7f0391304704bde96ba6f2c3bef1_106).] [added: Flows](#i1321522a81954b41bd1a0227ee3ad30e_121).] | | | [removed: [68](#ifb6f7f0391304704bde96ba6f2c3bef1_106)] [added: [65](#i1321522a81954b41bd1a0227ee3ad30e_121)] | | |

[removed: | [Consolidated Statements of Equity](#ifb6f7f0391304704bde96ba6f2c3bef1_109). | | | [69](#ifb6f7f0391304704bde96ba6f2c3bef1_109) | | |][added: CONSOLIDATED STATEMENTS OF EQUITY]

[removed: | [Notes to Consolidated Financial Statements](#ifb6f7f0391304704bde96ba6f2c3bef1_112). | | | [70](#ifb6f7f0391304704bde96ba6f2c3bef1_112) | | |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

[removed: Management of] Discovery, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) of the Securities Exchange Act of 1934, as amended.

Because of [removed: the] [added: its] inherent [removed: limitations in any internal control, no matter how well designed,] [added: limitations,] internal control over financial reporting may not prevent or detect misstatements.

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 [removed: system of] internal control over financial reporting as of December 31, [removed: 2021] [added: 2022] 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: 2021,] [added: 2022,] the Company’s internal control over financial reporting was effective [removed: at a] [added: to provide] reasonable assurance [removed: level based on] [added: regarding] the [removed: specified criteria.][added: reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.]

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2021] [added: 2022] 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.”

To the Board of Directors and Stockholders of [removed: Discovery, Inc.][added: Warner Bros.]

[removed: We have audited the accompanying consolidated balance sheets of] Discovery, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] 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: 2021,] [added: 2022,] including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, [removed: 2021] [added: 2022] 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: 2021,] [added: 2022,] 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021] [added: 2022] 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: 2021,] [added: 2022,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

[removed: *Changes in Accounting Principles*][added: | Cumulative effect of accounting changes | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2 | | | | | | — | | | | | | 2 | | | | | | — | | | | | | 2 | | |]

The critical audit [removed: matter] [added: matters] communicated below [removed: is a matter] [added: are matters] arising from the current period audit of the consolidated financial statements that [removed: was] [added: were] communicated or required to be communicated to the audit committee and that (i) [removed: relates] [added: relate] 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 [removed: a] critical audit [removed: matter] [added: matters] 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: matter] [added: matters] below, providing separate opinions on the critical audit [removed: matter] [added: matters] or on the accounts or disclosures to which [removed: it relates.][added: they relate.]

The principal considerations for our determination that performing procedures relating to [removed: certain reserves for uncertain tax positions] [added: determination of the accounting acquirer in the merger with the WarnerMedia business] is a critical audit matter are (i) the significant judgment by management [removed: when determining certain reserves for uncertain tax positions, including a high degree of estimation uncertainty when] [added: in] determining the [removed: reserves] [added: appropriate accounting acquirer] and (ii) a high degree of auditor judgment, [removed: subjectivity] [added: subjectivity,] and effort in performing procedures and evaluating audit evidence [removed: relating] [added: related] to management’s determination of [removed: certain reserves for uncertain tax positions,] the [removed: technical merits of the tax positions, and the accurate measurement of] [added: accounting acquirer considering] the [removed: uncertain tax positions.][added: facts above.]

[removed: DISCOVERY, INC.][added: Discovery, Inc.]

| [added: December 31, 2020] | | | | | | [removed: December 31,] [added: $] | [added: 23] | | | | | [added: $] | [added: 20] | | [added: | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 15 | | | | | $ | 58 | |]

| | | | | | | [added: 2022 | | | | | |] 2021 | | | | | | 2020 | | |

| Cash and cash equivalents | | | | | | $ | [removed: 3,905] [added: 3,731] | | | | | $ | [removed: 2,091] [added: 3,905] | |

| Receivables, net | | | | | | [removed: 2,446] [added: 6,380] | | | | | | [removed: 2,537] [added: 2,446] | | |

| [removed: Content] [added: Less: Current content] rights and prepaid license fees, net | | | | | | [removed: 245] | | | | | | [removed: 532] | | | [added: | | | (245) | | |]

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

| Total current assets | | | | | | [removed: 7,264] [added: 13,999] | | | | | | [removed: 6,130] [added: 7,264] | | |

| [removed: Noncurrent] [added: Total noncurrent film and television] content [removed: rights, net] [added: rights (a)] | | | | | | [removed: 3,832] | | | | | | [removed: 3,439] | | | [added: | | | $ | 3,832 | |]

| Property and equipment, net | | | | | | [removed: 1,336] [added: 5,301] | | | | | | [removed: 1,206] [added: 1,336] | | |

| Goodwill | | | | | | [removed: 12,912] [added: 34,438] | | | | | | [removed: 13,070] [added: 12,912] | | |

| Intangible assets, net | | | | | | [removed: 6,317] [added: 44,982] | | | | | | [removed: 7,640] [added: 6,317] | | |

| Other noncurrent assets | | | | | | [removed: 2,223] [added: $] | [added: 92] | | | | | [removed: 2,095] [added: $] | [added: —] | |

| Total assets | | | | | | $ | [removed: 34,427] [added: 134,001] | | | | | $ | [removed: 34,087] [added: 34,427] | |

| Accounts payable | | | | | | $ | [removed: 412] [added: 1,454] | | | | | $ | [removed: 397] [added: 412] | |

| Accrued liabilities | | | | | | [removed: 2,230] [added: 11,504] | | | | | | [removed: 1,793] [added: 2,230] | | |

| Deferred revenues | | | | | | [removed: 478] [added: 1,694] | | | | | | [removed: 557] [added: 478] | | |

| Current portion of debt | | | | | | [removed: 339] [added: 365] | | | | | | [removed: 335] [added: 339] | | |

| [Consolidated Balance Sheets.](#i1321522a81954b41bd1a0227ee3ad30e_112) | | | [64](#i1321522a81954b41bd1a0227ee3ad30e_112) | | |

| [Consolidated Statements of Equity](#i1321522a81954b41bd1a0227ee3ad30e_124). | | | [66](#i1321522a81954b41bd1a0227ee3ad30e_124) | | |

| [Notes to Consolidated Financial Statements](#i1321522a81954b41bd1a0227ee3ad30e_127). | | | [68](#i1321522a81954b41bd1a0227ee3ad30e_127) | | |

Management of Warner Bros.

On April 8, 2022, Discovery completed its Merger with the WM Business.

In accordance with the SEC’s guidance that a recently acquired business may be omitted from the scope of management’s assessment for up to one year from the date of acquisition, the Company’s management has excluded the WM Business from its evaluation of its internal control over financial reporting as of December 31, 2022.

As of and for the year ended December 31, 2022, total assets of the WM Business represented 29% of consolidated total assets of the Company, and total revenues of the WM business represented 66% of total revenues of the Company.

We have audited the accompanying consolidated balance sheets of Warner Bros.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded the WarnerMedia business from its assessment of internal control over financial reporting as of December 31, 2022 because it was acquired by the Company in a purchase business combination during 2022.

We have also excluded the WarnerMedia business from our audit of internal control over financial reporting.

The WarnerMedia business is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 29% and 66%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.

*Merger with WarnerMedia - Determination of Accounting Acquirer*

As described in Note 4 to the consolidated financial statements, on April 8, 2022, the Company completed a merger with the WarnerMedia business of AT&T.

The merger was executed as a Reverse Morris Trust transaction, under which WarnerMedia was distributed to AT&T’s shareholders via a pro-rata distribution, and immediately thereafter, combined with Discovery, Inc. (Discovery), with Discovery being identified as the accounting acquirer based primarily upon the following facts: (1) Discovery initiated the merger, was the legal acquirer of Magallanes, Inc., (“Spinco”), and transferred equity consideration to Spinco stockholders, (2) AT&T received $40.5 billion of consideration (subject to working capital and other adjustments) as part of its disposition of the WarnerMedia business, (3) the Chief Executive Officer of Discovery continued as Chief Executive Officer of the combined Company after the merger and was primarily responsible for appointing the rest of the executive management team of the combined Company, and the Chief Financial Officer of Discovery will continue as Chief Financial Officer of the combined Company, (4) no stockholder or group of stockholders held a controlling interest in WBD and a key Discovery stockholder was the largest minority interest in WBD, after the completion of the merger and (5) AT&T had no input on the strategic direction and management of the combined Company after the completion of the merger.

The above facts were deemed to outweigh the fact that the holders of shares of Spinco common stock that received shares of WBD common stock in the merger in the aggregate own a majority of WBD common stock on a fully diluted basis and associated voting rights after the merger.

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

These procedures included testing the effectiveness of controls relating to the merger accounting, including the control over management’s determination of the accounting acquirer.

These procedures also included, among others, (i) reading the merger agreement and other relevant transaction documents and (ii) evaluating management’s assessment of the facts considered in the identification of the accounting acquirer.

*Acquisition of WarnerMedia - Valuation of Trade Names and Affiliate Relationships Intangible Assets*

As described in Note 4 to the consolidated financial statements, on April 8, 2022, the Company completed its merger with WarnerMedia business for a purchase consideration of $42.4 billion.

The Company applied the acquisition method of accounting to WarnerMedia business, which resulted in the recognition of intangible assets, including $21.1 billion of trade names and $14.7 billion of affiliate, advertising and subscriber relationships, the primary component of which relates to the affiliate relationships.

The fair value of the trade names was estimated by management using the relief from royalty valuation method and the fair value of the affiliate relationships was estimated by management using the multi-period excess earnings valuation method.

Significant inputs used in the discounted cash flow analyses and other areas of judgment by management include (i) historical and projected financial information, (ii) discount rates used to present value future cash flows, (iii) royalty rates, (iv) projected revenue attributable to affiliate contracts and related renewals, (v) synergies, including cost savings, (vi) tax rates, (vii) economic useful life of assets, and (viii) attrition rates, as relevant, that market participants would consider when estimating fair values.

The principal considerations for our determination that performing procedures relating to the valuation of the trade names and affiliate relationships intangible assets acquired in the acquisition of WarnerMedia business is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the trade names and affiliate relationships intangible assets, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to royalty rates used in the valuation of the trade names and projected revenue attributable to affiliate contracts and related renewals used in the valuation of the affiliate relationships, 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 the application of acquisition accounting, including controls over management’s valuation of the trade names and affiliate relationships intangible assets and the development of the underlying assumptions related to the royalty rates for the trade names and projected revenue attributable to affiliate contracts and related renewals for the affiliate relationships.

These procedures also included, among others, (i) reading the purchase agreement, (ii) testing management’s process for developing the fair value estimates of the trade names and affiliate relationships intangible assets, (iii) evaluating the appropriateness of the relief from royalty and multi-period excess earnings valuation methods, (iv) testing the completeness and accuracy of underlying data used in the valuation methods, and (v) evaluating the reasonableness of the significant assumptions used by management related to royalty rates used in the valuation of the trade names and the projected revenue attributable to affiliate contracts and related renewals used in the valuation of the affiliate relationships.

Evaluating the reasonableness of the royalty rates used in the valuation of the trade names involved considering observable royalty rates of comparable businesses and other industry factors.

Evaluating the reasonableness of the projected revenue attributable to affiliate contracts and related renewals used in the valuation of the affiliate relationships involved considering the pre-existing contractual arrangements of WarnerMedia, as well as economic and industry forecasts.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the valuation method and the reasonableness of the royalty rates used in the valuation of the trade names.

*Goodwill Impairment Assessment - DTC Reporting Unit*

As described in Notes 2 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance was $34.4 billion as of December 31, 2022, and the goodwill associated with the DTC reporting unit was $7.9 billion.

The Company evaluates goodwill for impairment annually as of October 1, or if an event or other circumstance indicates that it may not recover the carrying value of the asset.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the DTC reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value of the DTC reporting unit, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to the revenue growth rates.

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

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the DTC reporting unit.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the DTC reporting unit, (ii) evaluating the appropriateness of the discounted cash flow model, (iii) testing the completeness and accuracy of underlying data used in the model, and (iv) evaluating the reasonableness of the significant assumption used by management related to the revenue growth rates.

Evaluating management’s significant assumption related to the revenue growth rates involved evaluating whether the assumption is reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether the assumption is consistent with evidence obtained in other areas of the audit.

February 24, 2023

WARNER BROS.

DISCOVERY, INC.

| [Consolidated Balance Sheets](#ifb6f7f0391304704bde96ba6f2c3bef1_97). | | | [65](#ifb6f7f0391304704bde96ba6f2c3bef1_97) | | |

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, and the manner in which it accounts for leases in 2019.

*Certain Reserves for Uncertain Tax Positions*

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

Management establishes a reserve for uncertain tax positions unless management determines that such positions are more likely than not to be sustained upon examination based on their technical merits, including the resolution of any appeals or litigation processes.

As disclosed by management, significant judgment is exercised in evaluating all relevant information, the technical merits of the tax positions, and the accurate measurement of uncertain tax positions when determining the amount of the reserve and whether positions taken on the Company’s tax returns are more likely than not to be sustained.

This also involves the use of significant estimates and assumptions with respect to the potential outcome of positions taken on tax returns that may be reviewed by tax authorities.

These procedures included testing the effectiveness of controls relating to the recognition, measurement, and completeness of uncertain tax positions.

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 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) for certain uncertain tax positions, testing the completeness of management’s assessment and possible outcomes, and (iv) evaluating the status and results of income tax audits with the relevant tax authorities.

February 24, 2022

| Equity method investments | | | | | | 543 | | | | | | 507 | | |

| Advertising | | | | | | $ | 6,215 | | | | | $ | 5,583 | | | | | $ | 6,044 | |

| Distribution | | | | | | 5,409 | | | | | | 4,866 | | | | | | 4,835 | | |

| Other | | | | | | 567 | | | | | | 222 | | | | | | 265 | | |

| Restructuring and other charges | | | | | | 32 | | | | | | 91 | | | | | | 26 | | |

| Basic | | | | | | 503 | | | | | | 505 | | | | | | 529 | | |

| Business acquisitions, net of cash acquired | | | | | | (2) | | | | | | (39) | | | | | | (73) | | |

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

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

| December 31, 2018 | | | | | | 14 | | | | | | $ | — | | | | | 691 | | | | | | $ | 7 | | | | | $ | 10,647 | | | | | $ | (6,737) | | | | | $ | 5,254 | | | | | $ | (785) | | | | | $ | 8,386 | | | | | $ | 1,716 | | | | | $ | 10,102 | |

| Settlement of common stock repurchase contract | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5 | | | | | | — | | | | | | — | | | | | | — | | | | | | 5 | | | | | | — | | | | | | 5 | | |

| Cumulative effect of an accounting change | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2 | | | | | | — | | | | | | 2 | | | | | | — | | | | | | 2 | | |

| Cumulative effect of accounting changes of an equity method investee | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (3) | | | | | | — | | | | | | (3) | | | | | | — | | | | | | (3) | | |

| Repurchases of stock | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (965) | | | | | | — | | | | | | — | | | | | | (965) | | | | | | — | | | | | | (965) | | |

Discovery, Inc. (“Discovery”, the “Company”, "we", "us" or "our") is a global media company that provides content across multiple distribution platforms, including linear platforms such as pay-television ("pay-TV"), free-to-air and broadcast television, authenticated GO applications, digital distribution arrangements, content licensing arrangements and direct-to-consumer ("DTC") subscription products.

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

The Company also operates production studios.

The Company has organized its operations into two reportable segments: U.S. Networks, consisting principally of domestic television networks and digital content services, and International Networks, consisting primarily of international television networks and digital content services.

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

COVID-19 has continued to spread throughout the world, and the duration and severity of its effects and associated economic disruption remain uncertain.

We continue to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including the impact on our customers, employees, suppliers, vendors, distribution and advertising partners, production facilities, and various other third parties.

Beginning in the second quarter of 2020, demand for the Company’s advertising products and services decreased due to economic disruptions from limitations on social and commercial activity.

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

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

Many of the Company’s third-party production partners that were shut down during most of the second quarter of 2020 due to COVID-19 restrictions came back online in the third quarter of 2020 and, as a result, the Company has incurred additional costs to comply with various governmental regulations and implement certain safety measures for the Company's employees, talent, and partners.

Additionally, certain sporting events that the Company has rights to were cancelled or postponed, thereby eliminating or deferring the related revenues and expenses, including the Tokyo 2020 Olympic Games, which occurred in July and August 2021.

The postponement of the 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 innovative production and programming strategies, including producing content filmed by our on-air talent and seeking viewer feedback on which content to air.

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.

We will continue to monitor COVID-19 and its impact on our business results and financial condition.

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: 2021.][added: 2022.]

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to [removed: ensure] [added: provide reasonable assurance] that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to [removed: ensure] [added: provide reasonable assurance] that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of [added: possible controls and procedures.]

Based on the evaluation of our disclosure controls and procedures as of December 31, [removed: 2021,] [added: 2022,] our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were [removed: effective.][added: effective at the reasonable assurance level.]

During the three months ended December 31, [removed: 2021,] [added: 2022,] 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.

possible controls and procedures.

None.

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.

The time and location of the 2022 Annual Meeting will be specified in our definitive Proxy Statement for the 2022 Annual Meeting, which will be filed with the SEC pursuant to Regulation 14A of the Exchange Act within 120 days of our fiscal year end.

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.

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 [removed: 2022] [added: 2023] Annual Meeting of Stockholders [removed: (“2022] [added: (“2023] 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: 2022] [added: 2023] Proxy Statement under the captions “Proposal [removed: One:] [added: 1:] Election of Directors,” “Delinquent Section [removed: 16(a)] [added: 16] Reports,” if applicable, and “Corporate Governance – Board Meetings and Committees – Audit Committee,” respectively, which are incorporated herein by reference.

Information regarding our executive officers is set forth in Part I of this Annual Report on Form 10-K under the caption “Executive Officers of [removed: Discovery, Inc.” as permitted by General Instruction G(3) to Form 10-K.][added: Warner Bros.]

Our [removed: Board] [added: board] of [removed: Directors] [added: directors] approved an updated Code in January [removed: 2019] [added: 2023] and reviews it regularly.

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 our Investor Relations website at [removed: ir.corporate.discovery.com.][added: ir.wbd.com.]

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

Discovery, Inc.” as permitted by General Instruction G(3) to Form 10-K.

Discovery, Inc., 230 Park Avenue South, New York, NY 10003.

Information regarding executive compensation will be set forth in our [removed: 2022] [added: 2023] 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: 2022] [added: 2023] Proxy Statement under the captions “Executive Compensation – Compensation Discussion and Analysis – Other 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: 2022] [added: 2023] 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: 2022] [added: 2023] Proxy Statement under the caption “Securities Authorized for Issuance [removed: Under] [added: 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: 2022] [added: 2023] Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management – [removed: Security Ownership of Certain Beneficial Owners”] [added: Principal Stockholders”] and “Security Ownership of Certain Beneficial Owners and Management – [removed: Security Ownership of Management,”] [added: Directors and Executive Officers,”] which are incorporated herein by reference.

Information regarding certain relationships and related transactions, and director independence will be set forth in our [removed: 2022] [added: 2023] 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: 2022] [added: 2023] Proxy Statement under the captions “Audit Matters – Audit Firm Fees and Services” and “Audit Matters – Audit Committee Pre-Approval [removed: Policy,”] [added: Procedures,”] which are incorporated herein by reference.

[removed: (1) The following consolidated financial statements of] Discovery, Inc. are filed as part of Item 8 of this Annual Report on Form 10-K:

| [Consolidated Balance [removed: Sheets.](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] [added: Sheets.](#i1321522a81954b41bd1a0227ee3ad30e_112)] | | | [removed: [65](#ifb6f7f0391304704bde96ba6f2c3bef1_97)] [added: [64](#i1321522a81954b41bd1a0227ee3ad30e_112)] | | |