Warner Bros. Discovery (WBD) 10-K risk factor changes: FY2023 vs FY2022

Risks Related to Our Acquisition [added: and Integration] of the WarnerMedia Business

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

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

The amount and timing of any such [removed: charges] [added: costs] could materially adversely affect our business, financial condition and results of operations.

We [added: have incurred and expect to continue to incur significant costs relating to the integration of the WarnerMedia business, and we] may not realize the anticipated benefits of the Merger because of difficulties related to [removed: integration, the achievement of such synergies,] [added: integration] and other challenges faced by the combined Company.

[removed: The] [added: Prior to the Merger, the] Discovery Business and the WarnerMedia Business [removed: previously] operated independently, and [added: while we have spent the last 23 months since the closing of the Merger on integration activities,] there can be no assurances that our businesses [removed: can] [added: will ultimately] be combined in a manner that allows for the achievement of any or all anticipated [removed: financial] [added: financial, strategic] or other benefits.

If we are not able to successfully [removed: integrate] [added: complete] the [removed: WarnerMedia Business with] [added: integration of] the Discovery [added: Business and the WarnerMedia] Business, the anticipated benefits of the Merger may not be realized fully, if at all, or may take longer than expected to be realized.

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

Specifically, the following issues, among others, must be addressed in [removed: combining the Discovery Business and the WarnerMedia Business in] order to realize the anticipated benefits of the Merger:

- [removed: integrating] [added: continuing and finalizing] the [added: integration of the] Discovery Business and the WarnerMedia Business in the time frame currently anticipated;

- resolving potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the [removed: Merger.][added: integration of the Discovery Business and the WarnerMedia Business.]

Even if the [removed: Discovery Business and the WarnerMedia Business are integrated] [added: integration is completed] successfully, the full benefits of the Merger may not be achieved within the anticipated time frame or at all.

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

[removed: We] [added: We] have a significant amount of debt and may incur significant amounts of additional debt, which could adversely affect our financial health and our ability to react to changes in our [removed: business.][added: business and our ability to incur debt, and the use of our funds could be limited by the restrictive covenants in the agreements governing our revolving credit facility and senior notes.]

Our consolidated indebtedness as of December 31, [removed: 2022] [added: 2023] was [removed: approximately $49.3 billion,] [added: $41,889 million,] of which [removed: $363] [added: $1,780] million is current.

This would have the effect of further increasing our [removed: leverage.][added: leverage ratio.]

[removed: As] [added: In addition, as] a result of our [removed: increased] [added: significant] indebtedness, our corporate or debt-specific credit rating could be downgraded, which may increase our borrowing costs or subject us to [added: even] more restrictive covenants when we incur new debt in the future, which could reduce profitability and diminish operational flexibility.

[removed: Our substantial] [added: If we are unable to effectively reduce and sustain our] leverage [added: ratio, it] could have significant negative consequences on our financial condition and results of operations, including:

- impairing our ability to meet one or more of the financial ratio covenants contained in our [removed: term loan and] revolving credit facility or to generate cash sufficient to pay the interest or principal, which could result in an acceleration of some or all of our outstanding debt in the event that an uncured default occurs;

- increasing our vulnerability to [removed: general] adverse economic and market conditions;

- requiring the dedication of a substantial portion of our cash flow from operations to service our debt, thereby reducing the amount of cash flow available for other purposes such as capital expenditures, [added: investments,] share repurchases, [removed: investments,] and mergers and acquisitions;

We have recognized, and could continue to [removed: recognize] [added: recognize,] impairment [removed: charges,] [added: charges] related to goodwill and other intangible [removed: assets.][added: assets.]

[removed: The Merger added] [added: We have] a significant amount of goodwill and other intangible assets [removed: to] [added: on] our consolidated balance sheet.

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

We [removed: are] [added: have been] engaged in legal proceedings [added: and disputes] related to the Merger and could be subject to additional legal proceedings [added: and disputes] related to the Merger, the outcomes of which are uncertain and could negatively impact our business, financial condition and results of operations.

[removed: Since the closing of] [added: In connection with] the Merger, multiple putative class action lawsuits relating to the Merger [removed: have been] [added: were] filed on behalf of stockholders of the Company against the Company and/or certain of our directors and executive officers seeking damages and other [removed: relief.][added: relief, and we have been engaged in other disputes arising out of definitive agreements entered into in connection with the Merger.]

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

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

We have incurred and will likely continue to incur significant costs to develop and market [removed: HBO Max and discovery+,] [added: our streaming services,] including costs related to [removed: developing and implementing a go-to-market strategy for our DTC business that aligns our HBO Max] [added: international expansion, technological enhancements,] and [removed: discovery+ products.][added: subscriber acquisition.]

There can be no assurance, however, that consumers and advertisers will embrace our [removed: offerings or] [added: offerings,] that subscribers will activate or renew a subscription, particularly given the [removed: increase in DTC products] [added: significant number of streaming services] in the [removed: marketplace.][added: marketplace, or that our DTC business will be as successful or as profitable as our traditional linear television business.]

Each distribution model has different risks and economic consequences for us, [removed: so] [added: and] the rapid evolution of consumer preferences may have an economic impact that is not ultimately predictable.

If we are not able to access our targeted audience with appealing category-specific content and adapt to new technologies, distribution [removed: methods and] [added: methods,] platforms and business models, we may experience a decline in viewership and ultimately a decline in the demand for our programming, which could lead to lower distribution and advertising revenues, materially and adversely affecting our business, financial condition and results of operations.

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

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

The appeal, success and performance of our content with consumers, as well as with third-party licensees and other distribution partners, are [removed: also] critical factors that can affect the revenue that we receive with respect to our content-related business.

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

Their success [added: and the success of other subscription-based streaming services we may offer in the future] will be largely dependent on our ability to initially attract, and ultimately retain, subscribers.

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

If existing subscribers, including those who receive subscriptions through wireless and broadband bundling arrangements with third [removed: parties,] [added: parties or through wholesale arrangements with MVPDs,] cancel or discontinue their subscriptions for any reason, including as a result of selecting an alternative wireless or broadband plan that does not bundle our products, [added: canceling] or [added: discontinuing their MVPD subscription, or] due to the availability of competing offerings that are perceived to offer greater value compared to our DTC products, our business may be adversely affected.

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

We face increased competitive pressure for talent, content, audiences, subscribers, service providers, advertising spending and production infrastructure.

We compete with a broad range of companies engaged in media, entertainment and communications services, some of whom have interests in multiple media and entertainment businesses that are often vertically integrated, all vying for consumer time, attention and discretionary spending.

In addition, the composition of our competitors has evolved with the entrance of new market participants, including companies in adjacent sectors with significant financial, marketing and other resources, greater efficiencies of scale, fewer regulatory burdens and more competitive pricing.

Such competitors could also have preferential access to important technologies, customer data or other competitive information.

Our competitors may also consolidate or enter into business combinations or alliances that strengthen their competitive positions.

Our ability to compete successfully depends on a number of factors, including our ability to consistently acquire and produce high quality content amidst a rapidly evolving competitive landscape.

In addition, new technology, including generative artificial intelligence (“AI”), is evolving rapidly and our ability to compete could be adversely affected if our competitors gain an advantage by using such technologies.

There can be no assurance that we will be able to compete successfully in the future against existing or new competitors, or that competition in the marketplace will not have an adverse effect on our business, financial condition or results of operations.

Our advertising revenues have been, and may continue to be, adversely impacted by several factors, including the changing landscape of television advertising spending and advertising market conditions.

We derive substantial revenues from the sale of advertising, and a continuing decline in advertising revenues could have a material adverse effect on our business, financial condition or results of operations.

Shifting consumer preferences toward streaming services and other digital products and the increasing number of entertainment choices has intensified audience fragmentation and reduced content viewership through traditional linear distribution models.

This has changed the landscape of traditional television advertising spending, prompting advertisers to shift their strategies, and ultimately advertising spend, toward streaming services and other digital products to reach target audiences.

In addition, a number of other streaming services with larger subscriber bases and greater household penetration have recently introduced ad-supported tiers.

The increase of digital advertising available in the marketplace, due to both the introduction of ad-supported tiers in competing streaming services and the expansion of free ad-supported television (“FAST”) products, has increased the competition we face for advertising expenditures for both our traditional linear networks and the ad-supported tiers in our streaming services, and also limited our ability to demand higher rates for our linear and digital advertising inventory or even the same rates that we previously charged for our advertising inventory prior to the surge in digital advertising.

There can be no assurance that we can successfully navigate the evolving streaming and digital advertising market or that the advertising revenues we generate in that market will replace the declines in advertising revenues generated from our traditional linear business.

Natural and other disasters, pandemics, acts of terrorism, political uncertainty or hostilities could also lead to a reduction in domestic and international advertising expenditures, which could also have an adverse effect on our advertising revenues.

Our advertising revenues are also dependent on our ability to measure viewership and audience engagement across all platforms and in all geographic regions.

Although audience measurement systems have evolved and improved to capture the viewership of programming across multiple platforms, they still do not fully capture all viewership across streaming and other digital platforms and advertisers may not be willing to pay advertising rates based on the viewership that is not being measured.

In certain geographic regions, our ability to fully capture viewership information may be limited by local laws and regulations.

As further discussed in other parts of this Item 1a.

Risk Factors, our ability to generate advertising revenue is also dependent on our ability to compete in highly competitive, rapidly evolving industries, our ability to respond to changes in consumer behavior and our ability to consistently achieve audience acceptance of our content and brands.

Changes in consumer behavior, as well as evolving technologies and distribution models, may negatively affect our business, financial condition or results of operations.

Our success depends on our ability to anticipate and adapt to changes in consumer behavior and shifting content consumption patterns.

The ways in which viewers consume content, and technology and distribution models in the media and entertainment industries, continue to evolve, and new distribution platforms, as well as increased competition from new entrants and emerging technologies, have added to the complexity of maintaining predictable revenues.

Technological advancements have empowered consumers to seek more control over how they consume content and have affected the options available to advertisers for reaching target audiences.

This trend has impacted certain traditional distribution models, as demonstrated by industry-wide declines in cable ratings, declines in subscribers to the traditional cable bundle, the development of alternative distribution platforms for content, and reduced theatergoing.

Declines in linear television viewership are expected to continue and possibly accelerate, which could adversely affect our advertising and distribution revenues.

The film industry has also been impacted by shifting consumer preferences and technological innovation.

While restrictions on theatergoing from the COVID-19 pandemic have largely lifted, in some markets, box office performance and movie theater attendance may be slower to rebound to pre-pandemic levels due to, among other things, consumer preferences for consuming movies at home, a vast library of which is available to them through one or more streaming subscriptions, and shorter theatrical release windows.

As a response to changing consumer preferences and to return theater attendance towards pre-pandemic levels, film studios such as ours can seek to invest in creating compelling films and seek to promote events in connection with feature films in order to enhance the consumer’s movie theater experience.

If the film industry and exhibitors are unable to successfully create and market “event” films and ultimately evolve and enhance the movie theater experience in response to shifting consumer preferences, the profitability, financial condition and results of operations of our studios business may be negatively impacted.

Further, technology in the media and entertainment industries continues to evolve rapidly.

For example, AI is a new technology for which the advantages and risks associated with its use in such industries are currently largely uncertain and unregulated.

For example, as some foreign film and filmmaking industries grow and the availability of popular local content rises, the demand from foreign audiences for American films may decrease, which could negatively impact our revenue.

Whether or not a distributor is willing to renew an agreement on terms that are favorable to us may be dependent upon our decision to make our content available on both our linear networks and our streaming platforms.

Failure to renew an agreement prior to its expiration could lead to service blackout, which could in turn affect both our revenues and our reputation with viewers.

Our success with sports programming is highly dependent on consumer acceptance of this content and the size of our viewing audience.

For example, the 2023 WGA and SAG-AFTRA strikes caused delays in the production of our television programs and feature films and in the release of certain programming.

The impact of these strike-related delays and other consequences of these strikes have continued, and are expected to continue to, impact our business even after the strikes were ultimately resolved.

If the media and entertainment industries experience prolonged strikes, work slowdowns or work stoppages, we may be unable to produce, distribute or license programming, feature films, and interactive entertainment, which could result in reduced revenue and have a material adverse effect on our business, financial condition and results of operations.

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

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.

- maintaining existing agreements with customers, distributors, providers, talent and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers, talent and vendors;

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

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

- aligning the businesses’ DTC streaming services for global customers; and

Our consolidated indebtedness increased substantially following completion of the Merger.

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 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 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.

Our traditional linear programming networks face increased competitive pressure from other television networks, subscription based streaming services, including our HBO Max and discovery+ products, and other forms of news, information and media entertainment, such as feature films, interactive games and entertainment, user-generated content, live sports and other events, social media and diverse on-line and mobile activities and other digital entertainment platforms and offerings all vying for consumer time, attention and discretionary spending.

There has also been a shift in consumer behavior related to changes in content distribution and technological innovation, including a preference by consumers to watch content on demand and a decline in subscribers to the traditional cable bundle.

The COVID-19 pandemic appears to have accelerated some existing trends.

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

Although we expect these trends to continue in the coming years, our viewership and the profitability of our business may be impacted in unpredictable ways as a result thereof.

Moreover, there can be no assurance of the continuation of these trends.

The WarnerMedia Business has in the past, and we could in the future, incur significant restructuring costs related to DTC products due to the rapidly and continuously-evolving DTC environment, in which consumer satisfaction, scale, differentiation and capacity to invest in content are crucial to streaming success.

Distribution windows are also evolving, potentially affecting revenues from other windows.

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

Decreases in consumer discretionary spending in the U.S. and other countries where our networks are distributed may affect cable television and other video service subscriptions, in particular with respect to digital service tiers on which certain of our programming networks are carried.

This could lead to a decrease in the number of subscribers receiving our programming from multi-channel video programming distributors, which could have a negative impact on our viewing subscribers and distribution revenues.

This section provides an analysis of our financial results for the fiscal year ended December 31, [removed: 2022] [added: 2023] compared to the fiscal year ended December 31, [removed: 2021.][added: 2022.]

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

Discovery is a premier global media and entertainment company that [removed: 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] [added: provides] audiences [added: with] a differentiated portfolio of content, brands and franchises across television, film, [removed: streaming] [added: streaming,] and gaming.

[removed: Pictures] [added: Motion Picture] Group, Warner Bros.

Television Group, DC, HBO, HBO Max, [removed: Discovery Channel,] [added: Max,] discovery+, CNN, [added: Discovery Channel,] HGTV, Food Network, [removed: TNT,] [added: TNT Sports,] TBS, TLC, OWN, Warner Bros.

We finalized the framework supporting our ongoing restructuring and transformation initiatives during [added: the year ended December 31,] 2022, which [removed: include,] [added: includes,] 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 [removed: charges.][added: charges, of which we have incurred $4.2 billion as of December 31, 2023.]

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

We incurred [removed: $3.8] [added: $0.5] billion of pre-tax restructuring charges during the year ended December 31, [removed: 2022.][added: 2023 related to this plan.]

As of December 31, [removed: 2022,] [added: 2023,] we classified our operations in three reportable segments:

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

- [removed: Networks, consisting principally] [added: Networks - Our Networks segment primarily consists] of our domestic and international television [removed: networks; and][added: networks.]

- [removed: DTC, consisting] [added: DTC \- Our DTC segment] primarily [added: consists] of our premium pay-TV and streaming services.

The discussion below compares our actual [removed: and pro forma combined results, as if the Merger occurred on January 1, 2021,] [added: results] for the year ended December 31, [removed: 2022] [added: 2023] to [added: our pro forma combined results for] the year ended December 31, [added: 2022, as if the Merger occurred on January 1,] 2021.

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

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: “2022] [added: “2023] Baseline Rate”), and the prior year amounts translated at the same [removed: 2022] [added: 2023] Baseline Rate.

Consolidated Results of Operations – [removed: 2022] [added: 2023] vs. [removed: 2021][added: 2022]

Our consolidated results of operations for [removed: 2022] [added: 2023] and [removed: 2021] [added: 2022] were as follows (in millions).

| | | | | | | [removed: 2022] [added: 2023] | | | | | | [added: 2022] | | | | | | [removed: 2021] | | | | | | | | | [added: % Change] | | | | | | [removed: % Change] | | | | | | | | |

| | | | | | | Actual | | | [removed: Pro Forma Adjustments] | | | [removed: Pro Forma Combined] | | | | | | Actual [removed: (a)] | | | Pro Forma Adjustments | | | Pro Forma Combined | | | | | | | | | Actual | | | Pro Forma Combined (Actual) | | | [removed: Combined] [added: Pro Forma Combined] (ex-FX) | | |

| Advertising | | | | | | [removed: $] [added: 8,700] | [removed: 8,524] | | [removed: $] | [removed: 1,412] | | [removed: $] | [removed: 9,936] | | | | | [removed: $] [added: 8,524] | [removed: 6,194] | | [removed: $] [added: 1,412] | [removed: 4,395] | | [removed: $] [added: 9,936] | [removed: 10,589] | | | | | | | | [removed: 38] [added: 2] | | % | [removed: (6)] [added: (12)] | | % | [removed: (4)] [added: (13)] | | % |

| Distribution | | | | | | [removed: 16,142] [added: $] | [added: 20,237] | | [removed: 4,339] | | | [removed: 20,481] | | | | | | [removed: 5,202] [added: $] | [added: 16,142] | | [removed: 15,579] [added: $] | [added: 4,339] | | [removed: 20,781] [added: $] | [added: 20,481] | | | | | | | | [removed: NM] [added: 25] | | [added: %] | (1) | | % | — | | % |

| Content | | | | | | [removed: 8,360] [added: 11,203] | | | [removed: 3,297] | | | [removed: 11,657] | | | | | | [removed: 737] [added: 8,360] | | | [removed: 12,455] [added: 3,297] | | | [removed: 13,192] [added: 11,657] | | | | | | | | | [removed: NM] [added: 34] | | [added: %] | [removed: (12)] [added: (4)] | | % | [removed: (9)] [added: (4)] | | % |

| Other | | | | | | [removed: 791] [added: 1,181] | | | [removed: 230] | | | [removed: 1,021] | | | | | | [removed: 58] [added: 791] | | | [removed: 706] [added: 230] | | | [removed: 764] [added: 1,021] | | | | | | | | | [removed: NM] [added: 49] | | [added: %] | [removed: 34] [added: 16] | | % | [removed: 36] [added: 14] | | % |

| Total revenues | | | | | | [removed: 33,817] [added: 41,321] | | | [removed: 9,278] | | | [removed: 43,095] | | | | | | [removed: 12,191] [added: 33,817] | | | [removed: 33,135] [added: 9,278] | | | [removed: 45,326] [added: 43,095] | | | | | | | | | [removed: NM] [added: 22] | | [added: %] | [removed: (5)] [added: (4)] | | % | [removed: (3)] [added: (4)] | | % |

| Costs of revenues, excluding depreciation and amortization | | | | | | [removed: 20,442] [added: 24,526] | | | [removed: 5,125] | | | [removed: 25,567] | | | | | | [removed: 4,620] [added: 20,442] | | | [removed: 21,353] [added: 5,125] | | | [removed: 25,973] [added: 25,567] | | | | | | | | | [removed: NM] [added: 20] | | [added: %] | [removed: (2)] [added: (4)] | | % | [removed: 1] [added: (4)] | | % |

| Selling, general and administrative | | | | | | [removed: 9,678] [added: 9,696] | | | [removed: 1,745] | | | [removed: 11,423] | | | | | | [removed: 4,016] [added: 9,678] | | | [removed: 8,987] [added: 1,745] | | | [removed: 13,003] [added: 11,423] | | | | | | | | | [removed: NM] [added: —] | | [added: %] | [removed: (12)] [added: (15)] | | % | [removed: (10)] [added: (15)] | | % |

| Depreciation and amortization | | | | | | [removed: 7,193] [added: 7,985] | | | [removed: 34] | | | [removed: 7,227] | | | | | | [removed: 1,582] [added: 7,193] | | | [removed: 6,774] [added: 34] | | | [removed: 8,356] [added: 7,227] | | | | | | | | | [removed: NM] [added: 11] | | [added: %] | [removed: (14)] [added: 10] | | % | [removed: (13)] [added: 10] | | % |

| Total costs and expenses | | | | | | [removed: 41,187] [added: 42,869] | | | [removed: 6,814] | | | [removed: 48,001] | | | | | | [removed: 10,179] [added: 41,187] | | | [removed: 37,427] [added: 6,814] | | | [removed: 47,606] [added: 48,001] | | | | | | | | | [removed: NM] [added: 4] | | [added: %] | [removed: 1] [added: (11)] | | % | [removed: 3] [added: (11)] | | % |

| Operating [removed: (loss) income] [added: loss] | | | | | | [removed: (7,370)] [added: (1,548)] | | | [removed: 2,464] | | | [removed: (4,906)] | | | | | | [removed: 2,012] [added: (7,370)] | | | [removed: (4,292)] [added: 2,464] | | | [removed: (2,280)] [added: (4,906)] | | | | | | | | | [removed: NM] [added: 79] | | [added: %] | [removed: NM] [added: 68] | | [added: %] | [removed: NM] [added: 70] | | [added: %] |

| Interest expense, net | | | | | | [removed: (1,777)] [added: (2,221)] | | | [removed: (515)] | | | [removed: (2,292)] | | | | | | [removed: (633)] [added: (1,777)] | | | [removed: (2,026)] [added: (515)] | | | [removed: (2,659)] [added: (2,292)] | | | | | | | | | | | | | | | | | |

| Loss from equity investees, net | | | | | | [removed: (160)] [added: (82)] | | | [removed: (20)] | | | [removed: (180)] | | | | | | [removed: (18)] [added: (160)] | | | [removed: 14] [added: (20)] | | | [removed: (4)] [added: (180)] | | | | | | | | | | | | | | | | | |

| Other [added: (expense)] income, net | | | | | | [removed: 347] [added: (12)] | | | [removed: 139] | | | [removed: 486] | | | | | | [removed: 72] [added: 347] | | | [removed: 100] [added: 139] | | | [removed: 172] [added: 486] | | | | | | | | | | | | | | | | | |

| [removed: (Loss) income] [added: Loss] before income taxes | | | | | | [removed: (8,960)] [added: (3,863)] | | | [removed: 2,068] | | | [removed: (6,892)] | | | | | | [removed: 1,433] [added: (8,960)] | | | [removed: (6,204)] [added: 2,068] | | | [removed: (4,771)] [added: (6,892)] | | | | | | | | | | | | | | | | | |

| Income tax benefit [removed: (expense)] | | | | | | [removed: 1,663] [added: 784] | | | [removed: (56)] | | | [removed: 1,607] | | | | | | [removed: (236)] [added: 1,663] | | | [removed: 1,448] [added: (56)] | | | [removed: 1,212] [added: 1,607] | | | | | | | | | | | | | | | | | |

| Net [removed: (loss) income] [added: loss] | | | | | | [removed: (7,297)] [added: (3,079)] | | | [removed: 2,012] | | | [removed: (5,285)] | | | | | | [removed: 1,197] [added: (7,297)] | | | [removed: (4,756)] [added: 2,012] | | | [removed: (3,559)] [added: (5,285)] | | | | | | | | | | | | | | | | | |

| Net income attributable to noncontrolling interests | | | | | | [removed: (68)] [added: (38)] | | | [removed: —] | | | [removed: (68)] | | | | | | [removed: (138)] [added: (68)] | | | — | | | [removed: (138)] [added: (68)] | | | | | | | | | | | | | | | | | |

| Net income attributable to redeemable noncontrolling interests | | | | | | [removed: (6)] [added: (9)] | | | [removed: —] | | | [removed: (6)] | | | | | | [removed: (53)] [added: (6)] | | | — | | | [removed: (53)] [added: (6)] | | | | | | | | | | | | | | | | | |

| Net [removed: (loss) income] [added: loss] available to Warner Bros. Discovery, Inc. | | | | | | $ | [removed: (7,371)] [added: (3,126)] | | [removed: $] | [removed: 2,012] | | [removed: $] | [removed: (5,359)] | | | | | $ | [removed: 1,006] [added: (7,371)] | | $ | [removed: (4,756)] [added: 2,012] | | $ | [removed: (3,750)] [added: (5,359)] | | | | | | | | | | | | | | | | |

Unless otherwise indicated, the discussion [added: below] through operating [removed: (loss) income below is] [added: loss reflects the results for the year ended December 31, 2022] on a pro-forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenues, and selling, general and administrative expenses are substantially attributable to the Merger.

| Restructuring and other charges | | | | | | 585 | | | | | | | | | | | | 3,757 | | | (90) | | | 3,667 | | | | | | | | | (84) | | % | (84) | | % | (84) | | % |

Distribution revenue was flat in 2023, as declines in linear subscribers and DTC wholesale in the U.S. were offset by higher U.S. contractual affiliate rates, new DTC partnership launches, DTC price increases in the U.S., and inflationary impact in Argentina.

Advertising revenue decreased 13% in 2023, primarily attributable to audience declines in domestic general entertainment and news networks, soft advertising markets in the U.S., and to a lesser extent, certain international markets, and the prior year broadcast of the *NCAA March Madness* Final Four and Championship, partially offset by higher Max U.S. engagement and ad-lite subscriber growth.

Studio Tour Tokyo in June 2023, continued strong attendance at Warner Bros.

Costs of revenues decreased 4% in 2023, primarily attributable to lower content expense at our Studios segment for television products and our DTC segment and lower sports networks content expense, due to the prior year broadcast of the Olympics in Europe and our exit from AT&T SportsNets, partially offset by higher games content expense.

Depreciation and amortization increased 10% in 2023, primarily attributable to intangible assets acquired during the Merger that are being amortized using the sum of the months’ digits method, which resulted in lower pro forma amortization in 2022.

*Restructuring and Other Charges*

Restructuring and other charges decreased 84% in 2023, primarily attributable to lower content impairments and other content development costs and write-offs, contract terminations, facility consolidation activities, organizational restructuring, and other charges.

*Impairments and Loss on Dispositions*

Impairments and loss on dispositions was a $77 million and $117 million loss in 2023 and 2022, respectively.

The loss in 2023 was primarily attributable to lease impairments and costs associated with our exit from AT&T SportsNets.

| | | | | | | 2023 | | | | | | 2022 | | | | | | | | |

| Interest income | | | | | | 179 | | | | | | 67 | | | | | | | | |

| | | | | | | 2023 | | | | | | | | | | | | 2022 | | | | | | | | |

These decreases were partially offset by a state uncertain tax benefit remeasurement following a multi-year tax audit agreement and a favorable state deferred tax adjustment recorded in the year ended December 31, 2023.

The decrease for the year ended December 31, 2023 was further offset by a one-time expense incurred in 2022 related to a preferred stock conversion transaction expense that was not deductible for tax purposes.

Integration costs include transformative system implementations and integrations, such as Enterprise Resource Planning systems, and may take several years to complete.

| | | | | | | 2023 | | | | | | 2022 | | | | | | | | | | | | | | | % Change | | | | | | | | | | | | | | |

| Amortization of capitalized interest for content | | | | | | 46 | | | | | | | | | | | | — | | | — | | | — | | | | | | | | | | | | | | | | | |

| Impairments and loss on dispositions | | | | | | 1 | | | | | | | | | | | | 30 | | | — | | | 30 | | | | | | | | | | | | | | | | | |

TV licensing revenue decreased due to the timing of TV production, including the impact of the WGA and SAG-AFTRA strikes, certain large TV licensing deals in the prior year, fewer series sold to our owned platforms, and fewer CW series.

Other revenue increased 13% in 2023, primarily attributable to the opening of Warner Bros.

Studio Tour Tokyo in June 2023 and continued strong attendance at Warner Bros.

Studio Tour London and Hollywood, partially offset by lower studio production services due to the impact of the WGA and SAG-AFTRA strikes.

Selling, general and administrative expenses increased 16% in 2023, primarily attributable to higher theatrical marketing expense due to the increased quantity of films released and higher games marketing expense to support the release of *Hogwarts Legacy*.

| | | | | | | 2023 | | | | | | 2022 | | | | | | | | | | | | | | | % Change | | | | | | | | | | | | | | |

| Impairments and loss on dispositions | | | | | | 13 | | | | | | | | | | | | 24 | | | — | | | 24 | | | | | | | | | | | | | | | | | |

The discussion below reflects the results for the year ended December 31, 2022 on a pro forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenue, selling, general and administrative expenses and Adjusted EBITDA are substantially attributable to the Merger.

Distribution revenue decreased 2% in 2023, primarily attributable to a decline in linear subscribers in the U.S., and to a lesser extent, lower sports related revenue due to our exit from AT&T SportsNets and the TNT Sports Chile shift to DTC, partially offset by higher U.S. contractual affiliate rates and inflationary impact in Argentina.

Advertising revenue decreased 13% in 2023, primarily attributable to audience declines in domestic general entertainment and news networks, soft linear advertising markets in the U.S., and to a lesser extent, certain international markets, as well as the impact of broadcast of the *NCAA March Madness* Final Four and Championship in 2022.

Content revenue decreased by 24% in 2023, primarily attributable to lower international sports sublicensing due to the prior year broadcast of the Olympics in Europe, and lower third-party content licensing deals in the U.S., partially offset by higher inter-segment licensing of content to DTC.

Costs of revenues decreased 7% in 2023, primarily attributable to lower sports content expense, including the prior year broadcast of the Olympics in Europe and the *NCAA March Madness* Final Four and Championship and our exit from AT&T SportsNets, lower domestic general entertainment and news related expense, partially offset by unfavorable expenses from inflationary impact in Argentina and costs associated with the unconsolidated TNT Sports UK joint venture.

| | | | | | | 2023 | | | | | | 2022 | | | | | | | | | | | | | | | % Change | | | | | | | | | | | | | | |

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

| Impairments and loss on dispositions | | | | | | 3 | | | | | | | | | | | | 13 | | | — | | | 13 | | | | | | | | | | | | | | | | | |

The discussion below reflects the results for the year ended December 31, 2022 on a pro forma combined basis, ex-FX, since the actual increases year over year for revenues, cost of revenue, selling, general and administrative expenses and Adjusted EBITDA are substantially attributable to the Merger.

As of December 31, 2023, we had 97.7 million DTC subscribers (as defined under Item 1.

“Business”).

Distribution revenue increased 2% in 2023, primarily attributable to new partnership launches, price increases in the U.S. and most international markets, the launch of the Ultimate tier for Max in the U.S., and the TNT Sports Chile shift to DTC, partially offset by U.S. wholesale declines.

Advertising revenue increased 35% in 2023, primarily attributable to higher Max U.S. engagement and ad-lite subscriber growth.

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

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.

Impact of COVID-19

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

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.

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

| Impairment and loss (gain) on disposition and disposal groups | | | | | | 117 | | | — | | | 117 | | | | | | (71) | | | 223 | | | 152 | | | | | | | | | NM | | | (23) | | % | (23) | | % |

| (a) Prior year actual results have been recast to conform to the current period presentation as a result of the Merger and segment recast. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Advertising revenue decreased 4% in 2022, primarily attributable to declines in domestic general entertainment and news networks, partially offset by subscriber growth on our DTC ad-supported tiers and higher sports advertising in the U.S. due to the NCAA Men's Final Four and Championship games airing on our networks and the addition of the NHL starting in the fourth quarter of 2021.

Distribution revenue was flat in 2022, primarily attributable to a decline in linear subscribers in the U.S. and lower contractual affiliate rates in some European markets, as well as a decline in wholesale revenues primarily due to the expiration of HBO Max on Amazon Channels in September 2021, offset by global retail subscriber gains on DTC platforms.

HBO Max re-launched on Amazon Channels in December 2022.

Costs of revenues increased 1% in 2022, primarily attributable to increased programming expenses on DTC platforms, higher theatrical product content expense, higher sports-related expense globally, and increased expense at CNN, partially offset by lower television product content expense and distribution fees.

Depreciation and amortization decreased 13% in 2022, primarily attributable to a change in amortization method from the straight-line method to the sum of the months’ digits method for some of the WM assets acquired.

*Restructuring*

Restructuring was $3,694 million and $121 million in 2022 and 2021, respectively.

Restructuring in 2022 primarily related to strategic content programming assessments, organization restructuring, facility consolidation activities, and other contract termination costs.

Impairment and loss (gain) on disposition and disposal groups was a $117 million and $152 million loss in 2022 and 2021, respectively.

(See Note 18 to the accompanying consolidated financial statements.) The gain in 2021 was primarily attributable to the sale of our Great American Country network, partially offset by the WM sale of Hello Sunshine.

| | | | | | | 2022 | | | | | | 2021 | | | | | | | | |

| Change in fair value of equity investments without readily determinable fair value | | | | | | (142) | | | | | | (13) | | | | | | | | |

| | | | | | | 2022 | | | | | | | | | | | | 2021 | | | | | | | | |

| UK Finance Act legislative change | | | | | | — | | | | | | — | | % | | | | (155) | | | | | | (11) | | % |

The decrease for the year ended December 31, 2022 was further offset by a deferred tax benefit of $155 million recorded in 2021 resulting from the UK Finance Act 2021 enacted in June 2021.

| Impairment and loss on disposition and disposal groups | | | | | | 30 | | | — | | | 30 | | | | | | — | | | — | | | — | | | | | | | | | | | | | | | | | |

TV licensing revenue decreased mainly due to large television licensing deals in the prior year and the timing of initial telecast revenue, as the prior year benefited from the ramp up of TV production following COVID-related delays in 2020.

Home entertainment revenue was lower due to strong COVID-induced demand in the prior year and fewer new releases of theatrical products.

Theatrical film rental revenue was favorably impacted by improved performance of our theatrical slate and improved audience attendance at movie theaters.

Studio Tour London and Hollywood, as well as the Harry Potter flagship store in New York, which opened in June 2021.

Selling, general and administrative expenses decreased 13% in 2022, primarily attributable to lower marketing expense due to fewer theatrical releases in 2022.

| Impairment and loss (gain) on disposition and disposal groups | | | | | | 24 | | | — | | | 24 | | | | | | (72) | | | (1) | | | (73) | | | | | | | | | | | | | | | | | |

Advertising revenue decreased 5% in 2022, primarily attributable to declines in domestic general entertainment and news networks, partially offset by higher sports advertising in the U.S. due to the NCAA Men's Final Four and Championship games airing on our networks and the addition of the NHL starting in the fourth quarter of 2021.

Distribution revenue decreased 1% in 2022, primarily attributable to a decline in linear subscribers in the U.S. and lower contractual affiliate rates in some European markets, partially offset by an increase in contractual affiliate rates in the U.S. and certain Latin American markets and premium sports packages in Latin America.

Content revenue increased by 7% in 2022, primarily attributable to higher inter-segment licensing of content to DTC, partially offset by overall net lower sub-licensing revenue for the Winter Olympics in 2022 compared to the Summer Olympics in 2021.

Costs of revenues increased 4% in 2022, primarily attributable to higher sports-related expense globally, increased expense at CNN, and costs associated with providing services to the unconsolidated BT Sport joint venture, partially offset by lower content expense due to the previously announced restructuring program and lower international sports rights driven by the Winter Olympics in 2022 (as compared to the Summer Olympics in 2021).

| Impairment and loss on disposition and disposal groups | | | | | | 13 | | | — | | | 13 | | | | | | 1 | | | — | | | 1 | | | | | | | | | | | | | | | | | |

As of December 31, 2022, we had 96.1 million DTC subscribers.2

Advertising revenue increased $229 million in 2022, primarily attributable to subscriber growth on our DTC ad-supported tiers.

Distribution revenue increased 3% in 2022, primarily attributable to global retail subscriber gains, partially offset by a decline in wholesale revenues primarily due to the expiration of HBO Max on Amazon Channels in September 2021.

During the year ended December 31, [removed: 2022,] [added: 2023,] we had access to a $6.0 billion multicurrency revolving credit facility.

We had no outstanding borrowings as of December 31, [removed: 2022.][added: 2023.]

We also have access to a commercial paper program, which had no outstanding borrowings as of December 31, [removed: 2022.][added: 2023.]

As of December 31, [removed: 2022,] [added: 2023,] we had [removed: $44.8] [added: $43.9] billion of fixed-rate senior notes, at par value.

As of December 31, [removed: 2022,] [added: 2023,] the fair value of our outstanding senior notes, including accrued interest, was [removed: $38.0] [added: $40.5] 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: $2.6] [added: $2.9] billion as of December 31, [removed: 2022.][added: 2023.]

Most of our non-functional currency risks related to our revenue, operating expenses and capital expenditures were not hedged as of December 31, [removed: 2022.][added: 2023.]

Prior to the Merger, WarnerMedia Holdings, Inc. [added: (“WMH”)] distributed $40.5 billion to AT&T (subject to working capital and other adjustments) in a combination of cash, debt securities, and [removed: WM's] [added: WM’s] retention of certain debt.

In August 2022, the Company and AT&T finalized the post-closing working capital settlement process, [removed: 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.

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 [removed: historical results.][added: results prior to the Merger.]

Discovery is a premier global media and entertainment company that [removed: 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] [added: provides] audiences [added: with] a differentiated portfolio of content, brands and franchises across television, film, [removed: streaming] [added: streaming,] and gaming.

[removed: Pictures] [added: Motion Picture] Group, Warner Bros.

Television Group, DC, HBO, HBO Max, [removed: Discovery Channel,] [added: Max,] discovery+, CNN, [added: Discovery Channel,] HGTV, Food Network, [removed: TNT,] [added: TNT Sports,] TBS, TLC, OWN, Warner Bros.

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

[removed: Additionally, we] [added: We] serve audiences and consumers around the world with content that informs, entertains, and, when at its best, inspires.

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

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 [removed: market,] [added: markets,] sales of console games and mobile in-game content, sublicensing of sports rights, and licensing of intellectual property such as characters and brands (content revenue); and other sources such as studio tours and production services (other revenue).

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

As of December 31, [removed: 2022,] [added: 2023,] we classified our operations in three reportable segments:

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

[removed: Pictures] [added: Motion Picture] Group [removed: (“WBPG”),] [added: (“WBMPG”),] DC Studios, Warner Bros.

Television Group (“WBTVG”), [removed: Global Brands and Experiences (“GBE”) (consumer products, themed entertainment, brand licensing,] [added: Consumer Products, Themed Entertainment] and [removed: publisher] [added: Brand Licensing,] DC [removed: Comics), content licensing, home entertainment, studio operations,] [added: Comics Publishing, Content Licensing, Home Entertainment, Studio Operations,] and [removed: interactive gaming.][added: Interactive Gaming.]

[removed: WBPG] [added: WBMPG] is comprised of Warner Bros.

Pictures, New Line [removed: Cinema] [added: Cinema,] and Warner [removed: Animation Group.][added: Bros.]

[removed: WBPG] [added: WBMPG] partners with [removed: inspiring] [added: captivating] storytellers to create filmed entertainment for a global audience.

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

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

International Television [removed: Production] [added: Production,] and Shed Media.

[removed: GBE operates] Global Consumer Products, Themed Entertainment and Brand Licensing, and world-renowned comic and publishing powerhouse DC [removed: Comics.][added: Comics, all drive opportunities for consumers to engage with WBD’s leading entertainment brands and franchises.]

Global distribution of most of WBD’s [removed: award-winning] content is handled by Content Sales, which provides content for viewers across streaming, cable, satellite and broadcast networks, local television stations, and airlines.

For the year ended December 31, [removed: 2022,] [added: 2023,] content and other revenues were [removed: 94%] [added: 93%] and [removed: 6%,] [added: 7%,] respectively, of total revenues for this segment.

WBD’s linear network operations include [removed: 30 U.S.] general entertainment, lifestyle, and news [removed: networks,] [added: networks in the U.S.,] as well as a host of international [added: media] networks and global [removed: and regional] sports networks.

General entertainment networks in the U.S. include TNT, cable’s #1 entertainment network; TBS, a top-rated destination for television among young adults; and Turner Classic [removed: Movies (TCM), which presents classic films, uncut and commercial-free.][added: Movies.]

Leading the lifestyle category are Magnolia Network, comprised of a collection of inspiring original series curated by Chip and Joanna Gaines featuring some of the U.S.’s most talented names in home and design, food, [removed: gardening] [added: gardening,] and the arts; HGTV, with relatable stories, real estate and renovation experts and home transformations; and Food Network, which connects viewers to the power and joy of food.

WBD Sports [added: (rebranded in January 2024 as TNT Sports)] is a global leader in premium sports content across multiple platforms, engaging fans in the U.S. and internationally.

[removed: WBD] [added: TNT] Sports’ U.S. [removed: portfolio includes] [added: sports rights include] the National Basketball Association (“NBA”), Major League Baseball (“MLB”), National Collegiate Athletic Association (“NCAA”), National Hockey League (“NHL”), and United States Soccer Federation (“USSF”).

[removed: WBD] [added: TNT] Sports’ owned-and-operated platforms include *Bleacher Report,* Eurosport.com, *House of Highlights, HighlightHER,* and a full suite of digital and social brands.

For the year ended December 31, [removed: 2022, advertising,] [added: 2023,] distribution, [added: advertising,] content, and other revenues were [removed: 43%, 50%, 6%,] [added: 54%, 39%, 5%,] and [removed: 1%,] [added: 2%,] respectively, of total revenues for this segment.

WBD’s DTC business includes our streaming services, such as [removed: HBO Max] [added: Max, HBO Max,] and discovery+, and premium pay-TV services, such as HBO. Our streaming services are available on most mobile and connected TV devices.

As of December 31, [removed: 2022,] [added: 2023,] we had [removed: 96.1] [added: 97.7] million DTC subscribers1.

HBO is one of the most respected and innovative entertainment brands in the world, serving iconic, award-winning programming through the HBO linear channels and our DTC streaming [removed: platform, HBO] [added: service,] Max.

discovery+ is WBD’s non-fiction, real-life [removed: subscription] [added: subscription-based] streaming service.

[added: Max,] HBO [removed: Max] [added: Max,] and discovery+ currently feature both ad-free and ad-lite versions.

For the year ended December 31, [removed: 2022, advertising,] [added: 2023,] distribution, [added: advertising,] and content revenues are [added: 86%,] 5%, [removed: 88%,] and [removed: 7%,] [added: 9%,] respectively, of total revenues for this segment.

The ability to secure distribution agreements is dependent upon the production, acquisition and packaging of [removed: original] content, viewership, the marketing and advertising support and incentives provided to distributors, the product offering across a series of networks within a region, and the prices charged for carriage.

1 [added: Direct-to-Consumer subscriber \-] We define a [removed: “DTC] [added: “Core DTC] Subscription” as:

(i) a retail subscription to discovery+, [added: HBO,] HBO [added: Max, Max,] or [removed: HBO Max] [added: a Premium Sports Product (defined below)] for which we have recognized subscription revenue, whether directly or through a third party, from a direct-to-consumer platform; (ii) a wholesale subscription to discovery+, HBO, [removed: or] HBO [removed: Max] [added: Max, Max, or a Premium Sports Product] for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription; (iii) a wholesale subscription to discovery+, [added: HBO,] HBO [added: Max, Max,] or [removed: HBO Max] [added: a Premium Sports Product] for which we have recognized subscription revenue on a per subscriber basis; [removed: and] (iv) [added: a retail or wholesale subscription to an independently-branded, regional product sold on a stand-alone basis that includes discovery+, HBO, HBO Max, Max, and/or a Premium Sports Product, for which we have recognized subscription revenue (as per (i)-(iii) above); and (v)] users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.

Industry Trends

The WGA and SAG-AFTRA went on strike in May and July 2023, respectively, following the expiration of their respective collective bargaining agreements with the Alliance of Motion Picture and Television Producers (“AMPTP”).

The WGA strike ended on September 27, 2023, and a new collective bargaining agreement was ratified on October 9, 2023.

The SAG-AFTRA strike ended on November 9, 2023, and a new collective bargaining agreement was ratified on December 5, 2023.

The strikes had a material impact on the operations and results of the Company, including a pause on certain theatrical and television productions.

Effects included a positive impact on cash flow from operations attributed to delayed production spend, and a negative impact on the results of operations attributed to timing and performance of the 2023 film slate, as well as the Company’s ability to produce, license, and deliver content.

Other headwinds in the industry, such as continued pressures on linear distribution and soft advertising markets in the U.S., have had, and are expected to continue to have, a material impact on the operations and results of the Company, including a negative impact on the results of operations attributed to declines in linear advertising revenue.

We are home to powerful creative engines and one of the largest collections of owned content in the world.

Pictures Animation.

Among the Studios segment’s content highlights for 2023 were *Barbie,* the #1 movie of the year globally based on worldwide gross revenue*, Wonka, Aquaman and the Lost Kingdom,* and *The Nun II* on the film side and award-winning TV titles including *Abbott Elementary*, *Ted Lasso*, *Night Court, Shrinking, Genndy Tartakovsky’s Primal, The Golden Bachelor,* and *The Voice.*

Based on the Wizarding World of Harry Potter franchise, Warner Bros.

Games launched *Hogwarts Legacy* in 2023, which became the #1 game of the year globally.

In June of 2023, the Worldwide Studios Operations group opened the Warner Bros.

Studio Tour Tokyo – The Making of Harry Potter, a new experience that was the first Warner Bros.

Studio Tour to open in Asia.

In 2023, CNN, our global news brand, launched CNN Max in the U.S., giving audiences the ability to access a combination of on-air CNN content and exclusive programming on WBD’s streaming service, Max.

In 2023, WBD exited its regional sports business (“AT&T SportsNets”) in the U.S.

In May 2023, WBD launched Max, creating a new destination for HBO Originals, Warner Bros.

films, Max Originals, the DC universe, the Wizarding World of Harry Potter, CNN, an expansive offering of kids’ content, and among the best programming across food, home, reality, lifestyle and documentaries from leading brands like HGTV, Food Network, Discovery Channel, TLC, ID and more.

Max initially launched in the U.S. and will roll out in international territories, starting in Latin America and the Caribbean in the first quarter of 2024, with more markets in EMEA and APAC to follow later in the year.

In addition, the composition of our competitors has evolved with the entrance of new market participants, including companies in adjacent sectors with significant financial, marketing, and other resources, greater efficiencies of scale, fewer regulatory burdens and more competitive pricing.

The Company defines a “Premium Sports Product” as a strategically prioritized, sports-focused product sold on a stand-alone basis and made available directly to consumers.

The current “independently-branded, regional products” referred to in (iv) above consist of TVN/Player and BluTV.

Further, new technologies such as generative AI and their impact on our intellectual property rights remain uncertain, and development of the law in this area could impact our ability to protect against infringing uses or result in infringement claims against us.

Impact of COVID-19

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.

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

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

Among the Studios’ content highlights for 2022 are *The Batman*, *Elvis*, *Fantastic Beasts: The Secrets of Dumbledore* and *Black Adam* on the film side and TV titles such as *Abbott Elementary*, *Ted Lasso*, *The Sandman*, *The Flight Attendant*, Y*oung Sheldon*, *The Voice,* *The Bachelor* franchise, *The Jennifer Hudson Show,* and *Batwheels.*

GBE is the global division that drives opportunities for consumers to engage with leading entertainment brands and franchises.

Through its strategic franchise development group and global commercial businesses, GBE creates lasting connections to WBD’s iconic characters, talent, and storytelling.

There are currently 11 wholly owned game development studios under the Warner Bros.

Games umbrella.

In addition, Warner Bros.

Studio Tour Tokyo – The Making of Harry Potter is set to open later in 2023.

CNN has been the #1 English-language news brand globally in multiplatform reach since at least 2018.

In 2022, CNN had more unique digital visitors than any other news source in the U.S. and globally.

In 2022, Eurosport UK combined with BT Sport to create an extensive collection of live sports coverage for fans in the UK and Ireland.

TNT Sports is WBD’s sports content brand in Argentina, Brazil, Chile and Mexico.

Several regional sports networks, serving fans live sports in select U.S. markets, are also owned and/or operated by WBD Sports in the U.S.

HBO Max is a streaming platform that offers best in class quality entertainment, delivering an array of series, movies, and specials from the iconic brands of HBO, Warner Bros., and DC, as well as third-party series and blockbuster films.

The platform launched in the U.S. in May 2020 and introduced a lower priced, advertising-supported tier in June 2021.

Currently available in over 60 countries across the U.S., Latin America, and Europe, HBO Max began its global rollout launching in markets across Latin America and the Caribbean in the summer of 2021, followed by European launches in the Nordics, Iberia, the Netherlands and Central and Eastern Europe regions.

We expect to rebrand and relaunch the HBO Max product in the U.S. during the first half of 2023 with an expanded content offering, including some of the content available on discovery+.

A rollout of this expanded product is expected to follow in Latin America later in the year.

European markets are planned to follow in 2024, with additional launches in key Asia-Pacific territories and some new European markets anticipated later in 2024.

We expect to have both an ad-lite and an ad-free version of the expanded product in many markets.

The company also intends to continue offering the standalone discovery+ service in the U.S. and international markets.

Our employees are located in 54 different countries, with 56% located in the U.S. and 44% located outside of the U.S.

From time to time, in the normal course of its operations, the Company is subject to various litigation matters and claims, including claims related to employees, stockholders, vendors, other business [removed: partners] [added: partners, government regulations,] or intellectual [removed: property.][added: property, as well as disputes and matters involving counterparties to contractual agreements, such as disputes arising out of definitive agreements entered into in connection with the Merger.]

However, a determination as to the amount of the accrual required for such contingencies is highly subjective and requires [removed: judgments] [added: judgment] about future events.

Although the outcome of these matters cannot be predicted with certainty and the impact of the final resolution of these matters on the [removed: Company's] [added: Company’s] results of operations in a particular subsequent reporting period is not known, management does not [added: currently] believe that the resolution of these matters will have a material adverse effect on [removed: our] [added: the Company’s future] consolidated financial position, future results of operations, or cash flows.

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

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

Discovery, Inc., et [removed: a*.,] [added: al.,] Case No. 1:22-cv-09125) were filed in the United States District Court for the Southern District of New York.

The complaints [removed: name] [added: named] Warner Bros.

The complaints generally [removed: allege] [added: alleged] that the defendants made false and misleading statements in SEC filings and in certain public statements relating to the Merger, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of [removed: 1933.][added: 1933, as amended, and sought damages and other relief.]

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

The Company may not currently be able to estimate the reasonably possible loss or range of loss for such matters until developments in such matters have provided sufficient information to support an assessment of such loss.

In the absence of sufficient information to support an assessment of the reasonably possible loss or range of loss, no accrual for such contingencies is made and no loss or range of loss is disclosed.

On February 15, 2023, the lead plaintiffs filed an amended complaint adding Advance/Newhouse Partnership, Advance/Newhouse Programming Partnership, Steven A.

Miron, Robert J.

Miron, and Steven O.

Newhouse as defendants.

The amended complaint asserted violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, and sought damages and other relief.

On February 5, 2024, the court dismissed the amended complaint with prejudice.

The complaints seek damages and other relief.

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.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

[removed: ][added: ]

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: 2022,] [added: 2023,] was approximately [removed: $32] [added: $30] billion.

Total number of shares outstanding of each class of the Registrant’s common stock as of February [removed: 9, 2023] [added: 8, 2024] was:

| Series A Common Stock, par value $0.01 per share | | | [removed: 2,430,029,982] [added: 2,439,687,237] | | |

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: 2023] [added: 2024] 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.](#i1321522a81954b41bd1a0227ee3ad30e_13)] [added: Business.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_19)] | | | [removed: [5](#i1321522a81954b41bd1a0227ee3ad30e_13)] [added: [5](#ib967c7daa8ec4ce6a8b1de52f3c4237e_19)] | | |

| [ITEM 1A. Risk [removed: Factors.](#i1321522a81954b41bd1a0227ee3ad30e_16)] [added: Factors.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_25)] | | | [removed: [13](#i1321522a81954b41bd1a0227ee3ad30e_16)] [added: [13](#ib967c7daa8ec4ce6a8b1de52f3c4237e_25)] | | |

| [ITEM 1B. Unresolved Staff [removed: Comments.](#i1321522a81954b41bd1a0227ee3ad30e_19)] [added: Comments.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_31)] | | | [removed: [27](#i1321522a81954b41bd1a0227ee3ad30e_19)] [added: [27](#ib967c7daa8ec4ce6a8b1de52f3c4237e_31)] | | |

| [ITEM 2. [removed: Properties.](#i1321522a81954b41bd1a0227ee3ad30e_22)] [added: Properties.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_2532)] | | | [removed: [27](#i1321522a81954b41bd1a0227ee3ad30e_22)] [added: [28](#ib967c7daa8ec4ce6a8b1de52f3c4237e_2532)] | | |

| [ITEM 3. Legal [removed: Proceedings.](#i1321522a81954b41bd1a0227ee3ad30e_25)] [added: Proceedings.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_37)] | | | [removed: [28](#i1321522a81954b41bd1a0227ee3ad30e_25)] [added: [29](#ib967c7daa8ec4ce6a8b1de52f3c4237e_37)] | | |

| [ITEM 4. Mine Safety [removed: Disclosures.](#i1321522a81954b41bd1a0227ee3ad30e_28)] [added: Disclosures.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_40)] | | | [removed: [29](#i1321522a81954b41bd1a0227ee3ad30e_28)] [added: [29](#ib967c7daa8ec4ce6a8b1de52f3c4237e_40)] | | |

| [ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities.](#i1321522a81954b41bd1a0227ee3ad30e_34)] [added: Securities.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_46)] | | | [removed: [31](#i1321522a81954b41bd1a0227ee3ad30e_34)] [added: [31](#ib967c7daa8ec4ce6a8b1de52f3c4237e_46)] | | |

| [ITEM 6. [removed: \[Reserved.\]](#i1321522a81954b41bd1a0227ee3ad30e_40)] [added: \[Reserved.\]](#ib967c7daa8ec4ce6a8b1de52f3c4237e_52)] | | | [removed: [32](#i1321522a81954b41bd1a0227ee3ad30e_40)] [added: [32](#ib967c7daa8ec4ce6a8b1de52f3c4237e_52)] | | |

| [ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations.](#i1321522a81954b41bd1a0227ee3ad30e_43)] [added: Operations.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_55)] | | | [removed: [33](#i1321522a81954b41bd1a0227ee3ad30e_43)] [added: [32](#ib967c7daa8ec4ce6a8b1de52f3c4237e_55)] | | |

| [ITEM 7A. Quantitative and Qualitative Disclosures about Market [removed: Risk.](#i1321522a81954b41bd1a0227ee3ad30e_100)] [added: Risk.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_112)] | | | [removed: [54](#i1321522a81954b41bd1a0227ee3ad30e_100)] [added: [52](#ib967c7daa8ec4ce6a8b1de52f3c4237e_112)] | | |

| [ITEM 8. Financial Statements and Supplementary [removed: Data.](#i1321522a81954b41bd1a0227ee3ad30e_103)] [added: Data.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_115)] | | | [removed: [57](#i1321522a81954b41bd1a0227ee3ad30e_103)] [added: [55](#ib967c7daa8ec4ce6a8b1de52f3c4237e_115)] | | |

| [ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure.](#i1321522a81954b41bd1a0227ee3ad30e_271)] [added: Disclosure.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_256)] | | | [removed: [124](#i1321522a81954b41bd1a0227ee3ad30e_271)] [added: [116](#ib967c7daa8ec4ce6a8b1de52f3c4237e_256)] | | |

| [ITEM 9A. Controls and [removed: Procedures.](#i1321522a81954b41bd1a0227ee3ad30e_274)] [added: Procedures.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_259)] | | | [removed: [124](#i1321522a81954b41bd1a0227ee3ad30e_274)] [added: [116](#ib967c7daa8ec4ce6a8b1de52f3c4237e_259)] | | |

| [ITEM 9B. Other [removed: Information.](#i1321522a81954b41bd1a0227ee3ad30e_277)] [added: Information.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_262)] | | | [removed: [124](#i1321522a81954b41bd1a0227ee3ad30e_277)] [added: [116](#ib967c7daa8ec4ce6a8b1de52f3c4237e_262)] | | |

| [ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections.](#i1321522a81954b41bd1a0227ee3ad30e_280)] [added: Inspections.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_265)] | | | [removed: [124](#i1321522a81954b41bd1a0227ee3ad30e_280)] [added: [116](#ib967c7daa8ec4ce6a8b1de52f3c4237e_265)] | | |

| [ITEM 10. Directors, Executive Officers and Corporate [removed: Governance.](#i1321522a81954b41bd1a0227ee3ad30e_286)] [added: Governance.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_271)] | | | [removed: [125](#i1321522a81954b41bd1a0227ee3ad30e_286)] [added: [117](#ib967c7daa8ec4ce6a8b1de52f3c4237e_271)] | | |

| [ITEM 11. Executive [removed: Compensation.](#i1321522a81954b41bd1a0227ee3ad30e_289)] [added: Compensation.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_274)] | | | [removed: [125](#i1321522a81954b41bd1a0227ee3ad30e_289)] [added: [117](#ib967c7daa8ec4ce6a8b1de52f3c4237e_274)] | | |

| [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters.](#i1321522a81954b41bd1a0227ee3ad30e_292)] [added: Matters.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_277)] | | | [removed: [125](#i1321522a81954b41bd1a0227ee3ad30e_292)] [added: [117](#ib967c7daa8ec4ce6a8b1de52f3c4237e_277)] | | |

| [ITEM 13. Certain Relationships and Related Transactions, and Director [removed: Independence.](#i1321522a81954b41bd1a0227ee3ad30e_295)] [added: Independence.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_280)] | | | [removed: [125](#i1321522a81954b41bd1a0227ee3ad30e_295)] [added: [117](#ib967c7daa8ec4ce6a8b1de52f3c4237e_280)] | | |

| [ITEM 14. Principal Accountant Fees and [removed: Services.](#i1321522a81954b41bd1a0227ee3ad30e_298)] [added: Services.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_283)] | | | [removed: [125](#i1321522a81954b41bd1a0227ee3ad30e_298)] [added: [117](#ib967c7daa8ec4ce6a8b1de52f3c4237e_283)] | | |

| [ITEM 15. Exhibits and Financial Statement [removed: Schedules.](#i1321522a81954b41bd1a0227ee3ad30e_304)] [added: Schedules.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_289)] | | | [removed: [126](#i1321522a81954b41bd1a0227ee3ad30e_304)] [added: [118](#ib967c7daa8ec4ce6a8b1de52f3c4237e_289)] | | |

| [ITEM 16. Form 10-K [removed: Summary.](#i1321522a81954b41bd1a0227ee3ad30e_310)] [added: Summary.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_295)] | | | [removed: [135](#i1321522a81954b41bd1a0227ee3ad30e_310)] [added: [127](#ib967c7daa8ec4ce6a8b1de52f3c4237e_295)] | | |

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 [added: product and] service offerings, financial prospects and anticipated sources and uses of capital.

- reduced spending on domestic and foreign television advertising, due to [removed: macroeconomic trends,] [added: macroeconomic,] industry [added: or consumer behavior] trends or unexpected reductions in our number of subscribers;

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

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

- the possibility or duration of an industry-wide strike, [added: such as the strikes of the Writers Guild of America (“WGA”) and Screen Actors Guild-American Federation of Television and Radio Artists (“SAG-AFTRA”) in 2023,] 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; [added: and]

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

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

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 [removed: environment,] [added: environments,] factors specific to Warner Bros.

Discovery and other factors described [removed: 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.”

| [PART I](#ib967c7daa8ec4ce6a8b1de52f3c4237e_10) | | | | | |

| [ITEM 1C. Cybersecurity.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_34) | | | [27](#ib967c7daa8ec4ce6a8b1de52f3c4237e_34) | | |

| [PART II](#ib967c7daa8ec4ce6a8b1de52f3c4237e_43) | | | [31](#ib967c7daa8ec4ce6a8b1de52f3c4237e_43) | | |

| [PART III](#ib967c7daa8ec4ce6a8b1de52f3c4237e_268) | | | [117](#ib967c7daa8ec4ce6a8b1de52f3c4237e_268) | | |

| [PART IV](#ib967c7daa8ec4ce6a8b1de52f3c4237e_286) | | | [118](#ib967c7daa8ec4ce6a8b1de52f3c4237e_286) | | |

| | | | | | |

| [SIGNATURES](#ib967c7daa8ec4ce6a8b1de52f3c4237e_298) | | | [128](#ib967c7daa8ec4ce6a8b1de52f3c4237e_298) | | |

- adverse outcomes of legal proceedings or disputes related to our acquisition of the WarnerMedia Business;

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

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

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

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

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

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

We have a cybersecurity program to assess and manage risks to the confidentiality, integrity, and availability of our data, networks and technology assets across WBD.

Our Chief Information Security Officer (“CISO”) is responsible for cybersecurity risk oversight and oversees a global organization whose responsibilities include proactively managing and monitoring information and content security, cybersecurity risk, and processes to enable secure and resilient access to, and use of, WBD products and services.

Since the closing of the Merger in 2022, we have continued to strengthen and enhance our cybersecurity program and integrate it into our overall risk management processes.

Risk Management and Strategy

We have a cybersecurity risk management strategy for safeguarding our digital assets that includes both technical and non-technical cybersecurity controls.

Our multi-layered technical defense involves a series of protective measures across various levels of our technology environment.

This includes fortifying our network perimeter through intrusion detection and prevention systems, securing individual devices with antivirus solutions and endpoint detection, implementing network security measures, and ensuring the resilience of applications.

In addition to these technical security solutions, we also leverage non-technical methods, such as promoting a cybersecurity-conscious culture throughout WBD which includes mandatory annual cybersecurity training for all employees, a regular cadence of cybersecurity messaging to our employees, and frequent phishing simulations.

Further, we engage independent third parties to conduct annual internal and external penetration testing and independent assessments of our cybersecurity risk management practices using the National Institute of Standards and Technology’s cybersecurity framework and other leading industry practices as guidelines.

We also engage an independent third party to conduct a biennial cybersecurity maturity assessment to evaluate the maturity of our entire cybersecurity program.

We also invest in cybersecurity incident detection and response.

Our Cybersecurity Operations Center provides continuous threat monitoring and anomaly detection that is intended to prevent or minimize damage from a cybersecurity attack.

We have a Cybersecurity Incident Response Plan that establishes procedures, roles, responsibilities, and communication protocols for WBD executive management and technical staff in the event of a cybersecurity incident.

We test the efficacy of the Cybersecurity Incident Response Plan and assess our response capabilities by conducting annual tabletop exercises that simulate cybersecurity threat scenarios.

We have ongoing processes to identify and assess cybersecurity risks associated with current and prospective third-party service providers.

These processes include a vendor cybersecurity compliance assessment at the time of onboarding, contract renewal and/or as needed in the event of a cybersecurity incident affecting such third-party vendor.

In addition, we require our providers to meet appropriate security requirements, controls and responsibilities and notify us in the event of a cybersecurity incident that impacts us.

We have established cybersecurity information sharing and collaboration practices with both government agencies and industry partners, which we believe enhances our overall cybersecurity resilience.

Governance

We have established a cybersecurity governance structure to engage appropriate stakeholders.

Our CISO is informed about and monitors our prevention, detection, mitigation and remediation efforts related to cyber threats through regular communication and reporting from our information security team.

Our Chief Financial Officer, our Chief Legal Officer, our Chief Audit and Risk Officer and our Chief Information Officer also have input and involvement in our cybersecurity program.

Our Board of Directors has an active role, as a whole and at the committee level, in overseeing the Company’s overall risk management, including cybersecurity risks.

Our Board of Directors has delegated responsibility for cybersecurity and information technology risks to our Audit Committee and is regularly informed about such risks through committee reports and other presentations.

Our Audit Committee regularly reviews and discusses our cybersecurity risks and is updated by our CISO on how we identify, assess and mitigate those risks.

Our Audit Committee receives quarterly updates from our CISO on our cybersecurity risk posture, the status of projects to strengthen and enhance our cybersecurity program, the evolving threat landscape, and cybersecurity incident reports and learnings.

The Audit Committee also periodically devotes additional meeting time, as needed, to in-depth discussions on a particularly relevant cybersecurity topic or to education on developments in the realm of cybersecurity.

In addition to the quarterly incident reports, cybersecurity incidents meeting pre-determined criteria are reported to the Audit Committee outside of regularly scheduled quarterly updates and to WBD executive management as needed.

See Item 1A, “Risk Factors” for details on the risks from cybersecurity threats that we face.

Our CISO has over 30 years of expertise in global digital and information security, cybersecurity risk management, data privacy and compliance across diverse industries including media and entertainment, biotechnology, pharmaceuticals, financial services, and government defense sectors and holds multiple industry-recognized certifications including, among others, a Certificate of Cybersecurity Oversight from the National Association of Corporate Directors and a Certified Information Systems Security Professional certification.

The Company owns and leases approximately [removed: 21] [added: 23] million square feet of offices; studios; technical, production and warehouse spaces; [removed: 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, [removed: 2022] [added: 2023] with respect to the Company’s principal properties:

| New York, NY 230 Park [removed: Ave] [added: Ave.] South | | | | | | [added: Headquarters,] Studios, Networks, DTC, [removed: &] [added: and] Corporate | | | | | | 360,000 | | | | | | Leased; [removed: Lease] expires in 2037. | | |

| New York, NY 30 Hudson Yards | | | | | | Studios, Networks, DTC, [removed: &] [added: and] Corporate | | | | | | 1,500,000 | | | | | | Leased; [removed: Lease] expires in 2034. | | |

| Burbank, CA [removed: The] [added: 4000] Warner [removed: Bros. Studios] [added: Blvd.] | | | | | | Studios | | | | | | 2,600,000 | | | | | | Owned. | | |

| Atlanta, GA 1050 Techwood [removed: Dr.] [added: Drive] | | | | | | Studios, Networks, DTC, [removed: &] [added: and] Corporate | | | | | | 1,170,000 | | | | | | Owned. | | |

| Atlanta, GA One CNN Center | | | | | | Studios, Networks, [removed: &] [added: and] Corporate | | | | | | 1,150,000 | | | | | | Leased; [removed: Lease] expires in 2024. | | |

| Burbank, CA [removed: Second Century Tower 1 & 2] [added: 100 and 200 South California Street] | | | | | | Studios [removed: &] [added: and] Corporate | | | | | | [removed: 800,000] [added: 811,000] | | | | | | Leased; Tower 1 [removed: lease] expires in 2037 [removed: &] [added: and] Tower 2 [removed: lease] expires in 2039. | | |

| Santiago, Chile Pedro Montt 2354 | | | | | | Studios [removed: &] [added: and] Networks | | | | | | 610,000 | | | | | | Owned. | | |

| Culver City, CA [removed: Ivy Station] [added: 8900 Venice Boulevard] | | | | | | Networks [removed: &] [added: and] DTC | | | | | | 244,000 | | | | | | Leased; [removed: Lease] expires in 2036. | | |

| Warsaw, Poland [removed: TVN Warsaw HQ] [added: Wiertnicza 166] | | | | | | Studios, Networks, DTC, [removed: &] [added: and] Corporate | | | | | | [removed: 198,000] [added: 247,000] | | | | | | Owned. | | |

| London, England [removed: Warner House] [added: 98 Theobalds Road] | | | | | | Networks, DTC, [removed: &] [added: and] Corporate | | | | | | 135,000 | | | | | | Leased; [removed: Lease] expires in 2034. | | |

| Buenos Aires, Argentina 599 [removed: &] [added: and] 533 Defensa [removed: St.] [added: Street] | | | | | | Studios, Networks, DTC, [removed: &] [added: and] Corporate | | | | | | 129,000 | | | | | | Owned. | | |

| London, [removed: England] [added: UK 160] Old Street | | | | | | Studios, Networks, DTC, [removed: &] [added: and] Corporate | | | | | | 116,000 | | | | | | Leased; [removed: Lease] expires in 2034. | | |

| Paris, France [removed: LaMiral Zac] [added: L’Amiral, ZAC] Forum Seine | | | | | | Networks, DTC, [removed: &] [added: and] Corporate | | | | | | [removed: 116,000] [added: 81,000] | | | | | | Leased; [removed: Lease] expires in 2031. | | |

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

| London, [removed: England] [added: UK] Chiswick Park, Bldg. 2 | | | | | | [added: Studios,] Networks, DTC, [removed: &] [added: and] Corporate | | | | | | [removed: 102,000] [added: 115,000] | | | | | | Leased; [removed: Lease] expires in 2034. | | |

| Washington, DC 820 First [removed: St.] [added: Street] | | | | | | Studios [removed: &] [added: and] Networks | | | | | | [removed: 71,000] [added: 109,000] | | | | | | Leased; [removed: Lease] expires in 2031. | | |

| Auckland, New Zealand 2 [removed: &] [added: and] 3 Flower [removed: St.] [added: Street] | | | | | | Studios, Networks, DTC, [removed: &] [added: and] Corporate | | | | | | 57,000 | | | | | | Leased; [removed: Lease] expires in 2025. | | |

| Sterling, VA 45580 Terminal [removed: Dr.] [added: Drive] | | | | | | Studios, Networks, [removed: & DTC] [added: DTC, and Corporate] | | | | | | 54,000 | | | | | | Owned. | | |

| Silver Spring, MD 8403 Colesville [removed: Rd.] [added: Road] | | | | | | Networks [removed: &] [added: and] Corporate | | | | | | 47,000 | | | | | | Leased; [removed: Lease] expires in 2030. | | |

| Leavesden, UK Warner Drive (Studios); Studio Tour Drive (Studio Tour); 5 and 6 Hercules Way (Leavesden Park) | | | | | | Studios | | | | | | 1,300,000 | | | | | | Owned. | | |

| Burbank, CA 3000 West Alameda Avenue | | | | | | Studios | | | | | | 860,000 | | | | | | Owned. | | |

| Tokyo, Japan 1-1625-1, Kasuga-cho, Nerima-ku | | | | | | Studios | | | | | | 527,000 | | | | | | Leased; expires in 2052. | | |

| Atlanta, GA 3755 Atlanta Industrial Pkwy. | | | | | | Studios | | | | | | 409,000 | | | | | | Leased; expires in 2024. | | |

| Cardington, Bedfordshire, UK Cardington Airfield, Shed 1 | | | | | | Studios | | | | | | 220,000 | | | | | | Leased; expires in 2027. | | |

| Radlett, UK Ventura Park, Old Parkbury Lane | | | | | | Studios | | | | | | 198,000 | | | | | | Leased; expires in 2028 and 2034. | | |

| Atlanta, GA 3700 Atlanta Industrial Pkwy. | | | | | | Studios | | | | | | 177,000 | | | | | | Leased; expires in 2024. | | |

| Krakow, Poland Plk. Dadka 2 | | | | | | Studios and Networks | | | | | | 151,000 | | | | | | Leased; expires in 2026. | | |

| Richmond, Canada 13480 Crestwood Place | | | | | | Studios | | | | | | 108,000 | | | | | | Leased; expires in 2030. | | |

| Hyderabad, India Block A, International Tech Park | | | | | | Corporate | | | | | | 89,000 | | | | | | Leased; expires in 2028. | | |

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

| Many of the listed locations are occupied by multiple segments; the most critical (or the principal) occupiers are listed here. | | | | | | | | | | | | | | | | | | | | |

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

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

| 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. | | |

As of February [removed: 24, 2023,] [added: 23, 2024,] the following individuals are the executive officers of the Company.

Age: [removed: 63][added: 64]

Age: [removed: 45][added: 46]

Age: [removed: 55][added: 56]

Age: [removed: 59][added: 60]

Age: [removed: 51][added: 68]

Age: [removed: 67][added: 68]

Ms. Sims has served as [added: our Chief Legal Officer since October 2023 and was previously] Executive Vice President and General Counsel [removed: since] [added: from] the closing of the Merger on April 8, [removed: 2022.][added: 2022 to October 2023.]

Sims, Chief Legal Officer

David Leavy, Chief Corporate Affairs Officer

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.

Sims, Executive Vice President and General Counsel

As of February [removed: 9, 2023,] [added: 8, 2024,] there were approximately [removed: 715,364] [added: 689,822] 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”), [added: and] (c) the Standard & Poor’s 500 Media and Entertainment Industry Group Index (“S&P 500 Media & Entertainment [removed: Index”), and (d) a peer group of companies (the “Prior Peer Group”)] [added: Index”)] for the five years ended December 31, [removed: 2022.][added: 2023.]

The graph assumes $100 was invested in each of Discovery Series A common stock, Series B convertible common stock, and Series C common stock, the S&P 500 Index, [added: and] the S&P 500 Media & Entertainment [removed: Index, and the stocks of the Prior Peer Group] [added: Index] on December 31, [removed: 2017,] [added: 2018,] and that $100 was invested in WBD common stock on April 11, 2022, the date on which it began trading.

[removed: ][added: ]

Copyright [removed: 1980-2023.][added: 1980-2024.]

| | | | | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | [added: April 11,] | | | | | | [removed: April 8,] [added: December 31,] | | | | | | [removed: December 31,] | | |

| | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2021] [added: 2022] | | | | | | 2022 | | | | | | [removed: 2022] [added: 2023] | | |

| WBD | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: $] | [added: 100.00] | | | | | $ | [removed: 100.00] [added: 38.26] | | | | | $ | [removed: 38.80] [added: 45.92] | |

Note that historic stock price performance is not necessarily indicative of future stock price performance.

| DISCA | | | | | | $ | 100.00 | | | | | $ | 132.34 | | | | | $ | 121.63 | | | | | $ | 95.15 | | | | | $ | 98.75 | | | | | $ | — | | | | | $ | — | |

| DISCB | | | | | | $ | 100.00 | | | | | $ | 108.24 | | | | | $ | 96.72 | | | | | $ | 88.81 | | | | | $ | 72.99 | | | | | $ | — | | | | | $ | — | |

| DISCK | | | | | | $ | 100.00 | | | | | $ | 132.11 | | | | | $ | 113.48 | | | | | $ | 99.22 | | | | | $ | 105.81 | | | | | $ | — | | | | | $ | — | |

| S&P 500 | | | | | | $ | 100.00 | | | | | $ | 131.49 | | | | | $ | 155.68 | | | | | $ | 200.37 | | | | | $ | 186.24 | | | | | $ | 164.08 | | | | | $ | 207.21 | |

| S&P 500 Media & Entertainment Index | | | | | | $ | 100.00 | | | | | $ | 134.15 | | | | | $ | 176.47 | | | | | $ | 224.01 | | | | | $ | 184.31 | | | | | $ | 125.65 | | | | | $ | 208.66 | |

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

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

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.

| 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 | |

| [Management’s Report on Internal Control Over Financial [removed: Reporting.](#i1321522a81954b41bd1a0227ee3ad30e_106)] [added: Reporting.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_118)] | | | [removed: [58](#i1321522a81954b41bd1a0227ee3ad30e_106)] [added: [56](#ib967c7daa8ec4ce6a8b1de52f3c4237e_118)] | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#i1321522a81954b41bd1a0227ee3ad30e_109).] [added: Firm](#ib967c7daa8ec4ce6a8b1de52f3c4237e_121).] (PCAOB ID 238) | | | [removed: [59](#i1321522a81954b41bd1a0227ee3ad30e_109)] [added: [57](#ib967c7daa8ec4ce6a8b1de52f3c4237e_121)] | | |

| [Consolidated Financial Statements of Warner Bros. Discovery, [removed: Inc.](#i1321522a81954b41bd1a0227ee3ad30e_115)] [added: Inc.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_124)] | | | [removed: [62](#i1321522a81954b41bd1a0227ee3ad30e_115)] [added: [59](#ib967c7daa8ec4ce6a8b1de52f3c4237e_124)] | | |

| [Consolidated Statements of [removed: Operations](#i1321522a81954b41bd1a0227ee3ad30e_115).] [added: Operations](#ib967c7daa8ec4ce6a8b1de52f3c4237e_124).] | | | [removed: [62](#i1321522a81954b41bd1a0227ee3ad30e_115)] [added: [59](#ib967c7daa8ec4ce6a8b1de52f3c4237e_124)] | | |

| [Consolidated Statements of Comprehensive (Loss) [removed: Income](#i1321522a81954b41bd1a0227ee3ad30e_118).] [added: Income](#ib967c7daa8ec4ce6a8b1de52f3c4237e_127).] | | | [removed: [63](#i1321522a81954b41bd1a0227ee3ad30e_118)] [added: [60](#ib967c7daa8ec4ce6a8b1de52f3c4237e_127)] | | |

| [Consolidated Balance [removed: Sheets.](#i1321522a81954b41bd1a0227ee3ad30e_112)] [added: Sheets.](#ib967c7daa8ec4ce6a8b1de52f3c4237e_130)] | | | [removed: [64](#i1321522a81954b41bd1a0227ee3ad30e_112)] [added: [61](#ib967c7daa8ec4ce6a8b1de52f3c4237e_130)] | | |

| [Consolidated Statements of Cash [removed: Flows](#i1321522a81954b41bd1a0227ee3ad30e_121).] [added: Flows](#ib967c7daa8ec4ce6a8b1de52f3c4237e_133).] | | | [removed: [65](#i1321522a81954b41bd1a0227ee3ad30e_121)] [added: [62](#ib967c7daa8ec4ce6a8b1de52f3c4237e_133)] | | |

| [Consolidated Statements of [removed: Equity](#i1321522a81954b41bd1a0227ee3ad30e_124).] [added: Equity](#ib967c7daa8ec4ce6a8b1de52f3c4237e_136).] | | | [removed: [66](#i1321522a81954b41bd1a0227ee3ad30e_124)] [added: [63](#ib967c7daa8ec4ce6a8b1de52f3c4237e_136)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i1321522a81954b41bd1a0227ee3ad30e_127).] [added: Statements](#ib967c7daa8ec4ce6a8b1de52f3c4237e_139).] | | | [removed: [68](#i1321522a81954b41bd1a0227ee3ad30e_127)] [added: [65](#ib967c7daa8ec4ce6a8b1de52f3c4237e_139)] | | |

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 internal control over financial reporting as of December 31, [removed: 2022] [added: 2023] 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: 2022,] [added: 2023,] the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the 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: 2022] [added: 2023] 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.”

Discovery, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the related consolidated statements of operations, of comprehensive [removed: income (loss),] [added: (loss) income,] of equity and of cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, [removed: 2022] [added: 2023] 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: 2022,] [added: 2023,] based on criteria established in [removed: *Internal] [added: Internal] Control - Integrated [removed: Framework*] [added: 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: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022] [added: 2023] 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: 2022,] [added: 2023,] based on criteria established in [removed: *Internal] [added: Internal] Control - Integrated [removed: Framework*] [added: Framework] (2013) issued by the COSO.

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

The communication of critical audit 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: matters] [added: matter] below, providing [added: a] separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the accounts or disclosures to which [removed: they relate.][added: it relates.]

These procedures included testing the effectiveness of controls relating to [removed: the merger accounting,] [added: management’s goodwill impairment assessments,] including [removed: the control] [added: controls] over [removed: management’s determination] [added: the valuation] of the [removed: accounting acquirer.][added: Networks and DTC reporting units.]

The principal considerations for our determination that performing procedures relating to the [removed: valuation] [added: goodwill impairment assessments] of the [removed: trade names] [added: Networks] and [removed: affiliate relationships intangible assets acquired in the acquisition of WarnerMedia business] [added: DTC reporting units] is a critical audit matter are (i) the significant judgment by management when developing the fair value [removed: estimates] [added: estimate] of the [removed: trade names] [added: Networks] and [removed: affiliate relationships intangible assets,] [added: DTC reporting units,] (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions [removed: related to royalty rates] used in the [removed: valuation of] [added: discounted cash flow method related to revenue projections for] the [removed: trade names] [added: Networks] and [removed: projected revenue attributable to affiliate contracts] [added: DTC reporting units] and [removed: related renewals used in the valuation of] [added: discount rate for] the [removed: affiliate relationships,] [added: Networks reporting unit,] and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

These procedures also included, among others, (i) [removed: reading the purchase agreement, (ii)] testing management’s process for developing the fair value [removed: estimates] [added: estimate] of the [removed: trade names] [added: Networks] and [removed: affiliate relationships intangible assets, (iii)] [added: DTC reporting units, (ii)] evaluating the appropriateness of the [removed: relief from royalty and multi-period excess earnings valuation methods, (iv)] [added: discounted cash flow method used by management, (iii)] testing the completeness and accuracy of underlying data used in the [removed: valuation methods,] [added: discounted cash flow method,] and [removed: (v)] [added: (iv)] evaluating the reasonableness of the significant assumptions used by management related to [removed: royalty rates used in the valuation of the trade names and the projected] revenue [removed: attributable to affiliate contracts] [added: projections] and [removed: related renewals used in the valuation of the affiliate relationships.][added: discount rate.]

Professionals with specialized skill and knowledge were used to assist in [removed: the evaluation of] [added: evaluating (i)] the appropriateness of the [removed: valuation] [added: discounted cash flow] method and [added: (ii)] the reasonableness of the [removed: royalty rates used in the valuation of the trade names.][added: discount rate assumption.]

*Goodwill Impairment [removed: Assessment] [added: Assessments] - [added: Networks and] DTC Reporting [removed: Unit*][added: Units*]

As described in Notes 2 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance was [removed: $34.4] [added: $35.0] billion as of December 31, [removed: 2022,] [added: 2023,] and the goodwill associated with the [added: Networks and] DTC reporting [removed: unit] [added: units] was [removed: $7.9 billion.][added: $17.6 billion and $8.1 billion, respectively.]

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

If a qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit goodwill [removed: or other indefinite-lived intangible asset] exceeds its fair value, a quantitative impairment test is performed.

As of October 1, [removed: 2022,] [added: 2023,] the Company performed a quantitative goodwill impairment assessment for all [removed: reporting.][added: reporting units.]

Significant judgments and assumptions for [removed: all] [added: the] quantitative goodwill tests performed include discount rates, control premiums, terminal growth rates, relevant comparable company earnings multiples, and the amount and timing of expected future cash flows, including [added: the] revenue [removed: growth rates] [added: projections] and profit margins.

Evaluating management’s [removed: significant assumption] [added: assumptions] related to [removed: the] revenue [removed: growth rates] [added: projections] involved evaluating whether the [removed: assumption is] [added: assumptions are] reasonable considering (i) the current and past performance of the [added: Networks and DTC] reporting [removed: unit,] [added: units,] (ii) the consistency with external market and industry data, and (iii) whether the [removed: assumption is] [added: assumptions were] consistent with evidence obtained in other areas of the audit.

[removed: WARNER BROS.][added: Motion Picture Group, Warner Bros.]

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

| | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Advertising | | | | | | [removed: $] [added: 8,700] | [removed: 8,524] | | | | | [removed: $] [added: 8,524] | [removed: 6,194] | | | | | [removed: $] [added: 6,194] | [removed: 5,572] | |

| Distribution | | | | | | [removed: 16,142] [added: $] | [added: 20,237] | | | | | [removed: 5,202] [added: $] | [added: 16,142] | | | | | [removed: 4,686] [added: $] | [added: 5,202] | |

| Content | | | | | | [removed: 8,360] [added: 11,203] | | | | | | [removed: 737] [added: 8,360] | | | | | | [removed: 355] [added: 737] | | |

| Other | | | | | | [removed: 791] [added: 1,181] | | | | | | [removed: 58] [added: 791] | | | | | | 58 | | |

| Total revenues | | | | | | [removed: 33,817] [added: 41,321] | | | | | | [removed: 12,191] [added: 33,817] | | | | | | [removed: 10,671] [added: 12,191] | | |

| Costs of revenues, excluding depreciation and amortization | | | | | | [removed: 20,442] [added: 24,526] | | | | | | [removed: 4,620] [added: 20,442] | | | | | | [removed: 3,860] [added: 4,620] | | |

| Selling, general and administrative | | | | | | [removed: 9,678] [added: 9,696] | | | | | | [removed: 4,016] [added: 9,678] | | | | | | [removed: 2,722] [added: 4,016] | | |

| Depreciation and amortization | | | | | | [removed: 7,193] [added: 7,985] | | | | | | [removed: 1,582] [added: 7,193] | | | | | | [removed: 1,359] [added: 1,582] | | |

Management determines the fair value of the reporting units by using a combination of discounted cash flow and market valuation methodologies.

| Restructuring and other charges | | | | | | 585 | | | | | | 3,757 | | | | | | 32 | | |

| Impairments and loss (gain) on dispositions | | | | | | 77 | | | | | | 117 | | | | | | (71) | | |

| Change in net unrealized gains (losses) | | | | | | 799 | | | | | | (651) | | | | | | (290) | | |

| Less: Reclassification adjustment for net (gains) losses included in net income | | | | | | — | | | | | | (2) | | | | | | — | | |

| Net change, net of income tax benefit (expense) of $30, $(53) and $9 | | | | | | 799 | | | | | | (653) | | | | | | (290) | | |

| Pension plans, net of income tax benefit (expense) of $(3), $21 and $(1) | | | | | | (21) | | | | | | (26) | | | | | | 2 | | |

| Derivatives | | | | | | | | | | | | | | | | | | | | |

| Less: Reclassification adjustment for net (gains) losses included in net income | | | | | | (12) | | | | | | (18) | | | | | | (25) | | |

| Net (loss) income | | | | | | $ | (3,079) | | | | | $ | (7,297) | | | | | $ | 1,197 | |

| Depreciation and amortization | | | | | | 7,985 | | | | | | 7,193 | | | | | | 1,582 | | |

| Impairments and loss (gain) on dispositions | | | | | | — | | | | | | 116 | | | | | | (71) | | |

| Purchase of redeemable noncontrolling interest | | | | | | (49) | | | | | | — | | | | | | — | | |

| Reclassification of redeemable noncontrolling interest to noncontrolling interest and change in noncontrolling interest ownership (See Note 19) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2 | | | | | | 60 | | | | | | 62 | | |

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

| December 31, 2023 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | — | | | | | 2,669 | | | | | | $ | 27 | | | | | $ | 55,112 | | | | | $ | (8,244) | | | | | $ | (928) | | | | | $ | (741) | | | | | $ | 45,226 | | | | | $ | 1,081 | | | | | $ | 46,307 | |

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

Labor Disruption

The Writers Guild of America (“WGA”) and Screen Actors Guild-American Federation of Television and Radio Artists (“SAG-AFTRA”) went on strike in May and July 2023, respectively, following the expiration of their respective collective bargaining agreements with the AMPTP.

The WGA strike ended on September 27, 2023, and a new collective bargaining agreement was ratified on October 9, 2023.

The SAG-AFTRA strike ended on November 9, 2023, and a new collective bargaining agreement was ratified on December 5, 2023.

As a result of the strikes, we paused certain theatrical and television productions, which resulted in delayed production spending amongst other impacts.

The strikes had a material impact on the operations and results of the Company.

This included a positive impact on cash flow from operations attributed to delayed production spend, and a negative impact on the results of operations attributed to timing and performance of the 2023 film slate, as well as the Company’s ability to produce, license, and deliver content.

Cash received is reflected as cash provided by operating activities in the consolidated statements of cash flows.

Increases to accounts payable and subsequent payments are reported as financing activities in the consolidated statements of cash flows.

The Company elected the short-term lease recognition exemption and leases with initial terms of one year or less are not recorded in the consolidated balance sheets.

- a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”); or

The Company may designate derivative instruments as fair value hedges to mitigate the variability in the fair value of a recognized asset or liability or of an unrecognized firm commitment.

For those derivative instruments designated as fair value hedges, the changes in fair value of the derivative instruments, including offsetting changes in fair value of the hedged items are recorded in the statements of operations in the same line item where the hedged risk occurs.

RSU awards generally provide for accelerated vesting upon retirement or after reaching a specified age and years of service.

The amounts recorded pursuant to the loss cap were not material during the year ended December 31, 2023.