Item 1. Unaudited Financial Statements.

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Item 1. Unaudited Financial Statements.

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in millions, except per share amounts)


	Three Months Ended March 31,
	2025		2024
Revenues:
Distribution	$	4,886	$	4,985
Advertising	1,980		2,148
Content	1,866		2,558
Other	247		267
Total revenues	8,979		9,958
Costs and expenses:
Costs of revenues, excluding depreciation and amortization	5,131		6,058
Selling, general and administrative	2,194		2,232
Depreciation and amortization	1,547		1,888
Restructuring and other charges	54		35
Impairments and loss on dispositions	90		12


Total costs and expenses	9,016		10,225
Operating loss	(37)		(267)
Interest expense, net	(468)		(515)
(Loss) gain on extinguishment of debt	(4)		25
Loss from equity investees, net	(7)		(48)
Other income (expense), net	82		(14)
Loss before income taxes	(434)		(819)
Income tax expense	(15)		(136)
Net loss	(449)		(955)
Net income attributable to noncontrolling interests	(8)		(7)
Net loss (income) attributable to redeemable noncontrolling interests	4		(4)
Net loss available to Warner Bros. Discovery, Inc.	$	(453)	$	(966)
Net loss per share available to Warner Bros. Discovery, Inc. Series A common stockholders:
Basic	$	(0.18)	$	(0.40)
Diluted	$	(0.18)	$	(0.40)
Weighted average shares outstanding:
Basic	2,462		2,443
Diluted	2,462		2,443

The accompanying notes are an integral part of these consolidated financial statements.

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited; in millions)


	Three Months Ended March 31,
	2025		2024
Net loss	$	(449)	$	(955)
Other comprehensive income (loss):



Currency translation, net of income tax (expense) benefit of $(90) and $7	231		(176)

Derivatives
Change in net unrealized gains	9		13
Less: Reclassification adjustment for net gains included in net income	(13)		(9)
Net change, net of income tax (expense) benefit of $(1) and $—	(4)		4
Comprehensive loss	(222)		(1,127)
Comprehensive income attributable to noncontrolling interests	(11)		(7)
Comprehensive (loss) income attributable to redeemable noncontrolling interests	4		(4)
Comprehensive loss attributable to Warner Bros. Discovery, Inc.	$	(229)	$	(1,138)

The accompanying notes are an integral part of these consolidated financial statements.

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited; in millions, except par value)


	March 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	3,868	$	5,312
Receivables, net	4,664		4,947

Prepaid expenses and other current assets	4,250		3,819
Total current assets	12,782		14,078
Film and television content rights and games	18,821		19,102
Property and equipment, net	6,211		6,087


Goodwill	25,746		25,667
Intangible assets, net	31,033		32,299

Other noncurrent assets	7,086		7,327
Total assets	$	101,679	$	104,560
Liabilities and equity
Current liabilities:
Accounts payable	$	1,008	$	1,055
Accrued liabilities	9,899		10,438

Deferred revenues	1,600		1,569
Current portion of debt	2,779		2,748
Total current liabilities	15,286		15,810
Noncurrent portion of debt	34,647		36,757
Deferred income taxes	6,714		6,985
Other noncurrent liabilities	9,861		10,070
Total liabilities	66,508		69,622
Commitments and contingencies (See Note 15)
Redeemable noncontrolling interests	23		109

Warner Bros. Discovery, Inc. stockholders’ equity:
Series A common stock: $0.01 par value; 10,800 and 10,800 shares authorized; 2,703 and 2,684 shares issued; and 2,473 and 2,454 shares outstanding	27		27
Preferred stock: $0.01 par value; 1,200 and 1,200 shares authorized, 0 shares issued and outstanding	—		—
Additional paid-in capital	55,585		55,560
Treasury stock, at cost: 230 and 230 shares	(8,244)		(8,244)
Accumulated deficit	(12,692)		(12,239)
Accumulated other comprehensive loss	(840)		(1,067)
Total Warner Bros. Discovery, Inc. stockholders’ equity	33,836		34,037
Noncontrolling interests	1,312		792
Total equity	35,148		34,829
Total liabilities and equity	$	101,679	$	104,560

The accompanying notes are an integral part of these consolidated financial statements.

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in millions)


	Three Months Ended March 31,
	2025		2024
Operating Activities
Net loss	$	(449)	$	(955)
Adjustments to reconcile net income to cash provided by operating activities:
Content rights amortization and impairment	3,145		3,827
Depreciation and amortization	1,547		1,888
Deferred income taxes	(312)		(399)

Share-based compensation expense	123		101




Impairments and loss on dispositions	90		12

Other, net	17		10
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Receivables, net	288		(304)
Film and television content rights, games, and production payables, net	(2,846)		(2,778)
Accounts payable, accrued liabilities, deferred revenues and other noncurrent liabilities	(1,026)		(753)
Foreign currency, prepaid expenses and other assets, net	(24)		(64)
Cash provided by operating activities	553		585
Investing Activities
Purchases of property and equipment	(251)		(195)

Proceeds from sales of investments	11		—
Investments in and advances to equity investments	(14)		(53)

Proceeds from asset dispositions	66		—



Other investing activities, net	(7)		41
Cash used in investing activities	(195)		(207)
Financing Activities

Principal repayments of debt, including premiums and discounts to par value	(3,665)		(1,047)
Borrowings from debt, net of discount and issuance costs	1,500		—
Distributions to noncontrolling interests and redeemable noncontrolling interests	(157)		(130)
Proceeds for noncontrolling interest in joint venture	601		—






Borrowings under commercial paper program and revolving credit facility	695		2,200
Repayments under commercial paper program and revolving credit facility	(695)		(2,200)


Other financing activities, net	(174)		(60)
Cash used in financing activities	(1,895)		(1,237)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	95		(74)
Net change in cash, cash equivalents, and restricted cash	(1,442)		(933)
Cash, cash equivalents, and restricted cash, beginning of period	5,416		4,319
Cash, cash equivalents, and restricted cash, end of period	$	3,974	$	3,386

The accompanying notes are an integral part of these consolidated financial statements.

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in millions)


		Warner Bros. Discovery, Inc. Common Stock				Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss		Warner Bros. Discovery, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Equity
	Shares		Par Value
December 31, 2024		2,684		$	27	$	55,560	$	(8,244)	$	(12,239)	$	(1,067)	$	34,037	$	792	$	34,829


Net (loss) income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests		—		—		—		—		(453)		—		(453)		8		(445)
Other comprehensive income		—		—		—		—		—		227		227		3		230
Share-based compensation		—		—		156		—		—		—		156		—		156



Tax settlements associated with share-based plans		—		—		(124)		—		—		—		(124)		—		(124)
Dividends paid to noncontrolling interests		—		—		—		—		—		—		—		(147)		(147)
Issuance of stock in connection with share-based plans		19		—		9		—		—		—		9		—		9
Redeemable noncontrolling interest adjustments to redemption value		—		—		(3)		—		—		—		(3)		—		(3)
Reclassification associated with the expiration of put rights		—		—		—		—		—		—		—		74		74
Formation of music catalog joint venture		—		—		(13)		—		—		—		(13)		582		569
March 31, 2025		2,703		$	27	$	55,585	$	(8,244)	$	(12,692)	$	(840)	$	33,836	$	1,312	$	35,148





























The accompanying notes are an integral part of these consolidated financial statements.

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in millions)


	Warner Bros. Discovery, Inc. Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss		Warner Bros. Discovery, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Equity
	Shares	Par Value
December 31, 2023	2,669	$	27	$	55,112	$	(8,244)	$	(928)	$	(741)	$	45,226	$	1,081	$	46,307


Net (loss) income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests	—	—		—		—		(966)		—		(966)		7		(959)
Other comprehensive loss	—	—		—		—		—		(172)		(172)		(1)		(173)
Share-based compensation	—	—		108		—		—		—		108		—		108



Tax settlements associated with share-based plans	—	—		(53)		—		—		—		(53)		—		(53)
Dividends paid to noncontrolling interests	—	—		—		—		—		—		—		(123)		(123)
Issuance of stock in connection with share-based plans	10	—		30		—		—		—		30		—		30
Redeemable noncontrolling interest adjustments to redemption value	—	—		(22)		—		—		—		(22)		—		(22)

March 31, 2024	2,679	$	27	$	55,175	$	(8,244)	$	(1,894)	$	(913)	$	44,151	$	964	$	45,115





























The accompanying notes are an integral part of these consolidated financial statements.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Warner Bros. Discovery, Inc. (“Warner Bros. Discovery”, “WBD”, the “Company”, “we”, “us” or “our”) is a leading global media and entertainment company that creates and distributes a differentiated and comprehensive portfolio of content and products across television, film, streaming, interactive gaming, publishing, themed experiences, and consumer products through brands including: Discovery Channel, Max, CNN, DC Studios, TNT Sports, HBO, Food Network, TLC, TBS, Warner Bros. Motion Picture Group, Warner Bros. Television Group, Warner Bros. Games, Adult Swim, Turner Classic Movies, and others.

In December 2024, the Company announced that its board of directors had authorized the Company to implement a new corporate structure designed to enhance its strategic flexibility and create potential opportunities to unlock shareholder value. Under the new corporate structure, the Company will serve as the parent company for two distinct operating divisions: Streaming & Studios and Global Linear Networks. In the first quarter of 2025, the Company renamed its Direct-to-Consumer reportable segment to Streaming and its Networks reportable segment to Global Linear Networks. There were no changes to the Company’s reportable segments or the composition of our reportable segments as a result of these changes.

As of March 31, 2025, we classified our operations in three reportable segments:

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

Our segment presentation is aligned with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries in which a controlling interest is maintained, including variable interest entities (“VIE”) for which the Company is the primary beneficiary. Intercompany accounts and transactions between consolidated entities have been eliminated.

Unaudited Interim Financial Statements

These consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from these estimates.

Recent Accounting and Reporting Pronouncements

Income Taxes

In December 2023, the Financial Accounting Standards Board (“FASB”) issued guidance updating the disclosure requirements for income taxes, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company expects to adopt this guidance prospectively and is currently evaluating the impact it will have on its annual tax disclosures that will be included in its Form 10-K for the year ended December 31, 2025.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued guidance updating the disclosure requirements for income statement expenses, primarily through disaggregation of certain types of expenses presented on the income statement. The amendments are effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either: (1) prospectively to financial statements issued for reporting periods after the effective date, or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact this guidance will have on its disclosures.

NOTE 2. GOODWILL AND INTANGIBLE ASSETS

We perform fair value-based impairment tests of goodwill and intangible assets with indefinite lives on an annual basis, and between annual tests if an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit or an indefinite-lived intangible asset below its carrying value.

During the three months ended March 31, 2025, the Company performed goodwill and intangible assets impairment monitoring procedures for all of its reporting units and identified no indicators of impairment. As of October 1, 2024, the date of the most recent quantitative impairment assessment, the estimated fair value of each reporting unit exceeded its carrying value.

The Company continues to monitor its reporting units for triggers that could impact the recoverability of goodwill. Long-term trends and risks the Company is monitoring in its ongoing assessment include, but are not limited to, the following:

the delta between market capitalization and book value, as well as volatility in the price of our common stock;
uncertainty related to affiliate rights renewals associated with the Company’s Global Linear Networks and Streaming reporting units;
declining levels of global GDP growth and continued softness in the U.S. linear advertising market associated with the Company’s Global Linear Networks reporting unit;
uncertainty surrounding the impacts related to the imposition of tariffs by the U.S. government and any retaliatory tariffs from foreign governments;
content licensing trends and volatility related to the performance of theatrical film and game slates in the Company’s Studios reporting unit; and
risks in executing the projected growth strategies of the Company’s Streaming reporting unit.

NOTE 3. RESTRUCTURING AND OTHER CHARGES

The Company periodically initiates restructuring programs, which may include, among other things, strategic content programming assessments, organization restructuring, facility consolidation activities, and other contract termination costs. During 2024, the Company initiated two restructuring initiatives; an organizational and personnel restructuring plan and a restructuring initiative associated with its Warner Bros. Games group.

Restructuring and other charges by reportable segments and corporate and inter-segment eliminations were as follows (in millions).


	Three Months Ended March 31,
	2025		2024
Streaming	$	12	$	2
Studios	(5)		11
Global Linear Networks	16		11
Corporate and inter-segment eliminations	31		11
Total restructuring and other charges	$	54	$	35

During the three months ended March 31, 2025 and 2024, restructuring and other charges were primarily related to organization restructuring costs and consulting fees.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Changes in restructuring liabilities recorded in accrued liabilities and other noncurrent liabilities by major category and by reportable segment and corporate and inter-segment eliminations were as follows (in millions).


	Streaming		Studios		Global Linear Networks		Corporate		Total
December 31, 2024	$	31	$	95	$	105	$	58	$	289



Employee termination accruals, net	12		(5)		14		8		29
Other accruals and adjustments	—		—		—		24		24
Cash paid	(3)		(24)		(26)		(27)		(80)
March 31, 2025	$	40	$	66	$	93	$	63	$	262

NOTE 4. REVENUES

The following tables present the Company’s revenues disaggregated by revenue source (in millions).


	Three Months Ended March 31, 2025
	Streaming		Studios		Global Linear Networks		Corporate and Inter-segment Eliminations		Total
Revenues:
Distribution	$	2,329	$	1	$	2,558	$	(2)	$	4,886
Advertising	237		1		1,758		(16)		1,980
Content	88		2,139		380		(741)		1,866
Other	2		173		78		(6)		247
Total	$	2,656	$	2,314	$	4,774	$	(765)	$	8,979


	Three Months Ended March 31, 2024
	Streaming		Studios		Global Linear Networks		Corporate and Inter-segment Eliminations		Total
Revenues:
Distribution	$	2,185	$	5	$	2,797	$	(2)	$	4,985
Advertising	175		4		1,987		(18)		2,148
Content	99		2,623		264		(428)		2,558
Other	1		189		77		—		267
Total	$	2,460	$	2,821	$	5,125	$	(448)	$	9,958

Contract Liabilities and Contract Assets

The following table presents contract liabilities on the consolidated balance sheets (in millions).


Category	Balance Sheet Location	March 31, 2025		December 31, 2024


Contract liabilities	Deferred revenues	$	1,600	$	1,569
Contract liabilities	Other noncurrent liabilities	210		206

For the three months ended March 31, 2025 and 2024, respectively, revenues of $677 million and $772 million were recognized that were included in deferred revenues as of December 31, 2024 and December 31, 2023, respectively. Contract assets were not material as of March 31, 2025 and December 31, 2024.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Remaining Performance Obligations

The following table presents a summary of revenue expected to be recognized from remaining performance obligations by contract type (in millions).


Contract Type	March 31, 2025		Duration
Distribution - fixed price or minimum guarantee	$	2,279	Through 2030
Content licensing and sports sublicensing	4,124		Through 2032
Brand licensing	3,031		Through 2052
Advertising	676		Through 2030
Other	132		Through 2029
Total	$	10,242

The value of unsatisfied performance obligations disclosed above does not include: (i) contracts involving variable consideration for which revenues are recognized in accordance with the sales or usage-based royalty exception, which typically have a similar duration as the contracts disclosed above, and (ii) contracts with an original expected length of one year or less, such as most advertising contracts; however for content licensing revenues, including revenues associated with the licensing of theatrical and television product for television and streaming services, the Company has included all contracts regardless of duration.

NOTE 5. SALES OF RECEIVABLES

Revolving Receivables Program

During 2024, the Company amended its revolving receivables program to reduce the facility limit to $5,200 million and extend the program to June 2025. The outstanding portfolio of receivables derecognized from our consolidated balance sheet was $4,748 million as of March 31, 2025.

The Company recognized $36 million and $51 million for the three months ended March 31, 2025 and 2024, respectively, in selling, general and administrative expenses in the consolidated statements of operations from the revolving receivables program (net of non-designated derivatives). (See Note 9.)

The following table presents a summary of receivables sold (in millions).


	Three Months Ended March 31,
	2025		2024
Gross receivables sold/cash proceeds received	$	4,231	$	3,956
Collections reinvested under revolving receivables program	(4,120)		(3,987)
Net cash proceeds received (remitted)	$	111	$	(31)
Net receivables sold	$	4,205	$	3,914
Obligations recorded (Level 3)	$	103	$	153

The following table presents a summary of the amounts transferred or pledged, which were held at the Company’s bankruptcy-remote consolidated subsidiary (in millions).


	March 31, 2025		December 31, 2024
Gross receivables pledged as collateral	$	2,242	$	2,402
Restricted cash pledged as collateral	$	102	$	100
Balance sheet classification:
Receivables, net	$	1,846	$	2,039
Prepaid expenses and other current assets	$	102	$	100
Other noncurrent assets	$	396	$	363

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Accounts Receivable Factoring

Total trade accounts receivable sold under the Company’s factoring arrangement were $102 million for the three months ended March 31, 2025. No amounts were sold under the factoring arrangement for the three months ended March 31, 2024. The impact to the consolidated statements of operations was immaterial for the three months ended March 31, 2025 and 2024. This accounts receivable factoring agreement is separate and distinct from the revolving receivables program.

NOTE 6. CONTENT RIGHTS

For purposes of amortization and impairment, capitalized production costs are grouped based on their predominant monetization strategy: individually or as a group. Live programming includes licensed sports rights and related advances. The tables below present the components of content rights (in millions).


	March 31, 2025
		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total










Production costs:
Released, less amortization		$	2,918	$	5,696	$	8,614
Completed and not released		613		765		1,378
In production and other		1,913		1,981		3,894
Total production costs		$	5,444	$	8,442	$	13,886


Licensed content, live programming, and advances, net						5,774
Game development costs, less amortization						253
Total film and television content rights and games						19,913
Less: Current content rights and prepaid license fees, net						(1,092)
Total noncurrent film and television content rights and games						$	18,821


	December 31, 2024
		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total










Production costs:
Released, less amortization		$	2,948	$	5,678	$	8,626
Completed and not released		794		767		1,561
In production and other		1,700		2,008		3,708
Total production costs		$	5,442	$	8,453	$	13,895


Licensed content, live programming, and advances, net						5,744
Game development costs, less amortization						247
Total film and television content rights and games						19,886
Less: Current content rights and prepaid license fees, net						(784)
Total noncurrent film and television content rights and games						$	19,102

Content amortization consisted of the following (in millions).


	Three Months Ended March 31,
	2025		2024

Predominantly monetized individually	$	580	$	922





Predominantly monetized as a group	2,530		2,779



Total content amortization	$	3,110	$	3,701

Content expense includes amortization, impairments, and development expense and is generally a component of costs of revenues on the consolidated statements of operations. Content impairments were $35 million and $126 million, for the three months ended March 31, 2025 and 2024, respectively.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 7. INVESTMENTS

The Company’s equity investments consisted of the following, net of investments recorded in other noncurrent liabilities (in millions).


Category	Balance Sheet Location	Ownership	March 31, 2025		December 31, 2024
Equity method investments:
The Chernin Group (TCG) 2.0-A, LP	Other noncurrent assets	44%	$	242	$	240
nC+	Other noncurrent assets	32%	141		128
TNT Sports	Other noncurrent assets	50%	83		92
Other	Other noncurrent assets		248		261
Total equity method investments			714		721

Investments with readily determinable fair values	Other noncurrent assets		42		41


Investments without readily determinable fair values	Other noncurrent assets(a)		344		353
Total investments			$	1,100	$	1,115

(a) Investments without readily determinable fair values included $17 million as of March 31, 2025 and December 31, 2024 that was recorded in prepaid expenses and other current assets.

Equity Method Investments

Certain of the Company’s other equity method investments are VIEs, for which the Company is not the primary beneficiary. As of March 31, 2025, the Company’s maximum exposure for all of its unconsolidated VIEs, including the investment carrying values and unfunded contractual commitments made on behalf of VIEs, was approximately $550 million. The Company’s maximum estimated exposure excludes the non-contractual future funding of VIEs. The aggregate carrying values of these VIE investments were $531 million and $550 million as of March 31, 2025 and December 31, 2024, respectively. VIE gains and losses are recorded in loss from equity investees, net on the consolidated statements of operations, and were not material for the three months ended March 31, 2025 and 2024.

Joint Venture

In January 2025, the Company contributed a 70% interest in its music catalog to a joint venture with Cutting Edge Group in exchange for net proceeds of $601 million. The Company retained a controlling financial interest and consolidated the joint venture as a VIE. The Company has determined that it is the primary beneficiary of the joint venture as the Company has certain operational rights that significantly impact the economic performance of the business including exploitation of the catalog works and selection of the administrator. As the primary beneficiary, the Company includes the joint venture assets, liabilities and results of operations in the Company's consolidated financial statements. As of March 31, 2025, the carrying amounts of assets and liabilities of the consolidated VIE were not material. In addition to the initial equity ownership, Cutting Edge Group, may receive up to an additional 10% economic interest in the venture based on the results of certain operational metrics.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 8. DEBT

The table below presents the components of outstanding debt (in millions).


	Weighted-Average Interest Rate as of March 31, 2025		March 31, 2025		December 31, 2024
Term loan with maturity of less than 1 year	5.45	%	$	1,500	$	—

Senior notes with maturities of 5 years or less	3.89	%	10,805		13,744
Senior notes with maturities between 5 and 10 years	4.38	%	7,211		7,853
Senior notes with maturities greater than 10 years	5.20	%	17,930		17,930
Total debt			37,446		39,527
Unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting, net			(20)		(22)
Debt, net of unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting			37,426		39,505
Current portion of debt			(2,779)		(2,748)
Noncurrent portion of debt			$	34,647	$	36,757

During the three months ended March 31, 2025, the Company repaid in full at maturity $2,165 million of aggregate principal amount outstanding of its senior notes due March 2025, and redeemed in full $1,500 million aggregate principal amount outstanding of its senior notes due March 2026. The redemption was funded with the proceeds of borrowings pursuant to a new $1,500 million 364-day senior unsecured term loan credit facility.

During the three months ended March 31, 2024, the Company repaid in full at maturity $726 million of aggregate principal amount outstanding of its senior notes due February and March 2024 and completed open market repurchases for $364 million of aggregate principal amount outstanding of its senior notes.

As of March 31, 2025, all senior notes are fully and unconditionally guaranteed by the Company, Scripps Networks Interactive, Inc. (“Scripps Networks”), Discovery Communications, LLC (“DCL”) (to the extent it is not the primary obligor on such senior notes), and WarnerMedia Holdings, Inc. (“WMH”) (to the extent it is not the primary obligor on such senior notes), except for $1,055 million of senior notes primarily related to the legacy WarnerMedia Business.

Revolving Credit Facility and Commercial Paper Programs

DCL and certain subsidiaries of the Company, as borrowers, have a multicurrency revolving credit agreement (the “Credit Agreement”). The Credit Agreement provides for a senior revolving credit facility (the “Credit Facility”) with aggregate commitments of $6.0 billion and includes a $150 million sublimit for the issuance of standby letters of credit. DCL may also request additional commitments up to $1.0 billion from the lenders upon the satisfaction of certain conditions. The obligations of the borrowers under the Credit Agreement are unsecured and are guaranteed by the Company, Scripps Networks, and WMH. The Credit Agreement is available on a revolving basis until October 2029, with an option for up to two additional 364-day renewal periods subject to the lenders’ consent.

The Company’s commercial paper program is supported by the Credit Facility. Under the commercial paper program, the Company may issue up to $2.0 billion. In March 2025, the Company increased the issuance capacity under the commercial paper program from $1.0 billion to $2.0 billion. Borrowing capacity under the Credit Facility is effectively reduced by any outstanding borrowings under the commercial paper program. As of March 31, 2025 and December 31, 2024, the Company and DCL had no outstanding borrowings under the Credit Facility or issuances under the commercial paper program.

The Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants, and also requires maintenance of a minimum consolidated interest coverage ratio of 3.00 to 1.00 and a maximum consolidated leverage ratio of 4.50 to 1.00. As of March 31, 2025, the Company was in compliance with all applicable covenants and there were no events of default under the Credit Agreement.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company is exposed to foreign currency exchange rate market risk and interest rate fluctuations. As part of its risk management strategy, the Company uses derivative financial instruments, primarily foreign currency forward contracts, fixed-to-fixed currency swaps, total return swaps and interest rate swaps to hedge certain foreign currency, market value, and interest rate exposures. The Company’s objective is to reduce earnings volatility by offsetting gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them. The Company does not enter into or hold derivative financial instruments for speculative trading purposes.

There were no amounts eligible to be offset under master netting agreements as of March 31, 2025 and December 31, 2024. The fair value of the Company’s derivative financial instruments was determined using a market-based approach (Level 2). The following table summarizes the Company’s derivative financial instruments recorded on its consolidated balance sheets (in millions).


	March 31, 2025										December 31, 2024
			Fair Value										Fair Value
	Notional		Prepaid expenses and other current assets		Other non- current assets		Accounts payable and accrued liabilities		Other non- current liabilities		Notional		Prepaid expenses and other current assets		Other non- current assets		Accounts payable and accrued liabilities		Other non- current liabilities
Cash flow hedges:
Foreign exchange	$	2,557	$	36	$	25	$	31	$	21	$	1,608	$	47	$	14	$	25	$	28


Net investment hedges: (a)
Cross-currency swaps	434		6		—		—		6		421		6		—		—		4



No hedging designation:
Foreign exchange	944		16		6		13		108		951		18		7		14		122
Cross-currency swaps	216		2		—		—		2		210		2		—		—		1
Interest rate swaps	1,500		1		—		—		—		—		—		—		—		—
Total return swaps	443		—		—		17		—		454		—		—		16		—


Total			$	61	$	31	$	61	$	137			$	73	$	21	$	55	$	155

(a) Excludes €1,500 million of euro-denominated notes ($1,618 million and $1,558 million equivalent at March 31, 2025 and December 31, 2024, respectively) designated as a net investment hedge. (See Note 8.)

Derivatives Designated for Hedge Accounting

Cash Flow Hedges

The Company uses foreign exchange forward contracts to mitigate the foreign currency risk related to revenues, production rebates, and production expenses. As production spend occurs or when rebate receivables are recognized, foreign forward exchange contracts designated as cash flow hedges are de-designated. Upon de-designation, gains and losses on these derivatives directly impact earnings in the same line and same period as the hedged risk. These cash flow hedges are carried at fair market value on the Company’s consolidated balance sheets. Hedge effectiveness is assessed using the spot method, with fair market value changes recorded in other comprehensive loss until the hedged item affects earnings. Excluded components, including forward points, are included in current earnings.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table presents the pre-tax impact of derivatives designated as cash flow hedges on income and other comprehensive loss (in millions).


	Three Months Ended March 31,
	2025		2024
Gains (losses) recognized in accumulated other comprehensive loss:
Foreign exchange - derivative adjustments	$	14	$	16

Gains (losses) reclassified into income from accumulated other comprehensive loss:
Foreign exchange - distribution revenue	4		2

Foreign exchange - costs of revenues	—		11

Interest rate - interest expense, net	(1)		(1)

Interest rate - other income (expense), net	14		—

If current fair values of designated cash flow hedges as of March 31, 2025 remained static over the next twelve months, the amount the Company would reclassify from accumulated other comprehensive loss into income in the next twelve months would not be material for the current fiscal year. The maximum length of time the Company is hedging exposure to the variability in future cash flows is 30 years.

Net Investment Hedges

The Company is exposed to foreign currency risk associated with the net assets of non-USD functional entities and uses fixed-to-fixed cross currency swaps to mitigate this risk.

The following table presents the pre-tax impact of derivatives designated as net investment hedges on other comprehensive loss (in millions). Other than amounts excluded from effectiveness testing, there were no other material gains (losses) reclassified from accumulated other comprehensive loss to income during the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
	Amount of gain (loss) recognized in AOCI				Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)		Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
	2025		2024			2025			2024
Cross currency swaps	$	(4)	$	25	Interest expense, net		$	3		$	6


Euro-denominated notes (foreign denominated debt)	(60)		—		N/A		—			—
Sterling notes (foreign denominated debt)	—		4		N/A		—			—
Total	$	(64)	$	29			$	3		$	6

Derivatives Not Designated for Hedge Accounting

The Company has deferred compensation plans that have risk related to the fair value gains and losses on these investments and uses total return swaps to mitigate this risk. The gains and losses associated with these swaps are recorded to selling, general and administrative expenses, offsetting the deferred compensation investment gains and losses.

The Company is also exposed to risk of secured overnight financing rate changes in connection with securitization interest paid on the receivables securitization program. To mitigate this risk, the Company entered into $1.5 billion notional of non-designated interest rate swaps in the first quarter of 2025. The gains and losses on these derivatives are recorded to selling, general and administrative expenses, offsetting securitization interest expense.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table presents the pretax gains (losses) on derivatives not designated as hedges and recognized in selling, general and administrative expense and other income (expense), net in the consolidated statements of operations (in millions).


	Three Months Ended March 31,
	2025		2024
Interest rate swaps	$	1	$	21
Total return swaps	(11)		19
Total in selling, general and administrative expense	(10)		40

Interest rate swaps	—		2
Cross-currency swaps	(1)		—


Foreign exchange derivatives	9		(8)
Total in other income (expense), net	8		(6)
Total	$	(2)	$	34

NOTE 10. FAIR VALUE MEASUREMENTS

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified in the following three categories:


Level 1	–	Quoted prices for identical instruments in active markets.
Level 2	–	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3	–	Valuations derived from techniques in which one or more significant inputs are unobservable.

The tables below present assets and liabilities measured at fair value on a recurring basis (in millions).


		March 31, 2025
Category	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Time deposits	Cash and cash equivalents	$	—	$	349	$	—	$	349

Equity securities:
Money market fund	Cash and cash equivalents	46		—		—		46

Mutual funds	Prepaid expenses and other current assets	18		—		—		18
Company-owned life insurance contracts	Prepaid expenses and other current assets	—		3		—		3
Mutual funds	Other noncurrent assets	210		—		—		210
Company-owned life insurance contracts	Other noncurrent assets	—		100		—		100



Total		$	274	$	452	$	—	$	726
Liabilities
Deferred compensation plan	Accrued liabilities	$	68	$	—	$	—	$	68
Deferred compensation plan	Other noncurrent liabilities	639		—		—		639
Total		$	707	$	—	$	—	$	707

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


		December 31, 2024
Category	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Time deposits	Cash and cash equivalents	$	—	$	95	$	—	$	95

Equity securities:
Money market funds	Cash and cash equivalents	46		—		—		46

Mutual funds	Prepaid expenses and other current assets	16		—		—		16
Company-owned life insurance contracts	Prepaid expenses and other current assets	—		1		—		1
Mutual funds	Other noncurrent assets	216		—		—		216
Company-owned life insurance contracts	Other noncurrent assets	—		102		—		102

Total		$	278	$	198	$	—	$	476
Liabilities
Deferred compensation plan	Accrued liabilities	$	62	$	—	$	—	$	62
Deferred compensation plan	Other noncurrent liabilities	650		—		—		650
Total		$	712	$	—	$	—	$	712

In addition to the financial instruments listed in the tables above, the Company holds other financial instruments, including cash deposits, accounts receivable, accounts payable, senior notes, and term loans. The carrying values for such financial instruments, other than the senior notes, each approximated their fair values as of March 31, 2025 and December 31, 2024. The estimated fair value of the Company’s outstanding senior notes, including accrued interest, using quoted prices from over-the-counter markets, considered Level 2 inputs, was $30.8 billion and $34.9 billion as of March 31, 2025 and December 31, 2024, respectively.

The Company’s derivative financial instruments are discussed in Note 9, its investments with readily determinable fair value are discussed in Note 7, and the obligation for its revolving receivable program is discussed in Note 5.

NOTE 11. SHARE-BASED COMPENSATION

The Company has various incentive plans under which performance based restricted stock units (“PRSUs”), service based restricted stock units (“RSUs”), and stock options have been issued. The table below presents awards granted (in millions, except weighted-average grant price).


	Three Months Ended March 31, 2025
	Awards	Weighted-Average Grant Price
Awards granted:
PRSUs	4.6	$	11.02
RSUs	38.7	$	10.99
Stock options	4.2	$	11.02

The table below presents unrecognized compensation cost related to non-vested share-based awards and the weighted-average amortization period over which these expenses will be recognized as of March 31, 2025 (in millions, except years).


	Unrecognized Compensation Cost		Weighted-Average Amortization Period (years)
PRSUs	$	89	1.5
RSUs	802		1.7
Stock options	90		1.8

Total unrecognized compensation cost	$	981

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 12. INCOME TAXES

Income tax expense was $15 million and $136 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in income tax expense was primarily attributable to variability in pre-tax book income and loss, the mix of jurisdictions to which they relate, and the effect of foreign operations.

Income tax expense for the three months ended March 31, 2025, reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributable to the effect of foreign operations, changes in unrecognized tax benefits, and state and local income taxes.

As of March 31, 2025 and December 31, 2024, the Company’s reserves for unrecognized tax benefits totaled $2,408 million and $2,371 million, respectively.

As of March 31, 2025 and December 31, 2024, the Company had accrued $774 million and $732 million, respectively, of total interest and penalties payable related to unrecognized tax benefits. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

The Organization for Economic Co-operation and Development’s (“OECD”) Pillar Two Global Anti-Base Erosion (“GloBE”) model rules, issued under the OECD Inclusive Framework on Base Erosion and Profit Shifting, introduce a global minimum tax of 15% applicable to multinational enterprise groups with consolidated financial statement revenue in excess of €750 million. Numerous foreign jurisdictions have already enacted tax legislation based on the GloBE rules, with some effective as early as January 1, 2024. As of March 31, 2025, we recognized an immaterial income tax expense for Pillar Two GloBE minimum tax. The Company is continuously monitoring the evolving application of this legislation and assessing its potential impact on our future tax liability.

NOTE 13. SUPPLEMENTAL DISCLOSURES

The following tables present supplemental information related to the consolidated financial statements (in millions).

Other Income (Expense), net

Other income (expense), net, consisted of the following (in millions).


	Three Months Ended March 31,
	2025		2024
Foreign currency gains (losses), net	$	30	$	(137)
Gains (losses) on derivative instruments, net	22		(6)

Change in the value of investments with readily determinable fair value	4		(1)


Change in fair value of equity investments without readily determinable fair value	(4)		(14)

Interest income	64		60
Indemnification receivable accrual	(38)		90
Other income (loss), net	4		(6)
Total other income (expense), net	$	82	$	(14)

Supplemental Cash Flow Information


	Three Months Ended March 31,
	2025	2024


Non-cash investing and financing activities:








Assets acquired under finance lease and other arrangements	144	111

Settlement of PRSU awards	51	31

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Cash, Cash Equivalents, and Restricted Cash


	March 31, 2025		December 31, 2024
Cash and cash equivalents	$	3,868	$	5,312
Restricted cash - recorded in prepaid expenses and other current assets (1)	106		104
Total cash, cash equivalents, and restricted cash	$	3,974	$	5,416

(1) Restricted cash primarily includes cash posted as collateral related to the Company’s revolving receivables program. (See Note 5.)

Earnings Per Share

The table below presents a reconciliation of net income (loss) available to Warner Bros. Discovery, Inc. Series A common stockholders for basic and diluted earnings per share (in millions).


	Three Months Ended March 31,
	2025		2024
Numerator:
Net loss	$	(449)	$	(955)
Less:
Net income attributable to noncontrolling interests	(8)		(7)
Net loss (income) attributable to redeemable noncontrolling interests	4		(4)
Redeemable noncontrolling interest adjustments of carrying value to redemption value (redemption value does not equal fair value)	—		(4)
Net loss available to Warner Bros. Discovery, Inc. Series A common stockholders for basic and diluted earnings per share	$	(453)	$	(970)

Denominator — weighted average:
Common shares outstanding — basic and diluted	2,462		2,443




Basic net loss per share allocated to common stockholders	$	(0.18)	$	(0.40)
Diluted net loss per share allocated to common stockholders	$	(0.18)	$	(0.40)

The table below presents the details of share-based awards that were excluded from the calculation of diluted earnings per share (in millions).


	Three Months Ended March 31,
	2025	2024
Anti-dilutive share-based awards	92	74

Supplier Finance Programs

As of March 31, 2025 and December 31, 2024, the Company has confirmed $254 million and $307 million, respectively, of accrued content producer liabilities. These amounts were outstanding and unpaid by the Company and were recorded in accrued liabilities on the consolidated balance sheets.

Leases

During the three months ended March 31, 2025, the Company subleased a portion of its Hudson Yards, New York office. As a result of executing the sublease, the Company recorded a right-of-use (“ROU”) asset impairment charge of $87 million. The ROU asset impairment charge was recorded in impairment and loss on dispositions in the consolidated statements of operations.

Other than the item disclosed above, no other material changes have occurred to the Company’s lease portfolio for the periods presented. Refer to the Company’s 2024 Form 10-K for more information on the Company’s leases.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Collaborative Arrangements

The arrangement among TNT Sports, CBS Broadcasting, Inc. (“CBS”), and the National Collegiate Athletic Association (the “NCAA”) provides TNT Sports and CBS with rights to the NCAA Division I Men’s Basketball Championship Tournament (the “NCAA Tournament”) in the U.S. and its territories and possessions through 2032. The aggregate programming rights fee, production costs, certain advertising revenues and sponsorship revenues related to the NCAA Tournament, and related programming are shared equally by the Company and CBS. However, if the amount paid for the programming rights fee and production costs in any given year exceeds the shared advertising and sponsorship revenues for that year, CBS’ share of such shortfall is limited to a specified annual cap. The amount recorded pursuant to the loss cap was $59 million during the three months ended March 31, 2025 and was not material for three months ended March 31, 2024. In accounting for this arrangement, the Company records advertising revenue for the advertisements aired on its networks and amortizes its share of the programming rights fee based on the estimated relative value of each season over the term of the arrangement.

Venu Sports

On February 6, 2024, the Company announced that it would enter into a joint venture with ESPN, a subsidiary of The Walt Disney Company (“Disney”), and Fox Corporation (“Fox”) to form Venu Sports, a sports-centric streaming service in the United States. On February 20, 2024, FuboTV Inc. and FuboTV Media Inc. (collectively, “Fubo”) filed a lawsuit against Disney, including certain affiliates, Fox, and WBD (collectively, the “Defendants”) in the U.S. District Court for the Southern District of New York alleging claims under federal and New York antitrust laws.

On January 6, 2025, Disney announced that it had entered into a definitive agreement to combine certain of Hulu Live TV’s assets with Fubo (the “Fubo Transaction”) and provide Fubo a senior unsecured term loan of up to $145 million in January 2026 (the “Fubo Loan”). If Disney funds the Fubo Loan prior to the consummation of the Fubo Transaction, the Company and Fox will participate in a portion of the Fubo Loan by providing loans to Disney with substantially the same economic terms as the Fubo Loan. A $130 million termination fee will be payable by Disney to Fubo if the transaction is terminated under certain circumstances. The Company and Fox have agreed to reimburse a portion of the termination fee to Disney if it becomes payable. In addition, the Defendants reached a settlement with Fubo related to Fubo’s antitrust claims and collectively paid $220 million to Fubo in January 2025, of which the Company’s share was $55 million.

On January 10, 2025, the Defendants announced their decision to discontinue the Venu Sports joint venture and not launch its streaming service effective immediately.

Discovery Family

Hasbro Inc. (“Hasbro”) had the right to put the entirety of its remaining 40% interest in Discovery Family to the Company. Hasbro did not exercise the right by the election period expiration date of March 31, 2025. As of March 31, 2025, Hasbro’s noncontrolling interest was reclassified from redeemable noncontrolling interest to noncontrolling interest outside of stockholders’ equity on the Company’s consolidated balance sheets.

Accumulated Other Comprehensive Loss

The table below presents the changes in the components of accumulated other comprehensive loss, net of taxes (in millions).


	Three Months Ended March 31, 2025
	Currency Translation		Derivatives		Pension Plan and SERP Liability		Accumulated Other Comprehensive Loss
Beginning balance	$	(1,008)	$	15	$	(74)	$	(1,067)
Other comprehensive income (loss) before reclassifications	231		9		—		240
Reclassifications from accumulated other comprehensive loss to net income	—		(13)		—		(13)
Other comprehensive income (loss)	231		(4)		—		227
Ending balance	$	(777)	$	11	$	(74)	$	(840)

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


	Three Months Ended March 31, 2024
	Currency Translation		Derivatives		Pension Plan and SERP Liability		Accumulated Other Comprehensive Loss
Beginning balance	$	(699)	$	18	$	(60)	$	(741)
Other comprehensive income (loss) before reclassifications	(176)		13		—		(163)
Reclassifications from accumulated other comprehensive loss to net income	—		(9)		—		(9)
Other comprehensive income (loss)	(176)		4		—		(172)
Ending balance	$	(875)	$	22	$	(60)	$	(913)

NOTE 14. RELATED PARTY TRANSACTIONS

In the normal course of business, the Company enters into transactions with related parties. Related party transactions include revenues and expenses for content and services provided to or acquired from equity method investees, entities that share common directorship, or minority partners of consolidated subsidiaries.

The table below presents a summary of the transactions with related parties (in millions).


	Three Months Ended March 31,
	2025		2024




Revenues and service charges (a)	$	214	$	653
Expenses	$	68	$	77
Distributions to noncontrolling interests and redeemable noncontrolling interests	$	157	$	130

(a) The decrease in revenue and service charges in 2025 is primarily attributable to transactions with certain entities that are no longer considered related parties, as such entities and the Company ceased to share common directorship in 2025.

The table below presents receivables due from and payables due to related parties (in millions).


	March 31, 2025		December 31, 2024
Receivables	$	238	$	254
Payables	$	27	$	13

NOTE 15. COMMITMENTS AND CONTINGENCIES

Put Rights

The Company has granted put rights to non-controlling interest holders in certain consolidated subsidiaries but is unable to reasonably predict the ultimate amount or timing of any payment.

Legal Matters

From time to time, in the normal course of its operations, the Company is subject to various litigation matters and claims, including claims related to employees, stockholders, vendors, other business partners, government regulations, or intellectual property, as well as disputes and matters involving counterparties to contractual agreements. A determination as to the amount of the accrual required for such contingencies is highly subjective and requires judgment about future events.

The Company may not currently be able to estimate the reasonably possible loss or range of loss for certain 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, including with respect to the matters noted below. Although the outcome of these matters cannot be predicted with certainty and the impact of the final resolution of these matters on the Company’s results of operations in a particular subsequent reporting period is not known, management does not currently believe that the resolution of these matters will have a material adverse effect on the Company’s future consolidated financial position, future results of operations, or cash flows.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Securities Class Action. On November 25, 2024, a securities class action complaint was filed in the United States District Court for the Southern District of New York (Collura v. Warner Bros. Discovery, Inc., No. 1:24-cv-09027-KPF). The complaint named Warner Bros. Discovery, Inc. (“WBD”), Gunnar Wiedenfels, and David M. Zaslav as defendants and asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. On February 21, 2025, the court appointed co-lead plaintiffs (Anthony Yuson and Michael Steinberg) and co-lead counsel (Pomerantz LLP and The Rosen Law Firm, P.A.) to represent the putative class. On May 7, 2025, the lead plaintiffs filed a First Amended Complaint against WBD, Gunnar Wiedenfels, and David M. Zaslav. The First Amended Complaint generally alleges that, between February 23, 2024 and August 7, 2024, defendants made false and misleading statements in SEC filings and other public disclosures relating to WBD’s negotiations with the National Basketball Association (“NBA”) concerning its contractual rights to broadcast the NBA’s content and the potential impact of a failure to renew the contract on its business, in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5, and seeks damages and other relief. The defendants have until July 11, 2025 to answer or move to dismiss.

Consolidated Derivative Action. Between December 20, 2024 and January 14, 2025, four shareholder derivative complaints were filed in the United States District Court for the Southern District of New York (Roy v. Zaslav et al., No. 1:24-cv-09856-AT, Hollin v. Zaslav et al., No. 1:24-cv-09885-AT, KO v. Zaslav et al., No. 1:25-cv-00114-AT, and Herman, III v. Chen et al., No. 1:25-cv-00352-AT). Each complaint names certain current and former directors and officers of WBD as defendants and WBD as nominal defendant, and each complaint seeks damages and other relief. The complaints generally assert claims against the defendants, derivatively on behalf of WBD, for alleged breaches of fiduciary duty based on the same facts alleged in the Collura securities case described above. The complaints assert various common law causes of action, including breach of fiduciary duties, aiding and abetting breach of fiduciary duties, abuse of control, unjust enrichment, gross mismanagement, and waste of corporate assets, as well claims for violations of Sections 14(a), 10(b), and 21D of the Exchange Act. On January 21, 2025, the court consolidated the four actions for all purposes under Case No. 1:24-cv-09856-AT, captioned as In re Warner Bros. Discovery, Inc. Derivative Litigation (the “Consolidated Derivative Action”). On February 19, 2025, the Court stayed the Consolidated Derivative Action pending resolution of a final decision on all motions to dismiss the operative complaint in the Collura securities action.

District of Delaware Derivative Action. On February 20, 2025, a fifth shareholder derivative complaint was filed in the United States District Court for Delaware (Harloff v. Zaslav, No. 1:25-cv-00207-JLH). The complaint named certain current and former directors and officers of WBD as defendants and named WBD as nominal defendant. The complaint asserted claims for breaches of fiduciary duty, unjust enrichment, abuse of control, and gross mismanagement, based on the same facts alleged in the Collura securities case described above in addition to violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and sought damages and other relief. On March 13, 2025, the court denied the parties’ joint request to stay the proceedings pending resolution of the Collura securities class action and ordered the plaintiff to show cause as to why the case should not be dismissed for failure to state a claim over which the court has original jurisdiction. On March 31, 2025, the plaintiff filed a notice of voluntary dismissal, which the court so-ordered on April 2, 2025.

NOTE 16. REPORTABLE SEGMENTS

The Company’s operating segments are determined based on: (i) financial information reviewed by its chief operating decision maker (“CODM”), the Chief Executive Officer (“CEO”), (ii) internal management and related reporting structure, and (iii) the basis upon which the CEO makes resource allocation decisions.

The accounting policies of the reportable segments are the same as the Company’s, except that certain inter-segment transactions that are eliminated for consolidation are not eliminated at the segment level. Inter-segment transactions primarily include advertising and content licenses. The Company generally records inter-segment transactions of content licenses at market value. The Company does not report assets by segment because it is not used by the CODM to allocate resources or evaluate segment performance.

The Company evaluates the operating performance of its segments based on financial measures such as revenues and Adjusted EBITDA. Adjusted EBITDA is defined as operating income excluding:

employee share-based compensation;
depreciation and amortization;
restructuring and facility consolidation;
certain impairment charges;
gains and losses on business and asset dispositions;
third-party transaction and integration costs;
amortization of purchase accounting fair value step-up for content;

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

amortization of capitalized interest for content; and
other items impacting comparability.

The CODM uses this measure to assess the operating results and performance of the segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. The Company believes Adjusted EBITDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses. The Company excludes employee share-based compensation, restructuring, certain impairment charges, gains and losses on business and asset dispositions, and transaction and integration costs from the calculation of Adjusted EBITDA due to their impact on comparability between periods. Integration costs include transformative system implementations and integrations, such as Enterprise Resource Planning systems, and may take several years to complete. The Company also excludes the depreciation of fixed assets and amortization of intangible assets, amortization of purchase accounting fair value step-up for content (which is included in consolidated costs of revenues), and amortization of capitalized interest for content, as these amounts do not represent cash payments in the current reporting period. We prospectively updated certain corporate allocations at the beginning of 2025. The impact to prior periods was immaterial.

The tables below present summarized financial information for each of the Company’s reportable segments (in millions).

Revenues


	Three Months Ended March 31,
	2025		2024
Streaming	$	2,656	$	2,460
Studios	2,314		2,821
Global Linear Networks	4,774		5,125
Corporate	—		1
Inter-segment eliminations	(765)		(449)
Total revenues	$	8,979	$	9,958

Reconciliation of Revenues to Segment Adjusted EBITDA


	Three months ended March 31, 2025
	Streaming		Studios		Global Linear Networks
Revenues	$	2,656	$	2,314	$	4,774






Less:
Content expense (a)	1,504		1,339		1,832
Personnel expense (b)	186		230		496
Marketing expense	220		252		104
Other segment expenses (c)	407		234		549
Segment Adjusted EBITDA	$	339	$	259	$	1,793

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


	Three months ended March 31, 2024
	Streaming		Studios		Global Linear Networks
Revenues	$	2,460	$	2,821	$	5,125






Less:
Content expense (a)	1,567		1,950		1,843
Personnel expense (b)	192		240		548
Marketing expense	289		289		88
Other segment expenses (c)	326		158		527
Segment Adjusted EBITDA	$	86	$	184	$	2,119

(a) Content expense includes amortization, impairments, participations, residuals, development expense, and production costs, including talent costs, and is a component of costs of revenues. Content expense excludes content impairments and other development costs recorded in restructuring and other charges, amortization of purchase accounting fair value step-up for content, and amortization of capitalized interest for content as these items are excluded from the calculation of Adjusted EBITDA.

(b) Personnel expense is a component of costs of revenues and selling, general and administrative expense. Personnel expense includes marketing personnel compensation and excludes commissions (included in other segment expenses) and talent costs (included in content expense).

(c) Other segment expenses include distribution costs, other direct costs, software and hardware costs, IT services, professional and consulting fees, commissions, and certain other overhead costs. Other segment expenses exclude depreciation and amortization, amortization of purchase accounting fair value step-up for content, amortization of capitalized interest for content, employee share-based compensation, third-party transaction and integration costs, and other items impacting comparability as these items are excluded from the calculation of Adjusted EBITDA.

Reconciliation of segment adjusted EBITDA to loss before income taxes


	Three Months Ended March 31,
	2025		2024
Streaming	$	339	$	86
Studios	259		184
Global Linear Networks	1,793		2,119
Segment Adjusted EBITDA	2,391		2,389
Depreciation and amortization	1,547		1,888
Employee share-based compensation	120		99
Restructuring and other charges	54		35
Transaction and integration costs	80		81
Facility consolidation costs	5		2
Impairment and amortization of fair value step-up for content	240		235
Amortization of capitalized interest for content	6		17
Impairments and loss on dispositions	90		12

Corporate	233		346
Inter-segment eliminations	53		(59)
Other (income) expense, net	(82)		14
Loss from equity investees, net	7		48
Loss (gain) on extinguishment of debt	4		(25)
Interest expense, net	468		515
Loss before income taxes	$	(434)	$	(819)

NOTE 17. SUBSEQUENT EVENTS

In April 2025, the Company borrowed $500 million under its Credit Facility, which is expected to be repaid within the current quarter.

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