Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s discussion and analysis of financial condition and results of operations is a supplement to and should be read in conjunction with the accompanying consolidated financial statements and related notes. This section provides additional information regarding our businesses, current developments, results of operations, cash flows and financial condition. Additional context can also be found in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

BUSINESS OVERVIEW

Warner Bros. Discovery 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.

We are home to one of the largest collections of owned content in the world with assets and intellectual property across sports, news, lifestyle, and entertainment in most languages and regions of the globe. We create some of the best-in-class content using our renowned library, beloved franchises, and acclaimed creative expertise to serve our audiences and consumers. Our asset mix strongly positions us to execute our key strategies: grow our streaming business globally, enhance our Studios segment, and manage our linear networks for the best possible success in order to create long-term value for our shareholders.

In December 2024, we announced that our board of directors had authorized the Company to implement a new corporate structure designed to enhance our 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, we renamed our Direct-to-Consumer reportable segment to Streaming and our Networks reportable segment to Global Linear Networks. There were no changes to our reportable segments or the composition of our reportable segments as a result of these changes. We have included supplemental Streaming & Studios and Global Linear Networks division information and supplemental consolidating data within Management’s Discussion and Analysis of this Quarterly Report on Form 10-Q.

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.

INDUSTRY TRENDS

Headwinds in the industry, such as continued pressures on linear distribution and declines in linear subscribers and continued softness in the U.S. linear advertising market, 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. The increase of digital advertising available in the marketplace has also resulted in, and is expected to continue to result in, increased competition for advertising expenditures for both traditional linear networks and ad-supported tiers in streaming services. In addition, the imposition of tariffs by the U.S. government and any retaliatory tariffs from foreign governments, including tariffs directly or indirectly applicable to our industry, may negatively impact our operations and results, including by leading to higher productions costs or decreased spending by advertisers whose expenditures are sensitive to such actions or to general economic conditions.

We continue to closely monitor the ongoing impact of industry trends to our business; however, the full effects on our operations and results will depend on future developments, which are highly uncertain and cannot be predicted.

RESULTS OF OPERATIONS

Foreign Exchange Impacting Comparability

The impact of exchange rates on our business is an important factor in understanding period-to-period comparisons of our results. For example, our international revenues are favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. We believe the presentation of results on a constant currency basis (“ex-FX”), in addition to results reported in accordance with U.S. GAAP provides useful information about our operating performance because the presentation ex-FX excludes the effects of foreign currency volatility and highlights our core operating results. The presentation of results on a constant currency basis should be considered in addition to, but not a substitute for, measures of financial performance reported in accordance with U.S. GAAP.

The ex-FX change represents the percentage change on a period-over-period basis adjusted for foreign currency impacts. 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 “2025 Baseline Rate”), and the prior year amounts translated at the same 2025 Baseline Rate. In addition, consistent with the assumption of a constant currency environment, our ex-FX results exclude the impact of our foreign currency hedging activities, as well as realized and unrealized foreign currency transaction gains and losses. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies.

Consolidated Results of Operations

The table below presents our consolidated results of operations (in millions).

						Three Months Ended March 31,
						2025						2024									% Change						% Change (ex-FX)
Revenues:
Distribution						$	4,886											$	4,985														(2)		%				(1)		%
Advertising						1,980												2,148															(8)		%				(8)		%
Content						1,866												2,558															(27)		%				(25)		%
Other						247												267															(7)		%				(6)		%
Total revenues						8,979												9,958															(10)		%				(9)		%
Costs of revenues, excluding depreciation and amortization						5,131												6,058															(15)		%				(15)		%
Selling, general and administrative						2,194												2,232															(2)		%				(1)		%
Depreciation and amortization						1,547												1,888															(18)		%				(18)		%
Restructuring and other charges						54												35															54		%				59		%
Impairments and loss on dispositions						90												12															NM						NM
Total costs and expenses						9,016												10,225															(12)		%				(12)		%
Operating loss						(37)												(267)															86		%				NM
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)

NM - Not meaningful

Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis. The ex-FX percent changes of line items below operating loss in the table above are not included as the activity is principally in U.S. dollars.

Revenues

Distribution revenue decreased 1% for the three months ended March 31, 2025, primarily attributable to a 9% decline in domestic linear subscribers, as well as lower international affiliate rates and international subscriber declines in the Global Linear Networks segment, partially offset by a 23% increase in Streaming subscribers and a 2% increase in domestic affiliate rates.

Advertising revenue decreased 8% for the three months ended March 31, 2025, primarily attributable to audience declines of 27% in domestic linear networks, partially offset by an increase in ad-lite subscribers.

Content revenue decreased 25% for the three months ended March 31, 2025, primarily attributable to a 27% decrease in theatrical product revenue as a result of lower film rental revenue and home entertainment revenue and a 48% decrease in games revenue. The decrease in content revenue was partially offset by the timing of Global Linear Networks third party licensing deals.

Other revenue decreased 6% for the three months ended March 31, 2025.

Costs of Revenues

Costs of revenues decreased 15% for the three months ended March 31, 2025, primarily attributable to a 41% decrease in theatrical product content expense, as a result of lower film costs commensurate with lower theatrical product revenue and lower payments to partners and participants, and a 66% decrease in games content expense due to a $187 million impairment related to Suicide Squad: Kill the Justice League in the prior year. In addition, costs of revenues was positively impacted by lower domestic Streaming content costs due to the timing of programming releases, and the timing of content, production, and news related spend at the Global Linear Networks segment.

Selling, General and Administrative

Selling, general and administrative expenses decreased 1% for the three months ended March 31, 2025, primarily attributable to lower marketing expenses and the release of previously recorded non-income tax reserves, partially offset by higher overhead expenses.

Depreciation and Amortization

Depreciation and amortization decreased 18% for the three months ended March 31, 2025, primarily attributable to intangible assets acquired during the Merger that are being amortized using the sum of the months’ digits method, partially offset by the shortening of the useful lives of certain intangible assets.

Restructuring and other charges

Restructuring and other charges increased 59% for the three months ended March 31, 2025. Restructuring and other charges primarily includes organizational restructuring costs and consulting fees. (See Note 3 to the accompanying consolidated financial statements.)

Impairments and Loss on Dispositions

Impairments and loss on dispositions was $90 million for the three months ended March 31, 2025, primarily attributable to a $87 million ROU asset impairment charge related to the Hudson Yards, New York office lease. (See Note 13 to the accompanying consolidated financial statements.)

Interest Expense, net

Interest expense, net decreased $47 million for the three months ended March 31, 2025, primarily attributable to lower debt during the period. (See Note 8 and Note 9 to the accompanying consolidated financial statements.)

(Loss) gain on extinguishment of debt

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

Loss From Equity Investees, net

Losses from our equity method investees were $7 million for the three months ended March 31, 2025. The changes are attributable to our share of net earnings and losses from our equity investees. (See Note 7 to the accompanying consolidated financial statements.)

Other Income (Expense), net

Other income (expense), net was $82 million for the three months ended March 31, 2025. (See Note 13 to the accompanying consolidated financial statements.)

Income Tax Benefit

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.

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 a nominal 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.

Division and Segment Results of Operations

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;

• 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 table below presents our Adjusted EBITDA for each of the Company’s reportable segments, corporate, and inter-segment eliminations (in millions).

						Three Months Ended March 31,
						2025						2024						% Change
Streaming						$	339					$	86					NM
Studios						$	259					$	184					41		%
Global Linear Networks						$	1,793					$	2,119					(15)		%
Corporate						$	(233)					$	(346)					33		%
Inter-segment eliminations						$	(53)					$	59					NM

Supplemental Streaming & Studios and Global Linear Networks Division Information

The following tables present, for our Streaming & Studios and Global Linear Networks divisions, supplemental information about revenues and Adjusted EBITDA (in millions).

Revenues

						Three Months Ended March 31,
						2025						2024						% Change						% Change (ex-FX)
Streaming						$	2,656					$	2,460					8		%				9		%
Studios						2,314						2,821						(18)		%				(16)		%
Streaming & Studios eliminations						(623)						(318)						(96)		%				(96)		%
Streaming & Studios						4,347						4,963						(12)		%				(11)		%
Global Linear Networks						4,774						5,125						(7)		%				(6)		%
Corporate						—						1						NM						NM
Other inter-segment eliminations						(142)						(131)						(8)		%				(8)		%
Total revenues						$	8,979					$	9,958					(10)		%				(9)		%

Adjusted EBITDA

						Three Months Ended March 31,
						2025						2024						% Change						% Change (ex-FX)
Streaming						$	339					$	86					NM						NM
Studios						259						184						41		%				63		%
Streaming & Studios eliminations						(58)						49						NM						NM
Streaming & Studios						540						319						69		%				95		%
Global Linear Networks						1,793						2,119						(15)		%				(14)		%
Corporate						(233)						(346)						33		%				33		%
Other inter-segment eliminations						5						10						(50)		%				(50)		%
Adjusted EBITDA						$	2,105					$	2,102					—		%				4		%

Streaming Segment

The following table presents, for our Streaming segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).

						Three Months Ended March 31,
						2025						2024									% Change						% Change (ex-FX)
Revenues:
Distribution						$	2,329											$	2,185														7		%				8		%
Advertising						237												175															35		%				35		%
Content						88												99															(11)		%				(7)		%
Other						2												1															NM						NM
Total revenues						2,656												2,460															8		%				9		%
Costs of revenues, excluding depreciation and amortization						1,824												1,895															(4)		%				(4)		%
Selling, general and administrative						493												479															3		%				4		%
Adjusted EBITDA - Streaming segment						339												86															NM						NM
Depreciation and amortization						371												515
Restructuring and other charges						12												2
Facility consolidation costs						—												2
Impairment and amortization of fair value step-up for content						47												102
Impairments and loss on dispositions						3												5
Operating loss						$	(94)											$	(540)

Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis.

Revenues

Subscriber information consisted of the following (in millions).

						March 31, 2025						March 31, 2024						% Change
Total Domestic subscribers1						57.6						52.7						9		%
Total International subscribers1						64.6						46.9						38		%
Total Streaming subscribers1						122.3						99.6						23		%

1Streaming subscriber - We define a “Core Streaming Subscription” as:

i.a retail subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product (defined below) for which we have recognized subscription revenue, whether directly or through a third party, from a Streaming platform;

ii.a wholesale subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription;

iii.a wholesale subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue on a per subscriber basis, including third-party services that host a branded environment of discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue on a per subscriber basis;

iv.a retail or wholesale subscription to an independently-branded, regional product sold on a stand-alone basis that includes discovery+, HBO, HBO Max, Max, and/or a Premium Sports Product, for which we have recognized subscription revenue (as per (i) –(iii) above); and 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.

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.

Subscribers to multiple WBD Streaming products (listed above) are counted as a paid subscriber for each individual WBD streaming product subscription.

We may refer to the aggregate number of Core Streaming Subscriptions as “subscribers”.

The reported number of “subscribers” included herein and the definition of “Streaming Subscription” as used herein excludes:

i.individuals who subscribe to Streaming products, other than discovery+, HBO, HBO Max, Max, a Premium Sports Product, and independently-brand, regional products (currently consisting of TVN/Player and BluTV), that may be offered by us or by certain joint venture partners or affiliated parties from time to time;

ii.a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time;

iii.domestic and international Cinemax subscribers, and international basic HBO subscribers; and users on free trials except for those users on free trial that convert to a Streaming Subscription within the first seven days of the next month as noted above.

Domestic subscriber - We define a Domestic subscriber as a subscription based either in the United States of America or Canada.

International subscriber - We define an International subscriber as a subscription based outside of the United States of America or Canada.

Distribution revenue increased 8% for the three months ended March 31, 2025, primarily attributable to a 23% increase in subscribers as a result of continued global expansion of Max, including new distribution deals, partially offset by lower global distribution ARPU due to a mix shift in the subscriber base across distribution channels, geography, and product type.

Advertising revenue increased 35% for the three months ended March 31, 2025, driven by an increase in ad-lite subscribers.

Global ARPU consisted of the following.

						Three Months Ended March 31,
						2025						2024						% Change (ex-FX)
Domestic ARPU						$	11.15					$	11.72					(5)		%
International ARPU						$	3.63					$	3.75					—		%
Global ARPU2						$	7.11					$	7.83					(9)		%

Global ARPU decreased 9% for the three months ended March 31, 2025, primarily attributable to growth in lower ARPU international markets. Additionally, global ARPU was negatively impacted by a 5% decrease in domestic ARPU for the three months ended March 31, 2025, primarily attributable to broader wholesale distribution of Max Basic with Ads.

Content revenue decreased 7% for the three months ended March 31, 2025, primarily attributable to lower third-party licensing as a result of launching Max in new international markets.

Costs of Revenues

Costs of revenues decreased 4% for the three months ended March 31, 2025, primarily attributable to lower domestic content costs due to the timing of programming releases, partially offset by higher international content costs to support Max launches.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses increased 4% for the three months ended March 31, 2025, primarily attributable to higher overhead expenses, partially offset by timing of marketing costs.

Adjusted EBITDA

Adjusted EBITDA increased $253 million for the three months ended March 31, 2025.

2ARPU: The Company defines Streaming Average Revenue Per User (“ARPU”) as total subscription revenue plus net advertising revenue for the period divided by the daily average number of paying subscribers for the period. Where daily values are not available, the sum of beginning of period and end of period divided by two is used.

Excluded from the ARPU calculation are: (i) Revenue and subscribers for streaming products, other than discovery+, HBO, HBO Max, Max, a Premium Sports Product, and independently-branded, regional products (currently consisting of TVN/Player and BluTV), that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) A limited amount of international discovery+ revenue and subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) Cinemax, Max/HBO hotel and bulk institution (i.e., subscribers billed on a bulk basis), and international basic HBO revenue and subscribers; and (iv) Users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.

Studios Segment

The following table presents, for our Studios segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).

						Three Months Ended March 31,
						2025						2024									% Change						% Change (ex-FX)
Revenues:
Distribution						$	1											$	5														(80)		%				(80)		%
Advertising						1												4															(75)		%				(75)		%
Content						2,139												2,623															(18)		%				(17)		%
Other						173												189															(8)		%				(7)		%
Total revenues						2,314												2,821															(18)		%				(16)		%
Costs of revenues, excluding depreciation and amortization						1,413												2,019															(30)		%				(29)		%
Selling, general and administrative						642												618															4		%				5		%
Adjusted EBITDA - Studios segment						259												184															41		%				63		%
Depreciation and amortization						170												186
Employee share-based compensation						—												(1)
Restructuring and other charges						(5)												11
Transaction and integration costs						—												1
Impairment and amortization of fair value step-up for content						36												(72)
Amortization of capitalized interest for content						6												17
Impairments and gain on dispositions						(1)												—
Operating income						$	53											$	42

Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis. The Studios discussion below also includes intra-segment revenue and expense between product lines, which represented less than 4% of total revenues and operating expenses for this segment for the three months ended March 31, 2025. Intra-segment revenue and expense are eliminated at the Studios segment level.

Fluctuations in results for our Studios segment may occur due to various factors, including (but not limited to) the timing and number of new film releases each quarter, the timing of marketing expenses recognized relative to (i.e., prior to) a film’s release, and the mix of content distributed each period.

Revenues

Content revenue decreased 17% for the three months ended March 31, 2025, primarily attributable to a 27% decrease in theatrical product revenue and a 48% decrease in games revenue, partially offset by a 4% increase in television product revenue.

• The decrease in theatrical product revenue was attributable to lower film rental revenue and home entertainment revenue, partially offset by higher intercompany content sales. The decrease in film rental revenue was primarily due to the strong prior year performance of Dune: Part Two and Godzilla x Kong: The New Empire, which were released in the first quarter of 2024, as well as higher carryover from releases in the fourth quarter of 2023 compared to the fourth quarter of 2024. The decrease in home entertainment revenue was primarily due to the strong prior year performance of Wonka and Aquaman 2.

• The decrease in games revenue was attributable to the prior year release of Suicide Squad: Kill the Justice League, which was released in the first quarter of 2024, and carryover from Hogwarts Legacy and Mortal Kombat 1, which were released in 2023, compared to no releases in the first quarter of 2025.

• The increase in television product revenue was attributable to higher intercompany content sales, partially offset by lower initial telecast revenue due to timing of deliveries in the current year.

Other revenue decreased 7% for the three months ended March 31, 2025.

Costs of Revenues

Costs of revenues decreased 29% for the three months ended March 31, 2025, primarily attributable to a 41% decrease in theatrical product content expense and a 66% decrease in games content expense. The decrease in theatrical content expense was a result of lower film costs commensurate with lower theatrical product revenue and lower payments to partners and participants. The decrease in games content expense was primarily due to a $187 million impairment related to Suicide Squad: Kill the Justice League in the prior year, and lower games content expense commensurate with lower games revenue.

Selling, General and Administrative

Selling, general and administrative expenses increased 5% for the three months ended March 31, 2025, primarily attributable to higher overhead expenses, partially offset by lower games marketing expenses.

Adjusted EBITDA

Adjusted EBITDA increased 63% for the three months ended March 31, 2025.

Global Linear Networks Segment

The table below presents, for our Global Linear Networks segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).

						Three Months Ended March 31,
						2025						2024									% Change						% Change (ex-FX)
Revenues:
Distribution						$	2,558											$	2,797														(9)		%				(8)		%
Advertising						1,758												1,987															(12)		%				(11)		%
Content						380												264															44		%				44		%
Other						78												77															1		%				1		%
Total revenues						4,774												5,125															(7)		%				(6)		%
Costs of revenues, excluding depreciation and amortization						2,327												2,372															(2)		%				(2)		%
Selling, general and administrative						654												634															3		%				3		%
Adjusted EBITDA - Global Linear Networks segment						1,793												2,119															(15)		%				(14)		%
Depreciation and amortization						907												1,105
Employee share-based compensation						1												—
Restructuring and other charges						16												11
Transaction and integration costs						—												1
Impairment and amortization of fair value step-up for content						130												125
Impairments and loss on dispositions						2												—
Operating income						$	737											$	877

Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis.

Revenues

Distribution revenue decreased 8% for the three months ended March 31, 2025, primarily attributable to a 9% decline in domestic linear subscribers, partially offset by a 2% increase in domestic affiliate rates. Additionally, distribution revenues were negatively impacted by lower international affiliate rates and international subscriber declines. Declines in linear subscribers are expected to continue.

Advertising revenue decreased 11% for the three months ended March 31, 2025, primarily attributable to audience declines in domestic networks of 27%.

Content revenue increased 44% for the three months ended March 31, 2025, primarily attributable to timing of third party licensing deals.

Other revenue increased 1% for the three months ended March 31, 2025.

Costs of Revenues

Costs of revenues decreased 2% for the three months ended March 31, 2025, primarily attributable to timing of content, production, and news related spend.

Selling, General and Administrative

Selling, general and administrative expenses increased 3% for the three months ended March 31, 2025, primarily attributable to higher marketing expenses.

Adjusted EBITDA

Adjusted EBITDA decreased 14% for the three months ended March 31, 2025.

Corporate

The following table presents our Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).

						Three Months Ended March 31,
						2025						2024									% Change						% Change (ex-FX)
Adjusted EBITDA - Corporate						$	(233)											$	(346)														33		%				33		%
Depreciation and amortization						99												82
Employee share-based compensation						119												100
Restructuring and other charges						31												11
Transaction and integration costs						80												79
Facility consolidation costs						5												—
Impairments and loss on dispositions						86												7
Operating loss						$	(653)											$	(625)

Corporate operations primarily consist of executive management and administrative support services, which are recorded in selling, general and administrative expense, as well as substantially all of our share-based compensation and third-party transaction and integration costs.

Adjusted EBITDA improved 33% for the three months ended March 31, 2025, primarily attributable to the release of previously recorded non-income tax reserves, lower facility costs due to office consolidations and closures, and lower securitization expense.

Inter-segment Eliminations

The following table presents our inter-segment eliminations by revenue and expense, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).

						Three Months Ended March 31,
						2025						2024
Inter-segment revenue eliminations						$	(765)					$	(449)
Inter-segment expense eliminations						(712)						(508)
Adjusted EBITDA - Inter-segment eliminations						(53)						59
Impairment and amortization of fair value step-up for content						27						80
Operating loss						$	(80)					$	(21)

Inter-segment revenue and expense eliminations primarily represent inter-segment content transactions and marketing and promotion activity between reportable segments. In our current segment structure, in certain instances, production and distribution activities are in different segments. Inter-segment content transactions are presented at market value (i.e., the segment producing and/or licensing the content reports revenue and profit from inter-segment transactions in a manner similar to the reporting of third-party transactions, and the required eliminations are reported on the separate “Eliminations” line when presenting our summary of segment results). Generally, timing of revenue recognition is similar to the reporting of third-party transactions. The segment distributing the content, e.g., via our streaming or linear services, capitalizes the cost of inter-segment content transactions, including “mark-ups” and amortizes the costs over the shorter of the license term, if applicable, or the expected period of use. The content amortization expense related to the inter-segment profit is also eliminated on the separate “Eliminations” line when presenting our summary of segment results.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Sources of Cash

Historically, we have generated a significant amount of cash from operations. During the three months ended March 31, 2025, we funded our working capital needs primarily through cash flows from operations. As of March 31, 2025, we had $3.9 billion of cash and cash equivalents on hand. We are a well-known seasoned issuer and have the ability to conduct registered offerings of securities, including debt securities, common stock and preferred stock, on short notice, subject to market conditions. Access to sufficient capital from the public market is not assured. We have a $6.0 billion revolving credit facility and a commercial paper program described below. We also participate in a revolving receivables program and an accounts receivable factoring program described below.

*•*Debt

Revolving Credit Facility and Commercial Paper

DCL and certain subsidiaries of the Company, as borrowers, have a multicurrency revolving credit agreement (the “Credit Agreement”) and have the capacity to borrow up to $6.0 billion under the Credit Agreement (the “Credit Facility”). DCL may also request additional commitments up to $1.0 billion from the lenders upon the satisfaction of certain conditions. The Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants. As of March 31, 2025, we were in compliance with all applicable covenants and there were no events of default under the Credit Agreement.

Additionally, our commercial paper program is supported by the Credit Facility. Under the commercial paper program, we may issue up to $2.0 billion. In March 2025, we 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 issuances under the commercial paper program.

During the three months ended March 31, 2025, we and DCL borrowed and repaid $695 million under our Credit Facility and commercial paper program. As of March 31, 2025, we and DCL had no outstanding borrowings under the Credit Facility or issuances under the commercial paper program.

Term Loan

During the three months ended March 31, 2025, we entered into a new $1,500 million 364-day senior unsecured term loan credit facility. The proceeds were used to fund the redemption of $1,500 million aggregate principal amount outstanding of WMH’s senior notes due 2026.

*•*Revolving Receivables Program

We have a revolving agreement to transfer up to $5,200 million of certain receivables through our bankruptcy-remote subsidiary, Warner Bros. Discovery Receivables Funding, LLC, to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. We service the sold receivables for the financial institution for a fee and pay fees to the financial institution in connection with this revolving agreement. As customers pay their balances, our available capacity under this revolving agreement increases and typically we transfer additional receivables into the program. In some cases, we may have collections that have not yet been remitted to the bank, resulting in a liability. The outstanding portfolio of receivables derecognized from our consolidated balance sheets was $4,748 million as of March 31, 2025.

*•*Accounts Receivable Factoring

We have a factoring agreement to sell certain of our non-U.S. trade accounts receivable on a limited recourse basis to a third-party financial institution. Total trade accounts receivable sold under the Company’s factoring arrangement was $102 million for the three months ended March 31, 2025.

*•*Investments

In January 2025 we contributed a 70% interest in our music catalog to a joint venture with Cutting Edge Group

in exchange for net proceeds of $601 million.

*•*Asset Dispositions

We received proceeds from asset dispositions of $66 million during the three months ended March 31, 2025.

Uses of Cash

Our primary uses of cash include the creation and acquisition of new content, business acquisitions, income taxes, personnel costs, costs to develop and market our enhanced streaming service Max, principal and interest payments on our outstanding senior notes, funding for various equity method and other investments, and repurchases of our capital stock.

• Content Acquisition

We plan to continue to invest significantly in the creation and acquisition of new content, as well as certain sports rights. Contractual commitments to acquire content have not materially changed as set forth in “Material Cash Requirements from Known Contractual and Other Obligations” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K.

*•*Debt

Senior Notes

During the three months ended March 31, 2025, we repurchased or repaid $3,665 million of aggregate principal amount outstanding of our senior notes. In addition, we have $487 million of senior notes coming due in June 2025, and an additional $2,293 million of senior notes coming due through March 2026.

We may from time to time seek to prepay, retire or purchase our other outstanding indebtedness through prepayments, redemptions, open market purchases, privately negotiated transactions, tender offers or otherwise. Any such repurchases or exchanges will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions, as well as applicable regulatory, legal and accounting factors. Whether or not we repurchase or exchange any debt and the size and timing of any such repurchases or exchanges will be determined at our discretion.

*•*Capital Expenditures

We effected capital expenditures of $251 million during the three months ended March 31, 2025, including amounts capitalized to support Max. In addition, we expect to continue to incur significant costs to develop and market Max.

*•*Investments and Business Combinations

Our uses of cash have included investments in equity method investments and equity investments without readily determinable fair value. (See Note 7 to the accompanying consolidated financial statements.) We also provide funding to our investees from time to time. During the three months ended March 31, 2025, we contributed $14 million for investments in and advances to our investees.

*•*Redeemable Noncontrolling Interest and Noncontrolling Interest

We had redeemable equity balances of $23 million at March 31, 2025, which may require the use of cash in the event holders of noncontrolling interests put their interests to us. Distributions to noncontrolling interests and redeemable noncontrolling interests totaled $157 million and $130 million for the three months ended March 31, 2025 and 2024, respectively.

*•*Income Taxes and Interest

We expect to continue to make payments for income taxes and interest on our outstanding senior notes. During the three months ended March 31, 2025, we made cash payments of $131 million and $822 million for income taxes and interest on our outstanding debt, respectively.

Cash Flows

The following table presents changes in cash and cash equivalents (in millions).

						Three Months Ended March 31,
						2025						2024
Cash, cash equivalents, and restricted cash, beginning of period						$	5,416					$	4,319
Cash provided by operating activities						553						585
Cash used in investing activities						(195)						(207)
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, end of period						$	3,974					$	3,386

Operating Activities

Cash provided by operating activities was $553 million and $585 million during the three months ended March 31, 2025 and 2024, respectively. The decrease in cash provided by operating activities was primarily attributable to a decrease in net income, excluding non-cash items, partially offset by an improvement in working capital activity.

Investing Activities

Cash used in investing activities was $195 million and $207 million during the three months ended March 31, 2025 and 2024, respectively. The decrease in cash used in investing activities was primarily attributable to proceeds from the sale of assets, partially offset by increased purchases of property and equipment during the three months ended March 31, 2025.

Financing Activities

Cash used in financing activities was $1,895 million and $1,237 million during the three months ended March 31, 2025 and 2024, respectively. The increase in cash used in financing activities was primarily attributable to higher net debt activity and higher distributions to noncontrolling interests and redeemable noncontrolling interests, partially offset by proceeds received for the contribution of 70% of our music catalog to a joint venture during the three months ended March 31, 2025.

Capital Resources

As of March 31, 2025, capital resources were comprised of the following (in millions).

						March 31, 2025
						Total Capacity												Outstanding Indebtedness						Unused Capacity
Cash and cash equivalents						$	3,868											$	—					$	3,868
Revolving credit facility and commercial paper program						6,000												—						6,000
Term loan						1,500												1,500						—
Senior notes (a)						35,946												35,946						—
Total						$	47,314											$	37,446					$	9,868
(a) Interest on the senior notes is paid annually or semi-annually. Our senior notes outstanding as of March 31, 2025 had interest rates that ranged from 1.90% to 8.30% and will mature between 2025 and 2062.

We expect that our cash balance, cash generated from operations and availability under the Credit Agreement will be sufficient to fund our cash needs for both the short-term and the long-term. Our borrowing costs and access to capital markets can be affected by short and long-term debt ratings assigned by independent rating agencies which are based, in part, on our performance as measured by credit metrics such as interest coverage and leverage ratios. Credit rating agencies may continue to

review and adjust our ratings or outlook. For example, in 2024, S&P and Moody’s revised our ratings outlook from stable to negative in part due to declines in our linear business, including as a result of the weak operating environment for linear networks, and our leverage ratio.

The 2017 Tax Cuts and Jobs Act features a participation exemption regime with current taxation of certain foreign income and imposes a mandatory repatriation toll tax on unremitted foreign earnings. Notwithstanding the U.S. taxation of these amounts, we intend to continue to reinvest some of these funds outside of the U.S. Our current plans do not demonstrate a need to repatriate to the U.S. However, if these funds were to be needed in the U.S., we would be required to accrue and pay non-U.S. taxes to repatriate them. The determination of the amount of unrecognized deferred income tax liability with respect to these undistributed foreign earnings is not practicable.

Summarized Guarantor Financial Information

Basis of Presentation

As of March 31, 2025 and December 31, 2024, the Company has outstanding senior notes issued by Discovery Communications, LLC (“DCL”), which are guaranteed by the Company, Scripps Networks Interactive, Inc. (“Scripps Networks”), and WarnerMedia Holdings, Inc. (“WMH”); senior notes issued by WMH, which are guaranteed by the Company, Scripps Networks, and DCL; senior notes issued by the legacy WarnerMedia Business (not guaranteed); and senior notes issued by Scripps Networks (not guaranteed). (See Note 8 to the accompanying consolidated financial statements.) DCL, Scripps Networks, and WMH are wholly owned by the Company.

The tables below present the summarized financial information as combined for Warner Bros. Discovery, Inc. (the “Parent”), Scripps Networks, DCL, and WMH (collectively, the “Obligors”). All guarantees of DCL and WMH’s senior notes (the “Note Guarantees”) are full and unconditional, joint and several and unsecured, and cover all payment obligations arising under the senior notes.

Note Guarantees issued by Scripps Networks, DCL or WMH, or any subsidiary of the Parent that in the future issues a Note Guarantee (each, a “Subsidiary Guarantor”) may be released and discharged (i) concurrently with any direct or indirect sale or disposition of such Subsidiary Guarantor or any interest therein, (ii) at any time that such Subsidiary Guarantor is released from all of its obligations under its guarantee of payment, (iii) upon the merger or consolidation of any Subsidiary Guarantor with and into DCL, WMH or the Parent or another Subsidiary Guarantor, as applicable, or upon the liquidation of such Subsidiary Guarantor and (iv) other customary events constituting a discharge of the Obligors’ obligations.

Summarized Financial Information

The Company has included the accompanying summarized combined financial information of the Obligors after the elimination of intercompany transactions and balances among the Obligors and the elimination of equity in earnings from and investments in any subsidiary of the Parent that is a non-guarantor (in millions).

						March 31, 2025						December 31, 2024
Current assets						$	762					$	2,194
Non-guarantor intercompany trade receivables, net						513						404
Noncurrent assets						4,105						4,077
Current liabilities						3,481						3,948
Noncurrent liabilities						35,077						37,118

						Three Months Ended March 31, 2025
Revenues						$	508
Operating loss						(42)
Net loss						(285)
Net loss available to Warner Bros. Discovery, Inc.						(308)

MATERIAL CASH REQUIREMENTS FROM KNOWN CONTRACTUAL AND OTHER OBLIGATIONS

In the normal course of business, we enter into commitments for the purchase of goods or services that require us to make payments or provide funding in the event certain circumstances occur. Our contractual commitments have not materially changed as set forth in “Material Cash Requirements from Known Contractual and Other Obligations” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K.

RELATED PARTY TRANSACTIONS

In the ordinary course of business, we enter into transactions with related parties, such as our equity method investees, entities that share common directorship, or minority partners of consolidated subsidiaries. (See Note 14 to the accompanying consolidated financial statements.)

CRITICAL ACCOUNTING ESTIMATES

Our critical accounting estimates have not changed since December 31, 2024. For a discussion of each of our critical accounting estimates, including information and analysis of estimates and assumptions involved in their application, see “Critical Accounting Estimates” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K.

NEW ACCOUNTING AND REPORTING PRONOUNCEMENTS

Certain new accounting and reporting standards will be effective for us during the year ended December 31, 2025. (See Note 1 to the accompanying consolidated financial statements.)

Supplemental Data for Results of Operations

The following table presents supplemental consolidating data for our Streaming & Studios division, Global Linear Networks reportable segment, Corporate, and consolidating adjustments.

Consolidated - Represents the consolidated results of operations of the Company and its subsidiaries.

Streaming & Studios - Represents the results of our Streaming & Studios division, which includes our Streaming and Studios reportable segments and eliminations between those two reportable segments.

Global Linear Networks - Represents the results of our Global Linear Networks reportable segment.

Corporate - Represents the results of our Corporate functions.

Consolidating adjustments - Represents eliminations between the Streaming & Studios division and the Global Linear Networks reportable segment, as well as other Corporate eliminations.

Supplemental Data for Results of Operations (in millions)																																	Supplemental Consolidating Data
						Consolidated																					Streaming & Studios												Global Linear Networks												Corporate												Consolidating adjustments
For the three months ended March 31,						2025						2024									2025						2024						2025						2024						2025						2024						2025						2024
Revenues:
Distribution						$	4,886											$	4,985														$	2,330					$	2,190					$	2,558					$	2,797					$	—					$	—					$	(2)					$	(2)
Advertising						1,980												2,148															237						179						1,758						1,987						—						—						(15)						(18)
Content						1,866												2,558															1,611						2,404						380						264						—						—						(125)						(110)
Other						247												267															169						190						78						77						—						1						—						(1)
Total revenues						8,979												9,958															4,347						4,963						4,774						5,125						—						1						(142)						(131)
Costs of revenues, excluding depreciation and amortization						5,131												6,058															2,762						3,594						2,457						2,497						21						12						(109)						(45)
Selling, general and administrative						2,194												2,232															1,134						1,099						655						635						416						514						(11)						(16)
Depreciation and amortization						1,547												1,888															541						701						907						1,105						99						82						—						—
Restructuring and other charges						54												35															7						13						16						11						31						11						—						—
Impairments and loss on dispositions						90												12															2						5						2						—						86						7						—						—
Total costs and expenses						9,016												10,225															4,446						5,412						4,037						4,248						653						626						(120)						(61)
Operating (loss) income						$	(37)											$	(267)														$	(99)					$	(449)					$	737					$	877					$	(653)					$	(625)					$	(22)					$	(70)

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q 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 product and service offerings, financial prospects and anticipated sources and uses of capital. Words such as “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “strategy,” “target” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would,” among other terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be accomplished. The following is a list of some, but not all, of the factors that could cause actual results or events to differ materially from those anticipated:

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

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

• the imposition of tariffs, including tariffs directly or indirectly applicable to our industry, by the U.S. government and any retaliatory tariffs from foreign governments;

• 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 streaming services;

• market demand for foreign first-run and existing content libraries;

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

• realizing streaming subscriber goals;

• disagreements with our distributors or other business partners;

• continued consolidation of distribution customers and production studios;

• industry trends, including the timing of, and spending on, sports programming, feature film, television and television commercial production;

• the possibility or duration of an industry-wide strike, such as the strikes of the WGA and 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;

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

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

• changes to our corporate or debt-specific credit ratings or outlook;

• unforeseen costs, execution risks, and operational challenges related to our efforts to integrate the WarnerMedia Business;

• changes in, or failure or inability to comply with, laws and government regulations, including, without limitation, regulations of the U.S. government and other international governments, the Federal Communications Commission and similar authorities internationally and data privacy regulations;

• adverse outcomes of legal proceedings or disputes, including those related to our acquisition of the WarnerMedia Business, or adverse outcomes from regulatory proceedings;

• threatened or actual cyber-attacks and cybersecurity breaches;

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

• general economic and business conditions, fluctuations in foreign currency exchange rates, global events such as pandemics, natural disasters impacting the geographic areas where our businesses and operations are located, and political uncertainty or unrest in the markets in which we operate.

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

These risks have the potential to impact the recoverability of the assets recorded on our balance sheets, including goodwill and other intangibles. 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 environments, factors specific to Warner Bros. Discovery, and other factors described under Part I, Item 1A, “Risk Factors,” in our 2024 Form 10-K. These forward-looking statements and such risks, uncertainties, and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions, or circumstances on which any such statement is based.