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

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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, HBO 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 June 2025, the Company announced its plans to separate the Company, in a tax-free transaction, into two publicly traded companies (the “Separation”), Warner Bros. and Discovery Global. Warner Bros. will primarily consist of our Streaming and Studios reportable segments and include Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max, as well as its film and television libraries. Discovery Global will primarily consist of our Global Linear Networks reportable segment and include premier entertainment, sports and news television brands around the world including CNN, TNT Sports in the U.S., and Discovery, free-to-air channels across Europe, and digital products such as Discovery+ and Bleacher Report. The Company remains on track to complete the Separation by mid-2026, subject to closing and other conditions, including final approval by the Board, receipt of tax opinions with respect to the tax-free nature of the transaction for U.S. federal income tax purposes, and market conditions. There can be no assurance that the Separation will occur in accordance with the expected plans or anticipated timeline, or at all.

In October 2025, the Company announced that the Board will evaluate a broad range of strategic options, including continuing to advance the Separation, a transaction for the entire company or separate transactions for Warner Bros. and/or Discovery Global, as well as an alternative separation structure that would enable a merger of Warner Bros. and spin-off of Discovery Global. There is no deadline or definitive timetable set for completion of the strategic alternatives review process. There can be no assurance that this process will result in the Company pursuing a transaction or other outcome or that the Company will be able to execute any strategic alternative that is identified and pursued.

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 have been no changes to the Company’s reportable segments or the composition of our reportable segments as a result of these announcements. 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 September 30, 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 inventory 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 September 30,							Nine Months Ended September 30,
	2025		2024			% Change	% Change (ex-FX)	2025		2024		% Change		% Change (ex-FX)
Revenues:
Distribution	$	4,702		$	4,920			(4)	%	(4)	%	$	14,473	$	14,784	(2)	%	(2)	%
Advertising	1,407			1,682				(16)	%	(17)	%	5,603		6,260		(10)	%	(11)	%
Content	2,649			2,721				(3)	%	(3)	%	6,986		7,388		(5)	%	(5)	%
Other	287			300				(4)	%	(7)	%	774		862		(10)	%	(12)	%
Total revenues	9,045			9,623				(6)	%	(6)	%	27,836		29,294		(5)	%	(5)	%
Costs of revenues, excluding depreciation and amortization	4,564			5,181				(12)	%	(12)	%	15,662		17,443		(10)	%	(10)	%
Selling, general and administrative	2,361			2,385				(1)	%	(2)	%	7,032		7,078		(1)	%	(1)	%
Depreciation and amortization	1,375			1,762				(22)	%	(22)	%	4,369		5,394		(19)	%	(19)	%
Restructuring and other charges	88			9				NM		NM		222		161		38	%	38	%
Impairments and loss on dispositions	46			5				NM		NM		162		9,412		(98)	%	(98)	%

Total costs and expenses	8,434			9,342				(10)	%	(10)	%	27,447		39,488		(30)	%	(31)	%
Operating income (loss)	611			281				NM		NM		389		(10,194)		NM		NM
Interest expense, net	(570)			(494)								(1,501)		(1,527)
(Loss) gain on extinguishment of debt, net	(1)			23								2,953		590
Income (loss) from equity investees, net	17			(18)								15		(89)
Other (expense) income, net	(30)			30								191		188
Income (loss) before income taxes	27			(178)								2,047		(11,032)
Income tax (expense) benefit	(170)			319								(1,051)		190
Net (loss) income	(143)			141								996		(10,842)
Net income attributable to noncontrolling interests	(4)			(3)								(19)		(20)
Net (income) loss attributable to redeemable noncontrolling interests	(1)			(3)								2		45
Net (loss) income available to Warner Bros. Discovery, Inc.	$	(148)		$	135							$	979	$	(10,817)

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 4% and 2% for the three and nine months ended September 30, 2025, respectively, primarily attributable to a 9% decline in domestic linear subscribers for the three and nine months ended September 30, 2025, and the first full quarter impact of the previously disclosed domestic wholesale streaming deal renewal, partially offset by a 16% increase in Streaming subscribers for the three and nine months ended September 30, 2025 as a result of continued global expansion of HBO Max, including new distribution deals, and a 2% increase in domestic affiliate rates for both periods.

Advertising revenue decreased 17% and 11% for the three and nine months ended September 30, 2025, respectively, primarily attributable to audience declines in domestic networks of 26% and 25% for the three and nine months ended September 30, 2025, respectively, and domestic pricing pressures within our Streaming segment, partially offset by an increase in ad-lite subscribers.

Content revenue decreased 3% and 5% for the three and nine months ended September 30, 2025, respectively. The decrease for the three months ended September 30, 2025 was primarily attributable to the sublicensing of Olympic sports rights in Europe, which had a favorable impact of $578 million on content revenue in 2024, and a decrease in television product revenue due to lower initial telecast revenue from fewer deliveries, partially offset by an increase in theatrical product revenue as a result of higher film rental revenue, primarily due to the strong performance of Superman, Conjuring: Last Rites, and Weapons, which were released in the third quarter of 2025, and carryover from F1, which was released in the second quarter of 2025.

The decrease for the nine months ended September 30, 2025 was primarily attributable to the sublicensing of Olympic sports rights in Europe, which had a favorable impact of $578 million on content revenue in 2024, a decrease in games revenue due to lower carryover and fewer releases in 2025, and a decrease in television product revenue due to lower initial telecast revenue from fewer deliveries, partially offset by an increase in theatrical product revenue. The increase in theatrical product revenue was primarily attributable to higher film rental revenue, due to the strong current year performance of A Minecraft Movie, Superman, F1, Conjuring: Last Rites, Sinners, Final Destination Bloodlines, and Weapons.

Other revenue decreased 7% and 12% for the three and nine months ended September 30, 2025, respectively.

Costs of Revenues

Costs of revenues decreased 12% and 10% for the three and nine months ended September 30, 2025, respectively, primarily attributable to the broadcast of the Olympics in 2024, which had unfavorable impacts to costs of revenues of $663 million and $665 million for the three and nine months ended September 30, 2024, respectively, lower games content expense due to impairments of $122 million and $335 million for the three and nine months ended September 30, 2024, respectively, and lower content expense related to the amortization of purchase accounting fair value step-up for content, partially offset by higher theatrical content expense primarily due to higher film costs commensurate with higher theatrical product revenue, higher domestic sports costs, and higher international content costs to support HBO Max launches.

Selling, General and Administrative

Selling, general and administrative expenses were decreased 2% and 1% for the three and nine months ended September 30, 2025, respectively, primarily attributable to lower marketing expenses and lower overhead expenses, partially offset by higher personnel costs.

Depreciation and Amortization

Depreciation and amortization decreased 22% and 19% for the three and nine months ended September 30, 2025, respectively, primarily attributable to intangible assets acquired in connection with the acquisition of the WarnerMedia business (the “WarnerMedia Business”) from AT&T Inc. that are being amortized using the sum of the months’ digits method and the end of the useful life for certain intangible assets, partially offset by the shortening of the useful lives of certain intangible assets.

Restructuring and other charges

Restructuring and other charges were $88 million and $222 million for the three and nine months ended September 30, 2025, respectively. Restructuring and other charges primarily includes organization restructuring costs and consulting fees. (See Note 3 to the accompanying consolidated financial statements.)

Impairments and Loss on Dispositions

Impairments and loss on dispositions were $46 million and $162 million for the three and nine months ended September 30, 2025, respectively, primarily attributable to a $87 million ROU asset impairment charge related to the Hudson Yards, New York office lease in the first quarter of 2025. (See Note 13 to the accompanying consolidated financial statements.)

Interest Expense, net

Interest expense, net increased $76 million and decreased $26 million for the three and nine months ended September 30, 2025, respectively. The increase for the three months ended September 30, 2025 was primarily attributable to higher interest costs associated with the Bridge Loan Facility. The decrease for the nine months ended September 30, 2025 was primarily attributable to lower debt during the period, partially offset by higher interest costs associated with the Bridge Loan Facility. (See Note 8 and Note 9 to the accompanying consolidated financial statements.)

(Loss) gain on extinguishment of debt, net

During the three months ended June 30, 2025, the Company commenced and completed the Tender Offers by purchasing senior notes and debentures in the aggregate principal amount of $17.7 billion and recorded a gain on extinguishment of debt of approximately $3.0 billion. (See Note 8 to the accompanying consolidated financial statements.)

Income (Loss) From Equity Investees, net

Income (loss) from our equity method investees was $17 million and $15 million for the three and nine months ended September 30, 2025, respectively. 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 (Expense) Income, net

Other (expense) income, net was $(30) million and $191 million for the three and nine months ended September 30, 2025, respectively. (See Note 13 to the accompanying consolidated financial statements.)

Income Tax (Expense) Benefit

Income tax (expense) benefit was $(170) million and $319 million for the three months ended September 30, 2025 and 2024, respectively and $(1,051) million and $190 million for the nine months ended September 30, 2025 and 2024, respectively. The increase in income tax expense for the three and nine months ended September 30, 2025 compared to the same periods in 2024 was primarily attributable to higher pre-tax book income, including a $3.0 billion gain recognized in connection with the Tender Offers in 2025 (See Note 8) and the absence of a non-cash goodwill impairment charge of $9.1 billion recorded in 2024, the majority of which was not deductible for tax purposes. The increase in tax expense was further impacted by the effect of foreign operations, including a net tax expense related to prior year tax positions finalized in tax returns filed during the three months ended September 30, 2025.

Income tax expense for the three and nine months ended September 30, 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 September 30, 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. (See Note 12 to accompanying consolidated financial statements.)

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 September 30,						Nine Months Ended September 30,
	2025		2024		% Change		2025		2024		% Change









Streaming	$	345	$	289	19	%	$	977	$	268	NM
Studios	$	695	$	308	NM		$	1,817	$	702	NM
Global Linear Networks	$	1,702	$	2,115	(20)	%	$	5,007	$	6,232	(20)	%
Corporate	$	(258)	$	(296)	13	%	$	(807)	$	(927)	13	%
Inter-segment eliminations	$	(14)	$	(3)	NM		$	(466)	$	35	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 September 30,								Nine Months Ended September 30,
	2025		2024		% Change		% Change (ex-FX)		2025		2024		% Change		% Change (ex-FX)
Streaming	$	2,633	$	2,634	—	%	—	%	$	8,082	$	7,662	5	%	6	%
Studios	3,321		2,680		24	%	23	%	9,436		7,950		19	%	19	%
Streaming & Studios eliminations	(675)		(424)		(59)	%	(59)	%	(2,698)		(1,158)		NM		NM
Streaming & Studios	5,279		4,890		8	%	7	%	14,820		14,454		3	%	2	%
Global Linear Networks	3,883		5,010		(22)	%	(23)	%	13,460		15,407		(13)	%	(13)	%
Corporate	1		4		(75)	%	(75)	%	2		6		(67)	%	(67)	%
Other inter-segment eliminations	(118)		(281)		58	%	58	%	(446)		(573)		22	%	22	%
Total revenues	$	9,045	$	9,623	(6)	%	(6)	%	$	27,836	$	29,294	(5)	%	(5)	%

Adjusted EBITDA


	Three Months Ended September 30,								Nine Months Ended September 30,
	2025		2024		% Change		% Change (ex-FX)		2025		2024		% Change		% Change (ex-FX)
Streaming	$	345	$	289	19	%	24	%	$	977	$	268	NM		NM
Studios	695		308		NM		NM		1,817		702		NM		NM
Streaming & Studios eliminations	(32)		42		NM		NM		(456)		64		NM		NM
Streaming & Studios	1,008		639		58	%	59	%	2,338		1,034		NM		NM
Global Linear Networks	1,702		2,115		(20)	%	(20)	%	5,007		6,232		(20)	%	(19)	%
Corporate	(258)		(296)		13	%	14	%	(807)		(927)		13	%	14	%
Other inter-segment eliminations	18		(45)		NM		NM		(10)		(29)		(66)	%	(66)	%
Adjusted EBITDA	$	2,470	$	2,413	2	%	2	%	$	6,528	$	6,310	3	%	5	%

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 September 30,							Nine Months Ended September 30,
	2025		2024			% Change	% Change (ex-FX)	2025		2024		% Change		% Change (ex-FX)
Revenues:
Distribution	$	2,317		$	2,320			—	%	—	%	$	7,056	$	6,707	5	%	5	%
Advertising	235			205				15	%	14	%	754		620		22	%	21	%
Content	79			107				(26)	%	(27)	%	269		329		(18)	%	(19)	%
Other	2			2				—	%	—	%	3		6		(50)	%	(50)	%
Total revenues	2,633			2,634				—	%	—	%	8,082		7,662		5	%	6	%
Costs of revenues, excluding depreciation and amortization	1,789			1,776				1	%	—	%	5,526		5,699		(3)	%	(4)	%
Selling, general and administrative	499			569				(12)	%	(13)	%	1,579		1,695		(7)	%	(7)	%
Adjusted EBITDA - Streaming segment	345			289				19	%	24	%	977		268		NM		NM
Depreciation and amortization	347			450								1,074		1,425

Restructuring and other charges	1			(16)								20		1
Transaction and integration costs	—			(1)								—		(1)
Facility consolidation costs	—			—								—		5
Impairment and amortization of fair value step-up for content	41			57								127		230

Impairments and loss on dispositions	—			1								14		17
Operating loss	$	(44)		$	(202)							$	(258)	$	(1,409)

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

Revenues

Subscriber information consisted of the following (in millions).


	September 30, 2025	September 30, 2024	% Change
Total Domestic subscribers1	58.0	52.6	10	%
Total International subscribers1	70.0	57.9	21	%
Total Streaming subscribers1	128.0	110.5	16	%

Distribution revenue was flat and increased 5% for the three and nine months ended September 30, 2025, respectively, primarily attributable to a 16% increase year-over-year in subscribers as a result of continued growth and global expansion of HBO Max, including new distribution deals, partially offset by the first full quarter impact of the previously disclosed domestic wholesale deal renewal. Additionally, the three months ended September 30, 2025 was negatively impacted by an offset to international revenue associated with a legal ruling that may require adjustments to prior customer billings.

Advertising revenue increased 14% and 21% for the three and nine months ended September 30, 2025, respectively, primarily attributable to an increase in ad-lite subscribers, partially offset by domestic pricing pressures.

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 product” referred to in (iv) above consist of TVN/Player.

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), 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.

Global ARPU consisted of the following.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025		2024		% Change (ex-FX)		2025		2024		% Change (ex-FX)
Domestic ARPU	$	10.40	$	11.99	(13)	%	$	10.91	$	11.93	(9)	%
International ARPU	$	3.70	$	4.05	(10)	%	$	3.73	$	3.89	(4)	%
Global ARPU2	$	6.64	$	7.84	(16)	%	$	6.96	$	7.89	(12)	%

Global ARPU decreased 16% and 12% for the three and nine months ended September 30, 2025, respectively, primarily attributable to growth in lower ARPU international markets and the negative impact of an offset to international revenue associated with a legal ruling that may require adjustments to prior customer billings. Additionally, global ARPU was negatively impacted by a 13% and 9% decrease in domestic ARPU for the three and nine months ended September 30, 2025, respectively, primarily attributable to the first full quarter impact of the previously disclosed domestic wholesale deal renewal.

Content revenue decreased 27% and 19% for the three and nine months ended September 30, 2025, respectively, attributable to lower third-party licensing as a result of launching HBO Max in new international markets.

Costs of Revenues

Costs of revenues was flat and decreased 4% for the three and nine months ended September 30, 2025, respectively. For the three months ended September 30, 2025, higher international content costs to support HBO Max launches were offset by the broadcast of the Olympics in Europe in 2024. The decrease for the nine months ended September 30, 2025 was primarily attributable to lower content costs due to the timing of programming releases and lower domestic sports costs, partially offset by higher international content costs to support HBO Max launches.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses decreased 13% and 7% for the three and nine months ended September 30, 2025, respectively, primarily attributable to lower marketing costs.

Adjusted EBITDA

Adjusted EBITDA increased $56 million and $709 million for the three and nine months ended September 30, 2025, respectively.

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), 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 September 30,							Nine Months Ended September 30,
	2025		2024			% Change	% Change (ex-FX)	2025		2024		% Change		% Change (ex-FX)
Revenues:
Distribution	$	2		$	6			(67)	%	(67)	%	$	4	$	14	(71)	%	(71)	%
Advertising	—			1				NM		NM		1		5		(80)	%	(80)	%
Content	3,111			2,463				26	%	26	%	8,841		7,323		21	%	21	%
Other	208			210				(1)	%	(4)	%	590		608		(3)	%	(5)	%
Total revenues	3,321			2,680				24	%	23	%	9,436		7,950		19	%	19	%
Costs of revenues, excluding depreciation and amortization	1,897			1,736				9	%	9	%	5,525		5,356		3	%	3	%
Selling, general and administrative	729			636				15	%	14	%	2,094		1,892		11	%	10	%
Adjusted EBITDA - Studios segment	695			308				NM		NM		1,817		702		NM		NM
Depreciation and amortization	170			171								509		531
Employee share-based compensation	—			—								—		(1)

Restructuring and other charges	12			2								6		32
Transaction and integration costs	—			—								—		2
Facility consolidation costs	—			1								—		2
Impairment and amortization of fair value step-up for content	33			34								94		45
Amortization of capitalized interest for content	19			8								28		38
Impairments and gain on dispositions	—			(5)								(1)		(6)
Operating income	$	461		$	97							$	1,181	$	59

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 3% of total revenues and operating expenses for this segment for the three and nine months ended September 30, 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 increased 26% for the three months ended September 30, 2025, primarily attributable to a 74% increase in theatrical product revenue, partially offset by a 13% decrease in television product revenue and a 23% decrease in games revenue.

The increase in theatrical product revenue was primarily due to higher film rental revenue and higher content licensing. The increase in film rental revenue was primarily due to the strong performance of Superman, Conjuring: Last Rites, and Weapons, which were released in the third quarter of 2025, and carryover from F1, which was released in the second quarter of 2025.
The decrease in television product revenue was primarily attributable to lower initial telecast revenue due to fewer deliveries.
The decrease in games revenue was attributable to lower carryover.

Content revenue increased 21% for the nine months ended September 30, 2025, primarily attributable to a 23% increase in theatrical product revenue and a 26% increase in television product revenue, partially offset by a 31% decrease in games revenue.

The increase in theatrical product revenue was attributable to higher film rental revenue and intercompany content sales. The increase in film rental revenue was primarily due to the strong current year performance of A Minecraft Movie, Superman, F1, Conjuring: Last Rites, Sinners, Final Destination Bloodlines, and Weapons.
The increase in television product revenue was attributable to higher intercompany content licensing, primarily due to the timing of renewals, partially offset by lower initial telecast revenue due to fewer deliveries.
The decrease in games revenue was attributable to lower carryover and fewer releases in 2025.

Other revenue decreased 4% and 5% for the three and nine months ended September 30, 2025, respectively.

Costs of Revenues

Costs of revenues increased 9% and 3% for the three and nine months ended September 30, 2025. The increase for the three months ended September 30, 2025 was primarily attributable to a 79% increase in theatrical product content expense, partially offset by a 51% decrease in games content expense and a 13% decrease in television product content expense. The increase in theatrical content expense was primarily due to higher film costs commensurate with higher theatrical product revenue. The decrease in television product content expense was due to lower costs commensurate with lower revenues. The decrease in games content expense was primarily due to impairments of $122 million in the prior year.

For the nine months ended September 30, 2025, television product content expense increased 19% and theatrical product content expense increased 10%, partially offset by a 58% decrease in games content expense. The increase in television product content expense was due to higher costs commensurate with higher intercompany content licensing due to the timing of renewals. The increase in theatrical content expense was primarily due to higher film costs commensurate with higher theatrical product revenue. The decrease in games content expense was primarily due to impairments of $335 million in the prior year and lower games content expense commensurate with lower revenue and fewer releases in 2025.

Selling, General and Administrative

Selling, general and administrative expenses increased 14% and 10% for the three and nine months ended September 30, 2025, primarily attributable to higher theatrical marketing expenses and overhead costs.

Adjusted EBITDA

Adjusted EBITDA increased $387 million and $1,115 million for the three and nine months ended September 30, 2025, respectively.

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 (loss) (in millions).


	Three Months Ended September 30,							Nine Months Ended September 30,
	2025		2024			% Change	% Change (ex-FX)	2025		2024		% Change		% Change (ex-FX)
Revenues:
Distribution	$	2,387		$	2,598			(8)	%	(8)	%	$	7,422	$	8,070	(8)	%	(7)	%
Advertising	1,186			1,490				(20)	%	(21)	%	4,897		5,691		(14)	%	(15)	%
Content	217			833				(74)	%	(74)	%	884		1,396		(37)	%	(36)	%
Other	93			89				4	%	3	%	257		250		3	%	1	%
Total revenues	3,883			5,010				(22)	%	(23)	%	13,460		15,407		(13)	%	(13)	%
Costs of revenues, excluding depreciation and amortization	1,520			2,185				(30)	%	(30)	%	6,439		7,088		(9)	%	(9)	%
Selling, general and administrative	661			710				(7)	%	(7)	%	2,014		2,087		(3)	%	(4)	%
Adjusted EBITDA - Global Linear Networks segment	1,702			2,115				(20)	%	(20)	%	5,007		6,232		(20)	%	(19)	%
Depreciation and amortization	758			1,048								2,494		3,205
Employee share-based compensation	—			—								1		—
Restructuring and other charges	16			5								57		58
Transaction and integration costs	—			3								—		3

Impairment and amortization of fair value step-up for content	—			—								440		419

Impairments and loss on dispositions	27			5								30		9,159
Operating income (loss)	$	901		$	1,054							$	1,985	$	(6,612)

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

Revenues

Distribution revenue decreased 8% and 7% for the three and nine months ended September 30, 2025, respectively, primarily attributable to a 9% decline in domestic linear subscribers, and to a lesser extent, lower international affiliate rates and international subscriber declines, partially offset by a 2% increase in domestic affiliate rates for both periods. Declines in linear subscribers are expected to continue.

Advertising revenue decreased 21% and 15% for the three and nine months ended September 30, 2025, respectively, primarily attributable to audience declines in domestic networks of 26% and 25%, respectively, and the broadcast of the Olympics in Europe in 2024.

Content revenue decreased 74% and 36% for the three and nine months ended September 30, 2025, respectively, primarily attributable to the sublicensing of Olympic sports rights in Europe, which had a favorable impact of $578 million on content revenue in 2024.

Other revenue increased 3% and 1% for the three and nine months ended September 30, 2025, respectively.

Costs of Revenues

Costs of revenues decreased 30% and 9% for the three and nine months ended September 30, 2025, respectively, primarily attributable to the broadcast of the Olympics in 2024, partially offset by higher domestic sports costs. Additionally, costs of revenues for the nine months ended September 30, 2025 benefited from timing of content, production, and news related spend. The broadcast of the Olympics in 2024 had unfavorable impacts to costs of revenues of $663 million and $665 million for the three and nine months ended September 30, 2024, respectively.

Selling, General and Administrative

Selling, general and administrative expenses decreased 7% and 4% for the three and nine months ended September 30, 2025, respectively, primarily attributable to lower overhead costs. Additionally, the decrease for the nine months ended September 30, 2025 was partially offset by higher marketing expenses.

Adjusted EBITDA

Adjusted EBITDA decreased 20% and 19% for the three and nine months ended September 30, 2025, respectively.

Corporate

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


	Three Months Ended September 30,							Nine Months Ended September 30,
	2025		2024			% Change	% Change (ex-FX)	2025		2024		% Change		% Change (ex-FX)
Adjusted EBITDA - Corporate	$	(258)		$	(296)			13	%	14	%	$	(807)	$	(927)	13	%	14	%
Depreciation and amortization	100			93								292		233
Employee share-based compensation	240			157								532		413
Restructuring and other charges	59			18								139		70
Transaction and integration costs	11			31								108		161
Facility consolidation costs	1			1								10		2
Impairment and amortization of fair value step-up for content	1			1								1		2

Impairments and loss on dispositions	19			4								119		242
Operating loss	$	(689)		$	(601)							$	(2,008)	$	(2,050)

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 increased 14% for the three and nine months ended September 30, 2025. The increase for the three months ended September 30, 2025 was primarily attributable to lower corporate overhead expense. The increase for the nine months ended September 30, 2025 was primarily attributable to lower facility costs due to office consolidations and closures, lower personnel costs, and the release of previously recorded non-income tax reserves.

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 September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Inter-segment revenue eliminations	$	(793)	$	(705)	$	(3,144)	$	(1,731)
Inter-segment expense eliminations	(779)		(702)		(2,678)		(1,766)
Adjusted EBITDA - Inter-segment eliminations	(14)		(3)		(466)		35





Impairment and amortization of fair value step-up for content	4		64		45		217


Operating loss	$	(18)	$	(67)	$	(511)	$	(182)

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 nine months ended September 30, 2025, we funded our working capital needs primarily through cash flows from operations. As of September 30, 2025, we had $4.3 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 $4.0 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

Bridge Loan Facility

During the three months ended June 30, 2025, we and DGH entered into a Bridge Loan Facility with JPMorgan Chase Bank, N.A. DGH drew $17.0 billion of the available Bridge Loan Facility to finance the early settlement of the Tender Offers, Consent Solicitations, and the repayment in full and termination of our $1,500 million 364-day senior unsecured term loan facility, and the payment of fees and expenses therewith and for general corporate purposes. The Bridge Loan Facility is expected to be refinanced prior to the Separation or in connection with the pursuit of a strategic alternative. The Bridge Loan Facility contains customary representations and warranties as well as affirmative and negative covenants. As of September 30, 2025, we were in compliance with all applicable covenants and there were no events of default under the Bridge Loan Facility.

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 $4.0 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. In June 2025, we amended the Credit Agreement to, among other things, decrease the borrowing capacity from $6.0 billion to $4.0 billion and provide for early termination of the Credit Agreement upon completion of the Separation. The Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants. As of September 30, 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 nine months ended September 30, 2025, we and DCL borrowed and repaid $3,551 million under our Credit Facility and commercial paper program. As of September 30, 2025, we and DCL had no outstanding borrowings under the Credit Facility or issuances under the commercial paper program.

Term Loan

During the nine months ended September 30, 2025, we entered into and repaid a $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 DGH’s senior notes due 2026.

*•*Revolving Receivables Program

We have a revolving agreement to transfer up to $5,000 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 $4,004 million as of September 30, 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 nine months ended September 30, 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. Additionally, we received proceeds from the sale of investments of $54 million for the nine months ended September 30, 2025.

*•*Asset Dispositions

We received proceeds from asset dispositions of $53 million during the nine months ended September 30, 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 HBO 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

Bridge Loan Facility

During the three months ended September 30, 2025, we repaid $1,000 million of aggregate principal amount outstanding of our Bridge Loan Facility.

Senior Notes

During the nine months ended September 30, 2025, we repurchased or repaid $21,663 million of aggregate principal amount outstanding of our senior notes. In addition, we have $139 million of senior notes coming due through September 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, exchange 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 $810 million during the nine months ended September 30, 2025, including amounts capitalized to support HBO Max. In addition, we expect to continue to incur significant costs to develop and market HBO 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 nine months ended September 30, 2025, we contributed $97 million for investments in and advances to our investees.

*•*Redeemable Noncontrolling Interest and Noncontrolling Interest

We had redeemable equity balances of $23 million at September 30, 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 $188 million and $172 million for the nine months ended September 30, 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 nine months ended September 30, 2025, we made cash payments of $1,750 million and $1,920 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).


	Nine Months Ended September 30,
	2025		2024
Cash, cash equivalents, and restricted cash, beginning of period	$	5,416	$	4,319
Cash provided by operating activities	2,515		2,660
Cash used in investing activities	(761)		(355)
Cash used in financing activities	(3,123)		(3,149)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	251		15
Net change in cash, cash equivalents, and restricted cash	(1,118)		(829)
Cash, cash equivalents, and restricted cash, end of period	$	4,298	$	3,490

Operating Activities

Cash provided by operating activities was $2,515 million and $2,660 million during the nine months ended September 30, 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 $761 million and $355 million during the nine months ended September 30, 2025 and 2024, respectively. The increase in cash used in investing activities was primarily attributable to reduced proceeds from the sale of investments and increased purchases of property and equipment during the nine months ended September 30, 2025.

Financing Activities

Cash used in financing activities was $3,123 million and $3,149 million during the nine months ended September 30, 2025 and 2024, respectively. The decrease in cash used in financing activities was primarily attributable to proceeds received for the contribution of 70% of our music catalog to a joint venture, partially offset by higher net debt activity.

Capital Resources

As of September 30, 2025, capital resources were comprised of the following (in millions).


	September 30, 2025
	Total Capacity		Outstanding Indebtedness		Unused Capacity
Cash and cash equivalents	$	4,294	$	—	$	4,294
Revolving credit facility and commercial paper program	4,000		—		4,000
Bridge loan	16,000		16,000		—
Senior notes (a)	17,844		17,844		—
Total	$	42,138	$	33,844	$	8,294

(a) Interest on the senior notes is paid annually or semi-annually. Our senior notes outstanding as of September 30, 2025 had interest rates that ranged from 1.90% to 8.30% and will mature between 2026 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- and long-term. We expect to refinance the Bridge Loan Facility prior to the Separation or in connection with the pursuit of a strategic alternative, though we may be unable to do so on favorable terms in a timely manner or at all. Additionally, 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 2025, S&P, Moody’s and Fitch downgraded certain of our ratings in part due to declines in our linear business, including as a result of the weak operating environment for linear networks, our leverage ratio, and an increase in secured debt and uncertainty in connection with the Separation.

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 September 30, 2025 and December 31, 2024, the Company has outstanding senior notes issued by DCL, which are guaranteed by the Company, Scripps Networks, and DGH; senior notes issued by DGH, which are guaranteed by the Company, Scripps Networks, and DCL; senior notes issued by the legacy WarnerMedia Business (not guaranteed); and as of December 31, 2024, senior notes issued by Scripps Networks (not guaranteed). (See Note 8 to the accompanying consolidated financial statements.) DCL, Scripps Networks, and DGH 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 DGH (collectively, the “Obligors”). All guarantees of DCL and DGH’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 DGH, 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, DGH 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).


	September 30, 2025		December 31, 2024
Current assets	$	552	$	2,194
Non-guarantor intercompany trade receivables, net	250		404
Noncurrent assets	4,007		4,077
Current liabilities	809		3,948
Noncurrent liabilities	34,794		37,118


	Nine Months Ended September 30, 2025
Revenues	$	1,350
Operating loss	(376)
Net income	1,025
Net income available to Warner Bros. Discovery, Inc.	1,002

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 September 30,	2025		2024			2025	2024	2025		2024		2025		2024		2025		2024
Revenues:
Distribution	$	4,702		$	4,920			$	2,319	$	2,326	$	2,387	$	2,598	$	—	$	—	$	(4)	$	(4)
Advertising	1,407			1,682				232		203		1,186		1,490		—		—		(11)		(11)
Content	2,649			2,721				2,533		2,153		217		833		—		—		(101)		(265)
Other	287			300				195		208		93		89		1		4		(2)		(1)
Total revenues	9,045			9,623				5,279		4,890		3,883		5,010		1		4		(118)		(281)
Costs of revenues, excluding depreciation and amortization	4,564			5,181				3,138		3,145		1,520		2,185		30		13		(124)		(162)
Selling, general and administrative	2,361			2,385				1,226		1,205		661		713		482		477		(8)		(10)
Depreciation and amortization	1,375			1,762				517		621		758		1,048		100		93		—		—
Restructuring and other charges	88			9				13		(14)		16		5		59		18		—		—
Impairments and loss on dispositions	46			5				—		(4)		27		5		19		4		—		—

Total costs and expenses	8,434			9,342				4,894		4,953		2,982		3,956		690		605		(132)		(172)
Operating income (loss)	$	611		$	281			$	385	$	(63)	$	901	$	1,054	$	(689)	$	(601)	$	14	$	(109)


Supplemental Data for Results of Operations (in millions)								Supplemental Consolidating Data
	Consolidated						Streaming & Studios			Global Linear Networks				Corporate				Consolidating adjustments
For the nine months ended September 30,	2025		2024			2025	2024	2025		2024		2025		2024		2025		2024
Revenues:
Distribution	$	14,473		$	14,784			$	7,060	$	6,721	$	7,422	$	8,070	$	—	$	—	$	(9)	$	(7)
Advertising	5,603			6,260				749		622		4,897		5,691		—		—		(43)		(53)
Content	6,986			7,388				6,493		6,502		884		1,396		—		—		(391)		(510)
Other	774			862				518		609		257		250		2		6		(3)		(3)
Total revenues	27,836			29,294				14,820		14,454		13,460		15,407		2		6		(446)		(573)
Costs of revenues, excluding depreciation and amortization	15,662			17,443				9,063		10,146		6,879		7,507		76		69		(356)		(279)
Selling, general and administrative	7,032			7,078				3,668		3,594		2,015		2,090		1,384		1,442		(35)		(48)
Depreciation and amortization	4,369			5,394				1,583		1,956		2,494		3,205		292		233		—		—
Restructuring and other charges	222			161				26		33		57		58		139		70		—		—
Impairments and loss on dispositions	162			9,412				13		11		30		9,159		119		242		—		—

Total costs and expenses	27,447			39,488				14,353		15,740		11,475		22,019		2,010		2,056		(391)		(327)
Operating income (loss)	$	389		$	(10,194)			$	467	$	(1,286)	$	1,985	$	(6,612)	$	(2,008)	$	(2,050)	$	(55)	$	(246)

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:

the occurrence of any event, change or other circumstances that could give rise to the abandonment of the Separation or pursuit of a different structure or strategic alternative;
failure to satisfy in a timely manner any of the conditions to the Separation or complete the Separation in a timely or favorable manner or at all, including as a result of the Company’s review of strategic alternatives;
the effects of the announcement, pendency or completion of the Separation or the Company’s review of strategic alternatives on our ongoing business operations;
the duration and outcome of the Company’s review of strategic alternatives, including whether the Company will be able to identify or pursue any strategic alternative to the Separation;
unforeseen costs, execution risks, and operational challenges related to the Separation and review of strategic alternatives, including risks relating to changes to the configuration of our existing business and disruption of management time away from ongoing business operations;
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 Writers Guild of America and Screen Actors Guild of America-American Federation of Television and Radio Arts 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;
challenges related to refinancing the Bridge Loan Facility on favorable terms in a timely manner or at all;
changes to our corporate or debt-specific credit ratings or outlook;
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, the Separation, the Company’s review of strategic alternatives, 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 and Part II, Item 1A, “Risk Factors” in our Form 10-Q for the quarter ended June 30, 2025. 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.

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