Item 1. Unaudited Financial Statements.

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Item 1. Unaudited Financial Statements.

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in millions, except per share amounts)


	Three Months Ended March 31,
	2026		2025
Revenues:
Distribution	$	4,906	$	4,886
Advertising	1,847		1,980
Content	1,887		1,866
Other	253		247
Total revenues	8,893		8,979
Costs and expenses:
Costs of revenues, excluding depreciation and amortization	4,643		5,131
Selling, general and administrative	2,475		2,194
Netflix Termination Fee (See Note 1)	2,800		—
Depreciation and amortization	1,226		1,547
Restructuring and other charges	204		54
Impairments and loss on dispositions	14		90


Total costs and expenses	11,362		9,016
Operating loss	(2,469)		(37)
Interest expense, net	(581)		(468)
Loss on extinguishment of debt, net	(27)		(4)
Loss from equity investees, net	(5)		(7)
Other (expense) income, net	(38)		82
Loss before income taxes	(3,120)		(434)
Income tax benefit (expense)	214		(15)
Net loss	(2,906)		(449)
Net income attributable to noncontrolling interests	(10)		(8)
Net loss attributable to redeemable noncontrolling interests	—		4
Net loss available to Warner Bros. Discovery, Inc.	$	(2,916)	$	(453)
Net loss per share available to Warner Bros. Discovery, Inc. Series A common stockholders:
Basic	$	(1.17)	$	(0.18)
Diluted	$	(1.17)	$	(0.18)
Weighted average shares outstanding:
Basic	2,492		2,462
Diluted	2,492		2,462

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

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited; in millions)


	Three Months Ended March 31,
	2026		2025
Net loss	$	(2,906)	$	(449)
Other comprehensive loss:



Currency translation, net of income tax expense of $(14) and $(90)	(218)		231
Pension plan and SERP liability, net of income tax benefit of $2 and $—	2		—
Derivatives
Change in net unrealized (losses) gains	(26)		9
Less: Reclassification adjustment for net losses (gains) included in net income	7		(13)
Net change, net of income tax benefit (expense) of $5 and $(1)	(19)		(4)
Comprehensive loss	(3,141)		(222)
Comprehensive income attributable to noncontrolling interests	(9)		(11)
Comprehensive loss attributable to redeemable noncontrolling interests	—		4
Comprehensive loss attributable to Warner Bros. Discovery, Inc.	$	(3,150)	$	(229)

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

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited; in millions, except par value)


	March 31, 2026		December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	3,264	$	4,566
Receivables, net	5,009		5,294

Prepaid expenses and other current assets	3,468		3,346
Total current assets	11,741		13,206
Film and television content rights and games	19,312		19,114
Property and equipment, net	6,642		6,685


Goodwill	25,874		25,933
Intangible assets, net	26,803		27,764

Other noncurrent assets	7,465		7,383
Total assets	$	97,837	$	100,085
Liabilities and equity
Current liabilities:
Accounts payable	$	1,110	$	1,093
Accrued liabilities	11,920		9,626

Deferred revenues	1,592		1,642
Current portion of debt	1,493		139
Total current liabilities	16,115		12,500
Noncurrent portion of debt	30,973		32,428
Deferred income taxes	5,873		6,383
Other noncurrent liabilities	11,169		11,608
Total liabilities	64,130		62,919
Commitments and contingencies (See Note 15)
Redeemable noncontrolling interests	—		19

Warner Bros. Discovery, Inc. stockholders’ equity:
Series A common stock: $0.01 par value; 10,800 and 10,800 shares authorized; 2,737 and 2,710 shares issued; and 2,507 and 2,480 shares outstanding	27		27
Preferred stock: $0.01 par value; 1,200 and 1,200 shares authorized, 0 shares issued and outstanding	—		—
Additional paid-in capital	55,865		56,055
Treasury stock, at cost: 230 and 230 shares	(8,244)		(8,244)
Accumulated deficit	(14,428)		(11,512)
Accumulated other comprehensive loss	(642)		(407)
Total Warner Bros. Discovery, Inc. stockholders’ equity	32,578		35,919
Noncontrolling interests	1,129		1,228
Total equity	33,707		37,147
Total liabilities and equity	$	97,837	$	100,085

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

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in millions)


	Three Months Ended March 31,
	2026		2025
Operating Activities
Net loss	$	(2,906)	$	(449)
Adjustments to reconcile net income to cash provided by operating activities:
Content rights amortization and impairment	2,499		3,145
Depreciation and amortization	1,226		1,547
Deferred income taxes	(513)		(312)

Share-based compensation expense	152		123




Impairments and loss on dispositions	14		90

Netflix Termination Fee accrual (See Note 1)	2,800		—
Other, net	119		17
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Receivables, net	246		288
Film and television content rights, games, and production payables, net	(2,603)		(2,846)
Accounts payable, accrued liabilities, deferred revenues and other noncurrent liabilities	(1,033)		(1,026)
Foreign currency, prepaid expenses and other assets, net	(209)		(24)
Cash (used in) provided by operating activities	(208)		553
Investing Activities
Purchases of property and equipment	(268)		(251)

Proceeds from sales of investments	—		11
Investments in and advances to equity investees	(25)		(14)

Proceeds from asset dispositions	—		66



Other investing activities, net	11		(7)
Cash used in investing activities	(282)		(195)
Financing Activities

Principal repayments of debt, including premiums and discounts to par value	(123)		(3,665)
Borrowings from debt, net of discount and issuance costs	(16)		1,500
Distributions to noncontrolling interests and redeemable noncontrolling interests	(129)		(157)
Proceeds for the formation of music catalog joint venture	—		601





Borrowings under commercial paper program and revolving credit facility	261		695
Repayments under commercial paper program and revolving credit facility	(261)		(695)



Cash paid to settle share-based awards, net	(422)		(117)
Other financing activities, net	(66)		(57)
Cash used in financing activities	(756)		(1,895)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(56)		95
Net change in cash, cash equivalents, and restricted cash	(1,302)		(1,442)
Cash, cash equivalents, and restricted cash, beginning of period	4,570		5,416
Cash, cash equivalents, and restricted cash, end of period	$	3,268	$	3,974

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

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in millions)


	Warner Bros. Discovery, Inc. Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss		Warner Bros. Discovery, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Equity
	Shares	Par Value
December 31, 2025	2,710	$	27	$	56,055	$	(8,244)	$	(11,512)	$	(407)	$	35,919	$	1,228	$	37,147


Net (loss) income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests	—	—		—		—		(2,916)		—		(2,916)		10		(2,906)
Other comprehensive loss	—	—		—		—		—		(235)		(235)		(1)		(236)
Net share-based plan activity	27	—		(187)		—		—		—		(187)		—		(187)




Dividends paid to noncontrolling interests	—	—		—		—		—		—		—		(127)		(127)

Redeemable noncontrolling interest adjustments to redemption value	—	—		(3)		—		—		—		(3)		—		(3)
Reclassification associated with the expiration of put rights	—	—		—		—		—		—		—		19		19

March 31, 2026	2,737	$	27	$	55,865	$	(8,244)	$	(14,428)	$	(642)	$	32,578	$	1,129	$	33,707





























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

WARNER BROS. DISCOVERY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in millions)


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


Net (loss) income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests		—		—		—		—		(453)		—		(453)		8		(445)
Other comprehensive income		—		—		—		—		—		227		227		3		230
Net share-based plan activity		19		—		41		—		—		—		41		—		41




Dividends paid to noncontrolling interests		—		—		—		—		—		—		—		(147)		(147)

Redeemable noncontrolling interest adjustments to redemption value		—		—		(3)		—		—		—		(3)		—		(3)
Reclassification associated with the expiration of put rights		—		—		—		—		—		—		—		74		74
Formation of music catalog joint venture		—		—		(13)		—		—		—		(13)		582		569
March 31, 2025		2,703		$	27	$	55,585	$	(8,244)	$	(12,692)	$	(840)	$	33,836	$	1,312	$	35,148
































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

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Warner Bros. Discovery, Inc. (“Warner Bros. Discovery”, “WBD”, the “Company”, “we”, “us” or “our”) is a leading global media and entertainment company that creates and distributes a differentiated and comprehensive portfolio of content and products across television, film, streaming, interactive gaming, publishing, themed experiences, and consumer products through brands including: Discovery Channel, 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.

Termination of Netflix Merger

On January 19, 2026, the Company entered into an amended and restated agreement and plan of merger, by and among the Company, Netflix, Inc. (“Netflix”), Nightingale Sub, Inc., a wholly owned subsidiary of Netflix, and New Topco 25, Inc., a wholly owned subsidiary of WBD (the “Netflix Merger Agreement”), pursuant to which Netflix would have acquired the Streaming and Studios segments (subject to certain deviations) and certain other assets and liabilities, including the Company’s film and television studios, HBO Max, and HBO, following the separation and distribution of Discovery Global to the Company’s stockholders (the “Separation Transaction”).

Following the board of directors’ determination that it had received a “Company Superior Proposal,” as defined in the Netflix Merger Agreement, from Paramount Skydance Corporation (“PSKY”) and Netflix’s waiver of its right to propose revisions to the Netflix Merger Agreement, on February 27, 2026, in accordance with the terms of the Netflix Merger Agreement, the Company terminated the Netflix Merger Agreement in connection with entering into the PSKY Merger Agreement (as defined below). As a result of the termination of the Netflix Merger Agreement, PSKY, on behalf of the Company, paid Netflix a termination fee of $2.8 billion in cash (the “Netflix Termination Fee”) as required by the terms of the Netflix Merger Agreement. During the three months ended March 31, 2026, the Company recorded an expense for the Netflix Termination Fee in the consolidated statements of operations. The amount paid by PSKY is reimbursable by the Company to PSKY in certain circumstances in the event the PSKY Merger Agreement is terminated, and therefore has been recorded in accrued liabilities in the consolidated balance sheets.

PSKY Merger

On February 27, 2026, the Company entered into an Agreement and Plan of Merger, by and among the Company, PSKY and Prince Sub Inc., a wholly owned subsidiary of PSKY (“Merger Sub”) (as may be amended from time to time, the “PSKY Merger Agreement”), pursuant to which and subject to the terms and conditions therein, at the effective time, Merger Sub will merge with and into WBD, with WBD surviving as a wholly owned subsidiary of PSKY (the “PSKY Merger”).

Upon completion of the PSKY Merger, each issued and outstanding share of WBD’s Series A common stock (“WBD Common Stock”) (subject to certain exceptions) will be converted into the right to receive an amount in cash equal to $31.00, without interest, plus, if the closing date of the PSKY Merger occurs after September 30, 2026, the Ticking Consideration (together, the “Merger Consideration”). The “Ticking Consideration” will be an amount in cash equal to $0.00277778 multiplied by the number of calendar days elapsed after September 30, 2026 to and including the closing date (which, for the avoidance of doubt, will not exceed $0.25 per 90 calendar day period).

Concurrently with the execution of the PSKY Merger Agreement, Larry J. Ellison and an affiliated trust entered into a guarantee in favor of WBD to, among other things, jointly and severally guarantee certain payments by PSKY under the PSKY Merger Agreement, including $45.72 billion of the aggregate Merger Consideration, and assist WBD with the consummation of the PSKY Merger.

On April 23, 2026, WBD stockholders approved the adoption of the PSKY Merger Agreement. The completion of the PSKY Merger is subject to customary closing conditions, including regulatory clearances. In addition, PSKY’s obligation to consummate the PSKY Merger is subject to WBD not having completed the separation of its Streaming & Studios business from its Global Linear Networks business nor having declared or made any dividend to WBD’s stockholders to effectuate the separation. There can be no assurance that the PSKY Merger will occur in accordance with the expected plans or anticipated timeline, or at all.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The PSKY Merger Agreement contains certain customary termination rights for WBD and PSKY, including, without limitation, a right for either party to terminate if the PSKY Merger is not completed on or before March 4, 2027, subject to an extension to June 4, 2027 in certain circumstances as specified in the PSKY Merger Agreement. Termination under specified circumstances will require WBD to pay PSKY a termination fee of $3.0 billion and reimburse PSKY for (i) any payment made by PSKY, which will in no event be more than $1,528 million, in connection with WBD’s obligation to complete the Junior Lien Exchange Offer by December 30, 2026 and (ii) the Netflix Termination Fee, or PSKY to pay WBD a termination fee of $7.0 billion. Additionally, the PSKY Merger Agreement provides for customary pre-closing covenants of WBD, including covenants relating to conducting its business in the ordinary course consistent with past practice and to refrain from taking certain actions without PSKY’s consent.

Reportable Segments

As of March 31, 2026, we classified our operations in three reportable segments:

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

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

Principles of Consolidation

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

Unaudited Interim Financial Statements

These consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).

Use of Estimates

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

Accounting and Reporting Pronouncements Adopted

Credit Losses

In July 2025, the Financial Accounting Standards Board (“FASB”) issued guidance which provides a practical expedient to simplify the estimation of expected credit losses by assuming that current conditions as of the balance sheet do not change for the remaining life of the asset. This guidance is effective for interim and annual periods beginning after December 15, 2025, and the standard is to be applied prospectively. The Company elected not to apply the practical expedient in its expected credit losses calculation therefore, there was no impact on its consolidated financial statements.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Accounting and Reporting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expenses

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

Accounting for Internal-Use Software

In September 2025, the FASB issued guidance which amends the existing standard for internal-use software to remove all references to prescriptive and sequential software development project stages. Under this guidance, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, and it is probable that the project will be completed, and the software will be used to perform the function intended. This guidance may be applied prospectively, retrospectively, or with a modified transition approach, and is effective for all annual periods beginning after December 15, 2027, and for interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.

Derivatives and Hedging and Revenue from Contracts with Customers

In September 2025, the FASB issued guidance that amends existing standards for derivatives and hedging (“Topic 815”) and revenue from contracts with customers (“Topic 606”). The guidance refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. The guidance also provides clarification under Topic 606 for share-based payments from a customer in a revenue contract. This guidance may be applied prospectively or with a modified retrospective approach, and is effective for all annual periods beginning after December 15, 2026, and for interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.

Derivatives and Hedging: Hedge Accounting Improvements

In November 2025, the FASB issued guidance that improves hedge accounting guidance by clarifying certain aspects and aligning hedge accounting more closely with the economics of an entity’s risk management activities. The update is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within those annual reporting periods, with early adoption permitted. The updates should be applied prospectively for all hedging relationships as of the date of adoption. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.

NOTE 2. GOODWILL AND INTANGIBLE ASSETS

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

During the three months ended March 31, 2026, the Company performed goodwill and intangible assets impairment monitoring procedures for all of its reporting units and identified no indicators of impairment.

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

uncertainty related to affiliate rights renewals associated with the Company’s Global Linear Networks and Streaming reporting units;
declining levels of global GDP growth and continued softness in the U.S. linear advertising market associated with the Company’s Global Linear Networks reporting unit;
increased competition for advertising expenditures associated with the Company’s Global Linear Networks and Streaming reporting units as a result of an increase in digital advertising inventory available in the marketplace;
content licensing trends and volatility related to the performance of theatrical film and game slates in the Company’s Studios reporting unit; and
risks in executing the projected growth strategies of the Company’s Streaming reporting unit.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 3. RESTRUCTURING AND OTHER CHARGES

The Company periodically initiates restructuring programs, which may include, among other things, strategic content programming assessments, organizational restructuring, employee retention, facility consolidation activities, other contract termination costs, and consulting fees related to the previously announced Separation Transaction and the PSKY Merger. During 2025, the Company initiated restructuring plans related to the previously proposed Separation Transaction.

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


	Three Months Ended March 31,
	2026		2025
Streaming	$	26	$	12
Studios	9		(5)
Global Linear Networks	42		16
Corporate and inter-segment eliminations	127		31
Total restructuring and other charges	$	204	$	54

During the three months ended March 31, 2026 and 2025, restructuring and other charges were primarily related to organization restructuring costs, employee retention, and consulting fees related to the previously announced Separation Transaction and the PSKY Merger.

Changes in restructuring liabilities recorded in accounts payable, accrued liabilities, and other noncurrent liabilities by major category and by reportable segment and corporate were as follows (in millions).


	Streaming		Studios		Global Linear Networks		Corporate		Total
December 31, 2025	$	23	$	58	$	69	$	127	$	277


Contract termination accruals, net	—		—		—		12		12
Employee termination accruals, net	—		9		6		(3)		12
Employee retention, net	15		6		36		23		80
Consulting fees and other accruals and adjustments	11		(6)		—		95		100
Cash paid	(19)		(4)		(30)		(111)		(164)
March 31, 2026	$	30	$	63	$	81	$	143	$	317

NOTE 4. REVENUES

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


	Three Months Ended March 31, 2026
	Streaming		Studios		Global Linear Networks		Corporate and Inter-segment Eliminations		Total
Revenues:
Distribution	$	2,533	$	1	$	2,373	$	(1)	$	4,906
Advertising	284		—		1,570		(7)		1,847
Content	68		2,934		346		(1,461)		1,887
Other	2		190		88		(27)		253
Total	$	2,887	$	3,125	$	4,377	$	(1,496)	$	8,893

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


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

Contract Liabilities and Contract Assets

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


Category	Balance Sheet Location	March 31, 2026		December 31, 2025


Contract liabilities	Deferred revenues	$	1,592	$	1,642
Contract liabilities	Other noncurrent liabilities	360		355

For the three months ended March 31, 2026 and 2025, respectively, revenues of $774 million and $677 million were recognized that were included in deferred revenues as of December 31, 2025 and December 31, 2024, respectively. Contract assets were not material as of March 31, 2026 and December 31, 2025.

Remaining Performance Obligations

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


Contract Type	March 31, 2026		Duration
Distribution - fixed price or minimum guarantee	$	2,848	Through 2030
Content licensing and sports sublicensing	4,528		Through 2032
Brand licensing	3,953		Through 2062
Advertising	1,006		Through 2032
Other	124		Through 2029
Total	$	12,459

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

NOTE 5. SALES OF RECEIVABLES

Revolving Receivables Program

During 2025, the Company amended its revolving receivables program to reduce the facility limit to $5,000 million and extend the program to June 2026. The outstanding portfolio of receivables derecognized from our consolidated balance sheet was $3,850 million and $3,700 million as of March 31, 2026 and December 31, 2025, respectively.

The Company recognized $20 million and $36 million for the three months ended March 31, 2026 and 2025, respectively, in selling, general and administrative expenses in the consolidated statements of operations from the revolving receivables program (net of non-designated derivatives). (See Note 9.)

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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


	Three Months Ended March 31,
	2026		2025
Gross receivables sold/cash proceeds received	$	3,445	$	4,231
Collections reinvested under revolving receivables program	(3,295)		(4,120)
Net cash proceeds received	$	150	$	111
Net receivables sold	$	3,416	$	4,205
Obligations recorded (Level 3)	$	67	$	103

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


	March 31, 2026		December 31, 2025
Gross receivables pledged as collateral	$	2,121	$	2,632

Balance sheet classification:
Receivables, net	$	1,652	$	2,230

Other noncurrent assets	$	469	$	402

Accounts Receivable Factoring

No amounts were sold under the Company’s factoring arrangement for the three months ended March 31, 2026. Total trade accounts receivable sold under the Company’s factoring arrangement was $102 million for the three months ended March 31, 2025. The impact to the consolidated statements of operations was immaterial for the three months ended March 31, 2026 and 2025. This accounts receivable factoring agreement is separate and distinct from the revolving receivables program.

NOTE 6. CONTENT RIGHTS

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


	March 31, 2026
		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Production costs:
Released, less amortization		$	3,269	$	5,930	$	9,199
Completed and not released		1,186		587		1,773
In production and other		1,723		2,082		3,805
Total production costs		$	6,178	$	8,599	$	14,777
Licensed content, live programming, and advances, net						4,544
Game development costs, less amortization						362
Total film and television content rights and games						19,683
Less: Current content rights and prepaid license fees, net						(371)
Total noncurrent film and television content rights and games						$	19,312

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


	December 31, 2025
		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Production costs:
Released, less amortization		$	3,006	$	5,686	$	8,692
Completed and not released		1,109		521		1,630
In production and other		1,782		2,544		4,326
Total production costs		$	5,897	$	8,751	$	14,648
Licensed content, live programming, and advances, net						4,478
Game development costs, less amortization						310
Total film and television content rights and games						19,436
Less: Current content rights and prepaid license fees, net						(322)
Total noncurrent film and television content rights and games						$	19,114

Content amortization consisted of the following (in millions).


	Three Months Ended March 31,
	2026		2025

Predominantly monetized individually	$	400	$	580





Predominantly monetized as a group	2,057		2,530



Total content amortization	$	2,457	$	3,110

Content expense includes amortization, impairments, and development expense and is generally a component of costs of revenues on the consolidated statements of operations. Content impairments were $42 million and $35 million, respectively, for the three months ended March 31, 2026 and 2025.

NOTE 7. INVESTMENTS

The Company’s equity investments consisted of the following (in millions).


Category	Balance Sheet Location	Ownership	March 31, 2026		December 31, 2025
Equity method investments:
The Chernin Group (TCG) 2.0-A, LP	Other noncurrent assets	44%	$	276	$	276
nC+	Other noncurrent assets	32%	153		153

Other	Other noncurrent assets		270		268
Total equity method investments			699		697




Investments without readily determinable fair values	Other noncurrent assets(a)		349		348
Total investments			$	1,048	$	1,045

(a) Investments without readily determinable fair values included $17 million as of March 31, 2026 and December 31, 2025 that was recorded in prepaid expenses and other current assets.

Equity Method Investments

Certain of the Company’s other equity method investments are VIEs, for which the Company is not the primary beneficiary. As of March 31, 2026, the Company’s maximum exposure for all of its unconsolidated VIEs, including the investment carrying values and unfunded contractual commitments made on behalf of VIEs, was approximately $477 million. The Company’s maximum estimated exposure excludes the non-contractual future funding of VIEs. The aggregate carrying values of these VIE investments were $467 million and $481 million as of March 31, 2026 and December 31, 2025, respectively. VIE gains and losses are recorded in loss from equity investees, net on the consolidated statements of operations, and were not material for the three months ended March 31, 2026 and 2025.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Joint Venture

In January 2025, the Company contributed a 70% interest in its music catalog to a joint venture with Cutting Edge Group in exchange for net proceeds of $601 million. The Company retained a controlling financial interest and consolidated the joint venture as a VIE. The Company has determined that it is the primary beneficiary of the joint venture as the Company has certain operational rights that significantly impact the economic performance of the business including exploitation of the catalog works and selection of the administrator. As the primary beneficiary, the Company includes the joint venture assets, liabilities and results of operations in the Company's consolidated financial statements. As of March 31, 2026, the carrying amounts of assets and liabilities of the consolidated VIE were not material. During the three months ended March 31, 2026, it was determined that the Cutting Edge Group will receive an additional 9% economic interest in the venture based on the results of certain operational metrics.

NOTE 8. DEBT

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


	Weighted-Average Interest Rate as of March 31, 2026		March 31, 2026		December 31, 2025
Bridge loan with maturity of 15 months	7.67	%	$	15,000	$	15,000

Senior notes with maturities of 5 years or less	3.91	%	6,525		6,659
Senior notes with maturities between 5 and 10 years	4.37	%	3,505		3,509
Senior notes with maturities greater than 10 years	5.17	%	7,671		7,677
Total debt			32,701		32,845
Unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting, net			(235)		(278)
Debt, net of unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting			32,466		32,567
Current portion of debt			(1,493)		(139)
Noncurrent portion of debt			$	30,973	$	32,428

During the three months ended March 31, 2026, the Company repaid in full at maturity $123 million of aggregate principal amount outstanding of its senior notes due January and March 2026.

On February 18, 2026, DGH (formerly WarnerMedia Holdings, Inc., the “Borrower”), together with JPMorgan Chase Bank, N.A., in its capacities as Administrative Agent and Collateral Agent, executed Amendment No. 1 (“Amendment No. 1”) to the Non-Investment Grade Leveraged Bridge Loan Agreement dated June 26, 2025 (the “Bridge Loan Agreement”). Amendment No. 1 extends the maturity of the Borrower’s outstanding bridge loans from the earlier of (i) December 30, 2026 and (ii) the completion of the previously proposed Separation Transaction to the earlier of (x) June 30, 2027 and (y) the date that the previously proposed Spin-Off (as defined in the Bridge Loan Agreement) occurs.

Under Amendment No. 1, all previously scheduled duration fees through June 30, 2026 remain unchanged, however, the duration fees payable on September 30, 2026 and December 31, 2026 were increased from 0.75% to 1.00% of the principal amount of outstanding loans on such dates. In addition, a new duration fee of 1.00% of the principal amount of outstanding loans will be payable on March 31, 2027.

Amendment No. 1 does not modify the mandatory prepayment provisions, guarantee structure, or collateral securing the bridge facility, all of which remain consistent with the Bridge Loan Agreement. The amendment also maintains the original representations and warranties, affirmative and negative covenants, events of default and continues to include no financial maintenance covenants.

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

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

We are obligated to cause certain of our subsidiaries to conduct one or more offers to exchange (collectively, the “Junior Lien Exchange Offer”) certain of the senior notes issued by DGH and DCL, as applicable, for new junior lien secured notes with the same economic terms (including denominations, interest rate, interest payment dates, maturity date and redemption provisions) to be issued by DGH or DCL, as applicable (the “junior lien notes”). If the Junior Lien Exchange Offer is not completed by December 30, 2026, WBD will be required to pay to each holder of the applicable senior notes entitled to participate in the Junior Lien Exchange Offer a one-time cash payment in the amount of $100 per $1,000 principal amount or €100 per €1,000 principal amount, as applicable, of the applicable senior notes held by such holder, equal to an aggregate amount of approximately $1.5 billion.

The PSKY Merger Agreement provides that, prior to October 15, 2026, PSKY may deliver one formal request (a “Specified Request”) in writing to WBD requesting that WBD either, subject to certain exceptions, (i) commence and use reasonable best efforts to effectuate a consent solicitation (on terms mutually determined by PSKY and WBD in good faith) to eliminate the obligation to commence the Junior Lien Exchange Offer or otherwise modify the required terms of the Junior Lien Exchange Offer, (ii) commence and use reasonable best efforts to effectuate the Junior Lien Exchange Offer (on terms mutually determined by PSKY and WBD in good faith, subject to certain conditions) or (iii) make a payment in the amount of $100 per $1,000 principal amount or €100 per €1,000 principal amount of such outstanding senior notes in lieu of effectuating the Junior Lien Exchange Offer (the “Amended Notes Payment Amount”); provided that, if the Amended Notes Payment Amount becomes due and payable pursuant to the above, PSKY shall timely and fully pay such amount (such amount not to exceed $1,528 million in the aggregate).

If PSKY does not make a Specified Request by October 15, 2026, WBD may, after such date, commence one or more consent solicitations with respect to the outstanding senior notes or commence the Junior Lien Exchange Offer, in each case, on terms determined by WBD in its sole discretion, or pay the Amended Notes Payment Amount; provided that, if the Amended Notes Payment Amount becomes due and payable pursuant to the above, PSKY shall timely and fully pay such amount (subject to the aggregate limit described above).

As of March 31, 2026, all senior notes are fully and unconditionally guaranteed by the Company, Scripps Networks, DCL (to the extent it is not the primary obligor on such senior notes), and DGH (to the extent it is not the primary obligor on such senior notes), except for $171 million of senior notes related to the legacy WarnerMedia business (the “WarnerMedia Business”).

Revolving Credit Facility and Commercial Paper Programs

DCL and certain subsidiaries of the Company, as borrowers, have a multicurrency revolving credit agreement, which was amended in June 2025 (the “Credit Agreement”). The Credit Agreement provides for a senior revolving credit facility (the “Credit Facility”) with aggregate commitments of $4,000 million and includes a $150 million sublimit for the issuance of standby letters of credit. DCL may also request additional commitments up to $1,000 million from the lenders upon the satisfaction of certain conditions. The obligations of the borrowers under the Credit Agreement are secured by the same collateral and have the benefit of the same guarantees as provided in respect of the Bridge Loan Facility, as described above. The Credit Agreement is available on a revolving basis until October 2029, with an option for up to two additional 364-day renewal periods subject to the lenders’ consent, and provides for an early termination of the Credit Agreement upon completion of the previously proposed Separation Transaction.

Additionally, the Company’s commercial paper program is supported by the Credit Facility. Under the commercial paper program, the Company may issue up to $2,000 million. In March 2025, the Company increased the issuance capacity under the commercial paper program from $1,000 million to $2,000 million. Borrowing capacity under the Credit Facility is effectively reduced by any outstanding borrowings under the commercial paper program.

As of March 31, 2026 and December 31, 2025, the Company and DCL had no outstanding borrowings under the Credit Facility or issuances under the commercial paper program.

The Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants, and also requires maintenance of a minimum consolidated interest coverage ratio of 3.00 to 1.00 and a maximum consolidated leverage ratio of 4.50 to 1.00. As of March 31, 2026, the Company was in compliance with all applicable covenants and there were no events of default under the Credit Agreement.

NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS

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

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

There were no amounts eligible to be offset under master netting agreements as of March 31, 2026 and December 31, 2025. The fair value of the Company’s derivative financial instruments was determined using a market-based approach (Level 2). The following table summarizes the Company’s derivative financial instruments recorded on its consolidated balance sheets (in millions).


	March 31, 2026										December 31, 2025
			Fair Value										Fair Value
	Notional		Prepaid expenses and other current assets		Other non- current assets		Accounts payable and accrued liabilities		Other non- current liabilities		Notional		Prepaid expenses and other current assets		Other non- current assets		Accounts payable and accrued liabilities		Other non- current liabilities
Cash flow hedges:
Foreign exchange	$	3,084	$	49	$	36	$	32	$	51	$	2,235	$	53	$	60	$	35	$	38


Net investment hedges: (a)
Cross-currency swaps	444		7		—		—		21		452		7		—		—		21



No hedging designation:
Foreign exchange	145		10		1		91		1		126		9		—		15		79
Cross-currency swaps	221		4		—		—		10		225		4		—		—		11

Total return swaps	486		—		—		27		—		501		—		—		—		—
Credit contracts	—		—		—		—		—		2,000		8		—		—		—


Total			$	70	$	37	$	150	$	83			$	81	$	60	$	50	$	149

(a) Excludes €781 million and €781 million of euro-denominated notes ($897 million and $919 million equivalent) at March 31, 2026 and December 31, 2025, respectively, designated as a net investment hedge.

Derivatives Designated for Hedge Accounting

Cash Flow Hedges

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

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


	Three Months Ended March 31,
	2026		2025
Gains (losses) recognized in accumulated other comprehensive loss:
Foreign exchange - derivative adjustments	$	(32)	$	14

Gains (losses) reclassified into income from accumulated other comprehensive loss:
Foreign exchange - distribution revenue	(10)		4

Foreign exchange - costs of revenues	3		—

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

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

If current fair values of designated cash flow hedges as of March 31, 2026 remained static over the next twelve months, the amount the Company would reclassify from accumulated other comprehensive loss into income in the next twelve months would not be material for the current fiscal year. The maximum length of time the Company is hedging exposure to the variability in future cash flows is 29 years.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Net Investment Hedges

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

The following table presents the pre-tax impact of derivatives and other instruments designated as net investment hedges on other comprehensive income (loss) (in millions). Other than amounts excluded from effectiveness testing, there were no other material gains (losses) reclassified from accumulated other comprehensive loss to income during the three months ended March 31, 2026 and 2025.


	Three Months Ended March 31,
	Amount of gain (loss) recognized in AOCI				Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)		Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
	2026		2025			2026			2025
Cross currency swaps	$	(3)	$	(4)	Interest expense, net		$	3		$	3


Euro-denominated notes (foreign denominated debt)	22		(60)		N/A		—			—

Total	$	19	$	(64)			$	3		$	3

Derivatives Not Designated for Hedge Accounting

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

During the year ended December 31, 2025, the Company entered into $2,000 million notional amount of credit contract swaptions to mitigate the interest rate risk related to future issuances of debt related to the previously proposed Separation Transaction, which were unwound during the three months ended March 31, 2026 for an immaterial loss.

The Company is also exposed to the risk of secured overnight financing rate changes in connection with securitization fees on the receivables securitization program. To mitigate this risk, the Company entered into $1,500 million notional of non-designated interest rate swaps in the first quarter of 2025. The gains and losses on these derivatives are recorded to selling, general and administrative expenses, offsetting securitization interest expense.

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


	Three Months Ended March 31,
	2026		2025
Interest rate swaps	$	—	$	1
Total return swaps	(12)		(11)
Total in selling, general and administrative expense	(12)		(10)


Cross-currency swaps	1		(1)
Credit contracts	(5)		—

Foreign exchange derivatives	2		9
Total in other (expense) income, net	(2)		8
Total	$	(14)	$	(2)

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 10. FAIR VALUE MEASUREMENTS

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


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

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


		March 31, 2026
Category	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Time deposits	Cash and cash equivalents	$	—	$	134	$	—	$	134

Equity securities:
Money market fund	Cash and cash equivalents	58		—		—		58

Mutual funds	Prepaid expenses and other current assets	15		—		—		15
Company-owned life insurance contracts	Prepaid expenses and other current assets	—		2		—		2
Mutual funds	Other noncurrent assets	201		—		—		201
Company-owned life insurance contracts	Other noncurrent assets	—		102		—		102



Total		$	274	$	238	$	—	$	512
Liabilities
Deferred compensation plan	Accrued liabilities	$	61	$	—	$	—	$	61
Deferred compensation plan	Other noncurrent liabilities	674		—		—		674
Total		$	735	$	—	$	—	$	735


		December 31, 2025
Category	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Time deposits	Cash and cash equivalents	$	—	$	107	$	—	$	107

Equity securities:
Money market funds	Cash and cash equivalents	61		—		—		61

Mutual funds	Prepaid expenses and other current assets	14		—		—		14
Company-owned life insurance contracts	Prepaid expenses and other current assets	—		2		—		2
Mutual funds	Other noncurrent assets	205		—		—		205
Company-owned life insurance contracts	Other noncurrent assets	—		105		—		105

Total		$	280	$	214	$	—	$	494
Liabilities
Deferred compensation plan	Accrued liabilities	$	66	$	—	$	—	$	66
Deferred compensation plan	Other noncurrent liabilities	682		—		—		682
Total		$	748	$	—	$	—	$	748

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In addition to the financial instruments listed in the tables above, the Company holds other financial instruments, including cash deposits, accounts receivable, accounts payable, senior notes, and a bridge loan. The carrying values for such financial instruments, other than the senior notes, each approximated their fair values as of March 31, 2026 and December 31, 2025. The estimated fair value of the Company’s outstanding senior notes, including accrued interest, using quoted prices from over-the-counter markets, considered Level 2 inputs, was $14,609 million and $15,205 million as of March 31, 2026 and December 31, 2025, respectively.

The Company’s derivative financial instruments are discussed in Note 9 and the obligation for its revolving receivable program is discussed in Note 5.

NOTE 11. SHARE-BASED COMPENSATION

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


	Three Months Ended March 31, 2026
	Awards	Weighted-Average Grant Date Fair Value
Awards granted:
PRSUs	1.2	$	29.08
RSUs	19.1	$	28.50
Stock options	3.1	$	10.47

The table below presents unrecognized compensation cost related to non-vested share-based awards and the weighted-average amortization period over which these expenses will be recognized as of March 31, 2026 (in millions, except years).


	Unrecognized Compensation Cost		Weighted-Average Amortization Period (years)
PRSUs	$	92	1.4
RSUs	877		1.5
Stock options	147		2.5

Total unrecognized compensation cost	$	1,116

NOTE 12. INCOME TAXES

Income tax benefit (expense) was $214 million and $(15) million for the three months ended March 31, 2026 and 2025, respectively. The increase in income tax benefit for the three months ended March 31, 2026 compared to the same period in 2025 was primarily attributable to excess tax benefits from share-based compensation.

Income tax benefit for the three months ended March 31, 2026, reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributable to a book tax difference in the Netflix Termination Fee accrual (See Note 1) based on current assessments, as well as excess tax benefits from share-based compensation.

As of March 31, 2026 and December 31, 2025, the Company’s reserves for unrecognized tax benefits totaled $2,368 million and $2,356 million, respectively.

As of March 31, 2026 and December 31, 2025, the Company had accrued $896 million and $856 million, respectively, of total interest and penalties payable related to unrecognized tax benefits. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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. In January 2026, the OECD issued additional guidance on the minimum tax framework, including a “side by side” safe harbor framework that would apply to U.S.-parented groups. Even if this safe harbor applies, we would still be subject to local minimum tax regimes in countries that have adopted these rules. The interpretation and adoption of the OECD’s recommendations continue to vary across jurisdictions. As of March 31, 2026, we recognized an immaterial income tax expense for Pillar Two GloBE minimum tax. The Company is continuously monitoring the evolving application of this legislation and assessing its potential impact on our future tax liability.

NOTE 13. SUPPLEMENTAL DISCLOSURES

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

Other (Expense) Income, net

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


	Three Months Ended March 31,
	2026		2025
Foreign currency (losses) gains, net	$	(52)	$	30
(Losses) gains on derivative instruments, net	(2)		22

Change in the value of investments with readily determinable fair value	—		4


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

Interest income	22		64
Indemnification receivable accrual	(3)		(38)
Other (expense) income, net	(3)		4
Total other (expense) income, net	$	(38)	$	82

Supplemental Cash Flow Information


	Three Months Ended March 31,
	2026		2025


Non-cash investing and financing activities:








Assets acquired under finance lease and other arrangements	$	17	$	144

Settlement of PRSU awards	$	97	$	51

Cash, Cash Equivalents, and Restricted Cash


	March 31, 2026		December 31, 2025
Cash and cash equivalents	$	3,264	$	4,566
Restricted cash - recorded in prepaid expenses and other current assets	4		4
Total cash, cash equivalents, and restricted cash	$	3,268	$	4,570

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Earnings Per Share

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


	Three Months Ended March 31,
	2026		2025
Numerator:
Net loss	$	(2,906)	$	(449)
Less:
Net income attributable to noncontrolling interests	(10)		(8)
Net loss attributable to redeemable noncontrolling interests	—		4

Net loss available to Warner Bros. Discovery, Inc. Series A common stockholders for basic and diluted earnings per share	$	(2,916)	$	(453)

Denominator — weighted average:
Common shares outstanding — basic and diluted	2,492		2,462




Basic net loss per share allocated to common stockholders	$	(1.17)	$	(0.18)
Diluted net loss per share allocated to common stockholders	$	(1.17)	$	(0.18)

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


	Three Months Ended March 31,
	2026	2025
Anti-dilutive share-based awards	111	92

Supplier Finance Programs

As of March 31, 2026 and December 31, 2025, the Company has confirmed $266 million and $260 million, respectively, of accrued content producer liabilities. These amounts were outstanding and unpaid by the Company and were recorded in accrued liabilities on the consolidated balance sheets.

Leases

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

Collaborative Arrangements

The arrangement among TNT Sports, CBS Broadcasting, Inc. (“CBS”), and the National Collegiate Athletic Association (the “NCAA”) provides TNT Sports and CBS with rights to the NCAA Division I Men’s Basketball Championship Tournament (the “NCAA Tournament”) in the U.S. and its territories and possessions through 2032. The aggregate programming rights fee, production costs, certain advertising revenues and sponsorship revenues related to the NCAA Tournament, and related programming are shared equally by the Company and CBS. However, if the amount paid for the programming rights fee and production costs in any given year exceeds the shared advertising and sponsorship revenues for that year, CBS’ share of such shortfall is limited to a specified annual cap. The amount recorded pursuant to the loss cap was $66 million and $59 million during the three months ended March 31, 2026 and 2025, respectively. In accounting for this arrangement, the Company records advertising revenue for the advertisements aired on its networks and amortizes its share of the programming rights fee based on the estimated relative value of each season over the term of the arrangement.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Venu Sports

On February 6, 2024, the Company announced that it would enter into a joint venture with ESPN, a subsidiary of The Walt Disney Company (“Disney”), and Fox Corporation (“Fox”) to form Venu Sports, a sports-centric streaming service in the United States. On February 20, 2024, FuboTV Inc. and FuboTV Media Inc. (collectively, “Fubo”) filed a lawsuit against Disney, including certain affiliates, Fox, and WBD (collectively, the “Defendants”) in the U.S. District Court for the Southern District of New York alleging claims under federal and New York antitrust laws. The Defendants reached a settlement with Fubo related to Fubo’s antitrust claims and collectively paid $220 million to Fubo in January 2025, of which the Company’s share was $55 million.

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

Discovery Family

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

Accumulated Other Comprehensive Loss

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


	Three Months Ended March 31, 2026
	Currency Translation		Derivatives		Pension Plan and SERP Liability		Accumulated Other Comprehensive Loss
Beginning balance	$	(342)	$	39	$	(104)	$	(407)
Other comprehensive income (loss) before reclassifications	(218)		(26)		2		(242)
Reclassifications from accumulated other comprehensive loss to net income	—		7		—		7
Other comprehensive income (loss)	(218)		(19)		2		(235)
Ending balance	$	(560)	$	20	$	(102)	$	(642)


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

NOTE 14. RELATED PARTY TRANSACTIONS

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

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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


	Three Months Ended March 31,
	2026		2025




Revenues and service charges	$	205	$	214
Expenses	$	55	$	68
Distributions to noncontrolling interests and redeemable noncontrolling interests	$	129	$	157

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


	March 31, 2026		December 31, 2025
Receivables	$	111	$	116
Payables	$	36	$	17

NOTE 15. COMMITMENTS AND CONTINGENCIES

Other Contingent Commitments

During the three months ended March 31, 2026, the Company entered into a tax reimbursement agreement with the Chief Executive Officer (“CEO”). In the event that the CEO incurs an excise tax in respect of any payment or benefit made or provided to him in connection with a change in control, he would be entitled to a tax reimbursement payment.

Legal Matters

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

The Company may not currently be able to estimate the reasonably possible loss or range of loss for certain matters until developments in such matters have provided sufficient information to support an assessment of such loss. In the absence of sufficient information to support an assessment of the reasonably possible loss or range of loss, no accrual for such contingencies is made and no loss or range of loss is disclosed. Although the outcome of these matters cannot be predicted with certainty and the impact of the final resolution of these matters on the Company’s results of operations in a particular subsequent reporting period is not known, management does not currently believe that the resolution of these matters will have a material adverse effect on the Company’s future consolidated financial position, future results of operations, or cash flows.

PSKY Complaint. On January 12, 2026, PSKY filed a complaint in the Delaware Court of Chancery against our board of directors (and our Chair Emeritus, Dr. Malone) and the Company. The suit asserted a claim for breach of fiduciary duty against the directors, alleging that our board of directors failed to disclose material information in both the Solicitation/Recommendation Statement on Schedule 14D-9, filed on December 17, 2025, and the amendment to that Schedule 14D-9, filed on January 7, 2026. PSKY also requested that the court expedite the case in light of the then-current expiration date of PSKY’s tender offer on January 21, 2026. On January 15, 2026, the Delaware Court of Chancery denied PSKY’s request for expedition, stating that PSKY failed to demonstrate that it would suffer any irreparable harm in its capacity as a stockholder of the Company if the litigation was not expedited, among other reasons. On February 2, 2026, the Company moved to dismiss the complaint. Pursuant to the PSKY Merger Agreement, PSKY filed a voluntary notice of dismissal with prejudice with respect to the complaint, and the court dismissed the case on March 2, 2026.

Securities Class Action. On November 25, 2024, a securities class action complaint was filed in the United States District Court for the Southern District of New York (Collura v. Warner Bros. Discovery, Inc., No. 1:24-cv-09027-KPF). The complaint named WBD, Gunnar Wiedenfels, and David M. Zaslav as defendants and asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder. On February 21, 2025, the court appointed co-lead plaintiffs (Anthony Yuson and Michael Steinberg) and co-lead counsel (Pomerantz LLP and The Rosen Law Firm, P.A.) to represent the putative class. On May 7, 2025, the lead plaintiffs filed a First Amended Complaint against WBD, Gunnar Wiedenfels, and David M. Zaslav. The First Amended Complaint generally alleges that, between February 23, 2024 and August 7, 2024, defendants made false and misleading statements in SEC filings and other public disclosures relating to WBD’s negotiations with the National Basketball Association (“NBA”) concerning its contractual rights to broadcast the NBA’s content and the potential impact of a failure to renew the contract on its business, in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5, and seeks damages and other relief. The defendants moved to dismiss on July 11, 2025, which the court granted without leave to amend on March 30, 2026.

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

Individual Stockholder Action. On April 2, 2026, an individual action was filed in the Supreme Court of the State of New York, County of Richmond (Nicosia v. Di Piazza, Jr., et al., Index No. 150851/2026). The complaint was brought by a purported stockholder of WBD and it named as defendants WBD, members of the WBD board of directors, and PSKY. The complaint alleged that the proxy statement disseminated to WBD stockholders in connection with the proposed transaction with PSKY contains materially false and misleading statements and omissions concerning, among other things, the alleged personal financial benefits of WBD’s directors and officers, the alleged conflicts of WBD’s financial advisors, and the process underlying and valuation of the proposed transaction. Following the issuance of certain supplemental disclosures via Form DEFA14A on April 16, 2026, the plaintiff voluntarily dismissed the litigation with prejudice on April 20, 2026.

Nokia Litigation. Over the past several years, Nokia Corporation and Nokia Technologies Oy (collectively, “Nokia”) have alleged that WBD is infringing on their portfolio of patents related to the delivery of streaming video. On November 1, 2025, Nokia brought suit against WBD in certain jurisdictions, and WBD and Dplay Entertainment Limited brought suit in other jurisdictions, and filed a rate-setting proceeding in the High Court of Justice of England and Wales (the “Court”) against Nokia seeking a determination of a reasonable and non-discriminatory (“RAND”) royalty rate for a global license to certain Nokia patents, including standard-essential patents related to the H.264/AVC and H.265/HEVC standards and other non-essential multimedia patents. The Court is scheduled to hold a hearing in May 2026 to determine the amount of an interim payment that WBD will be required to make to Nokia during the pendency of the litigation, which may include refundable and non-refundable components, and trial is currently scheduled for late 2026. As of March 31, 2026, the Company recorded an immaterial liability related to this matter. The amount of any adjustment to this liability as an outcome from the rate-setting process cannot be reasonably estimated.

NOTE 16. REPORTABLE SEGMENTS

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

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

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

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

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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.

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

Revenues


	Three Months Ended March 31,
	2026		2025
Streaming	$	2,887	$	2,656
Studios	3,125		2,314
Global Linear Networks	4,377		4,774
Corporate	1		—
Inter-segment eliminations	(1,497)		(765)
Total revenues	$	8,893	$	8,979

Reconciliation of Revenues to Segment Adjusted EBITDA


	Three months ended March 31, 2026
	Streaming		Studios		Global Linear Networks
Revenues	$	2,887	$	3,125	$	4,377






Less:
Content expense (a)	1,531		1,603		1,592
Personnel expense (b)	186		251		529
Marketing expense	285		275		129
Other segment expenses (c)	447		221		493
Segment Adjusted EBITDA	$	438	$	775	$	1,634


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






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

WARNER BROS. DISCOVERY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

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

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

Reconciliation of segment adjusted EBITDA to loss before income taxes


	Three Months Ended March 31,
	2026		2025
Streaming	$	438	$	339
Studios	775		259
Global Linear Networks	1,634		1,793
Segment Adjusted EBITDA	2,847		2,391
Depreciation and amortization	1,226		1,547
Employee share-based compensation	150		120
Restructuring and other charges	204		54
Netflix Termination Fee (See Note 1)	2,800		—
Transaction and integration costs	173		80
Facility consolidation costs	—		5
Impairment and amortization of fair value step-up for content	102		240
Amortization of capitalized interest for content	3		6
Impairments and loss on dispositions	14		90

Corporate	269		233
Inter-segment eliminations	375		53
Other expense (income), net	38		(82)
Loss from equity investees, net	5		7
Loss on extinguishment of debt, net	27		4
Interest expense, net	581		468
Loss before income taxes	$	(3,120)	$	(434)

NOTE 17. SUBSEQUENT EVENTS

In April 2026, the Company borrowed $1,000 million under its Credit Facility, which is expected to be repaid within the current quarter.

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