Warner Bros Discovery WBD · USD

REPORTABLE SEGMENTSThe Company’s operating segments are determined based on: (i) financial information reviewed by its 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 •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.

REVENUESDisaggregated RevenueThe following table presents the Company’s revenues disaggregated by revenue source (in millions).Year Ended December 31, 2025StreamingStudiosGlobal Linear NetworksCorporate and Inter-segment EliminationsTotalRevenues:Distribution$9,444 $8 $9,819 $(9)$19,262 Advertising1,032 1 6,332 (59)7,306 Content 388 11,740 1,195 (3,676)9,647 Other12 870 310 (111)1,081 Totals$10,876 $12,619 $17,656 $(3,855)$37,296 Year Ended December 31, 2024StreamingStudiosGlobal Linear NetworksCorporate and Inter-segment EliminationsTotalRevenues:Distribution$9,022 $8 $10,680 $(9)$19,701 Advertising855 5 7,306 (76)8,090 Content428 10,717 1,848 (2,696)10,297 Other8 877 341 7 1,233 Totals$10,313 $11,607 $20,175 $(2,774)$39,321 Year Ended December 31, 2023StreamingStudiosGlobal Linear NetworksCorporate and Inter-segment EliminationsTotalRevenues:Distribution$8,703 $17 $11,521 $(4)$20,237 Advertising548 15 8,342 (205)8,700 Content886 11,358 1,005 (2,046)11,203 Other17 802 376 (14)1,181 Totals$10,154 $12,192 $21,244 $(2,269)$41,321 Accounts Receivable and Credit LossesThe allowance for credit losses was not material at December 31, 2025 and 2024. Contract Assets and LiabilitiesThe following table presents contract liabilities on the consolidated balance sheets (in millions). CategoryBalance Sheet LocationDecember 31, 2025December 31, 2024Contract liabilitiesDeferred revenues$1,642 $1,569 Contract liabilitiesOther noncurrent liabilities355 206 The change in deferred revenue for the year ended December 31, 2025 primarily reflects cash payments received or contracted billings recorded for which the performance obligations were not satisfied prior to the end of the period, partially offset by $1,378 million of revenues recognized that were included in the deferred revenue balance at December 31, 2024. Revenue recognized for the year ended December 31, 2024 related to the deferred revenue balance at December 31, 2023 was $1,643 million. Contract assets were not material as of December 31, 2025 and 2024. Transaction Price Allocated to Remaining Performance ObligationsMost of the Company’s distribution contracts are licenses of functional intellectual property where revenue is derived from royalty-based arrangements, for which revenues are recorded as a function of royalties earned to date instead of estimating incremental royalty contract revenue.

COMMITMENTS, CONTINGENCIES, AND GUARANTEESCommitmentsIn the normal course of business, the Company enters into various commitments, which primarily include programming and talent arrangements, operating and finance leases (See Note 12), arrangements to purchase various goods and services, long-term debt (see Note 11), pension funding and payments (See Note 17), and future funding commitments to equity method investees (See Note 10) (in millions).Year Ending December 31,ContentOther Purchase ObligationsOther Employee ObligationsTotal2026$5,736 $1,384 $478 $7,598 20274,333 1,082 301 5,716 20283,354 475 167 3,996 20291,688 37 72 1,797 20301,641 33 53 1,727 Thereafter2,993 16 54 3,063 Total$19,745 $3,027 $1,125 $23,897 The commitments disclosed above exclude liabilities recognized on the consolidated balance sheets.Content purchase obligations include commitments associated with third-party producers and sports associations for content that airs on our television networks and streaming services. Production and licensing contracts generally require the purchase of a specified number of episodes and payments during production or over the term of a license, and include both programs that have been delivered and are available for airing and programs that have not yet been produced or sporting events that have not yet taken place. If the content is ultimately never produced, our commitments expire without obligation. Other purchase obligations include agreements with certain vendors and suppliers for the purchase of goods and services whereby the underlying agreements are enforceable, legally binding and specify all significant terms. Significant purchase obligations include transmission services, television rating services, marketing commitments and research, equipment purchases, and information technology and other services. Some of these contracts do not require the purchase of fixed or minimum quantities and generally may be terminated with a 30-day to 60-day advance notice without penalty, and are not included in the table above past the 30-day to 60-day advance notice period. Other purchase obligations also include future funding commitments to equity method investees. Although the Company had funding commitments to equity method investees as of December 31, 2025, the Company may also provide uncommitted additional funding to its equity method investments in the future. (See Note 10.

DEBTThe table below presents the components of outstanding debt (in millions).December 31,Weighted-AverageInterest Rate as of12/31/202520252024Bridge loan with maturity of 18 months7.22 %$15,000 $— Senior notes with maturities of 5 years or less3.92 %6,659 13,744 Senior notes with maturities between 5 and 10 years4.37 %3,509 7,853 Senior notes with maturities greater than 10 years5.17 %7,677 17,930 Total debt32,845 39,527 Unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting, net(278)(22)Debt, net of unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting32,567 39,505 Current portion of debt(139)(2,748)Noncurrent portion of debt$32,428 $36,757 During the year ended December 31, 2025, the Company repaid $2,000 million of aggregate principal amount outstanding of its Bridge Loan Facility, repaid in full at maturity $97 million of aggregate principal amount outstanding of its senior notes due July 2025, completed open market repurchases for $59 million of aggregate principal amount outstanding of its senior notes, and purchased $2 million of aggregate principal amount outstanding of its senior notes to finalize the Tender Offers further described below.During the year ended December 31, 2025, the Company’s wholly-owned subsidiaries, Discovery Communications, LLC (“DCL”), Discovery Global Holdings, Inc. (“DGH”) (formerly known as WarnerMedia Holdings, Inc.), Warner Media, LLC (“WML”), and Historic TW Inc. (“TWI”), commenced cash tender offers to purchase (the “Tender Offers”) up to approximately $14,600 million in aggregate purchase price of their outstanding notes and debentures. In conjunction with the Tender Offers, DCL, DGH and TWI also commenced solicitations of consents (the “Consent Solicitations”) from holders of substantially all of its outstanding notes and debentures to adopt certain proposed amendments to the indentures governing such notes and debentures, to, among other things, remove substantially all of the restrictive covenants and certain events of defaults under such indentures.To fund the Tender Offers and Consent Solicitations, as well as repay in full and terminate its $1,500 million 364-day senior unsecured term loan facility, the Company and DGH entered into a non-investment grade leveraged bridge loan facility (“Bridge Loan Facility”) with JPMorgan Chase Bank, N.A. in June 2025, which was amended and extended in February 2026.

INCOME TAXESThe domestic and foreign components of income (loss) before income taxes were as follows (in millions). Year Ended December 31, 202520242023Domestic$744 $(11,843)$(4,702)Foreign895 455 839 Income (loss) before income taxes$1,639 $(11,388)$(3,863)The components of the provision for income taxes were as follows (in millions). Year Ended December 31, 202520242023Current:Federal$1,025 $983 $753 State and local131 321 57 Foreign444 522 750 1,600 1,826 1,560 Deferred:Federal(601)(1,488)(1,845)State and local(113)(276)(548)Foreign4 32 49 (710)(1,732)(2,344)Income tax expense (benefit)$890 $94 $(784)We adopted ASU 2023-09 on a prospective basis beginning with the year ended December 31, 2025. A reconciliation of the Company’s effective income tax rate to the 21% U.S. federal statutory income tax rate for the year ended December 31, 2025, reflecting the adoption of ASU 2023-09, is presented below (in millions):Year Ended December 31, 2025U.S. federal statutory tax rate$344 21 %State and local income taxes, net of federal income tax effects(1)(14)(1)%Foreign tax effects:UK:Statutory tax rate differential25 1 %Tax incentives(102)(6)%Other16 1 %Canada withholding taxes61 4 %Withholding taxes from other foreign jurisdictions(2)256 15 %Other foreign jurisdictions75 5 %Effect of cross-border tax laws:Foreign branch income 62 4 %Other(19)(1)%Tax credits:Foreign tax credits(270)(16)%Research and development credit(46)(3)%Changes in valuation allowances242 15 %Nontaxable or nondeductible items:Compensation 89 5 %Indemnification costs47 3 %Transaction costs42 2 %Other16 1 %Change in unrecognized tax benefits84 5 %Other adjustments(18)(1)%Income tax expense$890 54 %(1) State taxes in California contributed to the majority (greater than 50%) of the tax effect in this category.(2) The majority of tax effect in this category is from Brazil (2%), China (2%), Mexico (2%), Spain (-1%), Italy (1%), Chile (1%), Australia (1%) and Argentina (1%).A reconciliation of the Company’s effective income tax rate to the 21% U.S. federal statutory income tax rate for the years prior to the adoption of ASU 2023-09, is presented below:Year Ended December 31,20242023Pre-tax income at U.S.

SHARE-BASED COMPENSATIONThe Company has various incentive plans under which PRSUs, RSUs, and stock options have been issued. Upon exercise or vesting of stock awards, the Company issues new shares from its existing authorized but unissued shares. As of December 31, 2025, there were 136 million shares of common stock in reserves that were available for future issuance under the incentive plans.Share-Based Compensation ExpenseThe table below presents the components of share-based compensation expense (in millions).Year Ended December 31,202520242023PRSUs$239 $89 $65 RSUs457 415 375 Stock options73 53 60 Total share-based compensation expense$769 $557 $500 Tax benefit recognized$115 $96 $97 Liability-classified share-based compensation awards include certain PRSUs. The Company recorded total liabilities for cash-settled and other liability-classified share-based compensation awards of $190 million and $66 million as of December 31, 2025 and 2024, respectively. The current portion of the liability for cash-settled and other liability-classified awards was $108 million and $27 million as of December 31, 2025 and 2024, respectively.Share-Based Award ActivityPRSUsThe table below presents PRSU activity (in millions, except years and weighted-average grant date fair value).PRSUsWeighted-AverageGrantDate Fair ValueWeighted-AverageRemainingContractualTerm(years)AggregateFairValueOutstanding as of December 31, 20249.8 $11.20 1.2$104 Granted4.8 $11.79 Performance adjustments2.6 $8.64 Converted(4.3)$9.57 $48 Forfeited(0.1)$10.06 Outstanding as of December 31, 202512.8 $11.87 1.0$370 Vested and expected to vest as of December 31, 202512.8 $11.87 1.0$370 Convertible as of December 31, 20252.5 $11.05 0.0$72 As of December 31, 2025, there was $73 million of unrecognized compensation cost related to PRSUs.RSUsThe table below presents RSU activity (in millions, except years and weighted-average grant date fair value).RSUsWeighted-AverageGrantDate Fair ValueWeighted-AverageRemainingContractualTerm(years)AggregateFairValueOutstanding as of December 31, 202478.8 $11.41 1.6$835 Granted43.0 $11.13 Vested(31.5)$12.69 $388 Forfeited(6.1)$10.42 Outstanding as of December 31, 202584.2 $10.81 1.2$2,432 Vested and expected to vest as of December 31, 202584.2 $10.81 1.2$2,432 As of December 31, 2025, there was $457 million of unrecognized compensation cost related to RSUs, of which $11 million is related to cash settled RSUs.

LEASESThe Company has operating and finance leases for transponders, office space, studio facilities, software, and other equipment. The Company’s leases were reflected in the Company’s consolidated balance sheets as follows (in millions).December 31,20252024Operating LeasesLocation on Balance SheetOperating lease right-of-use assetsOther noncurrent assets$2,749 $2,373 Operating lease liabilities (current)Accrued liabilities$285 $307 Operating lease liabilities (noncurrent)Other noncurrent liabilities3,226 2,731 Total operating lease liabilities$3,511 $3,038 Finance LeasesFinance lease right-of-use assetsProperty and equipment, net$635 $432 Finance lease liabilities (current)Accrued liabilities$149 $107 Finance lease liabilities (noncurrent)Other noncurrent liabilities534 356 Total finance lease liabilities$683 $463 Supplemental information related to leases was as follows.December 31,20252024Weighted average remaining lease term (in years):Operating leases1111Finance leases66Weighted average discount rateOperating leases4.97 %4.43 %Finance leases5.46 %5.11 %The Company’s leases have remaining lease terms of up to 27 years, some of which include multiple options to extend the leases for up to a total of 20 years. Most leases are not cancelable prior to their expiration.The components of lease cost were as follows (in millions):Year Ended December 31,202520242023Operating lease cost$407 $441 $540 Finance lease cost:Amortization of right-of-use assets$150 $111 $85 Interest on lease liabilities32 19 8 Total finance lease cost$182 $130 $93 Variable fees and other(a)$29 $44 $74 Total lease cost $618 $615 $707 (a) Includes variable lease payments related to our operating and finance leases and costs of leases with initial terms of less than one year.

ACQUISITIONS AND DISPOSITIONSAcquisitionsBluTVThe Company previously held a 35% interest in BluTV, a SVOD platform entity and content distributor in Turkey that was accounted for as an equity method investment. In December 2023, the Company acquired the remaining 65% of BluTV for $50 million.DispositionsIn May 2024, the Company sold its 50% interest in All3Media, an equity method investment, for proceeds of $324 million and recorded a gain of $203 million in other income (expense), net in the consolidated statements of operations. In October 2024, the Company sold its minority interests in Formula E, which were recorded as an equity method investment and an investment without readily determinable fair value, to Liberty Global Ltd. (“Liberty Global”), a related party, for total proceeds of $217 million and recorded a gain of $61 million in other income (expense), net in the consolidated statements of operations. During 2023, the Company sold or exited all of the AT&T SportsNets.