Warner Bros Discovery Inc.
08/07/2025 | Press release | Distributed by Public on 08/07/2025 13:55
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's discussion and analysis of financial condition and results of operations is a supplement to and should be read in conjunction with the accompanying consolidated financial statements and related notes. This section provides additional information regarding our businesses, current developments, results of operations, cash flows and financial condition. Additional context can also be found in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K").
BUSINESS OVERVIEW
Warner Bros. Discovery is a leading global media and entertainment company that creates and distributes a differentiated and comprehensive portfolio of content and products across television, film, streaming, interactive gaming, publishing, themed experiences, and consumer products through brands including: Discovery Channel, HBO Max, CNN, DC Studios, TNT Sports, HBO, Food Network, TLC, TBS, Warner Bros. Motion Picture Group, Warner Bros. Television Group, Warner Bros. Games, Adult Swim, Turner Classic Movies, and others.
We are home to one of the largest collections of owned content in the world with assets and intellectual property across sports, news, lifestyle, and entertainment in most languages and regions of the globe. We create some of the best-in-class content using our renowned library, beloved franchises, and acclaimed creative expertise to serve our audiences and consumers. Our asset mix strongly positions us to execute our key strategies: grow our streaming business globally, enhance our Studios segment, and manage our linear networks for the best possible success in order to create long-term value for our shareholders.
In June 2025, the Company announced its plans to separate the Company, in a tax-free transaction, into two publicly traded companies (the "Separation"). Warner Bros. will primarily consist of our Streaming and Studios reportable segments and include Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max, as well as its film and television libraries. Discovery Global will primarily consist of our Global Linear Networks reportable segment and include premier entertainment, sports and news television brands around the world including CNN, TNT Sports in the U.S., and Discovery, free-to-air channels across Europe, and digital products such as Discovery+ and Bleacher Report. The Separation is expected to be completed by mid-2026, subject to closing and other conditions, including final approval by the Warner Bros. Discovery Board, receipt of tax opinions with respect to the tax-free nature of the transaction for U.S. federal income tax purposes, and market conditions. There can be no assurance that the Separation will occur in accordance with the expected plans or anticipated timeline, or at all.
In the first quarter of 2025, the Company renamed its Direct-to-Consumer reportable segment to Streaming and its Networks reportable segment to Global Linear Networks. There have been no changes to the Company's reportable segments or the composition of our reportable segments as a result of these announcements. We have included supplemental Streaming & Studios and Global Linear Networks division information and supplemental consolidating data within Management's Discussion and Analysis of this Quarterly Report on Form 10-Q.
As of June 30, 2025, we classified our operations in three reportable segments:
•Streaming -Our Streaming segment primarily consists of our premium pay-TV and streaming services.
•Studios - Our Studios segment primarily consists of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/streaming services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming.
•Global Linear Networks - Our Global Linear Networks segment primarily consists of our domestic and international television networks.
Our segment presentation is aligned with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments.
INDUSTRY TRENDS
Headwinds in the industry, such as continued pressures on linear distribution and declines in linear subscribers and continued softness in the U.S. linear advertising market, have had, and are expected to continue to have, a material impact on the operations and results of the Company, including a negative impact on the results of operations attributed to declines in linear advertising revenue. The increase of digital advertising available in the marketplace has also resulted in, and is expected to continue to result in, increased competition for advertising expenditures for both traditional linear networks and ad-supported tiers in streaming services. In addition, the imposition of tariffs by the U.S. government and any retaliatory tariffs from foreign governments, including tariffs directly or indirectly applicable to our industry, may negatively impact our operations and results, including by leading to higher productions costs or decreased spending by advertisers whose expenditures are sensitive to such actions or to general economic conditions. We continue to closely monitor the ongoing impact of industry trends to our business; however, the full effects on our operations and results will depend on future developments, which are highly uncertain and cannot be predicted.
RESULTS OF OPERATIONS
Foreign Exchange Impacting Comparability
The impact of exchange rates on our business is an important factor in understanding period-to-period comparisons of our results. For example, our international revenues are favorably impacted as the U.S. dollar weakens relative to other foreign currencies and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. We believe the presentation of results on a constant currency basis ("ex-FX"), in addition to results reported in accordance with U.S. GAAP provides useful information about our operating performance because the presentation ex-FX excludes the effects of foreign currency volatility and highlights our core operating results. The presentation of results on a constant currency basis should be considered in addition to, but not a substitute for, measures of financial performance reported in accordance with U.S. GAAP.
The ex-FX change represents the percentage change on a period-over-period basis adjusted for foreign currency impacts. The ex-FX change is calculated as the difference between the current year amounts translated at a baseline rate, which is a spot rate for each of our currencies determined early in the fiscal year as part of our forecasting process (the "2025 Baseline Rate"), and the prior year amounts translated at the same 2025 Baseline Rate. In addition, consistent with the assumption of a constant currency environment, our ex-FX results exclude the impact of our foreign currency hedging activities, as well as realized and unrealized foreign currency transaction gains and losses. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies.
Consolidated Results of Operations
The table below presents our consolidated results of operations (in millions).
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | % Change (ex-FX) | 2025 | 2024 | % Change | % Change (ex-FX) | |||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution | $ | 4,885 | $ | 4,879 | - | % | - | % | $ | 9,771 | $ | 9,864 | (1) | % | - | % | ||||||||||||||||||||||||||||||||||
| Advertising | 2,216 | 2,430 | (9) | % | (10) | % | 4,196 | 4,578 | (8) | % | (9) | % | ||||||||||||||||||||||||||||||||||||||
| Content | 2,471 | 2,109 | 17 | % | 16 | % | 4,337 | 4,667 | (7) | % | (7) | % | ||||||||||||||||||||||||||||||||||||||
| Other | 240 | 295 | (19) | % | (23) | % | 487 | 562 | (13) | % | (15) | % | ||||||||||||||||||||||||||||||||||||||
| Total revenues | 9,812 | 9,713 | 1 | % | - | % | 18,791 | 19,671 | (4) | % | (4) | % | ||||||||||||||||||||||||||||||||||||||
| Costs of revenues, excluding depreciation and amortization | 5,967 | 6,204 | (4) | % | (4) | % | 11,098 | 12,262 | (9) | % | (10) | % | ||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 2,477 | 2,461 | 1 | % | - | % | 4,671 | 4,693 | - | % | (1) | % | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 1,447 | 1,744 | (17) | % | (17) | % | 2,994 | 3,632 | (18) | % | (18) | % | ||||||||||||||||||||||||||||||||||||||
| Restructuring and other charges | 80 | 117 | (32) | % | (32) | % | 134 | 152 | (12) | % | (12) | % | ||||||||||||||||||||||||||||||||||||||
| Impairments and loss on dispositions | 26 | 9,395 | (100) | % | (100) | % | 116 | 9,407 | (99) | % | (99) | % | ||||||||||||||||||||||||||||||||||||||
| Total costs and expenses | 9,997 | 19,921 | (50) | % | (50) | % | 19,013 | 30,146 | (37) | % | (37) | % | ||||||||||||||||||||||||||||||||||||||
| Operating loss | (185) | (10,208) | 98 | % | 98 | % | (222) | (10,475) | 98 | % | 98 | % | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | (463) | (518) | (931) | (1,033) | ||||||||||||||||||||||||||||||||||||||||||||||
| Gain on extinguishment of debt, net | 2,958 | 542 | 2,954 | 567 | ||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from equity investees, net | 5 | (23) | (2) | (71) | ||||||||||||||||||||||||||||||||||||||||||||||
| Other income, net | 139 | 172 | 221 | 158 | ||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | 2,454 | (10,035) | 2,020 | (10,854) | ||||||||||||||||||||||||||||||||||||||||||||||
| Income tax (expense) benefit | (866) | 7 | (881) | (129) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | 1,588 | (10,028) | 1,139 | (10,983) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (7) | (10) | (15) | (17) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests | (1) | 52 | 3 | 48 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) available to Warner Bros. Discovery, Inc. | $ | 1,580 | $ | (9,986) | $ | 1,127 | $ | (10,952) | ||||||||||||||||||||||||||||||||||||||||||
NM - Not meaningful
Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis. The ex-FX percent changes of line items below operating loss in the table above are not included as the activity is principally in U.S. dollars.
Revenues
Distribution revenue remained flat for the three and six months ended June 30, 2025, primarily attributable to a 9% decline in domestic linear subscribers for the three and six months ended June 30, 2025, offset by a 22% increase in Streaming subscribers for the three and six months ended June 30, 2025 as a result of continued global expansion of HBO Max, including new distribution deals.
Advertising revenue decreased 10% and 9% for the three and six months ended June 30, 2025, respectively, primarily attributable to audience declines in domestic networks of 23% and 25%, respectively, for the three and six months ended June 30, 2025 and domestic pricing pressures within our Streaming segment, partially offset by an increase in ad-lite subscribers.
Content revenue increased 16% and decreased 7% for the three and six months ended June 30, 2025, respectively. The increase for the three months ended June 30, 2025 was primarily attributable to a 38% increase in theatrical product revenue as a result of higher film rental revenue, primarily due to the strong performance of A Minecraft Movie, Sinners, and Final Destination Bloodlines, which were released in the second quarter of 2025. The increase in theatrical product revenue was partially offset by lower television product revenue due to lower third-party licensing.
The decrease for the six months ended June 30, 2025 was primarily attributable to a decrease in television product revenue due to lower third-party licensing, a 34% decrease in games revenue attributable to no releases in 2025 compared to the prior year release of Suicide Squad: Kill the Justice Leaguein the first quarter of 2024, and a decrease in home entertainment revenue due to the strong prior year performance of Dune: Part Two, Wonka, and Aquaman and the Lost Kingdom. The decrease for the six months ended June 30, 2025 was partially offset by an increase in theatrical product revenue attributable to higher film rental revenue due to the strong current year performance of A Minecraft Move, Sinners, and Final Destination Bloodlines.
Other revenue decreased 23% and 15% for the three and six months ended June 30, 2025, respectively.
Costs of Revenues
Costs of revenues decreased 4% and 10% for the three and six months ended June 30, 2025, respectively. The decrease for the three months ended June 30, 2025 was primarily attributable to lower content expense related to the amortization of purchase accounting fair value step-up for content, lower domestic sports and content costs due to the timing of programming releases in our Streaming segment, and a 49% decrease in games content expense commensurate with lower games revenue. The decrease for the three months ended June 30, 2025 was partially offset by an 18% increase in theatrical product content expense as a result of higher film costs commensurate with higher theatrical product revenue.
The decrease for the six months ended June 30, 2025 was primarily attributable to a 60% decrease in games content expense due to a $213 million impairment related to Suicide Squad: Kill the Justice Leaguein the prior year and lower games content expense commensurate with lower games revenue, a 13% decrease in theatrical product content expense as a result of lower film costs due to lower payments to partners, lower content expense related to the amortization of purchase accounting fair value step-up for content, and lower domestic sports and content costs due to the timing of programming releases in our Streaming segment. The decrease for the six months ended June 30, 2025 was partially offset by higher international content costs to support HBO Max launches.
Selling, General and Administrative
Selling, general and administrative expenses were flat and decreased 1% for the three and six months ended June 30, 2025, respectively. For the three months ended June 30, 2025, higher overhead expenses were offset by lower marketing and personnel expenses. The decrease for the six months ended June 30, 2025 was primarily attributable to lower marketing expenses, partially offset by higher overhead costs.
Depreciation and Amortization
Depreciation and amortization decreased 17% and 18% for the three and six months ended June 30, 2025, respectively, primarily attributable to intangible assets acquired in connection with the acquisition of the WarnerMedia business (the "WarnerMedia Business") from AT&T Inc. that are being amortized using the sum of the months' digits method and the end of the useful life for certain intangible assets, partially offset by the shortening of the useful lives of certain intangible assets.
Restructuring and other charges
Restructuring and other charges decreased 32% and 12% for the three and six months ended June 30, 2025, respectively. Restructuring and other charges primarily includes organizational restructuring costs and consulting fees. (See Note 3 to the accompanying consolidated financial statements.)
Impairments and Loss on Dispositions
Impairments and loss on dispositions were $26 million and $116 million for the three and six months ended June 30, 2025, respectively, primarily attributable to a $87 million ROU asset impairment charge related to the Hudson Yards, New York office lease in the first quarter of 2025. (See Note 13 to the accompanying consolidated financial statements.)
Interest Expense, net
Interest expense, net decreased $55 million and $102 million for the three and six months ended June 30, 2025, respectively, primarily attributable to lower debt during the period. (See Note 8 and Note 9 to the accompanying consolidated financial statements.)
Gain on extinguishment of debt, net
During the three months ended June 30, 2025, the Company commenced and completed the Tender Offers by purchasing senior notes and debentures in the aggregate principal amount of $17.7 billion and recorded a gain on extinguishment of debt of approximately $3.0 billion. Additionally, the Company repaid in full at maturity $487 million of aggregate principal amount outstanding of its senior notes due June 2025. (See Note 8 to the accompanying consolidated financial statements.)
Income (Loss) From Equity Investees, net
Income (loss) from our equity method investees was $5 million and $(2) million for the three and six months ended June 30, 2025, respectively. The changes are attributable to our share of net earnings and losses from our equity investees. (See Note 7 to the accompanying consolidated financial statements.)
Other Income, net
Other income, net was $139 million and $221 million for the three and six months ended June 30, 2025, respectively. (See Note 13 to the accompanying consolidated financial statements.)
Income Tax (Expense) Benefit
Income tax (expense) benefit was $(866) million and $7 million for the three months ended June 30, 2025 and 2024, respectively and $(881) million and $(129) million for the six months ended June 30, 2025 and 2024, respectively. The increase in income tax expense for the three and six months ended June 30, 2025 compared to the same periods in 2024 was primarily attributable to higher pre-tax book income, including a $3.0 billion gain recognized in connection with the Tender Offers in 2025 (See Note 8) and a non-cash goodwill impairment charge of $9.1 billion recorded in 2024, the majority of which was not deductible for tax purposes.
Income tax expense for the three and six months ended June 30, 2025, reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributable to the effect of foreign operations and changes in unrecognized tax benefits.
The Organization for Economic Co-operation and Development's ("OECD") Pillar Two Global Anti-Base Erosion ("GloBE") model rules, issued under the OECD Inclusive Framework on Base Erosion and Profit Shifting, introduce a global minimum tax of 15% applicable to multinational enterprise groups with consolidated financial statement revenue in excess of €750 million. Numerous foreign jurisdictions have already enacted tax legislation based on the GloBE rules, with some effective as early as January 1, 2024. As of June 30, 2025, we recognized an immaterial income tax expense for Pillar Two GloBE minimum tax. The Company is continuously monitoring the evolving application of this legislation and assessing its potential impact on our future tax liability. (See Note 12 to accompanying consolidated financial statements.)
Division and Segment Results of Operations
The Company evaluates the operating performance of its segments based on financial measures such as revenues and Adjusted EBITDA. Adjusted EBITDA is defined as operating income excluding:
•employee share-based compensation;
•depreciation and amortization;
•restructuring and facility consolidation;
•certain impairment charges;
•gains and losses on business and asset dispositions;
•third-party transaction and integration costs;
•amortization of purchase accounting fair value step-up for content;
•amortization of capitalized interest for content; and
•other items impacting comparability.
The CODM uses this measure to assess the operating results and performance of the segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. The Company believes Adjusted EBITDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses. The Company excludes employee share-based compensation, restructuring, certain impairment charges, gains and losses on business and asset dispositions, and transaction and integration costs from the calculation of Adjusted EBITDA due to their impact on comparability between periods. Integration costs include transformative system implementations and integrations, such as Enterprise Resource Planning systems, and may take several years to complete. The Company also excludes the depreciation of fixed assets and amortization of intangible assets, amortization of purchase accounting fair value step-up for content (which is included in consolidated costs of revenues), and amortization of capitalized interest for content, as these amounts do not represent cash payments in the current reporting period. We prospectively updated certain corporate allocations at the beginning of 2025. The impact to prior periods was immaterial.
The table below presents our Adjusted EBITDA for each of the Company's reportable segments, corporate, and inter-segment eliminations (in millions).
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| Streaming | $ | 293 | $ | (107) | NM | $ | 632 | $ | (21) | NM | ||||||||||||||||||||||||||||
| Studios | $ | 863 | $ | 210 | NM | $ | 1,122 | $ | 394 | NM | ||||||||||||||||||||||||||||
| Global Linear Networks | $ | 1,512 | $ | 1,998 | (24) | % | $ | 3,305 | $ | 4,117 | (20) | % | ||||||||||||||||||||||||||
| Corporate | $ | (316) | $ | (285) | (11) | % | $ | (549) | $ | (631) | 13 | % | ||||||||||||||||||||||||||
| Inter-segment eliminations | $ | (399) | $ | (21) | NM | $ | (452) | $ | 38 | NM | ||||||||||||||||||||||||||||
Supplemental Streaming & Studios and Global Linear Networks Division Information
The following tables present, for our Streaming & Studios and Global Linear Networks divisions, supplemental information about revenues and Adjusted EBITDA (in millions).
Revenues
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | % Change (ex-FX) | 2025 | 2024 | % Change | % Change (ex-FX) | |||||||||||||||||||||||||||||||||||||||||||
| Streaming | $ | 2,793 | $ | 2,568 | 9 | % | 8 | % | $ | 5,449 | $ | 5,028 | 8 | % | 9 | % | ||||||||||||||||||||||||||||||||||
| Studios | 3,801 | 2,449 | 55 | % | 54 | % | 6,115 | 5,270 | 16 | % | 16 | % | ||||||||||||||||||||||||||||||||||||||
| Streaming & Studios eliminations | (1,400) | (416) | NM | NM | (2,023) | (734) | NM | NM | ||||||||||||||||||||||||||||||||||||||||||
| Streaming & Studios | 5,194 | 4,601 | 13 | % | 12 | % | 9,541 | 9,564 | - | % | - | % | ||||||||||||||||||||||||||||||||||||||
| Global Linear Networks | 4,803 | 5,272 | (9) | % | (9) | % | 9,577 | 10,397 | (8) | % | (8) | % | ||||||||||||||||||||||||||||||||||||||
| Corporate | 1 | 1 | - | % | - | % | 1 | 2 | (50) | % | (50) | % | ||||||||||||||||||||||||||||||||||||||
| Other inter-segment eliminations | (186) | (161) | (16) | % | (16) | % | (328) | (292) | (12) | % | (12) | % | ||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 9,812 | $ | 9,713 | 1 | % | - | % | $ | 18,791 | $ | 19,671 | (4) | % | (4) | % | ||||||||||||||||||||||||||||||||||
Adjusted EBITDA
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | % Change (ex-FX) | 2025 | 2024 | % Change | % Change (ex-FX) | |||||||||||||||||||||||||||||||||||||||||||
| Streaming | $ | 293 | $ | (107) | NM | NM | $ | 632 | $ | (21) | NM | NM | ||||||||||||||||||||||||||||||||||||||
| Studios | 863 | 210 | NM | NM | 1,122 | 394 | NM | NM | ||||||||||||||||||||||||||||||||||||||||||
| Streaming & Studios eliminations | (366) | (27) | NM | NM | (424) | 22 | NM | NM | ||||||||||||||||||||||||||||||||||||||||||
| Streaming & Studios | 790 | 76 | NM | NM | 1,330 | 395 | NM | NM | ||||||||||||||||||||||||||||||||||||||||||
| Global Linear Networks | 1,512 | 1,998 | (24) | % | (25) | % | 3,305 | 4,117 | (20) | % | (19) | % | ||||||||||||||||||||||||||||||||||||||
| Corporate | (316) | (285) | (11) | % | (9) | % | (549) | (631) | 13 | % | 14 | % | ||||||||||||||||||||||||||||||||||||||
| Other inter-segment eliminations | (33) | 6 | NM | NM | (28) | 16 | NM | NM | ||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 1,953 | $ | 1,795 | 9 | % | 9 | % | $ | 4,058 | $ | 3,897 | 4 | % | 6 | % | ||||||||||||||||||||||||||||||||||
Streaming Segment
The following table presents, for our Streaming segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | % Change (ex-FX) | 2025 | 2024 | % Change | % Change (ex-FX) | |||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution | $ | 2,410 | $ | 2,202 | 9 | % | 9 | % | $ | 4,739 | $ | 4,387 | 8 | % | 8 | % | ||||||||||||||||||||||||||||||||||
| Advertising | 282 | 240 | 18 | % | 17 | % | 519 | 415 | 25 | % | 25 | % | ||||||||||||||||||||||||||||||||||||||
| Content | 102 | 123 | (17) | % | (21) | % | 190 | 222 | (14) | % | (15) | % | ||||||||||||||||||||||||||||||||||||||
| Other | (1) | 3 | NM | NM | 1 | 4 | (75) | % | (75) | % | ||||||||||||||||||||||||||||||||||||||||
| Total revenues | 2,793 | 2,568 | 9 | % | 8 | % | 5,449 | 5,028 | 8 | % | 9 | % | ||||||||||||||||||||||||||||||||||||||
| Costs of revenues, excluding depreciation and amortization | 1,913 | 2,028 | (6) | % | (6) | % | 3,737 | 3,923 | (5) | % | (5) | % | ||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 587 | 647 | (9) | % | (10) | % | 1,080 | 1,126 | (4) | % | (4) | % | ||||||||||||||||||||||||||||||||||||||
|
Adjusted EBITDA - Streaming segment
|
293 | (107) | NM | NM | 632 | (21) | NM | NM | ||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 356 | 460 | 727 | 975 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other charges | 7 | 15 | 19 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||
| Facility consolidation costs | - | 3 | - | 5 | ||||||||||||||||||||||||||||||||||||||||||||||
| Impairment and amortization of fair value step-up for content | 39 | 71 | 86 | 173 | ||||||||||||||||||||||||||||||||||||||||||||||
| Impairments and loss on dispositions | 11 | 11 | 14 | 16 | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating loss | $ | (120) | $ | (667) | $ | (214) | $ | (1,207) | ||||||||||||||||||||||||||||||||||||||||||
Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis.
Revenues
Subscriber information consisted of the following (in millions).
| June 30, 2025 | June 30, 2024 | % Change | ||||||||||||||||||
|
Total Domestic subscribers1
|
57.8 | 52.4 | 10 | % | ||||||||||||||||
|
Total International subscribers1
|
67.9 | 50.8 | 33 | % | ||||||||||||||||
| Total Streaming subscribers1 | 125.7 | 103.3 | 22 | % | ||||||||||||||||
Distribution revenue increased 9% and 8% for the three and six months ended June 30, 2025, respectively, primarily attributable to a 22% increase in subscribers as a result of continued global expansion of HBO Max, including new distribution deals, partially offset by the impact of a wholesale deal renewal and lower global distribution ARPU due to a mix shift in the subscriber base across distribution channels, geography, and product type.
Advertising revenue increased 17% and 25% for the three and six months ended June 30, 2025, respectively, primarily attributable to an increase in ad-lite subscribers, partially offset by domestic pricing pressures.
1Streaming subscriber - We define a "Core Streaming Subscription" as:
i.a retail subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product (defined below) for which we have recognized subscription revenue, whether directly or through a third party, from a Streaming platform;
ii.a wholesale subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription;
iii.a wholesale subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue on a per subscriber basis, including third-party services that host a branded environment of discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue on a per subscriber basis;
iv.a retail or wholesale subscription to an independently-branded, regional product sold on a stand-alone basis that includes discovery+, HBO, HBO Max, Max, and/or a Premium Sports Product, for which we have recognized subscription revenue (as per (i) -(iii) above); and users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.
The Company defines a "Premium Sports Product" as a strategically prioritized, sports-focused product sold on a stand-alone basis and made available directly to consumers.
The current "independently-branded, regional product" referred to in (iv) above consist of TVN/Player.
Subscribers to multiple WBD Streaming products (listed above) are counted as a paid subscriber for each individual WBD streaming product subscription.
We may refer to the aggregate number of Core Streaming Subscriptions as "subscribers".
The reported number of "subscribers" included herein and the definition of "Streaming Subscription" as used herein excludes:
i.individuals who subscribe to Streaming products, other than discovery+, HBO, HBO Max, Max, a Premium Sports Product, and independently-brand, regional products (currently consisting of TVN/Player), that may be offered by us or by certain joint venture partners or affiliated parties from time to time;
ii.a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time;
iii.domestic and international Cinemax subscribers, and international basic HBO subscribers; and users on free trials except for those users on free trial that convert to a Streaming Subscription within the first seven days of the next month as noted above.
Domestic subscriber- We define a Domestic subscriber as a subscription based either in the United States of America or Canada.
International subscriber - We define an International subscriber as a subscription based outside of the United States of America or Canada.
Global ARPU consisted of the following.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change (ex-FX) | 2025 | 2024 | % Change (ex-FX) | |||||||||||||||||||||||||||||||||
| Domestic ARPU | $ | 11.16 | $ | 12.08 | (8) | % | $ | 11.16 | $ | 11.90 | (6) | % | ||||||||||||||||||||||||||
| International ARPU | $ | 3.85 | $ | 3.85 | - | % | $ | 3.75 | $ | 3.80 | - | % | ||||||||||||||||||||||||||
| Global ARPU2 | $ | 7.14 | $ | 8.00 | (11) | % | $ | 7.12 | $ | 7.91 | (10) | % | ||||||||||||||||||||||||||
Global ARPU decreased 11% and 10% for the three and six months ended June 30, 2025, respectively, primarily attributable to a 33% increase year-over-year in international subscribers. Additionally, global ARPU was negatively impacted by an 8% and 6% decrease in domestic ARPU for the three and six months ended June 30, 2025, respectively, primarily attributable to broader distribution of HBO Max Basic with Ads.
Content revenue decreased 21% and 15% for the three and six months ended June 30, 2025, respectively, primarily attributable to lower third-party licensing as a result of launching HBO Max in new international markets.
Costs of Revenues
Costs of revenues decreased 6% and 5% for the three and six months ended June 30, 2025, respectively, primarily attributable to lower domestic sports and content costs due to the timing of programming releases, partially offset by higher international content costs to support HBO Max launches.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses decreased 10% and 4% for the three and six months ended June 30, 2025, respectively, primarily attributable to lower marketing costs. Additionally, the decrease for the six months ended June 30, 2025 was partially offset by higher overhead costs.
Adjusted EBITDA
Adjusted EBITDA increased $400 million and $653 million for the three and six months ended June 30, 2025, respectively.
2ARPU:The Company defines Streaming Average Revenue Per User ("ARPU") as total subscription revenue plus net advertising revenue for the period divided by the daily average number of paying subscribers for the period. Where daily values are not available, the sum of beginning of period and end of period divided by two is used.
Excluded from the ARPU calculation are: (i) Revenue and subscribers for streaming products, other than discovery+, HBO, HBO Max, Max, a Premium Sports Product, and independently-branded, regional products (currently consisting of TVN/Player), that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) A limited amount of international discovery+ revenue and subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) Cinemax, Max/HBO hotel and bulk institution (i.e., subscribers billed on a bulk basis), and international basic HBO revenue and subscribers; and (iv) Users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.
Studios Segment
The following table presents, for our Studios segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (loss) (in millions).
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | % Change (ex-FX) | 2025 | 2024 | % Change | % Change (ex-FX) | |||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution | $ | 1 | $ | 3 | (67) | % | (67) | % | $ | 2 | $ | 8 | (75) | % | (75) | % | ||||||||||||||||||||||||||||||||||
| Advertising | - | - | NM | NM | 1 | 4 | (75) | % | (75) | % | ||||||||||||||||||||||||||||||||||||||||
| Content | 3,591 | 2,237 | 61 | % | 59 | % | 5,730 | 4,860 | 18 | % | 18 | % | ||||||||||||||||||||||||||||||||||||||
| Other | 209 | 209 | - | % | (5) | % | 382 | 398 | (4) | % | (6) | % | ||||||||||||||||||||||||||||||||||||||
| Total revenues | 3,801 | 2,449 | 55 | % | 54 | % | 6,115 | 5,270 | 16 | % | 16 | % | ||||||||||||||||||||||||||||||||||||||
| Costs of revenues, excluding depreciation and amortization | 2,215 | 1,601 | 38 | % | 38 | % | 3,628 | 3,620 | - | % | - | % | ||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 723 | 638 | 13 | % | 12 | % | 1,365 | 1,256 | 9 | % | 8 | % | ||||||||||||||||||||||||||||||||||||||
|
Adjusted EBITDA - Studios segment
|
863 | 210 | NM | NM | 1,122 | 394 | NM | NM | ||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 169 | 174 | 339 | 360 | ||||||||||||||||||||||||||||||||||||||||||||||
| Employee share-based compensation | - | - | - | (1) | ||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other charges | (1) | 19 | (6) | 30 | ||||||||||||||||||||||||||||||||||||||||||||||
| Transaction and integration costs | - | 1 | - | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
| Facility consolidation costs | - | 1 | - | 1 | ||||||||||||||||||||||||||||||||||||||||||||||
| Impairment and amortization of fair value step-up for content | 25 | 83 | 61 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of capitalized interest for content | 3 | 13 | 9 | 30 | ||||||||||||||||||||||||||||||||||||||||||||||
| Impairments and gain on dispositions | - | (1) | (1) | (1) | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 667 | $ | (80) | $ | 720 | $ | (38) | ||||||||||||||||||||||||||||||||||||||||||
Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis. The Studios discussion below also includes intra-segment revenue and expense between product lines, which represented less than 2% and 3% of total revenues and operating expenses for this segment for the three and six months ended June 30, 2025, respectively. Intra-segment revenue and expense are eliminated at the Studios segment level.
Fluctuations in results for our Studios segment may occur due to various factors, including (but not limited to) the timing and number of new film releases each quarter, the timing of marketing expenses recognized relative to (i.e., prior to) a film's release, and the mix of content distributed each period.
Revenues
Content revenue increased 59% for the three months ended June 30, 2025, primarily attributable to a 115% increase in television product revenue and a 38% increase in theatrical product revenue, partially offset by a 14% decrease in games revenue.
•The increase in television product revenue was attributable to higher intercompany content licensing, primarily due to the timing of renewals.
•The increase in theatrical product revenue was attributable to higher film rental revenue, partially offset by lower content licensing. The increase in film rental revenue was primarily due to the strong performance of A Minecraft Movie, Sinners, andFinal Destination Bloodlines,which were released in the second quarter of 2025.
•The decrease in games revenue was attributable to no releases in 2025.
Content revenue increased 18% for the six months ended June 30, 2025, primarily attributable to a 54% increase in television product revenue and a 3% increase in theatrical product revenue, partially offset by a 34% decrease in games revenue.
•The increase in television product revenue was attributable to higher intercompany content licensing, primarily due to the timing of renewals.
•The increase in theatrical product revenue was attributable to higher film rental revenue and intercompany content sales, partially offset by lower home entertainment revenue. The increase in film rental revenue was primarily due to the strong current year performance of A Minecraft Movie, Sinners, andFinal Destination Bloodlines. The decrease in home entertainment revenue was primarily due to the strong prior year performance of Dune: Part Two, Wonka, and Aquaman and the Lost Kingdom.
•The decrease in games revenue was attributable to no releases in 2025 compared to the prior year release of Suicide Squad: Kill the Justice Leaguein the first quarter of 2024.
Other revenue decreased 5% and 6% for the three and six months ended June 30, 2025.
Costs of Revenues
Costs of revenues increased 38% and was flat for the three and six months ended June 30, 2025. The increase for the three months ended June 30, 2025 was primarily attributable to an 87% increase in television product content expense and an 18% increase in theatrical product content expense, partially offset by a 49% decrease in games content expense commensurate with lower games revenue. The increase in television product content expense was due to higher costs commensurate with higher intercompany content licensing due to the timing of renewals. The increase in theatrical content expense was a result of higher film costs commensurate with higher theatrical product revenue.
During the six months ended June 30, 2025, television product content expense increased 40%, offset by a 60% decrease in games content expense and 13% decrease theatrical product content expense. The increase in television product content expense was due to higher costs commensurate with higher intercompany content licensing due to the timing of renewals. The decrease in games content expense was primarily due to a $213 million impairment related to Suicide Squad: Kill the Justice Leaguein the prior year, and lower games content expense commensurate with lower games revenue. The decrease in theatrical content expense was primarily a result of lower film costs due to lower payments to partners.
Selling, General and Administrative
Selling, general and administrative expenses increased 12% and 8% for the three and six months ended June 30, 2025. The increase for the three and six months ended June 30, 2025 was primarily attributable to higher theatrical marketing expenses. Additionally, the increase in theatrical marketing expense for the six months ended June 30, 2025 was partially offset by lower games marketing expenses.
Adjusted EBITDA
Adjusted EBITDA increased $653 million and $728 million for the three and six months ended June 30, 2025, respectively.
Global Linear Networks Segment
The table below presents, for our Global Linear Networks segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (loss) (in millions).
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | % Change (ex-FX) | 2025 | 2024 | % Change | % Change (ex-FX) | |||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution | $ | 2,477 | $ | 2,675 | (7) | % | (7) | % | $ | 5,035 | $ | 5,472 | (8) | % | (7) | % | ||||||||||||||||||||||||||||||||||
| Advertising | 1,953 | 2,214 | (12) | % | (13) | % | 3,711 | 4,201 | (12) | % | (12) | % | ||||||||||||||||||||||||||||||||||||||
| Content | 287 | 299 | (4) | % | (2) | % | 667 | 563 | 18 | % | 19 | % | ||||||||||||||||||||||||||||||||||||||
| Other | 86 | 84 | 2 | % | (1) | % | 164 | 161 | 2 | % | - | % | ||||||||||||||||||||||||||||||||||||||
| Total revenues | 4,803 | 5,272 | (9) | % | (9) | % | 9,577 | 10,397 | (8) | % | (8) | % | ||||||||||||||||||||||||||||||||||||||
| Costs of revenues, excluding depreciation and amortization | 2,592 | 2,531 | 2 | % | 2 | % | 4,919 | 4,903 | - | % | - | % | ||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 699 | 743 | (6) | % | (6) | % | 1,353 | 1,377 | (2) | % | (2) | % | ||||||||||||||||||||||||||||||||||||||
|
Adjusted EBITDA - Global Linear Networks segment
|
1,512 | 1,998 | (24) | % | (25) | % | 3,305 | 4,117 | (20) | % | (19) | % | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 829 | 1,052 | 1,736 | 2,157 | ||||||||||||||||||||||||||||||||||||||||||||||
| Employee share-based compensation | - | - | 1 | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other charges | 25 | 42 | 41 | 53 | ||||||||||||||||||||||||||||||||||||||||||||||
| Transaction and integration costs | - | (1) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Impairment and amortization of fair value step-up for content | 310 | 294 | 440 | 419 | ||||||||||||||||||||||||||||||||||||||||||||||
| Impairments and loss on dispositions | 1 | 9,154 | 3 | 9,154 | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 347 | $ | (8,543) | $ | 1,084 | $ | (7,666) | ||||||||||||||||||||||||||||||||||||||||||
Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis.
Revenues
Distribution revenue decreased 7% for the three and six months ended June 30, 2025, primarily attributable to a 9% decline in domestic linear subscribers, and to a lesser extent, lower international affiliate rates and international subscriber declines, partially offset by a 2% increase in domestic affiliate rates for both periods. Declines in linear subscribers are expected to continue.
Advertising revenue decreased 13% and 12% for the three and six months ended June 30, 2025, respectively, primarily attributable to audience declines in domestic networks of 23% and 25%, respectively, and the broadcast of the NCAA Final Four and championship game in 2024, partially offset by the broadcast of the Stanley Cup Finals in 2025.
Content revenue decreased 2% and increased 19% for the three and six months ended June 30, 2025, respectively, primarily attributable to timing of third-party licensing deals.
Other revenue decreased 1% and was flat for the three and six months ended June 30, 2025, respectively.
Costs of Revenues
Costs of revenues increased 2% and was flat for the three and six months ended June 30, 2025, respectively, primarily attributable to higher domestic sports costs. Costs of revenues for the six months ended June 30, 2025 benefited from timing of content, production, and news related spend.
Selling, General and Administrative
Selling, general and administrative expenses decreased 6% and 2% for the three and six months ended June 30, 2025, respectively, primarily attributable to lower overhead costs.
Adjusted EBITDA
Adjusted EBITDA decreased 25% and 19% for the three and six months ended June 30, 2025, respectively.
Corporate
The following table presents our Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | % Change (ex-FX) | 2025 | 2024 | % Change | % Change (ex-FX) | |||||||||||||||||||||||||||||||||||||||||||
|
Adjusted EBITDA - Corporate
|
$ | (316) | $ | (285) | (11) | % | (9) | % | $ | (549) | $ | (631) | 13 | % | 14 | % | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 93 | 58 | 192 | 140 | ||||||||||||||||||||||||||||||||||||||||||||||
| Employee share-based compensation | 173 | 156 | 292 | 256 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other charges | 49 | 41 | 80 | 52 | ||||||||||||||||||||||||||||||||||||||||||||||
| Transaction and integration costs | 17 | 51 | 97 | 130 | ||||||||||||||||||||||||||||||||||||||||||||||
| Facility consolidation costs | 4 | 1 | 9 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||
| Impairment and amortization of fair value step-up for content | - | 1 | - | 1 | ||||||||||||||||||||||||||||||||||||||||||||||
| Impairments and loss on dispositions | 14 | 231 | 100 | 238 | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating loss | $ | (666) | $ | (824) | $ | (1,319) | $ | (1,449) | ||||||||||||||||||||||||||||||||||||||||||
Corporate operations primarily consist of executive management and administrative support services, which are recorded in selling, general and administrative expense, as well as substantially all of our share-based compensation and third-party transaction and integration costs.
Adjusted EBITDA decreased 9% and increased 14% for the three and six months ended June 30, 2025, respectively. The decrease for the three months ended June 30, 2025 was primarily attributable to higher overhead costs and securitization expense. The increase for the six months ended June 30, 2025 was primarily attributable to lower facility costs due to office consolidations and closures and the release of previously recorded non-income tax reserves.
Inter-segment Eliminations
The following table presents our inter-segment eliminations by revenue and expense, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Inter-segment revenue eliminations | $ | (1,586) | $ | (577) | $ | (2,351) | $ | (1,026) | ||||||||||||||||||
| Inter-segment expense eliminations | (1,187) | (556) | (1,899) | (1,064) | ||||||||||||||||||||||
|
Adjusted EBITDA - Inter-segment eliminations
|
(399) | (21) | (452) | 38 | ||||||||||||||||||||||
| Impairment and amortization of fair value step-up for content | 14 | 73 | 41 | 153 | ||||||||||||||||||||||
| Operating loss | $ | (413) | $ | (94) | $ | (493) | $ | (115) | ||||||||||||||||||
Inter-segment revenue and expense eliminations primarily represent inter-segment content transactions and marketing and promotion activity between reportable segments. In our current segment structure, in certain instances, production and distribution activities are in different segments. Inter-segment content transactions are presented at market value (i.e., the segment producing and/or licensing the content reports revenue and profit from inter-segment transactions in a manner similar to the reporting of third-party transactions, and the required eliminations are reported on the separate "Eliminations" line when presenting our summary of segment results). Generally, timing of revenue recognition is similar to the reporting of third-party transactions. The segment distributing the content, e.g., via our streaming or linear services, capitalizes the cost of inter-segment content transactions, including "mark-ups" and amortizes the costs over the shorter of the license term, if applicable, or the expected period of use. The content amortization expense related to the inter-segment profit is also eliminated on the separate "Eliminations" line when presenting our summary of segment results.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Sources of Cash
Historically, we have generated a significant amount of cash from operations. During the six months ended June 30, 2025, we funded our working capital needs primarily through cash flows from operations. As of June 30, 2025, we had $4.9 billion of cash and cash equivalents on hand. We are a well-known seasoned issuer and have the ability to conduct registered offerings of securities, including debt securities, common stock and preferred stock, on short notice, subject to market conditions. Access to sufficient capital from the public market is not assured. We have a $4.0 billion revolving credit facility and a commercial paper program described below. We also participate in a revolving receivables program and an accounts receivable factoring program described below.
•Debt
Bridge Loan Facility
During the three months ended June 30, 2025, we and WMH entered into a Bridge Loan Facility with JPMorgan Chase Bank, N.A. WMH drew $17.0 billion of the available Bridge Loan Facility to finance the early settlement of the Tender Offers, Consent Solicitations, and the repayment in full and termination of our $1,500 million 364-day senior unsecured term loan facility, and the payment of fees and expenses therewith and for general corporate purposes. The Bridge Loan Facility is expected to be refinanced prior to the Separation. The Bridge Loan Facility contains customary representations and warranties as well as affirmative and negative covenants. As of June 30, 2025, we were in compliance with all applicable covenants and there were no events of default under the Bridge Loan Facility.
Revolving Credit Facility and Commercial Paper
DCL and certain subsidiaries of the Company, as borrowers, have a multicurrency revolving credit agreement (the "Credit Agreement") and have the capacity to borrow up to $4.0 billion under the Credit Agreement (the "Credit Facility"). DCL may also request additional commitments up to $1.0 billion from the lenders upon the satisfaction of certain conditions. In June 2025, we amended the Credit Agreement to, among other things, decrease the borrowing capacity from $6.0 billion to $4.0 billion and provide for early termination of the Credit Agreement upon completion of the Separation. The Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants. As of June 30, 2025, we were in compliance with all applicable covenants and there were no events of default under the Credit Agreement.
Additionally, our commercial paper program is supported by the Credit Facility. Under the commercial paper program, we may issue up to $2.0 billion. In March 2025, we increased the issuance capacity under the commercial paper program from $1.0 billion to $2.0 billion. Borrowing capacity under the Credit Facility is effectively reduced by any outstanding issuances under the commercial paper program.
During the six months ended June 30, 2025, we and DCL borrowed and repaid $3,551 million under our Credit Facility and commercial paper program. As of June 30, 2025, we and DCL had no outstanding borrowings under the Credit Facility or issuances under the commercial paper program.
Term Loan
During the six months ended June 30, 2025, we entered into and repaid a $1,500 million 364-day senior unsecured term loan credit facility. The proceeds were used to fund the redemption of $1,500 million aggregate principal amount outstanding of WMH's senior notes due 2026.
•Revolving Receivables Program
We have a revolving agreement to transfer up to $5,000 million of certain receivables through our bankruptcy-remote subsidiary, Warner Bros. Discovery Receivables Funding, LLC, to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. We service the sold receivables for the financial institution for a fee and pay fees to the financial institution in connection with this revolving agreement. As customers pay their balances, our available capacity under this revolving agreement increases and typically we transfer additional receivables into the program. In some cases, we may have collections that have not yet been remitted to the bank, resulting in a liability. The outstanding portfolio of receivables derecognized from our consolidated balance sheets was $4,499 million as of June 30, 2025.
•Accounts Receivable Factoring
We have a factoring agreement to sell certain of our non-U.S. trade accounts receivable on a limited recourse basis to a third-party financial institution. Total trade accounts receivable sold under the Company's factoring arrangement was $102 million for the six months ended June 30, 2025.
•Investments
In January 2025 we contributed a 70% interest in our music catalog to a joint venture with Cutting Edge Group
in exchange for net proceeds of $601 million. Additionally, we received proceeds from the sale of investments of $54 million for the six months ended June 30, 2025.
•Asset Dispositions
We received proceeds from asset dispositions of $66 million during the six months ended June 30, 2025.
Uses of Cash
Our primary uses of cash include the creation and acquisition of new content, business acquisitions, income taxes, personnel costs, costs to develop and market our enhanced streaming service HBO Max, principal and interest payments on our outstanding senior notes, funding for various equity method and other investments, and repurchases of our capital stock.
•Content Acquisition
We plan to continue to invest significantly in the creation and acquisition of new content, as well as certain sports rights. Contractual commitments to acquire content have not materially changed as set forth in "Material Cash Requirements from Known Contractual and Other Obligations" in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Form 10-K.
•Debt
Senior Notes
During the six months ended June 30, 2025, we repurchased or repaid $20,403 million of aggregate principal amount outstanding of our senior notes. In addition, we had $97 million of senior notes that were due in July 2025, and an additional $124 million of senior notes coming due through June 2026.
We may from time to time seek to prepay, retire or purchase our other outstanding indebtedness through prepayments, redemptions, open market purchases, privately negotiated transactions, tender offers or otherwise. Any such repurchases or exchanges will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions, as well as applicable regulatory, legal and accounting factors. Whether or not we repurchase or exchange any debt and the size and timing of any such repurchases or exchanges will be determined at our discretion.
•Capital Expenditures
We effected capital expenditures of $532 million during the six months ended June 30, 2025, including amounts capitalized to support HBO Max. In addition, we expect to continue to incur significant costs to develop and market HBO Max.
•Investments and Business Combinations
Our uses of cash have included investments in equity method investments and equity investments without readily determinable fair value. (See Note 7 to the accompanying consolidated financial statements.) We also provide funding to our investees from time to time. During the six months ended June 30, 2025, we contributed $26 million for investments in and advances to our investees.
•Redeemable Noncontrolling Interest and Noncontrolling Interest
We had redeemable equity balances of $23 million at June 30, 2025, which may require the use of cash in the event holders of noncontrolling interests put their interests to us. Distributions to noncontrolling interests and redeemable noncontrolling interests totaled $174 million and $161 million for the six months ended June 30, 2025 and 2024, respectively.
•Income Taxes and Interest
We expect to continue to make payments for income taxes and interest on our outstanding senior notes. During the six months ended June 30, 2025, we made cash payments of $974 million and $1,275 million for income taxes and interest on our outstanding debt, respectively.
Cash Flows
The following table presents changes in cash and cash equivalents (in millions).
| Six Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | $ | 5,416 | $ | 4,319 | ||||||||||
| Cash provided by operating activities | 1,536 | 1,813 | ||||||||||||
| Cash used in investing activities | (431) | (137) | ||||||||||||
| Cash used in financing activities | (1,886) | (2,274) | ||||||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 256 | (104) | ||||||||||||
| Net change in cash, cash equivalents, and restricted cash | (525) | (702) | ||||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 4,891 | $ | 3,617 | ||||||||||
Operating Activities
Cash provided by operating activities was $1,536 million and $1,813 million during the six months ended June 30, 2025 and 2024, respectively. The decrease in cash provided by operating activities was primarily attributable to a decrease in net income, excluding non-cash items, partially offset by an improvement in working capital activity.
Investing Activities
Cash used in investing activities was $431 million and $137 million during the six months ended June 30, 2025 and 2024, respectively. The increase in cash used in investing activities was primarily attributable to reduced proceeds from the sale of investments and increased purchases of property and equipment during the six months ended June 30, 2025.
Financing Activities
Cash used in financing activities was $1,886 million and $2,274 million during the six months ended June 30, 2025 and 2024, respectively. The decrease in cash used in financing activities was primarily attributable to proceeds received for the contribution of 70% of our music catalog to a joint venture during the six months ended June 30, 2025.
Capital Resources
As of June 30, 2025, capital resources were comprised of the following (in millions).
| June 30, 2025 | ||||||||||||||||||||
|
Total Capacity |
Outstanding Indebtedness |
Unused Capacity |
||||||||||||||||||
| Cash and cash equivalents | $ | 4,888 | $ | - | $ | 4,888 | ||||||||||||||
| Revolving credit facility and commercial paper program | 4,000 | - | 4,000 | |||||||||||||||||
| Bridge loan | 17,000 | 17,000 | - | |||||||||||||||||
|
Senior notes (a)
|
18,000 | 18,000 | - | |||||||||||||||||
| Total | $ | 43,888 | $ | 35,000 | $ | 8,888 | ||||||||||||||
|
(a) Interest on the senior notes is paid annually or semi-annually. Our senior notes outstanding as of June 30, 2025 had interest rates that ranged from 1.90% to 8.30% and will mature between 2025 and 2062.
|
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We expect that our cash balance, cash generated from operations and availability under the Credit Agreement will be sufficient to fund our cash needs for both the short- and long-term. Our borrowing costs and access to capital markets can be affected by short and long-term debt ratings assigned by independent rating agencies which are based, in part, on our performance as measured by credit metrics such as interest coverage and leverage ratios. Credit rating agencies may continue to
review and adjust our ratings or outlook. For example, in 2025, S&P, Moody's and Fitch downgraded certain of our ratings in part due to declines in our linear business, including as a result of the weak operating environment for linear networks, our leverage ratio, and an increase in secured debt and uncertainty in connection with the Separation.
The 2017 Tax Cuts and Jobs Act features a participation exemption regime with current taxation of certain foreign income and imposes a mandatory repatriation toll tax on unremitted foreign earnings. Notwithstanding the U.S. taxation of these amounts, we intend to continue to reinvest some of these funds outside of the U.S. Our current plans do not demonstrate a need to repatriate to the U.S. However, if these funds were to be needed in the U.S., we would be required to accrue and pay non-U.S. taxes to repatriate them. The determination of the amount of unrecognized deferred income tax liability with respect to these undistributed foreign earnings is not practicable.
Summarized Guarantor Financial Information
Basis of Presentation
As of June 30, 2025 and December 31, 2024, the Company has outstanding senior notes issued by Discovery Communications, LLC ("DCL"), which are guaranteed by the Company, Scripps Networks Interactive, Inc. ("Scripps Networks"), and WarnerMedia Holdings, Inc. ("WMH"); senior notes issued by WMH, which are guaranteed by the Company, Scripps Networks, and DCL; senior notes issued by the legacy WarnerMedia Business (not guaranteed); and senior notes issued by Scripps Networks (not guaranteed). (See Note 8 to the accompanying consolidated financial statements.) DCL, Scripps Networks, and WMH are wholly owned by the Company.
The tables below present the summarized financial information as combined for Warner Bros. Discovery, Inc. (the "Parent"), Scripps Networks, DCL, and WMH (collectively, the "Obligors"). All guarantees of DCL and WMH's senior notes (the "Note Guarantees") are full and unconditional, joint and several and unsecured, and cover all payment obligations arising under the senior notes.
Note Guarantees issued by Scripps Networks, DCL or WMH, or any subsidiary of the Parent that in the future issues a Note Guarantee (each, a "Subsidiary Guarantor") may be released and discharged (i) concurrently with any direct or indirect sale or disposition of such Subsidiary Guarantor or any interest therein, (ii) at any time that such Subsidiary Guarantor is released from all of its obligations under its guarantee of payment, (iii) upon the merger or consolidation of any Subsidiary Guarantor with and into DCL, WMH or the Parent or another Subsidiary Guarantor, as applicable, or upon the liquidation of such Subsidiary Guarantor and (iv) other customary events constituting a discharge of the Obligors' obligations.
Summarized Financial Information
The Company has included the accompanying summarized combined financial information of the Obligors after the elimination of intercompany transactions and balances among the Obligors and the elimination of equity in earnings from and investments in any subsidiary of the Parent that is a non-guarantor (in millions).
| June 30, 2025 | December 31, 2024 | |||||||||||||
| Current assets | $ | 1,477 | $ | 2,194 | ||||||||||
| Non-guarantor intercompany trade receivables, net | 124 | 404 | ||||||||||||
| Noncurrent assets | 4,049 | 4,077 | ||||||||||||
| Current liabilities | 1,051 | 3,948 | ||||||||||||
| Noncurrent liabilities | 35,640 | 37,118 | ||||||||||||
| Six Months Ended June 30, 2025 | ||||||||
| Revenues | $ | 953 | ||||||
| Operating loss | (155) | |||||||
| Net income | 1,591 | |||||||
| Net income available to Warner Bros. Discovery, Inc. | 1,568 | |||||||
MATERIAL CASH REQUIREMENTS FROM KNOWN CONTRACTUAL AND OTHER OBLIGATIONS
In the normal course of business, we enter into commitments for the purchase of goods or services that require us to make payments or provide funding in the event certain circumstances occur. Our contractual commitments have not materially changed as set forth in "Material Cash Requirements from Known Contractual and Other Obligations" in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Form 10-K.
RELATED PARTY TRANSACTIONS
In the ordinary course of business, we enter into transactions with related parties, such as our equity method investees, entities that share common directorship, or minority partners of consolidated subsidiaries. (See Note 14 to the accompanying consolidated financial statements.)
CRITICAL ACCOUNTING ESTIMATES
Our critical accounting estimates have not changed since December 31, 2024. For a discussion of each of our critical accounting estimates, including information and analysis of estimates and assumptions involved in their application, see "Critical Accounting Estimates" included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Form 10-K.
NEW ACCOUNTING AND REPORTING PRONOUNCEMENTS
Certain new accounting and reporting standards will be effective for us during the year ended December 31, 2025. (See Note 1 to the accompanying consolidated financial statements.)
Supplemental Data for Results of Operations
The following table presents supplemental consolidating data for our Streaming & Studios division, Global Linear Networks reportable segment, Corporate, and consolidating adjustments.
Consolidated - Represents the consolidated results of operations of the Company and its subsidiaries.
Streaming & Studios - Represents the results of our Streaming & Studios division, which includes our Streaming and Studios reportable segments and eliminations between those two reportable segments.
Global Linear Networks - Represents the results of our Global Linear Networks reportable segment.
Corporate - Represents the results of our Corporate functions.
Consolidating adjustments - Represents eliminations between the Streaming & Studios division and the Global Linear Networks reportable segment, as well as other Corporate eliminations.
| Supplemental Data for Results of Operations (in millions) | Supplemental Consolidating Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | Streaming & Studios | Global Linear Networks | Corporate | Consolidating adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
For the three months ended June 30,
|
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution | $ | 4,885 | $ | 4,879 | $ | 2,411 | $ | 2,205 | $ | 2,477 | $ | 2,675 | $ | - | $ | - | $ | (3) | $ | (1) | ||||||||||||||||||||||||||||||||||||||||||
| Advertising | 2,216 | 2,430 | 280 | 240 | 1,953 | 2,214 | - | - | (17) | (24) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Content | 2,471 | 2,109 | 2,349 | 1,945 | 287 | 299 | - | - | (165) | (135) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 240 | 295 | 154 | 211 | 86 | 84 | 1 | 1 | (1) | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 9,812 | 9,713 | 5,194 | 4,601 | 4,803 | 5,272 | 1 | 1 | (186) | (161) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Costs of revenues, excluding depreciation and amortization | 5,967 | 6,204 | 3,163 | 3,407 | 2,902 | 2,825 | 25 | 44 | (123) | (72) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 2,477 | 2,461 | 1,308 | 1,290 | 699 | 742 | 486 | 451 | (16) | (22) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 1,447 | 1,744 | 525 | 634 | 829 | 1,052 | 93 | 58 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other charges | 80 | 117 | 6 | 34 | 25 | 42 | 49 | 41 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairments and loss on dispositions | 26 | 9,395 | 11 | 10 | 1 | 9,154 | 14 | 231 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total costs and expenses | 9,997 | 19,921 | 5,013 | 5,375 | 4,456 | 13,815 | 667 | 825 | (139) | (94) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (185) | $ | (10,208) | $ | 181 | $ | (774) | $ | 347 | $ | (8,543) | $ | (666) | $ | (824) | $ | (47) | $ | (67) | ||||||||||||||||||||||||||||||||||||||||||
| Supplemental Data for Results of Operations (in millions) | Supplemental Consolidating Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | Streaming & Studios | Global Linear Networks | Corporate | Consolidating adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
For the six months ended June 30,
|
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution | $ | 9,771 | $ | 9,864 | $ | 4,741 | $ | 4,395 | $ | 5,035 | $ | 5,472 | $ | - | $ | - | $ | (5) | $ | (3) | ||||||||||||||||||||||||||||||||||||||||||
| Advertising | 4,196 | 4,578 | 517 | 419 | 3,711 | 4,201 | - | - | (32) | (42) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Content | 4,337 | 4,667 | 3,960 | 4,349 | 667 | 563 | - | - | (290) | (245) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 487 | 562 | 323 | 401 | 164 | 161 | 1 | 2 | (1) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 18,791 | 19,671 | 9,541 | 9,564 | 9,577 | 10,397 | 1 | 2 | (328) | (292) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Costs of revenues, excluding depreciation and amortization | 11,098 | 12,262 | 5,925 | 7,001 | 5,359 | 5,322 | 46 | 56 | (232) | (117) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 4,671 | 4,693 | 2,442 | 2,389 | 1,354 | 1,377 | 902 | 965 | (27) | (38) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 2,994 | 3,632 | 1,066 | 1,335 | 1,736 | 2,157 | 192 | 140 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other charges | 134 | 152 | 13 | 47 | 41 | 53 | 80 | 52 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairments and loss on dispositions | 116 | 9,407 | 13 | 15 | 3 | 9,154 | 100 | 238 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total costs and expenses | 19,013 | 30,146 | 9,459 | 10,787 | 8,493 | 18,063 | 1,320 | 1,451 | (259) | (155) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (222) | $ | (10,475) | $ | 82 | $ | (1,223) | $ | 1,084 | $ | (7,666) | $ | (1,319) | $ | (1,449) | $ | (69) | $ | (137) | ||||||||||||||||||||||||||||||||||||||||||
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, marketing and operating strategies, integration of acquired businesses, new product and service offerings, financial prospects and anticipated sources and uses of capital. Words such as "anticipate," "assume," "believe," "continue," "estimate," "expect," "forecast," "future," "intend," "plan," "potential," "predict," "project," "strategy," "target" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would," among other terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be accomplished. The following is a list of some, but not all, of the factors that could cause actual results or events to differ materially from those anticipated:
•the occurrence of any event, change or other circumstances that could give rise to the abandonment of the Separation or pursuit of a different structure;
•failure to satisfy in a timely manner any of the conditions to the Separation or complete the Separation in a timely or favorable manner or at all;
•the effects of the announcement, pendency or completion of the Separation on our ongoing business operations;
•unforeseen costs, execution risks, and operational challenges related to the Separation, including risks relating to changes to the configuration of our existing business and disruption of management time away from ongoing business operations;
•more intense competitive pressure from existing or new competitors in the industries in which we operate;
•reduced spending on domestic and foreign television advertising, due to macroeconomic conditions, industry or consumer behavior trends or unexpected reductions in our number of subscribers;
•the imposition of tariffs, including tariffs directly or indirectly applicable to our industry, by the U.S. government and any retaliatory tariffs from foreign governments;
•uncertainties associated with product and service development and market acceptance, including the development and provision of programming for new television and telecommunications technologies, and the success of our streaming services;
•market demand for foreign first-run and existing content libraries;
•negative publicity or damage to our brands, reputation or talent;
•realizing streaming subscriber goals;
•disagreements with our distributors or other business partners;
•continued consolidation of distribution customers and production studios;
•industry trends, including the timing of, and spending on, sports programming, feature film, television and television commercial production;
•the possibility or duration of an industry-wide strike, such as the strikes of the Writers Guild of America and Screen Actors Guild of America-American Federation of Television and Radio Arts in 2023, player lock-outs or other job action affecting a major entertainment industry union, athletes or others involved in the development and production of our sports programming, television programming, feature films and interactive entertainment (e.g., games) who are covered by collective bargaining agreements;
•inherent uncertainties involved in the estimates and assumptions used in the preparation of financial forecasts;
•our level of debt, including the significant indebtedness incurred in connection with the acquisition of the WarnerMedia Business, and our future compliance with debt covenants;
•challenges related to obtaining permanent financing to refinance the Bridge Loan Facility on favorable terms in a timely manner or at all;
•changes to our corporate or debt-specific credit ratings or outlook;
•changes in, or failure or inability to comply with, laws and government regulations, including, without limitation, regulations of the U.S. government and other international governments, the Federal Communications Commission and similar authorities internationally and data privacy regulations;
•adverse outcomes of legal proceedings or disputes, including those related to our acquisition of the WarnerMedia Business, the Separation, or adverse outcomes from regulatory proceedings;
•threatened or actual cyber-attacks and cybersecurity breaches;
•theft of our content and unauthorized duplication, distribution and exhibition of such content; and
•general economic and business conditions, fluctuations in foreign currency exchange rates, global events such as pandemics, natural disasters impacting the geographic areas where our businesses and operations are located, and political uncertainty or unrest in the markets in which we operate.
Forward-looking statements are subject to various risks and uncertainties which change over time, are based on management's expectations and assumptions at the time the statements are made and are not guarantees of future results.
These risks have the potential to impact the recoverability of the assets recorded on our balance sheets, including goodwill and other intangibles. Management's expectations and assumptions, and the continued validity of any forward-looking statements we make, cannot be foreseen with certainty and are subject to change due to a broad range of factors affecting the U.S. and global economies and regulatory environments, factors specific to Warner Bros. Discovery, and other factors described under Part I, Item 1A, "Risk Factors," in our 2024 Form 10-K and Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q. These forward-looking statements and such risks, uncertainties, and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions, or circumstances on which any such statement is based.
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