WBD 10-K & 10-Q changes, risk factors and insider trading

TheWe operate in highly competitive global media and entertainment industries in which we compete for viewers, distributiondistribution, and advertising are highly competitive.spend. See the discussion under “Business – Competition” that appears above. We face increased competitive pressure for talent, content, audiences, subscribers, service providers, advertising spending and production infrastructure. We compete with a broad range of companies engaged in media, entertainmententertainment, communications and communicationstechnology services, some of whom have interests in multiple media and entertainment businesses that are often vertically integrated, all vying for consumer time, attention and discretionary spending. In addition, the composition of our competitors has evolved with the entrance of new market participants, including companies in adjacent sectors with significant financial, marketing and other resources, greater efficiencies of scale, fewer regulatory burdens and more competitive pricing. Such competitors could also have preferential access to important technologies, customer data or other competitive information. Our competitors may also consolidate or enter into business combinations or alliances that strengthen their competitive positions. These increased competitive pressures have resulted in, and could continue to result in, increased costs, including with respect to talent and intellectual property rights.

Our ability to compete successfully depends on a number of factors, including our ability to consistently acquire and produce high quality content and our ability to identify and successfully execute strategies and partnerships to distribute our content and attract viewers and subscribers amidst a rapidly evolving competitive landscape. In addition, new technology, including generative artificial intelligence (“AI”), is evolving rapidly and becoming more prevalent in business operations and content generation, and our ability to compete could be adversely affected if our competitors gain an advantage by using such technologies. Piracy could also adversely affect our business, as the unauthorized distribution of copyrighted material is a threat to copyright owners’ ability to maintain the exclusive control over their copyrighted material and thus the value of their property. There can be no assurance that we will be able to compete successfully in the future against existing or new competitors, or that competition in the marketplace will not have an adverse effect on our business, financial condition or results of operations.

Shifting consumer preferences toward streaming services and other digital products and the increasing number of entertainment choices has intensified audience fragmentation and reduced content viewership through traditional linear distribution models. This has changed the landscape of traditional television advertising spending, prompting advertisers to shift their strategies, and ultimately advertising spend, toward streaming services and other digital products to reach target audiences. In addition, a number of other streaming services with larger subscriber bases and greater household penetration have recently introducedoffer ad-supported tiers. The increase of digital advertising available in the marketplace, due to both the introduction of ad-supported tiers in competing streaming services and the expansion of free ad-supported television (“FAST”) products, has increased, and is expected to continue to increase, the competition we face for advertising expenditures for both our traditional linear networks and the ad-supported tiers in our streaming services, and has also limited our ability to demand higher rates for our linear and digital advertising inventory or even the same rates that we previously charged for our advertising inventory prior to the surge in digital advertising. There can be no assurance that we can successfully navigate the evolving streaming and digital advertising market or that the advertising revenues we generate in that market will replace the declines in advertising revenues generated from our traditional linear business.

The advertising market is also evolving and sensitive to general economic conditions andconditions, consumer buying patterns.patterns, advertising agency influences (such as how those advertising agencies manage their clients’ marketing budgets and negotiate for our advertising inventory), and developments in AI technology. Financial instability or a general decline in economic conditions in the U.S. and other countries where our content is distributed could adversely affect the spending priorities of our advertising partners who might reduce their spending, which could result in a decrease in advertising rates and volume and in our overall advertising revenues. Natural and other disasters, pandemics, acts of terrorism, political uncertainty or hostilities could also lead to a reduction in domestic and international advertising expenditures, which could also have an adverse effect on our advertising revenues. The use of AI tools in advertising technology is also becoming more prevalent. If our competitors are able to adopt the use of these tools more rapidly than us, potential advertisers may prefer to advertise with them, which could lead to declines in our advertising revenue.

Our success depends on our ability to anticipate and adapt to changes in consumer behavior and shifting content consumption patterns. The ways in which viewers consume content, and technology and distribution models in the media and entertainment industries, continue to evolve,evolve. and newNew distribution platforms, as well as increased competition from new entrants and emerging technologies,technologies and the availability of alternative forms of entertainment (including user-generated content), have added to the complexity of maintaining predictable revenues. Technological advancements have empowered consumers to seek more control over how they consume content and have affected the options available to advertisers for reaching target audiences. This trend has impacted certain traditional distribution models, as demonstrated by industry-wide declines in cable ratings, declines in subscribers to the traditional cable bundle, the development of alternative distribution platforms for content, and reduced theatergoing.

Declines in linear television viewership are expected to continue and possibly accelerate, which could adversely affect our advertising and distribution revenues. In order to respond to this decline, changing consumer behavior, increasing preferences to consume content on demand, and changes in content distribution models in the media and entertainment industries, we have invested in, developed and launched streaming services including HBO Max and discovery+. We have incurred and will likely continue to incur significant costs to develop and market our streaming services, including costs related to international expansion, technological enhancements, production of original content and subscriber acquisition. There can be no assurance, however, that consumers and advertisers will embrace our offerings, that subscribers will activate or renew a subscription, particularly given the significant number of streaming services in the marketplace, or that our DTCstreaming business or other strategies we implement will be as successful or as profitable as our traditional linear television business.

Each distribution model has different risks and economic consequences for us, and the rapid evolution of consumer preferences may have an economic impact that is not ultimately predictable. Further, technology in the media and entertainment industries continues to evolve rapidly. For example, AI is a new technology for which the advantages and risks associated with its use in our industry are currently largely uncertain and unregulated. Technology such as AI may be used in ways that increase access to publicly available free or relatively inexpensive content that could reduce demand for our content, products and streaming services. Regulations governing new technological developments, such as AI, remain unsettled, and these developments could affect aspects of our business model, including revenue streams for the use of our intellectual property and how we create and distribute our content. If we are not able to access our targeted audience with appealing category-specific content and adapt to new technologies, distribution methods, platforms and business models, we may experience a decline in viewership and ultimately a decline in the demand for our programming,content, which could lead to lower distributioncontent licensing, distribution, and advertising revenues, materially and adversely affecting our business, financial condition and results of operations.

The production and distribution of television programs, feature films, sports and news content are inherently risky businesses because the revenue we derive and our ability to distribute our content depend primarily on consumer tastes and preferences that often change in unpredictable ways. The appeal, success and performance of our content with consumers, as well as with third-party licensees and other distribution partners, are critical factors that can affect the revenue that we receive with respect to our content-related business. Our success depends on our ability to consistently create and acquire content that meets the changing preferences of viewers in general, in special interest groups, in specific demographic categories and in various international marketplaces. For example, generally, feature films that perform well upon initial release also have commercial success in subsequent distribution channels. Therefore, the underperformance of a feature film, especially an “event” film, i.e. one produced at higher cost and intended to reach a wider audience, upon its theatrical release can result in lower-than-expected revenues for our business which could limit our ability to create future content. We are required to make substantial investments in the production or acquisition and marketing of our television programs, feature films, sports and news content before we learn whether such content will reach anticipated levels of popularity with consumers. Failing to gain the level of audience acceptance we expect for our content may negatively impact our business, financial condition and results of operations.

The commercial success of our content also depends upon the quality and acceptance of competing content available in the applicable marketplace. For example, as some foreign film and filmmaking industries grow and the availability of popular local content rises, the demand from foreign audiences for American films may decrease, which could negatively impact our revenue. Other factors, including the availability of alternative forms of entertainment and leisure time activities, piracy, and our ability to develop strong brand awareness and general economic conditions and their effects on consumer spending may also affect the audience demand for our content. Consequently, reduced public acceptance of our television programs, feature films, sports and news content or negative publicity regarding individuals or operations associated with our content or brands may decrease our audience share and customer/viewer reach and adversely affect our business, financial condition and results of operations.

If our DTCstreaming products fail to attract and retain subscribers, our business, financial condition and results of operations may be adversely impacted.

Our HBO Max and discovery+ offerings are subscription-based streaming services and are among many such services in a crowded and highly competitive landscape. Their success and the success of other subscription-based streaming services we may offer in the future will be largely dependent on our ability to initially attract, and ultimately retain, subscribers. If we are unable to effectively market our DTCstreaming products or if consumers do not perceive the pricing and related features of our DTCstreaming products to be of value versus our competitors, we may not be able to attract and retain subscribers.

Further, decreases in consumer discretionary spending in the markets where our DTCstreaming products are offered may reduce our ability to attract and retain subscribers to our services, which could have a negative impact on our business. Relatedly, a decrease in viewing subscribers on our advertising-supported DTCstreaming products could also have a negative impact on the rates we are able to charge advertisers for advertising-supported services. The ability to attract and retain subscribers will also depend in part on our ability to provide compelling content choices that are differentiated from that of our competitors and that are more attractive than other sources of entertainment that consumers could choose in their free time. Furthermore, our ability to provide a quality subscriber experience and our relative service levels, may also impact our ability to attract and retain subscribers. In addition, from time to time, we have entered into, and may enter into, partnerships to offer our streaming services as part of a bundle with other streaming services, which may not lead to the anticipated financial benefit or growth in subscribers. Even if such bundling partnerships are successful, if we are unable to maintain existing or create new bundling partnerships, our ability to retain subscribers and grow our business could be adversely impacted.

If existing subscribers, including those who receive subscriptions through wireless, broadband, or streaming bundling arrangements with third parties or through wholesale arrangements with MVPDs, cancel or discontinue their subscriptions for any reason, including as a result of selecting an alternative wireless or broadband plan that does not bundle our products, canceling or discontinuing their MVPD subscription, or due to the availability of competing offerings that are perceived to offer greater value compared to our DTCstreaming products, our business may be adversely affected. We would need to add new subscribers both to replace subscribers who cancel or discontinue their subscriptions and to grow our business. If we are unable to attract and retain subscribers and offset the losses of subscribers who cancel or discontinue their subscriptions to our DTCstreaming products, our business, financial condition and results of operations could be adversely affected.

While the number of subscribers associated with our networks impacts our ability to generate advertising revenue (as further described elsewhere in this Item 1A1A. Risk Factors), subscription-based revenue also represents a significant portion of our revenue. The license fees and other commercial terms that we receive are dependent,dependent on, among other factors, on the acceptance and performance of our content with consumers. A reduction in the license fees that we receive or in the number of subscribers for which we are paid, including as a result of a loss or reduction in carriage for our networks or a reduction in distributor penetration, or as a result of changes in consumer habits, could adversely affect our distribution revenue. Such a loss or reduction in carriage could also decrease the potential audience for our programs thereby adversely affecting our advertising revenue. Changes in distribution strategy and variations on traditional theatrical distribution and other licensing models, such as shortening traditional windows, may also drive changes in the license fees that distributors and other downstream licensees in the value chain may be willing to pay for content, which may in turn negatively affect our revenue. As a result of industry consolidation, our distributors have become and may continue to become larger, and as a result have gained or could gain additional market power. Such consolidation gives these distributors leverage in negotiating their distribution agreements with us which could subject our affiliate fee revenue to reduction or discounts, which could have an adverse effect on our financial condition.

We invest significant resources to acquire and maintain licenses to produce sports programmingprogramming, and there can be no assurance that we will continue to be successful in our efforts to obtain or maintain licenses to recurring sports events or recoup our investment when the content is distributed.

There can also be no assurance that we will recoup our investment in sports programming or that revenue from our content distribution agreements will exceed our costs for the rights for sports programming, as well as the other costs of producing and distributing the programming. The value of programming licenses may be negatively affected by factors outside of our control, such as league agreements and decisions to alter the number, frequency and timing of regular and post-season games played during a season, which could affect the value of our sports rights. The impact of these licenses on our results of operations and cash flows over the term of the licenses depends on a number of factors, including the strength of advertising markets andmarkets, subscription levels andlevels, rates for programming.programming and the timing and amount of our rights payments. Our success with sports programming is highly dependent on consumer acceptance of this content and the size of our viewing audience. If viewers do not find our sports programming content acceptable, we could see low viewership, which could lead to low distribution and advertising revenues and adversely affect our business, financial condition and results of operations.

We and some of our suppliers and business partners retain the services of writers, directors, actors, announcers, athletes, technicians, trade employees and others involved in the development and production of our television programs, feature films and interactive entertainment (e.g., games) who are covered by collective bargaining agreements. If negotiations to renew expiring collective bargaining agreements are not successful or become unproductive, the affected unions could take, and have taken, actions such as strikes, work slowdowns or work stoppages. Strikes, work slowdowns, work stoppages, or the possibility of such actions, including the 2023 WGA and SAG-AFTRA strikes and potential future strikes by other unions involved in development and production, have resulted in, and could in the future result in, delays in the production of, or the release of, our television programs, feature films, and interactive entertainment. For example, the 2023 WGA and SAG-AFTRA strikes caused delays in the production of our television programs and feature films and in the release of certain programming.programming, Thewhich impact of these strike-related delays and other consequences of these strikes have continued to impactimpacted our business even after the strikes were ultimately resolved.

We have a significant amount of goodwill and other intangible assets on our consolidated balance sheets. In accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), management periodically assesses these assets to determine if they are impaired. (See Note 2 to the accompanying consolidated financial statements.) The occurrence of certain events or circumstances has resulted in, and could continue to result in, a downward revision in the estimated fair value of a reporting unit or intangible assets. For example, continued negative industry or economic trends, including the decline of traditional linear television viewership and linear ad revenues, declining levels of global GDP growth and soft advertising markets in the U.S., disruptions to our business, inability to effectively integrate acquired businesses, execution risk associated with anticipated growth in our DTCstreaming products, underperformance of our content, failure to renew content licenses and distribution agreements, including affiliate and sports rights renewals, unexpected significant changes or planned changes in use of the assets, including in connection with restructuring initiatives, divestitures and continued decline in our market capitalization could negatively affect our estimates of the fair value of our reporting units. When events or changes in circumstances such as this occur, we have needed to, and may in the future need to, write down the value of our goodwill and other intangible assets. If we determine that our estimate of the fair value of a reporting unit is below the recorded value of that unit on our balance sheet, we may record a non-cash impairment loss for the goodwill. For example, in 2024, we determined that our estimate of the fair value of our Global Linear Networks reporting unit was below its recorded value on our balance sheet and we recorded a $9.1 billion pre-tax, non-cash impairment of goodwill. Any charges relating to the impairment of our goodwill and other intangible assets could materially adversely affect our results of operations in the periods recognized.

Service disruptions or theoutages failure ofaffecting communications satellites or transmitterother facilitiesexternally managed critical technology infrastructure, including cloud-based platforms and connectivity services we rely uponupon, could adversely impact our business, financial condition and results of operations.

We rely on communications satellites and transmitter facilities and other technical infrastructure, including fiber, to transmit programming to affiliates and other distributors. Shutdowns of communications satellites and transmitter facilities or service disruptions will pose significant risks to our operations. Such disruptions maycould be caused by power outages, fires, natural disasters, extreme weather, terrorist attacks, war, failures or impairments of communications satellites or cloud-based platforms, failures of on-ground uplinks or downlinksdownlinks, orconnectivity otherinterruptions, technicalemployee facilitiesmisconduct, andthird-party services used to transmit programming,interference, failure of service providers to meet contractual requirements, or other similar events. If a communications satellitesatellite, cloud-based platform, or other transmission or hosting means (e.g., fiber or other connectivity services) is not able to transmitsupport our programming,operations, or if any material component thereof fails or becomes inoperable, we may not be able to secure an alternative communications path in a timely manneralternative because,due to, among other factors, there are athe limited number of available service providers and otherthe meanspotential availableneed for the transmission of programming, and any alternatives may requireadditional lead time and additionaltime, technical resourcesresources, andor infrastructure to implement.implement Ifalternatives. Any such an event were to occur, theredisruption could be a disruption inimpair the delivery of our programming,programming whichor couldservices, harm our reputationreputation, and materially adversely affect our business, financial conditioncondition, and results of operations.

Our consolidated indebtedness as of December 31, 20242025 was $39,505$32,567 million, of which $2,748$139 million is current. In addition, we have the ability to draw down on a $6.0$4,000 billionmillion revolving credit facility in the ordinary course, which would have the effect of further increasing our debt to the extent drawn. We are also permitted, subject to certain restrictions under our existing debt agreements, to obtain additional long-term debt and working capital lines of credit to meet future financing needs. This would have the effect of further increasing our leverage ratio.

In addition, our corporate or debt-specific credit rating could be downgraded, which may increase our borrowing costs or subject us to even more restrictive covenants when we incur new debt in the future, which could reduce profitability and diminish operational flexibility. In 2024,2025, S&PP, Moody’s and Moody’sFitch reviseddowngraded certain of our ratings outlook from stable to negative in part due to declines in our linear business, including as a result of the weak operating environment for linear networks, andenvironment, our leverage ratio.ratio, and an increase in secured debt and uncertainty in connection with the previously planned separation of Warner Bros. Credit rating agencies may continue to review and adjust our ratings or outlook.

•requiring the dedication of a substantial portion of our cash flow from operations to service our debt, thereby reducing the amount of cash flow available for other purposes such as capital expenditures, investments, share repurchases, and mergers and acquisitionsacquisitions, other business opportunities, and other purposes;

Our ability to meet our financial obligations and other contractual commitments will depend upon our ability to access cash. We are a holding company, and our sources of cash include our available cash balances, net cash from the operating activities of our subsidiaries, any dividends and interest we may receive from our investments, availability under our credit facilities or any credit facilities that we may obtain in the future and proceeds from any asset sales we may undertake in the future. The ability of our subsidiaries, including WarnerMedia Holdings, Inc., Scripps Networks Interactive, Inc., and Discovery Communications, LLCsubsidiaries to pay dividends or to make other payments or advances to us will depend on their individual operating results and any statutory, regulatory or contractual restrictions, including restrictions under our credit facilities, to which they may be or may become subject. Under the 2017 Tax Cuts and Jobs Act, we were subject to U.S. taxes for the deemed repatriation of certain cash balances held by foreign corporations. TheWhile the Company intends to continue to permanently reinvest somemost of these funds outside of the U.S., and current plans do not demonstrateinclude a needone-time torepatriation repatriateof thema toportion fundof ourthese U.S.funds operations.in 2026.

In addition, fromFrom time to time we may adjust our corporate structure, reporting and operating segments, or business strategies in connection with significant transactions, changes occurring across an evolving media landscape, macroeconomic conditions and/or other changes related to our business. For example, during fiscal year 2022, in connection with the completion of the acquisition (the “WarnerMedia Merger”) in which we acquired the WarnerMedia business (the “WarnerMedia Business”) from AT&T Inc. (“AT&T”), we changed our segment presentation and implemented various restructuring and transformation initiatives. During fiscal year 2024,2025, we announcedimplemented a new corporate structure whereby the Company would reorganizereorganized into two distinct operating divisions,divisions. anticipatedFurther, in connection with the previously proposed Separation Transaction, we have implemented, and may continue to beimplement, implementedvarious duringrestructuring 2025.initiatives. Such changes could incur unforeseen costs and disruptions, are subject to execution risk, and may not produce the anticipated benefits.

ItOur charter and bylaws contain provisions that may bemake it difficult for a third party to acquire us, even if such acquisition would be beneficial to our stockholders.

•establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and

In addition, under our charter, we have not opted out of the protections of Section 203 of the Delaware General Corporation Law, and we are therefore governed by Section 203.203 (which does not, for the avoidance of doubt, apply to the PSKY Merger). Accordingly, it is expected that Section 203 will have an anti-takeover effect with respect to transactions that our board of directors does not approve in advance and that Section 203 may discourage takeover attempts that might result in a premium over the market price of WBD capital stock.

Changes in domestic and foreign laws and regulations and other risks related to international operations could adversely impactaffect our business, financial condition and results of operations.

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. For a discussion of our global portfolio see our business overview set forth in Item 1, “Business” in this Annual Report on Form 10-K.

In connection with the WarnerMedia Merger, we have announced and taken actions to implement projects to achieve cost synergies for the Company. We finalized the framework supporting our ongoing restructuring and transformation initiatives during the year ended December 31, 2022, which included, among other things, strategic content programming assessments, organization restructuring, facility consolidation activities, and other contract termination costs. At that time, we expected to incur approximately $4.1$4,100 - $5.3$5,300 billionmillion in pre-tax restructuring charges, of which we have incurred $4.7$4,662 billionmillion as of December 31, 2024. Of the total expected pre-tax restructuring charges, we expected total cash expenditures to be $1.0 - $1.5 billion. While our restructuring efforts are ongoing, the WarnerMedia Merger-related restructuring program was substantially completed at the end of 2024. During 2023, we initiated a strategic realignment plan associated with our Warner Bros. Pictures Animation groupgroup. and duringDuring 2024, we initiated two additional restructuring initiatives; - an organizational and personnel restructuring plan and a restructuring initiative associated with our Warner Bros. Games group. During 2025, we initiated restructuring plans related to the previously proposed Separation Transaction.

•DTCStreaming - Our DTCStreaming segment primarily consists of our premium pay-TV and streaming services.

Distribution revenues are generated from fees charged to network distributors, which include cable, DTH satellite, telecommunications and digital service providers, and DTCstreaming subscribers. The largest component of distribution revenue is comprised of linear distribution rights to our networks from cable, DTH satellite, and telecommunication service providers. We have contracts with distributors representing most cable and satellite service providers around the world, including the largest operators in the U.S. and major international distributors. Distribution revenues are largely dependent on the rates negotiated in the agreements, the number of subscribers that receive our networks, the number of platforms covered in the distribution agreement, and the market demand for the content that we provide. From time to time, renewals of multi-year carriage agreements include significant year one market adjustments to reset subscriber rates. In some cases, we have provided distributors launch incentives, in the form of cash payments or free periods, to carry our networks.

Distribution revenue decreased 1%2% in 2024,2025, primarily attributable to an 8%9% decline in Networks domestic linear subscribers and ourthe exitimpact fromof ourthe regionalpreviously sportsdisclosed businessdomestic (“AT&Twholesale SportsNets”)deal renewal that occurred in the U.S.,second which had an unfavorable impactquarter of $225 million for the year,2025, partially offset by a 5%13% increase in streaming subscribers as a result of continued growth and global expansion of HBO Max and a 3% increase in domestic contractual affiliate rates, a 20% increase in DTC subscribers, and an increase in pricing following the launch of Max in Europe in 2024.rates.

Advertising revenues are principally generated from the sale of commercial time on linear (television networks and authenticated TVE applications) and digital platforms (DTCstreaming subscription services and websites), and sold primarily on a national basis in the U.S. and on a pan-regional or local-language feed basis outside the U.S. Advertising contracts generally have a term of one year or less. Advertising revenue is dependent upon a number of factors, including the number of subscribers to our channels, viewership demographics, the popularity of our content, our ability to sell commercial time over a group of channels, the stage of development of television markets, and the popularity of free-to-air television. Revenue from advertising is subject to seasonality, market-based variations, the mix in sales of commercial time between the upfront and scatter markets, and general economic conditions. Advertising revenue is typically highest in the second and fourth quarters. In some cases, advertising sales are subject to ratings guarantees that require us to provide additional advertising time if the guaranteed audience levels are not achieved. We also generate revenue from the sale of advertising through our digital platforms on a stand-alone basis and as part of advertising packages with our television networks.

Advertising revenue decreased 7%11% in 2024,2025, primarily attributable to audience declines in domestic linear networks of 18%,25%, partially offset by an increase in domestic HBO Max ad-lite subscribers.

Other revenue primarily consists of studio production services and tours.tours, and decreased 15% in 2025.

Selling, general and administrative expenses decreasedincreased 3%1% in 2024,2025, primarily attributable to lowerhigher marketingoverhead costs due to lower theatrical and games marketing expenses and the prior year launch of Max in the U.S.,costs, partially offset by thelower continuationmarketing of Max launches internationally.costs.

Depreciation and amortization decreased 12%19% in 2024,2025, primarily attributable to intangible assets acquired duringin connection with the WarnerMedia Merger that are being amortized onusing anthe acceleratedsum basis,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. (See Note 5 to the accompanying consolidated financial statements.)

Impairments and loss on dispositions waswere a$172 million and $9,603 million and $77 million loss in 20242025 and 2023,2024, respectively. The loss in 2024 was primarily attributable to a $9.1$9,147 billion pre-tax,million non-cash goodwill impairment charge related to the Global Linear Networks reporting unit during the second quarter of 2024 (see Note 5 to the accompanying consolidated financial statements) and $411 million right-of-use asset (“ROU asset”) impairment charges primarily related to the Hudson Yards, New York office lease. Impairments in 2025 were primarily attributable to an additional $112 million ROU asset impairment charge related to the Hudson Yards, New York office lease. (See Note 5 and Note 12 to the accompanying consolidated financial statements.) The loss in 2023 was primarily attributable to lease ROU asset impairments and costs associated with our exit from AT&T SportsNets.

Actual interest expense, net decreasedincreased $204$68 million in 2024,2025, primarily attributable toby higher interest costs associated with the Bridge Loan Facility, partially offset by lower debt during the period.year. (See Note 11 and Note 13 to the accompanying consolidated financial statements.)

Other Income (Expense),Income, net

Other income (expense),income, net was $150$65 million and $(29)$150 million in 20242025 and 2023,2024, respectively. The increase was primarily attributable to our gain on sale of equity method investments and an increase to the Merger related tax indemnification receivable accrual, partially offset by foreign currency losses. (See Note 18 to the accompanying consolidated financial statements.)

Income Tax Expense (Benefit)

Income tax expense for 20242025 reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributable to the non-deductible goodwill impairment charge and the effect of foreign operations.operations and changes in unrecognized tax benefits.

The Organisation 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 December 31, 2024,2025, we recognized aan nominalimmaterial 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.

Management believes that Adjusted EBITDA is an appropriate measure for evaluating the operating performance of the Company’s operating segments because it is the primary measure used by the Company’s chief operating decision makerCODM to assess the operating results and performance of the segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. (See Note 23 to the accompanying consolidated financial statements.)

Content revenue decreasedincreased 5%9% in 2024,2025, primarily attributable to a 53%15% decreaseincrease in gamestheatrical revenue,product revenue and a 4%9% decreaseincrease in theatricaltelevision product revenue, partially offset by a 9%32% increasedecrease in television productgames revenue.

•The decreaseincrease in theatrical product revenue was attributable to lowerhigher film rental revenue and intra-segment licensing revenue, partially offset by higher homecontent entertainmentlicensing. revenue.The Filmincrease in film rental revenue decreasedwas primarily due to the strong priorcurrent year performance of Barbie,A whichMinecraft wasMovie, releasedSuperman, inF1, 2023, partially offset by higher carryover releases from 2023 compared to 2022. Home entertainment revenue increased due to the performance of DuneConjuring: PartLast Two,Rites, GodzillaSinners, xFinal Kong:Destination The New Empire, Wonka, Aquaman 2,Bloodlines, and Beetlejuice Beetlejuice and higher catalog sales.Weapons.

•The increase in television product revenue was attributable to higher intercompanyinter-segment content saleslicensing, andprimarily higherdue to the timing of renewals, partially offset by lower initial telecast revenue due to thefewer impact of the WGA and SAG-AFTRA strikes in the prior year, partially offset by lower third-party content sales.deliveries.

Selling, general and administrative expenses decreasedincreased 11%10% in 2024,2025, primarily attributable to lowerhigher theatricaloverhead marketing expenses due to fewer new releases and lower games marketing expenses.costs.

Adjusted EBITDA decreasedincreased 23%52% in 2024.2025.

Global Linear Networks Segment

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

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

The PSKY Merger Agreement contains certain customary termination rights for WBD and PSKY, including, without limitation, a right for either party to terminate if the PSKY Merger is not completed on or before March 4, 2027, subject to an extension to June 4, 2027 in certain circumstances as specified in the PSKY Merger Agreement. Termination under specified circumstances will require WBD to pay PSKY a termination fee of $3.0 billion and reimburse PSKY for (i) any payment made by PSKY, which will in no event be more than $1,528 million, in connection with WBD’s obligation to complete the Junior Lien Exchange Offer (as defined below) by DecemberMarch 30,4, 20262027 and (ii) the Netflix Termination Fee, or PSKY to pay WBD a termination fee of $7.0 billion. Additionally, the PSKY Merger Agreement provides for customary pre-closing covenants of WBD, including covenants relating to conducting its business in the ordinary course consistent with past practice and to refrain from taking certain actions without PSKY’s consent.

As of MarchJune 31,30, 2026, we classified our operations in three reportable segments:

Distribution revenue decreasedincreased 1% and remained flat for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to a 10% decline in domestic linear subscribers and the impact of the previously disclosed domestic wholesale streaming deal renewal, partially offset by continued growth in existing streaming markets and the global expansion of HBO Max, including new distribution deals.deals, partially offset by a 10% decline in domestic linear subscribers for both periods and the impact of the previously disclosed domestic wholesale streaming deal renewal that occurred in the second quarter of 2025.

Advertising revenue decreased 8%22% and 16% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to audience declines in domestic networks of 17% and 13%, respectively, which were impacted by the absence of the NBA in 2026, which had a negative impact of $133 million to advertising revenue, and audience declines in domestic networks of 8%, partially offset by the broadcast of the NCAA Final Four and championship game in the current year quarter and an increase in global ad-lite streaming subscribers.

Other revenue decreased 1%11% and 6% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to the absence of the NBA in 2026.

Costs of revenues decreased 10%23% and 17% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to lower domestic sports costs due to the absence of the NBA in 2026, whichlower hadStudios atheatrical favorablecontent impactexpense tocommensurate costswith oflower revenuestheatrical ofproduct $358 million,revenue, and lower content expense related to the amortization of purchase accounting fair value step-up for content.content, partially offset by higher international content costs to support HBO Max launches.

Selling, general and administrative expenses increased 11%3% and 7% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to higher marketing and transaction and integration costs.costs and higher marketing expenses.

During the threesix months ended MarchJune 31,30, 2026, the Company recorded a $2.8 billion expense for the Netflix Termination Fee. (See Note 1 to the accompanying consolidated financial statements.)

Depreciation and amortization decreased 21%20% and 20% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to intangible assets acquired in connection with the acquisition of 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.

Restructuring and other charges were $204$113 million and $317 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Restructuring and other charges primarily includes organization restructuring costs, employee retention, and consulting fees related to the previously announced Separation Transaction and the PSKY Merger. (See Note 3 to the accompanying consolidated financial statements.)

Impairments and loss on dispositions were $14$23 million and $37 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively.

Interest expense, net increased $113$48 million and $161 million for the three monthsand ended March 31, 2026. The increase for the threesix months ended MarchJune 31,30, 20262026, wasrespectively, primarily attributable to higher interest costs associated with the Bridge Loan Facility.Agreement, which was repaid in full in June 2026. (See Note 8 to the accompanying consolidated financial statements.)

Loss (Gain) on extinguishmentExtinguishment of debt,Debt, net

OtherLoss (expensegain) income,on extinguishment of debt, net was $(38)$75 million and $102 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. (See Note 138 to the accompanying consolidated financial statements.)

Income tax benefit (expense) was $214$433 million and $(15866) million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $647 million and $(881) million for the six months ended June 30, 2026 and 2025, respectively. The increase in income tax benefit for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025 was primarily attributable to lower pre-tax book income, including the absence of a $3.0 billion gain recognized in 2025 associated with the Tender Offers (see Note 8 to the accompanying consolidated financial statements), as well as excess tax benefits from share-based compensation.

Income tax benefit for the three and six months ended MarchJune 31,30, 2026, reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributabledue to the effect of foreign operations, excess tax benefits from share-based compensation, and changes in unrecognized tax benefits. Income tax benefit for the six months ended June 30, 2026 also reflects a book tax difference in the Netflix Termination Fee accrual based on current assessments. (See Note 1 to the accompanying consolidated financial statements.) based on current assessments, as well as excess tax benefits from share-based compensation.

The Organization for Economic Co-operation and Development’s (“OECD”) Pillar Two Global Anti-Base Erosion (“GloBE”) model rules, issued under the OECD Inclusive Framework on Base Erosion and Profit Shifting, introduce a global minimum tax of 15% applicable to multinational enterprise groups with consolidated financial statement revenue in excess of €750 million. Numerous foreign jurisdictions have already enacted tax legislation based on the GloBE rules, with some effective as early as January 1, 2024. In January 2026, the OECD issued additional guidance on the minimum tax framework, including a “side by side” safe harbor framework that would apply to U.S.-parented groups. Even if this safe harbor applies, we would still be subject to local minimum tax regimes in countries that have adopted these rules. The interpretation and adoption of the OECD’s recommendations continue to vary across jurisdictions. As of MarchJune 31,30, 2026, we recognized an immaterial income tax expense for Pillar Two GloBE minimum tax. The Company is continuously monitoring the evolving application of this legislation and assessing its potential impact on our future tax liability. (See Note 12 to accompanying consolidated financial statements.)

Distribution revenue increased 7%11% and 9% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to continued growth in existing markets and the global expansion of HBO Max, including new distribution deals, partially offset by the impact of the previously disclosed domestic wholesale deal renewal that occurred in the second quarter of 2025.

Advertising revenue increased 19%8% and 13% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to an increase in global ad-lite subscribers.subscribers, partially offset by the absence of the NBA in 2026.

Costs of revenues increasedwere 2%relatively flat for the three and six months ended MarchJune 31,30, 2026, primarily attributable toas higher international content costs to support HBO Max launches,launches partiallywere offset by shifts in the overall mix of programming.

Selling, general and administrative expenses increased 17%14% and 16% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to higher marketing expenses to support HBO Max launches.launches and higher overhead costs.

Adjusted EBITDA increased 17%63% and 38% for the three and six months ended MarchJune 31,30, 2026.2026, respectively.

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

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%3% of total revenues and operating expenses for this segment for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Intra-segment revenue and expense are eliminated at the Studios segment level.

Content revenue increaseddecreased 33%41% for the three months ended MarchJune 31,30, 2026, primarily attributable to a 58%46% increasedecrease in televisiontheatrical product revenuerevenue, and a 21%45% increasedecrease in theatricaltelevision product revenue, partially offset by a 30%45% decreaseincrease in games revenue.

•The increasedecrease in television product revenue was primarily attributable to higherlower intercompany content licensinglicensing, relatedprimarily due to HBOthe Maxtiming internationalof launches and higher third-party licensing.renewals.

•The decreaseincrease in games revenue was primarily attributable to lowerthe libraryrelease revenues.of LEGO Batman: Legacy of the Dark Knight in the current quarter.

CostsContent ofrevenue revenuesdecreased increased 17%13% for the threesix months ended MarchJune 31,30, 2026, primarily attributable to a 32%21% increasedecrease in theatrical product revenue and a 7% decrease in television product content expense and an 11% increase in theatrical product content expense,revenue, partially offset by a 43%9% decreaseincrease in games content expense.revenue.

•The increasedecrease in theatrical content expense was primarily due to higherlower film costs commensurate with higherlower theatrical product revenuerevenue, andpartially higheroffset filmby impairments.impairments in the current year.

•The decrease in gamestelevision product content expense was primarily due to lower games content expensecosts commensurate with lower games revenue.revenues.

Adjusted EBITDA increaseddecreased $51689% millionand 26% for the three and six months ended MarchJune 31,30, 2026.2026, respectively.

Distribution revenue decreased 9% and 8% for the three and six months ended MarchJune 31,30, 2026, respectively, primarily attributable to a 10% decline in domestic linear subscribers,subscribers for both periods, partially offset by a1% and 2% increaseincreases in domestic affiliate rates.rates for the three and six months ended June 30, 2026, respectively. Declines in linear subscribers are expected to continue.