01—Abstract
Summary
Summary of the 10-K filed February 18, 2011. Cited figures are marked; the original filing is the authoritative source.
Warner Bros.
Discovery, Inc. (WBD), formerly Discovery Communications, Inc., reported strong revenue growth in 2010, driven by increases in both distribution and advertising revenues across its U.S. and International Networks segments. The company benefited from contractual rate increases, subscriber growth, and a recovering advertising market. Significant strategic developments included the international rollout of the TLC network and advancements in the company's digital media offerings.
Financially, WBD demonstrated improved operating income and net income compared to the previous year, although it incurred a substantial loss on debt extinguishment due to refinancing activities. The company continued to invest in content and expand its global reach, positioning itself for continued growth in the nonfiction media landscape. Investors should note the company's ongoing focus on optimizing its network portfolio and exploring new distribution platforms.
02—Key points
Key Highlights
- Total revenues increased by 9% to $3.77 billion in 2010, driven by distribution and advertising revenue growth.
- U.S. Networks segment revenues grew 9% to $2.36 billion, with advertising revenue up 13% and distribution revenue up 7%.
- International Networks segment revenues increased 11% to $1.25 billion, reflecting growth in distribution and advertising.
- Operating income rose 7% to $1.36 billion, demonstrating the company's ability to grow profitability.
- The company generated $668 million in cash from operating activities, indicating strong operational cash flow.
- Significant refinancing of debt occurred in June 2010, resulting in a $136 million loss on extinguishment of debt but extending maturities.
- WBD repurchased approximately $1.0 billion of its common stock authorized under a repurchase program, alongside a $500 million repurchase of Series C convertible preferred stock.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Warner Bros. Discovery, Inc. kept $0.18.
- Revenue$3.71B100.0%
- Cost of revenue−$1.01B27.3%
- Gross profit$2.69B72.7%
- Operating costs−$1.32B35.5%
- Operating income$1.38B37.2%
- Interest, other & tax−$724.0M19.5%
- Net income$653.0M17.6%
Where FY2010 revenue went
$3.71B- SG&A: $1.17B, 32% of revenue
- Cost of revenue: $1.01B, 27% of revenue
- Interest, other & tax: $724.0M, 20% of revenue
- Net income: $653.0M, 18% of revenue
- Other operating costs: $142.0M, 3.8% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 18, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $3.71B$3.46B | +7.2% |
| Cost of Revenue | $1.01B$1.04B | −3.0% |
| Gross Profit | $2.69B$2.41B | +11.6% |
| SG&A Expenses | $1.17B$1.19B | −1.2% |
| Operating Expenses | $2.33B$2.18B | +6.6% |
| Operating Income | $1.38B$1.27B | +8.1% |
| Interest Expense | $203.00M$248.00M | −18.1% |
| Net Income | $653.00M$549.00M | +18.9% |
| EPS (Basic) | $1.53$1.28 | +19.5% |
| EPS (Diluted) | $1.52$1.27 | +19.7% |
| Shares Outstanding (Basic) | 425.00M423.00M | +0.5% |
| Shares Outstanding (Diluted) | 429.00M425.00M | +0.9% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth for Warner Bros. Discovery in 2010?
Revenue growth in 2010 was primarily driven by increases in distribution fees from cable and satellite operators, as well as higher advertising revenues from both domestic and international networks. This was supported by contractual rate increases, subscriber growth, and a recovering advertising market.
What significant financial events occurred in 2010?
A major financial event was the refinancing of a substantial portion of the company's debt in June 2010, which involved issuing new senior notes and repaying existing debt. This resulted in a $136 million loss on extinguishment of debt but improved the company's debt maturity profile. Additionally, WBD actively engaged in its stock repurchase program, buying back common and preferred stock.
How did the company's segment performance contribute to the overall results?
The U.S. Networks segment remained the largest contributor to revenue and operating income, showing consistent growth. The International Networks segment also demonstrated strong double-digit revenue growth, indicating successful global expansion and monetization of its content. The Education and Other segment experienced modest growth.
What is the company's outlook on content investment and strategic initiatives?
WBD continues to prioritize investment in content creation and acquisition to drive viewership and maintain its leadership position in nonfiction media. Strategic initiatives include the ongoing international rollout of brands like TLC and the development of digital media services to reach audiences across multiple platforms.
06—Continue