10-KPeriod: FY2010

Warner Bros. Discovery, Inc. Annual Report, Year Ended Dec 31, 2010

Filed February 18, 2011For Securities:WBD

Summary

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.

Financial Highlights

51 data points
Beta

Revenue

$3.71B

72.7% Gross Margin

Net Income

$653.00M

17.6% Net Margin

EPS (Diluted)

$1.52

Total Assets

$11.02B

Cash & Equivalents

$466.00M

Free Cash Flow

$619.00M

Financial Statements
Beta
Revenue$3.71B
Cost of Revenue$1.01B
Gross Profit$2.69B
SG&A Expenses$1.17B
Operating Expenses$2.33B
Operating Income$1.38B
Interest Expense$203.00M
Net Income$653.00M
EPS (Basic)$1.53
EPS (Diluted)$1.52
Shares Outstanding (Basic)425.00M
Shares Outstanding (Diluted)429.00M

Key Highlights

  • 1Total revenues increased by 9% to $3.77 billion in 2010, driven by distribution and advertising revenue growth.
  • 2U.S. Networks segment revenues grew 9% to $2.36 billion, with advertising revenue up 13% and distribution revenue up 7%.
  • 3International Networks segment revenues increased 11% to $1.25 billion, reflecting growth in distribution and advertising.
  • 4Operating income rose 7% to $1.36 billion, demonstrating the company's ability to grow profitability.
  • 5The company generated $668 million in cash from operating activities, indicating strong operational cash flow.
  • 6Significant refinancing of debt occurred in June 2010, resulting in a $136 million loss on extinguishment of debt but extending maturities.
  • 7WBD 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.

Frequently Asked Questions

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.

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.

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.

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.