10-K/APeriod: FY2012

Warner Bros. Discovery, Inc. Annual Report (Amendment), Year Ended Dec 31, 2012

Filed February 19, 2013For Securities:WBD

Summary

Warner Bros. Discovery, Inc. (WBD), operating as Discovery Communications, Inc. at the time of this filing, reported strong revenue growth in 2012, driven by increases in both distribution and advertising revenues across its U.S. and International Networks segments. The company's diversified portfolio, including popular networks like Discovery Channel and TLC, contributed to this performance. While the Education segment remained a smaller contributor, it also saw revenue growth. Financially, WBD demonstrated robust operating income and net income, reflecting effective cost management and strategic investments in content. The company actively managed its capital structure, repurchasing shares and managing debt. Despite facing a competitive media landscape and evolving technological distribution platforms, WBD's focus on expanding its global reach and leveraging its extensive content library positioned it for continued growth.

Financial Highlights

52 data points
Beta

Revenue

$4.49B

72.9% Gross Margin

Net Income

$945.00M

21.1% Net Margin

EPS (Diluted)

$2.48

Total Assets

$12.93B

Cash & Equivalents

$1.20B

Free Cash Flow

$1.02B

Financial Statements
Beta
Revenue$4.49B
Cost of Revenue$1.22B
Gross Profit$3.27B
SG&A Expenses$1.29B
Operating Expenses$2.63B
Operating Income$1.86B
Interest Expense$248.00M
Net Income$945.00M
EPS (Basic)$2.51
EPS (Diluted)$2.48
Shares Outstanding (Basic)376.00M
Shares Outstanding (Diluted)380.00M

Key Highlights

  • 1Revenue increased by 8% to $4.49 billion in 2012, driven by strong performance in both distribution (up 7%) and advertising (up 10%).
  • 2Operating income grew by 3% to $1.86 billion, indicating effective operational management.
  • 3The U.S. Networks segment generated $2.75 billion in revenue, a 5% increase, with advertising revenue up 9% and distribution revenue up 4%.
  • 4International Networks saw a significant revenue increase of 13% to $1.64 billion, with both distribution and advertising revenues showing robust growth.
  • 5The company maintained a strong liquidity position with $1.2 billion in cash and cash equivalents as of December 31, 2012, and a $1 billion revolving credit facility.
  • 6Discovery Communications actively engaged in share repurchases, authorizing an additional $2.0 billion in 2012 and having $1.5 billion remaining under its stock repurchase program as of year-end.
  • 7The company made strategic investments, including a 20% equity stake in Eurosport for $264 million and plans for a significant acquisition in Nordic countries.

Frequently Asked Questions

Revenue growth was primarily driven by increases in both distribution fees from cable and satellite operators and advertising sales across its U.S. and International Networks segments. Growth in subscriber numbers and contractual rate increases for distribution, coupled with improved advertising pricing and volume internationally, contributed significantly.

Warner Bros. Discovery managed its debt by issuing $1.0 billion in senior notes in May 2012 and modifying its revolving credit facility to extend the expiration date. The company also continued its stock repurchase program, demonstrating a commitment to returning capital to shareholders while maintaining a solid liquidity position.

The company operates in three main segments: U.S. Networks, International Networks, and Education. U.S. Networks showed solid growth in revenue and Adjusted OIBDA. International Networks demonstrated strong performance with double-digit percentage increases in revenue and Adjusted OIBDA. The Education segment also experienced revenue growth, albeit from a smaller base.

Key risks include the dependence on audience acceptance of content, the impact of new technologies and distribution platforms on traditional TV, intense competition, potential adverse effects from consolidation among distributors, the loss of affiliation agreements or unfavorable renewal terms, and significant debt leverage. Additionally, risks related to international operations and foreign currency fluctuations are noted.