01—Abstract
Summary
Summary of the 10-K filed February 18, 2016. Cited figures are marked; the original filing is the authoritative source.
For the fiscal year ended December 31, 2015, Warner Bros.
Discovery, Inc. (WBD) reported total revenues of $6.39 billiona, a 2% increase compared to the previous year, driven primarily by an 8% rise in distribution revenue. Advertising revenue saw a slight decline of 3%. The company operates across two main segments: U.S. Networks and International Networks, with U.S. Networks contributing 49% of total revenues and International Networks contributing 48%.
The acquisition and full consolidation of Eurosport significantly impacted the International Networks segment's performance and comparability between the years. Despite revenue growth, Adjusted OIBDA (Operating Income Before Depreciation and Amortization) decreased by 4% to $2.40 billionb, largely due to a 10% increase in costs of revenues, mainly driven by higher content spending. Financially, WBD ended the year with $390 million in cash and cash equivalents and total debt of $7.735 billion.
The company actively repurchased its stock, with $2.0 billionc remaining under its repurchase authorization as of year-end. Significant content commitments, including €1.3 billion for Olympic broadcast rights, highlight ongoing investment in programming. Management expressed confidence in its ability to meet short-term cash needs through existing cash flows and its revolving credit facility.
02—Key points
Key Highlights
- Total revenues increased by 2% to $6.39 billion in 2015, primarily driven by a 7% increase in distribution revenue across both U.S. and International Networks (excluding the impact of Eurosport acquisition and foreign currency).
- Advertising revenue decreased by 3% to $3.00 billion, with U.S. Networks advertising up 3% and International Networks down 9% (though up 11% excluding certain impacts).
- Adjusted OIBDA (Operating Income Before Depreciation and Amortization) decreased by 4% to $2.40 billion, reflecting increased costs of revenues and selling, general, and administrative expenses.
- The company fully consolidated Eurosport in 2015, having acquired a controlling interest in 2014, which significantly impacted the International Networks segment's financials.
- As of December 31, 2015, WBD had $390 million in cash and cash equivalents and total debt of approximately $7.7 billion.
- WBD continued its share repurchase program, with $2.0 billion remaining authorization as of December 31, 2015.
- Significant content commitments were made, including €1.3 billion for the Olympic Games broadcast rights between 2018 and 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Warner Bros. Discovery, Inc. kept $0.16.
- Revenue$6.39B100.0%
- Cost of revenue−$2.34B36.6%
- Gross profit$4.05B63.4%
- Operating costs−$2.07B32.3%
- Operating income$1.99B31.0%
- Interest, other & tax−$951.0M14.9%
- Net income$1.03B16.2%
Where FY2015 revenue went
$6.39B- Cost of revenue: $2.34B, 37% of revenue
- SG&A: $1.67B, 26% of revenue
- Net income: $1.03B, 16% of revenue
- Interest, other & tax: $951.0M, 15% of revenue
- Other operating costs: $397.0M, 6.2% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 18, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $6.39B$6.26B | +2.1% |
| Cost of Revenue | $2.34B$2.12B | +10.3% |
| Gross Profit | $4.05B$4.14B | −2.2% |
| SG&A Expenses | $1.67B$1.69B | −1.4% |
| Operating Expenses | $4.41B$4.20B | +4.9% |
| Operating Income | $1.99B$2.06B | −3.7% |
| Interest Expense | $330.00M$328.00M | +0.6% |
| Net Income | $1.03B$1.14B | −9.2% |
05—Questions
Frequently Asked Questions
What was the overall financial performance of Warner Bros. Discovery in 2015?
In 2015, Warner Bros. Discovery reported total revenues of $6.39 billion, a 2% increase from the prior year, driven by growth in distribution revenue. However, Adjusted OIBDA saw a 4% decrease to $2.40 billion due to higher content spending and operating expenses.
How did the Eurosport acquisition impact the company's results?
The full consolidation of Eurosport in 2015, following a controlling interest acquisition in 2014, significantly influenced the International Networks segment. While Eurosport's operations contributed to revenue, the comparability of financial results between 2015 and 2014 was impacted, with International Networks' revenue decreasing 2% as reported but increasing 7% excluding Eurosport's impact.
What is the company's financial health in terms of debt and liquidity?
As of December 31, 2015, Warner Bros. Discovery had $390 million in cash and cash equivalents and total debt of approximately $7.7 billion. The company has access to a $1.5 billion revolving credit facility and expects its cash balances and operating cash flows to be sufficient to meet its needs for the next twelve months.
What are the key drivers of revenue growth and concern for the company?
The primary drivers for revenue growth were distribution fees from pay-TV operators and advertising sales. However, a key concern is the increasing cost of content, which rose by 10% in 2015, impacting profitability. Additionally, the competitive landscape and evolving consumer behavior in content distribution present ongoing challenges.
06—Continue