10-KPeriod: FY2021

Warner Bros. Discovery, Inc. Annual Report, Year Ended Dec 31, 2021

Filed February 24, 2022For Securities:WBD

Summary

Warner Bros. Discovery, Inc. (WBD), formerly Discovery, Inc., is presenting its 2021 annual report, highlighting significant events and operational performance leading up to its transformative combination with AT&T's WarnerMedia business. The anticipated merger, structured as a Reverse Morris Trust transaction, is expected to create a leading global entertainment company. During 2021, WBD continued to grow its advertising and distribution revenues, driven by the launch and expansion of its direct-to-consumer (DTC) streaming service, discovery+. Financially, the company saw a 14% increase in total revenues, reaching $12.19 billion, while operating income declined by 20% to $2.01 billion, impacted by increased costs for content, particularly related to the Olympics and discovery+ investment, and higher selling, general, and administrative expenses. The company ended the year with $3.9 billion in cash and cash equivalents, with a strong liquidity position to fund its ongoing operations and strategic initiatives, including the substantial debt associated with the impending WarnerMedia combination.

Financial Highlights

52 data points
Beta

Revenue

$12.19B

Net Income

$1.01B

8.3% Net Margin

EPS (Diluted)

$1.54

Total Assets

$34.43B

Cash & Equivalents

$3.90B

Free Cash Flow

$2.42B

Financial Statements
Beta
Revenue$12.19B
SG&A Expenses$4.02B
Operating Expenses$10.18B
Operating Income$2.01B
Interest Expense$633.00M
Net Income$1.01B
EPS (Basic)$1.55
EPS (Diluted)$1.54
Shares Outstanding (Basic)588.00M
Shares Outstanding (Diluted)664.00M

Key Highlights

  • 1Warner Bros. Discovery (WBD) reported total revenues of $12.19 billion for the year ended December 31, 2021, a 14% increase compared to 2020.
  • 2Operating income decreased by 20% to $2.01 billion in 2021, primarily due to increased content expenses and higher selling, general, and administrative costs.
  • 3The company launched discovery+, its aggregated direct-to-consumer (DTC) streaming service, in January 2021, reaching 22 million paid DTC subscribers by the end of the year.
  • 4WBD is progressing towards its combination with AT&T's WarnerMedia business, a transaction anticipated to close in the second quarter of 2022, subject to shareholder and regulatory approvals.
  • 5The company ended 2021 with $3.9 billion in cash and cash equivalents, demonstrating a strong liquidity position.
  • 6Advertising revenue increased by 11% to $6.22 billion, driven by market recovery post-COVID-19 and Olympic broadcast revenue.
  • 7Distribution revenue also rose by 11% to $5.41 billion, primarily due to the growth of discovery+ and increased contractual affiliate rates.

Frequently Asked Questions

The company has entered into definitive agreements with AT&T to combine with WarnerMedia's entertainment, sports, and news assets. The transaction is structured as a Reverse Morris Trust and is anticipated to close in the second quarter of 2022, pending shareholder approval and customary closing conditions, including regulatory approvals. Significant progress has been made, including receiving unconditional antitrust clearance from the European Commission and expiration of the Hart-Scott-Rodino statutory waiting period.

In 2021, WBD reported a 14% increase in total revenues to $12.19 billion. However, operating income saw a 20% decrease to $2.01 billion, largely due to increased content expenses related to the Olympics and the investment in discovery+, as well as higher selling, general, and administrative expenses primarily for marketing discovery+.

WBD launched its aggregated DTC streaming service, discovery+, in the U.S. in January 2021 and has since expanded it internationally. The company aims to reach consumers across various platforms and has seen significant subscriber growth, reaching 22 million paid DTC subscribers by the end of 2021. This strategy is a key focus for future growth and engagement.

As of December 31, 2021, WBD had approximately $15.2 billion in consolidated debt. The company ended the year with $3.9 billion in cash and cash equivalents, indicating a strong liquidity position. The upcoming WarnerMedia combination will involve a significant increase in debt, which the company plans to manage through its revolving credit facility and ongoing operations.