Summary
Warner Bros. Discovery, Inc. (WBD) reported its third-quarter 2021 financial results, showing an increase in total revenues to $3.15 billion, up from $2.56 billion in the prior year's comparable period. This growth was driven by strong performance in both Advertising and Distribution revenues across its U.S. and International Networks segments. The launch and expansion of its direct-to-consumer (DTC) product, discovery+, played a significant role in bolstering distribution revenue. Despite revenue growth, operating income saw a decline to $329 million from $531 million year-over-year. This was primarily due to a substantial increase in costs of revenue and selling, general, and administrative expenses, reflecting investments in content and marketing, particularly to support the discovery+ launch and the broadcasting of the Olympics. The company also highlighted its pending merger with WarnerMedia, which is progressing with expected closure in mid-2022, and outlined the significant financial and operational considerations related to this transformative transaction.
Financial Highlights
49 data points| Revenue | $3.15B |
| Cost of Revenue | $1.53B |
| Gross Profit | $1.62B |
| SG&A Expenses | $944.00M |
| Operating Expenses | $2.82B |
| Operating Income | $329.00M |
| Interest Expense | $159.00M |
| Net Income | $156.00M |
| EPS (Basic) | $0.24 |
| EPS (Diluted) | $0.24 |
| Shares Outstanding (Basic) | 589.00M |
| Shares Outstanding (Diluted) | 663.00M |
Key Highlights
- 1Total revenues increased by 23% to $3.15 billion, driven by a 12% rise in Advertising and a 15% rise in Distribution revenues.
- 2The launch and rollout of the direct-to-consumer (DTC) product, discovery+, contributed significantly to the increase in distribution revenue, with 20 million paid DTC subscribers reported as of September 30, 2021.
- 3Operating income decreased by 38% to $329 million, mainly due to a significant increase in costs of revenues (up 52%) and SG&A expenses (up 49%), largely driven by investments in content for discovery+ and the Olympics.
- 4The company announced a pending merger with WarnerMedia, expected to close in mid-2022, which is structured as a Reverse Morris Trust transaction and will create a larger, combined global entertainment company.
- 5Cash flow from operations remained strong, providing $1.9 billion for the nine months ended September 30, 2021, although lower than the prior year's $2.2 billion.
- 6Debt levels remain substantial, with total debt standing at $14.8 billion net of unamortized discount, premium, and issuance costs, though the company has no outstanding borrowings on its revolving credit facility.
- 7International Networks segment revenue saw a significant 44% increase (43% ex-FX) to $1.3 billion, boosted by advertising recovery and the Olympics broadcast.