Warner Bros. Discovery(WBD) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Provides Warner Bros. Discovery's unaudited consolidated financial statements and management's discussion and analysis ITEM 1. Unaudited Financial Statements Presents WBD's unaudited consolidated financial statements for Q3 2022 and 2021, with detailed notes on accounting policies and the WarnerMedia Merger Consolidated Statements of Operations Presents Warner Bros. Discovery's consolidated revenues, operating income, net income, and earnings per share for the specified periods Consolidated Statements of Operations (Three Months Ended September 30) | Revenues (in millions) | 2022 | 2021 | | :--------------------- | :--- | :--- | | Advertising | $2,042 | $1,453 | | Distribution | $4,990 | $1,328 | | Content | $2,531 | $352 | | Other | $260 | $17 | | Total revenues | $9,823 | $3,150 | | Operating (loss) income | $(2,190) | $329 | | Net (loss) income | $(2,285) | $197 | | Net (loss) income available to Warner Bros. Discovery, Inc. | $(2,308) | $156 | | Basic EPS | $(0.95) | $0.24 | | Diluted EPS | $(0.95) | $0.24 | Consolidated Statements of Operations (Nine Months Ended September 30) | Revenues (in millions) | 2022 | 2021 | | :--------------------- | :--- | :--- | | Advertising | $6,239 | $4,496 | | Distribution | $11,180 | $3,898 | | Content | $4,918 | $564 | | Other | $472 | $46 | | Total revenues | $22,809 | $9,004 | | Operating (loss) income | $(5,476) | $1,504 | | Net (loss) income | $(5,218) | $1,106 | | Net (loss) income available to Warner Bros. Discovery, Inc. | $(5,270) | $968 | | Basic EPS | $(3.00) | $1.47 | | Diluted EPS | $(3.00) | $1.46 | Consolidated Statements of Comprehensive (Loss) Income Details Warner Bros. Discovery's net income and other comprehensive income items, including currency translation and derivatives Consolidated Statements of Comprehensive (Loss) Income (Three Months Ended September 30) | Item (in millions) | 2022 | 2021 | | :----------------- | :--- | :--- | | Net (loss) income | $(2,285) | $197 | | Currency translation | $(690) | $(144) | | Derivatives | $24 | $12 | | Comprehensive (loss) income | $(2,951) | $65 | | Comprehensive (loss) income attributable to Warner Bros. Discovery, Inc. | $(2,974) | $24 | Consolidated Statements of Comprehensive (Loss) Income (Nine Months Ended September 30) | Item (in millions) | 2022 | 2021 | | :----------------- | :--- | :--- | | Net (loss) income | $(5,218) | $1,106 | | Currency translation | $(1,277) | $(203) | | Derivatives | $(12) | $137 | | Comprehensive (loss) income | $(6,507) | $1,040 | | Comprehensive (loss) income attributable to Warner Bros. Discovery, Inc. | $(6,559) | $902 | Consolidated Balance Sheets Presents Warner Bros. Discovery's consolidated assets, liabilities, and equity as of the specified dates Consolidated Balance Sheets (as of September 30, 2022 vs. December 31, 2021) | Item (in millions) | September 30, 2022 | December 31, 2021 | | :----------------- | :----------------- | :---------------- | | ASSETS | | | | Total current assets | $12,672 | $7,264 | | Film and television content rights and games, net | $28,288 | $3,832 | | Goodwill | $34,450 | $12,912 | | Intangible assets, net | $46,744 | $6,317 | | Total assets | $136,049 | $34,427 | | LIABILITIES AND EQUITY | | | | Total current liabilities | $14,676 | $3,459 | | Noncurrent portion of debt, net | $48,612 | $14,420 | | Total liabilities | $85,969 | $21,031 | | Total Warner Bros. Discovery, Inc. stockholders' equity | $48,517 | $11,599 | | Total liabilities and equity | $136,049 | $34,427 | * Total assets significantly increased from $34,427 million at December 31, 2021, to $136,049 million at September 30, 2022, primarily due to the WarnerMedia Merger, which added substantial film and television content rights, goodwill, and intangible assets[15][26] Consolidated Statements of Cash Flows Summarizes Warner Bros. Discovery's cash flows from operating, investing, and financing activities for the specified periods Consolidated Statements of Cash Flows (Nine Months Ended September 30) | Activity (in millions) | 2022 | 2021 | | :--------------------- | :--- | :--- | | Cash provided by operating activities | $1,458 | $1,914 | | Cash provided by (used in) investing activities | $3,742 | $(30) | | Cash used in financing activities | $(6,470) | $(811) | | Net change in cash, cash equivalents, and restricted cash | $(1,392) | $1,004 | | Cash, cash equivalents, and restricted cash, end of period | $2,513 | $3,126 | * Cash provided by operating activities decreased by $456 million (23.8%) from $1,914 million in 2021 to $1,458 million in 2022, primarily due to negative working capital fluctuations[17][345] * Investing activities shifted from a cash outflow of $30 million in 2021 to a cash inflow of $3,742 million in 2022, largely driven by cash acquired in the WarnerMedia Merger and derivative settlements[17][346] * Cash used in financing activities significantly increased from $811 million in 2021 to $6,470 million in 2022, mainly due to principal repayments of term loans and senior notes, and increased distributions to noncontrolling interests[17][347] Consolidated Statements of Equity Details changes in Warner Bros. Discovery's total equity, including stockholders' equity and noncontrolling interests, for the specified periods Consolidated Statements of Equity (September 30, 2022 vs. December 31, 2021) | Item (in millions) | September 30, 2022 | December 31, 2021 | | :----------------- | :----------------- | :---------------- | | Total Warner Bros. Discovery, Inc. stockholders' equity | $48,517 | $11,599 | | Noncontrolling interests | $1,245 | $1,434 | | Total equity | $49,762 | $13,033 | * Total equity increased significantly from $13,033 million at December 31, 2021, to $49,762 million at September 30, 2022, primarily due to the issuance of common stock in connection with the WarnerMedia Merger[15][20] Notes to Consolidated Financial Statements Provides detailed explanations and disclosures for Warner Bros. Discovery's financial statement line items and significant accounting policies NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Warner Bros. Discovery, formed by the April 2022 merger, is a global media and entertainment company operating through Studios, Networks, and DTC segments * Warner Bros. Discovery (WBD) was formed on April 8, 2022, through the merger of Discovery, Inc. and the WarnerMedia business of AT&T, with WBD shares trading on Nasdaq under WBD[25][26] *