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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             
Commission File Number: 001-34177

Warner Bros. Discovery, Inc.
(Exact name of registrant as specified in its charter)

Delaware 35-2333914
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)

230 Park Avenue South 10003
New York , New York
(Zip Code)
(Address of principal executive offices)

( 212 )  548-5555
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbols Name of Each Exchange on Which Registered
Series A Common Stock WBD The Nasdaq Global Select Market
4.302% Senior Notes due 2030 WBDI30 , WBDI30A
The Nasdaq Global Market
4.693% Senior Notes due 2033 WBDI33 , WBDI33A
The Nasdaq Global Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes    ý     No   o
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).     Yes    ý     No   ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ý Accelerated filer ¨
Non-accelerated filer o Smaller reporting company ¨
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐     No   ý

Total number of shares outstanding of each class of the Registrant’s common stock as of April 23, 2026:

Series A Common Stock, par value $0.01 per share 2,507,136,702  

WARNER BROS. DISCOVERY, INC.
FORM 10-Q
TABLE OF CONTENTS

 

  Page

PART I. FINANCIAL INFORMATION.

ITEM 1. Unaudited Financial Statements.

Consolidated Statements of Operations .
4

Consolidated Statements of Comprehensive (Loss) Income.
5

Consolidated Balance Sheets .
6

Consolidated Statements of Cash Flows .
7

Consolidated Statements of Equity .
8

Notes to Consolidated Financial Statements.
10

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
30

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
44

ITEM 4. Controls and Procedures.
44

PART II. OTHER INFORMATION.

ITEM 1. Legal Proceedings.
45

ITEM 1A. Risk Factors.
46

ITEM 5. Other Information
46

ITEM 6. Exhibits.
48

SIGNATURES.
50

3

PART I. FINANCIAL INFORMATION

ITEM 1. Unaudited Financial Statements.

WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except per share amounts)

  Three Months Ended March 31,
  2026 2025
Revenues:
Distribution $ 4,906   $ 4,886  
Advertising 1,847   1,980  
Content 1,887   1,866  
Other 253   247  
Total revenues 8,893   8,979  
Costs and expenses:
Costs of revenues, excluding depreciation and amortization 4,643   5,131  
Selling, general and administrative 2,475   2,194  
Netflix Termination Fee (See Note 1)
2,800   —  
Depreciation and amortization 1,226   1,547  
Restructuring and other charges 204   54  
Impairments and loss on dispositions 14   90  

Total costs and expenses 11,362   9,016  
Operating loss ( 2,469 ) ( 37 )
Interest expense, net ( 581 ) ( 468 )
Loss on extinguishment of debt, net ( 27 ) ( 4 )
Loss from equity investees, net ( 5 ) ( 7 )
Other (expense) income, net ( 38 ) 82  
Loss before income taxes ( 3,120 ) ( 434 )
Income tax benefit (expense) 214   ( 15 )
Net loss ( 2,906 ) ( 449 )
Net income attributable to noncontrolling interests ( 10 ) ( 8 )
Net loss attributable to redeemable noncontrolling interests —   4  
Net loss available to Warner Bros. Discovery, Inc. $ ( 2,916 ) $ ( 453 )
Net loss per share available to Warner Bros. Discovery, Inc. Series A common stockholders:
Basic $ ( 1.17 ) $ ( 0.18 )
Diluted $ ( 1.17 ) $ ( 0.18 )
Weighted average shares outstanding:
Basic 2,492   2,462  
Diluted 2,492   2,462  

The accompanying notes are an integral part of these consolidated financial statements.

4

WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(unaudited; in millions)

Three Months Ended March 31,
2026 2025
Net loss $ ( 2,906 ) $ ( 449 )
Other comprehensive loss:

Currency translation, net of income tax expense of $( 14 ) and $( 90 )
( 218 ) 231  
Pension plan and SERP liability, net of income tax benefit of $ 2 and $ —
2   —  
Derivatives
Change in net unrealized (losses) gains ( 26 ) 9  
Less: Reclassification adjustment for net losses (gains) included in net income 7   ( 13 )
Net change, net of income tax benefit (expense) of $ 5 and $( 1 )
( 19 ) ( 4 )
Comprehensive loss ( 3,141 ) ( 222 )
Comprehensive income attributable to noncontrolling interests ( 9 ) ( 11 )
Comprehensive loss attributable to redeemable noncontrolling interests —   4  
Comprehensive loss attributable to Warner Bros. Discovery, Inc. $ ( 3,150 ) $ ( 229 )

The accompanying notes are an integral part of these consolidated financial statements.

5

WARNER BROS. DISCOVERY, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except par value)

March 31, 2026 December 31, 2025
Assets
Current assets:
Cash and cash equivalents $ 3,264   $ 4,566  
Receivables, net 5,009   5,294  

Prepaid expenses and other current assets 3,468   3,346  
Total current assets 11,741   13,206  
Film and television content rights and games 19,312   19,114  
Property and equipment, net 6,642   6,685  

Goodwill 25,874   25,933  
Intangible assets, net 26,803   27,764  

Other noncurrent assets 7,465   7,383  
Total assets $ 97,837   $ 100,085  
Liabilities and equity
Current liabilities:
Accounts payable $ 1,110   $ 1,093  
Accrued liabilities 11,920   9,626  

Deferred revenues 1,592   1,642  
Current portion of debt 1,493   139  
Total current liabilities 16,115   12,500  
Noncurrent portion of debt 30,973   32,428  
Deferred income taxes 5,873   6,383  
Other noncurrent liabilities 11,169   11,608  
Total liabilities 64,130   62,919  
Commitments and contingencies (See Note 15)

Redeemable noncontrolling interests —   19  

Warner Bros. Discovery, Inc. stockholders’ equity:
Series A common stock: $ 0.01 par value; 10,800 and 10,800 shares authorized; 2,737 and 2,710 shares issued; and 2,507 and 2,480 shares outstanding
27   27  
Preferred stock: $ 0.01 par value; 1,200 and 1,200 shares authorized, 0 shares issued and outstanding
—   —  
Additional paid-in capital 55,865   56,055  
Treasury stock, at cost: 230 and 230 shares
( 8,244 ) ( 8,244 )
Accumulated deficit ( 14,428 ) ( 11,512 )
Accumulated other comprehensive loss ( 642 ) ( 407 )
Total Warner Bros. Discovery, Inc. stockholders’ equity 32,578   35,919  
Noncontrolling interests 1,129   1,228  
Total equity 33,707   37,147  
Total liabilities and equity $ 97,837   $ 100,085  

The accompanying notes are an integral part of these consolidated financial statements.

6

WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)

  Three Months Ended March 31,
  2026 2025
Operating Activities
Net loss $ ( 2,906 ) $ ( 449 )
Adjustments to reconcile net income to cash provided by operating activities:
Content rights amortization and impairment 2,499   3,145  
Depreciation and amortization 1,226   1,547  
Deferred income taxes ( 513 ) ( 312 )

Share-based compensation expense 152   123  

Impairments and loss on dispositions 14   90  

Netflix Termination Fee accrual (See Note 1)
2,800   —  
Other, net 119   17  
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Receivables, net 246   288  
Film and television content rights, games, and production payables, net ( 2,603 ) ( 2,846 )
Accounts payable, accrued liabilities, deferred revenues and other noncurrent liabilities ( 1,033 ) ( 1,026 )
Foreign currency, prepaid expenses and other assets, net ( 209 ) ( 24 )
Cash (used in) provided by operating activities ( 208 ) 553  
Investing Activities
Purchases of property and equipment ( 268 ) ( 251 )

Proceeds from sales of investments —   11  
Investments in and advances to equity investees ( 25 ) ( 14 )

Proceeds from asset dispositions —   66  

Other investing activities, net 11   ( 7 )
Cash used in investing activities ( 282 ) ( 195 )
Financing Activities

Principal repayments of debt, including premiums and discounts to par value ( 123 ) ( 3,665 )
Borrowings from debt, net of discount and issuance costs ( 16 ) 1,500  
Distributions to noncontrolling interests and redeemable noncontrolling interests ( 129 ) ( 157 )
Proceeds for the formation of music catalog joint venture —   601  

Borrowings under commercial paper program and revolving credit facility 261   695  
Repayments under commercial paper program and revolving credit facility ( 261 ) ( 695 )

Cash paid to settle share-based awards, net ( 422 ) ( 117 )
Other financing activities, net ( 66 ) ( 57 )
Cash used in financing activities ( 756 ) ( 1,895 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 56 ) 95  
Net change in cash, cash equivalents, and restricted cash ( 1,302 ) ( 1,442 )
Cash, cash equivalents, and restricted cash, beginning of period 4,570   5,416  
Cash, cash equivalents, and restricted cash, end of period $ 3,268   $ 3,974  

The accompanying notes are an integral part of these consolidated financial statements.

7

WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in millions)

Warner Bros. Discovery, Inc. Common Stock Additional
Paid-In
Capital Treasury
Stock Accumulated Deficit Accumulated
Other
Comprehensive
Loss Warner Bros. Discovery, Inc. 
Stockholders’ Equity Noncontrolling
Interests Total
Equity
Shares Par Value
December 31, 2025 2,710   $ 27   $ 56,055   $ ( 8,244 ) $ ( 11,512 ) $ ( 407 ) $ 35,919   $ 1,228   $ 37,147  

Net (loss) income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests —  —  —  —  ( 2,916 ) —  ( 2,916 ) 10   ( 2,906 )
Other comprehensive loss —  —  —  —  —  ( 235 ) ( 235 ) ( 1 ) ( 236 )
Net share-based plan activity 27   —  ( 187 ) —  —  —  ( 187 ) —  ( 187 )

Dividends paid to noncontrolling interests —  —  —  —  —  —  —  ( 127 ) ( 127 )

Redeemable noncontrolling interest adjustments to redemption value —  —  ( 3 ) —  —  —  ( 3 ) —  ( 3 )
Reclassification associated with the expiration of put rights —  —  —  —  —  —  —  19   19  

March 31, 2026 2,737   $ 27   $ 55,865   $ ( 8,244 ) $ ( 14,428 ) $ ( 642 ) $ 32,578   $ 1,129   $ 33,707  

The accompanying notes are an integral part of these consolidated financial statements.

8

WARNER BROS. DISCOVERY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in millions)

Warner Bros. Discovery, Inc. Common Stock Additional
Paid-In
Capital Treasury
Stock Accumulated Deficit Accumulated
Other
Comprehensive
Loss Warner Bros. Discovery, Inc.
Stockholders’ Equity Noncontrolling
Interests Total
Equity
Shares Par Value
December 31, 2024 2,684   $ 27   $ 55,560   $ ( 8,244 ) $ ( 12,239 ) $ ( 1,067 ) $ 34,037   $ 792   $ 34,829  

Net (loss) income available to Warner Bros. Discovery, Inc. and attributable to noncontrolling interests —  —  —  —  ( 453 ) —  ( 453 ) 8   ( 445 )
Other comprehensive income —  —  —  —  —  227   227   3   230  
Net share-based plan activity 19   —  41   —  —  —  41   —  41  

Dividends paid to noncontrolling interests —  —  —  —  —  —  —  ( 147 ) ( 147 )

Redeemable noncontrolling interest adjustments to redemption value —  —  ( 3 ) —  —  —  ( 3 ) —  ( 3 )
Reclassification associated with the expiration of put rights —  —  —  —  —  —  —  74   74  
Formation of music catalog joint venture —  —  ( 13 ) —  —  —  ( 13 ) 582   569  
March 31, 2025 2,703   $ 27   $ 55,585   $ ( 8,244 ) $ ( 12,692 ) $ ( 840 ) $ 33,836   $ 1,312   $ 35,148  

The accompanying notes are an integral part of these consolidated financial statements.

9

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Warner Bros. Discovery, Inc. (“Warner Bros. Discovery”, “WBD”, the “Company”, “we”, “us” or “our”) is a leading global media and entertainment company that creates and distributes a differentiated and comprehensive portfolio of content and products across television, film, streaming, interactive gaming, publishing, themed experiences, and consumer products through brands including: Discovery Channel, HBO Max, CNN, DC Studios, TNT Sports, HBO, Food Network, TLC, TBS, Warner Bros. Motion Picture Group, Warner Bros. Television Group, Warner Bros. Games, Adult Swim, Turner Classic Movies, and others.
Termination of Netflix Merger
On January 19, 2026, the Company entered into an amended and restated agreement and plan of merger, by and among the Company, Netflix, Inc. (“Netflix”), Nightingale Sub, Inc., a wholly owned subsidiary of Netflix, and New Topco 25, Inc., a wholly owned subsidiary of WBD (the “Netflix Merger Agreement”), pursuant to which Netflix would have acquired the Streaming and Studios segments (subject to certain deviations) and certain other assets and liabilities, including the Company’s film and television studios, HBO Max, and HBO, following the separation and distribution of Discovery Global to the Company’s stockholders (the “Separation Transaction”).
Following the board of directors’ determination that it had received a “Company Superior Proposal,” as defined in the Netflix Merger Agreement, from Paramount Skydance Corporation (“PSKY”) and Netflix’s waiver of its right to propose revisions to the Netflix Merger Agreement, on February 27, 2026, in accordance with the terms of the Netflix Merger Agreement, the Company terminated the Netflix Merger Agreement in connection with entering into the PSKY Merger Agreement (as defined below). As a result of the termination of the Netflix Merger Agreement, PSKY, on behalf of the Company, paid Netflix a termination fee of $ 2.8  billion in cash (the “Netflix Termination Fee”) as required by the terms of the Netflix Merger Agreement. During the three months ended March 31, 2026, the Company recorded an expense for the Netflix Termination Fee in the consolidated statements of operations. The amount paid by PSKY is reimbursable by the Company to PSKY in certain circumstances in the event the PSKY Merger Agreement is terminated, and therefore has been recorded in accrued liabilities in the consolidated balance sheets.
PSKY Merger
On February 27, 2026, the Company entered into an Agreement and Plan of Merger, by and among the Company, PSKY and Prince Sub Inc., a wholly owned subsidiary of PSKY (“Merger Sub”) (as may be amended from time to time, the “PSKY Merger Agreement”), pursuant to which and subject to the terms and conditions therein, at the effective time, Merger Sub will merge with and into WBD, with WBD surviving as a wholly owned subsidiary of PSKY (the “PSKY Merger”).
Upon completion of the PSKY Merger, each issued and outstanding share of WBD’s Series A common stock (“WBD Common Stock”) (subject to certain exceptions) will be converted into the right to receive an amount in cash equal to $ 31.00 , without interest, plus, if the closing date of the PSKY Merger occurs after September 30, 2026, the Ticking Consideration (together, the “Merger Consideration”). The “Ticking Consideration” will be an amount in cash equal to $ 0.00277778 multiplied by the number of calendar days elapsed after September 30, 2026 to and including the closing date (which, for the avoidance of doubt, will not exceed $ 0.25 per 90 calendar day period).
Concurrently with the execution of the PSKY Merger Agreement, Larry J. Ellison and an affiliated trust entered into a guarantee in favor of WBD to, among other things, jointly and severally guarantee certain payments by PSKY under the PSKY Merger Agreement, including $ 45.72  billion of the aggregate Merger Consideration, and assist WBD with the consummation of the PSKY Merger.
On April 23, 2026, WBD stockholders approved the adoption of the PSKY Merger Agreement. The completion of the PSKY Merger is subject to customary closing conditions, including regulatory clearances. In addition, PSKY’s obligation to consummate the PSKY Merger is subject to WBD not having completed the separation of its Streaming & Studios business from its Global Linear Networks business nor having declared or made any dividend to WBD’s stockholders to effectuate the separation. There can be no assurance that the PSKY Merger will occur in accordance with the expected plans or anticipated timeline, or at all.
10

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The PSKY Merger Agreement contains certain customary termination rights for WBD and PSKY, including, without limitation, a right for either party to terminate if the PSKY Merger is not completed on or before March 4, 2027, subject to an extension to June 4, 2027 in certain circumstances as specified in the PSKY Merger Agreement. Termination under specified circumstances will require WBD to pay PSKY a termination fee of $ 3.0  billion and reimburse PSKY for (i) any payment made by PSKY, which will in no event be more than $ 1,528  million, in connection with WBD’s obligation to complete the Junior Lien Exchange Offer by December 30, 2026 and (ii) the Netflix Termination Fee, or PSKY to pay WBD a termination fee of $ 7.0  billion. Additionally, the PSKY Merger Agreement provides for customary pre-closing covenants of WBD, including covenants relating to conducting its business in the ordinary course consistent with past practice and to refrain from taking certain actions without PSKY’s consent.
Reportable Segments
As of March 31, 2026, we classified our operations in three reportable segments:
• Streaming - Our Streaming segment primarily consists of our premium pay-TV and streaming services.
• Studios - Our Studios segment primarily consists of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/streaming services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming.
• Global Linear Networks - Our Global Linear Networks segment primarily consists of our domestic and international television networks.
Our segment presentation is aligned with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries in which a controlling interest is maintained, including variable interest entities (“VIE”) for which the Company is the primary beneficiary. Intercompany accounts and transactions between consolidated entities have been eliminated.
Unaudited Interim Financial Statements
These consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from these estimates.
Accounting and Reporting Pronouncements Adopted
Credit Losses
In July 2025, the Financial Accounting Standards Board (“FASB”) issued guidance which provides a practical expedient to simplify the estimation of expected credit losses by assuming that current conditions as of the balance sheet do not change for the remaining life of the asset. This guidance is effective for interim and annual periods beginning after December 15, 2025, and the standard is to be applied prospectively. The Company elected not to apply the practical expedient in its expected credit losses calculation therefore, there was no impact on its consolidated financial statements.
11

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Accounting and Reporting Pronouncements Not Yet Adopted
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued guidance updating the disclosure requirements for income statement expenses, primarily through disaggregation of certain types of expenses presented on the income statement. The amendments are effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either: (1) prospectively to financial statements issued for reporting periods after the effective date, or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.
Accounting for Internal-Use Software
In September 2025, the FASB issued guidance which amends the existing standard for internal-use software to remove all references to prescriptive and sequential software development project stages. Under this guidance, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, and it is probable that the project will be completed, and the software will be used to perform the function intended. This guidance may be applied prospectively, retrospectively, or with a modified transition approach, and is effective for all annual periods beginning after December 15, 2027, and for interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.
Derivatives and Hedging and Revenue from Contracts with Customers
In September 2025, the FASB issued guidance that amends existing standards for derivatives and hedging (“Topic 815”) and revenue from contracts with customers (“Topic 606”). The guidance refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. The guidance also provides clarification under Topic 606 for share-based payments from a customer in a revenue contract. This guidance may be applied prospectively or with a modified retrospective approach, and is effective for all annual periods beginning after December 15, 2026, and for interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.
Derivatives and Hedging: Hedge Accounting Improvements
In November 2025, the FASB issued guidance that improves hedge accounting guidance by clarifying certain aspects and aligning hedge accounting more closely with the economics of an entity’s risk management activities. The update is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within those annual reporting periods, with early adoption permitted. The updates should be applied prospectively for all hedging relationships as of the date of adoption. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.

NOTE 2. GOODWILL AND INTANGIBLE ASSETS
We perform fair value-based impairment tests of goodwill and intangible assets on an annual basis, and between annual tests if an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit or an intangible asset below its carrying value.
During the three months ended March 31, 2026, the Company performed goodwill and intangible assets impairment monitoring procedures for all of its reporting units and identified no indicators of impairment.
The Company continues to monitor its reporting units for triggers that could impact the recoverability of goodwill. Long-term trends and risks the Company is monitoring in its ongoing assessment include, but are not limited to, the following:
• uncertainty related to affiliate rights renewals associated with the Company’s Global Linear Networks and Streaming reporting units;
• declining levels of global GDP growth and continued softness in the U.S. linear advertising market associated with the Company’s Global Linear Networks reporting unit;
• increased competition for advertising expenditures associated with the Company’s Global Linear Networks and Streaming reporting units as a result of an increase in digital advertising inventory available in the marketplace;
• content licensing trends and volatility related to the performance of theatrical film and game slates in the Company’s Studios reporting unit; and
• risks in executing the projected growth strategies of the Company’s Streaming reporting unit.
12

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 3. RESTRUCTURING AND OTHER CHARGES
The Company periodically initiates restructuring programs, which may include, among other things, strategic content programming assessments, organizational restructuring, employee retention, facility consolidation activities, other contract termination costs, and consulting fees related to the previously announced Separation Transaction and the PSKY Merger. During 2025, the Company initiated restructuring plans related to the previously proposed Separation Transaction.
Restructuring and other charges by reportable segments and corporate and inter-segment eliminations were as follows (in millions).

  Three Months Ended March 31,
  2026 2025
Streaming $ 26   $ 12  
Studios 9   ( 5 )
Global Linear Networks 42   16  
Corporate and inter-segment eliminations 127   31  
Total restructuring and other charges $ 204   $ 54  

During the three months ended March 31, 2026 and 2025, restructuring and other charges were primarily related to organization restructuring costs, employee retention, and consulting fees related to the previously announced Separation Transaction and the PSKY Merger.
Changes in restructuring liabilities recorded in accounts payable, accrued liabilities, and other noncurrent liabilities by major category and by reportable segment and corporate were as follows (in millions).

Streaming Studios Global Linear Networks Corporate Total
December 31, 2025 $ 23   $ 58   $ 69   $ 127   $ 277  

Contract termination accruals, net —   —   —   12   12  
Employee termination accruals, net —   9   6   ( 3 ) 12  
Employee retention, net 15   6   36   23   80  
Consulting fees and other accruals and adjustments
11   ( 6 ) —   95   100  
Cash paid ( 19 ) ( 4 ) ( 30 ) ( 111 ) ( 164 )
March 31, 2026 $ 30   $ 63   $ 81   $ 143   $ 317  

NOTE 4. REVENUES
The following tables present the Company’s revenues disaggregated by revenue source (in millions).

Three Months Ended March 31, 2026
Streaming Studios Global Linear Networks Corporate and Inter-segment Eliminations Total
Revenues:
Distribution $ 2,533   $ 1   $ 2,373   $ ( 1 ) $ 4,906  
Advertising 284   —   1,570   ( 7 ) 1,847  
Content 68   2,934   346   ( 1,461 ) 1,887  
Other 2   190   88   ( 27 ) 253  
Total $ 2,887   $ 3,125   $ 4,377   $ ( 1,496 ) $ 8,893  

13

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Three Months Ended March 31, 2025
Streaming Studios Global Linear Networks Corporate and Inter-segment Eliminations Total
Revenues:
Distribution $ 2,329   $ 1   $ 2,558   $ ( 2 ) $ 4,886  
Advertising 237   1   1,758   ( 16 ) 1,980  
Content 88   2,139   380   ( 741 ) 1,866  
Other 2   173   78   ( 6 ) 247  
Total $ 2,656   $ 2,314   $ 4,774   $ ( 765 ) $ 8,979  

Contract Liabilities and Contract Assets
The following table presents contract liabilities on the consolidated balance sheets (in millions).

Category Balance Sheet Location March 31, 2026 December 31, 2025

Contract liabilities Deferred revenues $ 1,592   $ 1,642  
Contract liabilities Other noncurrent liabilities 360   355  

For the three months ended March 31, 2026 and 2025, respectively, revenues of $ 774  million and $ 677  million were recognized that were included in deferred revenues as of December 31, 2025 and December 31, 2024, respectively. Contract assets were not material as of March 31, 2026 and December 31, 2025.
Remaining Performance Obligations
The following table presents a summary of revenue expected to be recognized from remaining performance obligations by contract type (in millions).

Contract Type March 31, 2026 Duration
Distribution - fixed price or minimum guarantee $ 2,848   Through 2030

Content licensing and sports sublicensing 4,528   Through 2032

Brand licensing 3,953   Through 2062

Advertising 1,006   Through 2032

Other 124   Through 2029

Total $ 12,459  

The value of unsatisfied performance obligations disclosed above does not include: (i) contracts involving variable consideration for which revenues are recognized in accordance with the sales or usage-based royalty exception, which typically have a similar duration as the contracts disclosed above, and (ii) contracts with an original expected length of one year or less, such as most advertising contracts; however for content licensing revenues, including revenues associated with the licensing of theatrical and television product for television and streaming services, the Company has included all contracts regardless of duration.

NOTE 5. SALES OF RECEIVABLES
Revolving Receivables Program
During 2025, the Company amended its revolving receivables program to reduce the facility limit to $ 5,000 million and extend the program to June 2026. The outstanding portfolio of receivables derecognized from our consolidated balance sheet was $ 3,850 million and $ 3,700 million as of March 31, 2026 and December 31, 2025, respectively.
The Company recognized $ 20 million and $ 36 million for the three months ended March 31, 2026 and 2025, respectively, in selling, general and administrative expenses in the consolidated statements of operations from the revolving receivables program (net of non-designated derivatives). (See Note 9.)
14

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table presents a summary of receivables sold (in millions).

Three Months Ended March 31,
2026 2025
Gross receivables sold/cash proceeds received $ 3,445   $ 4,231  
Collections reinvested under revolving receivables program ( 3,295 ) ( 4,120 )
Net cash proceeds received $ 150   $ 111  
Net receivables sold $ 3,416   $ 4,205  
Obligations recorded (Level 3) $ 67   $ 103  

The following table presents a summary of the amounts transferred or pledged, which were held at the Company’s bankruptcy-remote consolidated subsidiary (in millions).

March 31, 2026 December 31, 2025
Gross receivables pledged as collateral $ 2,121   $ 2,632  

Balance sheet classification:
Receivables, net $ 1,652   $ 2,230  

Other noncurrent assets $ 469   $ 402  

Accounts Receivable Factoring
No amounts were sold under the Company’s factoring arrangement for the three months ended March 31, 2026. Total trade accounts receivable sold under the Company’s factoring arrangement was $ 102 million for the three months ended March 31, 2025. The impact to the consolidated statements of operations was immaterial for the three months ended March 31, 2026 and 2025. This accounts receivable factoring agreement is separate and distinct from the revolving receivables program.

NOTE 6. CONTENT RIGHTS
For purposes of amortization and impairment, capitalized production costs are grouped based on their predominant monetization strategy: individually or as a group. Live programming includes licensed sports rights and related advances. The tables below present the components of content rights (in millions).

March 31, 2026
Predominantly Monetized Individually
Predominantly Monetized as a Group
Total
Production costs:
Released, less amortization $ 3,269   $ 5,930   $ 9,199  
Completed and not released 1,186   587   1,773  
In production and other 1,723   2,082   3,805  
Total production costs $ 6,178   $ 8,599   $ 14,777  
Licensed content, live programming, and advances, net 4,544  
Game development costs, less amortization 362  
Total film and television content rights and games 19,683  
Less: Current content rights and prepaid license fees, net ( 371 )
Total noncurrent film and television content rights and games $ 19,312  

15

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

December 31, 2025
Predominantly Monetized Individually
Predominantly Monetized as a Group
Total
Production costs:
Released, less amortization $ 3,006   $ 5,686   $ 8,692  
Completed and not released 1,109   521   1,630  
In production and other 1,782   2,544   4,326  
Total production costs $ 5,897   $ 8,751   $ 14,648  
Licensed content, live programming, and advances, net 4,478  
Game development costs, less amortization 310  
Total film and television content rights and games 19,436  
Less: Current content rights and prepaid license fees, net ( 322 )
Total noncurrent film and television content rights and games $ 19,114  

Content amortization consisted of the following (in millions).

Three Months Ended March 31,
2026 2025

Predominantly monetized individually $ 400   $ 580  

Predominantly monetized as a group 2,057   2,530  

Total content amortization $ 2,457   $ 3,110  

Content expense includes amortization, impairments, and development expense and is generally a component of costs of revenues on the consolidated statements of operations. Content impairments were $ 42 million and $ 35 million, respectively, for the three months ended March 31, 2026 and 2025.

NOTE 7. INVESTMENTS
The Company’s equity investments consisted of the following (in millions).
Category Balance Sheet Location Ownership March 31, 2026 December 31, 2025
Equity method investments:
The Chernin Group (TCG) 2.0-A, LP Other noncurrent assets 44 % $ 276   $ 276  
nC+ Other noncurrent assets 32 % 153   153  

Other Other noncurrent assets 270   268  
Total equity method investments 699   697  

Investments without readily determinable fair values Other noncurrent assets (a)
349   348  
Total investments $ 1,048   $ 1,045  

(a) Investments without readily determinable fair values included $ 17  million as of March 31, 2026 and December 31, 2025 that was recorded in prepaid expenses and other current assets.
Equity Method Investments
Certain of the Company’s other equity method investments are VIEs, for which the Company is not the primary beneficiary. As of March 31, 2026, the Company’s maximum exposure for all of its unconsolidated VIEs, including the investment carrying values and unfunded contractual commitments made on behalf of VIEs, was approximately $ 477  million. The Company’s maximum estimated exposure excludes the non-contractual future funding of VIEs. The aggregate carrying values of these VIE investments were $ 467  million and $ 481  million as of March 31, 2026 and December 31, 2025, respectively. VIE gains and losses are recorded in loss from equity investees, net on the consolidated statements of operations, and were not material for the three months ended March 31, 2026 and 2025.
16

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Joint Venture
In January 2025, the Company contributed a 70 % interest in its music catalog to a joint venture with Cutting Edge Group in exchange for net proceeds of $ 601 million. The Company retained a controlling financial interest and consolidated the joint venture as a VIE. The Company has determined that it is the primary beneficiary of the joint venture as the Company has certain operational rights that significantly impact the economic performance of the business including exploitation of the catalog works and selection of the administrator. As the primary beneficiary, the Company includes the joint venture assets, liabilities and results of operations in the Company's consolidated financial statements. As of March 31, 2026, the carrying amounts of assets and liabilities of the consolidated VIE were not material. During the three months ended March 31, 2026, it was determined that the Cutting Edge Group will receive an additional 9 % economic interest in the venture based on the results of certain operational metrics.

NOTE 8. DEBT
The table below presents the components of outstanding debt (in millions).

Weighted-Average
Interest Rate as of
March 31, 2026
March 31, 2026 December 31, 2025
Bridge loan with maturity of 15 months
7.67   % $ 15,000   $ 15,000  

Senior notes with maturities of 5 years or less
3.91   % 6,525   6,659  
Senior notes with maturities between 5 and 10 years
4.37   % 3,505   3,509  
Senior notes with maturities greater than 10 years
5.17   % 7,671   7,677  
Total debt 32,701   32,845  
Unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting, net ( 235 ) ( 278 )
Debt, net of unamortized discount, premium, debt issuance costs, and fair value adjustments for acquisition accounting 32,466   32,567  
Current portion of debt ( 1,493 ) ( 139 )
Noncurrent portion of debt $ 30,973   $ 32,428  

During the three months ended March 31, 2026, the Company repaid in full at maturity $ 123  million of aggregate principal amount outstanding of its senior notes due January and March 2026.
On February 18, 2026, DGH (formerly WarnerMedia Holdings, Inc., the “Borrower”), together with JPMorgan Chase Bank, N.A., in its capacities as Administrative Agent and Collateral Agent, executed Amendment No. 1 (“Amendment No. 1”) to the Non-Investment Grade Leveraged Bridge Loan Agreement dated June 26, 2025 (the “Bridge Loan Agreement”). Amendment No. 1 extends the maturity of the Borrower’s outstanding bridge loans from the earlier of (i) December 30, 2026 and (ii) the completion of the previously proposed Separation Transaction to the earlier of (x) June 30, 2027 and (y) the date that the previously proposed Spin-Off (as defined in the Bridge Loan Agreement) occurs.
Under Amendment No. 1, all previously scheduled duration fees through June 30, 2026 remain unchanged, however, the duration fees payable on September 30, 2026 and December 31, 2026 were increased from 0.75 % to 1.00 % of the principal amount of outstanding loans on such dates. In addition, a new duration fee of 1.00 % of the principal amount of outstanding loans will be payable on March 31, 2027.
Amendment No. 1 does not modify the mandatory prepayment provisions, guarantee structure, or collateral securing the bridge facility, all of which remain consistent with the Bridge Loan Agreement. The amendment also maintains the original representations and warranties, affirmative and negative covenants, events of default and continues to include no financial maintenance covenants.
During the three months ended March 31, 2025, the Company repaid in full at maturity $ 2,165  million of aggregate principal amount outstanding of its senior notes due March 2025, and redeemed in full $ 1,500  million aggregate principal amount outstanding of its senior notes due March 2026. The redemption was funded with the proceeds of borrowings pursuant to a $ 1,500  million 364 -day senior unsecured term loan credit facility.
17

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

We are obligated to cause certain of our subsidiaries to conduct one or more offers to exchange (collectively, the “Junior Lien Exchange Offer”) certain of the senior notes issued by DGH and DCL, as applicable, for new junior lien secured notes with the same economic terms (including denominations, interest rate, interest payment dates, maturity date and redemption provisions) to be issued by DGH or DCL, as applicable (the “junior lien notes”). If the Junior Lien Exchange Offer is not completed by December 30, 2026, WBD will be required to pay to each holder of the applicable senior notes entitled to participate in the Junior Lien Exchange Offer a one-time cash payment in the amount of $100 per $1,000 principal amount or €100 per €1,000 principal amount, as applicable, of the applicable senior notes held by such holder, equal to an aggregate amount of approximately $ 1.5  billion.
The PSKY Merger Agreement provides that, prior to October 15, 2026, PSKY may deliver one formal request (a “Specified Request”) in writing to WBD requesting that WBD either, subject to certain exceptions, (i) commence and use reasonable best efforts to effectuate a consent solicitation (on terms mutually determined by PSKY and WBD in good faith) to eliminate the obligation to commence the Junior Lien Exchange Offer or otherwise modify the required terms of the Junior Lien Exchange Offer, (ii) commence and use reasonable best efforts to effectuate the Junior Lien Exchange Offer (on terms mutually determined by PSKY and WBD in good faith, subject to certain conditions) or (iii) make a payment in the amount of $100 per $1,000 principal amount or €100 per €1,000 principal amount of such outstanding senior notes in lieu of effectuating the Junior Lien Exchange Offer (the “Amended Notes Payment Amount”); provided that, if the Amended Notes Payment Amount becomes due and payable pursuant to the above, PSKY shall timely and fully pay such amount (such amount not to exceed $ 1,528  million in the aggregate).
If PSKY does not make a Specified Request by October 15, 2026, WBD may, after such date, commence one or more consent solicitations with respect to the outstanding senior notes or commence the Junior Lien Exchange Offer, in each case, on terms determined by WBD in its sole discretion, or pay the Amended Notes Payment Amount; provided that, if the Amended Notes Payment Amount becomes due and payable pursuant to the above, PSKY shall timely and fully pay such amount (subject to the aggregate limit described above).
As of March 31, 2026, all senior notes are fully and unconditionally guaranteed by the Company, Scripps Networks, DCL (to the extent it is not the primary obligor on such senior notes), and DGH (to the extent it is not the primary obligor on such senior notes), except for $ 171  million of senior notes related to the legacy WarnerMedia business (the “WarnerMedia Business”).
Revolving Credit Facility and Commercial Paper Programs
DCL and certain subsidiaries of the Company, as borrowers, have a multicurrency revolving credit agreement, which was amended in June 2025 (the “Credit Agreement”). The Credit Agreement provides for a senior revolving credit facility (the “Credit Facility”) with aggregate commitments of $ 4,000 million and includes a $ 150 million sublimit for the issuance of standby letters of credit. DCL may also request additional commitments up to $ 1,000  million from the lenders upon the satisfaction of certain conditions. The obligations of the borrowers under the Credit Agreement are secured by the same collateral and have the benefit of the same guarantees as provided in respect of the Bridge Loan Facility, as described above. The Credit Agreement is available on a revolving basis until October 2029, with an option for up to two additional 364 -day renewal periods subject to the lenders’ consent, and provides for an early termination of the Credit Agreement upon completion of the previously proposed Separation Transaction.
Additionally, the Company’s commercial paper program is supported by the Credit Facility. Under the commercial paper program, the Company may issue up to $ 2,000 million. In March 2025, the Company increased the issuance capacity under the commercial paper program from $ 1,000 million to $ 2,000 million. Borrowing capacity under the Credit Facility is effectively reduced by any outstanding borrowings under the commercial paper program.
As of March 31, 2026 and December 31, 2025, the Company and DCL had no outstanding borrowings under the Credit Facility or issuances under the commercial paper program.
The Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants, and also requires maintenance of a minimum consolidated interest coverage ratio of 3.00 to 1.00 and a maximum consolidated leverage ratio of 4.50 to 1.00. As of March 31, 2026, the Company was in compliance with all applicable covenants and there were no events of default under the Credit Agreement.

NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS
In the normal course of business, the Company is exposed to foreign currency exchange rate market risk and interest rate fluctuations. As part of its risk management strategy, the Company uses derivative financial instruments, primarily foreign currency forward contracts, fixed-to-fixed currency swaps, total return swaps and interest rate swaps to hedge certain foreign currency, market value, and interest rate exposures. The Company’s objective is to reduce earnings volatility by offsetting gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them. The Company does not enter into or hold derivative financial instruments for speculative trading purposes.
18

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

There were no amounts eligible to be offset under master netting agreements as of March 31, 2026 and December 31, 2025. The fair value of the Company’s derivative financial instruments was determined using a market-based approach (Level 2). The following table summarizes the Company’s derivative financial instruments recorded on its consolidated balance sheets (in millions).

March 31, 2026 December 31, 2025
Fair Value Fair Value
Notional Prepaid expenses and other current assets Other non-
current assets Accounts payable and accrued liabilities Other non-
current liabilities Notional Prepaid expenses and other current assets Other non-
current assets Accounts payable and accrued liabilities Other non-
current liabilities
Cash flow hedges:
Foreign exchange $ 3,084   $ 49   $ 36   $ 32   $ 51   $ 2,235   $ 53   $ 60   $ 35   $ 38  

Net investment hedges: (a)

Cross-currency swaps 444   7   —   —   21   452   7   —   —   21  

No hedging designation:
Foreign exchange 145   10   1   91   1   126   9   —   15   79  
Cross-currency swaps 221   4   —   —   10   225   4   —   —   11  

Total return swaps 486   —   —   27   —   501   —   —   —   —  
Credit contracts —   —   —   —   —   2,000   8   —   —   —  

Total $ 70   $ 37   $ 150   $ 83   $ 81   $ 60   $ 50   $ 149  

(a) Excludes € 781  million and € 781  million of euro-denominated notes ($ 897 million and $ 919  million equivalent) at March 31, 2026 and December 31, 2025, respectively, designated as a net investment hedge.
Derivatives Designated for Hedge Accounting
Cash Flow Hedges
The Company uses foreign exchange forward contracts to mitigate the foreign currency risk related to revenues, production rebates, and production expenses. As production spend occurs or when rebate receivables are recognized, foreign forward exchange contracts designated as cash flow hedges are de-designated. Upon de-designation, gains and losses on these derivatives directly impact earnings in the same line and same period as the hedged risk. These cash flow hedges are carried at fair market value on the Company’s consolidated balance sheets. Hedge effectiveness is assessed using the spot method, with fair market value changes recorded in other comprehensive income (loss) until the hedged item affects earnings. Excluded components, including forward points, are included in current earnings.
The following table presents the pre-tax impact of derivatives designated as cash flow hedges on income and other comprehensive income (loss) (in millions).

  Three Months Ended March 31,
  2026 2025
Gains (losses) recognized in accumulated other comprehensive loss:

Foreign exchange - derivative adjustments
$ ( 32 ) $ 14  

Gains (losses) reclassified into income from accumulated other comprehensive loss:

Foreign exchange - distribution revenue
( 10 ) 4  

Foreign exchange - costs of revenues
3   —  

Interest rate - interest expense, net ( 1 ) ( 1 )

Interest rate - other (expense) income, net
—   14  

If current fair valu es of designated cash flow hedges as of March 31, 2026 remained static over the next twelve months, the amount the Company would reclassify from accumulated other comprehensive loss into income in the next twelve months would not be material for the current fiscal year. The maximum length of time the Company is hedging exposure to the variability in future cash flows is 29 years.
19

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Net Investment Hedges
The Company is exposed to foreign currency risk associated with the net assets of non-USD functional entities and uses fixed-to-fixed cross currency swaps to mitigate this risk.
The following table presents the pre-tax impact of derivatives and other instruments designated as net investment hedges on other comprehensive income (loss) (in millions). Other than amounts excluded from effectiveness testing, there were no other material gains (losses) reclassified from accumulated other comprehensive loss to income during the three months ended March 31, 2026 and 2025.

Three Months Ended March 31,
Amount of gain (loss) recognized in AOCI Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing)
2026 2025 2026 2025
Cross currency swaps $ ( 3 ) $ ( 4 ) Interest expense, net $ 3   $ 3  

Euro-denominated notes (foreign denominated debt) 22   ( 60 ) N/A —   —  

Total $ 19   $ ( 64 ) $ 3   $ 3  

Derivatives Not Designated for Hedge Accounting
The Company has deferred compensation plans that have risk related to the fair value gains and losses on these investments and uses total return swaps to mitigate this risk. The gains and losses associated with these swaps are recorded to selling, general and administrative expenses, offsetting the deferred compensation investment gains and losses.
During the year ended December 31, 2025, the Company entered into $ 2,000 million notional amount of credit contract swaptions to mitigate the interest rate risk related to future issuances of debt related to the previously proposed Separation Transaction, which were unwound during the three months ended March 31, 2026 for an immaterial loss.
The Company is also exposed to the risk of secured overnight financing rate changes in connection with securitization fees on the receivables securitization program. To mitigate this risk, the Company entered into $ 1,500  million notional of non-designated interest rate swaps in the first quarter of 2025. The gains and losses on these derivatives are recorded to selling, general and administrative expenses, offsetting securitization interest expense.
The following table presents the pretax gains (losses) on derivatives not designated as hedges and recognized in selling, general and administrative expense and other (expense) income, net in the consolidated statements of operations (in millions).

Three Months Ended March 31,
2026 2025
Interest rate swaps $ —   $ 1  
Total return swaps ( 12 ) ( 11 )
Total in selling, general and administrative expense ( 12 ) ( 10 )

Cross-currency swaps 1   ( 1 )
Credit contracts ( 5 ) —  

Foreign exchange derivatives 2   9  
Total in other (expense) income, net
( 2 ) 8  
Total $ ( 14 ) $ ( 2 )

20

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 10. FAIR VALUE MEASUREMENTS
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified in the following three categories:
Level 1 – Quoted prices for identical instruments in active markets.
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 – Valuations derived from techniques in which one or more significant inputs are unobservable.

The tables below present assets and liabilities measured at fair value on a recurring basis (in millions).
    March 31, 2026
Category Balance Sheet Location Level 1 Level 2 Level 3 Total
Assets
Cash equivalents:
Time deposits Cash and cash equivalents $ —   $ 134   $ —   $ 134  

Equity securities:
Money market fund Cash and cash equivalents 58   —   —   58  

Mutual funds Prepaid expenses and other current assets 15   —   —   15  
Company-owned life insurance contracts Prepaid expenses and other current assets —   2   —   2  
Mutual funds Other noncurrent assets 201   —   —   201  
Company-owned life insurance contracts Other noncurrent assets —   102   —   102  

Total $ 274   $ 238   $ —   $ 512  
Liabilities
Deferred compensation plan Accrued liabilities $ 61   $ —   $ —   $ 61  
Deferred compensation plan Other noncurrent liabilities 674   —   —   674  
Total $ 735   $ —   $ —   $ 735  

December 31, 2025
Category Balance Sheet Location Level 1 Level 2 Level 3 Total
Assets
Cash equivalents:
Time deposits Cash and cash equivalents $ —   $ 107   $ —   $ 107  

Equity securities:
Money market funds Cash and cash equivalents 61   —   —   61  

Mutual funds Prepaid expenses and other current assets 14   —   —   14  
Company-owned life insurance contracts Prepaid expenses and other current assets —   2   —   2  
Mutual funds Other noncurrent assets 205   —   —   205  
Company-owned life insurance contracts Other noncurrent assets —   105   —   105  

Total $ 280   $ 214   $ —   $ 494  
Liabilities
Deferred compensation plan Accrued liabilities $ 66   $ —   $ —   $ 66  
Deferred compensation plan Other noncurrent liabilities 682   —   —   682  
Total $ 748   $ —   $ —   $ 748  

21

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

In addition to the financial instruments listed in the tables above, the Company holds other financial instruments, including cash deposits, accounts receivable, accounts payable, senior notes, and a bridge loan. The carrying values for such financial instruments, other than the senior notes, each approximated their fair values as of March 31, 2026 and December 31, 2025. The estimated fair value of the Company’s outstanding senior notes, including accrued interest, using quoted prices from over-the-counter markets, considered Level 2 inputs, was $ 14,609 million and $ 15,205 million as of March 31, 2026 and December 31, 2025, respectively.
The Company’s derivative financial instruments are discussed in Note 9 and the obligation for its revolving receivable program is discussed in Note 5.

NOTE 11. SHARE-BASED COMPENSATION
The Company has various incentive plans under which performance based restricted stock units (“PRSUs”), service based restricted stock units (“RSUs”), and stock options have been issued. The table below presents awards granted (in millions, except weighted-average grant price).

Three Months Ended March 31, 2026
Awards Weighted-Average Grant Date Fair Value
Awards granted:
PRSUs 1.2   $ 29.08  
RSUs 19.1   $ 28.50  
Stock options 3.1   $ 10.47  

The table below presents unrecognized compensation cost related to non-vested share-based awards and the weighted-average amortization period over which these expenses will be recognized as of March 31, 2026 (in millions, except years).

Unrecognized Compensation Cost Weighted-Average Amortization Period
(years)
PRSUs $ 92   1.4
RSUs 877   1.5
Stock options 147   2.5

Total unrecognized compensation cost $ 1,116  

NOTE 12. INCOME TAXES
Income tax benefit (expense) was $ 214 million and $( 15 ) million for the three months ended March 31, 2026 and 2025, respectively. The increase in income tax benefit for the three months ended March 31, 2026 compared to the same period in 2025 was primarily attributable to excess tax benefits from share-based compensation.
Income tax benefit for the three months ended March 31, 2026, reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributable to a book tax difference in the Netflix Termination Fee accrual (See Note 1) based on current assessments, as well as excess tax benefits from share-based compensation.
As of March 31, 2026 and December 31, 2025, the Company’s reserves for unrecognized tax benefits totaled $ 2,368 million and $ 2,356 million, respectively.
As of March 31, 2026 and December 31, 2025, the Company had accrued $ 896 million and $ 856 million, respectively, of total interest and penalties payable related to unrecognized tax benefits. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.
22

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The Organization for Economic Co-operation and Development’s (“OECD”) Pillar Two Global Anti-Base Erosion (“GloBE”) model rules, issued under the OECD Inclusive Framework on Base Erosion and Profit Shifting, introduce a global minimum tax of 15% applicable to multinational enterprise groups with consolidated financial statement revenue in excess of €750 million. Numerous foreign jurisdictions have already enacted tax legislation based on the GloBE rules, with some effective as early as January 1, 2024. In January 2026, the OECD issued additional guidance on the minimum tax framework, including a “side by side” safe harbor framework that would apply to U.S.-parented groups. Even if this safe harbor applies, we would still be subject to local minimum tax regimes in countries that have adopted these rules. The interpretation and adoption of the OECD’s recommendations continue to vary across jurisdictions. As of March 31, 2026, we recognized an immaterial income tax expense for Pillar Two GloBE minimum tax. The Company is continuously monitoring the evolving application of this legislation and assessing its potential impact on our future tax liability.

NOTE 13. SUPPLEMENTAL DISCLOSURES
The following tables present supplemental information related to the consolidated financial statements (in millions).
Other (Expense) Income, net
Other (expense) income, net, consisted of the following (in millions).
Three Months Ended March 31,
2026 2025
Foreign currency (losses) gains, net $ ( 52 ) $ 30  
(Losses) gains on derivative instruments, net ( 2 ) 22  

Change in the value of investments with readily determinable fair value —   4  

Change in fair value of equity investments without readily determinable fair value —   ( 4 )

Interest income 22   64  
Indemnification receivable accrual ( 3 ) ( 38 )
Other (expense) income, net ( 3 ) 4  
Total other (expense) income, net
$ ( 38 ) $ 82  

Supplemental Cash Flow Information
Three Months Ended March 31,
2026 2025

Non-cash investing and financing activities:

Assets acquired under finance lease and other arrangements $ 17   $ 144  

Settlement of PRSU awards $ 97   $ 51  

Cash, Cash Equivalents, and Restricted Cash
  March 31, 2026 December 31, 2025
Cash and cash equivalents $ 3,264   $ 4,566  
Restricted cash - recorded in prepaid expenses and other current assets 4   4  
Total cash, cash equivalents, and restricted cash $ 3,268   $ 4,570  

23

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Earnings Per Share
The table below presents a reconciliation of net income (loss) available to Warner Bros. Discovery, Inc. Series A common stockholders for basic and diluted earnings per share (in millions).

Three Months Ended March 31,
2026 2025
Numerator:
Net loss $ ( 2,906 ) $ ( 449 )
Less:
Net income attributable to noncontrolling interests ( 10 ) ( 8 )
Net loss attributable to redeemable noncontrolling interests —   4  

Net loss available to Warner Bros. Discovery, Inc. Series A common stockholders for basic and diluted earnings per share $ ( 2,916 ) $ ( 453 )

Denominator — weighted average:
Common shares outstanding — basic and diluted 2,492   2,462  

Basic net loss per share allocated to common stockholders $ ( 1.17 ) $ ( 0.18 )
Diluted net loss per share allocated to common stockholders $ ( 1.17 ) $ ( 0.18 )

The table below presents the details of share-based awards that were excluded from the calculation of diluted earnings per share (in millions).

Three Months Ended March 31,
2026 2025
Anti-dilutive share-based awards 111   92  

Supplier Finance Programs
As of March 31, 2026 and December 31, 2025, the Company has confirmed $ 266  million and $ 260  million, respectively, of accrued content producer liabilities. These amounts were outstanding and unpaid by the Company and were recorded in accrued liabilities on the consolidated balance sheets.
Leases
During the three months ended March 31, 2025, the Company subleased a portion of its Hudson Yards, New York office. As a result of executing the sublease, the Company recorded a right-of-use (“ROU”) asset impairment charge of $ 87  million. The ROU asset impairment charge was recorded in impairment and loss on dispositions in the consolidated statements of operations.
Collaborative Arrangements
The arrangement among TNT Sports, CBS Broadcasting, Inc. (“CBS”), and the National Collegiate Athletic Association (the “NCAA”) provides TNT Sports and CBS with rights to the NCAA Division I Men’s Basketball Championship Tournament (the “NCAA Tournament”) in the U.S. and its territories and possessions through 2032. The aggregate programming rights fee, production costs, certain advertising revenues and sponsorship revenues related to the NCAA Tournament, and related programming are shared equally by the Company and CBS. However, if the amount paid for the programming rights fee and production costs in any given year exceeds the shared advertising and sponsorship revenues for that year, CBS’ share of such shortfall is limited to a specified annual cap. The amount recorded pursuant to the loss cap was $ 66  million and $ 59  million during the three months ended March 31, 2026 and 2025, respectively. In accounting for this arrangement, the Company records advertising revenue for the advertisements aired on its networks and amortizes its share of the programming rights fee based on the estimated relative value of each season over the term of the arrangement.
24

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Venu Sports
On February 6, 2024, the Company announced that it would enter into a joint venture with ESPN, a subsidiary of The Walt Disney Company (“Disney”), and Fox Corporation (“Fox”) to form Venu Sports, a sports-centric streaming service in the United States. On February 20, 2024, FuboTV Inc. and FuboTV Media Inc. (collectively, “Fubo”) filed a lawsuit against Disney, including certain affiliates, Fox, and WBD (collectively, the “Defendants”) in the U.S. District Court for the Southern District of New York alleging claims under federal and New York antitrust laws. The Defendants reached a settlement with Fubo related to Fubo’s antitrust claims and collectively paid $ 220  million to Fubo in January 2025, of which the Company’s share was $ 55  million.
On January 10, 2025, the Defendants announced their decision to discontinue the Venu Sports joint venture and not launch its streaming service effective immediately.
Discovery Family
Hasbro Inc. (“Hasbro”) had the right to put the entirety of its remaining 40 % interest in Discovery Family to the Company. Hasbro did not exercise the right by the election period expiration date of March 31, 2025. As of March 31, 2025, Hasbro’s noncontrolling interest was reclassified from redeemable noncontrolling interest to noncontrolling interest outside of stockholders’ equity on the Company’s consolidated balance sheets.
Accumulated Other Comprehensive Loss
The table below presents the changes in the components of accumulated other comprehensive loss, net of taxes (in millions).

Three Months Ended March 31, 2026
Currency Translation Derivatives Pension Plan and SERP Liability Accumulated Other Comprehensive Loss
Beginning balance $ ( 342 ) $ 39   $ ( 104 ) $ ( 407 )
Other comprehensive income (loss) before reclassifications ( 218 ) ( 26 ) 2   ( 242 )
Reclassifications from accumulated other comprehensive loss to net income —   7   —   7  
Other comprehensive income (loss) ( 218 ) ( 19 ) 2   ( 235 )
Ending balance $ ( 560 ) $ 20   $ ( 102 ) $ ( 642 )

Three Months Ended March 31, 2025
Currency Translation Derivatives Pension Plan and SERP Liability Accumulated Other Comprehensive Loss
Beginning balance $ ( 1,008 ) $ 15   $ ( 74 ) $ ( 1,067 )
Other comprehensive income (loss) before reclassifications 231   9   —   240  
Reclassifications from accumulated other comprehensive loss to net income
—   ( 13 ) —   ( 13 )
Other comprehensive income (loss) 231   ( 4 ) —   227  
Ending balance
$ ( 777 ) $ 11   $ ( 74 ) $ ( 840 )

NOTE 14. RELATED PARTY TRANSACTIONS
In the normal course of business, the Company enters into transactions with related parties. Related party transactions include revenues and expenses for content and services provided to or acquired from equity method investees, entities that share common directorship, or minority partners of consolidated subsidiaries.
25

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The table below presents a summary of the transactions with related parties (in millions).

Three Months Ended March 31,
2026 2025

Revenues and service charges $ 205   $ 214  
Expenses $ 55   $ 68  
Distributions to noncontrolling interests and redeemable noncontrolling interests $ 129   $ 157  

The table below presents receivables due from and payables due to related parties (in millions).

March 31, 2026 December 31, 2025
Receivables $ 111   $ 116  
Payables $ 36   $ 17  

NOTE 15. COMMITMENTS AND CONTINGENCIES
Other Contingent Commitments
During the three months ended March 31, 2026, the Company entered into a tax reimbursement agreement with the Chief Executive Officer (“CEO”). In the event that the CEO incurs an excise tax in respect of any payment or benefit made or provided to him in connection with a change in control, he would be entitled to a tax reimbursement payment.
Legal Matters
From time to time, in the normal course of its operations, the Company is subject to various litigation matters and claims, including claims related to employees, stockholders, vendors, other business partners, government regulations, or intellectual property, as well as disputes and matters involving counterparties to contractual agreements. A determination as to the amount of the accrual required for such contingencies is highly subjective and requires judgment about future events.
The Company may not currently be able to estimate the reasonably possible loss or range of loss for certain matters until developments in such matters have provided sufficient information to support an assessment of such loss. In the absence of sufficient information to support an assessment of the reasonably possible loss or range of loss, no accrual for such contingencies is made and no loss or range of loss is disclosed. Although the outcome of these matters cannot be predicted with certainty and the impact of the final resolution of these matters on the Company’s results of operations in a particular subsequent reporting period is not known, management does not currently believe that the resolution of these matters will have a material adverse effect on the Company’s future consolidated financial position, future results of operations, or cash flows.
PSKY Complaint. On January 12, 2026, PSKY filed a complaint in the Delaware Court of Chancery against our board of directors (and our Chair Emeritus, Dr. Malone) and the Company. The suit asserted a claim for breach of fiduciary duty against the directors, alleging that our board of directors failed to disclose material information in both the Solicitation/Recommendation Statement on Schedule 14D-9, filed on December 17, 2025, and the amendment to that Schedule 14D-9, filed on January 7, 2026. PSKY also requested that the court expedite the case in light of the then-current expiration date of PSKY’s tender offer on January 21, 2026. On January 15, 2026, the Delaware Court of Chancery denied PSKY’s request for expedition, stating that PSKY failed to demonstrate that it would suffer any irreparable harm in its capacity as a stockholder of the Company if the litigation was not expedited, among other reasons. On February 2, 2026, the Company moved to dismiss the complaint. Pursuant to the PSKY Merger Agreement, PSKY filed a voluntary notice of dismissal with prejudice with respect to the complaint, and the court dismissed the case on March 2, 2026.
Securities Class Action. On November 25, 2024, a securities class action complaint was filed in the United States District Court for the Southern District of New York ( Collura v. Warner Bros. Discovery, Inc. , No. 1:24-cv-09027-KPF). The complaint named WBD, Gunnar Wiedenfels, and David M. Zaslav as defendants and asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder. On February 21, 2025, the court appointed co-lead plaintiffs (Anthony Yuson and Michael Steinberg) and co-lead counsel (Pomerantz LLP and The Rosen Law Firm, P.A.) to represent the putative class. On May 7, 2025, the lead plaintiffs filed a First Amended Complaint against WBD, Gunnar Wiedenfels, and David M. Zaslav. The First Amended Complaint generally alleges that, between February 23, 2024 and August 7, 2024, defendants made false and misleading statements in SEC filings and other public disclosures relating to WBD’s negotiations with the National Basketball Association (“NBA”) concerning its contractual rights to broadcast the NBA’s content and the potential impact of a failure to renew the contract on its business, in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5, and seeks damages and other relief. The defendants moved to dismiss on July 11, 2025, which the court granted without leave to amend on March 30, 2026.
26

WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Consolidated Derivative Action. Between December 20, 2024 and January 14, 2025, four stockholder derivative complaints were filed in the United States District Court for the Southern District of New York ( Roy v. Zaslav et al., No. 1:24-cv-09856-AT, Hollin v. Zaslav et al., No. 1:24-cv-09885-AT, KO v. Zaslav et al., No. 1:25-cv-00114-AT, and Herman, III v. Chen et al., No. 1:25-cv-00352-AT). Each complaint names certain current and former directors and officers of WBD as defendants and WBD as nominal defendant, and each complaint seeks damages and other relief. The complaints generally assert claims against the defendants, derivatively on behalf of WBD, for alleged breaches of fiduciary duty based on the same facts alleged in the Collura securities case described above. The complaints assert various common law causes of action, including breach of fiduciary duties, aiding and abetting breach of fiduciary duties, abuse of control, unjust enrichment, gross mismanagement, and waste of corporate assets, as well claims for violations of Sections 14(a), 10(b), and 21D of the Exchange Act. On January 21, 2025, the court consolidated the four actions for all purposes under Case No. 1:24-cv-09856-AT, captioned as In re Warner Bros. Discovery, Inc. Derivative Litigation (the “Consolidated Derivative Action”). On February 19, 2025, the Court stayed the Consolidated Derivative Action pending resolution of a final decision on all motions to dismiss the operative complaint in the Collura securities action.
Individual Stockholder Action. On April 2, 2026, an individual action was filed in the Supreme Court of the State of New York, County of Richmond (Nicosia v. Di Piazza, Jr., et al., Index No. 150851/2026). The complaint was brought by a purported stockholder of WBD and it named as defendants WBD, members of the WBD board of directors, and PSKY. The complaint alleged that the proxy statement disseminated to WBD stockholders in connection with the proposed transaction with PSKY contains materially false and misleading statements and omissions concerning, among other things, the alleged personal financial benefits of WBD’s directors and officers, the alleged conflicts of WBD’s financial advisors, and the process underlying and valuation of the proposed transaction. Following the issuance of certain supplemental disclosures via Form DEFA14A on April 16, 2026, the plaintiff voluntarily dismissed the litigation with prejudice on April 20, 2026.
Nokia Litigation. Over the past several years, Nokia Corporation and Nokia Technologies Oy (collectively, “Nokia”) have alleged that WBD is infringing on their portfolio of patents related to the delivery of streaming video. On November 1, 2025, Nokia brought suit against WBD in certain jurisdictions, and WBD and Dplay Entertainment Limited brought suit in other jurisdictions, and filed a rate-setting proceeding in the High Court of Justice of England and Wales (the “Court”) against Nokia seeking a determination of a reasonable and non-discriminatory (“RAND”) royalty rate for a global license to certain Nokia patents, including standard-essential patents related to the H.264/AVC and H.265/HEVC standards and other non-essential multimedia patents. The Court is scheduled to hold a hearing in May 2026 to determine the amount of an interim payment that WBD will be required to make to Nokia during the pendency of the litigation, which may include refundable and non-refundable components, and trial is currently scheduled for late 2026. As of March 31, 2026, the Company recorded an immaterial liability related to this matter. The amount of any adjustment to this liability as an outcome from the rate-setting process cannot be reasonably estimated.

NOTE 16. REPORTABLE SEGMENTS
The Company’s operating segments are determined based on: (i) financial information reviewed by its chief operating decision maker (“CODM”), the CEO, (ii) internal management and related reporting structure, and (iii) the basis upon which the CEO makes resource allocation decisions.
The accounting policies of the reportable segments are the same as the Company’s, except that certain inter-segment transactions that are eliminated for consolidation are not eliminated at the segment level. Inter-segment transactions primarily include advertising and content licenses. The Company generally records inter-segment transactions of content licenses at market value. The Company does not report assets by segment because it is not used by the CODM to allocate resources or evaluate segment performance.
The Company evaluates the operating performance of its segments based on financial measures such as revenues and Adjusted EBITDA. Adjusted EBITDA is defined as operating income excluding:
• employee share-based compensation;
• depreciation and amortization;
• restructuring and facility consolidation;
• certain impairment charges;
• gains and losses on business and asset dispositions;
• third-party transaction and integration costs;
• amortization of purchase accounting fair value step-up for content;
• amortization of capitalized interest for content; and
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WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

• other items impacting comparability.
The CODM uses this measure to assess the operating results and performance of the segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. The Company believes Adjusted EBITDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses. The Company excludes employee share-based compensation, restructuring, certain impairment charges, gains and losses on business and asset dispositions, and transaction and integration costs from the calculation of Adjusted EBITDA due to their impact on comparability between periods. Integration costs include transformative system implementations and integrations, such as Enterprise Resource Planning systems, and may take several years to complete. The Company also excludes the depreciation of fixed assets and amortization of intangible assets, amortization of purchase accounting fair value step-up for content (which is included in consolidated costs of revenues), and amortization of capitalized interest for content, as these amounts do not represent cash payments in the current reporting period.
The tables below present summarized financial information for each of the Company’s reportable segments (in millions).
Revenues

  Three Months Ended March 31,
2026 2025
Streaming $ 2,887   $ 2,656  
Studios 3,125   2,314  
Global Linear Networks 4,377   4,774  
Corporate 1   —  
Inter-segment eliminations ( 1,497 ) ( 765 )
Total revenues $ 8,893   $ 8,979  

Reconciliation of Revenues to Segment Adjusted EBITDA

Three months ended March 31, 2026
Streaming Studios Global Linear Networks
Revenues $ 2,887   $ 3,125   $ 4,377  

Less:
Content expense (a)
1,531   1,603   1,592  
Personnel expense (b)
186   251   529  
Marketing expense 285   275   129  
Other segment expenses (c)
447   221   493  
Segment Adjusted EBITDA $ 438   $ 775   $ 1,634  

Three months ended March 31, 2025
Streaming Studios Global Linear Networks
Revenues $ 2,656   $ 2,314   $ 4,774  

Less:
Content expense (a)
1,504   1,339   1,832  
Personnel expense (b)
186   230   496  
Marketing expense 220   252   104  
Other segment expenses (c)
407   234   549  
Segment Adjusted EBITDA $ 339   $ 259   $ 1,793  

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WARNER BROS. DISCOVERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(a) Content expense includes amortization, impairments, participations, residuals, development expense, and production costs, including talent costs, and is a component of costs of revenues. Content expense excludes content impairments and other development costs recorded in restructuring and other charges, amortization of purchase accounting fair value step-up for content, and amortization of capitalized interest for content as these items are excluded from the calculation of Adjusted EBITDA.
(b) Personnel expense is a component of costs of revenues and selling, general and administrative expense. Personnel expense includes marketing personnel compensation and excludes commissions (included in other segment expenses) and talent costs (included in content expense).
(c) Other segment expenses include distribution costs, other direct costs, software and hardware costs, IT services, professional and consulting fees, commissions, and certain other overhead costs. Other segment expenses exclude depreciation and amortization, amortization of purchase accounting fair value step-up for content, amortization of capitalized interest for content, employee share-based compensation, third-party transaction and integration costs, and other items impacting comparability as these items are excluded from the calculation of Adjusted EBITDA.
Reconciliation of segment adjusted EBITDA to loss before income taxes

  Three Months Ended March 31,
2026 2025
Streaming $ 438   $ 339  
Studios 775   259  
Global Linear Networks 1,634   1,793  
Segment Adjusted EBITDA 2,847   2,391  
Depreciation and amortization 1,226   1,547  
Employee share-based compensation 150   120  
Restructuring and other charges 204   54  
Netflix Termination Fee (See Note 1)
2,800   —  
Transaction and integration costs 173   80  
Facility consolidation costs —   5  
Impairment and amortization of fair value step-up for content 102   240  
Amortization of capitalized interest for content 3   6  
Impairments and loss on dispositions 14   90  

Corporate 269   233  
Inter-segment eliminations 375   53  
Other expense (income), net 38   ( 82 )
Loss from equity investees, net 5   7  
Loss on extinguishment of debt, net 27   4  
Interest expense, net 581   468  
Loss before income taxes $ ( 3,120 ) $ ( 434 )

NOTE 17. SUBSEQUENT EVENTS
In April 2026, the Company borrowed $ 1,000 million under its Credit Facility, which is expected to be repaid within the current quarter.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s discussion and analysis of financial condition and results of operations is a supplement to and should be read in conjunction with the accompanying consolidated financial statements and related notes. This section provides additional information regarding our businesses, current developments, results of operations, cash flows and financial condition. Additional context can also be found in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).
BUSINESS OVERVIEW
Warner Bros. Discovery is a leading global media and entertainment company that creates and distributes a differentiated and comprehensive portfolio of content and products across television, film, streaming, interactive gaming, publishing, themed experiences, and consumer products through brands including: Discovery Channel, HBO Max, CNN, DC Studios, TNT Sports, HBO, Food Network, TLC, TBS, Warner Bros. Motion Picture Group, Warner Bros. Television Group, Warner Bros. Games, Adult Swim, Turner Classic Movies, and others.
We are home to one of the largest collections of owned content in the world with assets and intellectual property across sports, news, lifestyle, and entertainment in most languages and regions of the globe. We create some of the best-in-class content using our renowned library, beloved franchises, and acclaimed creative expertise to serve our audiences and consumers. Our asset mix strongly positions us to execute our key strategies: grow our streaming business globally, enhance our Studios segment, and manage our linear networks for the best possible success in order to create long-term value for our stockholders.
In the first quarter of 2025, the Company renamed its DTC reportable segment to Streaming and its Networks reportable segment to Global Linear Networks.
Termination of Netflix Merger
On January 19, 2026, the Company entered into an amended and restated agreement and plan of merger, by and among the Company, Netflix, Inc. (“Netflix”), Nightingale Sub, Inc., a wholly owned subsidiary of Netflix, and New Topco 25, Inc., a wholly owned subsidiary of WBD (the “Netflix Merger Agreement”), pursuant to which Netflix would have acquired the Streaming and Studios segments (subject to certain deviations) and certain other assets and liabilities, including the Company’s film and television studios, HBO Max, and HBO, following the separation and distribution of Discovery Global to the Company’s stockholders (the “Separation Transaction”).
Following the board of directors’ determination that it had received a “Company Superior Proposal,” as defined in the Netflix Merger Agreement, from Paramount Skydance Corporation (“PSKY”) and Netflix’s waiver of its right to propose revisions to the Netflix Merger Agreement, on February 27, 2026, in accordance with the terms of the Netflix Merger Agreement, the Company terminated the Netflix Merger Agreement in connection with entering into the PSKY Merger Agreement (as defined below). As a result of the termination of the Netflix Merger Agreement, PSKY, on behalf of the Company, paid Netflix a termination fee of $2.8 billion in cash (the “Netflix Termination Fee”) as required by the terms of the Netflix Merger Agreement. During the three months ended March 31, 2026, the Company recorded an expense for the Netflix Termination Fee in the consolidated statements of operations. The amount paid by PSKY is reimbursable by the Company to PSKY in certain circumstances in the event the PSKY Merger Agreement is terminated, and therefore has been recorded in accrued liabilities in the consolidated balance sheets.
PSKY Merger
On February 27, 2026, the Company entered into an Agreement and Plan of Merger, by and among the Company, PSKY and Prince Sub Inc., a wholly owned subsidiary of PSKY (“Merger Sub”) (as may be amended from time to time, the “PSKY Merger Agreement”), pursuant to which and subject to the terms and conditions therein, at the effective time, Merger Sub will merge with and into WBD, with WBD surviving as a wholly owned subsidiary of PSKY (the “PSKY Merger”).
Upon completion of the PSKY Merger, each issued and outstanding share of WBD’s Series A common stock (“WBD Common Stock”) (subject to certain exceptions) will be converted into the right to receive an amount in cash equal to $31.00, without interest, plus, if the closing date of the PSKY Merger occurs after September 30, 2026, the Ticking Consideration (together, the “Merger Consideration”). The “Ticking Consideration” will be an amount in cash equal to $0.00277778 multiplied by the number of calendar days elapsed after September 30, 2026 to and including the closing date (which, for the avoidance of doubt, will not exceed $0.25 per 90 calendar day period).
Concurrently with the execution of the PSKY Merger Agreement, Larry J. Ellison and an affiliated trust entered into a guarantee in favor of WBD to, among other things, jointly and severally guarantee certain payments by PSKY under the PSKY Merger Agreement, including $45.72 billion of the aggregate Merger Consideration, and assist WBD with the consummation of the PSKY Merger.
30

On April 23, 2026, WBD stockholders approved the adoption of the PSKY Merger Agreement. The completion of the PSKY Merger is subject to customary closing conditions, including regulatory clearances. In addition, PSKY’s obligation to consummate the PSKY Merger is subject to WBD not having completed the separation of its Streaming & Studios business from its Global Linear Networks business nor having declared or made any dividend to WBD’s stockholders to effectuate the separation. There can be no assurance that the PSKY Merger will occur in accordance with the expected plans or anticipated timeline, or at all.
The PSKY Merger Agreement contains certain customary termination rights for WBD and PSKY, including, without limitation, a right for either party to terminate if the PSKY Merger is not completed on or before March 4, 2027, subject to an extension to June 4, 2027 in certain circumstances as specified in the PSKY Merger Agreement. Termination under specified circumstances will require WBD to pay PSKY a termination fee of $3.0 billion and reimburse PSKY for (i) any payment made by PSKY, which will in no event be more than $1,528 million, in connection with WBD’s obligation to complete the Junior Lien Exchange Offer by December 30, 2026 and (ii) the Netflix Termination Fee, or PSKY to pay WBD a termination fee of $7.0 billion. Additionally, the PSKY Merger Agreement provides for customary pre-closing covenants of WBD, including covenants relating to conducting its business in the ordinary course consistent with past practice and to refrain from taking certain actions without PSKY’s consent.
Reportable Segments
As of March 31, 2026, we classified our operations in three reportable segments:
• Streaming - Our Streaming segment primarily consists of our premium pay-TV and streaming services.
• Studios - Our Studios segment primarily consists of the production and release of feature films for initial exhibition in theaters, production and initial licensing of television programs to third parties and our networks/streaming services, distribution of our films and television programs to various third party and internal television and streaming services, distribution through the home entertainment market (physical and digital), related consumer products and themed experience licensing, and interactive gaming.
• Global Linear Networks - Our Global Linear Networks segment primarily consists of our domestic and international television networks.
Our segment presentation is aligned with our management structure and the financial information management uses to make decisions about operating matters, such as the allocation of resources and business performance assessments.
INDUSTRY TRENDS
Headwinds in the industry, such as continued pressures on linear distribution and declines in linear subscribers and continued softness in the U.S. linear advertising market, have had, and are expected to continue to have, a material impact on the operations and results of the Company, including a negative impact on the results of operations attributed to declines in linear advertising revenue. The increase of digital advertising inventory available in the marketplace has also resulted in, and is expected to continue to result in, increased competition for advertising expenditures for both traditional linear networks and ad-supported tiers in streaming services. In addition, the imposition of tariffs by the U.S. government and any retaliatory tariffs from foreign governments, including tariffs directly or indirectly applicable to our industry, may negatively impact our operations and results, including by leading to higher productions costs or decreased spending by advertisers whose expenditures are sensitive to such actions or to general economic conditions. We continue to closely monitor the ongoing impact of industry trends to our business; however, the full effects on our operations and results will depend on future developments, which are highly uncertain and cannot be predicted.
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RESULTS OF OPERATIONS
Foreign Exchange Impacting Comparability
The impact of exchange rates on our business is an important factor in understanding period-to-period comparisons of our results. For example, our international revenues are favorably impacted as the U.S. dollar weakens relative to other foreign currencies and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. We believe the presentation of results on a constant currency basis (“ex-FX”), in addition to results reported in accordance with U.S. GAAP provides useful information about our operating performance because the presentation ex-FX excludes the effects of foreign currency volatility and highlights our core operating results. The presentation of results on a constant currency basis should be considered in addition to, but not a substitute for, measures of financial performance reported in accordance with U.S. GAAP.
The ex-FX change represents the percentage change on a period-over-period basis adjusted for foreign currency impacts. The ex-FX change is calculated as the difference between the current year amounts translated at a baseline rate, which is a spot rate for each of our currencies determined early in the fiscal year as part of our forecasting process (the “2026 Baseline Rate”), and the prior year amounts translated at the same 2026 Baseline Rate. In addition, consistent with the assumption of a constant currency environment, our ex-FX results exclude the impact of our foreign currency hedging activities, as well as realized and unrealized foreign currency transaction gains and losses. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies.
Consolidated Results of Operations
The table below presents our consolidated results of operations (in millions).
Three Months Ended March 31,
2026 2025 % Change % Change (ex-FX)
Revenues:
Distribution $ 4,906  $ 4,886  —  % (1) %
Advertising 1,847  1,980  (7) % (8) %
Content 1,887  1,866  1  % (2) %
Other 253  247  2  % (1) %
Total revenues 8,893  8,979  (1) % (3) %
Costs of revenues, excluding depreciation and amortization 4,643  5,131  (10) % (10) %
Selling, general and administrative 2,475  2,194  13  % 11  %
Netflix Termination Fee (See Note 1)
2,800  —  NM NM
Depreciation and amortization 1,226  1,547  (21) % (21) %
Restructuring and other charges 204  54  NM NM
Impairments and loss on dispositions 14  90  (84) % (84) %

Total costs and expenses 11,362  9,016  26  % 25  %
Operating loss (2,469) (37) NM NM
Interest expense, net (581) (468)
Loss on extinguishment of debt, net (27) (4)
Loss from equity investees, net (5) (7)
Other (expense) income, net (38) 82 
Loss before income taxes (3,120) (434)
Income tax benefit (expense) 214  (15)
Net loss (2,906) (449)
Net income attributable to noncontrolling interests (10) (8)
Net loss attributable to redeemable noncontrolling interests —  4 
Net loss available to Warner Bros. Discovery, Inc. $ (2,916) $ (453)

NM - Not meaningful
Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis. The ex-FX percent changes of line items below operating loss in the table above are not included as the activity is principally in U.S. dollars.
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Revenues
Distribution revenue decreased 1% for the three months ended March 31, 2026, primarily attributable to a 10% decline in domestic linear subscribers and the impact of the previously disclosed domestic wholesale streaming deal renewal, partially offset by continued growth in existing streaming markets and the global expansion of HBO Max, including new distribution deals.
Advertising revenue decreased 8% for the three months ended March 31, 2026, primarily attributable to the absence of the NBA in 2026, which had a negative impact of $133 million to advertising revenue, and audience declines in domestic networks of 8%, partially offset by an increase in global ad-lite subscribers.
Content revenue decreased 2% for the three months ended March 31, 2026, primarily attributable to the timing of third-party licensing deals at Global Linear Networks, a decrease in television product revenue due to lower initial telecast, and lower games library revenue at our Studios segment, partially offset by higher Studios third-party television licensing.
Other revenue decreased 1% for the three months ended March 31, 2026.
Costs of Revenues
Costs of revenues decreased 10% for the three months ended March 31, 2026, primarily attributable to lower domestic sports costs due to the absence of the NBA in 2026, which had a favorable impact to costs of revenues of $358 million, and lower content expense related to the amortization of purchase accounting fair value step-up for content.
Selling, General and Administrative
Selling, general and administrative expenses increased 11% for the three months ended March 31, 2026, primarily attributable to higher marketing and transaction and integration costs.
Netflix Termination Fee
During the three months ended March 31, 2026, the Company recorded a $2.8 billion expense for the Netflix Termination Fee. (See Note 1 to the accompanying consolidated financial statements.)
Depreciation and Amortization
Depreciation and amortization decreased 21% for the three months ended March 31, 2026, primarily attributable to intangible assets acquired in connection with the acquisition of the WarnerMedia Business from AT&T Inc. that are being amortized using the sum of the months’ digits method and the end of the useful life for certain intangible assets.
Restructuring and other charges
Restructuring and other charges were $204 million for the three months ended March 31, 2026. Restructuring and other charges primarily includes organization restructuring costs, employee retention, and consulting fees related to the previously announced Separation Transaction and the PSKY Merger. (See Note 3 to the accompanying consolidated financial statements.)
Impairments and Loss on Dispositions
Impairments and loss on dispositions were $14 million for the three months ended March 31, 2026.
Interest Expense, net
Interest expense, net increased $113 million for the three months ended March 31, 2026. The increase for the three months ended March 31, 2026 was primarily attributable to higher interest costs associated with the Bridge Loan Facility. (See Note 8 to the accompanying consolidated financial statements.)
Loss on extinguishment of debt, net
Loss on extinguishment of debt, net was $27 million for the three months ended March 31, 2026.
Loss From Equity Investees, net
Loss from our equity method investees was $5 million for the three months ended March 31, 2026. The changes are attributable to our share of net earnings and losses from our equity investees. (See Note 7 to the accompanying consolidated financial statements.)
Other (Expense) Income, net
Other (expense) income, net was $(38) million for the three months ended March 31, 2026. (See Note 13 to the accompanying consolidated financial statements.)
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Income Tax Benefit (Expense)
Income tax benefit (expense) was $214 million and $(15) million for the three months ended March 31, 2026 and 2025, respectively. The increase in income tax benefit for the three months ended March 31, 2026 compared to the same period in 2025 was primarily attributable to excess tax benefits from share-based compensation.
Income tax benefit for the three months ended March 31, 2026, reflects an effective income tax rate that differs from the federal statutory tax rate primarily attributable to a book tax difference in the Netflix Termination Fee accrual (See Note 1) based on current assessments, as well as excess tax benefits from share-based compensation.
The Organization for Economic Co-operation and Development’s (“OECD”) Pillar Two Global Anti-Base Erosion (“GloBE”) model rules, issued under the OECD Inclusive Framework on Base Erosion and Profit Shifting, introduce a global minimum tax of 15% applicable to multinational enterprise groups with consolidated financial statement revenue in excess of €750 million. Numerous foreign jurisdictions have already enacted tax legislation based on the GloBE rules, with some effective as early as January 1, 2024. In January 2026, the OECD issued additional guidance on the minimum tax framework, including a “side by side” safe harbor framework that would apply to U.S.-parented groups. Even if this safe harbor applies, we would still be subject to local minimum tax regimes in countries that have adopted these rules. The interpretation and adoption of the OECD’s recommendations continue to vary across jurisdictions. As of March 31, 2026, we recognized an immaterial income tax expense for Pillar Two GloBE minimum tax. The Company is continuously monitoring the evolving application of this legislation and assessing its potential impact on our future tax liability. (See Note 12 to accompanying consolidated financial statements.)
Segment Results of Operations
The Company evaluates the operating performance of its segments based on financial measures such as revenues and Adjusted EBITDA. Adjusted EBITDA is defined as operating income excluding:
• employee share-based compensation;
• depreciation and amortization;
• restructuring and facility consolidation;
• certain impairment charges;
• gains and losses on business and asset dispositions;
• third-party transaction and integration costs;
• amortization of purchase accounting fair value step-up for content;
• amortization of capitalized interest for content; and
• other items impacting comparability.
The CODM uses this measure to assess the operating results and performance of the segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. The Company believes Adjusted EBITDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses. The Company excludes employee share-based compensation, restructuring, certain impairment charges, gains and losses on business and asset dispositions, and transaction and integration costs from the calculation of Adjusted EBITDA due to their impact on comparability between periods. Integration costs include transformative system implementations and integrations, such as Enterprise Resource Planning systems, and may take several years to complete. The Company also excludes the depreciation of fixed assets and amortization of intangible assets, amortization of purchase accounting fair value step-up for content (which is included in consolidated costs of revenues), and amortization of capitalized interest for content, as these amounts do not represent cash payments in the current reporting period.
The table below presents our Adjusted EBITDA for each of the Company’s reportable segments, corporate, and inter-segment eliminations (in millions).

  Three Months Ended March 31,  
  2026 2025 % Change

Streaming $ 438  $ 339  29  %
Studios $ 775  $ 259  NM
Global Linear Networks $ 1,634  $ 1,793  (9) %
Corporate $ (269) $ (233) (15) %
Inter-segment eliminations $ (375) $ (53) NM

34

Streaming Segment
The following table presents, for our Streaming segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (loss) (in millions).

  Three Months Ended March 31,
  2026 2025 % Change % Change (ex-FX)
Revenues:
Distribution $ 2,533  $ 2,329  9  % 7  %
Advertising 284  237  20  % 19  %
Content 68  88  (23) % (27) %
Other 2  2  —  % —  %
Total revenues 2,887  2,656  9  % 7  %
Costs of revenues, excluding depreciation and amortization 1,864  1,824  2  % 2  %
Selling, general and administrative 585  493  19  % 17  %
Adjusted EBITDA 438  339  29  % 17  %
Depreciation and amortization 332  371 

Restructuring and other charges 26  12 

Impairment and amortization of fair value step-up for content 41  47 

Impairments and loss on dispositions —  3 
Operating income (loss) $ 39  $ (94)

Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis.
Revenues
Distribution revenue increased 7% for the three months ended March 31, 2026, primarily attributable to continued growth in existing markets and the global expansion of HBO Max, including new distribution deals, partially offset by the impact of the previously disclosed domestic wholesale deal renewal that occurred in the second quarter of 2025.
Advertising revenue increased 19% for the three months ended March 31, 2026, primarily attributable to an increase in global ad-lite subscribers.
Content revenue decreased 27% for the three months ended March 31, 2026, primarily attributable to the timing of third-party licensing deals.
Costs of Revenues
Costs of revenues increased 2% for the three months ended March 31, 2026, primarily attributable to higher international content costs to support HBO Max launches, partially offset by shifts in the overall mix of programming.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses increased 17% for the three months ended March 31, 2026, primarily attributable to higher marketing expenses to support HBO Max launches.
Adjusted EBITDA
Adjusted EBITDA increased 17% for the three months ended March 31, 2026.
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Studios Segment
The following table presents, for our Studios segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).

  Three Months Ended March 31,
  2026 2025 % Change % Change (ex-FX)
Revenues:
Distribution $ 1  $ 1  —  % —  %
Advertising —  1  NM NM
Content 2,934  2,139  37  % 33  %
Other 190  173  10  % 4  %
Total revenues 3,125  2,314  35  % 31  %
Costs of revenues, excluding depreciation and amortization 1,679  1,413  19  % 17  %
Selling, general and administrative 671  642  5  % 3  %
Adjusted EBITDA 775  259  NM NM
Depreciation and amortization 170  170 

Restructuring and other charges 9  (5)

Impairment and amortization of fair value step-up for content 59  36 
Amortization of capitalized interest for content 3  6 
Impairments and gain on dispositions 1  (1)
Operating income $ 533  $ 53 

Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis. The Studios discussion below also includes intra-segment revenue and expense between product lines, which represented less than 2% of total revenues and operating expenses for this segment for the three months ended March 31, 2026. Intra-segment revenue and expense are eliminated at the Studios segment level.
Fluctuations in results for our Studios segment may occur due to various factors, including (but not limited to) the timing and number of new film releases each quarter, the timing of marketing expenses recognized relative to (i.e., prior to) a film’s release, and the mix of content distributed each period.
Revenues
Content revenue increased 33% for the three months ended March 31, 2026, primarily attributable to a 58% increase in television product revenue and a 21% increase in theatrical product revenue, partially offset by a 30% decrease in games revenue.
• The increase in television product revenue was primarily attributable to higher intercompany content licensing related to HBO Max international launches and higher third-party licensing.
• The increase in theatrical product revenue was primarily due to higher intercompany content licensing driven by the launch of HBO Max in international markets.
• The decrease in games revenue was primarily attributable to lower library revenues.
Costs of Revenues
Costs of revenues increased 17% for the three months ended March 31, 2026, primarily attributable to a 32% increase in television product content expense and an 11% increase in theatrical product content expense, partially offset by a 43% decrease in games content expense.
• The increase in television product content expense was due to higher costs commensurate with higher revenues.
• The increase in theatrical content expense was primarily due to higher film costs commensurate with higher theatrical product revenue and higher film impairments.
• The decrease in games content expense was primarily due to lower games content expense commensurate with lower games revenue.
Selling, General and Administrative
Selling, general and administrative expenses increased 3% for the three months ended March 31, 2026, primarily attributable to higher marketing expenses and overhead costs.
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Adjusted EBITDA
Adjusted EBITDA increased $516 million for the three months ended March 31, 2026.

Global Linear Networks Segment
The table below presents, for our Global Linear Networks segment, revenues by type, certain operating expenses, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating income (in millions).

  Three Months Ended March 31,
  2026 2025 % Change % Change (ex-FX)
Revenues:
Distribution $ 2,373  $ 2,558  (7) % (8) %
Advertising 1,570  1,758  (11) % (12) %
Content 346  380  (9) % (9) %
Other 88  78  13  % 13  %
Total revenues 4,377  4,774  (8) % (9) %
Costs of revenues, excluding depreciation and amortization 2,084  2,327  (10) % (11) %
Selling, general and administrative 659  654  1  % (1) %
Adjusted EBITDA 1,634  1,793  (9) % (10) %
Depreciation and amortization 621  907 
Employee share-based compensation —  1 
Restructuring and other charges 42  16 

Impairment and amortization of fair value step-up for content —  130 

Impairments and loss on dispositions 3  2 
Operating income $ 968  $ 737 

Unless otherwise indicated, the discussion of percent changes below is on an ex-FX basis.
Revenues
Distribution revenue decreased 8% for the three months ended March 31, 2026, primarily attributable to a 10% decline in domestic linear subscribers, partially offset by a 2% increase in domestic affiliate rates. Declines in linear subscribers are expected to continue.
Advertising revenue decreased 12% for the three months ended March 31, 2026, primarily attributable to the absence of the NBA in 2026 and audience declines in domestic networks of 8%. The absence of the NBA had a negative impact to advertising revenue of $133 million.
Content revenue decreased 9% for the three months ended March 31, 2026, primarily attributable to the timing of third-party licensing deals.
Costs of Revenues
Costs of revenues decreased 11% for the three months ended March 31, 2026, primarily attributable to lower domestic sports costs due to the absence of the NBA, which had a favorable impact to costs of revenues of $358 million.
Selling, General and Administrative
Selling, general and administrative expenses decreased 1% for the three months ended March 31, 2026.
Adjusted EBITDA
Adjusted EBITDA decreased 10% for the three months ended March 31, 2026.
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Corporate
The following table presents our Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).

  Three Months Ended March 31,  
  2026 2025 % Change % Change (ex-FX)
Adjusted EBITDA - Corporate
$ (269) $ (233) (15) % (13) %
Depreciation and amortization 106  99 
Employee share-based compensation 150  119 
Restructuring and other charges 127  31 
Netflix Termination Fee (See Note 1)
2,800  — 
Transaction and integration costs 173  80 
Facility consolidation costs —  5 

Impairments and loss on dispositions 10  86 
Operating loss $ (3,635) $ (653)

Corporate operations primarily consist of executive management and administrative support services, which are recorded in selling, general and administrative expense, as well as substantially all of our share-based compensation and third-party transaction and integration costs.
Adjusted EBITDA decreased 13% for the three months ended March 31, 2026, primarily attributable to the release of previously recorded non-income tax reserves in 2025.
Inter-segment Eliminations
The following table presents our inter-segment eliminations by revenue and expense, Adjusted EBITDA and a reconciliation of Adjusted EBITDA to operating loss (in millions).

  Three Months Ended March 31,
  2026 2025
Inter-segment revenue eliminations $ (1,497) $ (765)
Inter-segment expense eliminations (1,122) (712)
Adjusted EBITDA - Inter-segment eliminations
(375) (53)

Depreciation and amortization (3) — 

Impairment and amortization of fair value step-up for content 2  27 

Operating loss $ (374) $ (80)

Inter-segment revenue and expense eliminations primarily represent inter-segment content transactions and marketing and promotion activity between reportable segments. In our current segment structure, in certain instances, production and distribution activities are in different segments. Inter-segment content transactions are presented at market value (i.e., the segment producing and/or licensing the content reports revenue and profit from inter-segment transactions in a manner similar to the reporting of third-party transactions, and the required eliminations are reported on the separate “Eliminations” line when presenting our summary of segment results). Generally, timing of revenue recognition is similar to the reporting of third-party transactions. The segment distributing the content, e.g., via our streaming or linear services, capitalizes the cost of inter-segment content transactions, including “mark-ups” and amortizes the costs over the shorter of the license term, if applicable, or the expected period of use. The content amortization expense related to the inter-segment profit is also eliminated on the separate “Eliminations” line when presenting our summary of segment results.
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LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Sources of Cash
Historically, we have generated a significant amount of cash from operations. During the three months ended March 31, 2026, we funded our working capital needs primarily through cash flows from operations. As of March 31, 2026, we had $3,264 million of cash and cash equivalents on hand. We are a well-known seasoned issuer and have the ability to conduct registered offerings of securities, including debt securities, common stock and preferred stock, on short notice, subject to market conditions. Access to sufficient capital from the public market is not assured. We have a $4,000 million revolving credit facility and a commercial paper program described below. We also participate in a revolving receivables program and an accounts receivable factoring program described below.
• Debt
Bridge Loan Facility
We and DGH have a non-investment grade leveraged bridge loan facility (“Bridge Loan Facility”) with JPMorgan Chase Bank, N.A. The Bridge Loan Facility contains customary representations and warranties as well as affirmative and negative covenants. As of March 31, 2026, we were in compliance with all applicable covenants and there were no events of default under the Bridge Loan Facility.
Revolving Credit Facility and Commercial Paper
DCL and certain subsidiaries of the Company, as borrowers, have a multicurrency revolving credit agreement (the “Credit Agreement”) and have the capacity to borrow up to $4,000 million under the Credit Agreement (the “Credit Facility”). DCL may also request additional commitments up to $1,000 million from the lenders upon the satisfaction of certain conditions. The Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants. As of March 31, 2026, we were in compliance with all applicable covenants and there were no events of default under the Credit Agreement.
Additionally, our commercial paper program is supported by the Credit Facility. Under the commercial paper program, we may issue up to $2,000 million. Borrowing capacity under the Credit Facility is effectively reduced by any outstanding issuances under the commercial paper program.
During the three months ended March 31, 2026, we and DCL borrowed and repaid $261 million under our Credit Facility and commercial paper program. As of March 31, 2026, we and DCL had no outstanding borrowings under the Credit Facility or issuances under the commercial paper program.
• Revolving Receivables Program
We have a revolving agreement to transfer up to $5,000 million of certain receivables through our bankruptcy-remote subsidiary, Warner Bros. Discovery Receivables Funding, LLC, to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. We service the sold receivables for the financial institution for a fee and pay fees to the financial institution in connection with this revolving agreement. As customers pay their balances, our available capacity under this revolving agreement increases and typically we transfer additional receivables into the program. In some cases, we may have collections that have not yet been remitted to the bank, resulting in a liability. The outstanding portfolio of receivables derecognized from our consolidated balance sheets was $3,850 million as of March 31, 2026.
• Accounts Receivable Factoring
We have factoring agreements to sell certain of our non-U.S. trade accounts receivable on a limited recourse basis to a third-party financial institution. No amounts were sold under the Company’s factoring arrangement during the three months ended March 31, 2026.
Uses of Cash
Our primary uses of cash include the creation and acquisition of new content, business acquisitions, income taxes, personnel costs, costs to develop and market our enhanced streaming service HBO Max, principal and interest payments on our outstanding senior notes, funding for various equity method and other investments, and repurchases of our capital stock.
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• Content Acquisition
We plan to continue to invest significantly in the creation and acquisition of new content, as well as certain sports rights. Contractual commitments to acquire content have not materially changed as set forth in “Material Cash Requirements from Known Contractual and Other Obligations” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K.
• Debt
Bridge Loan Facility
The Bridge Loan Facility was amended in February 2026 to, among other things, extend the maturity to the earlier of (x) June 30, 2027 and (y) the date that the previously proposed Separation Transaction occurs. The Bridge Loan Facility is expected to be refinanced or repaid prior to its maturity.
Senior Notes
During the three months ended March 31, 2026, we repurchased or repaid $123 million of aggregate principal amount outstanding of our senior notes. In addition, we have $1,496 million of senior notes coming due through March 2027.
We may from time to time seek to prepay, retire or purchase our other outstanding indebtedness through prepayments, redemptions, open market purchases, privately negotiated transactions, tender offers, exchange offers, or otherwise. Any such repurchases or exchanges will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions, as well as applicable regulatory, legal and accounting factors. Whether or not we repurchase or exchange any debt and the size and timing of any such repurchases or exchanges will be determined at our discretion.
• Capital Expenditures
We effected capital expenditures of $268 million during the three months ended March 31, 2026, including amounts capitalized to support HBO Max. We expect to continue to incur significant costs to develop and market HBO Max.
• Investments and Business Combinations
Our uses of cash have included investments in equity method investments and equity investments without readily determinable fair value. (See Note 7 to the accompanying consolidated financial statements.) We also provide funding to our investees from time to time. During the three months ended March 31, 2026, we contributed $25 million for investments in and advances to our investees.
• Redeemable Noncontrolling Interest and Noncontrolling Interest
Distributions to redeemable noncontrolling interests and noncontrolling interests totaled $129 million and $157 million for the three months ended March 31, 2026 and 2025, respectively.
• Income Taxes and Interest
We expect to continue to make payments for income taxes and interest on our outstanding Bridge Loan Facility and senior notes. During the three months ended March 31, 2026, we made cash payments of $219 million and $621 million for income taxes and interest on our outstanding debt, respectively.
Cash Flows
The following table presents changes in cash and cash equivalents (in millions).
  Three Months Ended March 31,
  2026 2025
Cash, cash equivalents, and restricted cash, beginning of period $ 4,570  $ 5,416 
Cash (used in) provided by operating activities (208) 553 
Cash used in investing activities (282) (195)
Cash used in financing activities (756) (1,895)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (56) 95 
Net change in cash, cash equivalents, and restricted cash (1,302) (1,442)
Cash, cash equivalents, and restricted cash, end of period $ 3,268  $ 3,974 

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Operating Activities
Cash (used in) provided by operating activities was $(208) million and $553 million during the three months ended March 31, 2026 and 2025, respectively. The decrease in cash provided by operating activities was primarily attributable to a decrease in net income excluding non-cash items, partially offset by an improvement in working capital activity.
Investing Activities
Cash used in investing activities was $282 million and $195 million during the three months ended March 31, 2026 and 2025, respectively. The increase in cash used in investing activities was primarily attributable to reduced proceeds from the sale of assets and investments during the three months ended March 31, 2026.
Financing Activities
Cash used in financing activities was $756 million and $1,895 million during the three months ended March 31, 2026 and 2025, respectively. The decrease in cash used in financing activities was primarily attributable to lower net debt repayments, partially offset by proceeds received for the contribution of 70% of our music catalog to a joint venture in 2025 and higher amounts paid to settle share-based awards.
Capital Resource s
As of March 31, 2026, capital resources were comprised of the following (in millions).

  March 31, 2026
  Total
Capacity Outstanding
Indebtedness Unused
Capacity
Cash and cash equivalents $ 3,264  $ —  $ 3,264 
Revolving credit facility and commercial paper program 4,000  —  4,000 
Bridge loan 15,000  15,000  — 
Senior notes (a)
17,701  17,701  — 
Total $ 39,965  $ 32,701  $ 7,264 

(a) Interest on the senior notes is paid annually or semi-annually. Our senior notes outstanding as of March 31, 2026 had interest rates that ranged from 1.90% to 8.30% and will mature between 2026 and 2062.

We expect that our cash balance, cash generated from operations and availability under the Credit Agreement will be sufficient to fund our cash needs for the next 12 months. We expect to refinance or repay the Bridge Loan Facility prior to its maturity, though we may be unable to do so on favorable terms in a timely manner or at all. Additionally, our borrowing costs and access to capital markets can be affected by short and long-term debt ratings assigned by independent rating agencies which are based, in part, on our performance as measured by credit metrics such as interest coverage and leverage ratios. Credit rating agencies may continue to review and adjust our ratings or outlook. For example, in 2025, S&P, Moody’s and Fitch downgraded certain of our ratings in part due to declines in our linear business, including as a result of the weak operating environment for linear networks, our leverage ratio, and an increase in secured debt and uncertainty in connection with the previously planned separation of Warner Bros.
The 2017 Tax Cuts and Jobs Act features a participation exemption regime with current taxation of certain foreign income and imposed a mandatory repatriation toll tax on unremitted foreign earnings. As of March 31, 2026, the Company intends to remit certain previously undistributed foreign earnings to the United States. Accordingly, the Company has recorded deferred taxes for applicable foreign withholding associated with the expected remittance. The Company may continue to reinvest other foreign earnings outside of the United States. For those earnings, if any, that remain indefinitely reinvested, additional taxes would be recognized upon repatriation. Determination of the amount of any unrecognized deferred income tax liability related to such earnings is not practicable.

Summarized Guarantor Financial Information
Basis of Presentation
As of March 31, 2026 and December 31, 2025, the Company has outstanding senior notes issued by DCL, which are guaranteed by the Company, Scripps Networks, and DGH; senior notes issued by DGH, which are guaranteed by the Company, Scripps Networks, and DCL; senior notes issued by the legacy WarnerMedia Business (not guaranteed). (See Note 8 to the accompanying consolidated financial statements.) DCL, Scripps Networks, and DGH are wholly owned by the Company.
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The tables below present the summarized financial information as combined for Warner Bros. Discovery, Inc. (the “Parent”), Scripps Networks, DCL, and DGH (collectively, the “Obligors”). All guarantees of DCL and DGH’s senior notes (the “Note Guarantees”) are full and unconditional, joint and several and unsecured, and cover all payment obligations arising under the senior notes.
Note Guarantees issued by Scripps Networks, DCL or DGH, or any subsidiary of the Parent that in the future issues a Note Guarantee (each, a “Subsidiary Guarantor”) may be released and discharged (i) concurrently with any direct or indirect sale or disposition of such Subsidiary Guarantor or any interest therein, (ii) at any time that such Subsidiary Guarantor is released from all of its obligations under its guarantee of payment, (iii) upon the merger or consolidation of any Subsidiary Guarantor with and into DCL, DGH or the Parent or another Subsidiary Guarantor, as applicable, or upon the liquidation of such Subsidiary Guarantor and (iv) other customary events constituting a discharge of the Obligors’ obligations.
Summarized Financial Information
The Company has included the accompanying summarized combined financial information of the Obligors after the elimination of intercompany transactions and balances among the Obligors and the elimination of equity in earnings from and investments in any subsidiary of the Parent that is a non-guarantor (in millions).

March 31, 2026 December 31, 2025
Current assets $ 465  $ 914 
Non-guarantor intercompany trade receivables, net 109  78 
Noncurrent assets 3,897  3,951 
Current liabilities 5,098  1,072 
Noncurrent liabilities 32,181  33,733 

Three Months Ended March 31, 2026
Revenues $ 413 
Operating loss (3,021)
Net loss (3,425)
Net loss available to Warner Bros. Discovery, Inc. (3,425)

MATERIAL CASH REQUIREMENTS FROM KNOWN CONTRACTUAL AND OTHER OBLIGATIONS
In the normal course of business, we enter into commitments for the purchase of goods or services that require us to make payments or provide funding in the event certain circumstances occur. Our contractual commitments have not materially changed as set forth in “Material Cash Requirements from Known Contractual and Other Obligations” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K.

RELATED PARTY TRANSACTIONS
In the ordinary course of business, we enter into transactions with related parties, such as our equity method investees, entities that share common directorship, or minority partners of consolidated subsidiaries. (See Note 14 to the accompanying consolidated financial statements.)

CRITICAL ACCOUNTING ESTIMATES
Our critical accounting estimates have not changed since December 31, 2025. For a discussion of each of our critical accounting estimates, including information and analysis of estimates and assumptions involved in their application, see “Critical Accounting Estimates” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K.

NEW ACCOUNTING AND REPORTING PRONOUNCEMENTS
We adopted certain new accounting and reporting standards during the three months ended March 31, 2026. (See Note 1 to the accompanying consolidated financial statements.)
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CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, marketing and operating strategies, integration of acquired businesses, new product and service offerings, financial prospects and anticipated sources and uses of capital. Words such as “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “strategy,” “target” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would,” among other terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be accomplished. The following is a list of some, but not all, of the factors that could cause actual results or events to differ materially from those anticipated:
• the completion of the proposed transaction with Paramount Skydance Corporation (“PSKY”) pursuant to which PSKY will acquire Warner Bros. Discovery, Inc. (the “Company”) (the “PSKY Merger”) on the anticipated terms and timing;
• the occurrence of any event, change or other circumstance that could give rise to the termination of the PSKY Merger, including the risk that the necessary regulatory approvals for the PSKY Merger may not be obtained or are obtained subject to unanticipated conditions;
• failure to satisfy in a timely manner any of the conditions to the PSKY Merger or complete the PSKY Merger in a timely or favorable manner or at all;
• the effects of the announcement, pendency or completion of the PSKY Merger on our ongoing business operations or on the market price of WBD Common Stock;
• unforeseen costs, execution risks, and operational challenges related to the PSKY Merger, including risks relating to disruption of management time away from ongoing business operations;
• more intense competitive pressure from existing or new competitors in the industries in which we operate;
• reduced spending on domestic and foreign television advertising, due to macroeconomic conditions, industry or consumer behavior trends or unexpected reductions in our number of subscribers;
• the imposition of tariffs, including tariffs directly or indirectly applicable to our industry, by the U.S. government and any retaliatory tariffs from foreign governments;
• uncertainties associated with product and service development and market acceptance, including the development and provision of programming for new television and telecommunications technologies, and the success of our streaming services;
• market demand for foreign first-run and existing content libraries;
• negative publicity or damage to our brands, reputation or talent;
• realizing streaming subscriber goals;
• disagreements with our distributors or other business partners;
• continued consolidation of distribution customers and production studios;
• industry trends, including the timing of, and spending on, sports programming, feature film, television and television commercial production;
• the possibility or duration of an industry-wide strike, such as the strikes of the Writers Guild of America (“WGA”) and Screen Actors Guild-American Federation of Television and Radio Artists (“SAG-AFTRA”) in 2023, player lock-outs or other job action affecting a major entertainment industry union, athletes or others involved in the development and production of our sports programming, television programming, feature films and interactive entertainment (e.g., games) who are covered by collective bargaining agreements;
• inherent uncertainties involved in the estimates and assumptions used in the preparation of financial forecasts;
• our level of debt, including the significant indebtedness incurred in connection with the acquisition of the WarnerMedia Business, and our future compliance with debt covenants;
• challenges related to obtaining or consummating financing or refinancing on favorable terms in a timely manner or at all;
• changes to our corporate or debt-specific credit ratings or outlook;
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• changes in, or failure or inability to comply with, laws and government regulations, including, without limitation, regulations of the U.S. government and other international governments, the Federal Communications Commission and similar authorities internationally and data privacy regulations;
• adverse outcomes of legal proceedings or disputes, including those related to our acquisition of the WarnerMedia Business or the PSKY Merger, or adverse outcomes from regulatory proceedings;
• threatened or actual cyber-attacks and cybersecurity breaches;
• theft of our content and unauthorized duplication, distribution and exhibition of such content; and
• general economic and business conditions, fluctuations in foreign currency exchange rates, global events such as pandemics, natural disasters impacting the geographic areas where our businesses and operations are located, and political uncertainty, armed conflict, or unrest in the markets in which we operate.
Forward-looking statements are subject to various risks and uncertainties which change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results.
These risks have the potential to impact the recoverability of the assets recorded on our balance sheets, including goodwill and other intangibles. Management’s expectations and assumptions, and the continued validity of any forward-looking statements we make, cannot be foreseen with certainty and are subject to change due to a broad range of factors affecting the U.S. and global economies and regulatory environments, factors specific to the Company, and other factors described under Part I, Item 1A, “Risk Factors,” in our 2025 Form 10-K. These forward-looking statements and such risks, uncertainties, and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions, or circumstances on which any such statement is based.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Quantitative and qualitative disclosures about our existing market risk are set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the 2025 Form 10-K. Our exposures to market risk have not materially changed since December 31, 2025.

ITEM 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2026, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
During the three months ended March 31, 2026, there were no changes in our internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION