Analysis of Geographic Areas
Warner Bros. Discovery Inc. operates in 2 regions: U.S. and Non-U.S..
Area Asset Turnover
Warner Bros. Discovery Inc., asset turnover by geographic area
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. | 9.27 | 10.89 | 16.56 | 18.33 | 11.52 |
| Non-U.S. | 8.89 | 6.50 | 7.69 | 9.20 | 11.50 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The geographic asset turnover analysis reveals divergent efficiency patterns between domestic and international operations from 2017 to 2021, characterized by an initial period of growth in the U.S. market followed by a general decline in efficiency across both regions.
- U.S. Asset Turnover Trend
- The U.S. region experienced a significant increase in asset turnover between 2017 and 2018, rising from 11.52 to a peak of 18.33. Following this peak, a consistent downward trajectory is observed, with the ratio decreasing to 16.56 in 2019, 10.89 in 2020, and finally reaching 9.27 by the end of 2021. This indicates a sharp peak in asset utilization efficiency in 2018 followed by a multi-year contraction.
- Non-U.S. Asset Turnover Trend
- International operations began the period at 11.50 in 2017, nearly identical to the U.S. level. However, unlike the domestic market, the Non-U.S. region saw a steady decline in turnover for three consecutive years, hitting a low of 6.50 in 2020. A recovery occurred in 2021, with the ratio increasing to 8.89, suggesting a late-period improvement in the utilization of international assets.
- Comparative Geographic Analysis
- While the two regions started with equivalent efficiency in 2017, a wide performance gap emerged between 2018 and 2020, during which the U.S. maintained substantially higher turnover ratios. By 2021, this gap narrowed significantly, as U.S. efficiency continued to fall while Non-U.S. efficiency rebounded, resulting in a convergence toward a similar asset turnover level of approximately 9.0.
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Area Asset Turnover: U.S.
Warner Bros. Discovery Inc.; U.S.; area asset turnover calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenues | 7,728) | 7,025) | 7,152) | 6,415) | 3,560) |
| Property and equipment, net | 834) | 645) | 432) | 350) | 309) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 9.27 | 10.89 | 16.56 | 18.33 | 11.52 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Area asset turnover = Revenues ÷ Property and equipment, net
= 7,728 ÷ 834 = 9.27
An analysis of the U.S. geographic area reveals a period of significant revenue expansion coupled with a substantial increase in fixed asset investment, resulting in a diminishing trend in asset utilization efficiency after 2018.
- Revenue Performance
- Revenues experienced a sharp increase between 2017 and 2018, rising from 3,560 million US$ to 6,415 million US$. Following this surge, growth remained relatively stable, peaking at 7,728 million US$ by the end of 2021, despite a marginal contraction observed in 2020.
- Net Property and Equipment Growth
- Investment in net property and equipment demonstrated a consistent upward trajectory throughout the period. The asset base expanded from 309 million US$ in 2017 to 834 million US$ in 2021. The most accelerated growth occurred between 2019 and 2021, where the net value of these assets nearly doubled.
- Area Asset Turnover Analysis
- The area asset turnover ratio peaked in 2018 at 18.33, reflecting high efficiency in generating revenue relative to fixed assets. However, a sustained downward trend followed, with the ratio declining to 9.27 by December 31, 2021. This deterioration indicates that the growth in net property and equipment has outpaced the growth in revenues, leading to a reduction in the productivity of the asset base in the U.S. market.
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Area Asset Turnover: Non-U.S.
Warner Bros. Discovery Inc.; Non-U.S.; area asset turnover calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenues | 4,463) | 3,646) | 3,992) | 4,138) | 3,313) |
| Property and equipment, net | 502) | 561) | 519) | 450) | 288) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 8.89 | 6.50 | 7.69 | 9.20 | 11.50 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Area asset turnover = Revenues ÷ Property and equipment, net
= 4,463 ÷ 502 = 8.89
The financial performance of non-U.S. operations is characterized by a period of asset expansion and fluctuating revenue streams, which led to a significant decline in asset efficiency through 2020, followed by a partial recovery in 2021.
- Revenue Performance
- Revenues exhibited volatility over the five-year period, starting at 3,313 million US$ in 2017 and reaching a peak of 4,463 million US$ by 2021. A period of contraction occurred between 2018 and 2020, where revenues fell from 4,138 million US$ to 3,646 million US$, before rebounding strongly in the final year.
- Fixed Asset Investment
- Net property and equipment showed a consistent upward trajectory from 2017 to 2020, increasing from 288 million US$ to 561 million US$. This growth indicates a period of significant capital investment in non-U.S. markets. In 2021, this figure decreased slightly to 502 million US$.
- Area Asset Turnover Analysis
- The area asset turnover ratio demonstrates a marked decline from 11.50 in 2017 to a minimum of 6.50 in 2020. This inverse relationship between rising assets and fluctuating revenues suggests a diminishing return on invested capital during this window. However, a reversal of this trend is observed in 2021, as the ratio improved to 8.89, reflecting increased operational efficiency and a higher revenue generation per unit of net property and equipment.
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Revenues
Warner Bros. Discovery Inc., revenues by geographic area
US$ in millions
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. | 7,728) | 7,025) | 7,152) | 6,415) | 3,560) |
| Non-U.S. | 4,463) | 3,646) | 3,992) | 4,138) | 3,313) |
| Total | 12,191) | 10,671) | 11,144) | 10,553) | 6,873) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
Total revenue demonstrated a significant growth trajectory over the five-year period from 2017 to 2021, increasing from 6,873 million US$ to 12,191 million US$. While the overall trend is positive, the growth was characterized by a substantial surge between 2017 and 2018, followed by a period of relative stabilization and a subsequent peak in 2021.
- Domestic Revenue Performance
- The U.S. market experienced the most aggressive growth, particularly between 2017 and 2018, where revenues rose from 3,560 million US$ to 6,415 million US$. Following this spike, domestic revenue remained resilient, maintaining a range above 7,000 million US$ from 2019 through 2021, ending the period at 7,728 million US$. This indicates a strong and stable domestic foundation that became the primary driver of total revenue growth.
- International Revenue Performance
- Non-U.S. revenues showed greater volatility compared to domestic earnings. After an initial increase to 4,138 million US$ in 2018, international revenue entered a decline phase, dropping to 3,992 million US$ in 2019 and further to 3,646 million US$ in 2020. A recovery occurred in 2021, with revenues rebounding to 4,463 million US$, suggesting a successful reversal of the downward trend observed in the preceding two years.
- Geographic Revenue Distribution
- A shift in the geographic revenue mix is observable. In 2017, the revenue split was nearly balanced, with the U.S. contributing approximately 51.8% of total revenue. By 2021, the U.S. contribution increased to approximately 63.4%, reflecting an increased reliance on the domestic market as international growth failed to keep pace with U.S. expansion between 2018 and 2020.
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Property and equipment, net
Warner Bros. Discovery Inc., property and equipment, net by geographic area
US$ in millions
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. | 834) | 645) | 432) | 350) | 309) |
| Non-U.S. | 502) | 561) | 519) | 450) | 288) |
| Total | 1,336) | 1,206) | 951) | 800) | 597) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
Total net property and equipment experienced a consistent upward trajectory from 2017 to 2021, increasing from US$ 597 million to US$ 1,336 million. This growth represents a total expansion of approximately 124% over the five-year period, reflecting a significant increase in the company's physical asset base.
- U.S. Asset Growth
- Domestic property and equipment exhibited strong and accelerating growth, rising from US$ 309 million in 2017 to US$ 834 million in 2021. This represents an increase of approximately 170%, indicating a sustained and aggressive investment in United States-based infrastructure.
- Non-U.S. Asset Trends
- International assets grew from US$ 288 million in 2017 to a peak of US$ 561 million in 2020, before declining to US$ 502 million in 2021. While the long-term trend remains positive compared to 2017, the recent contraction suggests a shift in international asset management or potential impairments.
- Geographic Distribution Shift
- A notable shift in geographic concentration is observed. In 2017, the asset base was nearly evenly split between U.S. and Non-U.S. regions. By 2021, U.S. assets constituted a significantly larger portion of the total, indicating that the majority of recent capital expenditure has been directed toward domestic operations.
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