Analysis of Reportable Segments
Warner Bros. Discovery Inc. operates in 2 segments: U.S. Networks and International Networks.
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- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2008
- Return on Equity (ROE) since 2008
- Return on Assets (ROA) since 2008
- Price to Earnings (P/E) since 2008
- Price to Operating Profit (P/OP) since 2008
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Segment Profit Margin
Warner Bros. Discovery Inc., profit margin by reportable segment
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. Networks | |||||
| International Networks |
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).
- U.S. Networks Profit Margin Trend
- The profit margin for the U.S. Networks segment shows some fluctuations over the five-year period. It started at a relatively high level of 59% in 2017, decreased to 55.12% in 2018, then recovered to 58.05% in 2019. This was followed by a slight decline to 57.2% in 2020 and a more pronounced drop to 51.42% in 2021. Overall, while the margin remained above 50%, there is a noticeable downward trend in the latter years, indicating potential pressures or challenges affecting profitability in the U.S. Networks segment.
- International Networks Profit Margin Trend
- The International Networks segment experienced a significant decline in profit margin over the same period. Starting at 26.18% in 2017, the margin remained relatively stable through 2018 and 2019, with slight fluctuations around 26%. However, in 2020, there was a sharp decrease to 19.47%, followed by a further steep drop to 10.88% in 2021. This downward trajectory highlights a marked deterioration in profitability within the International Networks segment, which may suggest increased costs, reduced revenues, or other operational challenges specific to international markets.
- Comparative Insight
- Comparatively, the U.S. Networks segment has maintained a considerably higher and more stable profit margin throughout the period, despite its decline in the last recorded year. In contrast, the International Networks segment shows a continuous and pronounced erosion in profitability, with margins less than half of those in the U.S. Networks by 2021. This divergence suggests that the U.S. Networks remains a stronger profit contributor, while the International segment may require strategic review to address its diminishing returns.
Segment Profit Margin: U.S. Networks
Warner Bros. Discovery Inc.; U.S. Networks; segment profit margin calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Adjusted OIBDA | |||||
| Revenues | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
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
Segment profit margin = 100 × Adjusted OIBDA ÷ Revenues
= 100 × ÷ =
The analysis of the annual financial data for the U.S. Networks segment reveals several key trends over the five-year period ending in 2021.
- Revenues
- Revenues demonstrated a consistent upward trajectory, increasing each year from $3,434 million in 2017 to $7,662 million in 2021. The growth reflects a near doubling of revenues over the period, with especially notable jumps between 2017 to 2018 and 2018 to 2019. This sustained increase indicates expanding operations or market reach within the segment.
- Adjusted OIBDA
- Adjusted Operating Income Before Depreciation and Amortization (OIBDA) increased significantly from $2,026 million in 2017 to a peak of $4,117 million in 2019. However, after 2019, there was a slight decline with values settling around $3,940 million by 2021. This suggests that while profitability improved initially, it faced some pressure or stabilization in more recent years.
- Segment Profit Margin
- The segment profit margin exhibited a declining trend overall. Starting from a high of 59% in 2017, it declined to just above 51% in 2021. The margin dipped notably in 2018 to 55.12%, improved somewhat in 2019 and 2020 to around 58%, but decreased sharply in 2021 to 51.42%. This downward movement in margin may reflect increased costs or pricing pressures impacting profitability despite growing revenues.
In summary, the U.S. Networks segment experienced strong revenue growth through the entire period, with adjusted OIBDA growing initially but experiencing a moderate decline after 2019. The declining profit margin over the years indicates a squeeze on operational efficiency or margin pressures. These patterns suggest that while the segment has expanded in scale, maintaining profitability margins has become more challenging in recent years.
Segment Profit Margin: International Networks
Warner Bros. Discovery Inc.; International Networks; segment profit margin calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Adjusted OIBDA | |||||
| Revenues | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
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
Segment profit margin = 100 × Adjusted OIBDA ÷ Revenues
= 100 × ÷ =
The analysis of the International Networks segment over the five-year period reveals several noteworthy trends and changes in financial performance.
- Revenues
- Revenues exhibited an overall upward trend, growing from $3,281 million in 2017 to $4,539 million in 2021. There was a notable peak in 2018 at $4,149 million followed by a slight dip in 2019 and 2020, with figures of $4,041 million and $3,713 million respectively. The revenue rebounded significantly in 2021, reaching the highest point in the period reviewed.
- Adjusted OIBDA
- Adjusted Operating Income Before Depreciation and Amortization (OIBDA) showed growth from $859 million in 2017 to a peak of $1,077 million in 2018. However, a decline followed, with 2019 levels slightly below 2018 at $1,057 million. The downward trend accelerated in 2020 and 2021, with OIBDA decreasing sharply to $723 million and then to $494 million, the lowest level in the five-year span.
- Segment Profit Margin
- The segment profit margin remained relatively stable around 26% from 2017 through 2019, indicating consistent profitability relative to revenues during this period. However, this margin contracted significantly in 2020 to 19.47%, and saw a further sharp decline in 2021 to 10.88%, underscoring a deterioration in profitability despite the increased revenue in that year.
In summary, although revenues in the segment have generally increased, particularly with a strong recovery in 2021, profitability measures have weakened considerably since 2018. The adjusted OIBDA fell substantially from its peak in 2018, and the profit margin demonstrated significant contraction starting in 2020. This pattern suggests rising costs, margin pressure, or a shift in the revenue mix that adversely impacted segment profitability in recent years.
Revenues
Warner Bros. Discovery Inc., revenues by reportable segment
US$ in millions
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. Networks | |||||
| International Networks | |||||
| Corporate, inter-segment eliminations, and other | |||||
| Total |
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).
- U.S. Networks Revenue Trend
- The U.S. Networks segment showed marked growth from 2017 to 2019, with revenue increasing from $3,434 million to $7,092 million. A slight decline occurred in 2020, dropping to $6,949 million, followed by a recovery and further growth in 2021, reaching $7,662 million. Overall, the segment exhibited a strong positive trend over the five-year period.
- International Networks Revenue Trend
- International Networks revenue experienced growth from 2017 through 2018, rising from $3,281 million to $4,149 million. However, this was followed by a gradual decline in 2019 and 2020, decreasing to $4,041 million and $3,713 million respectively. In 2021, the revenue rebounded to $4,539 million, indicating partial recovery but remaining below the 2018 peak.
- Corporate, Inter-segment Eliminations, and Other
- This category displayed a consistent decrease over the period, starting at $158 million in 2017 and reducing to negative $10 million by 2021. The downward trend indicates increasing eliminations or negative contributions within these items over time.
- Total Revenue Trend
- Total segment revenues increased significantly from $6,873 million in 2017 to $11,144 million in 2019. There was a slight decline in 2020 to $10,671 million, followed by growth to $12,191 million in 2021. This overall upward trend reflects growth in core network revenues, especially within the U.S. Networks segment.
- Summary of Insights
- The data reveals strong performance in the U.S. Networks segment, which consistently contributed to overall revenue growth despite a minor setback in 2020. The International Networks segment faced challenges after 2018 but showed signs of recovery in 2021. Negative values in the corporate and inter-segment eliminations category increasingly offset revenues, which should be monitored. The total revenues indicate overall business growth, with a noticeable impact in 2020 likely related to external factors affecting the media industry.
Adjusted OIBDA
Warner Bros. Discovery Inc., adjusted oibda by reportable segment
US$ in millions
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. Networks | |||||
| International Networks | |||||
| Corporate, inter-segment eliminations, and other | |||||
| Total |
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).
- U.S. Networks Segment
- The U.S. Networks segment shows an overall increasing trend from 2017 to 2019, rising from US$2,026 million to US$4,117 million. However, there is a slight decline afterwards, with values decreasing to US$3,975 million in 2020 and further to US$3,940 million in 2021. Despite the recent downturn, the segment remains significantly higher than the initial 2017 value.
- International Networks Segment
- The International Networks segment exhibits growth from 2017 through 2018, increasing from US$859 million to US$1,077 million. This is followed by a modest decline in 2019 to US$1,057 million and a more pronounced drop thereafter, reaching US$723 million in 2020 and US$494 million in 2021. The overall trend indicates a contraction in international operations in the latter years.
- Corporate, Inter-segment Eliminations, and Other
- This category consistently records negative values across all periods, reflecting costs or eliminations. The negative amount grows steadily from -US$354 million in 2017 to -US$617 million in 2021, indicating increasing corporate expenses or higher inter-segment eliminations over time.
- Total Adjusted OIBDA
- The total adjusted OIBDA reached its peak in 2019 at US$4,671 million, following steady growth from 2017. After 2019, there is a clear decline, with total OIBDA falling to US$4,196 million in 2020 and further to US$3,817 million in 2021. This reduction is primarily attributable to decreases in both the U.S. Networks and International Networks segments, compounded by rising negative values in corporate and eliminations.
- Summary of Trends
- Overall, the data reveals robust growth in adjusted OIBDA from 2017 to 2019, particularly driven by gains in the U.S. Networks segment and, to a lesser extent, International Networks. The subsequent decline over 2020 and 2021 suggests challenges impacting both domestic and international segments, alongside increased corporate costs. The downward trend in total adjusted OIBDA in the last two years underscores a shift in operational profitability or potential strategic changes affecting segment performance.