Warner Bros. Discovery, Inc.WBD
Warner Bros. Discovery, Inc. Earnings Per Share Disclosure
EARNINGS PER SHARE
In calculating earnings per share, the Company follows the two-class method, which distinguishes between classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The Company's Series A, B and C common stock is treated as one class and the Series C-1 convertible preferred stock is treated as a separate class for purposes of applying the two-class method. The Company's Series C-1 convertible preferred stock is an in-substance common stock equivalent as it has substantially equal rights and shares equally on an as-converted basis with respect to income available to Discovery, Inc. The Company's Series A-1 convertible preferred stock is also a separate class but is not considered a common stock equivalent and therefore is not presented separately in the calculation of earnings per share. Series A-1 convertible preferred stock is currently convertible into 9 shares of the Company's Series A common stock and Series C-1 convertible preferred stock is convertible into 19.3648 shares of the Company's Series C common stock, subject to certain anti-dilution adjustments. During the years ended December 31, 2021, 2020 and 2019, no Series A-1 convertible preferred stock was converted. During the years ended December 31, 2021 and 2019, Advance Newhouse Programming Partnership converted 0.6 million and 1.1 million shares of its Series C-1 convertible preferred stock into 11.0 million and 22.0 million shares of Series C common stock, respectively. No Series C-1 convertible preferred stock was converted during the year ended December 31, 2020.
Net income allocated to Discovery, Inc. Series C-1 convertible preferred stockholders for diluted net income per share is included in net income allocated to Discovery, Inc. Series A, B and C common stockholders for diluted net income per share. The weighted average number of diluted shares outstanding adjusts the weighted average number of shares of Series A, B and C common stock outstanding for the potential dilution that would occur if common stock equivalents, including convertible preferred stock and share-based awards, were converted into common stock or exercised, calculated using the treasury stock method. The computation of the diluted earnings per share of Series A, B and C common stockholders assumes the conversion of Series A-1 and C-1 convertible preferred stock, while the diluted earnings per share amounts of Series C-1 convertible preferred stock does not assume conversion of those shares.
The table below sets forth the Company's calculated earnings per share (in millions). Earnings per share amounts may not recalculate due to rounding.
| Year Ended December 31, | ||||||||||||||||||||
| 2021 | 2020 | 2019 | ||||||||||||||||||
| Numerator: | ||||||||||||||||||||
| Net income | $ | 1,197 | $ | 1,355 | $ | 2,213 | ||||||||||||||
| Less: | ||||||||||||||||||||
Allocation of undistributed income to Series A-1 convertible preferred stock | (110) | (128) | (204) | |||||||||||||||||
Net income attributable to noncontrolling interests | (138) | (124) | (128) | |||||||||||||||||
Net income attributable to redeemable noncontrolling interests | (53) | (12) | (16) | |||||||||||||||||
| Redeemable noncontrolling interest adjustments of carrying value to redemption value (redemption value does not equal fair value) | 16 | — | (20) | |||||||||||||||||
| Net income available to Discovery, Inc. Series A, B and C common and Series C-1 convertible preferred stockholders for basic net income per share | $ | 912 | $ | 1,091 | $ | 1,845 | ||||||||||||||
| Allocation of net income: | ||||||||||||||||||||
| Series A, B and C common stockholders | 780 | 919 | 1,531 | |||||||||||||||||
| Series C-1 convertible preferred stockholders | 132 | 172 | 314 | |||||||||||||||||
| Total | 912 | 1,091 | 1,845 | |||||||||||||||||
| Add: | ||||||||||||||||||||
Allocation of undistributed income to Series A-1 convertible preferred stockholders | 110 | 128 | 204 | |||||||||||||||||
| Net income available to Discovery, Inc. Series A, B and C common stockholders for diluted net income per share | $ | 1,022 | $ | 1,219 | $ | 2,049 | ||||||||||||||
Denominator — weighted average: | ||||||||||||||||||||
Series A, B and C common shares outstanding — basic | 503 | 505 | 529 | |||||||||||||||||
Impact of assumed preferred stock conversion | 156 | 165 | 179 | |||||||||||||||||
Dilutive effect of share-based awards | 5 | 2 | 3 | |||||||||||||||||
Series A, B and C common shares outstanding — diluted | 664 | 672 | 711 | |||||||||||||||||
Series C-1 convertible preferred stock outstanding — basic and diluted | 4 | 5 | 6 | |||||||||||||||||
| Basic net income per share allocated to: | ||||||||||||||||||||
| Series A, B and C common stockholders | $ | 1.55 | $ | 1.82 | $ | 2.90 | ||||||||||||||
Series C-1 convertible preferred stockholders | $ | 30.01 | $ | 35.24 | $ | 56.07 | ||||||||||||||
| Diluted net income per share allocated to: | ||||||||||||||||||||
Series A, B and C common stockholders | $ | 1.54 | $ | 1.81 | $ | 2.88 | ||||||||||||||
| Series C-1 convertible preferred stockholders | $ | 29.80 | $ | 35.12 | $ | 55.80 | ||||||||||||||
The table below presents the details of share-based awards that were excluded from the calculation of diluted earnings per share (in millions).
| Year Ended December 31, | ||||||||||||||||||||
| 2021 | 2020 | 2019 | ||||||||||||||||||
Anti-dilutive share-based awards | 17 | 24 | 17 | |||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2021 | Feb 24, 2022 | Showing above |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 14, 2017 | |
| 2015 | Feb 18, 2016 | |
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.