EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Warner Bros. Discovery Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net operating profit after taxes (NOPAT)¹	1,066)	1,788)	2,393)	1,195)	(121)
Cost of capital²	11.10%	13.66%	10.72%	11.57%	9.59%
Invested capital³	30,724)	30,674)	30,994)	31,259)	21,151)

Economic profit⁴	(2,344)	(2,401)	(931)	(2,422)	(2,149)

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 NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,066 – 11.10% × 30,724 = -2,344

The analysis of economic performance from 2017 to 2021 reveals a consistent failure to generate positive economic profit, indicating that the company did not create value above its cost of capital during this period. While operational profitability showed signs of recovery and growth in the middle of the period, these gains were insufficient to offset the substantial capital charges associated with the invested capital base.

Net Operating Profit After Taxes (NOPAT): A volatile trajectory is observed in NOPAT, starting from a deficit of -121 million US$ in 2017 and peaking at 2,393 million US$ in 2019. Following this peak, a steady decline occurred, with NOPAT falling to 1,788 million US$ in 2020 and further decreasing to 1,066 million US$ by 2021. This downward trend in the latter years suggests a contraction in operational efficiency or increasing operational costs.
Invested Capital and Cost of Capital: Invested capital experienced a significant expansion between 2017 and 2018, rising from 21,151 million US$ to 31,259 million US$, after which it remained relatively stagnant, fluctuating slightly around the 30,700 million US$ level. Simultaneously, the cost of capital exhibited instability, peaking at 13.66% in 2020 before receding to 11.10% in 2021. The combination of a high, stable capital base and a fluctuating cost of capital created a persistent and high hurdle for value creation.
Economic Profit Trends: Economic profit remained negative throughout the entire five-year sequence, signifying continuous economic value destruction. The most significant improvement occurred in 2019, where the economic loss narrowed to -931 million US$, coinciding with the peak in NOPAT. However, the loss widened again in 2020 and 2021, settling at -2,344 million US$. The persistence of these negative values demonstrates that the return on invested capital remained consistently below the weighted average cost of capital.

Overall, the financial results indicate a structural inability to translate operational profits into economic value. The sharp increase in invested capital in 2018 permanently raised the threshold for profitability, and the subsequent decline in NOPAT from 2019 onwards has further deteriorated the company's economic position.

AI Ask an analyst for more

Download chart

Warner Bros. Discovery Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income (loss) available to Discovery, Inc.	1,006)	1,219)	2,069)	594)	(337)
Deferred income tax expense (benefit)¹	(511)	(186)	(504)	(131)	(199)
Increase (decrease) in allowance for credit losses²	(5)	5)	8)	(9)	8)
Increase (decrease) in deferred revenues³	(76)	52)	228)	5)	79)
Increase (decrease) in restructuring and other liabilities⁴	(39)	40)	(90)	65)	4)
Increase (decrease) in equity equivalents⁵	(631)	(89)	(358)	(70)	(108)
Interest expense, net	633)	648)	677)	729)	475)
Interest expense, operating lease liability⁶	18)	22)	27)	26)	8)
Adjusted interest expense, net	651)	670)	704)	755)	483)
Tax benefit of interest expense, net⁷	(137)	(141)	(148)	(158)	(169)
Adjusted interest expense, net, after taxes⁸	515)	530)	556)	596)	314)
Interest income	(18)	(10)	(22)	(15)	(21)
Investment income, before taxes	(18)	(10)	(22)	(15)	(21)
Tax expense (benefit) of investment income⁹	4)	2)	5)	3)	7)
Investment income, after taxes¹⁰	(14)	(8)	(17)	(12)	(14)
Net income (loss) attributable to noncontrolling interest	191)	136)	144)	87)	24)
Net operating profit after taxes (NOPAT)	1,066)	1,788)	2,393)	1,195)	(121)

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 Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in deferred revenues.

⁴ Addition of increase (decrease) in restructuring and other liabilities.

⁵ Addition of increase (decrease) in equity equivalents to net income (loss) available to Discovery, Inc..

⁶ 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 629 × 2.94% = 18

⁷ 2021 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 651 × 21.00% = 137

⁸ Addition of after taxes interest expense to net income (loss) available to Discovery, Inc..

⁹ 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 18 × 21.00% = 4

¹⁰ Elimination of after taxes investment income.

Net Income (Loss) Available to Discovery, Inc.: The net income experienced significant fluctuations over the five-year period. In 2017, the company reported a net loss of 337 million USD. A substantial turnaround occurred in 2018, with net income improving sharply to 594 million USD. This positive trend continued through 2019, peaking at 2069 million USD, indicating a phase of strong profitability. However, subsequent years showed a decline, with net income falling to 1219 million USD in 2020 and further down to 1006 million USD in 2021. Despite this decline, net income remained positive and considerably higher than the 2017 loss, reflecting sustained profitability after the initial recovery.
Net Operating Profit After Taxes (NOPAT): NOPAT mirrored a similar trajectory to net income but on a different scale. The value was negative in 2017 at -121 million USD, indicating operational challenges. A sharp recovery took place in 2018 as NOPAT increased substantially to 1195 million USD. This improvement continued in 2019, reaching a high point of 2393 million USD, which suggests enhanced operational efficiency and profitability. However, the subsequent years showed a downward trend with NOPAT decreasing to 1788 million USD in 2020 and 1066 million USD in 2021. This decline suggests that while operations remained profitable, perhaps operational cost pressures or other factors impacted the efficiency or scale of profit generation.
Overall Trends and Insights: Both net income and NOPAT demonstrate a recovery from losses in 2017 to strong profitability in 2019. This trend indicates successful strategic or operational changes during these years. However, the decline in the last two years suggests emerging challenges or market conditions affecting profitability. Despite this decline, the company maintained positive earnings, indicating resilience. The gap between NOPAT and net income also suggests consistent tax impacts and possibly financing costs that moderated net income compared to operating profits.

AI Ask an analyst for more

Download chart

Warner Bros. Discovery Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Provision for income taxes	236)	373)	81)	341)	176)
Less: Deferred income tax expense (benefit)	(511)	(186)	(504)	(131)	(199)
Add: Tax savings from interest expense, net	137)	141)	148)	158)	169)
Less: Tax imposed on investment income	4)	2)	5)	3)	7)
Cash operating taxes	880)	698)	728)	627)	537)

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).

Provision for Income Taxes: The provision for income taxes fluctuated significantly over the analyzed period. Starting at 176 million US dollars in 2017, it increased sharply to 341 million in 2018. This was followed by a notable decline to 81 million in 2019. Subsequently, the provision rose again to 373 million in 2020 before decreasing to 236 million in 2021. These fluctuations indicate variability in the company’s taxable income or tax planning strategies over the years.
Cash Operating Taxes: Cash operating taxes demonstrated a generally increasing trend throughout the period. From 537 million US dollars in 2017, the amount increased steadily to 627 million in 2018 and further to 728 million in 2019. Although there was a slight decline to 698 million in 2020, the figure rebounded to reach a peak of 880 million in 2021. This overall upward trajectory may suggest growing taxable operations or changes in tax payment timing and cash flow management.

AI Ask an analyst for more

Download chart

Warner Bros. Discovery Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Finance lease liabilities, current	58)	57)	47)	—)	—)
Current portion of debt	339)	335)	609)	1,860)	30)
Noncurrent portion of debt	14,420)	15,069)	14,810)	15,185)	14,755)
Finance lease liabilities, noncurrent	197)	184)	203)	—)	—)
Operating lease liability¹	629)	663)	703)	736)	205)
Total reported debt & leases	15,643)	16,308)	16,372)	17,781)	14,990)
Total Discovery, Inc. stockholders’ equity	11,599)	10,464)	9,891)	8,386)	4,610)
Net deferred tax (assets) liabilities²	470)	937)	1,216)	1,730)	255)
Allowance for credit losses³	54)	59)	54)	46)	55)
Deferred revenues⁴	573)	649)	597)	369)	364)
Restructuring and other liabilities⁵	19)	58)	18)	108)	43)
Equity equivalents⁶	1,116)	1,703)	1,885)	2,253)	717)
Accumulated other comprehensive (income) loss, net of tax⁷	830)	651)	822)	785)	585)
Redeemable noncontrolling interests	363)	383)	442)	415)	413)
Noncontrolling interests	1,434)	1,536)	1,633)	1,716)	—)
Adjusted total Discovery, Inc. stockholders’ equity	15,342)	14,737)	14,673)	13,555)	6,325)
Assets under construction⁸	(141)	(285)	—)	—)	—)
Equity investments with readily determinable fair values⁹	(120)	(86)	(51)	(77)	(164)
Invested capital	30,724)	30,674)	30,994)	31,259)	21,151)

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 Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of deferred revenues.

⁵ Addition of restructuring and other liabilities.

⁶ Addition of equity equivalents to total Discovery, Inc. stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of assets under construction.

⁹ Subtraction of equity investments with readily determinable fair values.

The financial data reveals several notable trends over the five-year period ending December 31, 2021. The total reported debt and leases exhibited fluctuation rather than a consistent trajectory. Starting at approximately $14.99 billion in 2017, the debt increased notably to about $17.78 billion in 2018. Subsequently, it declined over the next three years, reaching approximately $15.64 billion in 2021. This suggests a period of increased borrowing followed by a gradual reduction or restructuring of debt obligations.

Stockholders’ equity showed a consistent and robust upward trend throughout the period. Beginning at $4.61 billion in 2017, equity rose sharply to approximately $8.39 billion in 2018 and continued to increase steadily year-over-year, reaching about $11.60 billion by 2021. This steady growth in equity indicates an improvement in the company’s net asset position and indicates potentially positive retained earnings or capital injections over time.

Invested capital peaked in 2018 at approximately $31.26 billion, having increased significantly from $21.15 billion in 2017. Following 2018, invested capital remained relatively stable through 2021, hovering around $30.7 billion without substantial increase or decrease. This stabilization after an initial sharp rise could imply a plateau in new investments or acquisitions during the latter part of the period under review.

Total Reported Debt & Leases: Increased from 2017 to 2018, then gradually decreased each subsequent year, ending lower in 2021 than its peak.
Total Stockholders’ Equity: Displayed continuous and steady growth across the entire period, indicating strengthening financial foundations.
Invested Capital: Experienced a significant rise from 2017 to 2018, followed by a plateau, remaining relatively unchanged from 2018 through 2021.

AI Ask an analyst for more

Download chart

Warner Bros. Discovery Inc., cost of capital calculations

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	14,038)	14,038)	÷	32,122)	=	0.44	0.44	×	21.24%	=	9.28%
Total debt and finance lease liabilities³	17,455)	17,455)	÷	32,122)	=	0.54	0.54	×	4.13% × (1 – 21.00%)	=	1.77%
Operating lease liability⁴	629)	629)	÷	32,122)	=	0.02	0.02	×	2.94% × (1 – 21.00%)	=	0.05%
Total:	32,122)					1.00					11.10%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	26,945)	26,945)	÷	46,549)	=	0.58	0.58	×	21.24%	=	12.29%
Total debt and finance lease liabilities³	18,941)	18,941)	÷	46,549)	=	0.41	0.41	×	4.12% × (1 – 21.00%)	=	1.32%
Operating lease liability⁴	663)	663)	÷	46,549)	=	0.01	0.01	×	3.37% × (1 – 21.00%)	=	0.04%
Total:	46,549)					1.00					13.66%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	12,851)	12,851)	÷	30,914)	=	0.42	0.42	×	21.24%	=	8.83%
Total debt and finance lease liabilities³	17,360)	17,360)	÷	30,914)	=	0.56	0.56	×	4.12% × (1 – 21.00%)	=	1.83%
Operating lease liability⁴	703)	703)	÷	30,914)	=	0.02	0.02	×	3.77% × (1 – 21.00%)	=	0.07%
Total:	30,914)					1.00					10.72%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	15,237)	15,237)	÷	32,772)	=	0.46	0.46	×	21.24%	=	9.88%
Total debt and finance lease liabilities³	16,799)	16,799)	÷	32,772)	=	0.51	0.51	×	4.04% × (1 – 21.00%)	=	1.64%
Operating lease liability⁴	736)	736)	÷	32,772)	=	0.02	0.02	×	3.48% × (1 – 21.00%)	=	0.06%
Total:	32,772)					1.00					11.57%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	9,288)	9,288)	÷	24,943)	=	0.37	0.37	×	21.24%	=	7.91%
Total debt and finance lease liabilities³	15,450)	15,450)	÷	24,943)	=	0.62	0.62	×	4.12% × (1 – 35.00%)	=	1.66%
Operating lease liability⁴	205)	205)	÷	24,943)	=	0.01	0.01	×	3.89% × (1 – 35.00%)	=	0.02%
Total:	24,943)					1.00					9.59%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Warner Bros. Discovery Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	(2,344)	(2,401)	(931)	(2,422)	(2,149)
Invested capital²	30,724)	30,674)	30,994)	31,259)	21,151)
Performance Ratio
Economic spread ratio³	-7.63%	-7.83%	-3.00%	-7.75%	-10.16%
Benchmarks
Economic Spread Ratio, Competitors⁴
Alphabet Inc.	26.69%	—	—	—	—
Comcast Corp.	-2.60%	—	—	—	—
Meta Platforms Inc.	22.71%	—	—	—	—
Netflix Inc.	-6.22%	—	—	—	—
Trade Desk Inc.	-10.45%	—	—	—	—
Walt Disney Co.	-18.32%	-20.57%	—	—	—

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 Economic profit. See details »

² Invested capital. See details »

³ 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,344 ÷ 30,724 = -7.63%

⁴ Click competitor name to see calculations.

The analysis of economic value added from 2017 to 2021 reveals a persistent failure to generate positive economic profit, indicating that the entity consistently operated below its cost of capital throughout the observed period.

Economic Profit Performance: Economic profit remained negative for all five years, signifying a continuous destruction of shareholder value. The figures fluctuated from -2,149 million US dollars in 2017 to a peak deficit of -2,422 million US dollars in 2018. A notable improvement occurred in 2019, where the loss narrowed to -931 million US dollars, before regressing to -2,401 million US dollars in 2020 and -2,344 million US dollars in 2021.
Invested Capital Dynamics: A significant expansion in the capital base is observed between 2017 and 2018, with invested capital increasing from 21,151 million US dollars to 31,259 million US dollars. Following this sharp increase, the invested capital remained relatively stagnant, maintaining a range between 30,674 million and 30,994 million US dollars from 2019 through 2021.
Economic Spread Ratio Analysis: The economic spread ratio remained negative throughout the period, confirming that the return on invested capital was consistently lower than the cost of capital. The ratio showed a trend of improvement from -10.16% in 2017 to its highest point of -3.00% in 2019. However, this gain was not sustained, as the ratio declined again to -7.83% in 2020 and ended the period at -7.63% in 2021, indicating a return to levels of inefficiency similar to those seen in 2018.

AI Ask an analyst for more

Download chart

Warner Bros. Discovery Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	(2,344)	(2,401)	(931)	(2,422)	(2,149)

Revenues	12,191)	10,671)	11,144)	10,553)	6,873)
Add: Increase (decrease) in deferred revenues	(76)	52)	228)	5)	79)
Adjusted revenues	12,115)	10,723)	11,372)	10,558)	6,952)
Performance Ratio
Economic profit margin²	-19.35%	-22.40%	-8.18%	-22.94%	-30.91%
Benchmarks
Economic Profit Margin, Competitors³
Alphabet Inc.	17.70%	—	—	—	—
Comcast Corp.	-5.12%	—	—	—	—
Meta Platforms Inc.	17.84%	—	—	—	—
Netflix Inc.	-7.26%	—	—	—	—
Trade Desk Inc.	-13.44%	—	—	—	—
Walt Disney Co.	-46.68%	-55.32%	—	—	—

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 Economic profit. See details »

² 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -2,344 ÷ 12,115 = -19.35%

³ Click competitor name to see calculations.

The financial performance between 2017 and 2021 is characterized by consistent negative economic profit, indicating that the entity failed to generate returns exceeding its cost of capital throughout the observed period. While there was a general expansion in scale, the organization remained unable to achieve a positive economic value added state.

Adjusted Revenue Trends: A general upward trajectory in adjusted revenues is observed, growing from 6,952 million in 2017 to 12,115 million in 2021. The most significant growth occurred between 2017 and 2018, during which revenues increased by approximately 51.7%. Despite a slight contraction in 2020, the overall trend indicates substantial revenue expansion.
Economic Profit Analysis: Economic profit remained negative across all five years, reflecting a persistent destruction of economic value. The figures fluctuated significantly, reaching a peak (lowest loss) of -931 million in 2019 before deteriorating again to -2,401 million in 2020 and -2,344 million in 2021. This volatility suggests that revenue growth did not translate into stable economic gains.
Economic Profit Margin Fluctuations: The economic profit margin showed high volatility, starting at -30.91% in 2017 and improving markedly to -8.18% by 2019. This improvement represented the period's most efficient operational phase relative to the cost of capital. However, this trend was reversed in 2020, when the margin dropped back to -22.40%, followed by a marginal recovery to -19.35% in 2021.

AI Ask an analyst for more

Download chart

Warner Bros. Discovery Inc. (NASDAQ:WBD)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin