This report does not constitute a rating action.
S&P Global Ratings adjusts reported financials in our analysis of credit metrics in line with our methodologies, in part to increase comparability. Here, we provide the annual update to our analytical adjustments for EBITDA and debt for the five major U.S. media companies we rate: Fox Corp., Netflix Inc., Paramount Global, The Walt Disney Co., and Warner Bros. Discovery Inc.
We have historically favored leverage in evaluating the credit quality of the U.S. media companies. However, we recognize the limitation of using leverage as the main metric because generally accepted accounting principles (GAAP) EBITDA is not a perfect measure of cash flows given the way programming costs are expensed over time (amortized) rather than expensed when cash is paid. The growth in streaming and decline in legacy linear TV is exacerbating this effect, which will disproportionately impair the media industry's cash flows. Therefore, earlier this year, we added the free operating cash flow (FOCF)-to-debt ratio to our analysis, which we believe will better capture this difference. We note companies with both leverage and FOCF-to-debt thresholds will have to meet both metrics.
Table 1
| U.S. media companies--Leverage comparison | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Company | Rating | Business/financial risk profile | Adjusted leverage threshold- upside (x) | Adjusted leverage threshold- downside (x) | LTM adjusted leverage (x) | FOCF-to-debt threshold- upside (%) | FOCF-to-debt threshold- downside (%) | LTM adjusted FOCF-to-debt (%) | ||||||||||
| Fox Corp. | BBB/Stable/-- | Satisfactory/modest | 2.0 | 3.0 | 1.0 | NM | NM | 50.4 | ||||||||||
| Netflix Inc. | A/Stable/-- | Strong/minimal | 1.0 | 2.0 | 0.7 | NM | NM | 86.9 | ||||||||||
| Paramount Global | BB+/Stable/-- | Satisfactory/aggressive | 3.5 | 4.25 | 7.4 | 10.0 | 5.0 | 5.5 | ||||||||||
| The Walt Disney Co. | A/Stable/A-1 | Strong/intermediate | 2.0 | 2.5 | 2.1 | 25.0 | 15.0 | 21.2 | ||||||||||
| Warner Bros. Discovery Inc.* | BBB-/Negative/A-3 | Satisfactory/significant | 3.0 | 3.5 | 4.9 | NM | 10.0 | 12.4 | ||||||||||
| Note: Ratings as of March 24, 2025. Adjusted leverage as of Dec. 31, 2024. *For Warner Bros., thresholds are based on what could lead to an upgrade or a downgrade. Its outlook is negative. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||||||||||
Frequently Asked Questions
What debt adjustments does S&P Global Ratings make for the five major U.S. media companies?
Many of our adjustments to a company's as-reported debt balance--such as the tax-effected unfunded portion of pension and other post-employment benefits (OPEB), operating lease debt, and netting of accessible cash and liquid investments--are common across most corporate issuers. However, we make several less-common adjustments to debt for these companies. The most significant involve the put options to purchase minority stakes in investments and joint ventures (usually disclosed within redeemable noncontrolling interests). The largest such adjustment was Disney's put/call option for Hulu, which, at its maximum, reached $9.055 billion on Sept. 30, 2023. For more details on our methodology and adjustments, see "Corporate Methodology: Ratios And Adjustments," published April 1, 2019, on RatingsDirect.
How does S&P Global Ratings treat one-time restructuring and programming charges?
Companies report restructuring charges each year. Some are seemingly recurring, such as severance driven by headcount reductions. Others are more transformational and driven by major companywide reorganizations or mergers. We break restructuring charges into three buckets, some of which we add back to EBITDA and some we consider the cost of doing business:
Restructuring costs: Our calculation of EBITDA typically includes restructuring costs (which reduce EBITDA), including those that will be settled in cash in the future. We typically view restructuring costs, including severance and exit costs, as an operating item because most companies need to restructure their operations to adapt to changing environments and remain competitive and viable.
Acquisition-related costs: Our EBITDA calculation includes acquisition-related costs including advisory, legal, and other professional and administrative fees related to an acquisition. Many businesses make acquisitions as part of their growth strategy; therefore, it is important to factor these expenses into EBITDA (for example, large transformational events such as mergers and acquisitions [M&A]). Our use of nonrecurring or pro forma adjustments is typically limited to when there has been some transformational change in a company's business. A transformational event is one that causes a material change in an entity's business or financial profile, as defined in our corporate methodology. Examples include the divestment of part of the business or a fundamental change in operating strategy.
Asset impairments/write-downs: We exclude impairment costs or reversals on tangible and intangible noncurrent assets from our definition of EBITDA because they are akin to depreciation or amortization costs in that they represent a company's income statement recognition of earlier capital expenditures. However, we include impairment costs on current assets, such as inventory and trade receivables because the charges for inventory represent a company's recognition in the income statement of money that it has already spent, and those for trade receivables represent the reduction of revenue and income previously recognized but that the company will not fully collect. Our definition of EBIT generally includes impairment charges or reversals, except we may adjust for very large and irregular impairments or impairment reversals of noncurrent assets (for example, programming charges or write-downs of ongoing operational costs). These charges are specific to programming investments either abandoned before completion or written down because the project is no longer likely to generate revenues it once expected.
Why does S&P Global Ratings use as-reported EBITDA instead of cash EBITDA?
Cost accounting for film and TV series allows for costs associated with a project to be capitalized and then amortized at the same pace as revenues are recognized. (Note that even though this is called programming or content amortization, we view this as an operating cost and treat such amortization as a cost of sales.) Cash costs, meanwhile, are recognized as spent.
As a result, cash programming costs often differ in timing and amount from GAAP programming costs. For companies expanding their programming investments, cash programming costs will exceed GAAP costs. For those companies with programming investments that have reached a steady state, GAAP costs equal cash costs. Some would argue that substituting cash costs for GAAP costs would make cash EBITDA a more accurate measure of cash flow.
We choose to stick with as-reported EBITDA for three reasons:
- To maintain a consistent definition for EBITDA across all sectors and companies;
- Cash EBITDA is more volatile than as-reported EBITDA; and
- The disclosure of programming costs among media companies is inconsistent.
Some companies disclose both cash and amortized programming costs, a few others disclose only the difference between the two, and some don't disclose them at all.
Table 2
| U.S. media companies--Cash versus amortized programming spending | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Mil. $) | GAAP content spend | Cash content spend | Delta | |||||
| Fox Corp. | 5,899 | (6,432) | (533) | |||||
| Netflix Inc. | 15,302 | (16,224) | (922) | |||||
| Paramount Global | 13,888 | (15,812) | (1,924) | |||||
| The Walt Disney Co. | 23,935 | (24,390) | (455) | |||||
| Warner Bros. Discovery | 13,956 | (12,349) | 1,607 | |||||
| GAAP--Generally accepted accounting principles. $--U.S. dollar. Last-12-month spend as of Dec. 31, 2024. Fox does not disclose cash content spend and only discloses programming rights amortization in note 5. We use “Inventories net of programming expenses” as an estimate of the delta between GAAP and cash spend. Sources: Company reports and S&P Global estimates. | ||||||||
How do we treat the step-up of the fair value of content due to an acquisition?
We do not treat this as an operating cost, which occurs as accounting rules require that the purchase price be allocated across the acquired company's assets. More often than not, a significant portion of this value is allocated to goodwill, but also across the acquired company's assets including intangibles (intellectual property, trademarks); property, plant, and equipment; and inventory. With media companies, it's also their film and TV content libraries. We find EBITDA useful to our credit analysis because it reflects underlying profitability. Including the step-up amount in cost of goods sold would, in our opinion, distort EBITDA and thus our profitability analysis. Therefore, we don't include amortization or expense related to fair value step-up in our EBITDA calculation.
When a company buys or merges with another, does S&P Global Ratings assess the rating based on pro forma adjusted leverage?
We generally don't assess the impact of M&A on ratings using pro forma EBITDA unless there's a compelling reason. Company-provided pro forma financial statements allow for a more representative measure of full-year performance and more meaningful ratios. Still, pro forma has several limitations. First, it reflects the financial performance of the acquisition under a different management team, so at best it's an approximation of how the larger company will perform. Each company may have somewhat different accounting standards, especially for how they amortize programming costs. Also, pro forma estimates that companies provide to the market reflect recognition of all immediate synergies. Most synergies are realized over time (and some may not be achieved at all), and most companies' pro forma guidance don't include the costs (such as severance or restructuring) they will incur to achieve them. For example, Paramount Global's original 2020 pro forma guidance for the new company recognized all $750 million in expected synergies, even though the company expected to achieve those synergies over three years.
How does S&P Global Ratings treat programming guarantees?
We don't consider these obligations to be debt. We believe they are future operating costs that will be paid with future cash flow. In addition, if a media company defaults on its programming obligations, we believe these contracts would be voided. Depending on how attractive the programming guarantee is, the owner could easily sell those rights to a third party.
How does S&P Global Ratings calculate EBITDA for diversified media companies?
We define S&P Global Ratings-adjusted EBITDA as a company's revenues minus operating expenses (excluding depreciation, amortization, and noncurrent asset impairment and impairment reversals). We include cash dividends a company may receive from investments accounted for under the equity method and exclude its share of these investees' profits. We also exclude share-based compensation expense payable in shares. We add back acquisition-related transformational/M&A restructuring costs in our EBITDA calculation and don't exclude current asset impairments and write-downs. We treat programming amortization as a cost of sales (an operating cost) and therefore include the amortization (and any related write-downs) in our EBITDA calculation. Our adjustments to EBITDA include the interest and depreciation expenses associated with capitalizing operating leases.
How frequently does S&P Global Ratings update its adjustments?
We update our adjustments for pension and OPEB each year, when the companies release their annual Form 10-K reports. However, we make midyear adjustments when they're deemed material. For example, we made an adjustment for Disney, which closed on its acquisition of TFCF on March 20, 2019, after disclosing its revised pension and operating lease liabilities. We update all other adjustments quarterly.
Table 3
| Fox Corp.--S&P Global Ratings-adjusted debt reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Fiscal year ended June 30 | ||||||||||
| As of Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Reported debt | 7,200.0 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Reported lease liabilities | 922.0 | Operating lease liabilities reported under other current and long-term liabilities | Page 19; Form 10-Q dated Feb. 4, 2025 | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Postretirement benefit obligations/deferred compensation | 5.5 | Tax-effected pension (21%) and other postretirement obligations of the direct and shared plans net off trust asset ($266 million) | Page 13; Form 10-Q dated Feb. 4, 2025 | Paragraph 106-115; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Accessible cash and liquid investments | (4,454.0) | 100% of cash and cash equivalents. Also includes $1.13 billion of liquid equity investments in Flutter Entertainment | Pages 3 and 7; Form 10-Q dated Feb. 4, 2025 | Paragraphs 36-38 and 86-91; Criteria: General: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Redeemable noncontrolling interests | 200.0 | Put options outside control of the company | Page 3; Form 10-Q dated Feb. 4, 2025 | Paragraph 65; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | (3,326.5) | |||||||||
| S&P Global Ratings-adjusted debt | 3,873.5 | |||||||||
| $--U.S. dollar. Sources: Company reports and S&P Global estimates. | ||||||||||
Table 4
| Fox Corp.--S&P Global Ratings-adjusted EBITDA reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference* | Criteria reference | ||||||
| Reported EBITDA | 3,435.0 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Operating lease rent | 162.0 | -- | Pages 18-19; Form 10-Q dated Feb. 4, 2025 | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Share-based compensation expense | 110.0 | -- | Page 4; Form 10-Q dated Feb. 4, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Dividends received from equity investments | 13.0 | Cash distribution received from affiliates | Page 4; Form 10-Q dated Feb. 4, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 285.0 | |||||||||
| S&P Global Ratings-adjusted EBITDA | 3,720.0 | |||||||||
| $--U.S. dollar. *Page reference refers to the latest 10-Q filing. Sources: Company reports and S&P Global estimates. | ||||||||||
Table 5
| Fox Corp.--FOCF reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| As of Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Cash provided by operating activities | 2,171.0 | -- | Page 4; Form 10-Q dated Feb. 4, 2025 | -- | ||||||
| Less: Purchase of property and equipment | (333.0) | Capital expenditure as reported by the company | Page 4; Form 10-Q dated Feb. 4, 2025 | -- | ||||||
| Company/S&P Global Ratings-reported FOCF | 1,838.0 | -- | -- | -- | ||||||
| Plus: OLA depreciation | 114.8 | Operating lease depreciation | -- | Paragraphs 82 and 104; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 114.8 | |||||||||
| S&P Global Ratings-adjusted FOCF | 1,952.8 | |||||||||
| FOCF--Free operating cash flow. OLA--Operating lease adjustments. $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 6
| Netflix Inc.--Debt reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Fiscal year ending December 31 | ||||||||||
| As of Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Reported debt | 15,582.8 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Reported lease liabilities | 2,412.2 | On-balance sheet (operating and finance) lease liability | Page 50; Form 10-K dated Jan. 27, 2025 | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Accessible cash and liquid investments | (9,583.7) | Cash and short-term investments including money market and time deposits reported on balance sheet | Page 40; Form 10-K dated Jan. 27, 2025 | Paragraphs 36-38 and 86-91; Criteria: General: General Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | (7,171.6) | |||||||||
| S&P Global Ratings-adjusted debt | 8,411.2 | |||||||||
| $--U.S. dollar. Sources: Company reports and S&P Global estimates. | ||||||||||
Table 7
| Netflix Inc.--EBITDA reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Reported EBITDA | 10,746.5 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Operating lease rent | 468.3 | Operating lease rent as reported by the company | Page 50; Form 10-K dated Jan. 27, 2025 | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Share-based compensation expense | 272.6 | -- | Page 39; Form 10-K dated Jan. 27, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 740.9 | |||||||||
| S&P Global Ratings-adjusted EBITDA | 11,487.4 | |||||||||
| $--U.S. dollar. Sources: Company reports and S&P Global estimates. | ||||||||||
Table 8
| Netflix Inc.--FOCF reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Cash provided by operating activities | 7,361.4 | -- | Page 39; Form 10-K dated Jan. 27, 2025 | -- | ||||||
| Less: Purchase of property and equipment | (439.5) | Capital expenditure as reported by the company | Page 39; Form 10-K dated Jan. 27, 2025 | -- | ||||||
| Company/S&P Global Ratings-reported FOCF | 6,921.8 | -- | -- | -- | ||||||
| Plus: OLA depreciation | 383.5 | Operating lease depreciation | -- | Paragraphs 82 and 104; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 383.5 | |||||||||
| S&P Global Ratings-adjusted FOCF | 7,305.3 | |||||||||
| FOCF--Free operating cash flow. OLA--Operating lease adjustments. $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 9
| Paramount Global--As-reported EBITDA calculation | ||||
|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | |||
| Total operating income | (5,269) | |||
| Depreciation and amortization | 392 | |||
| Programming charges | 1,118 | |||
| Impairment charges | 6,130 | |||
| Restructuring charges | 747 | |||
| Company-reported adjusted operating income before depreciation and amortization | 3,118 | |||
| Programming charges | (1,118) | |||
| Other corporate matters | ||||
| Restructuring charges | (747) | |||
| Impairment charges (lease) | 31 | |||
| S&P Global Ratings-adjusted EBITDA | 1,284 | |||
| Sources: S&P Global Ratings and company reports. | ||||
Table 10
| Paramount Global--Debt reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Fiscal year ending December 31 | ||||||||||
| As of Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Reported debt | 14,501.0 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Reported lease liabilities | 1,332.0 | On-balance sheet (operating and finance) lease liability | Pages II-45 and II-72; Form 10-K dated Feb. 26, 2025 | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Accessible cash and liquid investments | (2,661.0) | 100% of cash and cash equivalents | Page II-45; Form 10-K dated Feb. 26, 2025 | Paragraphs 36-38 and 86-91; Criteria: General: General Corporate Methodology: Ratios And Adjustments | ||||||
| Intermediate hybrids reported as debt | (816.5) | 50% value of junior subordinated debentures | Page II-24; Form 10-K dated Feb. 26, 2025 | Paragraph 128-132; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Postretirement benefit obligations/deferred compensation | 1,022.3 | Tax-effected pension (21%) and other postretirement obligations | Page II-84, Form 10-K dated Feb. 26, 2025 | Paragraph 106-115; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | (1,123.2) | |||||||||
| S&P Global Ratings-adjusted debt | 13,377.8 | |||||||||
| $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 11
| Paramount Global--EBITDA reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| S&P Global Ratings-adjusted EBITDA | 1,284.0 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Operating lease rent | 301.0 | Operating lease rent as reported by the company | Page II-73; Form 10-K dated Feb. 26,2025 | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Share-based compensation expense | 210.0 | Excluding compensation related to merger transaction, which is already included in restructuring and other corporate matters | Page II-92; Form 10-K dated Feb. 26, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Dividends received from equity investments | 13.0 | Calculated as equity in losses of investee companies, net of cash distributions less loss on equity method investees | Pages II-46 and II-43; Form 10-K dated Feb. 26, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 524.0 | |||||||||
| S&P Global Ratings-adjusted EBITDA | 1,808.0 | |||||||||
| $--U.S. dollar. Sources: Company reports and S&P Global estimates. | ||||||||||
Table 12
| Paramount Global--FOCF reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | Comments | Financial Statements Reference | Criteria reference | ||||||
| Cash provided by operating activities | 752.0 | -- | Page II-46; Form 10-K dated Feb. 26, 2025 | -- | ||||||
| Less: Purchase of property and equipment | (263.0) | Capital expenditure as reported by the company | Page II-46; Form 10-K dated Feb. 26, 2025 | -- | ||||||
| Company/S&P Global Ratings-reported FOCF | 489.0 | -- | -- | -- | ||||||
| Plus: OLA depreciation | 246.9 | Operating lease depreciation | -- | Paragraphs 82 and 104; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 246.9 | |||||||||
| S&P Global Ratings-adjusted FOCF | 735.9 | |||||||||
| FOCF--Free operating cash flow. OLA--Operating lease adjustments. $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 13
| The Walt Disney Co--As-reported EBITDA calculation | ||||
|---|---|---|---|---|
| For the 12 months ended Dec. 28, 2024 | Amount (mil. $) | |||
| Income from continuing operations before income taxes | 8,358.0 | |||
| Equity in the income of investees | (486.0) | |||
| Net interest expense | 1,381.0 | |||
| Net other income | 65.0 | |||
| Amortization of TFCF and Hulu intangible assets and fair value step-up on film and television costs | 1,623.0 | |||
| Depreciation and amortization (excluding purchase accounting) | 3,400.0 | |||
| Goodwill and intangible asset impairments | 3,468.0 | |||
| S&P Global Ratings reported EBITDA | 17,809.0 | |||
| $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||
Table 14
| The Walt Disney Co.--Debt reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Fiscal year ending September 28 | ||||||||||
| As of Dec. 28, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Reported debt | 45,308.0 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Reported lease liabilities | 3,558.0 | As disclosed by company | -- | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Accessible cash and liquid investments | (5,486.0) | 100% of cash and cash equivalents | Page 5; Form 10-Q dated Feb. 5, 2025 | Paragraphs 36-38 and 86-91; Criteria: General: General Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | (1,928.0) | |||||||||
| S&P Global Ratings-adjusted debt | 43,380.0 | |||||||||
| $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 15
| The Walt Disney Co.--EBITDA reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec. 28, 2024 | Amount (mil. $) | Comments | Financial statements reference* | Criteria reference | ||||||
| S&P Global Ratings reported EBITDA | 17,809.0 | -- | -- | Ratios and Adjustments | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Operating lease rent | 921.0 | As disclosed by company | -- | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Share-based compensation expense | 1,375.0 | -- | Page 6; Form 10-Q dated Feb. 5, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Fair value step-up on film and television costs | 338.0 | -- | Page 38; Form 10-Q dated Feb. 5, 2025 | Paragraph 185; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Dividends received from equity investments | 317.0 | -- | Page 6; Form 10-Q dated Feb. 5, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| EBITDA: Other (situational) | (68.0) | -- | -- | -- | ||||||
| Total adjustments | 2,883.0 | |||||||||
| S&P Global Ratings-adjusted EBITDA | 20,692.0 | |||||||||
| $--U.S. dollar. *Page reference is for the latest 10-Q filing. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 16
| The Walt Disney Co.--FOCF reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec 28, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Cash provided by operations--continuing operations | 14,991.0 | -- | Page 6; Form 10-Q dated Feb. 5, 2025 | -- | ||||||
| Less: Purchase of property and equipment | (6,579.0) | Capital expenditure as reported by the company | Page 6; Form 10-Q dated Feb. 5, 2025 | -- | ||||||
| Company/S&P Global Ratings-reported FOCF | 8,412.0 | -- | -- | -- | ||||||
| Plus: OLA depreciation | 777.5 | Operating lease depreciation | -- | Paragraphs 82 and 104; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Less: Capitalized interest | -- | -- | -- | Paragraphs 82 and 83; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 777.5 | |||||||||
| S&P Global Ratings-adjusted FOCF | 9,189.5 | |||||||||
| FOCF--Free operating cash flow. OLA--Operating lease adjustments. $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 17
| Warner Bros. Discovery Inc--As-reported EBITDA calculation | ||||
|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | |||
| Total operating income | (10,032.0) | |||
| Restructuring and other charges | 447.0 | |||
| Depreciation and amortization | 7,037.0 | |||
| Employee share-based compensation | 557.0 | |||
| Transaction and integration costs | 242.0 | |||
| Gain on asset disposition | 9,603.0 | |||
| Amortization of step-up to fair value of content related to acquisitions | 1,139.0 | |||
| Facilities consolidation costs | 4.0 | |||
| Amortization of capitalized interest for content | 46.0 | |||
| Company-reported adjusted EBITDA | 9,043.0 | |||
| Content impairment and development cost write-offs | (165.0) | |||
| Employee share-based compensation | (557.0) | |||
| Amortization of capitalized interest for content | (46.0) | |||
| Transaction and integration costs | (242.0) | |||
| Amortization of step-up to fair value of content related to acquisitions | (1,139.0) | |||
| Facilities consolidation costs | (4.0) | |||
| Organization costs | (246.0) | |||
| Contract termination costs | (36.0) | |||
| Other | -- | |||
| S&P Global Ratings reported EBITDA | 6,608.0 | |||
| $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||
Table 18
| Warner Bros. Discovery Inc.--Debt reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Fiscal year ending December 31 | ||||||||||
| As of Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Reported debt | 39,505.0 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Reported lease liabilities | 3,501.0 | Note 12--Leases | Page 91; Form 10-K dated Feb. 27, 2025 | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Accessible cash and liquid investments | (5,312.0) | 100% of cash and cash equivalents | Page 61; Form 10-K dated Feb. 27, 2025 | Paragraphs 36-38 and 86-91; Criteria: General: General Corporate Methodology: Ratios And Adjustments | ||||||
| Postretirement benefit obligations/deferred compensation | 167.5 | Tax-effected pension (21%) and other postretirement obligations; Note 17--Retirement Savings Plans | Page 102; Form 10-K dated Feb. 27, 2025 | Paragraph 106-115; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Revolving receivables program | 4,637.0 | Outstanding portfolio of receivables recognized | Page 85; Form 10-K dated Feb. 27, 2025 | Paragraphs 44-45 and 124-127; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Accounts receivable factoring program | 231.3 | Trade accounts receivable sold under factoring arrangement | Page 86; Form 10-K dated Feb. 27, 2025 | Paragraph 44-45 and 123-126; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Put rights/option/redeemable noncontrolling interests | 109.0 | Value of the put rights as a component of redeemable equity | Page 61; Form 10-K dated Feb. 27, 2025 | Paragraph 65; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 3,333.8 | |||||||||
| S&P Global Ratings-adjusted debt | 42,838.8 | |||||||||
| $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 19
| Warner Bros. Discovery Inc.--EBITDA reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Reported EBITDA | 6,608.0 | -- | -- | -- | ||||||
| S&P Global Ratings adjustments | ||||||||||
| Operating lease rent | 441.0 | Operating lease rent as reported by the company | Page 91; Form 10-K dated Feb. 27, 2025 | Paragraph 92-105; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Share-based compensation expense | 468.0 | Stock-based compensation reported on the cash flow statement less cash and liability settled compensation. We assume performance based restricted stock units and stock appreciation rights is cash/liability settled. | Page 97; Form 10-K dated Feb. 27, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Dividends received from equity investments | 46.0 | Calculated as equity in losses of investee companies, net of cash distributions less loss on equity method investees | Pages 59 and 62; Form 10-K dated Feb. 27, 2025 | Paragraph 72; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Selling, general, and administrative expense for revolving receivables program | 116.0 | Costs associated with revolving receivables program (including in selling, general and administrative expenses) | -- | -- | ||||||
| Others | 1,139.0 | Impairment and amortization of fair value step-up for content | Pages 85 and 116; Form 10-K dated Feb. 27, 2025 | Paragraphs 74 and 185; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 2,210.0 | |||||||||
| S&P Global Ratings-adjusted EBITDA | 8,818.0 | |||||||||
| $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Table 20
| Warner Bros. Discovery Inc.--FOCF reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 months ended Dec. 31, 2024 | Amount (mil. $) | Comments | Financial statements reference | Criteria reference | ||||||
| Cash provided by operating activities | 5,375.0 | -- | Page 62; Form 10-K dated Feb. 27, 2025 | -- | ||||||
| Less: Purchase of property and equipment | (948.0) | Capital expenditure as reported by the company | Page 62; Form 10-K dated Feb. 27, 2025 | -- | ||||||
| Company/S&P Global Ratings-reported FOCF | 4,427.0 | -- | -- | -- | ||||||
| Plus: OLA depreciation | 299.5 | Operating lease depreciation | -- | Paragraphs 82 and 104; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Operating cash flow--asset disposals and other (principle based) | 23.4 | Cash flow impact from factoring arrangement related debt adjustment | -- | Paragraphs 82 and 124-127; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Less: Change in trade receivables sold | 563.0 | Cash flow impact related to outstanding portfolio of receivables recognized | Page 85; Form 10-K dated Feb. 27, 2025 | Paragraph 82 and 124-127; Criteria: General: Corporate Methodology: Ratios And Adjustments | ||||||
| Total adjustments | 885.9 | |||||||||
| S&P Global Ratings-adjusted FOCF | 5,312.9 | |||||||||
| FOCF--Free operating cash flow. OLA--Operating lease adjustments. $--U.S. dollar. Sources: Company reports and S&P Global Ratings estimates. | ||||||||||
Related Criteria
- Criteria | Corporates | General: Corporate Methodology, Jan. 7, 2024
- Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, April 1, 2019
Related Research
| Primary Contact: | Naveen Sarma, New York 1-212-438-7833; naveen.sarma@spglobal.com |
| Research Contributors: | Trupti S Kole, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Pune ; |
| Sharadhi V, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai ; | |
| Renuka Kumar, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Pune ; |
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