WBD · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

Warner Bros. Discovery, Inc. · 2026-08-06 · Importance 59 · Surprise 48 · In source text

Consolidated costs of revenues decreased 23% to $4.621 billion in the second quarter and 17% to $9.264 billion in the first six months of 2026. The reductions primarily reflected lower domestic sports costs because the NBA was absent, lower Studios theatrical content expense, and lower amortization of purchase-accounting fair-value step-up for content. Global Linear Networks’ costs of revenues benefited by $760 million in the quarter and $1.107 billion year to date from lower domestic sports costs. Higher international content costs supporting HBO Max launches partially offset the consolidated cost reductions.

Key facts

• Global Linear Networks costs of revenues decreased 27% and 20% for the three and six months ended June 30, 2026, respectively, and lower domestic sports costs due to the absence of the NBA had a favorable impact to costs of revenues of $760 million and $1,107 million for the three and six months ended June 30, 2026, respectively. source
• Consolidated costs of revenues, excluding depreciation and amortization, decreased 23% and 17% for the three and six months ended June 30, 2026, respectively. source
• Depreciation and amortization decreased 20% for both the three and six months ended June 30, 2026. source

Impact estimates