| Information About QVC Group's Operating Segments |
(15) Information About QVC Group's Operating Segments
QVC Group, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries. QVC Group identifies its reportable segments as (A) those consolidated subsidiaries that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of QVC Group's annual pre-tax earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.
QVC Group’s chief operating decision maker, the chief executive officer, evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, cost of goods sold, gross profit, operating expense, advertising expense, selling, general and administrative expense and Adjusted OIBDA, in addition to average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, QVC Group reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.
For segment reporting purposes, QVC Group defines Adjusted OIBDA as revenue less cost of goods sold, operating expenses, and SG&A excluding stock-based compensation and, where applicable, separately identified items impacting comparability. QVC Group believes this measure is an important indicator of the operational strength and performance of its businesses by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, and where applicable, separately identified impairments, litigation settlements, restructuring, penalties, acquisition-related costs, fire related
costs, net of recoveries (including Rocky Mount inventory losses) and gains on sale leaseback transactions, that are included in the measurement of operating income (loss) pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. QVC Group generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.
For the year ended December 31, 2024, QVC Group has identified the following consolidated subsidiaries as its reportable segments:
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QxH – QxH markets and sells a wide variety of consumer products in the U.S., primarily by means of its televised shopping programs and via the Internet through their websites and mobile applications. |
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QVC International – QVC International markets and sells a wide variety of consumer products in several foreign countries, primarily by means of its televised shopping programs and via the Internet through its international websites and mobile applications.
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CBI – CBI consists of a portfolio of aspirational home and apparel brands in the U.S. that sell merchandise through brick-and-mortar retail locations as well as via the Internet through their websites. |
QVC Group's operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments that are also consolidated subsidiaries are the same as those described in the Company's summary of significant accounting policies.
Performance Measures
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Year ended December 31, 2024 |
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QxH |
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QVC Int'l |
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CBI |
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Corporate and other |
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Total |
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amounts in millions |
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Net Revenue |
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$ |
6,598 |
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2,399 |
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1,040 |
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— |
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10,037 |
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Cost of goods sold |
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4,373 |
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1,532 |
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619 |
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— |
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6,524 |
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Gross profit |
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2,225 |
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867 |
|
421 |
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— |
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3,513 |
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Operating expense |
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512 |
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181 |
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41 |
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— |
|
734 |
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Advertising expense |
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|
277 |
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35 |
|
172 |
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— |
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484 |
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Selling, general and administrative expense (excluding stock based compensation and advertising) |
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671 |
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318 |
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172 |
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31 |
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1,192 |
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Adjusted OIBDA |
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$ |
765 |
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333 |
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36 |
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(31) |
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1,103 |
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Year ended December 31, 2023 |
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QxH |
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QVC Int'l |
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CBI |
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Corporate and other |
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Total |
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amounts in millions |
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Net Revenue |
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$ |
6,995 |
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2,454 |
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1,165 |
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301 |
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10,915 |
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Cost of goods sold (excluding depreciation and amortization) |
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4,711 |
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1,562 |
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717 |
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240 |
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7,230 |
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Gross profit |
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2,284 |
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892 |
|
448 |
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61 |
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3,685 |
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Operating expense |
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549 |
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190 |
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45 |
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11 |
|
795 |
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Advertising expense |
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251 |
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38 |
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178 |
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30 |
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497 |
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Selling, general and administrative expense (excluding stock based compensation and advertising) |
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|
738 |
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339 |
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158 |
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84 |
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1,319 |
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Adjusted OIBDA |
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$ |
746 |
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325 |
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67 |
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(64) |
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1,074 |
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Year ended December 31, 2022 |
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QxH |
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QVC Int'l |
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CBI |
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Corporate and other |
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Total |
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amounts in millions |
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Net Revenue |
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$ |
7,359 |
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2,528 |
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1,313 |
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906 |
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12,106 |
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Cost of goods sold (excluding depreciation, amortization, and Rocky Mount inventory losses) |
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5,131 |
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1,620 |
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850 |
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721 |
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8,322 |
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Gross profit |
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2,228 |
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908 |
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463 |
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185 |
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3,784 |
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Operating expense |
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|
562 |
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198 |
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48 |
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27 |
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835 |
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Advertising expense |
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259 |
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39 |
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166 |
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72 |
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536 |
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Selling, general and administrative expense (excluding stock based compensation and advertising) |
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657 |
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313 |
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171 |
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208 |
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1,349 |
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Adjusted OIBDA |
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$ |
750 |
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358 |
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78 |
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(122) |
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1,064 |
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Other Information
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December 31, 2024 |
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December 31, 2023 |
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Total |
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Capital |
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Total |
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Capital |
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assets |
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expenditures |
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assets |
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expenditures |
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amounts in millions |
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QxH |
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$ |
6,388 |
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122 |
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8,088 |
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128 |
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QVC International |
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1,761 |
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51 |
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1,892 |
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54 |
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CBI |
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567 |
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26 |
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566 |
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45 |
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Corporate and other |
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|
527 |
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— |
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822 |
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3 |
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Consolidated QVC Group |
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$ |
9,243 |
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199 |
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11,368 |
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230 |
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The following table provides a reconciliation of consolidated segment Adjusted OIBDA to operating income and earnings (loss) from continuing operations before income taxes:
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Years ended December 31, |
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2024 |
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2023 |
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2022 |
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amounts in millions |
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Consolidated segment Adjusted OIBDA |
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$ |
1,103 |
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1,074 |
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1,064 |
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Stock-based compensation |
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(32) |
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(53) |
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(60) |
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Depreciation and amortization |
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(383) |
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(407) |
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(481) |
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Restructuring, penalties and fire related (costs), net of recoveries |
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(18) |
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189 |
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(3) |
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Gains on sale of assets and sale leaseback transactions |
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1 |
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113 |
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520 |
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Impairment of intangible assets |
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(1,480) |
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(326) |
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(3,081) |
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Operating income |
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(809) |
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590 |
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(2,041) |
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Interest expense |
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(468) |
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(451) |
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(456) |
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Interest and dividend income |
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50 |
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52 |
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10 |
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Realized and unrealized gains (losses) on financial instruments, net |
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(60) |
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(61) |
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55 |
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Loss on disposition of Zulily, net |
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— |
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(64) |
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— |
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Tax sharing income (expense) with Liberty Broadband |
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(4) |
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(11) |
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79 |
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Other, net |
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— |
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11 |
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45 |
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Earnings (loss) from continuing operations before income taxes |
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$ |
(1,291) |
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66 |
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(2,308) |
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Revenue by Geographic Area
The following table summarizes net revenue generated by subsidiaries located within the identified geographic areas:
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Years ended December 31, |
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2024 |
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2023 |
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2022 |
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amounts in millions |
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United States |
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$ |
7,638 |
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8,442 |
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9,514 |
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Japan |
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870 |
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945 |
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1,017 |
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Germany |
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785 |
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788 |
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813 |
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Other foreign countries |
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744 |
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740 |
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762 |
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$ |
10,037 |
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10,915 |
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12,106 |
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Long-lived Assets by Geographic Area
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December 31, |
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2024 |
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2023 |
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amounts in millions |
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U.S. |
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$ |
351 |
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348 |
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Japan |
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81 |
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91 |
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Germany |
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21 |
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19 |
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Other foreign countries |
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49 |
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54 |
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$ |
502 |
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512 |
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