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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The domestic and foreign components of loss before income taxes were as follows (in millions).
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Domestic |  | $ | (11,843) |  |  | $ | (4,702) |  |  | $ | (8,747) |
Foreign |  | 455 |  |  | 839 |  |  | (213) |
Loss before income taxes |  | $ | (11,388) |  |  | $ | (3,863) |  |  | $ | (8,960) |
The components of the provision for income taxes were as follows (in millions).
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
Federal |  | $ | 983 |  |  | $ | 753 |  |  | $ | 629 |
State and local |  | 321 |  |  | 57 |  |  | 143 |
Foreign |  | 522 |  |  | 750 |  |  | 407 |
|  | 1,826 |  |  | 1,560 |  |  | 1,179 |
Deferred: |  |  |  |  |  |
Federal |  | (1,488) |  |  | (1,845) |  |  | (2,367) |
State and local |  | (276) |  |  | (548) |  |  | (418) |
Foreign |  | 32 |  |  | 49 |  |  | (57) |
|  | (1,732) |  |  | (2,344) |  |  | (2,842) |
Income tax expense (benefit) |  | $ | 94 |  |  | $ | (784) |  |  | $ | (1,663) |
The following table reconciles the Company’s effective income tax rates to the U.S. federal statutory income tax rates.
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Pre-tax income at U.S. federal statutory income tax rate |  | $ | (2,391) |  |  | 21 | % |  | $ | (811) |  |  | 21 | % |  | $ | (1,881) |  |  | 21 | %
Non-deductible goodwill impairment |  | 1,881 |  |  | (17) | % |  | — |  |  | — | % |  | — |  |  | — | %
State and local income taxes, net of federal tax benefit |  | 30 |  |  | — | % |  | (388) |  |  | 10 | % |  | (218) |  |  | 3 | %
Effect of foreign operations |  | 331 |  |  | (3) | % |  | 342 |  |  | (9) | % |  | 246 |  |  | (3) | %
Preferred stock conversion premium charge |  | — |  |  | — | % |  | — |  |  | — | % |  | 166 |  |  | (2) | %
Change in unrecognized tax benefits |  | 153 |  |  | (1) | % |  | 33 |  |  | (1) | % |  | (6) |  |  | — | %
Other, net |  | 90 |  |  | (1) | % |  | 40 |  |  | (1) | % |  | 30 |  |  | — | %
Income tax expense (benefit) |  | $ | 94 |  |  | (1) | % |  | $ | (784) |  |  | 20 | % |  | $ | (1,663) |  |  | 19 | %
Income tax expense (benefit) was $94 million and $(784) million, and the Company’s effective tax rate was (1)% and 20% for 2024 and 2023, respectively. In 2024, the Company recorded a non-cash goodwill impairment charge of $9.1 billion, the majority of which was not deductible for tax purposes. (See Note 5.) For the year ended December 31, 2024, the increase in income tax expense compared to the same period in 2023 was primarily attributable to a decrease in pre-tax book loss (excluding the non-cash goodwill impairment charge), an increase in state and local income taxes (including a state deferred tax adjustment recorded in the year ended December 31, 2024 and a one-time favorable release of an unrecognized state tax benefit in 2023 that did not recur in 2024), and a one-time favorable release of an unrecognized U.S. tax benefit in 2023 that did not recur in 2024. Income tax benefit was $(784) million and $(1,663) million, and the Company’s effective tax rate was 20% and 19% for 2023 and 2022, respectively. The decrease in tax benefit for the year ended December 31, 2023 was primarily attributable to a decrease in pre-tax book loss and the effect of foreign operations, including taxation and allocation of income and losses across various foreign jurisdictions. These decreases were partially offset by an unrecognized state tax benefit remeasurement following a multi-year tax settlement and a favorable state deferred tax adjustment recorded in the year ended December 31, 2023. The decrease for the year ended December 31, 2023 was further offset by a one-time expense incurred in 2022 related to a preferred stock conversion transaction expense that was not deductible for tax purposes. (See Note 3.) Components of deferred income tax assets and liabilities were as follows (in millions).
|  | December 31,
|  | 2024 |  | 2023
Deferred income tax assets: |  |  |  |
Accounts receivable |  | $ | — |  |  | $ | (86) |
Tax attribute carry-forward |  | 2,661 |  |  | 2,908 |
Lease liabilities |  | 793 |  |  | 851 |
Accrued liabilities and other |  | 1,180 |  |  | 919 |
Total deferred income tax assets |  | 4,634 |  |  | 4,592 |
Valuation allowance |  | (2,043) |  |  | (2,191) |
Net deferred income tax assets |  | 2,591 |  |  | 2,401 |
Deferred income tax liabilities: |  |  |  |
Accounts receivable |  | (267) |  |  | — |
Intangible assets |  | (6,916) |  |  | (7,988) |
Right-of-use assets |  | (636) |  |  | (796) |
Content rights |  | (342) |  |  | (685) |
Equity method investments and other outside basis differences |  | (61) |  |  | (411) |
Other |  | (741) |  |  | (560) |
Total deferred income tax liabilities |  | (8,963) |  |  | (10,440) |
Net deferred income tax liabilities |  | $ | (6,372) |  |  | $ | (8,039) |
As of December 31, 2024, the company maintains a valuation allowance of $2,043 million to offset deferred tax assets attributable to certain foreign net operating losses, and to a lesser extent U.S. federal and state tax attribute carryforwards. The Company’s net deferred income tax assets and liabilities were reported on the consolidated balance sheets as follows (in millions).
|  | December 31,
|  | 2024 |  | 2023
Noncurrent deferred income tax assets (included within other noncurrent assets) |  | $ | 613 |  |  | $ | 697 |
Deferred income tax liabilities |  | (6,985) |  |  | (8,736) |
Net deferred income tax liabilities |  | $ | (6,372) |  |  | $ | (8,039) |
The Company’s loss carry-forwards were reported on the consolidated balance sheets as follows (in millions).
|  | Federal |  | State |  | Foreign
Loss carry-forwards |  | $ | 47 |  |  | $ | 1,350 |  |  | $ | 8,255 |
Deferred tax asset related to loss carry-forwards |  | 11 |  |  | 71 |  |  | 1,972 |
Valuation allowance against loss carry-forwards |  | (6) |  |  | (46) |  |  | (1,544) |
Earliest expiration date of loss carry-forwards |  | 2028 |  | 2025 |  | 2025
A reconciliation of the beginning and ending amounts of unrecognized tax benefits (without related interest and penalty amounts) is as follows (in millions).
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Beginning balance |  | $ | 2,147 |  |  | $ | 1,929 |  |  | $ | 420 |
Additions based on tax positions related to the current year |  | 148 |  |  | 147 |  |  | 302 |
Additions for tax positions of prior years |  | 250 |  |  | 195 |  |  | 35 |
Additions for tax positions acquired in business combinations |  | — |  |  | 247 |  |  | 1,353 |
Reductions for tax positions of prior years |  | (76) |  |  | (275) |  |  | (114) |
Settlements |  | (30) |  |  | (46) |  |  | (20) |
Reductions due to lapse of statutes of limitations |  | (51) |  |  | (62) |  |  | (34) |
Changes due to foreign currency exchange rates |  | (17) |  |  | 12 |  |  | (13) |
Ending balance |  | $ | 2,371 |  |  | $ | 2,147 |  |  | $ | 1,929 |
As of December 31, 2024, if the Company were to recognize the full amount of unrecognized tax benefits, $2,182 million would reduce the Company’s income tax expense and effective tax rate after giving effect to interest deductions and offsetting benefits from other tax jurisdictions. The Company and its subsidiaries file income tax returns in the U.S. and various state and foreign jurisdictions. The Company is currently under audit by the Internal Revenue Service for its 2012 to 2019 consolidated federal income tax returns. It is difficult to predict the final outcome or timing of resolution of any particular tax matter. With few exceptions, the Company is no longer subject to audit by any jurisdiction for years prior to 2008. Adjustments that arose from the completion of audits for certain tax years have been included in the change in unrecognized tax benefits in the table above. It is reasonably possible that the total amount of unrecognized tax benefits related to certain of the Company’s unrecognized tax benefits could decrease by as much as $67 million within the next twelve months as a result of ongoing audits, foreign judicial proceedings, lapses of statutes of limitations, or regulatory developments. As of December 31, 2024, 2023, and 2022, the Company had accrued approximately $732 million, $571 million, and $413 million, respectively, of total interest and penalties payable related to unrecognized tax benefits. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. The 2017 Tax Cuts and Jobs Act features a participation exemption regime with current taxation of certain foreign income and imposed a mandatory repatriation toll tax on unremitted foreign earnings. Notwithstanding the U.S. taxation of these amounts, we intend to continue to reinvest some of these funds outside of the U.S. Our current plans do not demonstrate a need to repatriate them to the U.S. However, if these funds were to be needed in the U.S., we would be required to accrue and pay non-U.S. taxes to repatriate them. The determination of the amount of unrecognized deferred income tax liability with respect to these undistributed foreign earnings is not practicable. The Organisation for Economic Co-operation and Development’s (“OECD”) Pillar Two Global Anti-Base Erosion (“GloBE”) model rules, issued under the OECD Inclusive Framework on Base Erosion and Profit Shifting, introduce a global minimum tax of 15% applicable to multinational enterprise groups with consolidated financial statement revenue in excess of €750 million. Numerous foreign jurisdictions have already enacted tax legislation based on the GloBE rules, with some effective as early as January 1, 2024. As of December 31, 2024, we recognized a nominal income tax expense for Pillar Two GloBE minimum tax. The Company is continuously monitoring the evolving application of this legislation and assessing its potential impact on our future tax liability.

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