EARNINGS PER SHARE

In calculating earnings per share, the Company follows the two-class method, which distinguishes between the classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The Company's Series A, B and C common stock and the Series C convertible preferred stock are treated as one class for purposes of applying the two-class method, because they have substantially equal rights and share equally on an as converted basis with respect to income available to Discovery Communications, Inc. Any redeemable noncontrolling interests adjustments of redemption value to the floor that reflects a redemption in excess of fair value are included as an adjustment to net income available to Discovery Communications, Inc. stockholders in the calculation of earnings per share.

The table below sets forth the computation for income available to Discovery Communications, Inc. stockholders (in millions).



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Numerator:
Net income	$	283		$	287		$	822		$	902
Less:
Allocation of undistributed income to Series A convertible preferred stock	(61		)	(58		)	(176		)	(183		)
Net income attributable to noncontrolling interests	—			—			—			(2		)
Net income attributable to redeemable noncontrolling interests	(4		)	(7		)	(7		)	(11		)
Redeemable noncontrolling interest adjustments to redemption value	—			—			—			(1		)
Net income available to Discovery Communications, Inc. Series A, B and C common and Series C convertible preferred stockholders for basic net income per share	$	218		$	222		$	639		$	705
Allocation of net income available to Discovery Communications Inc. Series A, B and C common stockholders and Series C convertible preferred stockholders for basic net income per share:
Series A, B and C common stockholders	185			186			541			592
Series C convertible preferred stockholders	33			36			98			113
Total	218			222			639			705
Add:
Allocation of undistributed income to Series A convertible preferred stockholders	61			58			176			183
Net income available to Discovery Communications, Inc. Series A, B and C common stockholders for diluted net income per share	$	279		$	280		$	815		$	888

Net income available to Discovery Communications, Inc. Series C convertible preferred stockholders for diluted net income per share is included in net income available to Discovery Communications, Inc. Series A, B and C common stockholders for diluted net income per share. For the three months ended September 30, 2015 and 2014, net income available to Discovery Communications, Inc. Series C convertible preferred stockholders for diluted net income per share was $33 million and $35 million, respectively. For the nine months ended September 30, 2015 and 2014, net income available to Discovery Communications, Inc. Series C convertible preferred stockholders for diluted net income per share was $97 million and $112 million, respectively.

The table below sets forth the weighted average number of shares outstanding utilized in determining the denominator for basic and diluted earnings per share (in millions).



	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Denominator:
Weighted average Series A, B and C common shares outstanding — basic	432	449	434	458
Weighted average impact of assumed preferred stock conversion	217	227	220	228
Weighted average dilutive effect of equity-based awards	4	6	4	7
Weighted average Series A, B and C common shares outstanding — diluted	653	682	658	693

Weighted average Series C convertible preferred stock outstanding — basic and diluted	38	43	39	44

The weighted average number of diluted shares outstanding adjusts the weighted average number of shares of Series A, B and C common stock outstanding for the potential dilution that would occur if common stock equivalents, including convertible preferred stock and equity-based awards, were converted into common stock or exercised, calculated using the treasury stock method. Series A, B and C diluted common stock includes the impact of the conversion of Series A preferred stock, the impact of the conversion of Series C preferred stock, and the impact of equity-based compensation.

The table below sets forth the Company's calculated earnings per share.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Basic net income per share available to Discovery Communications, Inc. Series A, B and C common and Series C convertible preferred stockholders:
Series A, B and C common stockholders	$	0.43	$	0.41	$	1.25	$	1.29
Series C convertible preferred stockholders	$	0.86	$	0.82	$	2.50	$	2.58

Diluted net income per share available to Discovery Communications, Inc. Series A, B and C common and Series C convertible preferred stockholders:
Series A, B and C common stockholders	$	0.43	$	0.41	$	1.24	$	1.28
Series C convertible preferred stockholders	$	0.86	$	0.82	$	2.48	$	2.56

Series C convertible preferred earnings per share amounts may not recalculate due to rounding.

The computation of the diluted earnings per share of Series A, B and C common stockholders assumes the conversion of Series A and C convertible preferred stock, while the diluted earnings per share amounts of Series C convertible preferred stockholders does not assume conversion of those shares.

The table below presents the details of the equity-based awards and preferred shares that were excluded from the calculation of diluted earnings per share (in millions).



	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Anti-dilutive stock options and RSUs	6	4	6	3
PRSUs whose performance targets have not been achieved	3	4	3	3

Only outstanding PRSUs whose performance targets have been achieved as of the last day of the most recent period are included in the dilutive effect calculation.