Initial angular momentum: Lini=IAωA+IBωB
Since the forces applied to the discs are towards the centre, applied torques are zero.
Hnece, angular momentum will be conserved.
Let the final angular momentum: Lfinal=(IA+IB)ω
Iini=Ifinal
⇒IAωA+IBωB=(IA+IB)ω
⇒ω=IAωA+IBωBIA+IB
When the discs are rubbing against each other,
(KE)final=12(IA+IB)ω2==12(IA+IB)(IAωA+IBωBIA+IB)2
(KE)ini=12(IAω2A+IBω2B)
(KE)ini−(KE)final=12(IAω2A+IBω2B)−12(IA+IB)(IAωA+IBωBIA+IB)2=12IAIB(ωA−ωB)2>0
⇒(KE)ini>(KE)final
⇒ energy is lost in doing work against non-conservative internal forces.