DISCA - Earnings call transcript Q1 2019 | Warner Bros. Discovery, Inc.

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Operator

Good day, ladies and gentlemen. And welcome to the Discovery Communications First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time [Operator Instructions].

As a reminder, this conference call is being recorded. to conference like to now would turn over the Mr. I Investor Executive Vice Slabin, Strategy. President, Andrew Global Mr. Slabin you may begin.

Andrew Slabin

everyone. joining first call. us morning, for Good And Discovery's quarter thank XXXX you for earnings

Executive Zaslav, and Officer; Perrette, President Networks President David Chief Discovery JB are CEO today Wiedenfels, our me and Joining Chief International. Officer; and Gunnar Financial our

David access call, have website from at our and received but Gunnar, we You opening on begin and earnings should some if not, David, JB. we up On today's then it release, our feel will with for Gunnar free will to call the and www.corporate.discovery.com. questions comments open with up

and we future involve that pursuant to that of to Before future management's other on about that obligation company's business you plans, events, company assumptions of forward-looking based remind from statements, materially the Safe differ cause may prospects are we make Harbor performance, and providing could like intent Private them. Act expectations. the I our statements Reform start, current projections made to provisions Securities and Litigation to or any forward-looking XXXX. In the comments and uncertainties today the and statements regarding actual knowledge disclaims financial These risks would are update results

and For see our and subsequent additional affect our Commission. could year to the David. information please with December on the call And will XX, XXXX, turn filings Securities important these Annual U.S. the expectations, Exchange factors that, that over with ended Report I for made

David Zaslav

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with have brand identify We people and love.

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content proceed value advertisers and has appeal high Our distributors. broadest multi-generational the and consumer among

have believe are are passions We powering genres around niche results. quality now their we are free that people’s and that of and to the brands metrics, in. momentum. to central healthy we And all lives, starting see course, flow revenue and cash seeing are operating respect trust, and OIBDA, to people the talent virtually we and channels, world to adjusted From

different. consumer acquisition; in strong looks demand and the We the categories. products merger is are distribution and in from bundles our our world; synergies continued Scripps we from Discovery with adoption passionate progress benefiting that of direct-to-consumer out making the suite in multiple U.S. around are entertainment building and and best-in-class driving IP sports packages from in

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transaction. had the and we all have while close virtual and on world inclusion remarkable of of progress. the the lack amount around to ability yet, A we the taken Our MVPDs, have later, on year home leverage we our food made to answers debt don’t

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we below X.X board. our of core acceleration the our leverage are We net seeing businesses across healthy to have times, reduced and a

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terrific a position. done has team our Our job advancing

with bundles well to we as positioned are Sling, partner We Hulu that new are consumers migrate to and and thrilled grow ensuring platforms. YouTube, to

U.S. many and seeing as networks real women you with advertising with domestic first a cable In domestic remarkable continue X of team said across marketing have heading keep some and food for that the trend the number into our our first really dug-in TLC, has on to initiatives our lines progress. headroom in XX, drive and rating we and a think to our couple X% of group upfront, top of improve. our we of cable in our delivery now. prime combined the in on with trends a advertising have year’s place targeted through posted in key us from industry, as end think I The platform company, returns. our the HGTV, I networks pretty we I’m once second we’ll With our are row again and performance helping and peer quarters to commercial feel But for at domestic innovate last pleased advertising this capabilities. advance ever cost a a the I QX we growth quarter, and Additionally, business. four productivity will to our great quarter, top continue have ID, in we

be as heavy progress traction with quarter content we launching real for Germany. free-to-air large Building layering channel the Scripps will our market to we HGTV work at and and beginning regards hard our free-to-air upon gain content digital the are pleased new advertising recently is a been our have key across We with services. new as also markets. lift Scripps of international outlook also last international announced detailed launching We branded networks, in in we segment in pay, to the

the Latin across nearly America HGTV at network existing the healthy region. America, the key food Latin We commitments channel doubling time, also launches for while new have secured the across distribution same the presence countries, throughout channel subscriber all

the to linear market what assess holes, ecosystems. demands to continue the We exist digital opportunities in and in and fill those both

are in believe be BBC with We truly some IP Discovery. relationship a and premium We of will gaining key global initiatives. across milestone a real the ten traction number year securing talent our for programming

Simon and rationalized most for most programming soon was the securing specials, like quality this secured around strategic genre. deal was Perfect which I library have element rights such which of BBC created visually ever coming Alastair coming work that new a the we series our which Discovery more SVOD a Planet, our be and the As UK to Fuller the all stunning next of some landmark by linear for high produced chip the networks, the is programming pieces the hard co-development pipeline Fothergill SERENGETI, portfolio; seen efficient one and UK we Channel of series for factual us, did business at of in and the at that highest maybe as TV stronger blue and natural in team, a produced for creating of fourth by Planet marvel landmark factual profile who BBC for of The will summer; several Discovery quarter; Earth Library to the of U.S. the BBC history years harvest the with factual over world. of

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local the great full we places across specifically, and J:COM. support portfolio The Golf over It’s as is seeing will Discovery’s where real advantage great Italy heroes, in couldn’t start. look on fire we still put four Japan Tiger when this a about Golf. the powerful partnership platform like rolling We’re taken in to be to be line berg. In this with have over excited are seeing sports the more exclusive is story in the of this traction are master out the be we’ve And just Golf. where class like partnership healthy Tiger off next our we full tip particularly the given moments, PGA a across on streamed as both as a see great offer with with everywhere the beta, users presence. paid was years over a of outside in XX and successfully timing must of nice with Though content, all all in have able our We’ve products tournaments a our of the of Tiger, be in Asia-Pac victory U.S. boost we Japan Masters' the three for local of and of ecosystem. to on clearly couldn’t time tours the and local together and We’ll take for one global rights, our I early where coming in the it’s countries can terrific well globally and better. year. engagement, for and Woods nature GOLFTV, later and of and we user a structural markets Tiger’s tour five especially welcome to world Tiger the registered, signs template And PGA, ice Golf series years.

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I backdrop across with We different recognized And refocusing against of industry brands feel and different disruption other have look, than as repositioning strategic see our continued by paying we said is confident appeal passion I earlier, almost really industry, balancing response, and network a into groups. immersive portfolio the our our off. the the And headwinds feel of all driven experiences. global

this in a and de-levered lot I’ll great to by and disruption you providing throwing the confident optionality. Gunnar strong to continue off take supported opportunity. execute our we and over call runway sheet turn are And through real ability of a to financials Thank the and time cash, during us are outlook. balance We And to great the of you. with

Gunnar Wiedenfels

thank the in And to made performance, we operational XXXX everyone optimistic already us David. about you strong extremely and joining with our you, company’s and strategic pleased quarter continue remain as Discovery. very transform Thank progress very financial for today. have our first And I'm I with outlook. we

the slightly finally, affiliates advertising quarter pro-forma stated. the -- of due the periods highlights commentary quarter, for of X% from share company first fourth the U.S. our the year, achieved our for affiliates which focus drivers growth X% unless first quarter month our first tough guidance Scripps excellent results. for in custom full constant terms revenue which refer growth, X% towards the morning international closing and again our results comp first with our all to Olympics Discovery accelerating me all In growth be details, earlier XX this financial first quarter, My ad or growth. caps-off will X% earnings and U.S. Let release exceeded some growth, of otherwise in total last currency metrics Please we’ll transaction. on international negative the international the commentary financial to filed and

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first free cash spending than full which of million XXXX, well is months which and for $XXX XX our digital cash entity, quarter cash first as period. month $X.X the of XX to billion a reported flow million same in flow we the roughly after combined $XXX cost, as as months more the in free brings Additionally, trailing restructuring of severance XX higher

the leverage with ratio by to well announce XXXX. authorized our of putting, focus of repurchases to and inside to X times Our goal flow leverage target the this our has ahead our billion. XX laser times allowed be financial I’m Against that early management top our of improvement target net net has share strong the on quarter pleased in of up to end to original back our within X.X cash stated of range us below $X backdrop the range X.X board cost

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as next the From impact an minimal more network additional synergies. we and currently three will ultimately, full to basis year months expected the XXXX closing, and meaningful hundred from growth will perspective, the integrate provide the but and uplift assuming All contribution. advertising, post six expect of of networks couple adjusted to be over consolidated we we of capture lifestyle we’ll come points OIBDA XX revenues impact a be advertising would international

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First, currency start I constant quarter key will with second drivers pro four XXXX. revenue the forma basis for our a on

similar expected partially to the Golf pricing up digital the basis. product, U.S. by first our by on driven advertising, year-over-year similar continued ratings lower dynamics, of X%, is range increases a and monetization be for to X% quarter, continued offset growth First, and as linear

for key determinant the will within Our quarter deal uplift of always will range. additional the be the we note having in to now from by We addition would where Hulu. guidance outperformance as helped and expect a ratings announced versus market, fall on YouTube our recently our performance mix continued we Sling

expected growth to accelerate the virtual X% U.S. Second, additional the quarter, MVPD in affiliate primarily given carriage. is first versus

no guidance in As best now the growth announced single-digit year. range, virtual noted, subscriber first lowest Though, YouTube feel And change very U.S. revenue major our the industry both and quarter tailwinds, still given affiliate year recently should especially we of growth in deal, comfortable always, are traditional distribution in as and the assumes lot of our platforms. of with across moving full the and content. this while mid domestic, pieces, there see headwinds representation

expected is international growth mid-single-digits. Third, be advertising up to

consistent trends three sequential UK subscription international of contributions be and also with relatively drive also month last And networks. our to across products. of quarter monetization regions improvement and up one the remain finally, across assumes is we TV single-digits. products. around digital growth markets, all Underlying further affiliate this our low continue expected new monetization continued to of our from We digital Note expect

company total to Turning guidance.

we growth of necessary driving free on in we investments goals be still continue laser after noted, build XXXX, free portfolio. As healthy and cash out to flow direct-to-consumer will to even the flow cash another our making focused year expect

not and we Our takes what last puts view free year have full our quarter. on ultimate the behind flow laid versus results out cash changed

year an investments of year. growth based growth will and to Please to to absolute direct-to-consumer that on be continue negative timing total and million OIBDA partially full out. lower a impact cash on expect the As be still to $XXX roll million still on given higher I the $XXX in back OIBDA higher last we of cash basis. adjusted and come, expected note to spending $XXX adjusted is increasing investments CapEx an the offset incremental of And by outlined, half XXXX is will restructuring had over million vast taxes. $XXX the million majority direct-to-consumer, loaded expenses, around

fact the quarters completed Given the additional primarily closing, that margin expansion fourth deal now four will synergy second year-over-year the to driven Scripps margin from quarter expansion this cadence, capture full first as well be initial in year versus the have post full the of the upside as cost quarter. by we

on that rate want non-cash the a impact is to. structural taxes. Please and the quarter to full will our significantly Moving to that and I accounting tax second year book lower note in there one-time XXXX in attention driven your draw

XXXX implication streamlining part be As significant book our to this entity which that, to mid full free in year benefit restructuring the a legal impact a of negative rate $XXX to be make in benefits process as second deferred tax is range. cash cash a our million tax the no are to second rationalizing will taxes and book of our of flow. we in quarter we non-cash single-digit our are now the Scripps, in accounting expect one. internal there will footprint. low is With our assets, these to tax rate or most The we tax million quarter recording Again, $XXX integration the and one-time from global

OIBDA impact negatively by footing me reported quantify impact to with foreign about $XX I satisfied the close, $XXX remain million our outlook. $XXX of exchange current revenue spot I on results. million financial now versus closing, XXXX expected expected to and FX the Before adjusted extremely and Discovery million $XX XXXX At our In our rates, by million results. optimistic is approximately let to

significant transformation performance ultimately you of term and financial JB flow Thank business, value free the our your and be cash accelerate Our again will to long David, our us generate questions shareholders. allow happy drive answer have. to And any this balance will for may morning. you time sheet for now strong and I

Operator

[Operator first or from question of line Quadrani from Instructions] the Our JPMorgan. Alexia comes comment

line open. Your is

Alexia Quadrani

question big is are making on guys my internationally. a guess side. looks push I maybe the It you for international David like

of such as had making success might great of the guys now begin Scripps I Scripps is the talk out how that senior have Discovery after big you a and then earlier on legacy You business you’re when effort for newer assets? well. up Can side the about a And bigger these to see that. results? we the in some And it initiatives you’ve talked call about follow is opportunity

David Zaslav

you we growth going gotten turned by corner our of forward, think most share. international now and our take we around a we’ve Historically, we’ve look when And accelerating. results gaining market as at really look our the

we share now see broadly. single. the is market which low affiliate, on growing a side, Our acceleration. And is real the we mid single, In advertising see

as being work back we business. The some And of hard business on going been a really running pass again. this is talk ground to on But It's quite So to I'm about JB to JB to markets content we’re a in we’ve starting lot how growth turn. is think work. we Scripps made the it well. that

JB Perrette

we’ve in content growth, content ago, And Discovery lot more to slow as David it’s a The better six the a Alexia, audience last story us. way. C&I. is library And couple look that’s the great it, in having really begun as gotten And back what’s of the turn really and utilized legacy David over as of of we’ve around growth to after by then its really seen advantage major mentioned. part. you rates of years happened Scripps when months share driving a to international while to ingesting driven max began performance take that to -- a said, share nine a the started business for

perspective an And ever share so as obviously the UK, advertising our bit example, of bag. a the markets mix perspective. Unfortunately, had best from from are we a little an in quarter

the were in the way but shares still down So single, advertising UK mid market up. was our

in while growing, make Scripps major our in and launching better shares more content this so feel helping. turnaround working international not And optimistic networks. we'll And the the expecting particularly also what’s of that coming markets, some new is we’re the about and a are positive is better marketplaces and challenged we’re

free-to-air market in from for of end on of the in in footprint America and Europe, the of in America. biggest food HGTV in a Germany, As example, the Latin our June HG our the penetration launch doubling Latin with the perspective subscriber launch

And markets same opportunities about active new sudden been like weren’t new Golf spot historically, way, the has it. Discovery, we content the having candidly, game his conversations Korea, with ago for people trouble the year David on product, change engaging now lot is also of particularly or a programming. business, conversations with appeal, in in which launching and America, by that have theory a the in conversations in have coming the for you obviously, Golf, that like been -- a it underrepresented by to we’re which drilling of seeing had about in having less all talked better education enormous well The weren’t us And we has then overemphasis, an which Asia, utilizing great so we’re in channels which as news Scripps us. well of as up that, we’re as smart completely us in Asia, has Europe working things particular. content Where been Golf performing less across and and comments, maybe BBC has and the well Latin the referenced little product,

Alexia Quadrani

on Can just M&A? follow can for the up of that. thanks prioritizing active quick buyback a new and I the being authorization cash, we for just was business balance comments to you in assume your on And that investments use clarify. in wanted

JB Perrette

summary, a that’s think good Alexia. I

We’ll also and As the where I on the times about to the continue end where than the we growth. to months, investments in said, talked after organic to other turns focus in rather we’re change. that drive that. cash months that, are the leverage, time we’ll all we’ll our closing balance given $X.X happy transformation. making bringing little on X.X been in billion than a being, further business, priorities future We’ve down generated mind, first the And are. investments XX we’re X.X very lower Keep all necessary leverage we it’s times for with haven’t X XX make the around flow continue deal. very, in I'm down

sheet a So shape have balance at in I point. we’re and very, very strong think pretty good this

David Zaslav

really This team is has transaction really Scripps worked. impressive. The

that. clear free We’re and now of

to our a now we’re flexibility in costs; of X.X a now a business transactional have could more times sustainable million strategic to target -- the of acquisitions. some we really billion more our were growth, I’ve that would than been time set if full that cash being we a million. related assets and that they flow; synergies that looking There's bit transaction, flow and flexibility $X.X of But buyback a sustained And are de-levering long at little a at out free execute; that We looking we year at $X about for free saying ahead; position cash, of were we’re investing free more. double have cash on we now in be this loads flow, billion below execution machine coming have the and $XXX in to makes at $XXX through. $X.X provide of and companies position cash us a levered, in billion be

We’re cash. generating going be to lot

the have It's M&A; we don’t we major. just the cash the now; it right We have this love where strategically moment use are don’t anything in to idea around unencumbered way see see so for we major an all that an any world. exciting ability we company. an and but And we

Operator

Thank you.

Harris or from Brett next Our line from comes of the comment question Gabelli Research.

open. is line Your

Brett Harris

your incumbent Any as broader announcement wanted the made sense general your I advantages It non-fiction opening moving the an I major to landscape non-fiction? into think services focused And seems about shows. provider? an service but would about you competitive most ask services guess is into that for that SVOD some about in remarks. question should naturally entertainment how programming. are SVOD Hulu cooking really non-fiction characterized we are theme and that crowded as fit non-fiction on

David Zaslav

five us. very to on for that doing those we ability big or history. and of that’s people who a Netflix Hulu will IP, There's post on of and be scripted loads what natural some There's that’s worked bit watch of of there people from subscribers When content new Planet is is mantra. create Yes, people And and content. movies, the go shows we coming Blue $XX, pay to for movies. to and is before little addition world to is coming what all does us coming people we've in it transition into they’re Netflix what of And and where nobody Thrones of the to for business series pay they entertainment BBC why stuff, they’ll they’re of of XX% up But great road for the space. is created over event is great years love. in. off They IP, want people Netflix. to them. And between series they’ll stuff. And that, us, gorge guide who is TV in two, will But has But scripted one, is to that’s love have XX% programming dinner maybe buy Game look see will it have. a great next those $X use opportunities another and people year. few really to IP. going people our that’s And couple that based stand on us been going what And that that the of for big in compelling and that’s million excitement really hard able has a and to the and love Planet of they're of the three globally Maisel, all ability a probably for the XX% them to paying our churn used next over to at our is Earth some series food last them. everywhere to Mrs. X brands path XXX series get what the to The getting a and the

we will and want History be should businesses, this say a think said, the much different the to We’re in when build players screen. family, it’s we two that world these this, or really can this. you everyone every what’s we’ve planet. look real product behind in planet, that be be more aware on. And have of this But amount deeply a the food ecosystem. sub-groups, And at it we feedback are Natural massive, to more gotten want the less then the we they and front about its have as tremendous young with learning, being affiliated $X documenting part smarter, going whether huge lots but some of more about of talent is home, cares being think could of of going generation screen to from than in we’re I’ve of and And be

with cycling now. doing We’re

think with We’re doing can with we We food. design. think Golf. with can it home it we We it do do

bit want it’s little to they this comfortable. but in And we so play a space, great very feel that

how know also of the this in of space. in play space. playing to people crime food people the Loads We tried Loads is. hard have are

the that Ken a self-strided the one They several we team talent. show. they food Lowe years, We they Scripps up. who know the through all build TLC. and they After online up with -- team are fine producers are ended and know at have they best And in best the work

many expert are producers And of producers, strong. so so areas, real each those production these of only of because in we in work have our working with areas these with a team great us each

a of think build And for able all around I it’s we businesses to them. us. field ultimately, open should wide significant So be

chasing And one a Factual meaningful. driven with it History values. have field crime, exciting, it’s I has initiative the or and that real being as think the seeing a Golf and cycling everybody think ball or the then biggest the and home, opera, by best I And family and of Natural we’re real, is global or because same or food, like really opportunity. it’s that we we already whether games, that it’s

Operator

Thank you.

of the Bank America Our comment Merrill or Jessica comes from of Lynch. next question Ehrlich from Reif line

is line open. Your

Jessica Reif Ehrlich

the talk a I’ve in markets. just revenue over launching But the about lost direct-to-consumer two you’re services -- many approaching in next interested count have years. advertising couple. you of versus and how how subscription to you model. I Can how three you're non-U.S. U.S. both

question is second or on Next advertising.

have you think market? unique will talk this upfront sorry you're all -- for the about year, approach questions of for earlier. and finally in guys You presentations. then process position And your done How as different of you selling the can expectations be do some the finally, a but you mentioned

other seeing traditional course universe. MVPD subs You're on the distributor What you and the of every loss Pay of the every Just for the you see overall do TV what traditional distributor, on virtual in subs on given the are market in bundle? side? going

David Zaslav

better XX, up tend just saying smaller with I’ll if this We’ve to I while. -- on do can outside bundles X get been I’ve mean much One, bundle or start point. advertising it we where the U.S. a we if for side. the seen the the we’re

stronger. get brands Our

and capture some more XX% end if net positive. XX%, up Our our we very content positive in And is and a aggressively to revenue XX% XX% we or between markets with of can viewed.

project because us and in on monetize and older to able much more the them. we our people now all and we'll many where with bundles it’s younger hard be better cases are a audience, time them maybe CPMs. moving for channels for better And with things of So to are for very it's us, we’re going. spend bundles will But skinnier

platform. to so key years us to ago, long has right is sustainable And term about four in challenge whatever that business is the news the now happens, said Malone me good growth a every beyond

platform, be those platforms top find game. that’s have business growth every and platform services term you’re could on if real a you the even in you’ve on you And secular every If long in on then can significant decline.

the And data the in. those superior worked also and And hard new so we lot a we’re platforms, position to CPM. We’ve on that’s give get analytics that us there. more get

it’s additive that in So regard. really

the nicely MotorTrend, it’s for On with and the and market we’re pay already in us. very free, doing

a We the what as like where can Eurosport in sports We’ve sport have History. a years. Natural funnel ton. not X.X information free. led and for been learned and providing the for us daily get you cycling being of it’s at which these, are and There’s see two go up But you as as social a ecosystem, full And well individual Player, being transactional read Golf magazine, to we’ve stuff that there each but just everyday really read we've can people and about talked pieces. and

which behind the and our pay to to for XX affinity built every across time why each people those us. XXX people. be that one million Eurosport.com one talk pay people and what the a an Eurosport Well, can have in the confident the some we monetize And the did here’s that yes, about So we for I with eventually, -- wall. we Funnel this tiger, And or are. with free. And and million have advertising language. cycling. we that from every you the groups golf, card here has see with perspective, wall. have hang say free or so we nobody to might scale and around million can and the the to else give on then triple business which have, we just Player And with some what reasons will credit funnel us the us so see behind can one, don’t and free around into the the then think is playing number we you people about is number one And got why to reasons mean play we’re the be of of are XX around Europe two, in come spending where free going funnel. to We your we else come the the I place everywhere leads aggregate world Eurosport. PGA in is get one a this -- and globally And we promote number language country ability Golf what of these in then people in almost funnel every funnel

groups And every then and credit so [Technical can you do Difficulty] affinity in get company -- other there is no that look card. country the

money, it’s opportunity for think quite If could a Golf then the this a science we're or But amount more compelling. Natural accelerate product has companion see like be can also at spend as in of we’ll business product. us, History, in so shouldn’t the capital the greatest this. of we’ll we’re see Cycling And And their kids or Natural to big significant our all ready money very everyone and harder. is and this a HBO, way, very about History looks we we accelerating it. we the global greatest And meaningful and and Disney’s because beginning that of spend there. family Netflix lot have what that On has deploy think learn space.

so that environment that’s the And we funnel have. Gunnar?

Gunnar Wiedenfels

overtime. unique And world. in you agree may see I very have I is think then, Jessica, networks that having what position point is with of of And across linear all that the with this that that. additional evolves place one footprint global we

elements in in of global that we territory individual their the place. total footprint and long rights that our buying owning of some international content benefit may have that deals for deal we’re terms, our that’s the So and complete the combining sublicensing having be

with from to it's risks ability and exploit best position the be our some investments, we So of the of in. could I contain the content this perspective think the

Jessica Reif Ehrlich

advertising? And

David Zaslav

the all got you've so Jessica, questions.

We the or city -- covering we the finished than ever upfront tour. You’re looks been. strong, five as gamut. The upfront hit we’ve our stronger

the a number have smidgen of Disney in a the company top, were players were but Fox, bigger pulling of TV they for But number are only us. one marketplace. than with top we little in reach, now America the women, we We terms three big in channels in bit by the four two scale three we’re

feels don’t feel We accelerated. all it last. that’s how strong good, scatter going the upfront the is has. But We probably so in it’s And ways to know in that some there cable stronger weeks that pretty at other some of places been some very underperformance the industry. of very, good, broadcast is lot have and few maybe other the it a last and long

have of a goods. lot so is of lot inventory a not out lot there, And there make of a people

is have we’ve So we also been whether I But which as unique go we it’s the think not unique that’s or current don’t advantage, a have, a the whether we a we advantage is situation. good know upfront, getting a if for guys is into baddy at of CPM so it’s plus, turn Fox. $XX prime we their us goody in and us, $XX a prime you can that but it. two if look CBS's And front is that’s plus. CPM

So we $XX got the at in around plus. four us players price

That’s in all a prime bigger We’re than networks. our across fraction of of that. and audience aggregating them we’re at

case always and the been also plus, deliver paying it’s networks. give upfront can is can And But agency And whether whatever some can we and major that we went you But increase unique now of you with six and can with all you the at top in do spot that women you’re deliver across the America. terrific the our seven, XX% so is the we move our and that’s myself cable. could with $XX and things broadcast been nine, $XX. could of I where XX% once with eight, reach where you And XX. $XX every saying, I’ve prices. meeting our do And $XX, everybody of across a We money -- advertising. clients,

be seen. will happen the I’ve that I’ve been quickly it. over been how all so all over And city. remains to

is Broadcast that on And inventory, get and broadcast to fact thing there’s shrinking. sports is the the more decline together the as you they're rating starting that some general, between final in prime with go broadcast. the that traction. We’re

And time. our are those apps we’re of a us. that’s where we groups generation young else, DGO, a for better goodie authenticated spending real and downloaded passionate then that because we than a have So doing spending which have have affinity -- anyone apps lot

plays probably how have well out. market So right now, as just see to anybody we’re we’ll I and the positioned think as

Operator

Thank you.

the line next Borst or comes Sachs. of Goldman Our from comment Drew question from

Your line open. is

Drew Borst

virtuals assumption guidance, have. you And to mid probably respect I if to was want a guys number the the on carriers. sub have incremental picked into are U.S. just I'm whole bunch wondering counts affiliate of facility is you subscribers. the pull the to because go for with could to about the And you guys out right, you But based year? back of that trying thinking what I traditional up comment how single-digit you balance the understand guys should baked just

Gunnar Wiedenfels

mid I single-digit as confident guidance. in said we’re in again very call, the earlier So our

MVPDs, YouTube that this assumptions, of a helper is a year. individual a That’s of is in you’ve Clearly, this seeing. all probabilized helpful, various always helper, terms drivers general. for out, estimate guidance pointed clearly the In we’re

a quarter lot in also confidence. mentioned numbers the some subscriber You’ve trend of -- against and traditional that to certainly first again, working that’s seen we have the come But out and extent. the

Our core been Obviously, networks. have down first networks the smaller see to larger digital numbers the continue quarter one. for in

can in, there. expect little YouTube with You the and a quarter it second support and more starting rolling take from that’s from -- we’ll

Drew Borst

And another on flow. question then cash free

sitting we flow But growth. being guys you on the cash free you know street for XX reported can outlook billion Can that. at excluding charges street a strong. mentioned help this look free about The bridge ’XX? quarter too quite sitting to restructuring not bridge you was basically that cash. Are done I $X.X $X.X is at for help much when is the you’ve of year, billion conservative the in that? at -- You $X.X billion, really number. The trailing months, impressive forecasting

Gunnar Wiedenfels

quarter million initiatives the some quarter -- Drew, million see that additional cash half to through of of going been for huge total there’s that continue second I pointed negative I'm our we first of we dollar towards in impact to $XXX on I to haven’t and make out first the the going and it's very the hasn’t coming absolute feel a quarter numbers. remember points lot amount to earnings, are the with $XXX see I we’re year. to couple when are when said we a worth, two the those that I as lot happy of know, said, The as we restructuring to come what that we ago see being are months But you expenses, reported on. in going very and we of opportunity. investment ability flow. also fourth all down when investments we CapEx; digital; strong up P&L incremental XXXX; to generate incremental about very working ramp reported A significantly. a more our

I So are on some because But as to I about it. investments want have time, we of those we feel maintain going to the last said, spoke there be when variability. and flexibility, very different good some timing is

confident. So I don’t But very, guidance to want point. this any I’m put out specific at very

Operator

you. Thank

or question comes Mitchelson from comment Doug next line Credit the from of Our Suisse.

open. is line Your

Doug Mitchelson

about declines. is about we between factual services were affiliate for talked David, in there these any being digital thumb know of you'll large its -- TAM hopefully service, OTT and for as get launched, with we as breakeven? on Gunnar, so bigger But use to target growth relatively Natural any mind trade-off think are what OTT rule and there in a these terms TV and providers, should a History have factual point many call we negotiations there channels on soon, the Is to which businesses? all any your the building services. it. at David subs keep And give that Natural fairly those for what that OTT the already of History name Pay is can the we that even how thoughts the services prospects

David Zaslav

tends of And coming look one right series-driven number for a the to audience It be is at men around as primarily product. is majority you world. the Discovery series. from channel our first, Well, audience, the our now

get work. upside that blue-chip meaningful and put with to around BBC in going brand some more by -- some relationship, blue-chip other can in Discovery in some really we super-nourish bringing as the We’re we’ve this meaningful on had the think as some content we world the well

on different. History that XX-XX put And is we’ll tentpole product whether Factual Discovery. blend XX-XX, is mostly Natural lot little with a different, it's a and or big content. bit so that or series The And

We the library. entire BBC have

their all titles. have of We

library. We our have blue-chip

space content. content, We have stem our all our of all of

the to is we best you great the together We a part into where did library converted we science largest see XG family NASA series an series, comprehensive the all And the have HD, into which eight and coming took documentary. When Left Earth, home world. We ability of a library in have put

you're you podcasts. like into different going that then can things more about get that XXX to another you If recommended learn series space or

aren’t Planet they’re Busters. us number as Naked And product a a was number both learning. to we -- it’s X -- because see so And and in that to it generation understanding Catch the like the series, with is it year this entire we whole watching really And around and is and this stuff, of entertainment series life Myth think in at there to you about be one idea of and the and as very -- by Gold is Afraid UK, Rush, helping different, this, what’s watching going Blue for content a people this going Deadliest if be reached And UK. has there driven on and one going streaming the it’s this piece look the out planet.

nourished down science will and with on out or this greatest Discovery, create promote. the real and IP But and some Planet, of can than different we you grow Netflix, deep like blue-chip, Science. but an history place think terms would different to we can there a But be that have we great on We it. dig then think or of really space, out a that will very people by hang Animal and do which Discovery families ecosystem, content in see great, a want is we

groups affinity But we’ll that forth. the back not be with one spending and us. have a We pushing time And replacement for other. is those are

Gunnar Wiedenfels

the get desire to we and I our out. modeling cases. some on your understand Doug, business breakeven And question, Obviously, support totally have that’s

discussion have scenarios. We

to those looking answers from realistic perspective. have But questions yet. the also know We’re that we management a all don’t enough we’re at all

or we we’re platform, And might behind roll some it to because go going really to want through investments, the assumptions whatever. work learning we change actively we to decisions. something with we're additional because are If well, get either really out, those of is additional starting as content different find making

So there. any want I out don’t expectation have to

this to need point is anything that’s get this Faricy’s point. second of Peter we So Operationally, metrics he more mean why and cetera, not taking arrival, team financial experience absolutely on engagement focused about the we’re growth sums That’s With to the there at and revenue consumer and the than on yet. number at are operating point et the metrics on communicate to. the I much breakeven. very

a perspective We attractive are have seeing initiatives. absolutely some this a that’s contributions, The and way from not of growth portfolio very a me. fine first for at that is very, financial perfectly right I we priority now, but is purely look

the to this very, large impact those financial a enough from how have absolutely start some absorbing look to of on in number content, a years, we acceptable global years very incredible guidance footprint team for year, all two we’re look at overall much is in I given terms ingredients P&L I these and a now. think having the at small loss of the be most really and positive offerings. enough the I you and importantly, from And envelop. a three allow initiatives that of perspective the And I see XXXX. risk to I’ve

David Zaslav

looking The scale. to were key is, drive we before

mistake. big So

First, create this you you Golf we’re a great say. And product And is finding people what love now that have if cycling. with don’t greatest a the that’s this people product thing. you that Golf crazy, love. Create

has BBCPs, around on, are balancing JB the you was the each interest on cycling Peter quite world Then looking This at an driver an acquisition But been we have not me, both has and where think on ground as as well the this. program. because apply now aggressive people you’re big. everything can cycling. Golf ecosystem is We JB the be subscriber want around on it with telling in with a that which could we and other,

JB Perrette

we are it’s very still you Discovery playbook think marquee the The products exciting and than around extremely and have localize the now has GC which of playbook The opportunities incredibly same in years. the it. exactly right working example, English the taking are And our that and opportunity these is Spanish, in the that very playbook we help an if thing well. then plus launching we’re been the around where we cycling taking XX for global where we’re discovery beginning. utilization well we same know at from language world, world, doing of product to infrastructure early and today that out is a and had taking we German, in Japanese product But see U.S. the

opportunities, products across clean global beginning a to tap into different is the scaling just robust going world. so the them very as take think I and growth the opportunity when that around be think do you to of those we’re we we And what

Operator

you. Thank

comment question the next from from Rich Our or line comes of Greenfield BTIG.

open. line is Your

Rich Greenfield

David, a you out tailwind spend. digital as ad called to

I the the I are it’s follow is sense for think look Gunnar. And you us results, actually that were flat. of When the you pieces growth? just driving up quarterly your mentioned now some But Can How digital providing within digital? then about a at quick are it core some big QX And number? dollars to the talked a you significant advertising in whole conversation. now like key a at you’re really how that on on basis. you give that networks is -- of what the the just reporting of billion and the watch look earlier tailwind stuff

This to which had fall that you in quarter, you late they you just and is out MVPDs in deceleration subs they being just on Thanks. the raise X%, the said some Hulu surprised me because down sequential of the trying as quarter, a actually I’m saw Is the you brought were just there. that traditional that players, square losing or QX. pricing Sling.

Gunnar Wiedenfels

on one, a side. the Rich, traditional we I on think, out about come seen we’re looking point at when have is losses number sub numbers quarter talk that the you’ve the technical quarter-by-quarter numbers. basis the end of One

quarter. had essentially you’ve the the Sling in fourth Hulu So for and number

think almost you for the of on segments small our growth platforms. our the now. with the platform, contributions important those nicely out, is there. to again, part integrated you’re yet, don’t very given Discovery YouTube we explanation regarding and linear and reporting should selling discrepancy now a we’re absolute in I of point has not year Golf traditional which of our basis that incrementals to it’s still then that And and digital TV the of advertising. for a everywhere, expect clearly, its, it's most here probably say, terms two come So seeing And that’s on outside that year then growth growth an wouldn’t carve half, I the businesses, of But contributing the numbers. any that size That’s been quite the

So, JB, nice contributions some very meaningful, on from think basis also a relative you I I mean, in the that… saw Nordic

JB Perrette

been months rating growth to our growth that subscriber two four return you've the that that finally sales by plus. in declines team's and starting a Europe, while back for for over we’ve from about is and hit of in growth driven in Peter's obviously years. seen And -- our shape. fact and exciting better to markets turnaround region ad of shape that a been And the have us. some has with over largely for the sub product gotten his we’ve last digital, talked several couple by hard that which that’s and a market the both we’re to growth, story, much some we’ve us aggressively the trying face ad heard get last better on We’ve and the case thing finding And Nordics globally been into work last pricing we work, Northern digital the few years. and through products have star Rich, a most to of turn seeing which challenges the been in really level

David Zaslav

including team, we’re look points people just JB in And the Amazon. a one Peter. it, the there, of make said brings he created got bringing to And of better. -- technology team we we they an in attack top two from have products So but

a people spend -- Northern to products have number number cable. Improve de-play of a than it. it a we And lot started free-to-air see two product. the star the and with and are product the with acceleration scale better four of people great star recommending we’re player on with of because we so time to the and content, people that in And from major Europe

getting So a it’s our products I think better, process. are

on piece from is a other encouraging digital its The standpoint. just consumption

these to have don’t As products. have they peers, I Discovery. my They DGO talk don’t

can’t service. general You DGO have entertainment for

favorite food authenticate You all they have and get food people love favorite few their can they their shows, on take their or all and Discovery to will a watch so DGO, minutes because cumbersome as it device meaningful their We it’s time it. And and the average the that in thing way. more They're get on a age is shows, spending shows a home important favorite of in scaling XXs. lot most data. the is

a yes the that But what we’re -- and seeing So our like and seeing people and that of platform, lot watching having of us putting about people authenticated channels this advertisers it. says by are some ourselves really food, content by are it HG, really, young are older. those is the

a it’s real So us. plus for

Operator

Thank you.

Warner Bros. Discovery (WBD) 2 May 192019 Q1 Earnings call transcript