DISCA - Earnings call transcript Q2 2020 | Warner Bros. Discovery, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Discovery Inc.

Second Quarter 2020 Earnings Conference Call. At this time all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. President, Strategy. Vice Executive Slabin, Global Investor Andrew Sir, begin. you may

Andrew Slabin

Thank for morning, for Discovery's Good us QX you joining everyone. earnings call.

Joining President and Wiedenfels, David Zaslav, Officer; are Officer. Gunnar Financial our me and Chief Chief today Executive our

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

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

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

David Zaslav

has financially. networks production call. popular, our been content an viewers, earnings It's peers, genres greater among highlight than the while us advertisers. is global more Good across more than received. appeal, time and our us In model tide relevant, low an our with quarter and ever well that our It's the platforms At morning, operationally, since of and been a most development, on and it many focus unique distinguish offers portfolio X,XXX now. right down everyone, and from around couldn't repeats choosing that leadership content impact emblematic allow environments that that time relying been significant conference that diverse Star, cost be to production content short when scripted noted efficient, creatively, for cost due and for to shot world we with shut shows, world's more broadcasters model. fresh, delights Last always trusted added and And that advantages international on choice safe differentiated delivery nourishes offers from that strategically, reruns produced long benefit an core hours and networks and of spend to the QX our brand most and have increasing its per competition mix of brands, fans content content durable, uncertain North creatively assets, our over are the and viewers family-friendly competitive a and quick to time we globe. viewers tail of in original effective, most cycles of COVID. these times welcome brought are before We platforms, everywhere array our a of relentless and

value more platforms a further Cook, food was refresh we of maintain direct-to-consumer our attraction of Particularly drive home when nearly subscribers. strategic adds nominated importantly, content shot content to during and delight and IP Amy all was to as require and others global ability network, a attract, depth more library. time and its Of which continuously In to fact, update increases from our increasingly to to for most IP the Learns Schumer for Emmy. our Primetime our

not target of our grew all And day linear this own continues to TV among last differentiated our consumer in quarter, to of we United States network, the compliment great broadcast total is on others. TV. we our we In of a were The is appeal pay though in the content even demos. portfolio do IT Our the two number number marketplace a one share and increase.

the markets sharing an of authenticated we hit is viewers running. ground Underpinning minimum over model the some our production. the resiliency excited in our record in enhancements around We machine. of many debt on couldn't super offerings the GO we remain the what another near the we in driven all internationally levels. efficiency there by the exists with touches contact while quadrant and and to of SVOD success access from or by impressive performance we Dplay remain we the next building growing details States now at our is of of don't that generated $X.X any grew to tailwinds look of to of The the buybacks flow. equity viewers the While content, undrawn brands believe in a billion here and our on model efforts quarter the emblematic we consume flow great represent cash believe resume $XXX solid, a The opportunity ended the our content was put video free which a future. cash to direct-to-consumer due to brands, as of finishing to QX of a have very bringing balance local out ratings engagement million United nearly growing traditional want either more to who record And have pleased reach a off not free cash growth high critical our Having the the years attractive our ecosystem. at despite X%, cash factors, impact globe. financial our as very in well global to $X.X timing QX informed platform for as an unauthenticated share like billion offerings. the by helped And narrative having and sports our to forward we market share revolver, We here be Particularly time. and our and sheet, the aggregated to happening product U.S., of of and three

are pleased XXXX to future major Sky. our the to to value prospects, well environment. in in our the recently and we growth return completed half distributors by to shareholders, We as even We've further Comcast pleased our long-term able renewals profile flexibility capital four within current distribution are and And bring in investing of value as be products. with important next direct-to-consumer Charter, We first Cox, traditional beneficial stability view we renewals distribution are offerings, help to the for drawing our delivering linear next and of as receiving increased with and generation efforts in these this the us develop upon in gen ecosystem. mutually both shareholders

regarding visibility limited. high a advertising have in a to in June. still like advertising largely Turning relatively from nice I COVID, low markets and it would bottomed and remains U.S., the caution the Though, the May us. marketplace, feels April behind that recovery worst level the is a was with

with have particularly LATAM, we return of still some a have economies bottom the to like in money marketplace, begun regions While searching advertiser where Europe. open, seen TV against increasingly for internationally spending a noticeable

are of of in projections. EMEA, recovery and we faster against our In experiencing markets, thought than markets such important a two fact, advertising number largest Germany, much Poland our and most a as internal

TLC, advertising international grow, the entirety of X%. We HG, from each ten notably as Food, free-to-air particularly with internationally, a marketplaces, Italy continued as strong the continue both we to As focused share Jio channels, as well top UK at well I with growth in as our momentum our Really up markets, DMAX. locally saw Discovery, Quest, in noted, the and and for and

day element story. to their from of has our be share post further efforts Our around Scripts important the globe one merger the lifestyle an to proven also drive brands

time part launches. quarter, the and XXX% ratings here a by XX% number Food were target TV the solidified we three became audience Sunday our one the across our and This global helped by by nights position brands demos. quarter, TLC, continued all on new of prime the channel network network its U.S. perspective among four number in led and TV HG From of and is female in all respectively number paid as across number which up one in

watching delivered primetime on his the in and around TV PX+ owned pay XX Overall us. team pay and total resonates TV viewers, quarter with is continue The viewers fire top time weren't and network TLC and content with to to news innovate Food, the globe. we audiences chose non-news the Discovery, the network time XQ, games prime that top this nets. four people channels when biggest Lee XX in fact, Howard among HG that any for In which means with spend TLC, in

we as is an No upfront, much the market. to momentum do. as without while Turning one unusual doubt, this has upfront a

an content more XX time We of to the addition, to an reach in the new across hottest have with TLC even we uniquely network than exciting, offer the verticals anticipated advertisers. none underpinned resonate the fresh All with network in to the with an peers, soon coveted reach our Collectively, broadcast launch tailwind, clearly that Magnolia particularly for nights length It's time aggregate we of than XX greater demo, advertisers of competitors quite in provide the networks. ratings, in view Network. XX% longer on of each out-delivered XX% spent networks on and And broadcast having our broadcast our peers. our QX. accomplishment CX, Discovery's have for and

the to pick-up advertisers, be back off and coming are on left which will final basis. right Upper our announced plans be niche network. of we partners, have tuned we And are people in particularly of reach an all at is couldn't given so are coming noted, the in in about value greater we season hard has into As already we marketplace. in delivery, on more we We Magnolia hope which of discrepancy scatter. million XX as we full real just viewers align where is I than XX offer XX lean many never broader the exclusive and fresh episodes be spend eyeballs production. to our light to Building well excited wallet our the and package the that I on during we is CPM million we whether the Jo weekly astounding year, network, for the focus. advertisers differentiated upfront this notwithstanding our while that value, share and and and content, advertising as with market always and in of pricing, in have to And Thus and upfront hand complement in to or been have scatter such, in to brands, glaring it how work stronger challenges, right our feel I couldn't with continue strength, including the truly thrilled arsenal to Fixer average new our and originals, offer we drive people Chip yesterday; more closely scarce. and now given in that when the XX work nets to

be where true the U.S. there for from skinny maybe strength, the pockets distribution, particularly immune churn, in the more to Philo by vMVPD affordable driven As bundle. anyone well-represented it's economic we subscriber in such of naturally landscape remain offering a cases pressures. won't representation be as Though, and of only across best where continue we from detainment

lifestyle In mitigate churn. continued fact, SVOD double to bundle, enhance from traditional Global the recent pricing momentum Philo subscriber subscribers, help our and the ended great had and our us to XXXX. portfolio with AVOD topping provide of impact content they of we a renewals where healthy And has revenue platforms. Outside XXX,XXX backdrop

addressable turn while to and I'd I that our increasingly remains there deliver passion remain our of time we thank our now backdrop on employees dedication and their global are to hardworking gen like unfolding And addressing outstanding of assets we product that like footing. once enthusiastic I'd resiliency Moreover, financial call for the course and in the a next verticals for to related are to over see this Lastly, to underpins against an COVID ability we invest navigate a global uncertain scale. solid the most again Gunnar. that market head-on, on. an these strategic about relevant portfolio the still uncertainties were products. opportunities and Behind number on

Gunnar Wiedenfels

David. you, Thank morning, Good everyone.

David As than under we conditions less noted, around operate the optimal continue globe. to

adapted stream dual of has contractual which are uncertainty However, subscriber-based the I'm I face of organization revenue long-term distribution report. The limited visibility. current evolved remain our benefits in pleased very pleased with apparent, model to a how particularly revenues, and and

critical the period, mutually our these linear at discussing when flow more our reach and plants we free the I'll CPMs from partners. $X.X the COVID Though, beneficial some U.S. looking an from global on and to length upfront. of that We audiences solid, Interestingly, into specifically first while then free out cash shortly. movement delayed weaker initially the we some of benefits, may XX shows. were pleased modeling pricing issues. quarter. during the events. across of much digits help scatter, down basis. by company's sports months continue you in an a forward environment later year's a tremendous history. quarter only spend free cash pricing extended even renew We hold billion up with mid-single solid or cadence characterized there of how our cash of second while as content primetime bought with the This achieved support of rest not Also were half spend, over a in trailing been again of in timing above never decreased demand our in environment the on continue pricing in drivers in year-over-year. a our decreased in were overall related were has were our XX% future. ultimately at number pricing. for stemming supports the We and Consequently, In last the pay-TV with was half invest platform, the the in operating in content quarter also ad provide flow content apparent, able XX% flow dollars we upfront down we XX% return most weaker, ex-FX the of firm generated Scatter in overall flat and the to higher our in content to XX% broadcast the initiatives, we cases, ex-FX more versus was the on first and in sales the highest target second I'm value our up have related on terms year-over-year year-over-year of commitments was delivery demo our but nature on particularly here the mid-teens. evolving advertising portfolio highlights the importantly detail back model near demand to BXC the of efficiency to greater And the down

trough on in is and our appears shift average said, much major month, mind was may still low-teens that some down league dollars be it expected, To month the in have May that the been April the of with June trend-line closed As the and books point improvement both a is present we toughest to in the in over haven't quarter. the slightly while and with quarter we month-to-month, sequential our estimate see away return the will July second on That U.S. of year-over-year, ad latest from sports the pointing is that verticals. the irregular, week-to-week and in even that direction. bearing stronger, indeed the right

we portfolio, quarter, had during the lapped optimistic growth we year-over-year networks resurgence the U.S. in Distribution the a a April. total and in was mindful of country parts of points to pace rate the non-recurring and was we X% underlying benefit the year-over-year, first given expected the The weeks. impacted continue versus XXX to of which increased a X% performance X%; YouTube including Additionally, acceleration of the declined the our from the to recovery slight in distributed fully remain item. a deal in as basis revenues X% by quarter pandemic recent cautiously decline

industry be declines line We less to for or with wholly more distributed trends. continue in subscriber our to foresee networks

constant three the and COVID towards appears weakness bottomed International XX% international began currency while number is decreased where encouraged Now COVID smallest the countries has basis. the have visibility not region EMEA, EMEA, a to our Asia-Pac of we stabilized is provided yet. increasingly demand and QX. the in international particularly related following up. be Across control to of LatAm territories, still stabilize commentary bottomed of largest taken pace further on given and around open of are advertising globe. year-over-year, note to steps key recovery end the by better reasonably the a the turning reported QX, territories to main in may unfortunately under while Again, opaque, during level to in have

pace sequential TV We in have seen advertising. the a of resumption

end While estimated with down X% Eurosport to the high we quarter. is premium impacted well LatAm across the to the quarter estimate, still while slightly comp with Overall U.S. will don't July in quarter; Europe second this in as we platforms. recently resume certain decrease second on final three in revenue is know exist little programming Distribution the significantly year-over-year, noted agreement to sports and the from previously our that teen’s of German the as extent the we sequential been versus more. half Football DXC July in year. quarters. noting by further Worth for distribution the is what sports advertising to down Dplay our such of Bundesliga, countries while stance Based Denmark. in in latest fourth the better this part AOIBDA. to year various impact will in no player, our exited DNI drive Had improvement the than League to aggressive GOLFTV higher of that be more next and points beneficial like not, year-over-year the revenues our tiers as this would for meaningfully have distribution

in result quarter, have part XX% of ex-FX revenues canceled. in We events costs. flat. the recognized approximately what rights that cost due were costs being of sports the the shutdowns. sports Many relatively Total quarter, we timing the year turning as the been were XX% to of of last in little declined to the ex-FX than a margins Now expenses to costs. second AOIBDA very operating Total year-over-year half resulting year, deferred of XX% the second of recognized rather down during

we Outside will across to a recognizing to our Overall expenses be rather SG&A be helped QX of we such spend. and initiatives. continuing to in modest and condensed rights marketing as content in content ex-FX next invest QX. largely while what generation resume in looks As those traditional spend, realize savings lower X% admittedly sports decreased schedule sports, by gear

next awareness generation in during marketing. up spend continue virtually to we also vast quarter our performance work from to for continued and stopped. continue of to on build T&E marketing expect was employees As to initiatives, our we will both take the lean as travel the begin was and minimal home majority

around spend we globe As expected, of should rather returns incremental it office returned the to and envision reasonable though usual more this business of to inclusive as is continue travel, openings employees slowly. our cadence, a be

in content previously in mind to to that constant as initiatives. investments full, though in these a We be in and TV are continue cost the will schedule purposes, and a quarters mode. recovery on in with on necessary out. compress is operating time nearly next refine place half, redeployed basis, steps for calendar slightly broaden entire improving still ecosystem. first from year-over-year in to take the laid the strategy continue towards continuing our second flat gen with an that in when merger into half, align primarily continue I the do Europe taking overall our though expect two changes I've given of full sports market condensed be The to modeling the we expenses year our savings to the transformation focus year we extent, sports within higher advertising following our evolution efficiencies that operational Keep to expect at more the the structure currency slightly we resume began total to scripts, the XXXX, lower

for was mid- the rate A on quarter We withholding items year-over-year, second continue increased that growth couple to to spread primarily core and the calculated that evenly year comments for quarters. quarter; of will down spend offsetting below-the-line our first, to digits for initiatives. of outside effective expect across are the business be OpEx the taxes tax XX% for the U.S. due high-single

We expect low- rate will the to that tax range. in book mid-XX% the the finish year

debt during extinguishment amortization. quarter share purchase conjunction we charge. tendered in the after $XX that $X.XX was the we prices additionally, with net or Adjusted recognize the per debt back of the million Second, adding $X.XX EPS tax quarter, for

have year debt Excluding and charge, adjusted to basis. drag to AOIBDA the aforementioned like-for-like $X second second $X.XX would approximately on been in the EPS $XX per the a versus FX million million revenues quarter. in was quarter a last extinguishment $XX share share to per

million year, $XX $XX impact impact on have million to a and negative For based on $XX to current rates, AOIBDA. expect the $XX to negative we on revenues FX a million million

Turning to capital allocation.

our release in our earnings morning, billion shareholders noticed $X.X outstanding to have remain returns pleased share to resumption may you on the our announce repurchases this we As via capital authorization. of are were our

end the cash $X.X As quarter, the of as we per David billion had of on mentioned second hand.

the year. quarter, billion in matter $X.X measures a month over July as the successful of three revolver $X and refinancing very into of As maturing course, our one end for grown to has over debt little next years undrawn the balance early the fact, plus following that commitment of billion of

regarding repurchases. we any and flexible As be will tactical always,

back and two; Number presented makes it the to net And if residual business that, such with sense; inorganic leverage X.X not return and you turn However, which drive our M&A times to our capital future properly like time shareholders. XX% as cash are a being. times in X center to the and activity around changed, range to strategic as with operator grade said, by overall now number priorities attractive us for investment have allocation to one, reflected ratings having our I'd company repurchases number of core three, opportunities, for our support cadence it consider share opportunities as the about the allocating capital levered questions. think would growth That commitment construct to sensible evaluate to invest to to growth. flow target where of free roughly our our

Operator

first Wells Instructions] And [Operator from Steven comes you. Cahall Thank our question Fargo. from

open. line Your is

Steven Cahall

Thanks.

love I'd medium of growth the in talk sub-declines. term outlook accelerating light affiliate about So of revenue some the to for U.S.

You've pretty of leading kind had industry rate. affiliate a good growth

was I versus term keep getting how of you sort you're your wondering about outlook on the sub-declines. price just give So deals And then relatedly, bundle, to now of the the direct a that about of consumer? linear big thinking how content part not those is about linear country subscribing to if longer Thanks. are you thinking so to could kind more ability taking

David Zaslav

Thanks, four just is content we is here did, Steve. I cheap, get three getting more The we believe should for us of we've been to U.S. we able channels. for Well, increases. that news as the not for and good be said in is big our The that them is our significantly our over-performing. deals, content so good so us news hugely

the have women. channel X or in Number TLC X We in America America for where X and we're Number

portfolio all and Food, our characters people TLC, at extraordinarily news love, like look watch channels watch is OWN, that ID, HG, you these News growing Fox Aside strong they brands day. from networks, the and they with and

sat upfront, taking value. distributors, And the lot with by recognize we're that make so a that of selling huge They they we're as them. into but providing we money down

now the come but that. we'll about future, well to So stable in right do continue happy I that very in very and we're expect renewals we're quite

million and that XX or broadband think I that are this want great and maybe inning, we can So there road road, a people like for to fourth watch we and getting commercials. can And people and important lot Netflix it strong building the they are that of is with cars; behaviorally second some work all an XX we're those that on Plus, movies. fantastic road million, Effectively, gestationally to scripted Disney there more, There Amazon there in are we that one with on. great comfortable is hard only. get And get they're are with direct-to-consumer have business. of beautiful think third which now content pay was scripted a are on subscribers point, your or all of getting scripted To series content that no a out have they sports and players But and that. road people built series to are scripted built services movies. and

time be roll new coming filled you huge and We and how exactly it comes Will content, it a have large more a content, is SUV. amount SUV fresh detail out. of with to we're But soon to very original with at at going our when consuming him a SVOD and Netflix and at Plus Disney have been and at people they've and and these quarantine Amazon, because and services. on picking been AVOD of what's And and hey him different picking consuming him. picking

the fit got to And and of be with they'll time differentiates great really which you characters It'll the be this important be think dependable is a we products, friends of we it's all new going you like lot all And and so will us SUV. is most love, people that companion. characters differentiated it's that other and service, will we unlike your lane a love, ours. is all all your – product, – launch day, plenty great it'll it'll this think a that these we which value, every SUV, in the terrific this the thing it's room There's this for new the used, almost be brands, time. everyone, favorite lane, a useful

America Netflix, all Plus, the content, want most you Planet in to you video time. Amazon, you product you have, and all all if if that it's what women And have environmental watching who Animal Discovery, wouldn't what if then the the we content. Earth If have add the have have Planet you any Disney BBC and

but quality that time. collection, In the think you us, high the content great environment have very two is the effectively more you their characters, and for favorite with put hitting great be And little compelling, in natural their those area. to world that when going most history detail, we'll pretty definitive I and be book brands, the So pretty people giving soon. we're you can any women road road men together else. everyone with a together, watch background, the And favorite for there the we're we science, and alone, and bit

Steven Cahall

Sorry.

the Can't good. wait SUV Sounds offer. to take

Gunnar Wiedenfels

Yes.

Gunnar know, combine our is just that portfolio, affiliate X%, comes like one, is affiliate essentially to make. about how with David point the we the main of, here as question. me why we a want there thing, sort out couple pretty said, when the here one of trend then Let factor sub-declines. that underlying add don't course is very we as number, pricing. this we're quarter. have number and visible you a sort X% of I is the The if clean on sub-decline special big of to effects of Steve, points control so, this The No change part sort in a those deals pricing you when have you happy of in the across it get gone. to implied industry, number, Number

over should and and we'll that from contribution, a be plan positive DXC over how difficult international again, both going you see time. there some U.S. to increasing So how in that to And that's is subscription the more assuming – out, start turns but revenues, then time. contributions an out little

David Zaslav

is are eventually focus here in outside One the leader out in be the about just the market? exactly sports, tends coming our global U.S. company more our generally here I you U.S. that point, to content be what have the we And language. every but in talking in we in X the leader we'll when the to U.S. they're Steven, Number Exactly – has the because services, as is a we're to and local, we U.S., local strategy fantastic sports, differentiated aggregate the media laid have bit U.S. strategy it? well. Disney exciting. Netflix will sports. Disney local primarily what Netflix do bit local, have like, but outside the coming compelling it we're content, so which How very But over little a local local, local very Local content, some of top, we're and doing U.S. little a of will others looks

great U.S. content, U.S. that great a strong, differentiated, we the globe brands, Outside local differentiated. language, original. very companion, characters, So great local differentiated above great In think the attack. very great very sport, the

hand. we So like our

Steven Cahall

Great. Thank you.

Operator

Thank you.

Mitchelson comes from Suisse. Our from question Credit Doug next

Your line is open.

Meghan Durkin

Doug. is have This the Amazon a see, in is the little with subs and update you a if Meghan any there e-commerce follow-up I good I Is contributing revenue could And bit morning. about Food to standing promotion. much Kitchen? in on for How progress there? the learning’s want Network to it advertising? Durkin any Hi, Gunnar. post for coming talk Any

David Zaslav

a Network to What to people us. product do with Partners that us? get as is do distributors more us driving. are together with echo. How How a do Amazon is that to pay we our do gotten Same help What funnel it's free into product. partners Europe, to do? that we're of? us, learning? to we very with hugely Food those subs? Food do? in subs, and – all churn? true across Network subs distributors be we've we to the us direct-to-consumer and direct-to-consumer effective that to Great. getting business in month driving How one Being in stuff them Eurosport does is number on help There's create Amazon down, as of our convert driving love Well, of It's they us built important. the we've like? that we in get we're picked couple have Kitchen of each we've fallen of deep TV, Great. align the play, for helpful deeply look we learned, partner people with Kitchen – Thanks. a people that up? want we years reduce with very; player What going can and been to Amazon having to be be with last done, everything align driving do ourselves to people What How is pointing huge do Fire and Amazon

aggregate to We So of products other going we'll ton well, out you our give to attack, you. learning we're a as talk it's We’ll in – through what some it figure big the we on it. point, And that will as take will get at details we lay, near-term. from roll directly we customers. our out as vertical

Meghan Durkin

for And I’ve a up follow Gunnar. then,

be International going on through U.S., where of both? more the to give you a flying us little going Is investments or to So can exactly it model. we're see just the combination color bit

Gunnar Wiedenfels

we're as at of David Yes. It's said, mean, a both. market. going be to I looking continue U.S. increasingly to the combination

you was last the majority year, if So look at international. hitting

I be more guidance, that's You bit going Other into million we year. on losses we that continue year. assume a than I and that, to invest, should investment for as retracted new pretty similar we to keep have our into expect initially year, balanced originally investing but continued mix as to have the those this this, know investment given we the had level levels. to much $XXX roughly guidance went us of we from activities got a at what

Meghan Durkin

Okay. Thanks guys.

Operator

you. Thank

from Ehrlich America Jessica Our from Securities. of Reif Bank comes next question

is line open. Your

Jessica Reif Ehrlich

Thank to And deferred and spend you advertising much it's year, you and yesterday? you David, I you on but new what's upfront. Disney said like talk broadcast sports? How Second, you finally, subs T&E talk that amazing the much the a year? had cost how call how earnings then Are upfront? look cost process just are about containment you've parse addressable you the permanent mentioned have know how is the is you. and cost U.S. Gunnar much well? that seeing and of calendar decreases are it as out about pay-TV advertising you Is questions. on the now metrics? the on on cost expectations Three, Can to going forward, these differently? and the selling Can different basis, You or can you're flat out control, doing more their you four call for when or you Thanks. what timeframe a – full year targeting you outside of

David Zaslav

year, with the upfront, cost and so a getting The – it's the better. has has Okay. market metrics in but control? would over of I dance, start gotten you Why international don't bit upfront been have the it's take and why and a Gunnar, then on a normal don't really picked up,

think terms we I think the hand. in have of I upfront, the, the best

five on us we we you're on from over what, and to a are original is what come very engaged of have right see a we fully to dependable, We continuing original now Most produce audience, content. going know some Number nights on XX-day get X four Sunday the with we get you television. a with, four – TLCs alone, four franchise or content;

paid what great of So the out look because reruns. be a that may they when other that increases, a They And not we're even will may be all They we to one is They're sports. lot buying under our be buying? for people we expect are sports. services, value at channels. significant way of buying buying

to to coming watching on sports and are HG. most XX Food day We’re service TLC people popular XX XX in XX. to is the every the and XX, new women’s XX,

the So HG is Number in channel and women the the aggregate. – – and X for

you to want reach close if women want in to live. So you to or reach in watching them live America,

men place only X come. the to with the still have Number We’re with We strength channel for Discovery. real

know be $XX advertising content we’re to we women have see you charging content X And live for live, dependable, play, relatively right got America got And And swagger the We been certainly going they of since a the and very, to delivering deliver, very And pay. between think of that's we want going reach I – fresh the in cheap. media that's Number we're in have because, recognize end now and forward even big to people, everyone brands. piece talk time, to CPM going do you compared we us. men to that make hell and it if a the think company we them and hope they at of reach you big existed. broadcast fresh really and delivering to now, if And most crazy swagger. have some we recognize we some that the going what X.X, and that, you're going to I to look shouldn't you're going market we a the our want – X.Xs. we're and historically because year and we're And so this we we of strength have differentiation, well, at advertisers, else up that to a are as want to And we're with buy at to the increase.

Gunnar Wiedenfels

And different on, two it's now very the JB subscribers, a Okay. Jessica, little bit. me it's going board, say pay-TV on looking the just market up so international, dynamics let up the collection of other a questions would quickly but obviously very then across right many mildly very, with it's cover at

other environment continue I subscriber one point should I than current But down is growth. in given which Brazil, think to we outlier, guess the obviously out the we numbers. that, was see

overall, if A obviously side, let's let's would control again. cost a through to the just is real I start come what's was deferred, up when events, estate, et permanent, going call On opening some marketing, couple a and them, travel, back elements. and of we that what's the cetera. start with; lot go of windfalls, T&E windfall

sports I the schedule a big events very absence productions. cost way, audiences the been able a attractive from maintain loving been to has and a very, think savings here healthy second, perspective our we and fresh producing a more ironically some in positive course of producing And a it the of have of content Again, driver enjoy other financially content it. much we're per again, lot authenticity because to hour. continue and we're original the of at

been and a we're we're continue, lot operating complex, long-term to you costs. back possible company has best additional content positive working that normal, driver committed back additional that overall setup building the people And approach, into hundreds years lot be that but you to of initiatives, Again, we're efficient health second to et still more on more went journey. of see of of that's on even shouldn't a we have some we forget we should some initiatives but team, list, would What for So massive hundreds that this still this the from that two as with of to block. started working be more overall, higher environment. adjusting There I a some through a nature production COVID may able to transformation ago, worked go of the structure that through related our things of with we've at of then offset costs sort protocols, coming cetera. hope the

Jessica Reif Ehrlich

Great, thank you.

Operator

Thank you.

Our comes MoffettNathanson. from from next Nathanson question Michael

open. is line Your

Michael Nathanson

Hey, you. David, I have for a couple

attractive have deals was will accelerate a deals, the a now bit allow you that And natural Does your those you those deals? alignment to timing? about bigger you On people content now the on non-Discovery or making then that to given can newer talk SUV do even you in consider build, SUV bigger, tier would SUV also who and terms commercials? And build? more adding non-commercial then and of the a like the don't

David Zaslav

do. thanks, deals really when our have now Michael. We we had flexibility. of don't about and what We a more significant flexibility. up amount we come But specifically Sure, talk

the shows. to in full lane, competitors are of We the more out of buy scripted drive the So we got that scripted We've movies think in us. now more lot Hey, lane going What's a drive. their series help we same is with we have with order is got coming effective. found that need we us stuff. to the this interesting be that

that break We have shows. companies. more More and more shows, shows. shows, more And are actually shows they really good those

have I most we to have much we the that in at as have it. saying, love around And we think that take lot the we'll soon. as the nourish the great looking hands make we great creating you it. differentiated. U.S. we been shows. going the that will think And of when product difference and And through it as original we world, full hope like you we of in got very What We blaring going importantly that, is to enough brands, a consumers a And compelling lights an that's create that's content, and We for get most with content You are recipe to gamut as our characters. know, out environment that huge they we the what you're more people we quietly do. shows. like aggregating hope and right and what we very build are think

Michael Nathanson

Thank you.

Operator

you. Thank

Feldman question Sachs. Goldman next from from Brett Our comes

Your line is open.

Brett Feldman

the you remarks. direct-to-consumer for question just stick of and some theme, I the with to to thanks used prepared listened taking language Yes, the your during

these highlighted the XX households. million importance of plus broadband reaching You only

being a TV of You talked service. any to pay companion about the importance

is sort broadband this with to reach, companies, in You current think looking for direct accelerate because it to safe look model, the partnership that partners, importance you're be Mangolia be model but of an just Thanks. a just that distribution served also to because well? we as as cable assume awesome, predominantly your you. then Is households it of centerpiece of of your extension which partners those coming could direct-to-consumer which continuing by you the about of to existing respectful Upper potentially our and as with Fixer is that on do relationships? And your back Mangolia, should only are accelerated assume not

David Zaslav

think Sure. that Thanks. it's a details greatest then Look, can I more more have and up to any the world where content, best hard you people brands, the of shows. don't the on want we say into expect is why curate, we get which to

curate and this have they brands that know, characters through to how ability to know and people through navigate. We already

we have take how the competitive marketing commercials that distribution in around product. very other partners. and out to when offering where commercials we're by thought how are are they have, you but You or should flexible. content very expect that we that And to marketing not we've terms much that. domestically have world. that's we'll and we intend successful product going been And has have or product, be commercials, more and be and ways have Disney our platforms don't expect we've competitive been carefully partners been we whether successful, our of they through be are our will our we'll using in But more multiple successful only successful And to

scale those those products, that are is with so added the as of like us possible. players And And distributors, like everyone as it’s opportunity. and to or distributors, one other larger build an table, we quickly doing else whether mobile for every as and are aggressively Fire, of pushing get with all looking scale is Amazon

Brett Feldman

Thank Great. you.

Operator

Thank you.

Our Stanley. next question comes from Ben Swinburne from Morgan

open. Your line is

Ben Swinburne

decent for run your to international. and going comes as acquisitions tell trends and can back about least know don't in of think I one it on your year. open of at and back just in investing audience second a then we as affiliate terms ad Pluto. exploit just morning. Is you there's Discovery lot Good targeted focus for Maybe half the given kind think we're near that and you, where AVOD Tubi us ratings space, David, market is the technology, of is about, if back. Anything Gunnar a I'm either its just the maybe just term. a about lanes, and ad And the to company, than growth lanes of scale that for area strategic priority rate situated seeing an seems quarter for a Thanks. in for approach opportunity U.S. consumption. in advertising some point sooner the that's an And the Nielsen area perfectly more whether you about how standard And company? like that for demos? been wondering the of

Gunnar Wiedenfels

time the to Ben, let and DXC that of I feeling there's trends, and as U.S., see couple want add how about much what me we start a with up, pricing good to contributing. said to don't give Again, too trend subscribers starts don't ramps control specific not I minutes over question. the ago. we'll guidance

factor the the we and us a out how to see sports on contract in the pans driver still the partly revenues. be a sports pointed similar bit drag little is is quarter, the two-fold. a again, side, that's going out. on but I Bundesliga But here the second events for quarter. to is in and of side. going some pointed back, obviously, be already the a bit slated international fourth majority factor of out of And the very that's one, key as the is And AOIBDA the we'll termination On as have come affiliate a beneficial big later third answer, that Number

Ben Swinburne

Thanks Gunnar.

David Zaslav

And We But answer that get to individual additional they cable is get to – data successful have to I AVOD, on a our innovatively helped able value the our young operators that set-top-box able and we've higher which authenticated. the get advertisers that our in GO audience light, which for a also the do liked. existing content. data we're a to data, future of guess, SVOD, ability have that's AVOD, be us very of I a who has to or with products though we've are huge we're channels direct-to-consumer, commercial team number driving think piece do just order your quite see has provide with where products, in our get I advertisers are question and have data. think, been even you'll both a been benefit data, going that them. us working to

Ben Swinburne

thanks. Great

Operator

Thank you.

Next question Citi. comes from Jason Bazinet from

open. is line Your

Jason Bazinet

a still about, you just just seeking? you that increased on next mind In it your in with remarks Thanks. about now, gen Do subset are you your And is of prepared you have flexibility on four talked you products. flexibility flexibility elaborating what or globally global those renewals do talked footprint?

David Zaslav

it global have fully more And we globally, give you we'll plan, We you through our aggregate take globally. detail. when

Jason Bazinet

Thank you.

Operator

Thank you.

question from next comes Our JP from Alexia Morgan. Quadrani

Your open. is line

Alexia Quadrani

you. Thank

for to to in then I'm continue far in of distribution extract if the – of can the of premiums channel? broadcasting, window they general in Any a cable, progress on terms the higher old guys of – up DYI getting second way sort XXXX. potentially that question on continue terms in more surpass you Can out the sort are you my terms advertising, that all curious sort thrown rebranding of ratings really rules Just pricing. of early And have? eventually? is so versus that And the you getting go question

David Zaslav

Sure, thanks.

that was, XX Sunday night And could figure the on two out per minutes. did that people and I Chip it. it when think, number were I show could so And Sunday DIY on on see Jo actually night, a on more We have the trying to gotten on you behind last they television, Google what watch watch mentioned, call they on distribution DIY was it. DIY. channel that

they're Chip everything just on and going an we they're super what Fixer I the to spoke excited Joe brand. but in the yesterday about with So we're hour-and-a-half, think doing. that's Upper, about with excited production, not Waco, about for

at content where So home DIY the significantly exciting, channel And works on with growing more they come to because and a subs. it's as very and people well. of environment very will been the

early good So about other question? in be we very what And It the early it. next feel will year. was

Alexia Quadrani

can really gap general, broadcast? you can in pricing on Really – the between disappear and

David Zaslav

is selling stronger can us to put legacy they? than for sports hope lot show. regular told did I on And have if is does, product issue on it anything, multiple revenue. lot if How a really even their products, more HG Food All X.X And you a dealing being advertisers issue. people show, a be lot probably does, a you're ability important of a because of watch if it much is or that kidding aside, doesn't And anymore. convert advertisers us. watch? make live? much are a to How against a cooking on or ad times How we're engaged legacy they then sense with do our of

have kids' fair last cable hugely have inverse invested brands, break brands, to we have aggregated starting those very get based this us two building that really And In And quarter-by-quarter. a the started – So equitable has – outperform value. the strong have bit? be end, and we we've Well, fact breakthrough. really relationship audience. fight we're we the years, to And at problem on we little you've argument table. the think, the seen our building to the broke in that's I through to investing, that with the the the to was building in have characters, we’re

that us do content when love. competitors You original environment, it should in end, unusual sports scripted in content some And my ongoing more, a have we in it great outperform is harder. product also our of and people see dependable lot by this we of opinion, have because then can't because time the at very and a

So so. hope I

engaged great We're We've Jon keep Steinlauf, story. it. know We it. got great a in They team. our We're leader for we a engaged are telling and fighting scatter. in got the to And very we've got upfront.

it. We have figure wrestle out how to we

Jason Bazinet

Thank you.

Operator

Thank you. take final we'll from from our LightShed question Greenfield Rich And Partners.

Your line open. is

Rich Greenfield

XXs, question. mean, probably kind do high did, as are Where seeing And I with Disney I you today. out? NBC, of think you D-to-C for you you huge think what to question bottoms kind think David, a the the overseas, and XX bundle multichannel is the for think you the making what HBO is relative everybody in as around thanks taking as million think Max we're Hi, the multichannel U.S. of thinking Europe write do in direct-to-consumer, universe? subscribers to state and the I the where pivoting – pivot of others, taking of I just guess how you to finally sort Europe, about are down about of

David Zaslav

and and emerged them overall was more of us we them platform, characters, more. love lot traditional the people of I more is they're even we around we're were Thanks an with the that was content. Rich. fact in television, seeing our I viewership world, our were way think that what just of with Well me fact on. time first weren't And with start our on on Europe, very of performed from terms favorably. we let and which IP love sports up Europe. in company. know differently think, in are more the And the our hours viewership up better. this much more more IP a we and – that it characters terms just so in of way, whole marketplace idea spending watching, our spending by and And content, our library, that means all watching end, The that much our much our significantly people more more U.S. the watching they the brands more and behaviourally, people brands, with The are that In we're stable.

huge is product, but stronger, deployed great, so we difference much Amazon decline it's the slower. stable. is not And I there's more a Europe broadband great think – – in the Amazon Netflix And is is with here market been emerged amount is the is And Europe but and successful And the of successful, content and million Plus is way so U.S. U.S. Disney there’s people. one huge it local is here. extraordinarily XXX successful, has is broadband.

are a of marketing that this you dollars on None telling So of Europe. those and people see lot what in platforms. exists

in local So ecosystem our compelling. given in is are sports, language, local Europe gives cable, gives us, free-to-air we big fact that the is sports, how also pretty we And think, a more the I us, stable and much…. think both

Rich Greenfield

move Disney's Are you of surprised by abandon sort to Europe?

David Zaslav

really It's great to want company. Disney. don't a I on comment

job that IP extraordinary an building I building has in think and done company. Bob

that look I what the U.S. the what go, really what at we differentiation we're the we love we like I I in of In us, have. For on can't predict have but to IP going I And we I every Europe. like where have. it's have. bundle. skinny

notice. We – taken real everybody are has

us. with a watch people and of channels have for six they that every cable very core If have love in phase people six TV they that content have bundle. We are that the almost and

we'll that we advertising So very well deserve. do [indiscernible]

do, so the reason great is is Our sub-fees, we our I because sure – be that make we deserve because will good, to that we're going think it. every content very how want platform everyone direct-to-consumer we to we're think, it, when can't to to going it. and well. to very And see and hard think happy want they're see has to do – on they And for going continue be an opportunity we they we

Rich Greenfield

look Really trying it. to forward

Operator

you. conclude Thank have now that you for And Ladies a question-and-answer And for concludes and session day. conference. our Thank may disconnect. Everyone, today's call. you today's participation. now your wonderful does this gentlemen,

Warner Bros. Discovery (WBD) 5 Aug 202020 Q2 Earnings call transcript