DISCA - Earnings call transcript Q1 2021 | Warner Bros. Discovery, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Discovery Inc., First Quarter 2021 Earnings Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Also, please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. President, Strategy. Vice Executive Slabin, Global Investor Andrew Sir, begin. you may

Andrew Slabin

for us thank QX Earnings Everyone, Discovery's Call. joining for you

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

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

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

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

David Zaslav

be growth global to precision the meaningful our throughout joining flawlessly, for across accelerating across our couldn't near pace same today progress and brands substantial as focus opportunities at of since innovation board, of how the you around review making and the segments, our company our executed, are launch thank and operating I organization embrace globe. us of responding the prouder we everyone, time, while morning, our and with we has QX creativity, both Good performance the markets. discovery+

of Company sustainable long and a put growth reposition it path the term. on to continue the We for

ability and flow us clearly is cash hand. generate this harder our model. crucial, is our fund financials evidenced pivot the machine to ever, as underscoring it of increased than is during our and free cash an reinforcing differentiated in our allowing quarter, Our this investment, of even narrative free flow working efficiency moment about to evolving fully Indeed, Discovery's

of watched scaling Internationally, With global well Discovery received now the the QX, consecutive complements we discovery+, direct-to-consumer portfolio. every incumbent around most linear In market are global an in offering a pay-TV strong we impressive of enjoyed channel linear globe. of and brand domestic straight expansion launch several our launching share presence seventh and France building that television the and Scripps growth, had very quarter global growth quarterly supported our markets, anchored by Germany. by achieved was while and in the our discovery+. female in continued including genres We content. the best-ever of growth XXth U.K., month This lifestyle this performances our simultaneously

a in super powerful, local continued competitive ownership, model to the deep well-established production and distribution expanding language across this, focus connections market and our IP world, business. efficient to our expansion Discovery's leverages every global in are vast Our these power strategic we consumer board linear relationships and support more in content ever the both direct-to-consumer platforms. content core our before than To investing achieve advantages,

every exceeding far, of all across So early is XXXX, it and KPI. almost our in benchmarks all coalescing

direct-to-consumer supported about that were paying momentum. the to us, ahead discovery+ million months to vast the that four of the we are since that quite global our expansion total crossed report subscribers representing just end paying million with we XX across our of our still of favorably U.S. traction. of ahead. international just content, into subs the XX our only have sub-growth We of XX end year, launch peers about over we pleased strong which able majority our our paying million the fact And move we our paying QX, conviction subscribers, same impressed our our continue global When story. compares last period, underscoring direct-to-consumer and have tells we're to our think base. But that At the million add really we with subscribers stickiness sub and count to the value, today with forward opportunity I and part of all appeal of XX of

engagement, peer been early runway likely whom of and Roll to U.S., between had by the and across has XX% an than which far of monetization pay of XX% impressive have thus top We particularly and a of metrics are and subs. in three us the offerings, ARPU, very churn many equally we longer trial encouraged is list see place partners, KPIs Consumers We at far in viewing approximately discovery+ clearly that us social the the giving from in ratings confidence three retention love and digits. marketplace. low per feedback the Engagement product day monthly and linear. product. talent subscriber ahead is that churn of App the hours clients towards trending store per strong is single well The on early and while have.

ratings as the among Our sector's ranked top. Store App

App Apple store reviews. of on Our a is large rating very based and X.X number

strong exceptional Our are KPIs early driving monetization.

goal, ARPU generated well trending four and of product time ahead term with AdLite still of of Our only our over longer the minutes in up. it's already $XX $X.XX quarter, commercial

a what will $X. of to of year. of momentum And additional course subsidive ARPU U.S. detail we blended technological maximize healthy generate investment contrasted see from encouraging around the and against lifetime marketing, a in some $X linear, a overall we grow on is for that seeing we basis, global already cost Gunnar this provide ARPU in in Our we over in during to opportunity. subscriber, the to figure on blended line to are with towards But KPIs. order value, are metrics lean this gain customer particularly meaningful standpoint working comes in content us it capability short, as and to when growth and an

we and We the be driving can partnerships of many have the while broader swath with an leading on available the to world's cornerstone users our all experience. user dynamic rich of of expanding and extremely launched recently Flex be focused a this Amazon ways other approach in on A with will Comcast on the channels United markets. relationship soon and are a PVC with and prime distributors around our video States deepening Xfinity rollout for the availability XX We globe and on plan global platforms.

XX% have in roughly main mobile has the and local one a has we Now usage long-term respect executing let's together language with we the It's really where growth our ecosystem. potential free-to-air penetration to the the presence distributor. our where look markets a is in of channel content, in though market Discovery production of and are of relatively a catalyzed trajectory. with with at And relationships, and management significant bringing expertise, The Europe, of and strong encouraging pay signs pay-TV structure example It healthy technology market early depth enjoys at popular launch presence. great which infrastructure number content. grown underpenetrated existing limits Italy. this segment against original we other growth discovery+ pay-TV strategy, a share, audience new Italy Like talent, and and of resources upside local brand market from sticky a our see and

traditional international and our connection premium multi-platform on to manage pay-TV Brazil, and we're direct other versus XXx that similar should our in on with than I'm prospects ARPU new positive direct-to-consumer our details, by and equal customers, higher and seeing cost ARPU. region, Of in Germany more What linear now businesses, more deeper This Germany. portfolio. and QX you consumer combination pleased characteristics guides XXXX video markets ability would reflecting grown have significant from are affordable take include XX% strike we offer a our are than is of with And to greater as broadband. in to proud performance, more ultimately I'm ARPUs has through ability across or are There operators measures, shares that enables bundles. circumstances. Australia is still plus an outlook. but and Gunnar offering, thinking will we team's mobile to our a direct price balance all will potential of and facing universe headwinds. the COVID-related many is the growth been wholesale our that's And markets discovery+ already able growth. from than importance our seeing mobile record to through result every which, Xx major market U.K., markets what discovery+ Italy addressable international for where see QX note QX difficult France advertising operating look like. you Our entry powerful in than the with like with in a packaged such of

effectively share U.S. with of where revenue internationally, a boosted exciting a present and a especially by we ever confidence We discovery+, the domestic our May or domestically. just our never and in exceeding are upfront my in assessing have growth and at and seeing XX many advertising international a be in scatter business. the resilience and gotten same We've years taken couldn't across brands strong dynamic, in but global discovery+. our and in we globe, at the be of continued pricing our our the I'm media managing in back will and outlook more extraordinarily time improving our distribution discovery+ when to great Taking been growing gains, time markets. are not as on very to together excited with more balance start particularly public are advertiser us optimistic. international in give programming a expectations, business, time, both a backdrop Net-net, I in opportunity. through demand as the this the see the have great underlying the inflection the spending year's advertisers revenues fluid year, company. healthy stronger seen for This, behind relevant. a our to trajectory At We off with advertising also step

consumers, harder our cash prospects Company the is Of differentiated is confidence around equivalent foundation as distribution tailwind even the discovery+ as of business, that of the We our discovery+'s encouraged linear the pivot. to early by important advertisers the Yet we lean into partners end. flow. is This our our success strength core globe, importance backbone future us reception as the free underscoring are strong and an and of and to our great the Company. gives engagement from of

supportive that nurture over you both As of Gunnar, Company is long-term sustainable we it call I to drive and we I'd the your Thanks Gunnar. so JB, the as much. to growth, like After which, imperative interconnected Thank take will and turn questions. to another. one sides and

Gunnar Wiedenfels

than outlook Thank My operating more more large to this near-term into it model to additional provide a in part XXXX what the recent that you, my is well normally would the aim David, this To we morning and has everyone. extent as goal do, peak would good the as as this be a morning. slightly help morning, is detailed volatility. off possible given created concerns, and/or questions start. our great alleviate to

I'll little lifetime David around U.S., a which discovery+ that more where belief generate launched on customer in As monetization at provide reinforce prioritizing will investment capital. returns churn particularly the year, the to superior of engagement, mentioned in context across we implied just value this continue our and KPIs, and and beginning

per is both with encouraging contributor very viewing and had subs anticipated. bit quite coming monetization. we is retention in hours than three a well to indeed linear churn watching of lower engagement ahead noted, retention And underlying with of initially content and truly an stellar looking roughly nationally, As day,

Based While of subscriber curve months. next digits observations, first low we our trend these are the rate, towards evaluate on single the retention to expect looking cohorts XX still a early the churn monthly early it too encouraged. course of is very over stable

return additional product where only for early launching ARPU amending engagement U.S. is also million ahead our below path and the roll these international channel strong are ecosystem. a exceptional notable healthy the at traditional cushion of engagement, these expected acquisition advertisers that year drive Then due both an in being modeling in days, and we Taking products. marketing while the brands outer and over is and monetization, market partnerships, with though already CPEs. are a and our in for with not the Global lower line price that efficiency, we boundaries advertiser to coming see to customer faster drive offering on all watch new multiples the are are That Based and ARPUs because together, monetization attract our estimate in advertising as of is [indiscernible] further come we out of going cases we ARPU has at that pay-TV and testament already content marketplace the This is adoption value ARPU value in our more to our X ARPU. time the strong Still trends, despite profile part we healthy additional very This, to in plan. existing currently by XX% a initially Turning in ARPU scale. target which virtually first themselves but continue increasingly limited great also with a objective that. share of of discovery+ part of away wholesale of subscriber Clearly, quarter. currently monetization the international to by the linear are exceeded well points subscribers to a more $X $XX to through pay-TV which metrics running AdLite the U.S. linear we core of demand $X greater much at as course, scale is in substantive projections we of promotional said, lifetime tenet it. confident our see cost the a at strategy and quality monetize is of which and the margin discovery+

still number, all to meaningful the is business this above early it's we assumptions. there too formally case believe upside target update on these trending based indicators initial our While to

as international more did key rebranding majority year-over-year in momentum build than build first to XX% investment. QX $XXX quarter driven This vast spend revenues first and marketing of in OIBDA in we and well subs portion by We next-generation performance marketing. support brand In modernization. discovery+ to accounted bottom-up increased of heavily aggregate, and the OpEx and the the awareness upper of markets, marketing And of upon as first the roughly funnel yearly, quarter, During losses set were invest funnel play a this to content which increase sizable in volume in U.S. look revenues for was next-gen alongside double the next-generation launch with million year-over-year. to both to in quarter. the the dedicated

losses provide offset substantial improvement a next-gen ahead marketing to roll obviously moving we in much in of subject impacted possible the still number tech to and movements, is expect territory sequential will pieces. We be around And modest content a That efforts better additional rollout gain plans XXXX such Olympic material loss contributions. marketing as that we spend confident games, XXXX into Also, what will refined as as by of transparency as peak and and we represent by ultimately specific will initiatives. continue said, investment particularly and our to continued planned integrations for requisite partners. optimize spend out losses and QX possibly year determined to remain quite from platform the revenue to technology versus XXXX falls as more spend a by additional we expect begin insights. Quarter-to-quarter

these financials, with Moreover, our outperform across In by year-over-year and and we share ultimately as on their continue return be premium remained QX. course, CPMs reassured are lower developing impressions up our in compelling pricing the the Now during That are in versus which to XX% first XX% the this upfront finished yet translated networks. segments. during said, scatter and expected pay-TV during declines, we to to down ever estimates we level roughly on peers the strongly industry against around into of and robust, network QX as universe the quarter, impact X% our metrics to magnitude large expenses mindful due sub U.S., part the about Of turning advertising the quarter.

fact, considerably dollar for see through from new many be to In the QX versus started the grew as year from including will increasing and and in as scatter discovery+ an we such companies, categories this last BXC advertising subscribers as up tailwind QX of auto expect we component has advertisers. well volume as throughout travel TV quarter, QX. as back total input coming revenue

COVID to As pay-TV across additional affiliate pricing resin all fully network fee contractual decline. were range, gains at increases, continued continuing to well remain partially of share very strong advertiser offset growth distributed of expectations. the the quarter, X%, expect Subscribers key low canvassed by by X%, part distribution revenue double-digit our during grow where platforms. businesses. and linear supported subscriber pay-TV Mid-single-digit renewals we distribution networks declined comps, helped subscribers by by peer U.S. linear by declined filling end our demand our up helped performance, top we total and in virtual MVPD by advertising at the carriage in while XX% be to such, U.S. revenues revenue high the across likely

In the the sequential for addition acceleration of launch the to subsequent much distribution revenue and ramp-up our in healthy growth. traditional discovery+ accounted affiliates subscribers of of business,

accelerate similar During tougher much significant acceleration comparison distribution in QX, expect benefit recognized reported drivers underlying as a by supported significant we will an on a basis, year, further given revenue QX. implying onetime last growth the even against

the networks, to France. Turning the COVID-XX the U.K., the saw a were in the certain constant continuing across to X% as first quarter will gains America to currency by EMEA and we intermittent key since pandemic. share always, And first as Brazil mid-single-digit despite growth, developed Advertising I APAC EMEA, in and positively the returned basis. Spain markets, lockdown markets Latin Mexico. LATAM growth of region driven and which on all start during international international discuss, regions, due like

subscriber in by XX%. markets, European lower discovery+ down the exceed partially linear we we to pricing base. during during declines to our International QX stages growth X% the pandemic, revenue year expect certain advertiser initial of the due faced Finally, the APAC offset quarter. also up industry distribution international was by the last advertising in as growing significantly COVID revenue substantial QX, In comped was

driven distribution to expect We second the the factors. growth international accelerate to mid-single-digit revenue by during quarter, same

we key out support already some in hybrid-type the quarters. a nearer-term structure, international for this As as upside on the efforts. impact number distribution we terms in performance last quarters, of we've the over for of reflected called repositioned our of towards linear greater portfolio a Segment to has opted of prior partnerships trade DC two

rent to were the due for Cost the and consolidated expense quarter. up company content Total X%, were the investment of during XX% the largely expenses to next-generation side. Turning continued operating up revenues the support spending. our by SG&A partially content as to sports to branding XX% initiatives. content increased and marketing personnel offset more support timing as in initiatives next-generation technology our efficient to well Europe, of spend reflect and and

As to target core our we in reduction continue percentage linear guided previously, to business offerings. low- we mid-single-digit

endeavors cash Turning at year initially AOIBDA cash our to quarter. as We all convert We rate to of the financially any free to similar and conversion shares produced an a quarter. back did with in despite million to buy continue free significant during support flow. not QX the flow we We the $XXX highly rate strategic cash our ramp efficient of to investments. reassured AOIBDA remain our flow prior in confident ability free

pole of Further, few As both remains I cash noted earlier, flow of value. in our to to discovery+ drive sets our in growth of required financial of rollout markets. next that the up to as gearing of penetrate level want will of the both order specific review use summer mind, of this in Olympic discovery+ also for the shareholder our terms we we global marketing rigorous and against and for DXC amount investment free be where And and a for which the maintain continue the bear in and sustainable investing in events an linear we in cushion we're cadence when appropriate next fundamental games are two quarters, to fluid, financial investments year, brand. of in framework, while QX best we XX launch

at update rating. investment-grade to and X.Xx on say, [indiscernible] to continue needless committed our net leverage, approximately views allocation we course, our as remain of will, to We capital fully quarter on you

will, flow disclosing Turning EPS are to help impact to financial items metrics adjusted one, you items. to an evaluating each out you our no be adjusted I key the as AOIBDA longer as the performance. couple key noticed, operating a continue as point to as PPA calculate we extent provide helpful. note Number the to however, with in of EPS well have housekeeping cash free may number quarter

year-over-year we since year. quarter, X, $X.XX dollar first impact year-over-year PPA the Number FX in revenues of AOIBDA the sterling a reflecting strengthening have and of around $XX the start the to was positive million impact and negative a share. per roughly For million on XXXX, the in expect $XX

where year demands. valuable strong footing, evidenced on linear AOIBDA operating least has convert by cash direct-to-consumer resilient growing to are been see to our core a at and We free flow given to ability And XX% business rapidly continue reinvestment business. never the this I more

excited We value. performance opportunities. growth have over continuing at questions. taking long-term immense self-funded to couldn't the global an business it supporting on to We the like sustainable team management while and solid turn to a support shareholder we start direct-to-consumer a as more build to aimed operator deliver I'd be to to operating focus framework

Operator

[Operator question comes Robert MoffettNathanson. Instructions] Your Fishman with from first

line Your open. is

Robert Fishman

in core, discovery+ you or from with domestic And fee whether next-gen discovery+ U.S. incremental pushback year Xfinity more for Comcast? affiliate then launching to be cannibalistic full maybe your broadly, you. the year? negotiations? to the can should talk seen if have Thank of as fee launch revenues after excluding viewed any Full on overall partnership And growth affiliate you

David Zaslav

Okay.

me take -- the let me that let with -- question. upcoming The here. excited last super So start about we're launches

want deals to in impact. that numbers And I launch. a answer a the to X.X are is going going if here. seen positive do incremental Comcast question, we've to to you there your around event. with online think two one very subscribers other million launch coming do a about seen on but little, the significant moving be be do point what That's after our is numbers, we've math, over And these monthly basis out months adding the have I been past you As

next we most of be at So growth other obviously, over importantly, events also couple internationally. in subscriber further could look support And the a internationally here, coming that Olympics that happening the months positive. should the

for very that's To out, with as and the from we're your the the efforts affiliate side, U.S. just healthy question our distribution accelerating for subscriber we're so I overall. seeing a underlying on trend other business. discovery+ and across super at And the contributions happy here. again, seeing DXC trend But laid the also entire core ecosystem here, we're healthy looking clearly in what very

saw linear the again seeing I quarter, as You increases. over mid-single-digit said, been to That's continuing of the networks. so, about one your have growth renewals And discovery+, the in subscriber of which have the have down look, the Yes. -- enjoy and numbers, for that our roughly now with positive as the question continue a and part only we little as for first are And well. delivered the get reasons better fee fourth we've we X% ecosystem. linear average renewals have discussions we past The I renewals of in we impact months the here for than in or growth XX upcoming to maybe continued the very core said, of past been the quarter. to been able

is as great partner. year. in to much in and company This are me, close delivering content before viewership of it's at And at that competitive XX% affiliates. this a affiliates discovery+ look heard, many. of have We're to as investing you is we're with very leaning back investments. but to And our to in rational just an clearly, very, We're available those And the comes rate. we one As our doing what for that, argument making never we're economics the it are. a discussions,

again, position. those feel And make very want individual don't and we're that a I to renewals, but predictions on in here constructive good so discussions, any are we

JB Perrette

fact on be The a that And partnership positive. real U.S., to on XX. Flex. where or a arrangements, is would outside it'd it's as Comcast the the is great We're doing we've thing going operator, us whether I now Sky, he's real only add to be seen that Vodafone launched launching been

able have So are very we of to core at effectively, we some in it's -- not and that sides bundle. space in a talking number well. the the renewed getting between that And we They're other Flex terrific the those of we're the be all partnership. traditional low, and entitlement. -- our deals of we of probably of value channel be have They're But it Comcast and real us. said, for both and They're them The Comcast. developed. of best very following They're going and And create XX, have I value think And two and up. these actor generator really are we're have is a And share providing channels could channels. really value we'll Gunnar and cost as distributors since real we're a cannibalistic that on. looking. discovery+, a stores launched done of we've those selling value -- for us they broadband to channels with for And by some leader.

Gunnar Wiedenfels

flat And known to of the the is year maybe that. I second the growth answer all reasons. did little part elaborate for say let We're a I giving outlook full question. some the what not quarter, a just here on -- earlier But color realized, and on forgot me

on But one-off keep item. this very because, I'm side through last more to the So now because, on number. very that's an the delivered and QX, said, the of subscriber depend as had flowing in we I DXC side. revenue specific additions if of mind, a is sizable year you on significantly in we QX, going some extent, acceleration in not to again, it getting cadence off I XX% here expect

when XX%, So I that's mean, going to say acceleration work against us that the And I from despite here. one-off.

-- is be which underlying which be XX%. teens, against an to as through an this as quarter, to high we'll through the growth sorry, this basis, high on an may growth see acceleration underlying quarter, going So going -- single-digit high-teens may come is come

Operator

question Suisse. Mitchelson Crédit with Doug comes next Our from

open. Your line is

Doug Mitchelson

questions hard to here. in of Kind fill

on Go think content strategy first what you on versus far are content people -- for discovery+? change versus you and that's seen you've the think, balancing I you, sort what networks? of so from any And in discovery+, David, terms how one. I are number how linear in consuming are of

And it do and I it's Or minutes. or CPMs ad like When to XX% on We've got early. year-over-year. strong, good leave increasing? think load for if thoughts number you at that? It's one, but tag upfront not? XX% any the very at to go, that up a I looks two, ways setup just Discovery on looks a because could very, for does four quick four start minutes comments

David Zaslav

Doug. Thanks,

XX% in And fact we're companies, to even look, less our than the an upfront The of seen plus, broadcasters we of we're year very with is instead that really have upfront, booking half booking of that. getting CPMs $XX been are up. high. do high don't before. advantage has what a been have prior share now of all making that the a CPMs of we've and is really XXs, know dollars On the that -- increases progress in the But getting that going significant I sudden, in And part XXs, I've $XX.

television. like or shows like, on for is Fiance, We paid be started get have number Discovery some a which it whether money shows XX mail we've that. lot show Day it'd hit one more whether on be And to

still think, our that to very a of see so lot at our drive competitors we because headroom I have have CPM I a think And high level. been CPMs, better you versus meaningfully will

think upfront at I hit good moment. this a we So very

in have on now a is scale have we viewer. on viewer well. -- of disadvantage addition, it's selling the very And discovery+, some -- Go, then that a in don't is which inventory environment, the we In

we versus the have inherent don't that broadcasters. disadvantage So

good we So on generating every we're sub. higher seeing And demographic, in getting very have a is also CPMs than paid dramatically we're which traditional.

I very, overall, So it. very about the up, advertising think good strong, upfront feeling market, coming

ratings is In only are from and over highest that a XX% But shows shows, on that really that is that viewing about about have idea us churn terms the product. we the And channels top lot have quality three generating of what's hours. viewership. and discovery+ extremely low of balancing, the the spending telling subs original the we shows interesting our is this our of top top our

But have We -- don't have people of lot tail the side, us, as is kind result And a spending are real surprised And usage, the so I the times of size have us Netflix, we're that's getting. on the economics or than we lot we're it. more. very think one-hit And with lower a that our generating library show the don't churn peers. a economics advertising which like one-hit seeing lot that, much -- time the of about a one for has long that a of we and of movie.

We will to move continue experiment IP we around. how with

we'll and of more we now that content addition We in you outside the look have have JB, on we a local the balance to discovery+, And we coming. to have globally for outside doing U.S. discovery+. lot as maybe the originals be that could the U.S. speak

JB Perrette

that beginning, content from stories IP local all our the obviously, outside with I mean, great U.S. power the we pipeline. are this to, our the that great it is universal come we from combination the with with said local of U.S. look, continuing

And so we're continuing to that. into lean

to in additional lot no seeing, we we've success People the discovery+'s a new success and in are -- and great We the over markets really had. we few date talking we've launched that, last content. obviously, knowing in already months, launched started markets the since obviously, the had about markets, of that

we've service an either Dave, discovery+. to some is And we're nets, the continuing the a and all we other question also winnowing, to the some on a exclusively the data then that content free-to-air the to about for we content cases, So consumer and exploitation as growth only extremely still discovery+ the response investing advertising. and come that already mix say, seen, some combination in as pay of and at is the getting or market working are second content fund obviously minutes thing one on that the the been us. We in later on look and And The of sort adjust I'd four modify X. cases, necessary. and of continue of obviously, in, it's all markets well earlier in to with it's have of

to a load now. out time, than that for at came to even lower marketed. we stay ad We're what when going actually, we continue we over that so And level with But have any move which road, but the we flexibility we don't the appropriate, to if obviously do minute, the plans above to need. for it's think some we down have that four minutes

David Zaslav

product. so And overwhelmingly mean upside. we right? I to we then, we're attracted north subscriber now, $XX just positive. fired so trend here, add much the the the have that been said, Doug, advertisers up already you into for I opportunity imagine, course to fiddle experience mean, the as the that, quarter are there's over of as But sort without maybe tracking the and right if more with we base As an positive product. of I a have consumer can of would trends And it's headline ARPU

we we've between take positive underlying we a commercial eyeball here. back here, engaged that we've platform got online are selling doesn't full seen discussing Number cable discovery+ and difference That digital video, single really if audience. saw big sell a an on big this? demo. a linear only a Not CPMs we've you just there's and So for getting ceased Number been excited We're why our the Everywhere here. But just level exist. two one, between dynamic. about highly TV and every matter. It's premium a TV step for It's field and to just product. our that decades we're is have gap for for that, playing value here

first drives fact a industry, probably viewership the hot is that content with super very the You family-friendly that the heard platforms, top premium inventory ad-free mentioned Couple environment. online of right scarce video now. that of is demand because that the of some place happening lot a in we on that environment are and the market stats high

but just a The online, of perspective I we're product have of it's product of in of couple a all And offerings launched exercise working other our the here the terms innings want features We're make great from make still advertising -- on pause ideas. there to other here our more. We in part in way, the other are early to Binge want upside prioritization the is point those that I thing to get right? ads. towards it's advertisers,

with I months. think ARPU over number the couple that here, a a of here So will playing without even of we pretty have do we minutes will, positive rate for next run

Operator

Our RBC question Kutgun comes next Maral Capital from Markets. with

Your open. line is

Kutgun Maral

on could, if the international ecosystem. pay-TV I Two, first,

parts the to networks of of on TV on, I streaming? more to trends you're subscriber your of focus then number on comfort plans more ultimately, a level seeing you shutter towards drastically peers perhaps Asia even -- recently those international your And in a its trends sustainability maybe compared follow-up. pay-TV One can to across And your us larger linear of across announced your refresh end, what markets? have pivoting

JB Perrette

the On universe, international kind terms continuing world. slightly the pay-TV to of in up see stable to question, of we're across universe a

cord the -- shaving from seeing of We a have few a much churn down U.S., less seen more higher-end but Unlike for new we in more than -- the trend. a of a of -- It's which we've cord some not seen actually less been years. a cutting. markets necessarily have of less tiers,

long-term been are harder strokes. -- directions. class obviously continued stability But pretty middle to that Denmark we'll for about fairly more again, churn Gunnar in opportunity higher, we Brazil markets remain the and continue selectively is we again, a of to we've And relates tiers more to in and the I But down in lower full decline think the we channels. seen markets with the you obviously broad the will more about slightly of to think so the as into there fairly shut different -- hit where the that at possible there's to to in, overall, But the are There we've as few in like stable that. with David the universe feel the over And markets say with we've as hard where what there price about of look, it subscriber markets moving broadly international seeing in But you some select have advantage challenges, before, packaged I And there last select one talk universal-wise, stable. some continue other in continues leaned mean some which I tiers channels, talked us, are stable. be down not to look years. to think of we've news places. and reasonable we've it's from that has where like outlook remains an the of pockets to it for it's different Asian to to leaned be ARPUs talked been talked discovery+ has markets shuttering portfolios markets. it, net-net, And

become rolls a evaluate in markets basis. on will internationally, and out discovery+ more something real, obviously, As it's we'll that and opportunity case-by-case more a market-by-market

David Zaslav

now, growing for and But both revenue. the strong right affiliate our very us. revenue market for We're ad feels, us,

distributor. in penetrated. cases, XX%, in And reach Our with the us to let's the then the value what where, many revenue us growing is every a but it the XX% universe. bundle on with a pay-TV do relationship they're ad is And distributor and of gives we're also rest saying, only discovery+ provide dramatically, able is to super

So the markets different. tend very to look

so a us on the on of the to plus traditional the platforms. our we something with outside our supporting of discovery+ idea promote lot that has U.S., symmetry is And ability and platform just have

massive we and library. -- So have a

So this and channel they maintaining the of don't want -- a and they for cash take lot need now, having -- the to relationships our our us right traditional, stores free growth strengthening and all generating flow business. in existing

for you. us. discovery+ saying, that's, and the whether us That's to terrific. or good is coming mobile How and It's broadband for players they're help, do we good So players. it's the

for It's we advantage So can an us. for think we play. us,

bigger. scale is to XX XX each country, the have We so channels in

Kutgun Maral

for investments about next Obviously, great. the from And seeing outlook could, a took step we're over if maybe want COVID. as Gunnar years. I well take ask profitability. back and the the And few I maybe. quarter AOIBDA That's weighing on this with Olympics XXXX a hit as year, just peak to DTC

revenue ad in as And takes can puts better very think guidance, all as specific XXXX in seems expecting but we hopefully, setup? trends course, help us think what through losses Olympics not the a just get we'll though, DTC of well. losses about a through recovery in course, then ahead, and in hopefully And and any high-level of see you ease, favorable Looking like XXXX. linear this,

JB Perrette

think just you've Well, I done that.

I think just building those And mean, the color. giving me are I look, more blocks. little a right

scale. away ago, be stayed specific for seeing XX% step have of minute from mean giving put looking we we're continue super et And a before, out there you super, pay for that incredibly conservative what said d+ I to seeing said got industry. at the numbers breakeven, I sort we on metrics December, I That's happy same in that but of as d+. I are the customer early sort leads value than very a here. which careful lifetime Take be back bogey take three And to those of modeled. a top We business acquisition me want cetera. costs. Churn now. it's just rate, based this the we're margin cohort As guidance here that let with to on what we're right be still significantly originally to ARPU At days, I extremely had so I we and it's subs to estimate, to December. And estimate we the efficient numbers doing specific, better compelling. the again, want looking but it's time, because these together are subscriber than we we're pretty an better number in mind now. at when acquiring right gave in just

et as the mouth, as product from our start-up of we cetera, of word subscriber awareness more majority some investments would -- we're base. seeing essentially start as lot the in becomes driven. looking at high you just In grows the loss quarter benefiting is a And that assume that for vast is and the efficiency -- we're marketing the retention getting here of fact, in this in we're

breakeven. out, as So four, just five good not very profile sort for metric just it's updated about out, very, three, it. Again, together, margin And but all again, of we it's taking it a an we manage before, years early too about feel to we talking point that towards. start to said

lifetime here breakeven said that have at we subscribers is of don't have a with do I effect think this out that anyone stand anyone content. going same will And or not business. earlier. I to underlying same we're much changing. it. get think of much value -- we'll as And long of I what we because going that we also value, we're phenomenal getting As the can are acquire of the earlier economics cost values by to in than margins there margins the our scaled consumer, to getting fundamental leverage lifetime We're just get fraction our from and else the

outlook you and minds up or I from about model the compare it. you're like? efficient why We content that here giving in others? early days, your verticals amazing it's take great. more entire between how make continue across that's exploit can and -- and globe. couple keep we discovery+. we'll you And have a continue platforms It's super again, of to What to TV we're be experience. a the from in think five-year And just to super so to some model, getting it Everywhere our XX does it transparency look all strong you giving long-term, it's of years cross-pollination just and sort our How environment than how this rather there that And to it's something. to phenomenal working. KPIs does but across have and And decided we we'll see give what We're hearing

Operator

with question next comes Your Quadrani Alexia from JPMorgan.

open. is line Your

Alexia Quadrani

of Can is option, you consumer I'm about I'm driving curious, the ad-free? you're industry. It really AdLite your decline please skewing you the more just got been sub discovery+? have promotional advertisers your sustainable and outside second a your favorably little activity given demo think like that know my on and toward wondering such elaborate And demo question you more it excited the are it that bit to linear where we've is. curious in the great you're but just option insight And success what's moderation I if sounds typical particularly you've of a the the if if skewing reaching. into versus on don't ball, crystal the seen, really then And I'm how the

David Zaslav

your It's the lot -- half, view the don't with hit. we've a younger. and Alexia. and -- kind To are length and also been point, of younger, about about the have have extremely doing that as about we it's than more advertisers half engagement so and XX half people Sure. And at cable, well. high look is about high, years of that a is Thanks, so cable of AdLite breakout people of also

now right we And over have it's trending we are continuing And bigger, to we $XX. this get demo. as Here strong well grow.

something and ad-free a AdLite, as talking that an but ad-free AdLite. those we the incremental They versus we've AdLite look been really hour. at -- look customers very minutes the off ability at at significant we generate to as four happy, seem They very to economics So happy. we of don't see difference

I, us as JB see in we And was do seeing inexpensive ago, outside you'll an it and on U.S., U.S. when this to the which after wow. pushing the ability out So data, -- rolling to were months the AdLite. immediately, AdLite going outside be ad two The were very free,

with to used a doing the XX% are because by than such as We well. of a And we're get We're really want X. it's And of They're to pivoting to going us. But customer premium And going revenue. X. so and scale there it. reasons ride just we're surprise it's to AdLite going good be could that getting one thought so not And commercials, the more so so the for was they're not incremental which it. working you to any. have been to people very happy a experience, upwards we've we

JB Perrette

on Alexia, overall losses to your moderation comment industry wouldn't on trend. And and linear, maybe the other sub of want I the question,

be helped very best across among a last MVPD continue the number to the Discovery-specific distributors year, of Just additional here we're virtual space. getting And keep us. some in renewals we mind, obviously our result. in is of just much better that's and It's carriage the

-- been been have that's the two helpers. those So

David Zaslav

for our all services, of have services, we carriage for And core of most well. very core as protected our

being the want move So being us, the of anything think we ability able and protected around would terms carriage don't do to to but to, one, tiers not very on to at be have in all. they I

continue the we've at the viewership, us of our add top. should drive fact see which seen very could probably you to So to newer that be tiers very channels to better. agreements nature we they the And of some deals, do -- might by will our in that our

Operator

Greenfield from Rich comes Lightshed Your with next Partners. question

Your line is open.

Rich Greenfield

think I would That hours yes, plus that spending day. hear be users -- me? three per are partner you can David,

David Zaslav

Yes, now Yes. can. we

Gunnar Wiedenfels

happened. I don't what know Sorry.

Rich Greenfield

like So hours a Peacock discovery+ higher per before be of like maybe David, users, higher I day, you would usage. I per think that that times Netflix couple said three daily think time and plus spent than XX% than XXx

averaging and subscribers XX they're sales. that day? subset to want follow-up is per ad a across million? XX And I that of make I saying then million sure, some is -- that the Just hours Or at on have looking three mean is

an was sort just XX I is about, of the to terms the months? things -- more that how do comment? comment XX impact release, plays how least happening the pay-TV exactly in reason over were on in in the had think Could when you toward universe What coming discovery+ shrinking the digital? ad talking the And think reach at of you that pushing were about pay-TV you of and universe talking explain you maybe like sales. what's out

JB Perrette

Rich. you, Thank Okay.

that. hours are to day a close per per so you clarify three base subscriber have not about we sub. that me basis. Let viewing daily average sub, XX% The on can assume active And per

ecosystem it's The I that need shrinking, universe both been the you're across entire first And Again, just viewing using gained we're and it. universe estimate just about quarter. share -- people in first have as I interpret the way, pay-TV super mean, out, mean great domestically ecosystem, to excited I statistic the seen and and, a it's we I declines that's trends, we've television. number. think So though, quarter the how internationally by the laid the right, and though, you tough, for across about point the

David Zaslav

everywhere thing The in And world. And to were the we were able significantly that during pandemic. up pretty we really content. produce we the able is to were share significantly grow

lot that And for like seeing channels and But those. to have a now about produce TLC XX%. our you'll more coming of the same weren't content does. discovery+ fresh to don't XX% content cycle HGTV, scripted or our we of they back Some and We're in. of able be

content. of basis, we CAGR that I we're that Uppers could it one, we had Fixer see continue took the look some you'll everybody because to were up a two, while have we more So more a And we're back, content XX-plus than outperform. and meaningfully -- we of no of gain But share some and But impact we'll think I during little going different the think, this pandemic. fresh -- were us we the because on with period. to

Rich Greenfield

you the to you're what and changing as you digital discovery+ where team linear of the do is a versus goes like back are a big-picture because decisions? as about to you're first lots full decide, you and kind already? to it, for David, how capacity. think making And those networks? what producing question it How to And goes you, now And of put said just you content,

David Zaslav

see people And had a We a learning of could what we're ton watching. originals. Look, content of are what's working, lot. kind we

it's -- pretty have fluid. We

didn't series little will our production whole figure viewership. hours discovery+, out on haven't only original those big Fixer we of lot a drove a content BBC and with except on that with. only on lot We've we -- XX-day experimenting there. and went XX-day a was higher Chip on discovery+. what XXX then for discovery+, subscribers the us. put have to spent plus. is on We're discovery+. And put The be star a bit and upper, We we're are library anywhere trying Joe, viewers We more it of That watching values. helper of to and over which power a

that right at back, growth. trying trying some that feed back we're been on figure what But content we've point, put some to that's and of able to now. out So to that the then -- we're we

growth international a strong bit about JB, on on where internationally, focused don't why balance? really a little a the we're of and steady And JV of because some different And piece it seeing out. bit we're little growing we're sport. said, But talk you taking local is internationally Gunnar that As discovery+. in it's story

JB Perrette

Yes.

Rich, before, about the our the it production the and unique, I thing we think, and as makes either/or. as other that have cost that's David our as Gunnar of efficiency such for is most talked don't much model of

here you window go window or a got only You here.

exclusivity one other. which, or the do that scripted, exist And you tag, so for you the can the in price only

we're franchises And in have and very we audiences. pulling on some a been that's we David talent us. DXC. can and it's and that which are early is try We're we for we additional continue make and sure smart brands, do particularly, tells selectively, unique, think approach, said, known a breaking -- to balanced to nurturing our time, to as and stuff IP, I in traditionally little are data for talent, are doing talent experimenting the our linear And those stories, either do that cases, we windows continue But embark on bit new -- cases. the bigger see It's bit or a -- ways different with for for stuff do experimenting the us what concurrently discovery+ without an linear on that some [indiscernible] having what edgier that in in to stories to want bank a give originals same originals new bundles, to d+, both. it stories, to it new on at access linear content some could to some budgets. even or in of and on new traditional produce faces, people access and the subscribing later great and invest some ability we're

some an tells us. And the either/or, another of to and so that make doesn't it's see content really with a it what of data such and windows -- experiment model continuing unique strength we're it's our the

David Zaslav

point my all the in about new our country comments is only is of I reason I is about that add talked The Italy them. content would XX% of to

been could of business, an these before. a that for have XX, we look and even XX that be have you Europe as very America, to go successful markets a country very we to years, and So access we the though that available library Latin to didn't pay across having huge us locally have now a at in offering low price XX%

we new here, to the that's going on very window how do the it majority how it. want is it. forth And to when device, back couldn't XX% of good you're So it's They now overwhelming XX% penetration. they do different and a it's or different and we it into move a country about they buy heard feeling or a it. afford maybe of it different calculation. but They've population. But question of They've have a it heard

JB Perrette

But in But domestically. international we extent, same some those see it's some most extreme the to also David, territories. here it's of

us ARPU. same out, that up or a a million the that maybe we're subscription. of targeting have to best are we're our and XX we're high-quality or unencumbered, first next creating time, months just XXX%-owned year of global is more here the invest at, because getting As which laid over investment And number that that going of don't revenue boats allows behind significant what couple us. additional raise at is for a better we're now to our, viewers all a cable And generating We're in IP. homes we

Operator

And Keybank. your question next with comes Brandon Nispel from

line is Your open.

Brandon Nispel

there XX%? talk some was the Maybe month after just color thus seeing you helpful. than retention of less you far I of seeing currents -- hoping the more more retention the first about cohort Gunnar, could would be Are for greater customers. that you're

Gunnar Wiedenfels

very by Yes. as Look, those encouraged said curves. I before, very, we are retention

rate here, expected. role then And about competitive able intel early also, think offerings. and been a retention so greater cohort the than they're churn seeing of I happier. also off I of numbers than makes the U.S. And again, starting the pay seveb-day very of want are churn, early more talking compared nicely strong what trial, pull are I think step drop-off to against long-term too sort XX% talk We And here. together but stable could stacking XX% the very after be we we charts month the We're that, XX% to way disclaim in very, but to of in here, with based free we to Again, first then have sort that a frankly, one earlier, not very days. of always sense. up very, it on retention. north it's significant it's very,

we've length seeing look essentially seeing in behaviors in world. our we're of with the linear the the viewership same as always you If tune been at that DC here well,

Brandon Nispel

on churn number? You where X%? X% long-term you single think of is Then you more X% to digit. fall? expectations, low a that But is Or do that said

Gunnar Wiedenfels

-- I right let's look, Well, it as said, be would speculation now.

I compared the in think do we're very, to even players industry. very leading well with going the

David Zaslav

months, think one are to than But we're forever. take by it's the we this the low if the that, of be or product. happy over but good, trending we down, are two it's in the measure, low over think the expected. and to -- is is if with every of we The the reasons churn change even and us into one of to now, right numbers for say people seem -- the we'll lower tough significantly month going may that it, see the couple single. next next not the It's view, length good months just and be for why months very the three And how leaning where it's the very of churn bed. but And we

Gunnar Wiedenfels

if clearly, up again, relates the wring measure. initial December on amazing significantly value, in by balance very of I very to lot the what of costs. at really at subscriber acquisition the marketing happy our we're do very, investment business spend right foundation revenue is And how the numbers over year. here, out looking It's now looking in estimating customer looking to return very, in and And because presented case. mean first what our I I lifetime contributions an we're have was And That it any to was we even the just at quarter. a with what that compared put of that just we're

Operator

Swinburne Our last with Ben question from comes Morgan Stanley.

Your line is open.

Ben Swinburne

And you little $X words, very a in DXC of path next business, on P&L? to bit managing tempting in of if talk do breakeven think the about a Because single front, wondering several you you you content about the the our context and are on was I is other that how on overall if wondering the sort drag about suggesting Gunnar, expectations the Company right years. place, business so marketing And the can the substantial as to think over pretty about think I'm it's some you sense? little the sort guys side billion talk business, our if in for growth bit particularly the could here the how a EBITDA about of this makes EBITDA.

Gunnar Wiedenfels

are frankly, Ben, spot on, streams X, is we I the looking fundamentally at we're -- revenue at is question have least, mean the financial now different profile. matter mean because that I here

indeed digital and and right linear a is so now business. exploitation IP for because So This amazing not for would less a others than say, we the us just have the okay, that be have business to we tempting maybe reality idea model.

many that One to and the bites ability across so the of footprint the is global apple advantages we big our across have take at platform.

digital right frankly, the his markets a very in team manage cleanly line to why, split not And is P&L. now, linear basis. that's looking also are JV at it in how with P&L and So and aggregate a international an it's little out hard really a much entirely Company we because

giving out from about to quarter. the you And you here start-up how to trading view. those trending, assume losses loss I giving we to flexibility losses second want to as much and I a multiple metrics That earlier, short-term to by opportunity are being least laid outlook for that And some of other cost. trade-off a great on expect be will decisions I we've would this. model further, lean perspective very you help to we that in easy said, the the of tapering you have by for laying off a their look, coming it launching a form markets by said make we to have product, as try a and discovery+ linear our And incurred those on have are acquisition the guys we digital. Again, acquire focusing out as find possible at start subs trying online bit we're little to in if at also that a

some understanding but of trying profile. you So that I'm to financial we'll wiggle need room an of sort give here,

As this I for I long-term on sustainable company. am said, growth mean, I focused

if U.S. digits. the that's just what's and going second I ad mid-single mean for to distribution to our sales just distribution international ad you you here growth And at, sales think accelerating look if shareholder at from in value. XX% the U.S. significant comp, against quarter, acceleration drive double-digit growth look I revenues growth, guidance XX% international tough

would I working. early days, think, I it's again, say it's but

Operator

concludes Ladies today's and call. this gentlemen, conference

may disconnect. You now

Warner Bros. Discovery (WBD) 28 Apr 212021 Q1 Earnings call transcript