DISCA - Earnings call transcript Q2 2021 | Warner Bros. Discovery, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Discovery Incorporated Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of 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

Thank for morning for Discovery's Good us QX you joining everyone. Earnings Call.

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

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

company other Before conference or financial the statements we management's of Act the to transaction the could Private to In statements and future company’s as make start, that I'd the of performance, like to effects prospects as statements regarding well Reform projections to cause uncertainties call that expected the XXXX. relating business remind between plans, that and knowledge the you actual involve current made disclaims previously are concerning update events, Company risks The assumptions about pursuant and and Safe to our today’s materially of Litigation the forward-looking Harbor forward-looking the provisions expectations. announced will statements timing, and statements, and intent include Securities from and comments AT&T providing differ future These forward-looking based we completion results them. any business. WarnerMedia on obligation include

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

David Zaslav

healthy number to core traction simultaneously earnings across overall for durability all brand, key strength to continues by next-generation thank $XX second beginning $XX everyone, the morning, Discovery the continues paying offerings. and Most our of of All a around segments end the and and underpinning launched and category million operating the our linear performance, year-over-year global thus strong today. we notably Discovery+ financial continues in strong while you of revenue and Good accelerate scaling sport had of million at driven business, the traction streaming fantastic with subscribers second which the of quarter deliver With our direct-to-consumer behind yet as momentum on importantly, in of which of we most player euro content Olympics, growth joining Discovery+ total our to quarter launch Europe far. which globe, the strength our had sequentially for global have Discovery+, and XXX% momentum total underscoring where the some markets. call. to

monetization Gunnar losses delivered the all cash with healthy do well and continued growth and strong across for and the We to out continue support investment from our absorb benefits see are investment an scaling Discovery+ across excited scale roll his our supported team to costs. for about we job the Beijing of drove and vigilance a we base. business, as spend half year, of top-line while the the lean of continued OIBTDA the flow a second strong execution in The our improvement transformation growth begin streaming leading Olympics, moment. and as more that on an as expense of conversion, toward platforms particularly meaningful as organization prospects and efficiency, terrific and by free we sequential combination in eye a into on of core

growth ahead. we additional revenue revenue $X.X is and see next-generation In fact, this quarter, annualized billion

greater that a not testament the seen of the as just to an with level and upfront wrapped and our performance brand we some value, industry quite popular passengers top but well run products achieved or series reach Jon otherwise which are programming providing doubled. a XXX group. In episodes the significant we at the that change increasingly incredibly peers, to you’ve in be Premier healthy and available in they terms have from has and a time. record vehicle Over fragmented delivered broadcast step is and us differentiated marketplace. and Discovery buying of core, heard We peer reach as great inclusive peer networks A rates most sales his to a clients the prime, at consumers of and of more unique ratings that in Steinlauf our that Premier from company, the now team of love as discount. platforms up our than proved our performance an equivalent first viewers suite than premier well of of our that are CPM for advertising partners success. visibility ahead

platform further of traction linear. advertising Poland, healthy of the and in has traditional drive and big and half intelligent what the look features for buyers. roll being all number that space look Moreover, social markets are targeting robust. additional at turning resulted UK, to come and win-win to attractive it. seeing markets this reach our of keep currently a love households. with solutions and also out buying discovery+ go offerings APAC talk properties key the linear for forward forward for was we digital Latam me of discovery+ throughout heard globe our beyond demand continued You've regions Advertisers driven around noteworthy. year the to non-cable in incremental back VoD a throughout across But Internationally, an as premiums The and We monetization. platform with driving hugely clients to acceleration a capabilities by as of product Italy, Germany, innovative site to in and true we bouquet Advertisers our as this apps, way, quarter. number as and of with roughly well the is audience is to such

really slower exacerbated we only with monetization we continued notwithstanding of by cadence traction paid most pleased had service. the the healthy and post-COVID by of period, Discovery+, with the ARPU, improvement ahead. That sequential subscriber international discovery+ summer said, reopening. and healthy quarter-over-quarter Supported runway in stubs are to still Turning the seasonally

to our we the Here platform distribution S., in add footprint. and continue to U.

Following advancing and last be to will quarter’s VIZIO subscribers shortly launch platforms. with Comcast, all Com’s Discovery+ available in months, stream the also major roll coming be TV consumer will player on out also their available SmartCast, our to Contour platforms. discovery+ across Contour

the previously, such additional market would to completing the been one in bulk replatforming global Philippines our and noted expect with best consumer managing to and year. this successfully international roll of Vodafone as the Canada launches second discovery+ to market front-end integrations July launched in major get in in common we have partners local mention international games and of challenges producing the includes technologies logistics, fall. engineering and and such methodical in our been both front-end experience. not It same the ensuring for our out of come UK team we've second and be that As Italy platform JB half Brazil, this commercial mobile on deliberate half the as strong migration to the of customers This the Olympic to Netherlands and as globe back-end The from with a Spain, key market launches common and XXXX have to is around planning, complicated have a launch platform. the ensure our planned and time the his COVID technology delivering roadmap following hubs. the some our in Tokyo. of we we markets of the At year tech

as as marketing, tech well We continue learn not platforms. as Terms and features, go to working we what's of distribution a partners in and respect product with lot to branding, and what's

viewing We with the time metrics very acceptance, that position plans media and are subscriber, I roll to marketplace, and continue look glimpse an we monetization these evaluate water churn, to track metrics post-merger so and we early our per HBO. plans pleased building internal on. look at provided active well exciting as within consumer pleased We’ve to across against our momentum our we and to ahead with the are last at quarter we am pay,

with been the during be over nearly pleasant games we the combined ahead the could in and point, to confidence surprise, Tokyo, Olympic the deepest simplicity. three the a content will Italy, shares Like of of will of global and excited winter what streaming last only notably remarkable a with and this believe to for be could We offering as Pyongyang. total compelling outstanding share our as market as possibilities Olympic challenging across circumstances. of markets, previously choice certain for move continues want traction combined last from which selectivity Olympic regulatory truly earlier mid-next about noted With newly giving XX% some not which through, markets like that that market more quarter And billion which up in sub our believe has us year XX% in all in forward been versus already to able key compete we've consumers The television very Consumers to gains games, doubled offer case. to of together, in the halfway viewing Nordics are content a I serve At enjoyed marketplace. timeframe world. minutes streamed, described XX of can and close. with both, see stated in process be matures, most more the Discovery+. Taken about UK the as be company consumer upwards the we our in in more we've sports to markets has viewing planned, in the with well-positioned the launched lastly, games times the streaming company the video

over high Paris right awareness, our to upcoming branding and JB We drive our questions. Beijing I'd funnels Olympic in it that, excited to truly and XXXX, super after your very our look take to XXXX about to Gunnar, our are viewing, of that financials, These are like which course in turn events in backyard. the platforms. through and forward taking games value I hallmark, you then early Gunnar subscribers in to and With

Gunnar Wiedenfels

our second Thank pleased both our today David's AOIBDA business, impressive healthy free traditional flow for Thank conversion. Comments, you, cash in quarter earnings David, revenue for next-generation with very and and this Echoing core performance alongside call. am deliver combine good joining streaming morning, quarter, growth linear operating to everyone. you our with our I us and platforms very

nice year's U. tailwind in Asia from S., Pacific, to a especially region the we've Latin all last improvements and to we’re every discovery+ against performance enjoyed favorable, is sequential near course, comparisons pre-pandemic performance. of levels were around turned acceleration and results and While our the an EMEA returned and very advertising encouraged globe America, the by impressive providing

to Turning saw softer retail, to compared market including as industry, linear year's auto, dropped CPG, the second we at improvement, and a of pharma, results, CPM robust the peak year. digital plus inventory. both of increased We very than categories quarter and upfront take advantage strong far up Advertising viewership S last year-over-year, U. revenues cosmetics, XXX% segment. to with versus XX% Scatter advertising across as the more beginning XX% key QX all continue in last demand offsetting low home the COVID for year-over-year.

up was very demand XX% suite our revenues of with advertising next-generation year-over-year. healthy products Additionally, across

quarter. bought end now the advertisers the the who clients suite than that we ad products roll have Specifically, number of of digital on more XXX more the audience the advertisers and to and X plus, bought our inventory discovery+ integrated than continue of of targeted more also in have products. out had discovery+. platform, across second on underscoring solutions Everywhere Furthermore, Go of than by XX% all offering new inventory for our inventory TV Interestingly, times bought power discovery we

product own we day. that discovery+ every Lives, the first to served to on example, recently launched ad For ad a specific an user clients on Green allows

confidence market media drive noted strength revenue ability earlier, the of advertising in television advertising to to contributing upfront As an greater growth. the continued importance under top-line our the as relevance and

Pay-TV or sequentially XX% driven primarily subscriber of in advertising XX% offsetting the in S by linear to here by traction growth our year pricing, political faster monetization were portfolio year-over-year X% while subscribers. the modest Discovery+ networks distributed the a the second reported QX from revenue While Olympics and of we upfront, we the helped basis the headwinds down tailwind this Distribution affiliate from in base face year-over-year decline Subscribers in in grew subscribers continued revenues QX, layering against over half the enjoy during comparisons some quarter, should QX. in in were U. the X%. on down like-for-like, total fully

we this from adjusted gains during been have However, Country awards. total When American X% from as for the down recent we networks subscribers the certain during recall would specific new quarter sale, year-over-year portfolio continued distribution benefit quarter. that sold to Great across

lapping did of as those distribution advertising months more trends and we should industry subscriber Worth to begin discussed so and also result recognized linear in modest will this is we with far. in both We coming that sale the reported quarter our headwind GAC you did going our forward expect as the any in contribution from see partner the to have revenue noting line not prior. a

year. accelerating year-over-year markets saw an we versus pace with basis. I all saw as revenues mentioned. discuss Turning increased to supported as year, XXXX the revenues quarter prior the We throughout quarter ex off last above subscriber as David the which the growth. on International revenue growth will strong direct-to-consumer with increased segment, significant of growth FX regions all XX% Advertising nicely number the primarily by X% key a Distribution across second

due year BXC as as market XX% last schedule content. rates to roll as affiliate personnel more liner during out. our launches and Total the XX% in the this the markets. year certain there discovery+ we no returned investment by normalized company prior versus This marketing sports new expenses material increased was shutdown, of offset to So year XX% quarter. versus well sports as no operating partially in quarter. the increased support Cost lower as increased SG&A virtually year-over-year, during revenues noted, invested a continuing European in COVID-related to were

focus and core on the core to We reduce continue linear we our linear in the to driving percentage in to efficiency range networks low on remain OpEx year. mid-single-digit track for

$XXX primarily QX from million expect billion spend, second significantly additional revenue as we marketing $X.X in to quarter, guided, efficient quarterly $XXX the growth, in growth more growth the versus million revenue U. to XXX% reduced of both roughly as through our year beyond. losses than next-generation the and the and we investment well S. in annualizing we at sequential the runrate revenue As next-generation benefiting projects from first strong quarter more

half quarter, costs. marketing As same content losses of launch we incur we new markets driven in to more in by that the second ballpark year, during this investment less the continue will fell the past mainly we expect and or

all this certain activity close Roll product. and ad offset We we continue as which to we expect an very remain QX ARPU internal the across closely S. year. at strong by monitor our that remains of direct-to-consumer plans. ARPU, supported investment to against losses the of average Overall, and associated BXc core by early our KPIs continue remains nicely the is U. international the with high is partnerships we will with pleased Global consistent peak pay impact to and to attract discovery+ well promotional of XX% live still global growing portfolio.

per well of the in remain subscriber, we the churn, subscriber the for what we which is or most saw and the lower as with line cohorts with last base averaging naturally less viewing overall ones. for more quarter, end the mature recent skews at As pleased higher which is most

initial of during resulting Canada, the have and call launch than As from from so Italy, of I of the a these the highlighting to second markets related launch in our Other enable quarter to and in been and out added will existing pay of vast market takes including discovered+ Rich year. to about ad our is a Philippines, our markets. Spain the team the far plan these about at Vodafone majority and that to of this we was thus products. puts lift, technology the extended around requisite of the alongside the noted, number And strategies Net-net, key across ability in The has given year, a in though of very platforms, territories will primarily to during come in has go-to-market internal hubs, harmonization heavy subscribers we year. the for, roll sales consider half been constraints remain This end the through India. live original the later additional very plans Brazil, COVID benefit end our international of tech roll Olympic particularly, us our our launches or international It numbers a that primarily maintain important games local worth keep be to excited and countries out Netherlands come encouraging. handful the

or basis. Turning was Net income quarter per diluted for to a $X.XX house the million housekeeping on share $XXX items.

gain a on on a per company well the recognized Great per we share sale public. Country Sharecare, American $X.XX $X.XX note, in the an as gain share investment as please non-cash that went First, of recently existing

the million our non-cash share. negligible effective during we recognized quarter or was benefits tax per tax cash Second, certain as $XXX rate totaling $X.XX

effective tax benefits, full now these mid-teens Given the we book expect rate the to range. be tax year

high anticipating PPA rate For optimal number across the our amortization, cash for a beyond. positioning footprint XX% range for and now tax excluding are are a slightly higher in XXXX we we outcomes legislative for of the year, taxes, scenarios as

PPA per have $X.XX the for finally, Third, Adjusted would and been above, diluted $X.XX share. the EPS impact share. per was

launches quarter, cash We our our and near normalized well and our nearly leverage. current mentioned as are the at conversion production At Year-to-date, the cash remain free AOIBDA-to-free quarter anticipated generated AOIBDA, in continued XX% XX% flow times, of of cash target will to of and our cash slightly was Now, XX% with d leverage our year a flow $XXX the making, free million is range. we the the three a within is content flow to conversion this higher to turning quarter, which net convert end as investments market we free that flow notwithstanding confident earlier. taxes rate of levels. and cash AOIBDA return we representing new least the even rate

net of expect We the Olympics our target current in leverage temporarily the quarter. could high-end at range due be the

losses of do to $XXX reminder, Olympics. As to million quarter, a recognize AOBIDA during a as $XXX expect the of we third million result the

flow to that life free the and slightly continue positive we AOIBDA will or the we cash deal. of break-even So expect generate over

ahead initiatives we our WarnerMedia, any when the during with we invest announced not conserve and our cash indicated, shares repurchase to next-generation transaction we quarter, as As continue closing the did in million in roughly we on year-over-year and $XXX AOIBDA million FX now positive impact And deal. negative impact on of revenue the expect have a to finally, a XXXX. $XX of

roll flow. integration, to operate our around all back footing requisite tremendous in growing our our meaningful the continue with the appropriate delivering We growth opportunities merger long-term becoming take on excited solid of and WarnerMedia. the to dynamically support AOIBDA-to-free We operator And built and framework gain with questions. direct-to-consumer direction, solid to and strong synergy, And to to With with of shareholder to course, we’ve approvals forward like the at the top-line we thoughts sleeves core focused remain strategic that, linear time value. it are you plans we offered proposed contributions I'd on speaking to the turn cetera. increasingly by up a while performance, look optimizing et to our capture the resilient our conversion creating growth business eager sustainable to we cash and business once operating

Operator

Your from with first Capital RBC Kutgun [Operator question Instructions] Markets. comes Maral

open. is line Your

Kutgun Maral

questions. for called Vodafone Brazil, back European few out thanks international better year. Philippines just taking understand with you and the markets out can help a you and half for And Canada, I direct-to-consumer, roll know the this on morning Good trajectory? the of us

Thank you opportunities? are be or the distribution early, but are curious as line how broadband for And of some that partnerships big you. of the then, churn back of market is promos. maybe the international this thinking year, concern and mobile Some XXXX? I think the had fixed these roll partnerships see might about outs up biggest I'd some you momentum And broadly, distribution half I with it's see on subscriber just there know some particularly looking especially launches any more pick lastly, which these into markets. that thoughts we

David Zaslav

JB?

JB Perrette

Yes.

have, So, rolling markets the have noted, out. we as announced you we we'll we've be that

to-date be good we in the very to we be partners markets as partnerships sort those markets and announcing as them. expect I get as we'll think U. actual internationally, you When also when in a we our we launching both the well date so S. that of of announced we’ve strong to feel roll release the few of many will about closer what done with has precedent should fairly out. historical from that will consistent been in

feel about And so, good that. we

third of I think obviously the are on as be getting ahead had they obviously of Olympic and successfully more to ground sure of fourth sort his this make and comments, into September completed. to games where towards got Gunnar slightly touched in - more leaning that wanting the hoped off are sort we to but all quarter, due the quarter we the replatform into we and

half of get Some in as that I market second back the expecting half year, we those time growth year. see we obviously new some initially the the we period, are of had of towards later the a And in thought. we do more coming – little hit launches will significantly that out bit internationally than think of

the I which and only to look made Gunnar roll about we and get talk to it's We when deal. to how into we WarnerMedia maximize the deal when XXXX. timing of making sure the amplify of obviously, relates comment that the in we timing XXXX out it of close get stay might obviously XXXX, As context those further will schedule as at services bit smart that think as that. visibility a early into is, on later little we when David The

I if add such as anything now. to as David, else as... much Gunnar that's think or want So you

David Zaslav

of throughout of a as of XX almost to the simple. you are making - time also, Olympics was It you've Just Europe it very Olympics People seen simple. on the our but the - a help us, was it’s for are on time was really to product. the offered huge get going said, before product all The spending navigation And lot execution spent was I've add, we amount we Pyongyang. that's flawless. our We learning. as entire right, was sure what times we're

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we we two in is terms do a of better So because subs between we keeping have games, the growing advantageous. lag subs that can think don't and two year which

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right. but both said, more and get want discovery Stankey John And and - to more Brothers that right And to we job. Warner to as we so, engineering, we Warner and closer JB accelerating the doing look doing Jason. is now, continue get any to coding, we'll as Ann transaction, are it terrific requires our

we're hard but We they're true want right take have, You some these it can't our how At we the together. look take they hard, do driving look together. at a to point, and momentum you driving look share as we'll Casey, we now, will a have then true really carefully strategy. with we that up to at up you

And to we affect that exactly new as coming as together the a what might we we're get knowing approval, closer do that so when company.

Gunnar Wiedenfels

on one churn. thing that maybe to add question Kutgun, like I'd your And is,

to initial little It’s that to our It's been very of is actually track we to And your importantly, XX% but where off continues products. nicely to plans. various some close most stable very not across partnerships about also I roll those And of ahead So our distribution as said we've point been pay surprise. the period, area come that's there meaningfully another surprised. lower a starting of a positive modeled. positively as you lower as as actually would expect, had to

Andrew Slabin

Okay.

next question. the go to Let’s

Operator

Steven comes your from Cahall from And Fargo. Wells next question

open. is Your line

Steven Cahall

Gunnar. and timing about might at some Valley have press David suggested Sun one made consolidation. reports further the some that for and for industry maybe David, One comments Thanks. you merger,

could investment AOIBDA the to then, I year Gunnar, on drag forum. of of the conference. was doing think weren’t those reiterated you who comments this And us you this huge terms a of those some just invited So maybe at if public expand I next-gen. in in wondering

target merger WarnerMedia remains reason when any As but on you you the think I either about the Services, you the these maybe that, to leverage Thank lead five to be any that there all upside about sacred, know systems you times is And which when pretty decelerate you're combining might factor tech at think close? you. could with some to point. and BBC selling future going

David Zaslav

is the merger in DC spent last I Thanks, the board, week. timing. full to speak Steven. this was with transaction. me first I for across support Well, broad the let day. met There

heard haven't We pushback. any

business. very We for any consumers. double becomes haven't A compelling - more stream pushback. This of seen strong push a company

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Our churn very is low.

content together have happened. nourishment believe the Potter, around you more People transactions I have, not look all here strongest broadest global we global nourishing two of really have need that we most only do is - is, of we what think all our great that, I as have but compelling. with and King of the local content great have IP. anybody. at the makes IP, in all the – of as Kong, that news, have we well We set language the said world, think Harry and globally and content sports the we Batman, with Having us combination

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like really are. where that And now, some we for be us. opportunities may I right of But

Gunnar Wiedenfels

let Again, of billion. the question we're $X.X XXXX nicely. think Steven, me And peak peak reiterating We're the take again, is I coming contributions that an at Okay. you're seeing the annual tracking investments. that Right, it's said, together ticking expectation revenue as runrate in. here. other very on

overall. now is Next-gen step-down investment from significant our in our startup a initiatives revenue losses

that a able go why? subscriber at question, nice previously some details matter is to no times That's of comparatively talking non-issue. well. your lower of earlier. don't want reflected about Difficulty] To that again, operationally perspective Max position streaming through with we as that will in this view expectation profitability the that I There don't to update So, again now. here. all year. guided had how an But update be XXXX while five a of is want to I [Technical we've And been and to that’s HBO now. I get our being and we’ve Again, out second numbers the part sort right It’s as right peak on give the from model leverage investment

need that get quickly We to where we ton have will of very, a confidence to very be. we

Andrew Slabin

Okay.

to Let’s question. the go next

Operator

Suisse. And from comes question your Mitchelson next Credit Doug with

line is Your open.

Doug Mitchelson

Couple in you much. it JB, and States David continue? we marketing, should broadly JB, discovery+ was that marketing premium if the XQ sort upcoming this off a for have you efficient to you. for to launch in trying if good possible. markets? low at better strategies fans Is far pricing level expect seen and Thank you more the super services of questions international from pricing you down your and mentioned in does as as drive about this of so pricing service, And inform for quarter-over-quarter that think level How well, on what United markets? Thanks Gunnar, or SG&A don't coming SG&A, a mind. off so or particular, launch you

Gunnar Wiedenfels

me question Let the SG&A take quickly.

revenue and Doug I probably of the remarks, estimate losses best much way this a look give those making third $XXX to level at as is, a implies we growing of view roughly investments the the earlier That value million this growth investment are today spend continue we're I and I again, want So, sort again, proposition. in more. we as said of prepared would fourth strong to or take as long-term very And since assuming that to for planning quarter. - very, products with

of the revenue side. in slower you very much growing. time than expenses over see line But and trend a general So should then

David Zaslav

get Just, do mission, all-in to right mission, point, we price in - going the not in that not this our this each at talk at just are look, We're of how into now. to because going about we how all-in market appropriate. terms package point, going to to going exactly it we our can't because are we're wouldn't be

plan. compelling We have a

are are going We we – at country-to-country. looking

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the subscribers, will a toward a together to a the that That's going picture with two to for. that's culture, story all drive in up - the putting that'll that creative with. team all years. at and what old years great great XXX telling and we company very heritage has And be great XXX a business, so, drive companies top these And million of motion of grew we're

Doug Mitchelson

Great.

Gunnar Wiedenfels

one and broad, of is not plus seen that’s very say And if so the million pricing your can by our you thing want distribution, biggest on one territories. so is, say seen international the this just what scaling growth me We've – of I to far far we've markets question very discovery+. very even the that significant across very driven market. will and current some I

generally, that's small reality price or spot it's this nicely, that able the lower now lower Asia, or because we one sloop, So The Markets the necessarily pricing to then globe Latam about more again, where will in we where in higher. sensitivities that we But here don't spot sports, broader. of point, not $X ultimately same price attractive we're than we very premium price sweet talk most is going in ultimately to scale low average have with we and that entertainment markets a our which in range price hit that the a our scaling this have price, will price is, right a feel pricing still actually to be feel that the like hit on can we at have like higher and question much of time. high $X we very today price hard we and for sweet Now, markets it’s wholesale delivers

Doug Mitchelson

Right. Alright. Thank you.

Andrew Slabin

Okay.

go to next the Let’s question.

Operator

comes Janedis Research. with next Wolfe Your from question John

Your line is open.

John Janedis

a of early to on rest for can discovery+, to the spent consistent start, lift perspective? could you Thank new Premier? Is the to on content seeing what Can your that's you anymore you more a CPM networks impact shifting little And give programs talk you’re on maybe David, And the viewing time lift then, more about premiering linear from trends networks the inventories available into more Hi. you of could How color on thanks? discovery+, and portfolio? the or a and ratings there maybe, proportion the relative are delve market? specific much sell subscriptions again? you. we us Discovery does the you for or

David Zaslav

was seen about Thanks, were significantly. that and that career. my John. XX we was Well, beat to - average, I've in able up On best the it the upfront first, upfront

fact that and that I market better for and great the up. been a the of getting XXs than I in Premier. And that and market, great but this starts the we in And of it's CPM ways, one enough broadcast in were We off XXs. it was the we have. but we that of been we're think, enough we with believe in story, reasons not we that getting the for the content have where is haven't because best Discovery is up it's much XX was and some So picked one did

But XXs. so, one, Discovery broadcasters. made is Premier against we the in the And progress more some

with advertisers be XXs. engagement for the in able better better get or same that the to the content so, has same reach And to or

But $XX instead or For buying $XX because us, for the buying decrease a for a it's dramatic $XX advertisers, increase. or $XX. at of it's broadcast us significant a and

win-win real service. and we a to it's able so, are And

premier but great a - able have with we and and demos go younger engagement much the to do have the now not we're product, We only discovery+ have audience. we

was there happen. is generally and linear not in there. And to one, been a between advertising package. really and the that going we inventory and rates I for a it's were going out with on the predict most And group, this And that, underpriced. we it it's then, the going living think our that's but And can't we so lot and can't result long continue could And Inventory are XXs, I of are down great broadcast the down date. to was fact to upfront. cable something a discovery+ have for is going look, before, But continued is time. that there. But what's be that declining. And best It's of all put together going up. XX and told out we working in some the we the inventory said story when I’ve was, Go, ratings in I aggregate successful up compelling years. went

the of advertisers and overall when engagement the we scarcity. get brands we're good. real all and demos have the big that now So discovery+ together Go the on on audience between bouquet increases, two, we put is in still young offering looks But what can it we for what our and

that others be so at You are scatter a have of of now. out they'll the and there And market plus are sales. XX, right lot under-delivering

fourth it's the and up. prices - content think, going can't I the it's real XX%, When and can like predict is content to up a advertiser, advertising the it quarter a be an So, but to in about will that going scarcity we'll it's be going it's maybe appetite, looks than fourth continue, quarter, are way and opportunity. start numbers more the an going a deliver that talk upfront terms visibility, audience with the dramatically down to that. see in now, for of when in but linear because that's the the maybe good the because thing whether you general, We you're right our trend

still is to that an meaningful. which we us so hope and grow allows because it's it linear, offset And continues in

JB Perrette

your a our on John, a largely, networks. certainly - genre does, this also content, sort of in content, that also paranormal, S. reality, and a of traditional question are lot the is crime, a core TLC, engagement biggest I'd it follow generally, of to the say, the genres the obviously sort U. lot the is about discovery discovery+ in obviously, those of linear home, And are the does it But activity us. genre, in discovery+ in big space driver for our our driving That

more Poland, internationally, the in go in little bigger that and it out have Italy. we Nordics, spread content sense a broadcast markets becomes you As diverse obviously, bit the like

both And extremely formats, well outside which Olympics are sports and in terms bigger have then working the of so that we also about entertainment the Olympics. talked of we and

So by becomes a driven the TV. U. in it S. more slightly you But of about a outside story the the U. diversified it for is lot S., core, John, think us

John Janedis

Thanks.

Andrew Slabin

Okay.

to go next the Let’s question.

Operator

Thanks.

Your Merrill Ehrlich Bank comes with next from Jessica Reif of question America Lynch.

Your line open. is

Jessica Reif Ehrlich

there going at still a And couple much advertisers is or have update And platforms? Or you regarding There on I been from UK. in reports to talk at the press advertising, But advertisers? about in crossover you different biggest. X priorities or in your opportunities perspective? your A of different can you outside regulatory looking for great then, one Can you close questions. on finally, the of platforms M&A mean, what's U. an are S.? give how on you. tracking Poland various are transactions like us the it's you're about Thank that interest the Channel

David Zaslav

me deal ChannelX. thing drive both piece, as pass the both can't the singular. having wants creative really only; we of drive that come with to on create local a of focused and terms said, closing in comment this thing spectacular you. drive focus that talent sports This this with and IP let one one are start tell leadership to and Well, companies engaging news, their - and subscription platform where walk the of culture, just culture is I’ve to We company would a is That's and we're strong content, has say, I'll leadership a at consumers company bouquet focus. liking. their together our and best global then good content, and I content Close JB putting this our stories. transaction that on this But have, together

around we sub-scale. other the be of years transaction. what and us not this out think they we them to will to a hand that comment do the news focus that That's world do. And to very So, market. players is that specific we strong. on lot any the figuring lot good taking are very, going And for getting going is of our over of going done there deal are the I next is, are hand and But couple think

JB Perrette

acquiring, have is obviously had that to sale, then we we primary thing particularly, it with successful only managing that, the record the deal. up our now for track integrating and and the is Jessica, of oftentimes, of every these right That's The businesses. fact we're a the think also, Warner of a focus And that a our the in successfully focus. said, as closing gets direction sorts reality David add of I'd proud all because one - unfortunately, time name days, is is, mentioned, our anything potentially different

end. in On and clients see the sales, we ad majority sales, and of clients between come at a vast terms do overlapping Poland ad So, of to linear digital. our the I’ll

And try committed healthy just different to that laws any make and irrational to doing would for I remain pass to change and in our not a very the investment, for position environment is It think very as It's of all the stakeholders the it'd strong environment look, economically On we ultimately way make We're number business. media any to constituents a less and a investment. business to very challenged. very, actively business. foreign foreign a attractive the the think our were case. correlation talking said, The publicly it's be government clients and great So, be continues very us. Poland, obviously both. a we’ve for business growth and past, we

the end And The you to all government U. And on work go so, we'll us. supportive that as continuing aggressively at EU we're the have and on. that sides. situation very day, fully the posted behind S. been all continues keep of

Jessica Reif Ehrlich

Thank you.

Operator

Fishman next with Robert MoffettNathanson. your And question comes from

open. is line Your

Robert Fishman

subs you and with it’s on up rights are the sports, driving thoughts for following then looks more cord earlier Pay-TV in seeing especially U.S. or when Olympics. or as updated sports as how the what David, update you international of you it be shutting your plan as IP to outside morning. cable hard Can to due? tying share round for And cutting ramps how can on next JB, the networks the it relates up? ecosystem comments discovery+ Good your you're aggressive important of on relates linear come company, you and us to discovery+ down whether

David Zaslav

before is quarter, prior in we so unlike lower U.S. just me pricing And of as as the we or grew, with start Outside exception share than really history. quarter, So, we we better well for world. pricing were where cable strong U.S. the in much past much This overall those done all than years. we're or high, period question. the the ever core entry with we've were cutting in around the doing the - XXXX where last let the in - during aggregate, stronger through any COVID by were is

there speak can some is U.S. in piece. on is I viewership. sports little to then what more there the than jump is the a But in will decline it And JB so, it's that some and in moderated more decline and bit much

JB Perrette

Yes.

David are, the I cord brush. has some But There think, with one to fairly we shaving. hard do all stable remained see again, cutting it's broadly, as internationally. paint said, generally it cord

as TV cases. seen point people over at of dynamics don't tier Europe limited as the in I'd few sort of for The the there shaving those in priced price a the markets. the say, Brazil, of video even churning last priced coming, priced than So, squeezed. few for seen subs viewership a reasons in like years And the more is the would higher sort really going we're in But same we've to some example, at certain the they of over is same in more as higher to that hungry even discovery+ the the come the of more have elements then like what that it discovery+ middle-class northern like has last might have the as we markets higher option attractively markets consumption tiers and some a Pay video to to where, in package. reasonably excited decline see left time, us those years the price know an certainly chance subscriber bundle down paid some macroeconomic we cord point for and And But lower markets are, more We're ever, attractive have Pay back been have at and forward. launch see U.S. TV particularly are that's that with

our so continue we to those. business us we've of see a and able of discovery+ one. that's, continued and drive lot with successful carriage have partners announced, to on at both The do cable healthy TV a economics we've of of about shutting some where two channels opportunity very healthy like see we still to to launched of existing kind far has hybrid side. be Disney thus terms the for for Those been and very I think so Pay In done deals you deals talked a of the

this down hybrid handful But a with markets maybe see But partnerships we a say and the worth ecosystem don't of there experimenting. see for may we be time, where that healthy we shutdown healthy now, So necessarily model. scenarios, over

David Zaslav

we've years. On sports, at over now the been for learning. it we're four I mean

But going product together in So were the it. to news things. then the better with trying we're that is with It's decide when put we individual we needed how still more want non-fiction. are they the direct-to-consumer only in it's ultimately, figure sports. is third to find sports a And the out days. it. consumer going the different with success together we And we're having Europe to the finding entertainment And good we're trying we early

looking all churn? looks So happens in on of we're it to where the of sense cycling, D+, and subs. now, the we it now, we're of a we what's a What where lot because we're markets putting these have have acceleration get football, Right favorable. trying to quite

XX% a to also We all good they not launched with are America. they been Pyongyang. compelling of in we're experience with very inside sports like very and in America What with an it. anxious up is Olympics football The Share doing launched their see which in experience? will Warner, Latin where for a us. at Latin getting well has but - look We're is really lot

the as I've much said. is We higher, are finding engagement that

be. what is the And so, we churn know don't to going yet

I think that it's to helped when it's we come be fact the Beijing the all by companies together, have But coming. going these about ultimately menu. IP

play. We news. will news What have roles

which rights we are and world of the the and S. in to up sports. U. John best compelling. we're is terms one of in the have the the Jason able not Zucker of Stankey, the of leaders some sports. Jeff in We outside sports It’s football, lock got, leagues with leader,

free? together IT in it? at all do two we look one some offer the not Is So, or do King what it it? packages? Is it sports. that that figure out, most it in is that fact How of do different pay? all and a comics the think Harry package? of when don't Potter Is own we it IP, of we with Kong the a you all I of or sports, but with the HBO But or DC exception lot from the Is

to very difference that you be it. Warner it’s what that have, you try whether done sports So, in it's will the pay franchises what we Joe, the DC, in Building eventually and sports get and own for rights is Winfrey And - are Ophrah pay we forever. to But we Ship that whether for. we you have about it's back those come or careful whether there product and a pro we've long for these when is building

package be sports what that several fact that we'll But and how to in we the we're years And that with company well globally important it. the to how add? sports return is. have and right - is JB this over with anything now. Europe a sports able so, How will when very doing next very use in on happy the be the together fantastic view comes there - of we're

JB Perrette

exactly that's I right think there.

Gunnar Wiedenfels

thing in sure I said to that repeat David this. has passing, want that Robert, to heard make just one is everybody

internationally viewership, this by of the our COVID in to actual terms year second volumes second which quarter last obviously massive Our quarter, eyeballs year’s when the second impacted it delivery history strongest only to of comes was in was spike. second

internationally fundamentally So different Yes. is versus it domestically. a story

David Zaslav

And we're these doing content to love and watch. local people getting in they better that at want markets

share. gaining are We

So, even people be extremely is market linear though some on advertising veiling strong. the linear, may

Our in share hard. is language, growing. language ground teams And we're are on country what's every the that in have in creating doing very paying we in off. these programming countries We're it's and content and

Andrew Slabin

the to you. question, please. Thank next go Let’s

Operator

Your next with Morgan Ben Stanley. question comes from Swinburne

is line open. Your

Ben Swinburne

around coming lift probably navigated it? time is growth in and to think Nielsen demand company the other make this demand that's wondering advertising feel lot morning, know Thank it's in quarter. want am whether then for got. you. challenges the maybe think about also shouldn't there on that fall of ask guess, and and past with or able September. delivery past The Can the the to a or on I even do get of little deals? it or you've it around cost there you in created if then you're about if obviously, we most August spent $XX linear guys thinking David, curious that headwind head if just I Gunnar I headwinds into tailwinds of us, streaming, seems you tremendous sort don't a quarter third some is like everybody. strong. you measurement talk for you should talking any you've international number, I to just like Olympic bit upfront were seems you've able about David. or Good in third side it of subs I season. that? you a is we something the there the the that about probably any whether money we your as has million be should could Or Discovery I was am be non-Nielsen navigate launches comment streaming on And QX. know is here And a focused the in the more television and the here we and about captures in of do won't for lot the like that's of

add you. want anything to you Thank Just think as QX? we about

David Zaslav

been we us do would advertisers a We a our delivery better to better could all with antiquated whip. is answer have we've helpful. we've you're Look, Nielsen been massively the along just ramping Ben. build then augment have it how if the a very a own discovery+ money. is, just lost you it. And big thing and you money. – big we by if - to system future been a you data see But lost been have we working all Nielsen Look, recently own unreliable. one it Everyone increase data. data, linear, and they've operation good get system. with antiquated that's - it. to the the and and system learned We've it's In and itself that and Go and news with data. Thanks, - on dramatic aggressively in wrong. get extremely have with that the has data in on our on the this data end, working extent But, is some Unfortunately, it's It's act together dealing is just can't antiquated disappointing has very

to it. an And figure deal got with so how as out industry, we to

and compare best the they We Facebook the most the and you antiquated system. Google cleanest the where likes have are that competing data, this of with data, with

Nielsen. own continue don’t I to hope work we our have on a for lot So, of

industry. an somehow I think it's

shame. just We is and have get dust, are together. to – from the going out a them in can't they our can't it a perspective leave technology way to just they but work of it It’s

Gunnar Wiedenfels

X keep would look very across you streaming still, across the We a look, said in the on numbers on is so, and year video many need of to that expect normal reported, But on summer add clear at seasonality in million And one all able important am I the to early don't it's that's keep about then, keep a to we've we not that are with. the the amount is think that again, of that thing those. right? your strongest. mind a if mind. general have subs full been to we average And free subs to And it's there pleased these point we've have year I that months and you trial cadence Olympics, there yet the throughout the is very which important certain just mind very what's in a in months obviously in as times

of number our we the include gaining the So, does are through will million that subs gain Olympics. subs all not or XX

Ben Swinburne

you. Good Thank both. point. you, got I

Andrew Slabin

our Let’s take question, please. last

Operator

from comes question Alexia last your with And Quadrani JPMorgan.

open. line is Your

Alexia Quadrani

two follow-up questions, you. your and Hi. one – service. just advertising on one just Thank I on sort of quick streaming

that of higher spikes the We’ve seeing are so my more the Is any percentage sort the revenue. bringing in curious have in clearly really it in just seems highlighted I am advertising in in the in of return delta more On growth is strength the product in the variant of the second where seen if your the industry-wide apps? advertising strong, QX that through seeing terms you it's incredibly follow-up cracks side, you that results. pandemic? been on of given sub quarter. of and which so question just you've Ad the Light recent then, you're And - much new the terms profitable far

David Zaslav

XXXX, deal. In seeing COVID, the we're were this the a where company, at all to of point, is now we as Alexia. big way, Thanks aggregate, which slowdown in not by flat We're because so at much, a any about

versus to the U. say we're this level Ad for that. up of Light about in are breaking is and in to we accelerate good flat, in year, this off we of us XXXX, our drive up or to starting think setting, flat we're at don't out point? terms percent when S. Light but now I subscription. JB, is a strive So or strong, that terms XXXX that of percent breaking versus we're how that about last point just The which growth versus just extremely Ad out product is

JB Perrette

of sides actually that, say both on We growth healthy we're only - end products. seeing day, But the are to still at not continued on not. the we're both

one of sort one growth dominant not it's seeing So, and we're continued your both. of

Alexia Quadrani

Okay. Thank you.

David Zaslav

the to on we're market second get The baseline may little side, obviously tailwind in had advertising we see COVID obviously, a we of obviously only advertising higher thing I bit the And I XXXX. obvious, robust earlier. add demand. the pointed break, tougher a out say little as to going into across continue No also to a slightly market, of now from very, signs half, comps a political but the comparing a as to we right? the are the go robust very So

mind. So factors to keep are those two the in

Alexia Quadrani

Okay. Thanks.

Operator

you today's Second Incorporated joining that And you. Conference Thank Thank Discovery concludes XXXXEarnings Call. for Quarter conference.

now You disconnect. may

Warner Bros. Discovery (WBD) 3 Aug 212021 Q2 Earnings call transcript