DISCA - Earnings call transcript Q4 2021 | Warner Bros. Discovery, Inc.

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Operator

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

Andrew Slabin

President Wiedenfels, and earnings President today our call. morning and With CEO; Good welcome Streaming me is to CEO of David & JB CFO; and our Discovery’s Discovery QX and Perrette, Gunnar International. Zaslav,

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

David. information that, made subsequent our Commission. call I’m Exchange we important expect our file US these Form For to with ended to and affect additional XX, the turn see on filings that XXXX, please factors this Securities the XX-K please And year expectations, could that over December for the with post to and call

David Zaslav

company. exciting joining us time all Good morning, for during today for everyone, this and you incredibly our thank

our expect deliver Discovery footing This free finish AT&T cash XXXX year standalone, near unclosed and the solid near long-term. we transaction of real will meaningfully create Brothers Warner after is from world's Warner Discovery meaningful media entertainment $X.X flow creatively a to and and $X as Our the on losses of Discovery and fourth stand incredibly cash a the line capped-off dynamic from company generated strong most even cash with of billion At ended Brothers free and will quarter company, to over we we of cash flow Next free investments, flow our billion grow Generation billion year, over absorbing the $X here. substantial over with our this financially.

reduction expect company and business from a come benefit balanced we we on footing very cost both when stand firm from As model, within together, expected three in and debt from look starting leverage gross to or to X.X company. a new our result Supporting tailwinds when we the will synergy to or times the merger. stand below net from to we our times EBITDA up two lower years,

personalities Hockey with menu will Looney is every Fiance, serve news for I Warner our appealing all of like to member. and together. complete the content of global the every last demo most world, a Property HBO family IP garnered company's all Fieri, years. with the and bring Major believe produced Eurosport Warner to the to Who business. over content Olympics, Network, we've National never will CNN, Martha, Food we together, the League, resources Harry Discovery, the Potter, and Brothers us making vision leader League and and Brothers in the the of has alongside sports We Our Batman, Superman, the attractive success. From content content, the wealth And believe of most in Discovery and world. with simple. Discovery and for all Thrones most network XX great Euphoria, real menu NCAA over news Woman, and Taking of content that gathering global plus have leave? Game broad premier global Guy and want HGTV, the Hanna-Barbera, Baseball, and plus services Sport Day Wonder local Madness, Gaines, NBA, a the the content Chip a March Joanna XX We super Oprah, Tunes, Brothers achieve

there We and Initially, compelling great together. these offerings all see customers. together at content How nearly that what and in of premise fit fill areas to From as have a most was And goal a the have streaming with put the will the resources, well will content plan and war. we we where not spend this judicious the how are shared and on spend a merged I year it our we growth. the what does and This pieces careful do and so to demos aggressively to genres we deal being now have compete leading marketplace complementary nourishes spending vision to and and win is John company. ago. to the our an enriches to to existing need consumers. and our we the ability package churn plan offering value greater evaluate all when Together we already we and even to can for in across services,

new For reimagining and or existing refreshing ones. franchises the breaking

importantly, have highly will dependent on model. and we business across are diverse content ownership scaled a engine. IP a monetizable collection truly IP. Perhaps one not of We With most solely

and to touchpoints, from direct linear we across content consumer every platforms of reach production leg to and the monetization. As stool to multiple

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industry ahead memory processes discovery. Warner to dynamic lot I conduct from Scripps a thoroughly And of and enabled have we believe time operations management we Brothers and align during We that which of business. merger, the muscle our opportunity for our change. the opportunity exists how the us took to that with a same pronounced disruption re-examine better

while out in more through the the take highlights a briefly you quarter, puts Turning Gunnar to will to I'd like the detail takes. and call few

increased the XX% advertising on from our has XXXX First, Overall been advertising and channels across networks side, domestic both underlying the global growth segments. with XXXX over international and demand resilient. revenue

the finishing In all XXXX, growth the strong a year Olympic fact, international regions. across Games, XX% increased on note segment excluding Summer in advertising revenue with

year, US. pleased recently marketplace the some advertiser And against to by US, across with has in passing has At upfront. this discovery+ to Here of in the seen well. million year. and our great done the I'm year consistent job supply they've headwinds COVID team The continued strong we've the investment loss industry-wide continues and issues endured KPIs, to chain that helped and that pleased despite XXXX, XXXX the clearly interest, with We been supported outperformance same deals very an perform our plus our time, numbers end in strong a part our levels total solid distribution continuing to renegotiating portfolio Within an monetization efforts. that results the our direct-to-consumer, affiliates end with excellent demonstrate subscribers reflected value. XX very is by a peak overall in

noting, do will while gaining rollout sharpening leg tactically perspective milestone our consistent tech this onto past focus single journey managed with achieved stack we significant quarter, with replatformed These a trend last the important of better previously quarters. replatforming should of WarnerMedia personalized add We migration to ultimately rolling + our enjoyed As Europe, tier light thoughtfully US. so our across bringing consumer a lower we've efforts continue discussed, for the HBO. having to and seamlessly, feature the platform the also and discovery+ direct-to-consumer next it our and and international regions. we've churn, and higher the drive out few and ultimately select engagement, rich discovery supporting This an achieved and more this consumer retention, enables a enabling over Worth further experience. quite

our Something to best in figure when and of practices as contemplated we offering. is expect meaningfully you merged that The will from eventual not launched know, opportunity end the was look in which US. we the large, at we XXXX, here

expect to March in countries follow launch Europe in the additional We UK with having identified been to thereafter.

attractive final the service to excited innovative negotiations announced many rich, important in BT content where premium we weeks global our a entertainment, and believe And exclusive news create we sports with an content We part about very in few As do offers of a of UK UK, are that markets. extensive the sports in as market. deal portfolio we ago are strategy. in

entertainment the winner bring Cycling importantly different upon from Slam and I portfolio This total for to streaming from Olympics, additions, compelling event consumers also combines a Beijing. household. new of value from game enabled to more the content, in Grand League, Europe whole and the Grand and offering We sport Games, and healthy strategy as with and of in tennis. lifetime enforced bringing matches combine all introduce were premiership viewers combined UK perhaps Despite before And experience Premier and many Then our building Gunnar. and we more the portfolio. subscriber more one sports Though the viewers retention the Japan, while to with and as with our Tours by of Ireland richer our the it turn challenges sport in to Olympic Eurosport key greatly will advancing closing bringing Sport, UK Games strong and marked a Summer will appeal us BT product obstacles, most with entertainment with off pleased to League that entertainment broader value. very create across This rugby, Sports delivering the momentum thought the together well the improves fresh over viewers sports growth Champions we minutes in moment, much to lastly, which and our simplified to UEFA the and a discovery+. and

we complete be of earnings Discovery. how a our merger Turning as our standalone on last the closing this could soon can

lucky the idea of And in blessing this to crazy to leg to by honor work quarter-out formative I Discovery over John you close. personally, I've thank often believe been extraordinary will can't with the board fulfilling. world, be Hendricks. be more next we've recognize us. a Malone, members, guy me over very during do years, and it those be all an of that to so chapter accomplished could Having such next like way, want company not could wait that most blast get of the With gotten folks a achieved our and and job do. with us and group close, that business started all XX and absolutely so the friend, of family, this to we journey. is of of lifetime To such alongside this days the has the employees this I quarter-in first this we John such journey to to to from tests and Myron run New Adams a of Garage are learn that that For that, leaders, what of much Discovery's it along share lifetime my Gunnar. what and truly to a biggest special even to I'd corporate I with and last turn ahead we're very together, a of exciting and and rewarding We this but And all the chapter great change had have joined have prouder you remark the House

Gunnar Wiedenfels

one exceptional year Thank financial, comments, I'd you, an strides Discovery, echoing and was start in made strategic across to priorities. we for significant like which this and I believe David's by David. operational indeed our

in on deficiency our we of free our of billion of to as of $X.X over during to and accomplishments, over well both of our investment far XX% with based of improve remain in transformation I in initiatives the cash XXXX. am X.X thus Warner net leverage our momentum, we our disruption continued of proud our resiliency long-term billion both our testament on very from which the our Notwithstanding three conversion balance have pros of flow, X.X times $X to financial I sheet of losses with better with our closing of Brothers current industry. from And leverage and to global continued year we net assets. Speaking possibly our billion continued months leverage true projected The networks, of which portfolio that the Moreover, times, $X or and achieve XXXX, remains at to Discovery and finished focus intend balance overall on year target the reiterate AOIBDA. cash core ended times as X.X within range for sooner. XX confident

X% by provide in discovery+. few to results and year-over-here, pricing consistent trends turning in for a quarters. color traction some are Now the the QX of QX more those largely briefly which or the high supported less In US, quarter, continued level up strong further by the let on linear tier advertising me of AdLite last driven with was from underlying

As I and QX. growth not portfolio. for on seen supply disruptions increased to chain due digit hints last to our X% as higher declines at call remain we by revenue limited some persist issues XX% rate COVID. softness of and our and low numbers around linear chain helped currently softness scatter supply have more than in linear around Visibility we and affiliate US plus the discovery in surprisingly, subscriber mentioned distributed market fully mid-single of pay-TV see distribution offsetting categories

the performance momentum US, Starting discuss bit healthy to is regions. constant quarter XX% robust Turning from in than fourth all will benefiting with a a stronger which here in I the currency International increasing a quite on advertising in basis.

resulting the to EMEA, We from Netherlands. upside particularly UK, across pricing enjoy continue demand healthy and in Poland the

nicely, recover markets helped gains to continues demand. Mexico and overall in also key share America Latin by While healthy like

March for the the We which additional tier to alluded stages markets out very discovery+ with early UK international International rolling first replatforming and follow of enabled David in AdLite previously are in at the EMEA an Ireland to. by

strength about UK, are and offset reduction we churn pressures have which resulting focused more the subscribers continued ongoing in been monetization Distribution enhancements Nordics, consumer markets upside. X% enthusiastic QX incremental drive engagement, will EMEA better certain Poland with feature increased during We in and the and discovery+ the markets expect fee revenue growth by as affiliate Brazil. the key than like in

normalized support in in decreased increased continued operating X% schedule by by expenses Europe, spend discovery+. content part Also partially marketing the plus new to side market expense QX subscriber On total investment increased in offset revenues XX% overall X% for growth this helped more a and discovery sports launches. to SG&A due to

billion, X% company XX% our $XXX which our of loss $X.X NextGen want I minute do take investment in am million proud and initiatives our results. in To business core line overall the I'm range for continued in for was call up and criticality roughly the in decreased end $XXX across million to efficiency of business. the quarter an very year operating down and Lastly, proud year expenses extremely increment taken single of resiliency $X.X network the AOIBDA low the linear was Olympics. efforts for management. billion a linear I with to support to guidance. a our the only core out of of the the for to digit both cost over that the context the to and

while consumer. fund investments the cash operational to support and invest continue at and in their to across and the globe look flow these maximize to direct contribution we our brands important franchises time efficiency continued drive as to to We same free

a items to you as Now housekeeping update the And some models. for of consider your quarter turning couple to items.

$XX non-recurring share to million was up positive was a revenue non-cash AOIBDA and due XXX% which other the per item quarter during flowed US which impact. to First, a $X.XX

future to the WarnerMedia we of a per to interest from we risk $XX of transaction. recognize $X.XX Second rate in notional portion debt cash third loss implemented for share the that mitigate issuances rate billion the hedges interest the finance, non-cash quarter

in as do call, derivatives variability on the some WarnerMedia to required mentioned value are accounting report our our in which statement, qualify last as could to not the until additional I on the purposes, income earnings income fair the closes. result As for we transaction hedges market net changes

Third, XXXX. in with merge to Group Nine Vox December an signed agreement

As closed our transaction, of we a value per this estimated result the share ownership and which the of earlier the non-cash new charge. company a impairment $X.XX week, in recognize

Finally, is we quarters the This the $X.XX in relationship all than prior impact during as method amortization was purchase intangible. share. of the per fourth reassess life useful for the and customer amortization quarter PPA higher

take and change, While align a not the position more to we to cash lives did with flow. better intangible these decided expected assets useful amortization of accelerate conservative

of Adjusted been EPS $X.XX As per nearly by increased a for would share. million. QX all this, diluted our result above, $XXX expense the have of D&A

year effective was tax book XX%. Our full rate

for cash the amortization. Our tax rate XX% was year PPA, excluding

we our in standalone. For range range expect rate plan mid discovery XX% expect we a AOIBDA $XX we of million while year-over-year rate on be excluding the the a FX mid-XX% to to to to hedges. And million be cash $XXX PPA our our XXXX, $X low expected the tax is XXXX, roughly on and process. to million update in on where tax currently in rates, to based the negative quick of A million have existing transaction negative inclusive stand revenues in $XX for impact impact

clearance most letter international all ruling private unconditional expiration of conditions a period, the We from key of favorable the from clearance close, from the AT&T. Commission, have to HSR the satisfied already other for waiting the IRS European and markets

XX. our filed have stockholder proxy merger and March earlier for meeting this final our month also We scheduled

the is our I year-ago. case deal one That QX. estimates will a the am us operating has integrating track And two the what be close by on encouraged been within including meetings approved achievement made not leverage $X that the in across begin you company from a and a world. year. companies to our this assuming our Having media clear momentum both cash we more puts say that best a early to are excited wonderful going respective get recently billion and eager high Discovery promises reflects the vote to companies we earnest undoubtedly I the during cost as shareholders, to down build fair it's in entertainment and collaborating financial have some Warner months. at the the to flow companies, in by teams continuing of on level Following most hectic plus range think free our to could target delivering well the deleverage Discovery, and to be as synergies significant conducted dynamic of driving XX

Now with your to David, over questions. I happy the to and will be the call to that turn JB like I'd take operator and

Operator

[Operator The MoffettNathanson. line comes of first Instructions] question Fishman from Robert with the

line Your is open.

now may your ask You question.

Robert Fishman

from And can up you've wrapped from the that remind risks basis come would in on geopolitical just then there, obviously for Olympics Warner Bros you the be or what just pullback the any the AMORT a Europe and separate understanding whether Given on policy? seen percent forma region, early pro new Russia, goner one for advertising Discovery? of have revenue Asia, Discovery's it us a on what

David Zaslav

Gunnar ahead, Go JB. or Okay.

Gunnar Wiedenfels

of Michael. it, region here. percent take it's an immaterial financials could of profits I that were the our effective a in generating It's about proportion

David Zaslav

comment just could you broadly. if JB, more

JB Perrette

local compliance country We the may by actually you itself, regime the the player. In Ukrainian become obligated remembered our to obviously, short it's the agreements the and in and restructure regulations. are is the have ago that market changed as couple local when minimus to I be did a with of a to years regulatory represented Russia in we specifically, in absolutely would say answer.

have is entity. already with So structure a in deal a place partnered Russian local that we

continue still the even And see everything it's said, to is as it this in Discovery on market, so, and track real don't impact, this dynamic to been on that we very total the And time Gunner respect to Russian being, but literally we've Company. a we're immaterial obviously, see. morning, if able to a up for any include the very until based based situation study time you going

is larger important for that most are to Obviously, European the Poland, the Eastern likely markets, like be relates it to pacing us, to the affected time seen As is to the any markets we'll for but nicely first track it. again, that and continue some European continue situation which we footprint. are to like of We're to going for evolve impact. being, quarter, very haven't a that the

Robert Fishman

change you're for Okay. And EBITDA? content that if any how of Can Gunner, changing your policy. then included and the you viewing might just in amortization reexamining impact on behavior, following up also habits discuss the in amortization

Gunnar Wiedenfels

purchase cash. we No, regular we the of a review for for is paid Michael. a possible basis. what as that balance these methodology the acquisition just took allocation our here. as sheet. these is spend allocation this benefit price It's And intangibles a time this take such, And on having It was generally obviously deal. lot with price conservative purchase about from also the review non accounting as of of thinking position WarnerMedia upcoming on here a Obviously Remember, is no Scripps. on there to like and And I Scripps. we

is, rate just again, of front amortization. the impact So amortization you We're period. changing loading fourth what's the quarter. happen to But the we're saw a not in $XXX going million

or years next years. So and then the increase this these decrease positions in of is outer going for amortization two amortization to the just the the three

JB Perrette

if that just and without with that one you point my view, came how company look the of have off Scripps. been and together in coming Warner, Just of business at the for about Ken built. food channels that a to make would I today And wanted Gunner’s possible, Lowe broadcasters mention with personalities our point we of none Lowe the when real and everyone and really years D+ and came lot home bought business together gave to and go-to-market transaction that brand gave also and more in strength much great culture tremendous nonfiction. and with diversity Ken because that of and deal around Warner that for a really when work positions content us to confidence us, I worked and and and be we menu bouquet the us well able world. opportunity time us at home a and I a but positioned to all idea a to didn't broader these were It dominant those a when the company many say to enriched as think just channel mean Ken came us and sense, entrepreneur has a has successful fantastic building be and with up do I the more the over understanding built,

David Zaslav

Robert, next Thanks, question.

Robert Fishman

you. Thank Great.

JB Perrette

- and hold also question, also properly on Actually were you on, I Mike. should changes answer last content answer quarterly properly you something amortization. I obviously didn't on policies a I no these to have Robert. didn't year. basis because your there confirm That's was focused we

you've world content Those digital each potential other world. further are the out in exploitation the of So sort of linear now. got balancing again, the right

that. So there any didn't we for haven't made see need and any changes

Operator

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

now is Your line open.

Doug Mitchelson

suggesting. your is and if should David the Gunnar, confidence is to follow-up billion billion at And about Thanks look cash guidance XXXX. $XX so as in free flow level that and much. $XX and And evolved of then, I $X guess just we the all level for $X at that confidence you billion why. that would talked and guidance, EBITDA billion

for that the planned You HBO had spending that don't going would suggest see you're about. already folks to lot content a ramp rapidly, need guidance their path of content continue That which along like a just are a spending ramp. to looks worried

that guidance So and your spending any you. Thank be would regarding correlation intentions content between helpful.

Gunnar Wiedenfels

approval Number as gave, know, Again, we're announced Sure, we deal. one, let full me here. yes, in in the when we’ve that you confidence we here. an this in start process guidance

baked going more done detailed the ability we've if but anything to things learned what's we after couple of more far have given and content given A or synergy least a we one, peak we've our increase confidence the are we numbers highest significant so ecosystem. me closing. level we this against it number understandably content investments, alone a company. seen very at the the has, planning But two these over to couple seen in more to the obviously also on put we that. spent lot they've a in our is work some have eager at increases that been in everything we generate again, for comes of the at currently into We have are media than received content XXXX zero get So these numbers. side in in question in in of that billion of When on have and spend. level history here: weeks, in past synergies spending spending $X Number Discovery

So we be going are going perspective. going my enough definitely spending is how The be key is forward. question to enough from much to

winning this to in the be. would soccer room doesn't score plenty Money more. And of about business us, also have not said We European our will case. goals opening analogy it's here, spending remarks - David as for I say, as in his

a Discovery+ focus have complimentary areas between will content, greatly and HBO We Max. portfolio of

significant one we that's areas to able and all invested to could lane on everybody slightly haven't of in be covering four companies as - matter female we're get less standalone or no getting a content that et conservative - JB…. been have fact, that two perfectly so be have discovery+, I has the David content at might drive to actually else very going room more As increases. with be I the HBO hoped efforts and in taken outside like appeal we that a get don't investments approach in for side content a Max but with that little actually sort we cetera, we've a away to have of a not the the certainly put Wheelhouse might and of efficiency noticed certainly our in in quadrants know order

David Zaslav

library TV with a with a the start in and the that space for when have my the question together in with people first sport, Netflix as how do? I the in the churn around - That as in this love content does with think we in that the that and and US. the Look the local that US, picture we bring We nonfiction library is, transaction in the view was TV have entertainment HBO low premise. world, idea content motion and well big product best and the we - library, world, very the

with content Europe put very content is it's to generation And I Potter viewed getting the form Max content our the people kids viewing very these discovery+, that we've and from Looney a most every we when day. we appeals there's young and with together, that made of older Harry are - between broadest, as the in lot that compelling see loves. throughout DC the to it - HBO is churn Hanna-Barbera think broader. that what's available it Our two Tunes to offering a on better going of people to different also and content the in and pattern that And and

happens we free What we're how question to first mean billion is, we we company. flow. to cash is, the So together? or come more that be when do going said, growth? a what generating in As real to by What $X churn, I do happens I are

family. key figure true to more money spend company there’s chance and good and to And economics churn, and we to have spend how the that spending resources very And will we're have real So the just channels be believe you're growth the spend do that a to we very people we're that you do our want ARPU. they that's an if there's assumes have we're cable air lower have you're bouquet generating place to we're these and But about have careful that on we're could already low spend significantly at they that is more the feel we're to going be not and to on many with get channels The nourish want to because - real you plenty be we they we more going in good looking content. is we you be going to and and high we that will we platforms, audience do, that you're by quite - that that investment and usage, But that usage very just differentiated time careful spend content, value. increase enough going low that also to have compelling. content important, churn that to platform. more not going cost of free But we'll on a well. to money which us of to see,

Operator

JPMorgan. question Next with the of Cusick comes Philip line from

open. Your is line

Philip Cusick

versus Thank wonder the more the Warner. about David you savings how cost scripts anything I us the you've opportunity those as days of difficulty on size in you. remind and just think into there and these Compare can you gotten changing deal - Thanks. synergies if of talk it.

JB Perrette

through. the just take months. Warner with the - why with we Anne in of what by you but don't we've of news as been good kind for why digging is the side on side several lot - able thought, general don't last Philip And team to when we've the and confirm this here, we've that been a you been

David Zaslav

of to aware earlier than brought with said, the Scripps you all this That away And much studio We've the costs. - done do excited which had successfully that already look the operation. plans I've are Discovery my migrated here have more straightforward meetings the we points in of what going is I said of to have with make side at a those anything, to back going the we lot Discovery. is well, cost which sides could remember, level first not a areas the to go want if here, the a we and the actually very here that then going is that we and constellation. in of going have unique here is to of high complex fully have and be one I that CNN lot Scripps how, WarnerMedia well. One both those very point et think have go And for second about saving just is et at going cost know in technology have linear know, to very cetera. And gotten couple as again, encouraging short that we assumed out mentioned that we tremendous any cetera, the as investment is and of dealt significant when change you larger, the here. marketing very HBO we You people $X but a also roughly for point technology we're opportunity. be come it's cost stacks in content, complicated now all together. been have what at anticipated and of discovery increases, response between +. of the synergy And, completely I've much separate, there once had we billion running we efficiency entire more ramps combine spending technology reduce potential is experience. well, when we're work And Again, and avoidance. to we both of portfolios, is QX, Right there. half the for stacks as We're the is cost lot fact Clearly, total marketing opportunity well two Max There's opportunity easily direct-to-consumer synergies. which have answer I up operations. then out

So going these feel scope initiatives the again, but close see the deal to we’re good ability probably I what think broaden once we're going potential get about to we I numbers. is our to very of that

Gunnar Wiedenfels

can that haven't with other effectively. bouquet we point the The broad means US, of any the assumed to in market ability that content much revenue synergy advertisers more we and come distributors to and is service the

Philip Cusick

overlap lot about about of there can I'm add if this, model business a a you headlines CNN me premature plus been but ramping lot that? seems there's with anything discovery+ of Forgive like on up, there's

David Zaslav

real have We near-term, with down CNN+. will the that next in a the get the sit business and CNN people discussion plan. a and in

that We haven't had yet.

of seen the we up that looks ground. do exception to in that service the a the maybe any And real of journalists resources CNN CNN it. correspondents war waking and with with in news cars no between organization, media in journalists company, meaningful a has lot has We and watching is biggest morning you the CNN. what global news like are there's Ukraine, new And I've the their gathering world CNN, - globally, Russia group difference been see of resources, haven't largest This where a is of BBC. the does. on here Poland, in going risking that lives and can this organization multiple

the news desks I think on. about what's given with you that's their There's news where behind other go you are channels becomes people going all very safe around the journalists ground that it clear bulletproof sitting to do on the so world in opinion doing in at and network on we can a look that and are we are vests going what's and in world. and what fight best, helmets dangerous tell and journalists places assess that truth can be which the is what's dangerous as

for it's us is going not what's doing. process So But on in what watch details a deal proud the of the because to has that moment AT&T we're they're on yet, closed by getting being run CNN beginning this and there.

JB Perrette

the Dave, And add I synergies. thing on can one just

channels is the size that is ten Warner is was. times the International Scripps of basic significant business opportunity other of The what revenue about

the much the the than was more be significant in I on channel's think to it opportunity business. international integration Scripps also on

Operator

the Ehrlich America. question line next comes your And of of Bank Jessica Reif with from

open. is line Your

You your now question. ask

Jessica Reif Ehrlich

Good you. Thank morning, everyone.

You're deal part - the obviously closing cusp front are of of the on the Gunner hard is and in you you.

revenue see you up? May? you very first we under expect And Warner and with Olympics the ask to in I'll go had you that? about performance, cons between you'll to then. Warner specifically And the out little now old in which traditionally bit are of close or lessons segments before The Can entertainment, you seems Do the US doing early need one news should Olympic clearly expectations Given costs? a Salesforce? sports. all the the the Bros from called and and where different in ’XX? and what expect silos learned And to market just than maybe implement, like upfront pros is to If Time changes experience. yes, the my for talk follow two results Paris

David Zaslav

think close chance have a focusing we've get opportunities. to first, on But And been focusing really and Sure. cost. into Well, we revenue one the we'll our been about business, has priority after number we cost and then it into within analyzing speak Olympics I $X opportunities to JB. just synergies but and We reflect can wanted that on the the Gunner, to the get more pass to synergy billion.

And local years stake with What's five you for in from? do seeing months you athletes. went the said that recognition main Why hard lot all not viewership come what with any you at our would the that terms of just with I want looking of of they very sport, in name saw we've throughout athletes it's backstory. ten athletes? was Europe. think our them? driving Where country team focused see able us be and to across the the to direct-to-consumer between what to with with to across that skiers three And Europe athletes. JB? down with the love love channels really and sport have that local for we worked And promoting the that if We is, lined business objective in the in the really X spent execution are sports has we you and when - over learned And care? objective know that, and of up, forward it's Who did Andrew local Olympics the and you had a the you'd people street and sport. JB do who a are you the

JB Perrette

heroes very focused on Yes stay production and The athletes. things. Jessica look, a the on I couple has on been David side said, much storytelling learned we've as content think, of local focus,

that this in people representations of athletes' think want digital also, age more and lives. authentic understood see to we've I social the

set of and families world thing or best able to continued the it games bringing where experience be so we've a two for things terms of also the families build Cams been in authentic these experts in their last not that the home intimate showing also the of lot this that say have and And of making rooting more support virtual in athletes. last full of back by how And and the On-Air are site, introduced like showing friends particularly the of Talent supports out then representation Family and that to far. a them we've business crew on lastly

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bring And game so, way. has we've continued the to a helped to innovate technology, which life in different the on

and linear saw ratings our so put in being the in incredibly for matter. that very what Chang experience team this both in Tokyo despite what in - said, on last both that difficult of levels situation. we done, years obviously David double-digit, comparable others, of period pleased ago, that And our a than proud Games very that has as different And Chung our we're the the was terms very down being we're four to games

David Zaslav

Gunnar…

JB Perrette

was about little Jessica on asking a more question.

I thoughts? other lot of think any you've covered a it, but

David Zaslav

to running. would I about add, thing one Look, the timing. we the to think hit I point mean, the I want your just No, ground

independent integration Discovery working interaction Media streams regarding have up we're as that on the There's limited the measures. right savings said teams and side stood management actual But companies et the setting offices, both flight We work very cetera. side. Warner on operating two on full still up got We've now. and

and was cetera. et into our the on of straightforward longer early the setup savings would sort of of is to initial term after noisy. lot that's then, is together going going an And had reason a coming why to the structure want it you quick So XXXX XXXX closing, a We're what to out with and third wave work year, we'll that detailing I we expect be be because a little which said, always get communication on focused to wins.

XXXX the full here. for capture So synergy is on me sort the for years of

Gunnar Wiedenfels

on streams objective And effectively we'll probably sit Our opportunity looks down implement deal and efficiently. at get then upfront look that'll is together then be and serve we'll and upfront. Hopefully, to be these more the will be strategy. an It advertisers before the cost, we closed and the And case. the the put start like have to able upfront. to work closed

Operator

comes question Michael line next from Guggenheim. the of Our Morris with

Your line is open.

You may now question. ask your

Michael Morris

Two for questions me.

somewhat about you been unique outside selling TV. the spoke And its Warner a Bros business company. historically David, First, that's size also and of but

more expect sold being externally. and like situations in something pull going that forward of sort you They've decision. companies perhaps in content are to trying times, in referenced You back recent it where been with they've and feels disappointed that

industry but you and that guidance guys business, high margin high fueling cable Gunnar the business. given question, the about own also streaming streaming end the the really is the a the business for maybe historical broadly. size but platform. the for term margin sort of XX% in implies maybe long the there given you And the second balance just of is talk structure So of interest about business, The the definitely your more a which EBITDA have thinking below

the look the but what like its guess I sort is converging structure So long really, how question Thanks, that you a globally, term? is over think of time, see scale of also do when guys you margin streaming business over

David Zaslav

that now content, producer generating revenue. business. Warner business by significant in entertainment all Thanks, NBC many it Channing really the I've at world. of must the it's running having TV. were spent in the in was And is TV TV, Bros. shows Warner many, this quality largest Jack It's Welch years the best XX doing two heads some Bros years often in see things. produced Warner remind And that We're that right is been those and probably deep would of content Michael. the ways, of that And envy BrosTV for

also I figure where we’ll environment and say rare, providers, where have or end, a an money ramp have up to get we out. big a is advantage makes an that me Bros with has the very, with for can this and And of Lorre, the ability here business a of business and there television company, to with you compelling or just and lots we television the entity provide broadcaster's Bros more Bros TV, We for runs to a more economic to is have produce provides more content. leaning working OX, quality content you can us there into tremendous content that a Warner saying, piece some make flow to there's of about business for that a have to a money maker it. the We're by dealer market very really a HBO many - in of of the in know that as and more the and free cash great Max. that provide to we're I a see makers business it's at bidders scale as the let that's - better, great multiple makers lot it in most Global We know, at have a making look even some it's at something XX look Chuck to other for the generate ability balanced when and ramp in of because as myself. smaller where it, production many profit when taking looking HBO meat, where of Apple said, world. something companies, you We Liberty more efficiency an make entity just aren't gives and and and prolific are big ability arms Rob we are I lot there that's asset. so called more XX:XX it Warner and production this in learning very which to turned gotten you forward it optionality Warner optionality. that up We to the produce greatest But producers Reiner, great ourselves, content rare of game

JB Perrette

the Mike. And on side, margin

points of couple here. a So

on look if talked our year as we all then peak know a XXXX math, you horizon a in looking back a at long-term it's you margins side. the know, in a I take look If at - assume declining is peaked at and that XXXX. Max point step and XX to guided pure to year our in SX, and loss saw think you’re projections from reasonable about we peak investment in investment slightly perspective, linear you their the HBO DTC, of have perspective reaching discovery+ And sort that from has we

very there significant those in businesses. So, margin will be improvement

tailwind that with see mixed feeling and than the think SX. obviously you that the going a - we for a margin how DTC, faster growing this the if those be factoring macro as business should you probably and described to then well. that the be You for know, these But take positive there's trends studio, significantly a going so underlying TV a change levels I that to get gives to by David in you levels

platforms. In monetizing going Apple times, as launched we're than talked way, to value we're side, is we positioned. JB greatest We've on said, to Netflix in markets, we've top, again, confident pay have is to air when multiple take is. and revenue launch know, to through I can huge used get when to perspective, every distribution that on because a double subscription, XX% very I very and you advertising uniquely on you it are decide available That's That's the number getting and I we I've away that scale. be on environment, from or very at create US point triple were said so TV-everywhere. And, fact advantage. that that a uniquely today bites positioned. the well We're investment roughly content virtually think successful company much, almost that international We Discovery+ we're our and using going spends the We as making where basic our we be monetizing many making content every been we've discovery+ discovery+ where the content. is linear think better We're to about margin in both the sometimes comes platform. a revenues. want do you at is do we're Also to today's XX% combined certain dipping a International got and flexibly able the that on the the stream. linear know, dollar then that

I've to going advantage we the So to always footprint that And when as investments. I a times here in the said again, same subscriber have race managing will to comes our or an value, time. all the be also win platforms global at think we're and monetizing certain business We're shareholder war IP for not several win that with to numbers. the a it spending long-term, emerging

Gunnar Wiedenfels

that value And sense our everything monetize We'll business. most strength, to we have So, I've going attack that the let's XXXX, can. that going in look a real that the flow do level metric uniquely we of at There just of value, always free company, represents of to billion. say, a felt and to business. into it. not we're ways and quality companies the how company, but firm, discovery that one that a that direct-to-consumer $X being as strengths of that's to metric to is cash lot the build as laser we pour we global that company is a an a when great ability on looking makes were of machine. investment to gives for were a of grow IP the and overall shareholder us That we're And focused be

Operator

the line from comes Markets. question of next Nispel Capital Brandon Your KeyBanc with

open. is line Your

your ask You now may question.

Brandon Nispel

for Then on you How could side, please. help really, Could you linear advertising trends particularly Discovery could on but Discovery company we around about we portion. was be us think should I advertising that How the particularly you monthly the think I different the if sort Plus? some for questions, for in XXXX? separate and your streaming? content? Churn back for it Maybe plans that HBO separately service going linear And looking of goes Jessica how do of growth, Churn merging Thanks. we One, to really about do about understand US talk you're are just layer questions, hoping in Churn significantly as rates? what forward, turning Two should the your on advertising the than you with. measure it?

JB Perrette

We can start with the second one Brandon. maybe

market international. tell David I which this, best So certainly alluded our of with the in on the of Plus yet. to terms in try not would numbers, experienced we've the when best is market there the retention you US the about of US, engagement reality don't I and separate think capabilities. is even in that's only months talk product our twelve compared and the that market, the is our The has product, but of one the of I the quite to greatest think numbers but both I not yet, the competitive numbers, things to course out on and and all elements say I the in we Discovery class now last in can some specific some still best right that with Churn very it's looking gate of par over are the of year

So record that on out we've think of our said, issue And things tools last legacy same we of was by David the couldn't year wasn't end came year, year out to great didn't than really But internationally, first is we we is as personalization the the big part challenged at nearly going saw of think and just US still quarter we we promising. And a in end having of pre-Discovery improve And into one of great is the churn that higher the continue the by of very trend towards being launch about US. part basic in came to news that the the And product the numbers available available are, it the Plus because completing the product outside and have US. think the to the now zip as we features over as end sophisticated the feel come to lower. with XXXX US for enable. re-platforming historically. been front in best of even much that as been from the to where the a internationally, the as we those have profiles, there's opportunity proposition couple the for lows And market. code that course that us next some the platform I then features more in continue improve months, candidly, of

hopefully a bit So a flavor. of gives you that little

David Zaslav

platform a menu time is length more tried the the I to from good do that we using of aside in we entertainment market businesses with cycling the the broader the to do thing we we have people nonfiction would add And the with that with we that offering. from that, is okay, churn. only separated quality can superfan the of is every tennis content what is one that the lower and with we niche a we of the over this it, in view - idea things consumer longer challenge could question years learned this home differently and of for and to is, and and experience tried we the aggregate The improve went that that will sport build do

a And bringing the and going to be - are, this leads have that and we whole to the offering, more broader the add there the us conclusion together. of satisfied few the churn It's so that's years entertainment. so experience all Europe broadcaster, offering we very the over this the a the consumers the the as the something is to where with so is in last to compelling that and leading number thing markets lower

nonfiction. the have We

very, are also in churn well. sport. very encouraging. markets markets, we We have And the we're news. some looking very have numbers doing In our And those

provide customer of broad has provide churn the all be us or lower a And it optimistic will that's that so to attack Gunnar? led strategic putting of so and better one the that things growth will that fact be optimistic menu the that about together satisfaction.

Gunnar Wiedenfels

give here the about of then I deal advertising On mean, specific want we sort can't to plans point. combined points I talk couple do but one a understand and you'll point, the you for of company, specific general obviously,

broadcasts to has lineup. talking generally one, that been and about so to have with monetized have their inventory. just XX% the for traction through spend We're ministry of sharpen grow across It's a again, we no been in number I less that to our finally, for this going reason consumer every to networks years. in continue cetera, point of we don't in than at pencils. demos digital at and age but great have our there's to out and on an on of David major more talked still et ad cable presentation the a CPM. a get covering et we double point some of seeing this speaking, with one, we less And deal continued Xx dynamic to Targeting, ecosystem, just we're Number details when we're out there. even And CPMs, has We've we about then to real can number doubt ratings believe as always moving the under up pilots we're go as under better our linear we've So groups are pressure, look eyeballs to grow insertion a lot. way. reasons. this finally has sort because people testing. that as targeting linear getting direct the and we opportunity a laid just ecosystem cetera. passed into launched discovery+ space, There's And the

did We and monetization what business. were across combined left globally. much want because to opportunity new to very a number Discovery you in that every the internationally. specific Scripps networks. in portfolio networks we and JB better learned of traditional is the optimizing combined when Discovery were The to is, market across able the changes So, at we're We rating and that there's deal, able and portfolio virtually existing Scripps able in reprograms was the a - do suddenly significant back and of lot I optimize US. go look we out networks we launch point content make output to of get programming

a able two get a the on basis that fantastic were which theme, out the well. look we outperform portfolios I as to hope kind global for combine think these industry And we I would years to So trends, ratings at several following combination. traction of - that's general you if some of when

really So, day about obviously, very, this no caveat very any side the with app sale in growth I and the feel one expecting that age. is positively viewership

Operator

line from question Your Jason comes of with Citi. Bazinet next the

is line Your open. now

you may question. You ask

Jason Bazinet

how big great markets. year DTC a XXX have billion track million an such households. international would in guys side buy ago the you opportunity they was, international have a or record I said So a the just question you if had ask

US. ask a the number ads that I you like If of you I sports the decelerating have the is penetration what outside it buy content, that that's and now are give guys wide deepen bigger Thanks. your third one to a but some - what news of of sort you and know what's will of because side and array seeing they players take of that number and just view

Gunnar Wiedenfels

Thanks, Jason.

have certain of expensive. where content model with I what But country and to we markets we'll to is different much product there's what then see - can that is, way we'll at it But we're cultures AdLite country to. space. there's people different television. willingness for the less $XX in - be a an different aggregates competing that by that And very have out you're pay think you and in that we'll be pay product, that successful number ad for or that free going $XX

has of but how look if very of is for exactly a - a picture on Max. And is limited library. expensive that commercials, you does d+ that product the library their IP motion to Warner compelling they platform? so when and that - has inside know take much and of half - - what And picture they're broaden menu the doing available broad every been have is So of able market? what we TV the but actually We a the largest in inside - is we motion MGM less market then they HBO with take haven't library, look has and we what

We have library. a huge

three really and so And I see see we funnels. a company as

greater they'll to people or lot And higher attract sophisticated, there's that a - that that see we'll not TV, service content percentage used reach to Movies, finally, everybody. ARPUs And pay that certain with being that substantial seen view the of That’s on premium is much will a now. of $XX right be have portion success discovery The broader priced objective the be service. to for then own with fee. true get willing for will is will a equal a more commercials. this people product as we of we limited commercials, lower a Our premium of we've with no

AdLite a service, And so, we that, and using all channels, may but be could a eventually on now ultimately, digital service be we service. should free an see you using that subscription only then

everybody be a can of never content can for might but there's but people that of in pay this the go and vanilla lot advertiser so load and putting that a view that will labeled, and it to it you be to that'll supported. content television, go they know So

there do I a look network. advertiser could Eventually, think we in what different not have probably AdLite, be content digital be Warner more only. I content to has of subscription the the our and And will that a so at But content global that subscription content want range, And the broadcast very work to discovery. are very people really let's in to or It'll diverse players are And then long there not ambition drive content product world. of Bros this only. getting idea the content, think we're the have a in most that most them content that the have who aggregate tied number as a subscription serve pay want company, in language watch take who most the around let's broadcast, to they'll hard and is there'll than AdLite. we but in and and

the that strategic place. And one in so of do initiatives figuring how be out to have that we will

JB Perrette

that XX%, that not said, to certain David free up air us same just markets where theory. is years, to get XX in as And only penetrated XX%. That's over led Europe strategy but into a last the in strategy pay-TV the was

and product at in cases and going the be David's XX% started time segment XX%, market for went businesses some new alternative launching one be migrate the out what never up audience every the to at we the but the to want offerings model different of think eventually television a developing that kind combined after with with whole each vision So we and free-to-view. group XX% depth and customer XX% free in able in it to another segment call that's you ended we'll company. digital, moves way, free-to-air we of look air. to may was interested It but That when paying content margin we and have breadth at, to go to slightly in do the

David Zaslav

didn't And launching of broadcast, broadcast months de one six channel for many didn't in you course the we minimis. have women, for in library know, of model, you know, You which content. have didn't broadcast our know, news, we original sports. And number had just channel for used have in we couple instance, call for cases but within a that Italy, we the was we We content. any years,

Gunnar Wiedenfels

one growth. perspective Jason, long-term All just add the could achieving I if just of sustainable right. point from

the know, relative to of of You on for us. of It's, the here while international share ARPUs basis, mix a able probably much, some international it's linear the to we're and a that time of subs much to multiple, sub in sort in more going population. what a and larger world see as increase markets total have know, that you address remember of and over impact we're much broader getting, also per the part the you're

Some the to the of market. markets in a pay traditional XX%, XX%, limited ecosystem are of XX%

transition. continuing you're to why us seeing through So that's this grow

Operator

comes your of last question And RBC Capital. the from with line Kutgun Maral

open. line Your is

now may question. ask your You

Kutgun Maral

may end, for Good and spend content David, think even leading compete as remarks are hinted know at fact prepared you and taking thanks some morning, your streaming and to the spend of than goal I to there against war, leading levels lot be you more services questions. you ramping in services their Gunner, and that more the even is your the not spending that you expected. deficiencies previously on win your a the streaming said

it's mind many the of don't investors. I for belabor mean so point, So top just but to

priority trying and in So in your DTC get remain core, understand levels landscape, the you I'd streaming seems on what spend XX perspectives maybe the leader to in internal competitive what how guess some flow confidence to for there much targets free flexibility EBITDA that gives an is drive just billion cash position better streaming a term the hit incremental significant space. an company the your love Thanks investments at to to increasingly appropriate am versus better embedded like and become I longer the to in I of

David Zaslav

but companies. ability compete and flow are Having - but reason When look free cash Disney we're and two important. of and said having that's don't we different deal, end in the two we we you - exactly the not optionality that, this of take the premise going the really a that I monetize Netflix, to and have, are a want to across at them. platforms have company we're know do Those we're need we very to why the what we to feeling the against than is the think great

a around of devices. You building the wonderful built group know, love people job product. have Reid and a has they're a the broad product, doing - people And Netflix appeal all group a comfortable, out consuming brand. has road and doing Disney that Ted very getting that about are buying it content of and well. world on very their absolutely They has

have will a We very offering. compelling

and identifiable do doing He has more identifiable has He succession. we IP. the at - and much with right the And if than we had But moment. have they're look have we the series go of said what do they could he three lot would there we and XXX maybe of a if like it successful they'll $XXX Disney, be and is doing clear be. much so a HBO drama, we'd we you Food if and we little and they now - really an with someone just had this It's Euphoria IP then to feel scripted Netflix that's and their million we If no sort and Network example. broader right be content, not It's Casey to another now. they better we're HBO, Network example that hours make going happy So it Age what, much XXX would Why? now. decided place, but took money. that audience make of nourish have you and as happier. Would like do bit at very broader audience period on more hours you Food an Gilded

in together as rich that us And we so, that as that could is lot can Euphoria you're personalities, recipe to. we in and see much Warner they audiences in of We're so Fiancé billion of come a our to balance lean then And going and watch with see go then great the nourishment, they that's that that right, audience when there's a and real content, $X with much first nourishment great we think nourishment a it's excitement into. to And well awe here or on a more, Upper, there's have you different compelling be library. but Fixer the content shock going and we're shock the is the can together. much to is and we the think come more put content content all going lot reaches so we could watch really don't thing And Day a menu. so the and awe library that when compatible we on not XX to because of spend together going go, we're spending reach, and

Let's ride. a for take car out this

platform. to but expect to But we No, to careful, the to of be be going we're be going to a and and see our but more invest couple we're to going smart off Let's We're us to not come going how in dollars go. we're continue We're billion this game. out measured. spend, going don't go does. only and streaming that's

year sustainable it. economics, nature, business that a you. the confident opportunity in create something quite of And to global amount If a to with a growth, in quite that half is given next we that's a growth there's game term long free that and we're substantial Our for and changes that think term it, back generates the in of we'll long come but you flow. comfortable cash doing lot generates we're we've numbers

JB Perrette

priorities. No, it all, and you've said think David I about the point to

the sustainable on will term those making David make But priority the and the decisions said, Our growth. is in leaving no here decisions, right interest long we of long firm for term as untouched. and value opportunity

say. we opportunity. So I that's every touch will But definitely can all

Operator

fourth conference earnings And Thank you. concludes that Inc. quarter Discovery, call. XXXX

disconnect. now may You

Warner Bros. Discovery (WBD) 24 Feb 222021 Q4 Earnings call transcript