WBD - Earnings call transcript Q2 2024 | Warner Bros. Discovery, Inc.

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Operator

Ladies and gentlemen, welcome to the Warner Bros. Discovery's Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Additionally, please be advised that today's conference call is being recorded.

I would now like to hand the call over to Mr. Andrew Slabin, Executive Vice President, Global Investor Strategy. begin. now may you Sir,

Andrew Slabin

Good afternoon, Bros. us Warner for thank QX earnings you Discovery's joining call. for and

Joining me Perrette, today Officer; is David Zaslav, President Chief Global and Officer; President, Gunnar and Financial and and JB CEO Streaming Games. Wiedenfels, Chief Executive

and that forward-looking forward-looking safe of comments risks future actual the statements involve Securities may will Private pursuant Act Reform business provisions made and company's statements include presentation materially that to we plans, financial uncertainties Today's of could the to Litigation results include the from harbor XXXX. performance expectations. prospects and our The regarding cause differ

the additional the most on report XX-K that company's For and recent could and see the Form on Form its with X-K. expectations, to, U.S. Form Securities please but factors XX-Q company's on filings including, and Exchange annual affect information Commission, reports these limited not

financial non-GAAP the in our of which we section to the addition, call. this be trending In Reconciliation GAAP can website. our discuss of on Relations will financial in and found in measures measures can earnings release financial measure be these Investor schedules, non-GAAP closest our found

the And David. to to with turn call that, like I'd over

David Zaslav

for joining thank Hello, and everyone, you us.

well against a transition marked after market by many the been quarter, some midst progress be long-term challenges. a as we as the tough of our of busy, has are to productive company, conditions. what continues This launching backdrop years albeit tough Two-plus still points in notable

a walk some legacy highlights. business. upside. and conditions the were the that there see the Our as same tough is direct-to-consumer a tremendous very business At of frame, amount you of very, we doing me well, in through let With time,

the the timed social in XX capitalize online look a channels XX Max and home XXX our Games, heart challenging broadcast the the attention only was our side, Olympic million It easy. of and and on TV platforms. linear, and are the On of and virtually watch a the in with Eurosport at the the lift on people the every it markets multi-platform really purposely been and spanning Olympics. We center off. channels to in and around the it's We games linear Paris on through for Max digital, and paid the Europe, minute any It's different Discovery+ Europe us. across at our endeavor worked languages, has engaged Max Olympics a to yet streaming place to by broadcast launch it Discovery+ made of team in measure experience heavy of more than direct-to-consumer

response last years, of More in content over success of in importantly, America has games amount since growth offering both terms work the reflects our X start available to we an from and subscriber expectations, whole our exceeded the and the incredible make viewership. of consumers Europe. the our and U.S. outside highest finally The the And Latin in there now Olympics of fighting are the

an you service momentum the building. best service proposition direct-to-consumer worldwide, is It's our our very successful product that sports restructuring had business. I Discovery was refocusing of I our and and majority a am important the content, and We of markets strategic requisite fueled absolute plan of With media Max, the And rebuilding content XX now our reloading cost at to attack local the and It's and really and global. creation scale shareholder world, value be our for at to core entertainment global which a brand, and is original an arsenal, in after beginning successful, convinced and to around platform have months be in international a Discovery, strongest what the are belief at local our one companies there. we're grow now advantage. world. streaming series, films, the global and

the in Meanwhile, Europe X and greater We growth the launching House only with exists. quarter second We only it's sequentially platform unlock the worth opportunity noting quarter. revenue. we million driving we'll Dragon the the And had see value first more in beginning just that global X this scaled middle kicked that before the of to off. are And the of in in of subscribers weeks Olympics increased even began while X.X subscribers subscriber and quarter. the than added million even quarter we've

We and real momentum. have lots ahead still of runway

all SVOD market advantage big together every Our our our can to teams now row almost in that service. channels, is promote local infrastructure and

very this more international Global distributor streamer launched present with biggest the we've including new not a finally in are And an true we the and sizable world, lead and the distributors reimagining date is our for significant of including have experience. on our devices positive done of international more and Max, to and XX off, to Japan, pay half distribution that Max the been time, and We've more streaming last new existing almost Italy. bundle deals the like franchises our a acquisition given can overall Germany channels, Claro partnerships largest with At been Europe key consumer offers space Netflix to in we and XXX support the to addressable Claro, to and of where linear reducing them of the with bundling, The TV+. for benefits to a These the in fraction big to still bundle of both parties. around in them market and the Max Latin XX get begin Max markets bases the encourage cost. in on in same players in you'll more to help ways really months. in also markets come. We've entry consumers, global active these win-win U.K., the drumbeat consumers, Play, content XX lowering have in and than faster cost continue at it and intend fan see proponents the of next of Brazil. local partnerships churn over month Australia, continue markets, market the America, our We yet having provide of cable launches

Here tracking in the the ultimate Hulu, bundle Max consumers weeks launched extremely we and provide X ago, that package. in in U.S. the sports the updating FOX. consumer is fall, to been And Disney+, with from you on will compelling response profile. venue what with look and pleased forward even retention a and stronger we roll believe we'll out the ESPN experience an We've

two is Giants, most have lineups many well. we support driver the the course, expansion. the the series, done great both incredibly direct-to-consumer the one quarter, have the the of franchise, and Among our next strongest And of important Of which of from content. Dragon, House years hit over to X-plus growth the featuring global of season Hard highlights our our Knocks

premiering The few. ahead, hit White next HBO The the highly name of series, new coming just Doom we're City coming the in Looking November. Matt later The Blockbuster excited series like of On, series, and for premiering titles written in international Last Penguin, The a September. God: anticipated by and seasons Fight of this new to Reeves, year, month, Us directed Lotus shows, The new with along Rages

deliver goal will EBITDA Bottom the in achieving line, our set the XXXX. for we're well underpins over which to up second increased momentum year, in half billion us on $X the enjoying outlook positive EBITDA of of in our

has direct-to-consumer driver a Our meaningful business also been advertising. for

and total ad-lite driven reduction In subscribers a declines in greater in to QX, fact, in sales had part quarter advertising biggest by engagement, company streaming ad This traction. X% its early sequential X% increased QX. contributed from to ever in international notable

ad encouraged healthy momentum see continue by trends and in our the reflect bifurcation market, remain While we growing across scale the advertising to streaming. the in business broader we

to to almost our the audience. well upfront. performed Turning and by younger see in skewing value grew clients volume relative XX% upscale Max the great continue as We industry. to

Major and coverage French by volume March and of As and League well content in Lotus. the series, like the White sponsorship Finals Madness, award-winning Baseball, linear, The Cup pricing growth, NBA, demand opportunities as we with our in The in Stanley new strong properties NHL, the of especially double-digit Season NASCAR did sports, led increased And hit well like including Open. X for in

our Shifting business. focus studio to

with office box XX for and multiyear with million Universal films partners Joaquin We and in Lady the year's September, what have will a Amblin. we be XX% coming October. a early highest Du premiering said and top of X been There's great were worldwide. film hit Beetlejuice we're are starring one grossing turnaround. and in Folie midst And nearly ahead still Pictures Joker, has in $XXX which Twisters, what's a Phoenix Gaga of The to response excited become the

across DC. live Studios coming There's on focused Peter and television, on lot of stuff and also fully great James from experiences. film, DC XX-year and their a animated plan for are action delivering games

at months, just Man, look If the X Kite doing adult animated premiered Max very is July in you well. and on series, the next new

incredibly theaters will in in Max. September Chris a to run documentary, The before moving the Reeve brief Superman, have Story coming

generation of live As amazing series The and the Penguin, James in premiers whole for July is film can't wait just on original which Then in Superman, kicks wrapped James that, XX. action We September, moviegoers. The beyond by I animated followed an of mind a Joker October. crew this series, And mentioned, show release new the from theaters Commandos, December. on Creature in in Gun set to to off

platforms. On currently team XX series close different unscripted and live to and for producing the XX side, are Bros. TV animated Warner scripted, her Channing nearly action

major in fact, is shows #X Presumed Apple drama Innocent In the the history the of the which studio on platform Television every TV+, is series Warner Bros. platform. now industry-wide, Group which only on including

our superpowers. one is This of

of well content most ourselves are third as We parties. producer the prolific for as

we've I said hard our few last bolster content many times, to and capability wins, further. believe over storytelling I've years working been best the the As even

seat this us We assets, even best and strongest at table. maybe the a talent, the have strong, the the we're confident gives best

both abroad. across U.S. I growth mentioned for the huge Pivoting to of sports, with been in Games, the and the seeing we're and internationally. growth the has driver a business, activity which us Olympic we're pleased

momentum into We best leading the all record-breaking France. also platforms saw across performance and our with Olympics, a Roland-Garros Tour streaming for de strong ever

League. stages strong Champions record for achieved where of we sports Max finals presence also of America, a Latin We in knockout levels have during UEFA the and engagement

which and in in TNT. and we Men's Championship early and especially on will March note, Stanley National U.S., had rebranded Sports performances Eurosport as growth by and in U.K. on the Madness scale leading NHL the we XXXX. with TBS a quarter strong U.K. to The BT we big Cup of growing second sports the the Sports, TNT platform the a be of helpful In Max is Also at NCAAs launch TNT strength playoffs

in put sports at TNT we As Sports, rights. a continue place plan part of strong our build of we portfolio the growth to

we're the price just for and women's launch we're College we of truTV business to are now soccer, existing pay-TV House months, our currently as week, NHL, future our tremendous have In say, Highlights rolls the will Baseball, packages. sports served best-in-class And programming. live of last Bleacher all all the out partnerships. be event West support NASCAR, service of truTV, to East and added college sports. When help breadth And October. of of confident These all partners. I Men's result point not Major well compelling all leagues a and quality Needless shows basketball, Sports provide will the as of in the our of also and Max, men's final fans portfolio TNT, a conferences this and never professional that coverage sports an shoulder upcoming converting NBA, to TBS, TNT of XX Playoff will point. Football to top spread rights fans we major Football make sports, will this cutter add as new cord the one will And Tennis, to and and additional Prime and we multiyear across venue appeal in all studio the Report. the live to and to as popular fans, and Women's scale and League fall, extensive the games U.S. last games, Mountain by service access and at cord existing Big we available announced value excited offering want Roland-Garros

market a attributed more this even goodwill moment. As a linear It's prevailing impairment years conditions and outlook. we to to were our to are ago, quarter, media on in our legacy say values acknowledges say networks. you fair the this saw, recorded have different companies that of and noncash than X quite this valuations today. they And impairment with better this will aligns Gunnar our carrying future for

position this to opportunities industry, impacting we bold on generational steps a the Bros. and best see early media our Discovery was necessary us requiring across disruption take future. the landscape Warner recognized to We pursue to for

We strategic way. capital structure with scaled advantaged businesses and and us a are to that thoughtful uniquely these moves make globally a allow in

We storytelling bundling internationally, pursuing have and finally opportunities launched unparalleled globally domestically are the serve Max customers all and to our world with around content. and

while do, quality unique We over to are are lots library and our recipe Gunnar. do. And I'll to with confident global a grow, local storytelling, branded than still can there's strategy. few best-in-class content, turn Local to positioned that, more sports, ever it we and in

Gunnar Wiedenfels

good and Thank you, David, afternoon, everyone.

key briefly topics to before through I'd quarter. I the like focus a remarks run on my few

making we're down I First, debt on highlight paying want progress balance. our the to

executed $X.X of will embedded be successfully $X.X capturing upsized continue value leverage. million from the this to ended cash use funded our down. The cash, pay We X.X discount. an a billion. for primary of free debt $XXX quarter, Eurobond flow cash with Xx free flow we debt, the During of with billion of around of offering debt $XX.X quarter tender debt purchase the utilizing net and billion in or EUR net We billion second

We that through and a XXXX, weighing that this posture we $X.X discount trading may maintain a debt including have billion through of end be benefits end year. the flexible of will and purchasing million at the $XXX versus deeper balanced of the the maturing

to our transformation an of enough. and XX maturity can't flows, free average for years, year than in with cash average point the we of capital cost and an have the X.X%, and nearly structure greater strong opportunities weighted growth any support stress our this future, maturities a foreseeable given significantly ahead. our With advantageous I

commitment admittedly our frame to to Importantly, our though firmly gross our leverage to maintaining initially on X.Xx Xx also longer committed rating. wavered a in we anticipated. am have not target, time than achieving I investment-grade

back like Second, To over created of impairment regarding on the of carries segment. goodwill including amounts we series comments a Network build Warner past value of Discovery's of M&A the Bros. use WBD the And first, I'd assets. transactions, step of course, for a David's to regularly the in sheet monitor formation charge and balance significant take XXXX. our

market carrying between market the continued our of number of and to segment. renewals cap related events, the rights to including In Networks ad the affiliate the value planning in against second triggering assumptions the billion and quarter, a $X required the us noncash uncertainty difference softness and our impairment sports the in adjust the current book company, and take U.S. a values charge

been business the of have recognize in across I am across that growth our it's opportunity certainly direct-to-consumer our impairment, and flip business magnitude I the global value shift stronger. this not value of to studios believe never of confidence While dismissive and equally this reflects important models and side conviction and the the

continue the pleased very rollout am with I point, successful around Max with recently and that Latin to to the taking Europe. globe, America the and most make, Third, across progress we

seen great as momentum so quarter and even the a have into with Olympics more past the launching We the pad. current, serving fantastic over

content, as And We labor, the the and as promotional more brands, financially. global footprint, in feels growth investments heavy excited on, the could beloved many beginning about and local, scalable for that the out, have both finally about of global infrastructure strong expanding one for fully a our fruits substantial pointed the world made, aligned talked both see not multiyear team, every and now virtually and sports, now our lift of to ahead it international operationally our lies journey we across with like truly we've available we're story operational streaming we're our David state-of-the-art to product be a what and years our platform and and rapidly territory come. global

remain always as will declined on by due of some recent content prior which revenues the Continuing which noted, revenues, advertising the Turning QX, briefly discuss more grew modest to deals wholesale Max revenue subscriber-related I the and Domestic large March we the year. headwinds. basis. to previously DTC, And X% XX% certain we churn licensing to slightly timing retail continued trends as of highlights during quarters. results, the quarter than similar linear due second growth key That while from we a NHL expected, in momentum and conclusion strong in space, net seasons. of was see the the in is NBA add to offset uptick the have in an with Madness largely as did after ex-FX our

bulk the biggest during expect domestically, and with as X domestic through growth continued to recently the the ad addition least QX, We inventory base. evidenced net total by on free upside Streaming the term. adds monetization from content, the of emanate rolled the revenues raised of the million to gains increase continue subscriber regions, strong perhaps to all sports by which nearer doubled price opportunity U.S., saw Max outside in existing of churn expect we do during we when ad While see healthy from price subscriber nearly July drove internationally at for better-than-expected $X and engagement. the demand year-over-year

continued content we discipline. discovery a meaningful even momentum taken And allocation stronger key improving launches in by more part fueled ahead last EBITDA towards driven behind opt together, continued and this engagement represented behind personalized expense half which profitability slate, the experience costs. All for second XX% our begin tracking than subscriber-related quarter. EMEA expectations, our content trends, pivot a tier, the with of subscribers and as investment heavy is better us, to adds growth half first DTC ad-lite with sports costs $XXX should of over by revenue impacted more negative EBITDA We year. of global expect was by gross million, launch

EBITDA I've profitable segment In the to secure a That or given ramp in quarter year. a near-term the meaningful will year second noted, be to Max any least in target expect with fact, half, full investing as nicely at strong said, step for the $X our and versus we I XXXX will billion. represent prioritize towards DTC always of maximizing profitable which subscribers EBITDA

on Turning to X% reported decreased revenues Distribution basis. Networks. a

ad rates Excluding and X% outperform sports-related quarter partially the revenues domestic SportsNet, domestic affiliate EMEA distribution the declined the quarter. during pay-TV declined domestically, X% Network were during AT&T of impressions as by nicely the to while up decreased impact XX% decreased offset X% X%. increased subscribers as continued pricing. revenue and was strong

I am enjoyed impairment also how X% down in hand-in-hand the in total QX. down trends another is advertising great significant pleased segment conversation, tailwinds that company in versus of example one in pressure sequential this we in on back QX this a basis, to improvement another. with X% Tying goes

over continued just Finally, games our pay-TV million to the partnership EBITDA, will And the we our IOC Milan in Networks. and we expect are new begin better agreement Olympic is aligned on $XXX platforms. with struck this the as winter Olympics and the looking agreement is negative we XXXX. Recall, to XXXX our in of with to forward streaming rights which the and Olympics, mostly final Cortina impact under at games

up franchises. strike around particularly us coordinating perform healthy growth from despite a we better for processes we consumer remain down, to revenues sets in Now theatrical half. continued the the turning QX Television last by Experiences releases. upbeat We big product to about opportunity nicely, as of in deliveries, was the which and carryover the work recent up in second underperformance of Studios. very through swing delayed and releases aided revenue we strong managing enjoyed see

it last EBITDA Hogwarts this modeling cash muted as the headwind present are against on we've to second year's while games called and Squad a the standpoint, quarter, comp will Suicide impact out still Legacy response favorable will a be year. From spend. content strike of half struggling comp to While the a last year, the year-over-year during

nearly two generated billion was flow. a to representing driven largely Turning decrease by key This $X free the factors. million We $XXX year-over-year. during cash quarter,

modest cash And savings WGA in the an net partially content prior strike costs. lower start by the in First, against profits, restructuring cash with increase operating investment lower year. of second, the the offset

flow like And strike drag consider capital against have during three, payments puts two, will few cash our part we quarter, year. of third working in flow due to the third dynamics. the and to the during one, Number be comping Finally, the takes for on normal meaningful quarters the free half will a number will a Number cash QX, interest impacted most in be year. quarter. Olympics last second semiannual we during including the cash free

dedication, I remain long-term cash year. through and believe debt. the adaptability As be with and the focus in we're certainly change. success. and of up the that both much aligning company such, discipline our finish have That net organization's elevated I flow to better capital the cash path so pay maintaining proud while flexibility the very with conversion resiliency leverage at the at to generate levels industry made to I than investments the within set while confident confident our remain an very feel continue allocation the said, our for down in expect we right on we and than going meaningful will last of And lower year ability year. I second to half start free lower the

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

Operator

And Fishman we'll question Robert MoffettNathanson. Instructions] [Operator with take our first from

Robert Fishman

party deals? million you licensing think streaming or do XXX in future marketplace how exploring have the looking internationally, DTC U.S. in subscribers, the to I'm curious content a to preference JVs, over with of or expand the either now offering through whether about Max formal the you third and

then negotiations? write-down. of uncertainty and Gunnar, you that the a goodwill Can about outcome think help can the sensitivities any more to about NBA led with just talk fee you the if us how affiliate the future bit And for maybe little around

David Zaslav

Robert. Thanks,

global we X As core, spent a company. you we know, and our media rebuilding years Max at last are, the

country. We have every in infrastructure

most content with have relationships have and sports countries, we distributors. in and We local

the bit fact So and competitive order be be think to to chomping the And kind we is are the and launched be this at can of growth, a global ultimately we've product key leader. get sustainable that advantages really the globally. of to have and been one In long we term half Europe, quarter we're quarter. seeing will growth, off now in start. and seen, X the that as of America, second in a we're quarter. be in last launched We're subscribers you've We'll more launched this to see Latin real blend. we terrific almost It million internationally a

And the more add or the sustainable gave very We're to very will will a driven to have with America. bundle, very we're all U.S., those is with think have and our well I in and Hulu, I also but Brazil, Europe in compelling all in and is off what so JB? The in working and that a and we by it's good experience. some content Disney believe the example be that that to consumer start Latin will offering cases, be we very this [Technical accelerated -- offering going of with we early, like Disney+ Difficulty] consumer the

Jean-Briac Perrette

We for or lost second. right. lost -- it All it a I

traditional is are Look, "Hey, and players U.S., be out particularly, for of together," a that love in international that streaming and something more content more on that rollout do Dave as outside so is other echoing looking side, space local of platform look have we'd having and whether a obviously, which do the about who us the distribution international an figure U.S. incredible to the to the are the David's saying, said, us can a whether important we outside and partner together. things we markets very have we more lineup ways at anything to offering -- as content partners players comments, coming who strong in capability and lot be,

us you certainly do more strength had and us scale conversations some additional more we as showed, help lot get to we David as a partners over the will and a active help months local roll of of examples the weeks which about offerings content And out, have come. with into lot we've so we'll of that localize but and these tell already

Gunnar Wiedenfels

on driving more Robert, impairment. to factor straight get Okay. a here, is one this is point no little going and goodwill the the impairment. there color is then And that this to

So Network the the was obviously, the a as us every then the amount our books view for a the this event, planning and way goodwill a one latest play is be case in process clearly monitoring segment. the how what a strategic to that's with with which the is, in business for which on that into like is reevaluate evaluation, the and and leads assumptions, there's And process second that through so-called go the compels below we're NBA with we quarter triggering best then where of of quarter, systematic industry And to a that field. triggering play this what sports have, discussion events. to works happened billion where $X.X we the we rights comes

do the not is, to where outcome the a response investment of business. talking coin what we're one in television only distribution the market, really it's linear do sides price. I I re-evaluation, share want is global frankly, and about where also basis. in we're side perspective, a reflects market the We're a David less And significant the streaming I but increasingly go So ecosystem the successfully community very ecosystem content other what, minute from And space so my on current not is, in distribution back in think using to full with transition and a transition. is side. our linear ago, our of both that said in factor. the here, consistent not our a there to a the individual that deals more This really content on mentioned increasingly -- engaging we're right? increasingly

the The in here sales, outcomes I upfront the U.S. another example, of as the earlier. are ad mentioned

So the just industry. company. There I transformation There a as want to of that a transition well. point the is is stress in

end of the extent, that accounting the reflection and that We industry strategy. the are the of state and our at some impairment day driving actively is the to of goodwill

Operator

with is Our Min Sachs. from next Goldman question Michael

Unknown Analyst

I have just two.

about video over games. Bros. talk last last certainly within as games view one a And well. and on of strategic as Games follow-up. part for games performance the been First Warner a some but I you value portfolio? Could core the a bit uneven of couple Warner have Player potential just month, First it years, video then of you whether quick the acquired little but there's clearly, lots of

David Zaslav

JB?

Jean-Briac Perrette

and Yes. space terms the the in terms Look, that I interactive of both is the and of and media revenue. growing, spent, terms one think a we as in engagement entertainment look of time areas growing say growing at storytelling evolution the in it's growing of unique of in

we gaming see a huge can customer games. know this including in still our franchises getting number particularly a We that a we And so help demand ones and acquisition, world launching us. deprecation harder high and of franchises, are is like and where in in harder for brand-new industry the as -- for and have reasons, marketing more and that challenges with opportunity IDFA that see launching franchises the

deal of XXXX from Player business. having of really had was the releases, is even to the -- when we've games and do the console-based a also particularly little help we areas we have XX that you But inevitable we lumpiness unfortunate Now great still -- we the of is space reality capabilities of about of are side Hogwarts do still a X- with that more about leaning the bit into there balance one -- cyclicality the some get business months, Squad. in that of of do the from went which game. will right. in having more X-year short time when Suicide it our And record will unfortunately, driven that -- it in and which hit which And subscale to Legacy more we $XXX is And we year had provide you horizon a opportunities is have need a be if are space. business in that period spectrum billion grow opposite strengthening think games some still that the it free-to-play First the is part to, of the because market. And our we with that is a more we nature space, the half big to the

be in We continue see on. tell certainly to into as it the and get out lean more we'll how figure bigger to strong space. And you to believers we space. time so And that games and goes continue about in we want it

David Zaslav

the or launch the Harry something TV it's able that of or to do Batman our a the And is industry series of you become Potter, part and to it was But will into be entered as this and reasons is went ability of Legacy that you piece whether of still owning and all and create last successful is, experience there'll then world. or big Legacy Hogwarts ultimately, is, a Superman to game all so a has the going, movie, of one you of and we characters that TV that the you own. movie where be advantages think, game you a #X then and I show. But is with One maybe that used spending IP to of that have go launch time you the a strategic world that a changed, game. Hogwarts the year were world

as IP own has the we bigger to gaming advantage take gaming, coming we studios that we that for value a of JB the And of it something have some because We to also -- we have looking and space of. here is and advantage in interest which at get IP. lot we're take looking XX of to IP need of we're lot said, among others as a there's the and and that

Unknown Analyst

so, second, then carriage the potential the you just was wrapped in programming. just up? And Are the there in the Great. could changes strategy negotiation number that I to given related wondering if terms next expectation of the just wide around any of NBA the that changes up given year or deals of come NBA just carriage negotiations, about talk

David Zaslav

speak living. to to going not do for specific or XXX a specific of is IP. I'm content negotiation countries. We're what Michael. a this in But Thanks, we any or piece

with make other could our of with been it that get very is spend channels by significant library And content. very to XX the been that, years. carrying at Max an U.S. And business sure for services channels our drive business. of our world. We're the leader the content, that robust of want and world, studio food look advertising, the so audience you'll over us and we've time be a meaningful the agreements. And value -- sports sports channel in that a in one excitement that. around you it's two, require TV they a business, make a and being and that but different able us robust all therefore, and increases one, worked And that it that We've channel to cable business BXB world, have we we've pay the entertainment of that carriage we an may Aside are content get we we've that value. And distributors that have or been monetize and maker for lot hard our those effective our whether and one we to of channels and businesses. biggest very that the of the here we from offering or excites offering whether is we are significant of in nourishes sports our job, or around And to as see leaders free-to-air channel so sports They sure it's have or globally. be meaningful. channels, around

Operator

Benjamin question Stanley. our Morgan Swinburne And we'll take next with from

Benjamin Swinburne

kind a at the been about asset kind released months in through unlocking of press few David, splitting there's weeks to over the of sales last company everything the the lot up. value smaller from or company

the You talked stand-alone business interesting be at about That's that a a about the -- Gunnar markets. could company you public talked DTC. pretty in as and strength

wondering all wondering price given potential stock value it's to just some try in your on just know investors a EBITDA. the basic to I'm losing think are I NBA certainly, there. And but aggressive question, the tough about to then how of if impact Networks your unlock more So considering action you're the press out speculation

share we about be think much as that So can would us Gunnar XXXX anything outcome potential with you appreciated. into or

Gunnar Wiedenfels

is last Yes. David past I point, that I we Again, right, have about mean, analysis but that whatever in look, appropriately, just the mean, go is the scenarios it and refreshed should time in the said the this profitable Ben, earlier, into seeing. that we're to not we've said any NBA level assume as a you obviously, on been our reflects we very clear that. of the detail,

David So say it want I'll options, hand one -- thing but then to to make second, just that's I about back that. And strategic in and all a to on the clear.

any expect This we're are public or don't board. our of But out all, on of is the view same have And out answer public the we look, aware company strategic specific First there. applies second, options well on rumors team, a speculations to a and very a there. management individual responsibility company. are a whatever to

business. just focused everything clearly operational beyond very on evaluating running the are We

are see we out us M&A engaging before, be there. said So surprised on you processes going whatever shouldn't to in

partnership us seen in discussions. for engaging time. shouldn't sense, has in engage have where things. surprised makes some You talking this see been David it you quite And be about to those us

reflected that of and is not we the all... This of updating are the constantly of Regarding portfolio, believe company. course, our assets in they're in or the own views value our we properly on whether our the valuation portfolio

David Zaslav

As those well as assets. value of strategic the

Gunnar Wiedenfels

Yes. Yes.

across the of professional all Bros. I'm to one of Warner the have those benefits the mentioned And seeing DC, a of plan, rumors strategies. David that we of day, I And under cash unit. I is everywhere IP, to So we're that about strategy Warner all past leveraging all your evidence just business units, business say. the all that years going is team how for XX-year question specifically, have our this since earlier all operating we our seeing assets, ongoing the how would can registers been the creating Look, company. distribution X.X And Discovery. Discovery been and coordinate. now get every that use potentially there sentence platforms be important that our splitting able various have to across to is it in business of no great management, doubt Bros. in the up results.

heard the And third, the David, more a don't that of value, corporate structure more opportunity. on very the be. been a as business, get in an and our multiple I the segment production, the should is TV times is the film making. And secondary that that from longer on for incredibly actually labor business, the the to, DTC we perspective, of alluded we're to for takes once the to this it is seeing see So perspective, It's that anything significant as materialization you've evidence call space. starting my focus tremendous and us making sure results to say the and the that on already, fruits the running has Studio from valuable we changes the focus know, space, JB where then value that really consideration. I studio DTC have a is of see to team seeing believe for unfortunately, it little asset start game And my add? and same true

David Zaslav

we look, add was and challenging. from just tough, I conditions within that, business generationally business disrupted. would that traditional the are perspective, the being But the our X saw ago, market they're years

in And of to did lot sheet so get shape. our an we awful work balance good

have We capital a structure. terrific

#X all to is this to, grow value. and scales run at look way will then see, as if that -- is debt and company. this said, -- will possible. direct-to-consumer that very that are. it's free But is that And we will the expect company global of substantially Gunnar believe to our We're and effectively The apparent going as as that business we sports. so priority Our good the strength storytelling create investors we as And investing shareholder you content cash generating storytelling the be to, and about local an consider all to begins global where and Studio have company we our We're entertainment options. in company very we with we works debt well a We're all And view feel content. we're asset. meaningful as around flow. our a world,

Operator

next take ISI. from question Jayant We'll our Evercore with Vijay

Kutgun Maral

on Maral Kutgun is Vijay. for This

you tough have lot expectations maybe Studio. and one if given investments the the I the pieces? other the bit linear nature encouraging. to not you're Just very that of help you DTC see certainly for through walk a help was of outlook. us some guidance, level a provided DTC set outlook you the hit-driven could it's but Can moving I on But EBITDA know on back to the wanted visibility providing challenges, and half? Gunnar, of

Gunnar Wiedenfels

again, significant we as position go are we guidance. a step detailed here, bit in a little the side. again, the a if segments So DTC expecting very forward But to we're provide said, through not we on

the On the films side, we pipeline. studio in as I two big have mentioned,

lot marketing if would generally December. release year, and you one I versus the the say, we expenses beneficial with some a of speaking, didn't in took releases benefit December, compare So get last year, little a year film a lot last the only more of whereas of this late schedules in of

those of So out strike create the volatility the TV in now are the that's better. part was said, studio, impacted last I each year and things some point get well. Elsewhere coming lot want as the the also, hit-driven production that in as deeply by to a factor. But one that certainly, definitely should into business, I you of year. We're a

should be a that So helper.

side... network the On

David Zaslav

in is side, we're On TV content. investment not a TV lot purchasing really marketplace there is which less that. quantifiably encouraging, the the seeing in And

I think high-quality it we very fact that the content. represents have

working content well. Our very is

strong IP known. have We that's

the And team the looking... so numbers seeing -- Channing are are and

Gunnar Wiedenfels

much XX trends. ongoing those of any pretty productions on by unaffected air

bit called side, high I visibility that surprisingly market, in a lot in U.S. in environment our point, the want looking of network QX us as sports differentiated. ad ongoing. out in little a the linear typically make we're It's a quarter the schedule. also a point anything, market market is And almost if some smaller the whereas for predictions seeing is from that not the which -- I and ad change Europe, relative earlier those U.S., in that That's a is the not to of markets. of timing being beyond of in in given I a bit On your any taking Olympics weaker the have Europe the the said, strong to positive them we're to a definitely again, little the is actually we don't hit U.S. remember, outlier. But rights, of

so to those Vijay. the And that -- blocks building are hope that I'm helpful, I that's happy and provide,

David Zaslav

but business, We're have Motion generating we side, are encouraging Picture that is it real is back-to-back just have long-cycle rooting and team we the for On and Mike value. that. really a it a with movies good this Pam, summer that

As that theater storytelling. we or the compelling idea seems for the launch to very getting, be provide Beetlejuice, back that good going data which positive some some early people that to unique there's we're there movies -- seem

get pushing it Bros. and We into coming really back be been Warner. whether up. to Joker And Motion also we've DC have the business, Picture Warner aggressively

optimistic we're encouraged way and through that, what more ahead. much our We're and by slate we're slate by we encouraged that have the our still ahead. we're we So about working inherited,

Operator

Securities. We'll Reif question from Ehrlich next of America take with Jessica Bank our

Jessica Reif Cohen

and you're the will massive enough what in all to decline Max steady also, to obviously to is at Is this. course, a consolidated well be guys But you -- the we to letup the with it restore of think doing? it universe Studios offset and Is Bros. guess day, HBO. no it that enough offset I Warner sight. it TV or are -- the efforts on enough basis, appreciate as in pay-TV So of the the undertaking your and operations plural, as NDC I end

rights matching thing So thing. And David the lawsuit, you discussed a upcoming gap? you are know said basis? the WBD. earlier, do growing earnings I to on one on and win you're close So acquisitions Gunnar, the When sports more if loss, NBA positioned recent on maybe second consolidated sustainable growth. that's don't foresee you some rights enough for the the

David Zaslav

this really our lawyers. -- a we've I'm -- in at It point, off we're and not can't litigation. we -- to handed it

-- not. our We confidence and our see. And matching position. decide whether what matched off judge We're the work, have right, go. the We we'll getting this, to handle we'll the back we XX whether pages represents long, is decide -- and will which will we're offered and our judge will lawyers in and

Gunnar Wiedenfels

happening Jessica, your there upside the team is And enough question no both the linear business. is opportunity, that the doubt business the to the Studio in believe a -- We side. and is is yes. DTC on it answer on And offset there on first question, that in -- tremendous as what's the look, to us management to

very said, we've in a a going driver Am a what plan We've DTC process years $X for accelerate. and Yes. to point that to impairment? board, haven't is. happen. finally, we not It strategic about little clear. as starting just have this. the been through better? significant that position There's business a disappointed talked predict ago. on the I And we're I'm topline, while acceleration with the you ready of to heavy recovery discussion, a key here are I XXXX. as where where supports about went the strong across the going Again, is have point, been our trends we as years see another after I it an That about not been side, this hard We're business. managing we year, we point ending on of really we disappointed in billion and in planning The that every is linear strategic Am investments, work, when this X the X.X heard us, the for mark at an best we perfectly the EBITDA happened. to point. from is talk hasn't And can. It is a opportunity believe

it's approach, have through And the the is and from the windowing the little bit that as along share Studio at between the of on well, chain we become going production can the value lot effective. XXXX the It that. cycles side, the in studio JB a confidence by physical dominate cetera. step and level be day a to the really side every first more I films game rigor virtually So has on talked and greenlit the night the little to going light while difference. a green is effort the of teams, year in coordination into development a et takes Mike going slide. are to Pam about various when long the

The Studio question significantly operate So can very, there's at very a performance. no about higher level of it.

David Zaslav

on. be something think I is that helpful. the This Talk would all drivers -- direct-to-consumer business. in seeing day. are of gives some what real you plan out lay profit where But substantial meeting it talking JB, And have acceleration about every why and every it I week, we and the direct-to-consumer confidence an hands in growth -- of attack now for and we us growth the have we're our global that about acceleration

Jean-Briac Perrette

international growth in more mean, markets I Yes. by rollouts levers. about look, talked and far we Obviously, biggest. our the growth is

slate content Dragon launch, slate, we U.S. one originals is talked a timing we've pay-X obviously team, we lineups next net just two the the as our calls, period of and Gunnar have have a back, U.S. our pools X post the first well the of of so. of quarter, have just slates. We Number improved months coming months as of probably the side, David and content content one. work didn't that had tent strongest one strikes, tent number now about talked obviously from great or the this from some but that's which the thanks the about the to his of between out of that XX go prior Casey We the with So our on weakest help. pools more XX House to all and content series starting obviously, unfortunately with into Max cycle, where over all great being as

we content And slate, about a massive clearly is so our driver which success. great the of feel

seen the story ARPU you've where U.S. the obviously Our is price in raise third us one

outside the We on some We price rev historically the feel HBO changing raising shares underpriced. U.S., of which the also we're agreements side. U.S. wholesale the in outside are We're

rolling driving markets. markets old Am, in out to -- more roll was that. HBO product on across more across XX rolled handful of out ad-lite we're many it in We're an the Europe. We're it markets the previously now in out only So a in Max We've U.S. markets Lat ad-lite looking

we the that world not year So still from bigger it's ways And working us. The a ago out reality we -- to is we improve inches to of Max become that one recommendation U.S., product a of product. great not advertising talked a It's class. in the about. the we're features, for day good. will personalization the in get product But to experience we've takes the to a that a product, got lot are play bigger every improve game rolled continuously And to and the is said when But went driving. the time.

about crackdown, and and sharing not our and front Another more towards as customers market we are faster into to of said will -- which with we and and on us last earlier, of David end out, is year are bleed lever do efficient get accelerate least, our more is rolling more partnering it as just in then to agreements. and the this It distribution devices way. And XXXX. who more we've but before, -- rollout can password obviously, in we a the more talked effective partners start

will driver. be that another revenue so And

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David Zaslav

a global distribution this It's a Gunnar disruption. transition. it's look, felt It's a is more by consuming this being ever. content disruption People everyone. And as said, are is than -- And challenge.

Our being But of so that ever the many, felt seen by a lot content local it's fact the is been. markets. it's we've stronger than

content that make at saying, money. platforms, players to great Some us are and starting have looking don't "You're that

though around more you. maybe a and could be You're And the works I'm part really that's it, that bundles, sense? be people makes say that you, of How declining." Some of a felt right -- these through then I'm people of what even were marketplace this discussions that's being is starting I the Maybe the doing and chance terrific but forcing what have wouldn't not we're challenge if economics to turning wouldn't difficulty, experience successful business of now fighting work and scale. they this the pain that Many they happening is of challenge better? And feeling providing opportunity. in, it's of can I a the their we're part these is if good. about the to on own, the consumer of

And always best the and what be experience it so is toward What's we're to works content. driven best all going this the -- consumer way.

to it that least hoping they being see so bundling through in alone. that or that number make -- of the through And players and you U.S., playing or believe we're global platform outside we you part that a other huge U.S. think players driven say, country, we're can you're the need become are At world going and no part players I above you're to can of competing to globe. markets against markets the in for in around one big, a a look be is challenge when global. And be a matter is the building Harry I billion you how who when people Potter and of, who a taking because around

of with -- year, finally and be come say, each think, position profitable along?" I be global in playing there's to a countries around can ourselves, I this people only positioned to out and they at where "Can have can the and being and we've challenged -- this or been be now world a so accelerating these employers And losing have few that reach money to

Gunnar Wiedenfels

doubt, the to want question. just avoidance to back your Jessica, I come for original And of

plan very topline have today. transformation saw the took through working We obviously, impairment bottom in a we as we're growth. a that growth, foresees that is period growth, line that There you

flow period. generate rating. come a I out investment-grade We and fully the have side that maintaining growing strong We're company committed going free have cash the to going to through we're a as no other strong that tremendous doubt to balance this. and transformation sustainably And We're healthy sheet. very on of

Operator

UBS. with final from today come our for And Hodulik John question will

John Hodulik

JB's for wanted David, I to I comments. markets follow on just now up XX think you Max. mentioned

expect drive could globe. big do of will imagine, how Just third Olympics of -- on growth? quarter, mean, everywhere to that be get can it it as on business how the it I the many terms But more to both markets in that relates be? to you just expect here to? And how in -- DTC and sort the that you advertising color any the then

David Zaslav

markets our has of biggest the and three the the it in just And saying in by huge Italy. content and we're U.K. numbers in we -- Let not me in start see is viewership where Germany in appeal.

advantage. of launching end is be own gives our an in So also leader soon, up which Sport sports a at we'll the product TNT in U.K. our which coming us own We're the 'XX, with product

out you're scale. to And see think in come those real to three going I markets, so

can talked XX% JB? other bit about but of -- some markets little not JB, yet. than to we're our talk Japan a we markets, our more and in you

Jean-Briac Perrette

is time the about the vast That's of bigger our we the have X best rollout and to by million in are of We're -- talked is just majority XXX% those frame, you that way XX-month half addressable markets. And we're today, addressable to subs. underway them mentioned, the the will if of first there about XXX David in we and about place. over taken scaling, at XX- and 'XX, reality and but peers market will over exactly talked the of fact our be think measure XX%

significant. and the about at our think point, David's content half market your where to and markets the we know big -- of but opportunity what addressable have size could you we So XXX our the of be, We million XXX thinking markets audiences, are today some do opportunity million penetration to is we're of of own them know our those subs. in

And of so we top think today. XX in are the and where we is the in tens subscribers to of of next months, the millions easily opportunity tens certainly on XX

David Zaslav

And in And Europe XX% last it's just -- of to middle last Latin that be and in Europe, launched launched we're We going we quarter. We look, the attacking. in America. quarter. that's launched

of a couple we're So in. weeks

those you're And see markets we months. haven't going you'll to next this quarter. yield, which coming it over So to from the see the several had start

John Hodulik

And the Olympics?

Gunnar Wiedenfels

And and years, subscriber taking X-year period. arrangement, years, importantly, opportunity. in more are of rollout flow more drive next then benefits and the Olympic affiliate Max going the Player, recognized our from past big, are sublicensing seeing going requirements. in engagement obviously, our the And the we have impact at to the keep be is wholesale Eurosport it's our that going all rollout. the the entire essentially push to and It broadcast this we're generated XXXX. us. business the X loss believe, in a where lot games in discussions the And place to quarter, costs contract free is cash very see the much about be the on as driver one all That's to the Olympics on based continue under you're are phenomenal little for because and quarter on new side, pronounced And where the the these we called a numbers negative And of a rights the from and of which to and the benefited over again, that was large benefits to a markets acquisition. a to, that There streaming I why thing struck games of individual in out, take is rights a games focused pay-TV it's time, past place. in most mind, under was very digital very, significantly today. This over meet and for last had Olympics we've renewals. The There's components Olympics. contract. free-to-air set helpful a old having talked in the those The that we that we don't various this

Operator

that And this wonderful participation. please that you does session. have today's time, today's you conclude And does disconnect thank at program. Difficulty] question-and-answer any We [Technical a and for day. your conclude

Warner Bros. Discovery (WBD) 7 Aug 242024 Q2 Earnings call transcript