Q4 2023 Warner Bros Discovery Inc Earnings Call

Ladies and gentlemen, welcome to the Warner Brothers Discovery's fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. Additionally, please be advised that today's conference call is being recorded I would now like to hand the conference.

Operator: Ladies and gentlemen, welcome to the Warner Bros. Discovery 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. Additionally, please be advised that today's conference call is being recorded. I would now like to hand the conference over to Mr. Andrew Slabin, Executive Vice President, Global Investor Strategy. Mr. Slabin, you may begin.

Over to Mr. Andrew Slaven Executive Vice President Global Investor strategy, Sir you may begin.

Okay.

Andrew T. Slabin: Good morning, and thank you for joining us for Warner Bros. Discovery's Q4 earnings call. Joining me today is David Zaslav, President and Chief Executive Officer, Gunnar Wiedenfels, Chief Financial Officer, and J.B. Perrette, CEO and President, Global Streaming and Games. Today's presentation will include forward-looking statements that we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include comments regarding the company's future business plans, prospects, and financial performance and involve risks and uncertainties that could cause actual results to differ materially from our expectations.

Andrew T. Slabin: Good morning, and thank you for joining us for Warner Brothers discoveries Q4 earnings call. Joining me today is David Zaslav, President and Chief Executive Officer, Gunther of Eaton Fells, Chief Financial Officer, and JB, Perrette, CEO and president global streaming of games.

Andrew T. Slabin: Today's presentation will include forward looking statements that we make pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Andrew T. Slabin: Forward looking statements may include comments regarding the company's future business plans prospects and financial performance and above risks and uncertainties that could cause actual results to differ materially from our expectations for additional information on factors that could affect these expectations. Please see the company's filings with the U S Securities and Exchange Commission, including but not limited to the company's most recent annual report on form.

Andrew T. Slabin: For additional information on factors that could affect these expectations, please see the company's filings with the U.S. Securities and Exchange Commission, including but not limited to the company's most recent annual report on Form 10-K and its reports on Form 10-Q and Form 8-K. And with that, I'd like to turn the call over to David. Our top priority this year was to get this company on solid footing and on a pathway to growth. And we've done that. We said we'd be less than four times levered, and we are. We paid down $5.4 billion in debt for the year, for a total of more than $12.4 billion since the deal closed.

Andrew T. Slabin: <unk> 10-K, and its reports on Form 10-Q and form 8-K.

Andrew T. Slabin: And with that I'd like to turn the call over to David.

David M. Zaslav: Hello, everyone and thank you for joining us for our fourth quarter and full year earnings call.

David M. Zaslav: Top priority. This year was to get this company on solid footing and on a pathway to growth and we've done that.

David M. Zaslav: Said, we'd be less than four times levered and we are we.

David M. Zaslav: We paid down $5 4 billion in debt for the year for a total of more than $12 4 billion. Since the deal closed. We're now at three nine times and expect to continue to Delever in 2024.

David M. Zaslav: We're now at 3.9 times and expect to continue to delever in 2024. We've significantly enhanced the efficiency of the organization with a long runway still to go. We said we were going to generate meaningful, free cash flow, a key KPI for our leadership and company. And we exceeded our goal with $6.2 billion for the year. Gunnar will take you through the financials.

David M. Zaslav: We have significantly enhanced the efficiency of the organization with a long runway still to go with.

David M. Zaslav: We said, we were going to generate meaningful free cash flow a key kpis for our leadership and company and we've exceeded our goal with $6 2 billion for the year.

David M. Zaslav: Gunnar will take you through the financials.

Gunnar: And I would just highlight that as we look at the start of the first quarter two months in.

David M. Zaslav: But I would just highlight that as we look at the start of the first quarter, two months in, we are already seeing markedly improved free cash flow for Q1 versus the first quarter last year, and an inflection sequentially in linear, and an acceleration in screaming advertisers. We are optimistic that the efforts we've undertaken on digital and advanced advertising solutions, much of which you'll hear about leading up to and during the upfront, will enable us to achieve a more competitive profile. Bottom line, we're a far healthier company now, and we're building real momentum. And we expect 2024 will be a year to drive that momentum forward even further. That said, this business is not without its challenges. Among them, we continue to face the impacts of ongoing disruption in the pay TV ecosystem and a dislocated linear advertising ecosystem. We are challenging our leaders to find innovative solutions.

Gunnar: We're already seeing markedly improved free cash flow for Q1 versus first quarter last year.

Gunnar: And inflection sequentially in linear and.

Gunnar: And an acceleration and screaming and advertising.

Gunnar: We are optimistic that the efforts we've undertaken on digital and advanced advertising solutions much of which youll hear about leading up to and during the upfront will enable us to achieve a more competitive profile.

Gunnar: Bottom line, we're up.

Gunnar: Far healthier company now.

Gunnar: And we're building real momentum.

Gunnar: And we expect 2024 will be a year to drive that momentum forward even further.

Gunnar: That said this business is not without its challenges.

Gunnar: Among them, we continue to face the impacts of ongoing disruption in the pay TV ecosystem and a dislocated linear advertising ecosystem.

Gunnar: We are challenging our leaders to find innovative solutions.

David M. Zaslav: For example, our U.S. networks and sports teams have been collaborating on a number of initiatives aimed at expanding audience reach and impact through cross-promotion. And I do believe we are getting smarter at determining what's working and what's not, which is helping to drive healthy traction in ratings and an improved near-term outlook for advertising revenue. Internationally, Gerhard Zeiler and his regional teams are doing an outstanding job, as international networks are performing strongly and gaining momentum, particularly in EMEA. Of note, linear advertising in EMEA was positive in Q4, with standout markets in Poland, Germany, and Italy, the latter of which is enjoying a truly material upswing in ratings behind some of the incredibly successful programming moves at flagship Nove, which had its best quarter ever in Q4. I was just in Italy two weeks ago and spent some time with the team.

For example, our U S networks and sports teams have been collaborating on a number of initiatives aimed at expanding audience reach and impact through cross promotion and.

Gunnar: And I do believe we are getting smarter at determining what's working and what's not.

Gunnar: Helping to drive healthy traction in ratings and an improved near term outlook and advertising revenue.

Gunnar: Internationally, Gerhard Zeiler and his regional teams are doing an outstanding job.

Gunnar: International networks are performing strongly and gaining momentum, particularly in EMEA.

Gunnar: Of note linear advertising in EMEA was positive in Q4.

Gunnar: With standout markets in Poland, Germany, and Italy, the latter of which is enjoying a truly material upswing in ratings behind some of the incredibly successful programming moves at flagship novae, which had its best quarter ever in Q4, I was just in Italy, two weeks ago and spent some time with the team.

David M. Zaslav: Their ratings this quarter are tracking it up over 20%. It's a terrific, creative team, and they have some real momentum. In fact, EMEA enjoyed its largest quarterly year-over-year share growth since the outset of the pandemic in 2020, despite some sluggishness in the UK and certain Nordic markets.

Gunnar: Their ratings this quarter are tracking it up over 20%, it's a terrific creative team and they have some real momentum.

Gunnar: In fact, EMEA enjoyed its largest quarterly year over year share growth since the outset of the pandemic in 2020, despite some sluggishness in the U K and certain Nordic markets.

David M. Zaslav: This next chapter for Warner Bros. Discovery is about putting us on a path to growth. And we've got a lot of drivers of that growth, which at its core is underpinned by great storytelling. We are a creative storytelling company powered by 100 years of arguably the best franchises, brands, libraries, and content in the business, and we are on. Our studios are back and firing on nearly all cylinders after the strike. We're one of the biggest makers and sellers of content in the world. On the theatrical and gaming side, well, we did have some real misses this year.

Gunnar: This next chapter for Warner Brothers Discovery is about putting us on a pathway to growth.

Gunnar: And we've got a lot of drivers of that growth, which at its core is underpinned by great storytelling.

We are creative storytelling company powered by 100 years of arguably the best franchises brands libraries and content in the business and we are on offense.

Gunnar: Our studios are back and firing on nearly all cylinders after the strikes.

Gunnar: We're one of the biggest makers and sellers of content in the world.

Gunnar: On the theatrical and gaming side, while we did have some real Mrs. This year.

David M. Zaslav: We also had some really big wins, including Barbie, the number one movie globally and the most successful movie in the history of Warner Brothers, and Hogwarts Legacy, the biggest game of 2023. Also, in 2023, we relaunched our theatrical animation division with an commitment to have two features a year on our slate beginning in 2026. Bill Domanski is leading our animation division after spending two decades at DreamWorks, and he's hard at work here with us on the lot.

Gunnar: We also had some really big wins, including Barbie the number one movie globally and the most successful movie in the history of Warner Brothers, and Hogwarts legacy the biggest game of 2023.

Gunnar: Also in 2023, we relaunched our theatrical animation division with a commitment to have two features a year on our slate beginning in 2026.

Gunnar: Bill demand ski is leading our animation division after spending two decades at Dreamworks and he is hard at work here with us on the lot.

David M. Zaslav: Now, with the addition of animation, DC, and our existing Warner Bros. and New Line cinema labels, we have created a home for every kind of film and story to be told, and we are excited about what's ahead for movie-going audiences. We've had a challenging couple of years, but we are now very excited about our slate for the year ahead, starting with Dune Part 2, which arrives in theaters a week from today and has strong tracking, 97% on Rotten Tomatoes, which is rare for a sequel. We also have Godzilla vs. Kong: The New Empire, a follow-up to the hugely successful 2021 film opening next month.

Gunnar: Now with the addition of animation D C and our existing Warner brothers in New line cinema labels. We have created a home for every kind of film and story to be told and we are excited about what's ahead for moviegoing audiences.

Gunnar: We've had a challenging couple of years, but we are now very excited about our slate in the year ahead, starting with dune part two which arrives in theaters a week from today and a strong tracking 97% on Rotten Tomatoes, which is rare for a sequel.

Gunnar: We also have Godzilla versus call it the new Empire, a follow up to the usually successful 2021 film opening next month.

Gunnar: When we launched this company almost two years ago, we made it clear we believe in this business.

David M. Zaslav: When we launched this company almost two years ago, we made it clear we believed in this business. We're a pure storytelling company, and we're going to bring the best people in front of and behind the camera back to Warner Bros., and we have been laser focused on doing just that. First, Warner Brothers is back in business with Tom Cruise. Our partnership with Tom is off and running. Mike and Pam spent a couple of days hard at work with Tom in London earlier this month. As you saw yesterday, we are in negotiations for a new film by Academy Award winner Alejandro Iárritu. Starring Tom.

Gunnar: We are a pure storytelling company and we're going to bring the best people in front of and behind the camera back to Warner Brothers, and we have been laser focused on doing just that.

Gunnar: First Warner Brothers is back in business with Tom cruise.

Gunnar: Our partnership with Tom is often running.

Gunnar: Mike and Pam spent a couple of day is hard at work with Tom in London earlier this month.

Gunnar: As you saw yesterday, we are in negotiations for a new film by Academy Award winner, our Hangzhou and <unk>.

Gunnar: Starring Tom.

David M. Zaslav: This will be the first of many films with us and Tom, and we look forward to a long future together. Paul Thomas Anderson is also at Warner, hard at work on his new film starring Leonardo DiCaprio, Sean Penn, and Regina Hall. Maggie Gyllenhaal's new movie is set to begin shooting soon, starring Christian Bale, Jesse Buckley, Penelope Cruz, and Annette Bening.

Gunnar: This will be the first of many films with us and Tom and.

Gunnar: And we look forward to a long future together.

Gunnar: Paul Thomas Anderson is also a one are hard at work on this new film starring Leonardo Dicaprio, Sean Penn and Regina Hall.

Gunnar: Maggie Gyllenhaal New movie is set to begin shooting soon starring Christian Bale, Jesse Buckley, Penelope Cruz and Annette Bening.

David M. Zaslav: Black Panther director Ryan Coogler and star Michael B. Jordan are coming together for a new original genre film that will go in front of cameras later this spring. George Clooney is back with Warner Brothers and working on a number of exciting projects. On the TV side, we just announced another season of the hit show True Detective with creator and showrunner Issa Lopez. Juggernaut series The White Lotus, from creator and showrunner Mike White, is currently in production. And Craig Maven has started filming the new season of the hit show, The Last of Us. It's really encouraging to see so many incredibly talented creatives here at Warner Bros. And, most importantly, They share our vision of being home to great storytelling, stories that entertain, inform, and, when we are at our best, inspire. This is the Warner Bros. we are building together. This is the Warner Bros. of the future.

Gunnar: Black Panthers director Ryan Kugler in Star, Michael B, Jordan are coming together for our new original genre film that will go in front of cameras later this spring.

George Clooney is back with Warner brothers, and working on a number of exciting projects.

Gunnar: On the TV side, we just announced another season of the hit show true detective with creator and showrunner visa Lopez.

Gunnar: <unk> series, the white Lotus from creator and showrunner Mike White is currently in production.

And Craig Nathan has started filming the new season of the hit show the last of Us.

Gunnar: It's really encouraging to see so many incredibly talented creative here at Warner Brothers and.

Gunnar: And most importantly, they.

Gunnar: They share our vision.

Gunnar: To be home to great storytelling.

Gunnar: Stories that entertain inform when we're at our best inspire.

Gunnar: This is the Warner brothers, we are building together.

Gunnar: This is the Warner brothers of the future.

Gunnar: A real strategic advantage, we have as a company.

David M. Zaslav: A real strategic advantage we have as a company, and I've talked about it often, is the strength and depth of our franchise, which I believe will be a meaningful driver of asset value and growth for us. We intend to deliver on our commitment to reinvigorate the best of them. And as I've said, major franchises have been underused and underleveraged. We are hard at work to begin to get full value. Superman! We haven't made a Superman movie in over a decade.

And I've talked about it often is the strength and depth of our franchises.

Gunnar: Which I believe will be a meaningful driver of asset value and growth for us.

Gunnar: And we intend to deliver on our commitment to reinvigorate the best of them.

Gunnar: And as I've said.

Gunnar: Major franchises have been under used and under leveraged.

We are hard at work.

Gunnar: To begin to get full value.

Gunnar: Superman.

Gunnar: We haven't made a Superman movie in over a decade.

David M. Zaslav: James Gunn's Superman starts filming next week. I've had a glimpse into what James and Peter are doing, and it really does serve as an exciting indicator of where the new DC is headed under their leadership. And there'll be more that you'll hear from them in the months ahead. Game of Thrones. George R.R.

Gunnar: James Gunn Superman starts filming next week I've had a glimpse into what James and Peter are doing and it really does serve as an exciting indicator of where the new DC is headed under their leadership and there'll be more that youll hear from them in the months ahead.

Gunnar: Game of Thrones.

Gunnar: George RR Martin is in preproduction for the new spin off a night of the seven kingdoms, which will premiere in late 2025 on Max.

David M. Zaslav: Martin is in pre-production for the new spin-off, A Knight of the Seven Kingdoms, which will premiere in late 2025 on Mac. Harry Potter, We've not been shy about our excitement around Harry Potter. The last film was made more than a dozen years ago. I was in London a few weeks ago with Casey and Channing, and we spent some real time with J.K. and her team.

Gunnar: Harry Potter.

Gunnar: We've not been shy about our excitement around Harry Potter.

Gunnar: The last film was made more than a dozen years ago.

Gunnar: I was in London, a few weeks ago with KC and chatting and we spent some real time with JK and her team.

David M. Zaslav: Both sides are thrilled to be reigniting this franchise. Our conversations were great, and we couldn't be more excited about what's ahead. We can't wait to share a decade of new stories with fans around the world on Mac; we're aiming for a debut in 2026. A top priority for us has been building Macs, our streaming server. We fought hard to get Max to be profitable last year, and we are now committed to driving profitable top-line growth. And while it's still early innings, we feel good about the trajectory we were on and are on track to achieve our guidance of $1 billion in EBITDA in 2025. We're especially excited about the next 24 months. We have a number of meaningful growth levers ahead, including the rollout of Macs in key international regions and markets, starting with Latin America next week, with markets in EMEA and APAC to follow later in the year, including new markets France and Belgium to coincide with the Paris Olympics this summer. We are only available in less than half the addressable households and markets as compared to our larger peers.

Gunnar: Both sides are thrilled to be reigniting this franchise.

Gunnar: Our conversations were great and we couldnt be more excited about what's ahead.

Gunnar: We can't wait to share a decade of new stories with fans around the world on Max we're aiming for a debut in 2026.

Gunnar: The top priority for US has been building Max our streaming service, we fought hard to get Max to be profitable last year. We are now committed to driving profitable topline growth.

Gunnar: And while it's still early innings, we feel good about the trajectory. We're on and are on track to achieve our guidance of $1 billion in EBITDA for 2025.

Gunnar: We're especially excited about the next 24 months.

We have a number of meaningful growth levers ahead, including the rollout of Max in key international regions and markets, starting with Latin America next week with markets in EMEA and APAC to follow later in the year, including new markets, France, and Belgium to coincide with the Paris Olympics. This summer.

Gunnar: Keep in mind, we are only available in less than half the addressable households end markets as compared to our larger peers.

David M. Zaslav: So we still have a huge opportunity for growth and globalization over the next two years, including many critical markets around the globe, such as the UK, Germany, Italy, Australia, and Japan, on all of which we have a substantial amount of local content, and in many, we have sports as well. We're also driving better segmentation and monetization by launching the new ad-supported offering, which is currently only available here in the U.S. And by the end of this year, will be available in over 40 markets globally as well. We also have a number of lucrative partnership deals internationally that will help us scale in a more efficient and accelerated fashion. It's worth noting that Q4 saw the lowest U.S. churn rates in HBO Max and Max's history, and the personalization and product improvements planned for this year should continue to have a positive impact on churn. And finally, we're excited to be refreshing and reinvigorating. Our content pipeline at max. The fact is... The strikes really slowed down production.

Gunnar: So we still have a huge opportunity for growth from globalization over the next two years, including many critical markets around the globe, such as the UK, Germany, Italy, Australia and Japan.

Gunnar: All of which we have a substantial amount of local content and in many we have sports as well.

Gunnar: We're also driving better segmentation and monetization.

Gunnar: By launching the new AD supported offering which is currently only available here in the U S. By the end of this year will be available in over 40 markets globally as well.

Gunnar: We also have a number of lucrative partnership deals internationally that will help us scale and more efficient in accelerated fashion.

Gunnar: It's worth noting that Q4 saw the lowest U S churn rates and HBO Max and matches history.

Gunnar: And the personalization and product improvements planned for this year should continue to have a positive impact on churn.

Gunnar: And finally, we're excited to be refreshing and reigniting.

Gunnar: Our content pipeline at mass.

Gunnar: The fact is the.

Gunnar: The strikes really slowed down production.

David M. Zaslav: And we didn't have as much content as we wanted from that, but we're now moving forward with a great flight. Our most recent series, True Detective Night Country, starring Jodie Forster, was a real success, averaging over 12.5 million viewers, the highest season ever for the series.

Gunnar: And we didn't have as much content as we wanted for Max.

Gunnar: And we're now moving forward with a great slate.

Gunnar: Our most recent series true Detective Knight country, starring Jodie Foster was a real success.

Gunnar: Averaging over $12 5 million viewers the highest season ever for this series.

David M. Zaslav: Looking ahead, we've got one of the best lineups in the history of HBO. This next quarter, we'll have HAC and House of the Dragon, followed by DC's The Penguin and the new Dune series. Then, in 2025, we'll kick off the year with the new season of The White Lotus, followed by The Last of Us, and Euphoria, just to name a few. Also coming to Max from Warner Brothers Motion Pictures are Aquaman and The Last Kingdom on February 27th.

Gunnar: Looking ahead, we've got one of the best lineups and the history of HBO.

Gunnar: This next quarter, we'll have hacks.

Gunnar: In house of the Dragon.

Gunnar: Solid by Dcs the Penguin.

And the new <unk> series.

Gunnar: Then in 2025, we will kick off the year with the new season of the White Lotus.

Gunnar: Followed by the last of Us.

Gunnar: And you for you just to name a few.

Gunnar: Also coming to Max from Warner Brothers Motion Pictures are Aquaman and the last Kingdom on February 27th.

David M. Zaslav: Wonka will join the service on March 8th, followed by Dune Part 2 in the spring. We've also inked a multi-year deal with A24 in December to bring A24's theatrical releases exclusively to Max, and they've already started being carried.

<unk> will join the service on March 8th followed by due in part to in the spring.

We also inked a multiyear deal with <unk> 24 in December to bring a 'twenty force theatrical releases exclusively to Max they've already started being carried.

David M. Zaslav: I want to mention one other area of our business before turning it over to Gunnar to talk through the quarter. As you heard last week, we're entering a new joint venture with Disney and Fox focused on sports. We believe this will provide a terrific consumer experience and will be a great business that we couldn't be more excited about. We will also be able to bundle this product with Max. So we see this new joint venture as another potential driver of incremental growth for our business going forward. One more point about our sports business. Last weekend, we saw great coverage and strong ratings for the NBA All-Star Game and All-Star Weekend. We have had a strong, positive 40-year relationship with the NBA.

Gunnar: I want to mention one other area of our business before turning it over to Gunnar to talk through the quarter. As you heard last week, we're entering a new joint venture with Disney and Fox focused on sports. We believe this will provide a terrific consumer experience.

Gunnar: It will be a great business.

Gunnar: Wouldn't be more excited about it.

Gunnar: We will also be able to bundle this product with Max So we see this new joint venture is another potential driver of incremental growth for our business going forward.

Speaker Change: One more point on our sports business.

Speaker Change: Last weekend, we saw great coverage and strong ratings at the NBA All star game in all Star weekend.

Speaker Change: We have a strong positive 40 year relationship with the NBA.

Gunnar Wiedenfels: And in terms of our MBA rights, we are now fully engaged in renewal discussions, and they are constructive and productive. Our global sports portfolio continues to provide real, meaningful value to all of our platforms. We're proud to be the home of one of the most coveted collections of premium sports content in the industry, along with a best-in-class talent roster and exceptional production value. We're excited for our expansive coverage of the Paris Summer Olympics throughout all of Europe as well. The hard work we've done over the last nearly two years has positioned us well financially and creatively. And as we look towards the future, we will continue to make the tough calls and do what is necessary to get this business on a clear pathway to growth and to drive increased shareholder value. With that, I'll turn it over to Gunnar, and he'll walk you through the financials for the quarter. Thank you, David.

Speaker Change: And in terms of our NBA rights. We are now fully engaged in renewal discussions and they are constructive and productive.

Speaker Change: Our global sports portfolio continues to provide real meaningful value to all of our platforms.

Speaker Change: We're proud to be the home of one of the most coveted collections of premium sports content in the industry.

Speaker Change: Along with our best in class talent roster and exceptional production values.

Speaker Change: We're excited for our expansive coverage of the Paris Summer Olympics throughout all of Europe as well.

Speaker Change: The hard work we've done over the last nearly two years has positioned us well financially and creatively and as we look towards the future. We will continue to make the tough calls and do what is necessary to get this business on a clear pathway to growth.

Speaker Change: And to drive increased shareholder value.

Speaker Change: With that I'll turn it over to Gunnar and he'll walk you through the financials for the quarter.

Gunnar Wiedenfels: And thank you everyone for joining us this morning. 2023 was indeed a year marked by the accomplishment of several key objectives. And I'm very pleased with the effort across the organization to evolve our company as our industry continues to change. We come into 2024 well-positioned and, once again, with an ambitious agenda to further enhance our financial and strategic profiles and to drive meaningful long-term shareholder value. Though we grew EBITDA 12% for the year on a pro-forma basis, more than $1 billion year-over-year, the enormous financial benefits of our many important and successful transformative efforts have been somewhat mitigated by sustained headwinds across the United States. Yet, we made strong progress against this backdrop this year, and I'd like to highlight a few notable accomplishments. First, our post-merger integration is substantively complete as of the end of 2023. We have now achieved total combined merger and transformation savings of four billion dollars, not including the significant savings realized on content.

Gunnar: Thank you David and thank you everyone for joining US. This morning, 2023 was indeed, a year marked by the accomplishment of several key objectives and I am very pleased with the effort across the organization to evolve our company as our industry continues to change.

Gunnar: We come into 2024, well positioned and once again with an ambitious agenda to further enhance our financial and strategic profile and to drive meaningful long term shareholder value.

Gunnar: Though we grew EBITDA, 12% for the year on a pro forma basis more than $1 billion year over year, the enormous financial benefits of our many important and successful transformative efforts have been somewhat mitigated by a sustained headwinds across the industry. Yet we made strong progress against this backdrop this year and I'd like to highlight a few notable.

Gunnar: <unk>.

Gunnar: First our post merger integration is substantively complete as of the end of 2023, we have now achieved total combined merger and transformation savings of $4 billion.

Gunnar: Not including the significant savings realized on content as well as.

Gunnar Wiedenfels: As David has laid out before, while we talked about synergies, we're really applying a fundamentally different management approach to the combined company, data-driven and rational, with shareholder value at the center. There are substantial improvement opportunities left for us to capture, particularly in areas such as enterprise systems, production flow, and global centers of excellence, to name a few. And we expect to see this reflected in our near and long-term free cash flow journey. This is an entire organization buying into and operating under a one team, one company model. Second, our streaming team has made the turn.

Gunnar: As David has laid out before while we talked about synergies, we're really applying a fundamentally different management approach to the combined company data driven and rational with shareholder value at the center. There are substantial improvement opportunities left for us to capture particularly in areas such as enterprise systems production flow global centers of excellence to name a.

Gunnar: A few and we expect to see this reflected in our near and long term free cash flow generation. This is an entirely.

Gunnar: Fire organization buying into an operating with a one team one company mindset.

Gunnar: Second our streaming team has made the turn the DTC segment generated approximately $100 million of positive EBITDA, a $2 2 billion dollar improvement year over year on a pro forma basis, well ahead of our targets.

Gunnar Wiedenfels: The DTC segment generated approximately $100 million of positive EBITDA, a $2.2 billion improvement year over year on a pro forma basis, well ahead of our target. This was accomplished with a tremendous level of rigor and discipline across every aspect of the business, from programming to marketing to technology. And, as expected, we've begun to see an inflection in subscriber-related revenue, both distribution and advertising, which accelerated to over 6% during the second half of the year versus very modest growth in the first, helped by price increases, growth in the ultimate tier, and scaling of the AdLight subscriber. 2024 will indeed be a pivotal year for Macs.

Gunnar: This was accomplished with a tremendous level of rigor and discipline across every aspect of the business from programming to marketing to technology.

Gunnar: And as expected we have begun to see an inflection in subscriber related revenues, both distribution and advertising, which accelerated to over 6% during the second half of the year versus very modest growth in the first helped by price increases growth in the ultimate Pierre and scaling up the AD light subscriber base.

Gunnar: 2024 will indeed be a pivotal year for Max re launches and rebranding and existing Latin American and European markets over the next few months will be critical to bringing consumers and improved product experience and a more robust content offering which will put us a better competitive footing.

Gunnar Wiedenfels: Relaunches and rebranding in existing Latin American and European markets over the next few months will be critical to bringing consumers an improved product experience and a more robust content offering, which will put us on a better competitive footing. We will continue to take a disciplined approach to investing in subscriber growth, mindful of lifetime value to subscriber acquisition cost ratios as we proceed into this next phase. D2C advertising roles should layer in nicely throughout the year, and the business is gaining momentum as it scales. With a more high-profile slate of shows from HBO scheduled for release throughout the year, as compared to the second half of 2023, we're very well positioned to offer a greater share of highly coveted premium streaming. Third, you have heard us talk about the free cash flow opportunity since we first announced the deal. In 2023, we generated $6.2 billion of free cash flow, a 60% conversion of our EBITDA to free cash. The impact of the strikes contributed roughly $1 billion to free cash flow while negatively impacting our EBITDA by a few hundred million.

Gunnar: We will continue to take a disciplined approach to investing in subscriber growth mindful of lifetime value to subscriber acquisition cost ratios as we proceed into this next phase.

Gunnar: DTC advertising growth should layer in nicely throughout the year and the business is gaining momentum as it scales with the more high profile slate of shows from HBO are scheduled for release throughout the year as compared to the second half of 2023, we're very well positioned to offer a greater share of highly coveted premium streaming inventory.

Gunnar: Third you have heard us talk about the free cash flow opportunities since we first announced the deal in 2023, we generated $6 2 billion of free cash flow, a 60% conversion of our EBITDA to free cash flow the impact of the strikes contributed roughly $1 billion to free cash flow, while negatively impacting our EBITDA by a few hundred million.

Gunnar: We made great strides in realizing capital efficiencies throughout the year and it was particularly evident in Q4 with over $3 $3 billion of free cash flow generated this quarter alone I am very pleased with the momentum here as the focus of the entire team continues to shift towards a deeper understanding of capital returns and shareholder value.

Gunnar Wiedenfels: We made great strides in realizing capital efficiencies throughout the year, and it was particularly evident in Q4, with over $3.3 billion of free cash flow generated this quarter alone. I am very pleased with the momentum here, as the focus of the entire team continues to shift towards a deeper understanding of capital returns and shareholder value. We have laid a very solid foundation in 2023, and I expect 2024 to be another strong free cash flow year. Finally, all of this has helped support $5.4 billion of debt paydown during, including all of our more expensive variable rate term loans, enabling us to finish 2023 with less than $40 billion of net debt and resulting in net leverage of 3.9 times EBITDA, in line with our guidance from last February, despite all the headwinds mentioned I am very pleased and comfortable with our current capital structure, given the tremendous progress we have made. The entirety of our outstanding debt is now fixed at an average cost of 4.6%, and an average duration of 15 years.

Gunnar: Have laid a very solid foundation in 2023, and I expect 2024 to be another strong free cash flow year.

Gunnar: Finally, all of this has helped support $5 $4 billion of debt pay down during the <unk>.

Gunnar: Including all of our more expensive variable rate term loans, enabling us to finish 2023 with less than $40 billion of net debt and resulting in net leverage of three nine times EBITDA in line with our guidance from last February despite all the headwinds mentioned earlier.

Gunnar: I am very pleased and comfortable with our current capital structure given the tremendous progress we have made.

Gunnar: The entirety of our outstanding debt is now fixed with an average cost of four 6% and average duration of 15 years.

Gunnar Wiedenfels: Importantly, we have only very manageable amounts of debt coming due over the next three years, $1.8 billion this year, $3.1 billion next year, and $2.3 billion in 2026, providing us with real flexibility in how exactly we de-leverage. We remain committed to our long-term gross leverage target of two and a half to three times. And while we do not expect to hit that target by the end of this year, as we noted on our last earnings call, we do expect to continue de-levering in 2024, as we stay focused on debt repayment with our free cash flows and any proceeds from non-core asset sales, like the all three media sale announced last year. Turning briefly to the quarter, which I will discuss on a constant currency basis, I'd like to call out a few items and offer some additional puts and takes to consider for each of the sectors.

Gunnar: <unk>, we have only very manageable amount of debt coming due over the next three years $1 8 billion. This year three.

Gunnar: $3 1 billion next year and $2 3 billion in 2026, providing us with real flexibility and how exactly we delever the company.

We remain committed to our long term gross leverage target of two five to three times and while we do not expect to hit that target by the end of this year as we noted on our last earnings call. We do expect to continue Delevering in 2024, as we stay focused on debt repayment with our free cash flows and any proceeds from noncore asset sales like all three media.

Gunnar: Announced last week.

Gunnar: Turning briefly to the quarter, which I will discuss on a constant currency basis I'd like to call out a few items and offer some additional puts and takes to consider for each of the segments.

Gunnar Wiedenfels: Starting with studios, the primary call-outs were number one, the impact of the strikes, as I noted, which halted the production and delivery of TV content during the fourth quarter, which also informed some of our decisions about retaining or licensing content externally in the second half of the year. And two, what can best be characterized as an inconsistent performance on the theatrical Wonka, the co-financing partnership, had great success at the global box This was evident in our lower-than-expected financial results across revenue and EBIT.

Gunnar: Starting with studios.

Gunnar: Primary callouts, where are number one the impact of the strikes as I noted, which hold with the production and delivery of TV content during the fourth quarter, which also inform some of our decisions about retaining our licensing content externally in the second half of the year.

Gunnar: And two what can best be characterized as an inconsistent performance after theatrical slate.

Gunnar: <unk> the co financing partnership has had great success at the global box office and performed well above expectations, while aqua manner last kingdom and the color purple. Unfortunately did not this was evident in our lower than expected financial results across revenue and EBITDA.

Gunnar: A couple of items to consider for the studio segment during the coming quarter. We are lapping the release of <unk> legacy in February last year, which saw the largest portion of its very positive financial impact in the first quarter.

Gunnar Wiedenfels: A couple of items to consider for the studio segment during the coming quarter. We are lapping the release of Hogwarts Legacy in February last year, which saw the largest portion of its very positive financial impact in the first quarter. This year, Suicide Squad, one of our key video game releases for 2024, has fallen short of our expectations since its release earlier in the quarter, setting our games business up for a tough year-over-year comp in Q1. On the film side, Q1 will be burdened with the marketing campaigns for Dune II and Godzilla vs. Kong, which opens at the very end of the quarter. Turning to networks, revenues decreased 8% as advertising decreased 14% due to continuing softness in U.S. linear advertising.

Gunnar: This year suicide squad one of our key video game releases in 2024 has fallen short of our expectations since its release earlier in the quarter setting our games business up for a tough year over year comp in Q1.

Gunnar: On the film side Q1 will be burdened with the marketing campaigns for June two and Godzilla vs Kong, which opens at the very end of the quarter.

Gunnar: Turning to networks' revenues decreased 8% as advertising decreased 14% due to continuing softness in the U S linear advertising market.

Gunnar Wiedenfels: Note that this position of the AT&T sports nets negatively impacted advertising revenues by approximately 100 basis points during the quarter. While still not back to where we'd like it to be, we are seeing a nice improvement thus far in Q1. Domestic ad sales are pacing meaningfully better quarter to date as we are beginning to capture the benefits of our strong upfront deals struck last year. International ad sales, which account for over 20% of total network ad sales, continue to be firmer overall, particularly in EMEA, which represents over three quarters of international ad revenue and where we saw modest growth year-over-year during the fourth quarter. Like the U.S., we're seeing acceleration through the beginning of the first quarter so far in EMEA overall, while we continue to face a challenging market environment in LATAM, as ad dollars more steadily migrate to streaming, which ultimately presents a nice opportunity for Max as we relaunch in these markets.

Gunnar: The disposition of the AT&T sports nets negatively impacted advertising revenues by approximately 100 basis points during the quarter.

Gunnar: While still not back to where we'd like it to be we are seeing a nice improvement thus far in Q1 domestic AD sales are pacing meaningfully better quarter to date as we are beginning to capture the benefits of our strong upfront deals struck last year.

Gunnar: International AD sales, which accounts for over 20% of total network AD sales continue to be a firmer overall, particularly in EMEA, which represents over three quarters of international AD revenues and what we saw modest growth year over year during the fourth quarter like the U S. We're seeing acceleration through the beginning of the first quarter so far in <unk>.

Gunnar: Overall, while we continue to face a challenging market environment in Latam as AD dollars more steadily migrate to streaming which ultimately presents a nice opportunity for Max as we relaunch in these markets.

Network distribution revenues were effectively flat in the quarter after adjusting for the 400 basis points headwind from exiting the At&t's sports nets, and transferring to TNT sports, Chile business to the DTC segment.

Gunnar Wiedenfels: Network distribution revenues were effectively flat in the quarter after adjusting for the 400 basis points headwind from exiting the AT&T SportsNets and transferring the TNT Sports Chile business to the D2C sector. However, on a reported basis, revenue decreased 3% as U.S. paid TV subscriber declines outpaced U.S. affiliate ratings, while inflationary impacts supported by inflation-linked pricing agreements in Argentina also benefited results. Overall, networks EBITDA decreased 11% as the decline in high-margin advertising revenues was only partially offset by a 3% decrease in operating expenses, excluding AT&T SportsNets and TNT Sports Chilean.

Gunnar: On a reported basis revenue decreased 3% as U S pay TV subscriber declines outpaced U S affiliate rate increases.

Gunnar: While inflationary impact supported by inflation linked pricing agreements and the Argentina also benefited results.

Gunnar: Overall networks EBITDA decreased 11% as the decline in high margin advertising revenues was only partially offset by a 3% decrease in operating expenses, excluding the AT&T sports nets, and TMT sports Chile impact.

Gunnar Wiedenfels: Turning now to D2C, we finished the quarter with nearly 98 million subscribers, a modest sequential increase after accounting for the full consolidation following our acquisition of the outstanding shares of Blue TV, as well as transferring our TNT Sports Chile subscribers to the D2C segment as part of our premium sports streaming strategy. International remains the most important driver of our DTC subscriber growth, with over a million subscribers gained in Q4. This more than offset domestic declines where we continue to feel the impact of the partly strike-driven lack of fresh 10 pull content through the second half of the year. And, as discussed before, remember that linear wholesale losses continue to mask underlying retail D2C track. Content revenue in this segment declined 30% due to the intra-year timing of third-party licensing deals that we laid out in detail earlier in the year.

Gunnar: Turning now to DTC, we finished the quarter with nearly 98 million subscribers. The modest sequential increase after accounting for the full consolidation following our acquisition of the outstanding shares of Blue television as well as transferring our TNT esports, Chile subs to the DTC segment as part of our premium sports streaming strategy.

International remains the most important driver of our D to C subscriber growth with over 1 million subscribers gained in Q4 this more than offset domestic declines where we continue to feel the impact of the partly strike driven lack of fresh tentpole content through the second half of the year.

Gunnar: And as discussed before remember that linear wholesale losses continue to mask underlying retail DTC traction.

Gunnar: Content revenue in this segment declined 30% due to the intra year timing of third party licensing deals that we laid out in detail earlier in the year keep this in mind as we comp this in Q2 of 2024.

Gunnar Wiedenfels: Keep this in mind as we count this in Q2 of 2020. Among the D2C subscriber-related revenues, which were up over 6% in the quarter, distribution revenues increased 4% and benefited from price increases in the U.S. and certain international markets, as well as the Amazon Prime partnership in the U.S., which we lapped in December. Advertising revenues accelerated nicely versus Q3 to over 50%, helped by the 23-24 upfront deals, higher engagement on max, and AdLight subscriber growth. We currently see the pace of DTC advertising revenue accelerate off this pace in Q1 and expect this to be an impactful segment driver for 2024 overall. With regional relaunches and key new market launches heavily weighted towards the first half of the year, we expect D2C EBITDA to be modestly negative in the first half and then profitable again in the second half.

Gunnar: Among the <unk> subscriber related revenues, which were up over 6% in the quarter distribution revenues increased 4% and benefited from price increases in the U S and certain international markets as well as the Amazon Prime partnership in the U S, which we left in December.

Gunnar: Advertising revenues accelerated nicely versus Q3 to over 50%.

Gunnar: By the 'twenty three 'twenty four upfront deals higher engagement on Max and add light subscriber growth.

Gunnar: Currently see the pace of PVC advertising revenue accelerating after space in Q1 and expect this to be an impactful segment driver for 2024 overall.

Gunnar: With regional re launches in key new market launches heavily weighted towards the first half of the year, we expect D to C EBITDA to be modestly negative in the first half and then profitable again in the second half net net we currently expect to BDC segment to be profitable for the year as we continue to pivot our focus on profitable topline growth.

Gunnar Wiedenfels: Net-net, we currently expect the D2C segment to be profitable for the year as we continue to pivot our focus on profitable top-line growth. We remain focused on our target of $1 billion in D2C segment EBITDA in 2025, and 2024 will certainly lay important foundations for achievement. Turning to our outlook for Q1 free cash flow, we're off to an outstanding start. Remember, Q1 is traditionally our seasonally weakest quarter, yet we see continued strong momentum so far and expect a very meaningful improvement year over year versus the negative $930 million we incurred last year. We continue to capture our cash opportunities, and I believe we have many more bites at the apple for years to come. Let me mention additional puts and takes to consider as you think about free cash flow for the company. Number one, the net cash benefit from the strikes, which will reverse this year as content production resumes to normalized levels, will naturally be a negative to free cash. We incurred roughly $1 billion in integration-related cash costs, a little lower than what we had anticipated for 2023 due to the timing of certain initiatives. As we continue to execute on our transformation journey, we will likely incur some additional cash restructuring. But we expect this to be at a significantly lower level.

Gunnar: We remain focused on our target of $1 billion in DTC segment EBITDA in 2025, and 'twenty 'twenty four will certainly lay important foundations for achieving this goal.

Gunnar: Turning to our outlook for Q1 free cash flow, we're off to an outstanding start remember Q1 is traditionally our seasonally weakest quarter, yet we see continued strong momentum so far and expect a very meaningful improvement year over year versus the negative $930 million, we incurred last year, we continue to capture our cash.

Gunnar: <unk> and I believe we have many more bites at the Apple for years to come.

Gunnar: Let me mention additional puts and takes to consider as you think about free cash flow for the year.

Gunnar: Number one the net cash benefit from the strikes, which will reverse this year as content production resumes to normalized levels will naturally be a negative to free cash flow, we incurred roughly $1 billion in integration related cash costs, a little lower than what we had anticipated for 2023 due to the timing of certain initiatives as we continue to execute on our transformation.

Gunnar: <unk> journey, we will likely incur some additional cash restructuring costs, but we expect this to be at a significantly lower level.

Gunnar Wiedenfels: Number three, the Olympics will be a drag to free cash flow this year given its working capital. Number four, interest expense will certainly be lower in 2024 as we continue to de-lever, and CapEx will likely be slightly lower as well. And then, of course, EBITDA will be the biggest determinant of free cash. Before I turn it back to the Q&A, I'd like to finish with a final remark on the magnitude of change that's taken place at WBD. It really is night and day compared to where we started.

Gunnar: Number three the Olympics will be a drag to free cash flow. This year given its working capital dynamic number for interest expense, we will certainly be lower in 2024, as we continued to delever and capex will likely be slightly lower as well and then finally of course EBITDA will be the biggest determinant of free cash flow.

Speaker Change: Before I turn it back for Q&A I'd like to finish with a final remark on the magnitude of change that's taken place at <unk>. It really is night and day versus where we started.

Gunnar Wiedenfels: Of course, we still have additional work to do and more opportunity to capture, but the heavy lifting we've done helps pave the way for ongoing transformation and our ability to embrace the three pillars of our strategy, which reflect our strong commitment to quality storytelling, achieving maximum value through broad distribution and monetization, and operating professionally with a one company mind. We are significantly closer to our longer-term leverage targets, with more than $12 billion of debt paid down in less than two years. Certainly, having a more flexible financial profile doesn't insulate us, or anyone else, for that matter, from having creative wins and losses. But it most certainly will help us take the necessary steps required to further achieve our growth objectives and to more intently focus on driving shareholder value. Now, David, JB, and I will take, At this time, I would like to remind everyone, in order to ask a question, press the star, then the number 1 on your telephone keypad. Your first question comes from a line of VJ Jam from Evercore ISI. Your line is open. Good morning. Thanks. This is the Kapkan Mural for VJ.

Speaker Change: Of course, we still have additional work to do and more opportunity to capture but the heavy lifting we've done helps pave the way for ongoing transformation and our ability to embrace the three pillars of our strategy, which reflect our strong commitment to quality storytelling.

Speaker Change: Achieving maximum value through broad distribution and monetization.

Speaker Change: And operating professionally with a one company mindset.

Speaker Change: We are significantly closer to our longer term leverage targets with more than $12 billion of debt paid down in less than two years.

Speaker Change: Having a more flexible financial profile doesn't insulate us or anyone else for that matter from having creative wins and losses.

Speaker Change: But it most certainly will help us take the necessary steps required to further achieve our growth objectives and to more intently focused on driving shareholder value.

Speaker Change: Now, David JB, and I will take your questions.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Speaker Change: Our first question comes from the line of Vijay Jayant from Evercore ISI. Your line is open.

Speaker Change: Good morning. Thanks. This is Chuck on morale on for Vijay one on the studios and one on DTC on the studios can you talk a little bit more about your strategic.

Operator: One on the studios and one on DTC. On the studios, can you talk a little bit more about them in the next few years? And when do you think we'll get to see the execution on your vision manifest more meaningfully from a financial perspective? Can we see more signs of this in 2024, 2025?

Chuck: The next few years and when do you think we will get to see the execution on your vision.

Chuck: Manifest more meaningfully from a financial perspective can we see more signs of this in 2024 to 25 or do you think it will.

David M. Zaslav: Or do you think it'll still be at least a few years until we get it to full value since it takes a while to reinvigorate franchises? And at DTC, when I look at MAX from a content perspective, it feels a lot more like legacy HBO MAX and maybe with less of a focus on legacy Discovery+? So I was hoping you had a little bit more color on how you think about the content portfolio overall at MAX and if there are areas you expect to invest more or less in going forward. And I guess, as we all think about the evolution of the broader media ecosystem and debate M&A scenarios, what I'm really trying to get at is whether more programming tonnage is necessary to be successful in DTC as we think about the evolution of the broader ecosystem Thanks. Thanks so much.

Chuck: Sylvia at least a few years until we get it to full value since it takes a while to reinvigorate franchises and at DTC.

Chuck: When I look at Max from a content perspective.

Chuck: A lot more like legacy HBO, Max and maybe with a less of a focus on legacy discovery plus so I was hoping to get a little bit more color on how you think about the content portfolio overall at Max and if there are areas you expect to invest more or less in going forward and I guess as we all think about the evolution of the broader media ecosystem and debate.

Scenarios, what I'm really trying to get at is whether more programming tonnage is necessary to be successful in DTC as we think about the evolution of the broader ecosystem. Thanks.

Speaker Change: Thanks, so much.

David M. Zaslav: Look, we're coming through two years of product that we inherited that was a struggle, and you saw it as it came through our balance sheet. This year, we expect it's going to be much better. Wonka was very strong.

Speaker Change: Look where we are coming through two years of Prada.

Speaker Change: Product that we inherited that was a struggle and you saw it as it came through.

Speaker Change: Our balance sheet.

Speaker Change:

Speaker Change: This year, we expect is going to be much better.

Speaker Change: <unk> was very strong the team got in and really rework that that product.

David M. Zaslav: The team got in and really reworked that product. We've shown that we have a great ability to market a product globally. We're very committed to the motion picture business. We have loads of talent back, which I enumerated, but when you look at this year, we have M. Night Shyamalan. His daughter has a movie coming out this summer, The Watchers.

Speaker Change: We've shown that we have a great ability to market our product globally.

Speaker Change: We're very committed to the motion picture business.

Speaker Change: We have loads of <unk>.

Speaker Change: Talent, Bath, which I enumerated, but when you look at this year, we have we have Aetna M night.

Speaker Change: His daughter is has a movie coming up this summer the watchers, we a beetle juice coming we're very excited about Todd Phillips.

David M. Zaslav: We have Beetlejuice coming, which we're very excited about. Todd Phillips has his Joker 2 coming, all of which make our overall lineup this year much more compelling. We have a team that's ready to build those brands around the world, and as I've said, we've really targeted DC. We have Superman, Supergirl, a great script that's been written, and that's being cast. We'll have James and Peter take you through, in the next few months, a full spectrum of what they see over the next 10 years. And we're attacking Lord of the Rings, we're attacking Harry Potter, because we think this is the balance.

Speaker Change: Has his Joker Joker.

Speaker Change: Joker to coming.

Speaker Change: All of which.

Speaker Change: Our overall lineup this year.

Speaker Change: Is much more compelling.

Speaker Change: We have a team that's ready to take that to build those those brands around the world and as I've said.

We've really targeted DC, we have Superman Supergirl, great script has been written Thats being cast.

Speaker Change: We will have.

Speaker Change: James and Peter take you through in the next few months a full spectrum of what they see over the next 10 years and we're attacking Lord of the rings, we're attacking Harry Potter because we think this is a balance we have these great brands.

David M. Zaslav: We have these great brands, like Game of Thrones. We have these great brands that people everywhere in the world know, love, and will leave dinner to come run and see. And the balance is that we also need things like new things, like Barbie. Mike and Pam are doing a terrific job, and our commitment to the motion picture business is something that there's a real sense of in the town, and it's one of the reasons why we're getting some of the very best people coming on board with us. So I'm pretty excited about what we have this year and what you'll see rolling out in the year ahead. Bottom line, the studio has really been underperforming. You know, including the end of the year, where we had some real struggles, but we're very optimistic about this year, and it gives us a chance to have a lot of upside in the next two years. I mean, it was really a struggle.

Speaker Change: Game of Thrones, we have these great brands that people everywhere in the World No love and will leave dinner to come run and see in the balances. We also need things like the.

Speaker Change: The new things like Barbie.

Speaker Change: And Mike and Pam are doing a terrific job.

Speaker Change: And our commitment to the motion picture business.

Speaker Change: Something thats there is a real sense of in the town and it's one of the reasons why we're getting some of the very best people coming on board with Us. So I'm pretty excited about what we have this year and what youll see pulling out in the year ahead.

Speaker Change: Bottom line the studio studio has really been underperforming.

Speaker Change: And.

Speaker Change: Including the end of the year.

Speaker Change: Where we had some real struggle, but we're very optimistic about this year and it has it gives us a chance to have a lot of upside in the next two years I mean, it was really <unk>.

Speaker Change: Struggle.

J.B. Perrette: JB. Yeah, and Kafka, on the B2C segment, I guess a couple points. Number one is, I think, as we mentioned on previous calls, first of all, as we're eight months in, the encouraging thing for us that we've seen is our engagement in terms of time spent per active account has continued to increase, and most of that increase has been driven by the inclusion of the legacy discovery content. So, and it's not been cannibalistic with the legacy HPO Max content.

Speaker Change: J P and caveat on the DTC segment, I guess, a couple of points number one is I think as we mentioned on previous calls first of all we're as we're eight months and the encouraging thing for us that we've seen as ours engagement in terms of time spent.

Speaker Change: Proactive account is has continued to increase and most of that increase has been driven by the inclusion of the legacy discovery content. So.

Speaker Change: And it's not been cannibalistic to the legacy HBO Max content. So we have seen increased engagement increased our views all driven by the inclusion of the legacy discovery content. The second point I'd make is if you look at the top 10 rail thats pretty indicative and Youll see often times in their weeks, where 90 day fiance or some of our.

J.B. Perrette: So, we have seen increased engagement and increased hours of use, all driven by the inclusion of the legacy discovery content. The second point I'd make is that if you look at the top 10 rails, it's pretty indicative. And you'll often see in their weeks where 90 Day Fiance or some of our other legacy discovery content is making up three, four, five, sometimes even, of the top 10 series on Max. So again, talking about content diversity and the success of the two content portfolios coming together. And then the third thing I'd say is, You know, I think what is exciting about the next sort of 12, 24, 36 months is that about a year and a half ago, Casey and the team with the non-HBO content, the Max Originals, really took a turn to sort of focus on bigger, broader, WB-based franchises. And when you think of the lineup coming, they're very broad, very four-quadrant titles like Penguin, Dune, It, Conjuring, and Harry Potter.

Speaker Change: Other legacy discovery content are making up three four or five sometimes even of the top 10 series on on Max So again talking to the content diversity and the and the success of the two content portfolio is coming together.

Speaker Change: And then the third thing I'd say is.

I think what is exciting about the next sort of 12 to $24 36 months is.

About a year and a half ago Casey in the team.

Speaker Change: With the non HBO content. The Max original has really took a turn to sort of focus on bigger broader WB based franchises and when you think of the lineup coming theyre very broad that very four quadrant titles like Penguins dune.

Speaker Change: Conjuring Harry Potter.

J.B. Perrette: And so we feel like we're on a great trajectory. And frankly, the content lineup over the next two-plus years on Max is the most rich and the deepest and broadest that I think we will ever have been, not just on Max but, frankly, even within the HBO lineup as well. And contrasted, candidly, with the last six to eight months where we just didn't have a lot of content.

Speaker Change: And so we feel like we're on a great trajectory and frankly the content lineup over the next two plus years on Max is the most rich in the deepest and broadest that I think we will ever have been not just on Max but frankly, even within the HBO lineup as well.

Speaker Change: In contrast, it candidly.

Speaker Change: The next of the last six to eight months, where we just didn't have a lot of content. So what's encouraging is that we've been able to grow.

J.B. Perrette: So what's encouraging is that we've been able to grow, and we really haven't had much fresh content. And so this True Detective was step one, but we're going to be rolling out all of these franchises and shows over the next 12 to 24 months, and it gives us a real sense of optimism. That's very helpful. Thank you both.

Speaker Change: And we really haven't had much fresh content and so this true detective was step one, but we're going to be rolling out all of these franchises and shows over the next 12 months to 24 months and it gives us a real sense of optimism.

Speaker Change: That's very helpful. Thank you both.

Speaker Change: Next question.

Operator: Your next question comes from John Hodulik from UBS. Your line is open. Great. Thanks, guys. Two, if I could.

Speaker Change: Next question comes from the line of John Hodulik from UBS. Your line is open.

John Christopher Hodulik: Great. Thanks, guys, two if I could first maybe for Gunnar.

David M. Zaslav: First, maybe for Gunnar, you know, thanks for some of the puts and takes for 24, but just any other color you could give regarding EBITDA and potential growth, maybe break it down by segments, if you could. And then on the new Skinny Sports Bundle, just any other info you guys could provide in terms of what the product's going to look like, pricing, economics, and just maybe, David, your confidence that it's not going to accelerate court. Sure. Well, why don't I start with that?

John Christopher Hodulik: Thanks, Thanks for the some of the puts and takes for 'twenty four but just any other color you could give regarding EBITDA and potential growth.

John Christopher Hodulik: Maybe breakdown by segments, if you could and then on the new Skinny sports bundle just any other info you guys could provide in terms of what the product is going to look like pricing economics, and just maybe David your confidence that it's not going to accelerate cord cutting.

David M. Zaslav: Sure why don't I start with that.

David M. Zaslav: Look, there are about 125 million households in America, and there are more than 60 million of those that are not in the traditional bundled cable ecosystem. And we see that with things like Bleacher Report, where we have 30 million people, mostly under 30, that the overwhelming majority are not in the traditional cable universe, but they love sports. They've been watching Bleacher and House of Highlights all day.

David M. Zaslav: Look there's about 125 million households in.

David M. Zaslav: In America, and there is more than $60 million of those that that are not in the traditional bundled cable ecosystem.

David M. Zaslav: And we see that with with things like Bleacher report, where we have 30 million people, mostly under 30 that the overwhelming majority are or are.

David M. Zaslav: Not in the traditional cable universe, but they love sports there I'm bleacher in house the highlights all day and so we have a very rich target of over 60 million people that love sports and it's a product that's quite moderate.

David M. Zaslav: And so we have a very rich target of over 60 million people that love sports, and it's a product that's quite modern. So today, when people are thinking, what channel should I watch? What channel is my sport on? You'll be able to go to this new product, this new app-based product, and if you love the baseball playoffs, you'll watch all of them, and you're not thinking, "What channel is it on?" If you love hockey, you'll watch all of the hockey playoffs right through to the Stanley Cup.

David M. Zaslav: So today when people were thinking what channels should I watch what channel is my sport on you'll be able to go to this new product.

New App based product and if you if you love the baseball playoffs, Youll watch all of them and Youre not thinking what channel is it on hockey you'll watch all of the hockey playoffs right through to the Stanley Cup.

David M. Zaslav: For basketball, you'll watch all the playoffs right through to the championships, and you will never think or ever have to Google, "where is it?". And so it's a platform that the younger generation that is not subscribing to, and we're able to go after those that we're missing. We're missing those subscribers. The traditional cable industry is missing those subscribers, too. We think it's very pro-consumer. Look, we have a great relationship with our existing distributors. This is a unique product that's looking to meet very strong demand. And together, I think this partnership of us, together with Disney and Fox, with Bob and with Lachlan, we're like-minded, we're aligned.

David M. Zaslav: Basketball, you will watch all the playoffs right through to the championships and you will never think we're ever have to Google where is it and so it's a platform that that this that the the younger generation that.

David M. Zaslav: That is not subscribing, we're able to go after those that we're missing we're missing those subscribers. The traditional cable industry is missing those subscribers. It's we think it's very pro consumer look we have a great relationship with our existing distributors. This is a unique product that's looking to meet to meet a very strong demand.

David M. Zaslav: And together I think this partnership with us together with Disney and Fox.

David M. Zaslav: With with Bob and with Laughlin, where like minded. We're aligned we believe that this could be a very compelling product, but we're going to be very aggressive whether it was to be aggressive marketing. It and we will think we think can coexist.

David M. Zaslav: We believe that this could be a very compelling product. We're going to be very aggressive with it, we're going to be aggressive in marketing it, and we think it coexists very effectively. We don't see a lot of people unsubscribing to cable in order to get this.

David M. Zaslav: Very effectively we don't see a lot of people unsubscribing to cable in order to get this we're going after the $60 million plus those that debt.

David M. Zaslav: We're going after the 60 million plus, those that are not thinking about getting cable when they get their own apartments. And so we're quite excited about it. I've seen a number of the prototypes.

David M. Zaslav: And then I'm thinking about getting cable when they when they get when they get their own apartments, and so we're quite excited about it I've seen the number of the prototypes.

David M. Zaslav: We're pretty far along. This is not an announcement. We're going to follow pretty quickly with our plans, and I think it's going to meet a demand that's very strong in the marketplace. Well, and then on your question, John.

Pretty far along this is not an announcement youre going to see we're going to follow pretty quickly.

David M. Zaslav: With our plans and.

David M. Zaslav: I think it is going to meet or really it's going to meet the demand that's very strong in the marketplace.

Yeah.

David M. Zaslav: And then on the on your on your EBITDA question, John So I did go through some some of the puts and takes as you said in the in the prepared remarks.

Gunnar Wiedenfels: So I did go through some of the puts and takes, as you said, in the prepared remarks. We are also going to continue calling out factors that will affect comparability over the course of the year on a segment by segment level. If we start with the studio, you know, we talked about the game cadence last year, this year, and on the film side, obviously, this is going to continue to be a hit-driven business. And, you know, just last year was a great example with the greatest success in the film studio's history and some real challenges across the industry on the superhero side.

David M. Zaslav: We are also going to continue calling out factors that will affect comparability over the course of the year on a segment by segment level. If we start with the studio we've talked about the the game's cadence last year this year.

David M. Zaslav: And on the film side. Obviously this is going to continue to be a hit driven business.

David M. Zaslav: Just last year was a great example, with the greatest success in the film Studios history, and some and some real challenges across the industry on the on the superhero side. So there is not a lot more to add at this point for <unk>, which clearly is the top priority here from a from a growth perspective for us we're.

Gunnar Wiedenfels: So there's not a lot more to add at this point for DTC, which clearly is the top priority here from a growth perspective for us. We're committed to maintaining profitability. But, as we said last time, we spoke to all you.

David M. Zaslav: To maintain profitability, but as we said last time, we spoke to all you guys as we've restructured the business $2 2 billion.

Gunnar Wiedenfels: You guys, we've restructured the business. Two point two billion dollars of profit improvement in twelve months from here. The priority is going to be different. We're not going back to subs at all costs, but we want to fuel profitable, top-line growth, and that's going to be guiding us as we go through this year and beyond. We have the one billion dollar bogeyman for the four twenty twenty five. And J.B. and the team are going to lay very important foundations this year. We have deliberately not given a more specific target here because we will not be in a situation where we manage the business for results in individual quarters or or fiscal years.

David M. Zaslav: Profit improvement and 12 months from here the priority is going to be different we're not going back to subs at all cost, but we want to you will profitable topline growth and that's going to be guiding us as we go through this year and beyond.

David M. Zaslav: We have the $1 billion bogey for the for 2025 and JV and the team are going to lay very important foundations. This year, we have deliberately not giving any more.

More specific target here, because we will not be in a situation, where we manage the business for results in individual quarters or or fiscal years, we will do the right thing for the company and especially on the DTC side that might.

Gunnar Wiedenfels: We'll do the right thing for the company. And especially on the DTC side, that might mean, you know, decisions over the course of the year to pull back on individual markets, accelerate into others, and respond to how our consumers are receiving our content. So rest assured, we'll do the right thing from the perspective of long-term asset value and value generation. But we will not be focused so much on individual quarters or years of profitability on the linear side. Just one point on that.

David M. Zaslav: Mean.

David M. Zaslav: Decisions over the course of the year to pullback on individual markets accelerate into others.

David M. Zaslav: Respond to how our consumers are receiving our content so.

David M. Zaslav: Rest assured we will do the right thing from the perspective of long term asset value and value generation.

David M. Zaslav: We'll not be focused.

So much on individual quarters or years profitability on the linear side just one.

Speaker Change: One point on that.

Gunnar Wiedenfels: You know, this ability to now have a profitable streaming business and to keep that business profitable and growing in a year where we're launching in multiple markets around the world where we're deploying, you know, real capital to build the brand, to market the programming, and to have the infrastructure around the world. You know, and so, you know, for us, we see this year as a continued build as we go toward next year and a billion dollars in streaming. And then just to finish up the segments here on the linear side, I mean, you heard us talk about what we're seeing right now, and that is a more optimistic view than we have had throughout most of the past, you know, 21 months since we closed this deal. But at the same time, I don't have a crystal ball, and we're not in the business of making longer-term projections here.

Speaker Change: This the ability to now have a profitable.

Speaker Change: Screaming business and to keep that business profitable and growing in a year, where we're launching in multiple markets around the world, where we're deploying real capital to to to build the brand to market the programming.

Speaker Change: And to have the infrastructure around the world.

Speaker Change: So for US we see this year as a continued build as we go towards next year.

Speaker Change: And of $1 billion and screaming Alright, and then just just to finish up the segments here on the linear side I mean, you've heard us talk about what we're seeing right now and that is a a more optimistic view than we have than we have had throughout most of the past.

Speaker Change: 21 months since we closed this deal but at the same time I don't have a crystal ball and we are not in the business of making longer term projections here, where we're going to be as transparent as we can and as much detail as we can about what we're seeing and we'll continue doing that as we as we go through the year, what really matters to me is we're going to continue to be very.

Gunnar Wiedenfels: We're going to be as transparent as we can in as much detail as we can about what we're seeing, and we'll continue doing that as we go through the year. What really matters to me is that we're going to continue to be very focused on delivering the company. I told you that against the $6.2 billion of cash generated last year, we're off to a strong start in Q1. January was very good.

Speaker Change: Focus on Delevering the company.

Speaker Change: Would you that against the $6 2 billion.

Speaker Change: Cash generated last year, we're off to a strong start in Q1 January was.

Gunnar Wiedenfels: We're going to continue focusing, and I do think that we're still in the early innings here. We have an entire organization with 35,000 people changing their views on how we run the company, how we deploy capital, and what we're optimizing for. That's going to pay dividends for us for many, many years, so we'll continue to de-lever. We're committed to our two and a half to three times target range, and you'll continue to hear us talk about free cash flow generation. Free cash flow is a key metric for us, and we said we're going after it to have generated the 6.2, but also just the 60% conversion.

Speaker Change: Good we're going to continue.

Speaker Change: Focusing and I do think that we're still in the early innings here, we have an entire organization with 35000 people changing their view on how we run the company, how we deploy capital and what we're optimizing for that's going to have.

Dividends for us for many many years, so we will continue to delever.

Speaker Change: We're committed to our two and a half to three times target range and Youll continue to hear us talk about free cash flow generation with free cash flow is a key metric for us.

Speaker Change: And we will.

Speaker Change: We said we're going after it.

Speaker Change: Two two to have generated the $6 two but also just the 60% conversion this company.

David M. Zaslav: This company, and in a year where we held back dramatically on selling our content to third parties, where you saw, I think it was almost a billion dollars in difference year over year in terms of the content that we sold. We're doing what's right for the business long term. We're laser focused on driving free cash flow, and de-levering. You'll see us driving free cash flow this year.

Speaker Change: And in a year, where we held back dramatically on selling our content to third parties.

Speaker Change: Where you saw I think it was almost $1 billion in difference year over year in terms of the content that we sold were doing whats right for the business long term, we're laser focused on on driving free cash flow Delevering Youll see us driving free cash flow. This year Youll see us delevering the balance sheet that makes us a healthy.

Gunnar Wiedenfels: You'll see us de-levering the balance sheet. That makes us a healthy company because when you partner that with the fact that we have great content, great creatives at Warner, at Max, at HBO, great content coming up in the next few years, that we think is the recipe to really differentiate us. Your next question comes from a line from Rick Prentiss from Raymond James. Your line is open. Thanks, good morning.

Company, because when you partner that with the fact that we have great content, great creative at Warner at at Max at HBO, Great content coming up in the next in the next few years that we think is the recipe to really differentiate us.

Speaker Change: Yes.

Speaker Change: Your next question comes from the line of Ric Prentiss from Raymond James Your line is open.

Richard Greenfield: Good morning.

Operator: Yeah, pitting the free cash flow, and we're obviously having a strong year this year, but you have the strike benefit, and you say you're going to grow the free cash flow. Can you give us a sense of, you know, is that, can you go beyond the 6.2? Can you normalize for the billion? Can you do mid-fives?

Richard Greenfield: Hitting the free cash flow number obviously strong year. This year, but you had the strengthens it and you say youre going to grow the free cash flow can you give us a sense of is that when you go beyond the six point do we kind of normalize for the $1 billion and can you do the advice you would.

Gunnar Wiedenfels: Can you give us kind of a goalpost on free cash flow? And then, second question, as you think about that free cash flow production that you're driving and the de-levering that you're driving, it naturally brings up capital allocation questions. Someday stock by vaccinating but also through organic and external growth. What assets do you think you've got covered? We don't need any other assets in this category. There are some other assets out there in the marketplace. That might be interesting on a nice to have or need.

Richard Greenfield: It was kind of a goalpost on the free cash flow and then second question as.

And as you think about that free cash flow production that you're driving and the delevering that youre driving that naturally brings up capital allocation questions someday stock buybacks, maybe would also organic and external growth what assets do you think you've got covered we don't need any other assets. In this category are there some other assets out there in the marketplace that might be interesting.

Richard Greenfield: On a nice to have or need to have.

Speaker Change: Well, let me, let me start with the with the free cash flow question.

Gunnar Wiedenfels: Let me start with the free cash flow question on investment priorities. So, I did go through my prepared remarks, some of the puts and takes, and I deliberately do not want to give specific quantitative free cash flow guidance. We did call out the fact that there was a billion dollars of benefit last year. And that is going to, you know, reverse, and in 2024, there's no question about it. I also took you through some of the below-the-line helpers here; interest expense and cash out is going to come down. CapEx is going to come down, and restructuring expenses are going to come down. And as I said, we will continue to be very, very focused on capital efficiency. And some of that impact is not going to be individual quarters, but it's a longer-term process.

Speaker Change: On the investment priorities so I.

Speaker Change: I did go through my prepared remarks, some of the puts and takes and I really do not want to give a specific quantitative free cash flow guidance.

Speaker Change: We did call out the fact that there was $1 billion.

Speaker Change: A benefit last year and that is going to reverse in 2024. There is no question about it I also took you through some of the below the line help us here interest expense and cash out is going to come down.

Speaker Change: Capex is going to come down restructuring expenses are going to come down.

Speaker Change: And as I said, we will continue to be very very focused on capital efficiency and some of that impact is not going to be individual quarters, but its a longer term.

Speaker Change: Process and we have already.

Gunnar Wiedenfels: And we have already very significantly changed the approach to our investment decision making and and a harmonized process across the entire company. So I have a lot of confidence that these will be very positive contributions over the years to come. And as I said before, I'm not in a position this year to give very specific EBITDA or cash conversion guidance.

Speaker Change: Very significantly changed the approach to.

Speaker Change: Two our investment decision, making.

Speaker Change: And a harmonized process across the entire company so.

Speaker Change: I have a lot of confidence that these will be very positive contributions over over years to come.

Speaker Change: And as I said before.

Speaker Change: I'm not in a position this year to give very specific EBITDA or <unk>.

Speaker Change: Cash conversion guidance will be very very focused on it we still believe that our long term.

David M. Zaslav: We'll be very, very focused on it. We still believe that our long-term target of 60% cash conversion is very, very doable, and very achievable. We'll continue to focus on delivering the company. And what I will say is we haven't really made any trade-off decisions here between investing in the company and and delivering. We have funded our investments. David talked a little bit about the film studio, but we've also made investments on the game side to get to a more consistent cadence of releases over time. We have deployed hundreds of millions of capital into our studio lots and tours and operations. And we have funded, you know, every promising content project, and all of that is happening at the same time as we're investing in an overhaul of our systems landscape, etc.

Speaker Change: Our target of 60% cash conversion is very.

Speaker Change: Very doable very achievable.

Speaker Change: And you have to focus on Delevering the company and what I will say is we havent really we havent made any any trade off decisions here between investing in the company and and Delevering. We have we have funded our investments.

Speaker Change: David talked a little bit about the film studio, but we've also made investments on the game side to get to a more consistent cadence of releases over time, we have deployed hundreds of millions of capital into our studios.

Speaker Change: What's in tourism and operations.

Speaker Change: And we have funded.

Speaker Change: Every promising content project.

Speaker Change: All of that is happening at the same time as we're investing in an overhaul of our systems landscape itself. So we have made a ton of investments we have great assets, we know where to invest more over time.

David M. Zaslav: So, we have made a ton of investments. We have great assets. We know where to invest more over time, and as I said, from a capital allocation and capital structure perspective, we remain focused on the two and a half to three times for now. But you're right, over time, there's going to be more and more optionality. And just as an operating thesis for the company, we're really focused on running these companies, each of the companies efficiently, having them work together, and we're fighting for free cash flow and growing free cash flow in each of the businesses. As Gunnar said, this past year, we did get the help of the Stripes.

And.

Speaker Change: As I said, we from a capital allocation and capital structure perspective, we remain focused on the two and a half to three times for now, but you're right over time.

Speaker Change: Going to be more and more optionality.

And just as an operating.

Speaker Change: Thesis for the company, we're really focused on running these companies in each of the companies sufficiently having them work together and we're fighting for free cash flow into growth free cash flow at each of the businesses.

Speaker Change: And as Gunnar said.

Speaker Change: This past year, we did get the help of <unk>.

Speaker Change: Of the strikes.

David M. Zaslav: On other transactions or whether there are assets out there for investing in ourselves that make sense. Obviously, we look at everything. We work really hard to get ourselves a healthy balance sheet, to pay down debt, to get below four times levered, to really focus on where we're spending money to drive free cash flow. And so we've positioned this company really now as being a healthy company and with a great leadership team with a lot of direction. We have a great set of assets. We're probably the only pure storytelling company, particularly a pure storytelling company that operates on all platforms. And I think we have the greatest set of franchise content assets. And so I like our hand.

Speaker Change: On on other transactions or whether theres assets out there outside of investing in ourselves that makes sense.

Speaker Change: Obviously, we look at everything we worked really hard to get ourselves a healthy balance sheet to pay down debt to get below four times levered two to really focus on on where were on where we're spending money on driving free cash flow and so we have positioned this company really now as being a healthy company and with a great leadership team.

A lot of direction.

Speaker Change: We have a great set of assets, where we are.

Speaker Change: We're probably the only.

Speaker Change: Pure storytelling company, particularly a pure storytelling company that operates on on all platforms and I think we have the greatest set of franchise content assets and so I like our hand, I think as we look to the future now with Max profitable, we think we can build that and.

David M. Zaslav: I think as we look to the future now with Max Profitable, we think we can build that. And so we like where we are. We do have the optionality of looking at other assets, but it's going to be a very high bar for us. We like our hand where it is.

And so we like where we are we.

Speaker Change: We do have the optionality of looking at other assets.

Speaker Change: But it's going to be a very high bar for us, we like our hand, where it is and we like we like the the particular strategy right now of building Max and really deploying all of our great creative assets.

Operator: And we like we like our particular strategy right now of building Max and really deploying all of our great creative assets. Next question, please. Your next question comes from the line of Jessica Reeve-Ehrlich from Bank of America. Your line is open.

Speaker Change: Next question please.

Speaker Change: Your next question comes from the line of Jessica Reif Ehrlich from Bank of America. Your line is open.

Gunnar Wiedenfels: So maybe switching gears to advertising, you know, you mentioned a few times that Q1 you're starting to see strength. Can you just give us some color on where it's coming from, how confident you are that this will continue throughout the year, particularly in light of all the increase in inventory, whether it's Amazon coming to the business, Walmart with the Vizio. And then, as a follow-up, you mentioned some market launches in some pretty big countries, UK, Germany, Italy, Australia. Can you talk about the timing?

Speaker Change: Thank you so maybe switching gears to advertising.

Speaker Change: You mentioned, a few times that Q1, you're starting to see strength can.

Speaker Change: Can you just give us some color on where it's coming from how confident you wanted that this will continue throughout the year, particularly in light of all the increase in inventory whether it's <unk>.

Speaker Change: Amazon coming to the business business Walmart with Disney.

Speaker Change: And then as a follow up you mentioned some market launches and some pretty big countries, UK, Germany, Italy, Australia, Japan.

Speaker Change: Can you just talk about the timing some of these markets have limitations like the U K.

J.B. Perrette: Some of these markets have limitations, like the UK. And then lastly, any color that you can give on third-party content sales or your views on that? There's just no way, given your library, that you can use all this content.

Speaker Change: And lastly on.

Speaker Change: Any color that you can give on third party content sales or your views on that ambitious no way given your library can use all of this content on <unk>.

Speaker Change: Alright, let me let me maybe take the first one here.

Gunnar Wiedenfels: All right. Let me maybe take the first one here and provide a little more color on advertising. As we said in our prepared remarks, we have actually seen improvements now into the first quarter across the board. The US side is, I think, benefiting from the fact that we've seen improving ratings trends over the entire second half of last year, and I think that we're beginning to monetize that. The upfront deals are kicking in. Remember, we've had a very different strategy this year compared to last year, so there's a visible improvement across the board, and, and, And we, again, I don't want to make any predictions for the rest of the year, but, you know, we have a lot of growth priorities lined up.

Speaker Change: Provide a little more color on advertising so.

Speaker Change: As we said in our prepared remarks, we have actually seen improvements now into the first quarter.

Speaker Change: The board.

Speaker Change: U S side is I think benefiting from the fact that we've seen improving ratings trends over the entire second half of last year and I think that we're beginning to monetize that the upfront deals are kicking in.

Speaker Change: Remember, we had a very different strategy this year versus last year or so.

Speaker Change: It's a visible improvement across.

Speaker Change: Across the board.

Speaker Change: And and.

Speaker Change: And we.

Speaker Change: Again, I don't want to make any predictions for the rest of the year, but we.

Speaker Change: We have a lot of growth priorities lined up we're catching up on the advanced advertising revenues. The team has made some structural changes and were beginning to.

Gunnar Wiedenfels: We're catching up on advanced advertising revenues. The team has made some structural changes, and we're beginning to harness the entire data footprint of Warner Bros. Discovery.

Speaker Change: Two harnessed the entire data footprint of Warner Brothers discovery.

Gunnar Wiedenfels: As we roll this out, upfront cancellations are looking good. So that's the US market. And again, forget about the streaming side of it, which, as I said, is growing at north of 50% internationally as well. And while there is no such thing as one international market, it is a mixed picture. But the key markets, the most relevant markets for us in Europe specifically are doing very well. Again, Poland is doing incredibly well.

Speaker Change: As we roll this out.

Speaker Change: Cancellations are looking so.

Speaker Change: So that's that.

Speaker Change: The U S market and again forget about the streaming side of it which is I said is growing at north of 50% internationally as well and while there is no such thing as one international market. It is a mixed picture, but the key markets. The most relevant markets for us.

Speaker Change: In Europe, specifically are doing very well again, Poland is doing incredibly well and we've got very very strong network positions are there, Italy has seen real upswing in programming.

Gunnar Wiedenfels: We've got very, very strong network positions there. Italy has seen a real upswing in programming. We're the fastest growing group in that market, and that's all flowing through to advertising. And even in those markets that historically have underperformed a little bit for us, such as the UK and the Nordics, those numbers are looking much more stable now than they did in the fourth quarter. Again, this is seven weeks into the year. I don't want to make any predictions, but we're in a much, much better place today than we were.

Speaker Change: Fastest growing group in that market and that's all flowing through to <unk>.

Speaker Change: Advertising and even in those markets that historically have underperformed a little bit for us such as the U K the nordics.

Speaker Change: Those numbers are looking much more stable now than they did in.

Speaker Change: The fourth quarter again. This is this is a seven.

Speaker Change: Seven weeks into the year I don't want to make any predictions, but we're in a much much better place today than we were.

Speaker Change: On the on the on the Max side, Jessica in terms of International Rollouts I mean, David as David said in his remarks, one of the things that sort of misunderstood when people look at our subscriber numbers versus certainly our larger peers is the point. He made in his remarks, which is that we are currently available our tam is less than half the size of.

J.B. Perrette: On the Mac side, Jessica, in terms of international rollouts, I mean, as David said in his remarks, one of the things that's sort of misunderstood when people look at our subscriber numbers versus, certainly, our larger peers is the point he made in his remarks, which is that, currently, we are available; our TAM is less than half the size of those larger peers. So that means we still have, you know, 2x the addressable market to go after, the other half of the addressable market. We are excited that in 2024, we're getting back to growth and new market rollouts, which is the first time in two years as we've been obviously hard at work retooling the platform and the technology and getting it right in the US with LATAM's launch next week, and Europe starting in the second quarter with two brand new markets in France and Belgium starting in the second quarter. Asia and Australasia will likely be more diverse by 25.

Speaker Change: Those larger peers. So that means we have still two works.

Speaker Change: The addressable market to go after.

Speaker Change: Half of the addressable market to go after.

We are excited that in 2024, we're getting back to growth and new market Rollouts, which is the first time in two years as we've been obviously hard at work retooling the platform and the technology and getting it right in the U S.

Speaker Change: Latam launch next week paint Europe, starting in the second quarter with.

Speaker Change: With two brand new markets in France, and Belgium, starting in the second quarter.

Speaker Change: Asia and Australasia.

Speaker Change: We'll likely be more by by 'twenty five.

J.B. Perrette: And then the rest of the European markets for now, scheduled more for 26. So that's sort of how we see the rollout coming. And we think that's a huge tailwind for us for growth and subscriber growth and revenue growth over the next 24 months. And then, Jessica, on the third-party sales, and, you know, David weighs in as well, of course, but we are doing exactly what we said we were going to do. There is no religion with regard to warehousing all of our content on Macs or not doing business with competitors.

Speaker Change: The rest of the European markets for now scared slated more for 'twenty six so thats sort of how we see the rollout coming in we think that's a huge tailwind for us for growth in subscriber growth and revenue growth over the next 24 months.

Speaker Change: And then Jessica on the other third party sales.

Speaker Change: I'll, let David weigh in as well of course, but we are doing exactly what we said we were going to do there is no religion with regards to warehousing all of our content on Max or not doing business with our competitors. We are one of the greatest makers of content in the world and we serve our own platforms and we are sorry.

Gunnar Wiedenfels: You know, we are one of the greatest makers of content in the world, and we serve our own platforms, and we serve third-party platforms, and, you know, the honest answer is I can't give you a sort of high-level direction. We are looking at this case-by-case, and we have got a process in place. We have, you know, the best possible view now on the strategic and financial merits of exploitation on our own platforms versus, you know, partial exploitation with third parties are, and we have healthy discussions. And what you will notice is we haven't sold anything since we closed the Warner Bros. Discovery merger. We have done some co-exclusive deals, and that makes a lot of sense. We have got all the data. We know exactly what we are giving up, and we know exactly what we are winning.

Speaker Change: Third party platforms and.

David M. Zaslav: The honest answer is I can't give you a sort of high level direction. We're looking at this case by case and we've got a process in place we have the best possible view now on what the strategic the financial merits of exploitation of our own platforms versus partial exploitation with third parties are and we have a healthy discussion.

David M. Zaslav: And what you will notice is we haven't sold anything.

David M. Zaslav: Since we closed the Warner Brothers Discovery a.

David M. Zaslav: Merger, we have done some co exclusive deals and that makes a lot of sense. We've got all the data we know exactly what we're what we're giving up and we know exactly what we're winning now at the same time, we are having a tough discussions internally we look at the data together and there are definitely certain red lines in.

David M. Zaslav: Now, at the same time, we are having tough discussions internally. We look at the data together, and, you know, there are definitely certain red lines, and David makes sure that we never cross them, but in other cases, we have gone with some deals that have garnered some press attention and that I am very, very happy with because we are doing the right thing. We are providing oxygen for our content, and we are optimizing returns here, not only for the company or shareholders but also for the talent that we are working with. We are doing the best we can to make those great stories and monetize them in the best possible way. You know, the point that Gunnar made, when we do sell content, we do it only co-exclusively so that we hold on to everything. There is nothing that we want that is on Max that we would sell, and it would not be on Max anymore. You know, I would put it in two categories.

David M. Zaslav: David.

David M. Zaslav: Make sure that we that we never crossed them, but in other cases we've.

David M. Zaslav: We've gone with some with some deals that have garnered some press attention and that I'm very very happy with because we're doing the right thing, we're providing oxygen to our content.

David M. Zaslav: Optimizing returns here not only for the company or our shareholders, but also for the talent that we're working with we are doing the best we can to make those great stories and monetize them in the best possible way.

David M. Zaslav: <unk> Gunnar made when when we do sell content, we do it only.

David M. Zaslav: Only.

David M. Zaslav: <unk> exclusively so that we hold onto everything there is nothing that we want that's on that's on Max that we would sell and wouldn't be on Max anymore.

David M. Zaslav: I would put it in two categories Channing is back in business quite aggressively the Warner Brothers television business. We have over 100 series some of the best series on television shrinking Abbott Elementary Ted last though.

David M. Zaslav: Channing is back in business quite aggressively, the Warner Brothers television business. We have over 100 series, some of the best series on television, Shrinking, Abbott Elementary, Ted Lasso. We have some of the greatest talent on the TV side working with us, and so that is back on, and we think we are going to see a lot of opportunity there. With our library, we are incredibly aggressive on the bottom end of it. There is a group of big-name programs that represent the core of who we are as a company, and those are going to stay with us. You have seen some big-name shows, but most of those have been around for a very long time.

David M. Zaslav: We have some of the some of the greatest talent on the TV side.

David M. Zaslav: Working with us and so that's back up and we think we're going to see a lot of.

David M. Zaslav: We will see a lot of opportunity there on our library.

David M. Zaslav: We're incredibly aggressive on the bottom end of it.

David M. Zaslav: There is a group of big branded programs that represent the core of who we are as a company and where.

David M. Zaslav: Those are going to stay with us.

David M. Zaslav: And you've seen some big name shows, but most of those have been around for a very long time, they've already been syndicated on on on other platforms and we're able to reap a significant amount of dollars from them and so that will be the balance we probably have the biggest motion picture and TV library in the world and our job is to really focus on how to monetize that with different windows.

David M. Zaslav: We are also syndicated on other platforms, and we are able to reap a significant amount of dollars from them, and so that will be the balance. We probably have the biggest motion picture and TV library in the world, and our job is to really focus on how to monetize that with different windows. Next question. Your next question comes from a line by Ben Swinburne from Morgan Stanley. Your line is open. Thank you. Good morning.

Speaker Change: Great next question.

Speaker Change: Our next question comes from the line of Ben Swinburne from Morgan Stanley. Your line is open.

Benjamin Daniel Swinburne: Thank you good morning.

Operator: Maybe for JB, just to follow up on the direct to consumer max strategy, you listed UK, Italy, Germany. I know those are sky licensing deals, I'm assuming Australia, Japan have similar structures. So you guys, have you guys made the decision to sort of move out of those relationships and go direct to consumer? We can just talk about your thoughts.

Benjamin Daniel Swinburne: Maybe for a JV just to follow up on the direct to consumer Max strategy.

Benjamin Daniel Swinburne: Listed U K, Italy, Germany, I know those are sky licensing deals I'm, assuming Australia, Japan have similar structure. So you guys have you guys made the decision to sort of move out of those relationships and go direct to consumer because we can just talk about your thoughts.

J.B. Perrette: Because you have had, you know, some nice deals in those markets in the past. And then, you know, for J.B. and maybe Gunnar, however you want to address it, great news to hear in the NBA conversations. Clearly, that would be a big positive to retain those rights. But how do you think about making that work financially for the company? You know, it's not a big debate that linear TV is under pressure on the revenue side, and I think it's probably safe to say the NBA costs are going to go up. So how do you guys approach this from a kind of a P&L point of view when you think about exploiting the NBA for what I imagine will be another long-term, you know, long-term deal? Thanks so much.

Benjamin Daniel Swinburne: Because you have had some nice deals in those markets in the past and then for JV and maybe Gunnar. However, you want to address it it's great news to hear on the NDA conversations clearly that would be a big positive to retain those rights. How do you think about making that work financially for the company.

Benjamin Daniel Swinburne: It's not a big debate that linear TV is under pressure on the revenue side.

It's probably safe to say the NDA costs are going to go up so how do you guys approach. This from a kind of a P&L point of view when you think about exploiting the NBA for what I imagine it'll be another long term long term deal. Thanks, so much.

Thanks Ben.

Gunnar Wiedenfels: Thanks, Ben. Look, the UK, Germany, and Italy, and I think we've said it before in the last year, are key markets for us. You know, we have deals in those markets with Sky, which has been, over the years, a great partner to us in many ways and will continue to be a great partner to us. But having our own direct-to-consumer product in those markets is a core strategic initiative of ours. And we're already in business aggressively in those markets. In the UK, we have our direct-to-consumer Discovery Plus product.

Benjamin Daniel Swinburne: Look at the.

Benjamin Daniel Swinburne: The UK, Germany, and Italy, and I think we've said it before over the last year are key markets for US we have deals in those markets with Sky, which is a has been a over the years a great partner to us in many ways and will continue to be a great partner to us, but having our own direct to consumer product in those markets is core.

Benjamin Daniel Swinburne: Strategic initiative of ours.

Benjamin Daniel Swinburne: And were already in business aggressively in those markets and the U K, we have our direct to consumer discovery plus product.

J.B. Perrette: And we're one of the leaders in sport in the UK, where we have our partnership with TNT, which we just rebranded as TNT Sports, and that has millions and millions of subscribers. And that partnership is going very, very well. And so the idea of coming into that market with the wealth of content that we have, and our content is, we see how well our content works in the UK, Germany, and Italy. We could see the ratings of that content when it airs on Sky and the share that it gets in the aggregate. And so we think those will be real businesses for us and meaningful and real opportunities to grow revenue and grow subscribers. But that'll be the beginning in 26.

Benjamin Daniel Swinburne: And we're one of the leaders in sport in the U K, where we have.

Benjamin Daniel Swinburne: Our partnership with <unk>.

Benjamin Daniel Swinburne: Which we just rebrand it as TNT sports and that has millions and millions of subscriber subscribers and that partnership is going very very well and so the idea of coming into that market with the wealth of content that we have and our content as we see how well our content works in in.

Benjamin Daniel Swinburne: In the UK, Germany and Italy.

Benjamin Daniel Swinburne: We could see the ratings of that content when it airs on sky and the share then it gets in the aggregate and so we think those will be real businesses for us and meaningful in real opportunity to grow economics and grow subscribers, but that'll be in beginning in 2006 and I'd just add Ben I think the thing Thats.

J.B. Perrette: Yeah. But I just add, Ben, the thing that's been most exciting for the international rollouts is that, as David mentioned in some of his prepared remarks, there are a number of distribution partners in all these markets that are very eager to find ways to help us get to market faster and scale faster. And doing it with a partner, in many cases, can drive a lot of efficiencies from a marketing standpoint and get us to scale very quickly. So those are also great and very, good conversations and, ultimately, economically, I think will be very interesting for us as we transition from a more licensed model to a. Now, there are markets, you know, like, for instance, India, where we did a very attractive deal with Reliance. Now, there are markets where we look, and we say, you know, that for the near term, even in that case, we did not do a long-term deal.

Benjamin Daniel Swinburne: <unk> been most in some ways most exciting for the international Rollouts is that.

Benjamin Daniel Swinburne:

Benjamin Daniel Swinburne: David mentioned in some of his prepared remarks, there are a number of distribution partners in all of these markets that are very eager to find ways to help us get to market faster and scale faster and doing it with a partner in many cases can drive a lot of efficiencies from a marketing standpoint, and get us to scale very quickly so.

Benjamin Daniel Swinburne: Those are also great and very.

Benjamin Daniel Swinburne: Oh, good conversations and ultimately economically I think will be very interesting for us as we transition from more licensed model to a D to C model.

Benjamin Daniel Swinburne: Now there are markets.

Benjamin Daniel Swinburne: For instance, India, where we did a very attractive deal with reliance there are markets, where we where we look and we say that.

Benjamin Daniel Swinburne: For the near term.

Benjamin Daniel Swinburne: Even in that case, we did not do a long term deal we get a chance to see how all of our content does and if we think that we can be more profitable and build asset value in the market. We will go in.

David M. Zaslav: We get a chance to see how all of our content does, and if we think that we can be more profitable and build asset value in a market, we will go. In markets where we don't, and the economics are very compelling to sit out for a period of time, we'll do that, like we did in India. But Europe is core to us, and Latin America is too.

Benjamin Daniel Swinburne: In markets, where we don't and the economics are very compelling to sit out for a period of time.

Benjamin Daniel Swinburne: We will do that like we did in India.

Benjamin Daniel Swinburne: But Europe is core to us and Latin America.

Gunnar Wiedenfels: And so you're seeing us really speak to that with these launches, and you'll see it over the next 18 months. And then, Ben, on the NBA, as you know, we're in the middle of exclusive discussions here. So I want to lift it up maybe one level to a general statement on how we look at sports. We're spending close to $20 billion on content and programming in the broadest sense. And every dollar we spend plays a different role across the portfolio. We generally like to own our content. That's not the case with sports.

Benjamin Daniel Swinburne: You're seeing us really speak to that with these launches and you'll see it over the next 18 months.

Benjamin Daniel Swinburne: On the NBA as you know we're in the middle of exclusive discussions here, so I want to lift it up maybe one level to a general statement on how we look at sports rights, we're spending close to $20 billion sort of on content and programming.

In the broadest sense and every dollar we spend plays a different role across the portfolio, we generally like to own our content. That's not the case with sports, but we obviously acknowledge the enormous value reach value emotional value of these deals and we have been able to strike profitable deals.

Gunnar Wiedenfels: But we obviously acknowledge the enormous value, reach value, and emotional value of these deals. And we have been able to strike profitable deals. And we're always going to be disciplined. It's very easy to lose control over sports rights investments.

Benjamin Daniel Swinburne: And we're always going to be disciplined it's very easy to lose control over our sports rights investments that's not what we do at where we're going we know exactly what our value we assign and we stay disciplined during during our discussions.

Gunnar Wiedenfels: That's not what we do. We know exactly what value we assign, and we stay disciplined during our discussions. And if you take that into account, I think we have an enormous opportunity to be much more efficient with our content spent overall across the entire company. And that will include certain areas in which you're right. You probably have to assume that there is inflation going forward.

Benjamin Daniel Swinburne: And if you take take that into account I think we have enormous opportunity to be much more efficient with our content spend overall across the entire company and that will include certain areas in which.

Speaker Change: Youre right you probably you have to assume that that there is that there is inflation going forward on the NBA specifically, we've had a very very strong partnership for 40 years and.

Gunnar Wiedenfels: On the NBA specifically, we've had a very, very strong partnership for 40 years, and I certainly hope that we're going to be able to continue that in the most positive way. I hope you have time for one more quick one.

Speaker Change: I certainly hope that we're going to be able to continue that in the year and the most positive way.

Speaker Change: Let's see if we've time for one more quick one.

Operator: Your final question comes from the line of Robert Fishman from Moffitt & Nathanson. Your line is open. Thanks. Good morning. Two for you guys quickly, if I can.

Speaker Change: Our final question comes from the line of Robert Fishman from Moffett Nathanson. Your line is open.

Robert S. Fishman: Thanks. Good morning, two for you guys quickly if I can.

David M. Zaslav: David, you've been vocal about the idea of re-bundling. Do you think it's inevitable that the digital streaming ecosystem will end up looking a lot like the old MVPD world? And maybe you can talk about the benefit of bundling Macs with other streaming services like Netflix through Verizon. And then, for JB or Gunnar, can you talk about the future of Bleacher Reports, sports add-on products, given the SportsJV announcement, anything you can share in terms of the engagement with sports on Macs to date with the free option? Thanks so much.

David <unk> been vocal about the idea of a re bundling do you think it's inevitable that the digital streaming ecosystem will end up looking a lot like the old N V. P. D World, maybe if you can talk about the benefit of bundling Max with other streaming services like Netflix through Verizon and then for JP <unk> can you talk about the future of Bleacher report.

Robert S. Fishman: Sports add on product given the sports JV announcement and anything you can share in terms of the engagement with sports on Max to date with the free option. Thanks, so much.

David M. Zaslav: Thanks, Robert. I think everything is driven by the consumer experience. And the consumer experience right now is cluttered, it's awkward, it's somewhat confusing. But people have learned how to deal with it. They Google what show, where a show is, or where a sport is.

Robert S. Fishman: Thanks, Robert look I think everything is driven by the consumer experience and the consumer experience right. Now is it's cluttered, it's awkward it's somewhat confusing.

Robert S. Fishman: Have learned how to deal with it you Google.

Show, where show where show is.

Robert S. Fishman: And.

Or worse.

Robert S. Fishman: Sport is but re bundling just makes an awful lot of sense.

David M. Zaslav: But re-bundling just makes an awful lot of sense, and this idea, I think we've transitioned out of the idea of subs at any cost. We've done that by getting max profitable and really focusing on getting real subscribers with real economics and growing that like a real business. But the ability for a consumer to go to one place, you know, the Verizon example is a good example. And Netflix is a great product. You put it together with Max, and you can get those together and provide, you know, a very meaningful experience for people. And it makes it a lot easier to travel across our universe and theirs. In the longer term, you know, I expect that there will be meaningful bundling. It's going to happen in one of two ways.

Robert S. Fishman: And then this idea I think we've transitioned out of the idea of subs at any cost.

Robert S. Fishman: We've done that by by getting Max profitable and really focusing on getting real subs with real economics and growing that like a real business.

Robert S. Fishman: But.

Robert S. Fishman: The ability for a consumer to go to one place.

Robert S. Fishman: The Verizon example is a good example, where Netflix is a great product you put it together with Max and you can get.

Robert S. Fishman: Net those together provide a very meaningful experience for people and it makes it a lot easier to traverse across.

Robert S. Fishman: Our universe and theirs in the longer term.

Robert S. Fishman: I expect that there will be meaningful bundling, it's going to happen in one of two ways it'll either be a bundling by an intermediary.

David M. Zaslav: It'll either be bundling by an intermediary, you know, a platform company like an Apple or an Amazon or a Roku or, you know, what's going on with Charter and Comcast, which is very compelling and, I think, very helpful to all of us in the content business, that these channel stores morph into places that just provide a simpler and easier and less anxious experience for people to find the content that they want and have it be Or we could do it ourselves. And I've always advocated that we should do it ourselves. And so we're looking to do that domestically. We're looking to do it outside the US.

Robert S. Fishman: <unk>.

Robert S. Fishman: A a platform company like an apple or an Amazon or a roku or whats going on with charter and Comcast, which is very compelling and I think very helpful to all of us in the content business.

Robert S. Fishman: These channel stores.

Robert S. Fishman: Morph into places that have just provide a simpler and easier.

Robert S. Fishman: And less anxious experience for people to find the content that they want and have it be simple and fluid.

Or we could do it ourselves and I have always advocated that we should do it ourselves and so we're looking to do that domestically. We're looking to do it outside the U S. In some ways. The sports venture is is is that very is trying to meet that very need that wouldn't you.

David M. Zaslav: In some ways, the sports venture is is trying to meet that very need that when you put our product together with Lachlan and Fox's product together with the ESPN product, it just has a much better, more fluid, more simple consumer experience. It's not on which channel is it on? It's not Where do I go? How do I go? Do I have it? Don't I have it?

Robert S. Fishman: Put our product together with with the with Lachlan and Fox <unk> product together with the with the ESPN product. It just has a much better more fluid more simple consumer experience, it's not which channel is it on it's not where do I go how do I go do I have it do not have it it is.

J.B. Perrette: It's in one place, and I think more and more will be gravitating toward that. And I think, Robert, on the BR Sports part of the question, it really does dovetail exactly with what David just said, which is we look at the overall sports venture, this new sports venture, and the ability for the partners to bundle with their existing streaming services, and, in our case with Mac, is great for the consumer, making it much more simplified. And as it relates to what that means for the existing VR sports that are on Macs, we' But obviously, it's incredibly compelling to be able to say that we'll be able to take the incredible entertainment offering that will be on the platform that is Max, along with the great aggregated, simpler, more compelling consumer offering of the joint venture and put those two together and offer them in a compelling fashion to the subscribers.

Robert S. Fishman: In one place.

Robert S. Fishman: And I think more and more will be gravitating toward that.

Robert S. Fishman: And I think Robert on the VR sports are part of the question. It really dovetails exactly with what David just said, which is we look at the overall the sports venture this new sports venture and the ability for the partners to bundle with their existing streaming services and with our case with Max.

Robert S. Fishman: It is great for the consumer make it much more simplified and as it relates to.

Robert S. Fishman: What does that mean for the existing VR sports that are on Max.

But we'll have more to share with that over the coming months as the.

Robert S. Fishman: We get closer to launch debenture.

Robert S. Fishman: Debenture.

Robert S. Fishman: But obviously, it's incredibly compelling to be able to say.

Robert S. Fishman: That will be able to take the incredible entertainment offering.

Robert S. Fishman: That will be on.

Robert S. Fishman: That is on Max along with the great.

Robert S. Fishman: Brigaded simpler more compelling consumer offering of the joint venture.

Robert S. Fishman: Those two together and often in a compelling fashion to the subscribers.

J.B. Perrette: And as just a note, obviously, in the meantime, we're continuing to lean in on the Bleacher Report sports offering, and we're incredibly excited over the next few months to bring all of our March Madness, including building up to the final four on Max for the first time here over the next 45 days, and then leading into the NBA playoffs and a little bit later in the year. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect, and a little bit later in the interview.

Robert S. Fishman: And as just as a note obviously in the meantime, we're continuing to lean in on the Bleacher report sports offering and we're incredibly excited over the next few months to bring.

Robert S. Fishman: All of our March madness, including building up to the final four on Max for the first time here over the next 45 days.

Robert S. Fishman: And then leading into the NBA playoffs, and I'm a little bit later in the spring.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: That's in a little bit later in the spring.