Q2 2024 Warner Bros Discovery Inc Earnings Call

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Operator: Ladies and gentlemen, welcome to the Warner Bros. Discovery second quarter 2024 earnings conference call. At this time, all participant lines 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 call over to Mr. Andrew Slabin, Executive Vice President, Global Investor Strategy. Sir, you may now begin.

Andrew Slabin: Star Zero

Speaker Change: Ladies and gentlemen, welcome to the Warner Bros. Discovery Second Quarter 2024 Earnings Conference Call. At this time, all participant lines are in a listen-only mode.

Speaker Change: 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 call over to Mr. Andrew Slabin, Executive Vice President, Global Investor Strategy. Sir, you may now begin.

Andrew Slabin: Good afternoon, and thank you for joining us for Warner Bros. Discovery's Q2 earnings call. Joining me today is David Zaslav, President and Chief Executive Officer, Gunnar Wiedenfels, Chief Financial Officer, and J.B. Peretz, CEO and President, Global Streaming and Games.

Speaker Change: Good afternoon, and thank you for joining us for Warner Bros. Discovery's Q2 earnings call. Joining me today is David Zaslav, President and Chief Executive Officer, Gunnar Wiedenfels, Chief Financial Officer, and J.B. Peretz, CEO and President, Global Streaming and Games.

Andrew 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. Such 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. 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.

Speaker Change: Today's presentation will include forward-looking statements that we made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: The 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.

Speaker Change: for additional information of 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 ten -k and his reports on form ten -q and form eight -k

Andrew Slabin: In addition, we will discuss non-GAAP financial measures on this call. Reconciliation of these non-GAAP financial measures to the closest GAAP financial measure can be found in our earnings release and in our trending schedules, which can be found in the investor relations section of our website. And with that, I'd like to turn the call over to David.

Speaker Change: In addition, we will discuss non-GAAP financial measures on this call.

David Zaslav: Reconciliation of these non-GAAP financial measures to the closest GAAP financial measure can be found in our earnings release and in our trending schedules, which can be found in the Investor Relations section of our website. And with that, I'd like to turn the call over to David.

David Zaslav: Hello, everyone, and thank you for joining us. This has been a busy, productive quarter, albeit against the backdrop of what continues to be tough market conditions, two plus years after launching our company. We are still in the midst of a long-term transition, marked by many notable progress points, as well as some tough challenges. Our direct-to-consumer business is doing very, very well, and we see a tremendous amount of upside at the same time. There were tough conditions in the legacy, but that is a frame.

David Zaslav: Hello, everyone, and thank you for joining us.

David Zaslav: This has been a busy, productive quarter.

David Zaslav: albeit against the backdrop of what continues to be tough market conditions.

David Zaslav: two-plus years after launching our company.

David Zaslav: We are still in the midst of a long-term transition.

David Zaslav: marked by many notable progress points.

David Zaslav: as well as some tough challenges.

David Zaslav: Our direct-to-consumer business is doing very, very well, and we see a tremendous amount of upside.

David Zaslav: Business. With that as a frame, let me walk you through some of the highlights. On the direct to consumer side, at the home of the Olympics in Europe, Max and Discovery Plus are the only places to watch virtually every minute of the Olympic Games. And it's really worked for us. It's been a multi-platform experience spanning linear, digital, social, and streaming, with more than 141 million people engaged across our channels and platforms. We purposely timed the launch of Max and Europe to capitalize on the attention around the Olympics. It was a heavy lift, and it paid off.

David Zaslav: At the same time, there are tough conditions in the legacy business.

David Zaslav: Let me walk you through some of the highlights. On the direct-to-consumer side, at the home of the Olympics in Europe, Max and Discovery Plus are the only place to watch virtually every minute of the Olympic Games. And it's really worked for us. It's been a multi-platform experience spanning linear, digital, social, and streaming, with more than 141 million people engaged across our channels and platforms. We purposely timed the launch of Max in Europe to capitalize on the attention surrounding the Olympics.

David Zaslav: But that is a frame.

David Zaslav: Let me walk you through some of the highlights.

David Zaslav: On the direct-to-consumer side, at the home of the Olympics in Europe , Max and Discovery Plus are the only place to watch virtually every minute of the Olympic Games.

David Zaslav: And it's really worked for us.

David Zaslav: It's been a multi-platform experience spanning linear, digital, social, and streaming, with more than 141 million people engaged across our channels and platforms.

David Zaslav: We purposely timed the launch of MAX in Europe to capitalize on the attention around the Olympics.

David Zaslav: It was a heavy lift, and it paid off. We broadcast the games on Max and Discovery+, on LinearTV, and online through our Eurosport channels to 47 markets in 20 different languages. A challenging endeavor by any measure, and yet the team at our broadcast center in the heart of Paris made it look easy. More importantly...

David Zaslav: We broadcast the games on Max and Discovery Plus, on linear TV and online through our Euro Sport channels, the 47 markets in 20 different languages. A challenging endeavor by any measure, and yet the team at our Broadcast Center in the heart of Paris has made it look easy. More importantly, the response from consumers since the start of the games has exceeded our highest expectations, both in terms of subscriber growth and viewership. The success of the Olympics and our whole offering reflects an incredible amount of work over the last two years, fighting to make our content available outside the US.

Speaker Change: It was a heavy lift and it paid off. We broadcast the games on Macs and Discovery Plus, on Linear TV and online through our Eurosport channels to 47 markets in 20 different languages.

Speaker Change: A challenging endeavor by any measure, and yet the team at our broadcast center in the heart of Paris has made it look easy.

David Zaslav: The response from consumers since the start of the games has exceeded our highest expectations, both in terms of subscriber growth and viewers. The success of the Olympics and our whole offering reflect an incredible amount of work over the last two years, fighting to make our content available outside the U.S., and now we are finally there in Latin America and in Europe. We are now a global streaming service and one of the strongest international media companies in the world.

Speaker Change: More importantly, the response from consumers since the start of the games has exceeded our highest expectations.

Speaker Change: both in terms of subscriber growth and viewership. The success of the Olympics and our whole offering.

Speaker Change: reflects an incredible amount of work over the last two years.

Speaker Change: fighting to make our content available outside the U.S.

David Zaslav: And now we are finally there in Latin America and in Europe. We are now a global streaming service and one of the strongest international media companies in the world. It's an important and strategic advantage, with films, series, local content, local sports, and the very best original entertainment in markets around the world, which is an absolute requisite for a successful direct-to-consumer business. I am convinced that to be successful, you have to be global. It's a core belief I had at Discovery, and our global attack plan at Discovery was what fueled the majority of our shareholder value creation there.

Speaker Change: And now we are finally there, in Latin America and in Europe . We are now a global streaming service and one of the strongest international media companies in the world.

David Zaslav: It's an important and strategic advantage, with films, series, local content, local sports, and the very best original entertainment in markets around the world, which is an absolute requisite for a successful direct-to-consumer business. I am convinced that to be successful, you have to be global.

Speaker Change: It's an important and strategic advantage.

Speaker Change: with films, series, local content, local sports, and the very best original entertainment in markets around the world.

Speaker Change: which is an absolute requisite for a successful direct-to-consumer business. I am convinced that to be successful, you have to be global.

David Zaslav: It's a core belief I had at Discovery, and our global attack plan at Discovery was what fueled the majority of our shareholder value creation. And now, after 18 months of rebuilding our product and platform at MAP, refocusing our proposition and brand, restructuring our cost, and reloading our content. We're beginning to really scale and grow the service worldwide, and momentum is building. We are only just beginning to unlock the global value opportunity that exists. We added 2 million subscribers sequentially in the first quarter and more than 3.6 million subscribers in the second quarter.

Speaker Change: It's a core belief I had at Discovery, and our global attack plan at Discovery was what fueled the majority of our shareholder value creation there.

David Zaslav: And now, after 18 months of rebuilding our product and platform at Max, refocusing our proposition and brand, restructuring our cost, and reloading our content arsenal, we're beginning to really scale and grow the service worldwide, and momentum is building. We are only just beginning to unlock the global value opportunity that exists. We added two million subscribers sequentially in the first quarter and more than 3.6 million subscribers in the second quarter. And it's worth noting that we began launching in Europe in the middle of the quarter, with only two weeks of House of the Dragon and before the Olympics had even kicked off.

Speaker Change: And now, after 18 months of rebuilding our product and platform at max.

Speaker Change: Refocusing our proposition and brand, restructuring our cost, and reloading our content arsenal.

Speaker Change: We're beginning to really scale and grow the service worldwide.

Speaker Change: and momentum is building.

Speaker Change: We are only just beginning to unlock the global value opportunity that exists.

Speaker Change: We added 2 million subscribers sequentially in the first quarter and more than 3.6 million subscribers in the second quarter. And it's worth noting that we began launching in Europe in the middle of the quarter with only two weeks of House of the Dragon and before the Olympics had even kicked off.

David Zaslav: And it's worth noting that we began launching in Europe in the middle of the quarter with only two weeks of House of the Dragon and before the Olympics had even kicked off, and we'll see even greater subscriber growth this quarter. Meanwhile, we've scaled the platform while driving increased revenue. We have lots of runway still ahead and real momentum. Our big advantage is our channels, infrastructure, and local teams in almost every market that can now all work together to promote our SVOD service.

David Zaslav: And we'll see even greater subscriber growth this quarter. Meanwhile, we've scaled the platform while driving increased revenue. We have lots of runway still ahead and real momentum. Our big advantage is our channels, infrastructure, and local teams in almost every market that can now all road together to promote our SVOD service. Max is finally in 65 international markets and yet still not present in almost half the global addressable markets, including sizable screaming markets where our content and franchises have significant fan bases like Australia, Japan, the UK, Germany, and Italy. We intend to continue our drumbi of new market launches over the next 18 to 24 months.

Speaker Change: And we'll see even greater subscriber growth this quarter.

Speaker Change: Meanwhile, we've scaled the platform while driving increased revenue.

Speaker Change: We have lots of runways still ahead and real momentum.

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

David Zaslav: With that as a frame, let me walk you through some of the highlights. On the direct to consumer side, at the home of the Olympics in Europe, Max and Discovery Plus are the only place to watch virtually every minute of the Olympic Games. And it's really worked for us.

David Zaslav: Max is finally in 65 international markets and yet is still not present in almost half the global addressable market, including sizable streaming markets where our content and franchises have a significant fan base, like Australia, Japan, the UK, Germany, and Italy.

Speaker Change: Max is finally in 65 international markets.

Speaker Change: and yet still not present in almost half the global addressable markets.

Speaker Change: including sizable streaming markets where our content and franchises have significant fan bases like Australia, Japan, the UK, Germany, and Italy.

David Zaslav: It's been a multi-platform experience spanning linear digital social and streaming with more than 141 million people engaged across our channels and platforms. We purposely timed the launch of Max and Europe to capitalize on the attention around the Olympics. It was a heavy lift and it paid off. We broadcast the games on Max and Discovery Plus, on linear TV and online through our Euro Sport channels, the 47 markets in 20 different languages.

David Zaslav: We intend to continue our drumbeat of new market launches over the next 18 to 24 months. At the same time, we've been very active in reimagining our existing partnerships with international distributors of our linear channel to encourage them to support the distribution of Mac in ways that are a true win-win for both parties. These partnerships help get Macs on the devices of more consumers faster and at a fraction of the acquisition cost.

Speaker Change: We intend to continue our drumbeat of new market launches over the next 18 to 24 months.

David Zaslav: At the same time, we've been very active in reimagining our existing partnerships with international distributors of our linear channels to encourage them to support the distribution of Macs in ways that are a true win-win for both parties. These partnerships help get Macs on the devices of more consumers faster and at a fraction of the acquisition cost. We've done more than 150 of these deals to date in Europe and in Latin America, and you'll begin to see them really pay off, and we have more to come. We've also been big proponents of bundling, given the benefits it can provide on lowering the cost of entry for consumers, reducing churn, and having an overall more positive consumer experience.

Speaker Change: At the same time, we've been very active in reimagining our existing partnerships with international distributors of our linear channels.

Speaker Change: to encourage them to support the distribution of MACs in ways that are a true win-win for both parties.

David Zaslav: A challenging endeavor by any measure, and yet the team at our Broadcast Center in the heart of Paris has made it look easy. More importantly, the response from consumers since the start of the games has exceeded our highest expectations, both in terms of subscriber growth and viewership.

Speaker Change: These partnerships help get Macs on the devices of more consumers, faster, and at a fraction of the acquisition cost. We've done more than 150 of these deals to date in Europe and in Latin America. And you'll begin to see them really pay off, and we have more to come.

David Zaslav: We've done more than 150 of these deals to date in Europe and in Latin America, and you'll begin to see them really pay off, and we have more to come. We've also been big proponents of bundling, given the benefits it can provide for lowering the cost of entry for consumers, reducing churn, and having an overall more positive consumer experience, and we continue to lead in this space with key players around the world, including a new bundle launched last month with Clara. The Biggest Cable Distributor in Brazil, The bundle offers Max, Netflix, and Global Play, the largest local streamer in the market, and Claro TV Plus.

David Zaslav: The success of the Olympics and our whole offering reflects an incredible amount of work over the last two years, fighting to make our content available outside the US. And now we are finally there in Latin America and in Europe. We are now a global streaming service and one of the strongest international media companies in the world. It's an important and strategic advantage, with films, series, local content, local sports, and the very best original entertainment in markets around the world, which is an absolute requisite for a successful direct-to-consumer business.

Speaker Change: We've also been big proponents of bundling, given the benefits it can provide on lowering the cost of entry for consumers, reducing churn, and having an overall more positive consumer experience.

David Zaslav: And we continue to lead in this space with key players around the world, including a new bundle launch last month with Clara, the biggest cable distributor in Brazil. The bundle offers Macs, Netflix, and Global Play, the largest local streamer in the market, and Clara TV Plus. Here in the US, two weeks ago, we launched the ultimate bundle in the Disney Plus, Hulu, Macs package. We've been extremely pleased with the response from consumers, and look forward to tracking and updating you on what we believe is a compelling consumer experience that will provide an even stronger retention profile.

Speaker Change: And we continue to lead in this space with key players around the world.

Speaker Change: including a new bundle launched last month with Claro.

Speaker Change: The Biggest Cable Distributor in Brazil

Speaker Change: The bundle offers Max, Netflix, and Global Play, the largest local streamer in the market, and Claro TV+. Here in the U.S. two weeks ago, we launched the Ultimate Bundle in the Disney Plus Hulu Max package.

David Zaslav: Here in the U.S., two weeks ago, we launched the Ultimate Bundle in the Disney Plus Hulu Max Pack. We've been extremely pleased with the response from consumers and look forward to tracking and updating you on what we believe is a compelling consumer experience that will provide an even stronger retention profile. And in the fall, we'll roll out venue sports with ESPN and Fox. Of course, the most important driver of our direct consumer growth.

David Zaslav: I am convinced that to be successful, you have to be global. It's a core belief I had at Discovery, and our global attack plan at Discovery was what fueled the majority of our shareholder value creation there. And now, after 18 months of rebuilding our product and platform at Max, refocusing our proposition and brand, restructuring our cost, and reloading our content arsenal, we're beginning to really scale and grow the service worldwide. And momentum is building.

Speaker Change: We've been extremely pleased with the response from consumers and look forward to tracking and updating you on what we believe is a compelling consumer experience that will provide an even stronger retention profile.

David Zaslav: And in the fall, we'll roll out venue sports with the SPM and Fox. Of course, the most important driver of our direct consumer growth is great content. And we have one of our strongest lineups over the next two-plus years to support our global expansion. Among the many highlights from the quarter, season two of the hit series, House of the Dragon, and the Hard Knocks franchise featuring the Giants, which are both done incredibly well. Looking ahead, we're excited for the highly anticipated HBO series, The Penguin, written and directed by Matt Reeves, premiering in September. The new Dune series coming in November.

Speaker Change: And in the fall, we'll roll out venue sports with ESPN and FOX.

Speaker Change: Of course, the most important driver of our direct consumer growth is great content.

David Zaslav: And we have one of our strongest lineups over the next two plus years to support our global expansion. Among the many highlights from the quarter are season two of the hit series House of the Dragon and the Hard Knocks franchise featuring the Giants, which have both done incredibly well. Looking ahead, we're excited for the highly anticipated HBO series, The Penguins, written and directed by Matt Reeves, premiering in September.

Speaker Change: And we have one of our strongest lineups over the next two plus years to support our global expansion.

David Zaslav: We are only just beginning to unlock the global value opportunity that exists. We added two million subscribers sequentially in the first quarter and more than 3.6 million subscribers in the second quarter. And it's worth noting that we began launching in Europe in the middle of the quarter, with only two weeks of house of the dragon, and before the Olympics had even kicked off. And we'll see even greater subscriber growth this quarter.

Speaker Change: Among the many highlights from the quarter, Season 2 of the hit series, House of the Dragon.

Speaker Change: and the Hard Knocks franchise featuring the Giants, which have both done incredibly well.

Speaker Change: Looking ahead, we're excited for the highly anticipated HBO series, The Penguin, written and directed by Matt Reeves, premiering in September .

David Zaslav: The new Dune series coming in November. Blockbuster international titles like the new series City of God, The Fight Rages On, premiering later this month, along with new seasons of hit shows The White Lotus and The Last of Us coming next, just to name a few. Bottom line, the increased momentum we're enjoying underpins our outlook. We expect positive EBITDA in the second half of the year, which will set us up well to deliver on our goal of achieving over $1 billion in EBITDA in 2025.

David Zaslav: Blockbuster international titles like the new series, City of God, The Fight Rages On, premiering later this month. Along with new seasons of hit shows, The White Lotus and The Last of Us coming next year, just to name a few.

Speaker Change: The new Dune series coming in November .

Speaker Change: Blockbuster international titles like the new series City of God, The Fight Rages On, premiering later this month.

David Zaslav: Meanwhile, we've scaled the platform while driving increased revenue. We have lots of runway still ahead and real momentum. Our big advantage is our channels, infrastructure, and local teams in almost every market that can now all road together to promote our SVOD service. Max is finally in 65 international markets.

Speaker Change: along with new seasons of hit shows The White Lotus and The Last of Us coming next year, just to name a few.

David Zaslav: Bottom line, the increased momentum we're enjoying underpins our outlook for positive EBITDA in the second half of the year, which will set us up well to deliver on our goal of achieving over one billion in EBITDA in 2025. Our direct to consumer business has also been a meaningful driver for advertising. In fact, ad sales had its biggest streaming quarter ever in Q2, in part driven by greater engagement, increased ad-light subscribers, and early international track. This contributed to a notable sequential reduction in total company advertising declines to 3% from 7% in Q1. While trends across our advertising business continue to reflect the bifurcation in the broader ad market, we remain encouraged by the healthy momentum in growing scale we see in streaming.

Speaker Change: Bottom line, the increased momentum we're enjoying underpins our outlook for positive EBITDA in the second half of the year, which will set us up well to deliver on our goal of achieving over 1 billion in EBITDA in 2025.

David Zaslav: And yet still not present in almost half the global addressable markets, including sizable screaming markets where our content and franchises have significant fan bases, like Australia, Japan, the UK, Germany and Italy. We intend to continue our drumbly of new market launches over the next 18 to 24 months. We are very active in reimagining our existing partnerships with international distributors of our linear channels to encourage them to support the distribution of MAX in ways that are a true win-win for both parties.

David Zaslav: Our direct-to-consumer business has also been a meaningful driver for Avatar. In fact, ad sales had their biggest streaming quarter ever in Q2, in part driven by greater engagement, increased ad-like subscribers, and early international traction. This contributed to a notable sequential reduction in total company advertising declines to 3% from 7% in Q1.

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

Speaker Change: In fact, ad sales had its biggest streaming quarter ever in Q2, in part driven by greater engagement, increased ad light subscribers, and early international traction.

Speaker Change: This contributed to a notable sequential reduction in total company advertising declines to 3% from 7% in Q1.

David Zaslav: While trends across our advertising business continue to reflect the bifurcation in the broader ad business, we remain encouraged by the healthy momentum and growing scale we see in Scream. Turning to the upfront, we performed well relative to the industry. Max volume grew by almost 50% as clients continue to see great value in our upscale and younger-skewing audience, as well as in sponsorship opportunities for award-winning content like season three of the hit series, The White Lotus.

Speaker Change: While trends across our advertising business continue to reflect the bifurcation in the broader ad market.

Speaker Change: We remain encouraged by the healthy momentum and growing scale we see in streaming.

David Zaslav: Turning to the upfront, we performed well relative to the industry. We grew by almost 50%, as clients continue to see great value in our upscale and younger skewing audience, as well as in sponsorship opportunities in award-winning content like season 3 of the hit series The White Lotus. And in linear, we did especially well in sports, with strong pricing and double-digit volume growth led by increased demand for our coverage of March Madness, Major League Baseball, NBA, the NHL, including the Stanley Cup Finals, and new properties like NASCAR and the French Open.

David Zaslav: These partnerships help get MAX on the devices of more consumers faster and at a fraction of the acquisition cost. We've done more than 150 of these deals to date in Europe and in Latin America. And you'll begin to see them really pay off and we have more to come. We've also been big proponents of bundling given the benefits can provide on lowering the cost of entry for consumers, reducing churn and having an overall more positive consumer experience.

Speaker Change: Turning to the upfront, we performed well relative to the industry.

Speaker Change: Max volume grew by almost 50% as clients continue to see great value in our upscale and younger skewing audience.

Speaker Change: as well as in sponsorship opportunities in award-winning content like season 3 of the hit series, The White Lotus.

David Zaslav: And in linear, we did especially well in sports, with strong pricing and double-digit volume growth, led by increased demand for our coverage of March Madness, Major League Baseball, NBA, the NHL, including the Stanley Cup Finals, and new properties like NASCAR and the French Open. Shifting focus to our studio business, we are still in the midst of what we have said will be a multi-year turnaround. There's been a great response to Twisted, which was 50% partners with Universal Pictures and Amblin. The film has become a nearly $275 million box office hit and one of the year's top 10 highest grossing films worldwide.

Speaker Change: And in linear, we did especially well in sports with strong pricing and double-digit volume growth led by increased demand for our coverage of March Madness.

David Zaslav: And we continue to lead in this space with key players around the world, including a new bundle launch last month with Clara, the biggest cable distributor in Brazil. The bundle offers MAX, Netflix and global play, the largest local streamer in the market and Clara TV Plus. Here in the US two weeks ago, we launched the ultimate bundle in the Disney Plus Hulu Max package. We've been extremely pleased with the response from consumers and look forward to tracking and updating you on what we believe is a compelling consumer experience that will provide a even stronger retention profile. And in the fall, we'll roll out venue sports with the SPM and Fox.

Speaker Change: Major League Baseball, NBA, the NHL including the Stanley Club Finals and new properties like NASCAR and the French Open.

David Zaslav: Chifting focus to our studio business, we are still in the midst of what we have said will be a multi-year turnaround. There's been a great response to Twisters, which were 50% partners with Universal Pictures and Amblin. The film has become a nearly 275 million box office hit, and one of the year's top 10 highest grossing films worldwide. And we're excited for what's ahead with Beetlejuice 2 coming in September, and Joker, Folio Du, starring Joaquin Phoenix and Lady Gaga for Meering in early October. There's also a lot of great stuff coming from DC Studios, across live action and animated film, television, games, and experiences.

Speaker Change: Shifting focus to our studio business.

Speaker Change: We are still in the midst of what we have said will be a multi-year turnaround.

Speaker Change: There's been a great response to Twisters.

Speaker Change: which were 50% partners with Universal Pictures and Amblin. The film has become a nearly $275 million box office hit and one of the year's top 10 highest grossing films worldwide.

David Zaslav: And we're excited for what's ahead with Beetlejuice 2 coming in September and Joker, Fully Oddoo, starring Joaquin Phoenix and Lady Gag, premiering in early October. There's also a lot of great stuff coming from DC studios across live action and animated film, television, games, and experiences. James and Peter are fully focused on delivering on their 10-year plan for DC.

Speaker Change: And we're excited for what's ahead with Beetlejuice 2 coming in September , and Joker, fully odue, starring Joaquin Phoenix and Lady Gaga, premiering in early October .

David Zaslav: Of course, the most important driver of our direct consumer growth is great content. And we have one of our strongest lineups over the next two plus years to support our global expansion. Among the many highlights from the quarter, season two of the hit series, House of the Dragon and the hard knocks franchise featuring the Giants, which have both done incredibly well. Looking ahead, we're excited for the highly anticipated HBO series, The Penguin written and directed by Matt Reeves premiering in September.

Speaker Change: There's also a lot of great stuff coming from DC Studios across live-action and animated film, television games, and experiences.

David Zaslav: James and Peter are fully focused on delivering on their 10-year plan for DC. If you just look at the next six months, the new adult animated series, Kite Man, premiered on Max in July and is doing very well. The incredibly moving documentary Superman, the Chris Reeve Story, will have a brief run in theaters in September before coming to Max. As I mentioned, the live-action series, The Penguin, premieres in September, followed by the Joker in October. Then Creature Commandos, an original animated series from the mind of James Gunn, kicks off in December. And beyond that, James and Crew just wrapped on Superman, which is set for release in theaters on July 11th.

Speaker Change: James and Peter are fully focused on delivering on their 10-year plan for DC. If you just look at the next six months, the new adult animated series Kite Man premiered on Max in July and is doing very well.

David Zaslav: If you just look at the next six months, the new adult animated series Kite Man premiered on Max in July and is doing very well; the incredibly moving documentary Superman: The Chris Reeve story. We'll have a brief run in theaters in September before coming to Mac. As I mentioned, the live action series, The Penguin, premieres in September, followed by The Joker in October.

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

David Zaslav: The new Dune series coming in November. Blockbuster international titles like the new series City of God, The Fight Rages on, premiering later this month. Along with new seasons of hit shows, The White Lotus and the Last of Us coming next year, just to name a few.

Speaker Change: As I mentioned, the live-action series The Penguin premieres in September , followed by The Joker in October .

David Zaslav: Then, in December, Creature Commandos, an original animated series from the mind of James Gunn, kicks off. And beyond that, Gunn and his crew just wrapped on Superman, which is set for release in theaters on July 11. We can't wait to show this amazing film to a whole new generation of moviegoers. On the Warner Bros. TV side, Channing and her team are currently producing close to 90 live-action scripted, unscripted, and animated series for nearly 20 different platforms. In fact, Warner Bros. Television Group is the only studio with shows on every major platform industry-wide, including Presumed Innocent on Apple TV+, which is now the number one drama series in the history of the platform.

Speaker Change: Then Creature Commandos, an original animated series from the mind of James Gunn, kicks off in December.

James: And beyond that, James and crew just wrapped on Superman, which is set for release in theaters on July 11th. We can't wait to show this amazing film to a whole new generation of moviegoers.

David Zaslav: We can't wait to show this amazing film to a whole new generation of moviegoers. On the Warner Bros. TV side, Channing and her team are currently producing close to 90 live-action, scripted, unscripted, and animated series for nearly 20 different platforms. In fact, Warner Bros. Television Group is the only studio which shows on every major platform industry-wide, including Presumed Innocent on Apple TV Plus, which is now the number one drama series in the history of the platform. This is one of our superpowers. We have the most prolific producer of content for ourselves, as well as third parties.

David Zaslav: Bottom line, the increase momentum we're enjoying underpins our outlook for positive EBITDA in the second half of the year, which will set us up well to deliver on our goal of achieving over one billion in EBITDA in 2025. Our direct to consumer business has also been a meaningful driver for advertising. In fact, ad sales had its biggest streaming quarter ever in Q2, in part driven by greater engagement, increased ad light subscribers and early international track.

Channing: On the Warner Bros. TV side, Channing and her team are currently producing close to 90 live-action scripted, unscripted, and animated series for nearly 20 different platforms.

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

David Zaslav: This is one of our superpowers. We are the most prolific producer of content for ourselves, as well as third parties. As I've said many times, I believe the best content wins.

Speaker Change: This is one of our superpowers. We are the most prolific producer of content for ourselves as well as third parties. As I've said many times, I believe the best content wins, and we've been working hard over the last few years to bolster our storytelling capability even further.

David Zaslav: This contributed to a notable sequential reduction in total company advertising declines to 3% from 7% in Q1. While trends across our advertising business continue to reflect the bifurcation in the broader ad market, we remain encouraged by the healthy momentum in growing scale we see in streaming. We grew by almost 50%, as clients continue to see great value in our upscale and younger skewing audience, as well as in sponsorship opportunities in award-winning content like season three of the hit series, The White Lotus.

David Zaslav: As I've said many times, I believe the best content wins, and we've been working hard over the last few years to bolster our storytelling capability even further. We have the best talent, the best assets, and what confident this gives us a strong, maybe even the strongest, see that the tape. Tiveting to sports were pleased with the growth and activity we're seeing across the business both in the US and abroad. I mentioned the Olympic Games, which has been a huge driver of growth for us internationally. We also saw strong momentum leading into the Olympics with a record-breaking Roland Garros across all platforms and our best-ever swimming performance for Tour de France.

David Zaslav: And we've been working hard over the last few years to bolster our storytelling capability even further. We have the best talent, the best assets, and we're confident this gives us a strong, maybe even the strongest, seat at the table. Pivoting to sports, we're pleased with the growth and activity we're seeing across the business, both in the US and abroad. I mentioned the Olympic Games, which has been a huge driver of growth for us internationally.

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

David Zaslav: We also saw strong momentum leading into the Olympics with a record-breaking Roland-Garros across all platforms and our best-ever streaming performance for the Tour de France. We also have a strong sports presence in Latin America, where we achieved record levels of engagement for MAX during the knockout stages and finals of the UEFA Champions League. Also of note, we rebranded BT and Eurosport to TNT Sports, which is a leading at-scale and growing sports platform in the UK.

Speaker Change: Pivoting to sports, we're pleased with the growth and activity we're seeing across the business, both in the U.S. and abroad.

Speaker Change: I mentioned the Olympic Games, which has been a huge driver of growth for us internationally. We also saw strong momentum leading into the Olympics, with a record-breaking Roland Garros across all platforms.

David Zaslav: We also have a strong sports presence in Latin America, where we achieved record levels of engagement for Max during the knockout stages and finals of UEFA Champions League. Also of note, we rebranded BT and Euro Sport to TNT Sports, which is a leading at scale and growing sports platform in the UK. The strength and growth of TNT Sports will be helpful as we launch Max in the UK in early 2026. In the US, we had a big second quarter with especially strong performances by the NCAA's Men March Madness National Championship on TBS and the NHL Stanley Cup Playoffs on TNT.

David Zaslav: And in linear, we did especially well in sports, with strong pricing and double-digit volume growth led by increased demand for our coverage of March madness, Major League Baseball, NBA, the NHL including the Stanley Club finals, and new properties like NASCAR and the French Open.

Speaker Change: and our best ever streaming performance for Tour de France. We also have a strong sports presence in Latin America, where we achieved record levels of engagement for MAX during the knockout stages and finals of UEFA Champions League.

Speaker Change: Also of note, we rebranded BT and Eurosport to TNT Sports.

David Zaslav: Shifting focus to our studio business, we are still in the midst of what we have said will be a multi-year turnaround. There's been a great response to Twisters, which were 50% partners with Universal Pictures and Amblin. The film has become a nearly 275 million box office hit, and one of the year's top 10 highest-grossing films worldwide. And we're excited for what's ahead with Beetlejuice 2 coming in September, and Joker, Folio Du, starring Joaquin Phoenix and Lady Gaga for Meering in early October.

Speaker Change: which is a leading at-scale and growing sports platform in the UK. The strength and growth of TNT Sports will be helpful as we launch MAX in the UK in early 2026.

David Zaslav: The strength and growth of TNT Sports will be helpful as we launch MAX in the UK in early 2020. In the US, we had a big second quarter with especially strong performances by the NCAA Men's March Madness National Championship on TBS and the NHL Stanley Cup Playoffs on TNT.

Speaker Change: In the U.S., we had a big second quarter with especially strong performances by the NCAA Men's March Madness National Championship on TBS and the NHL Stanley Cup Playoffs on TNT.

David Zaslav: As a part of the growth plan we put in place at TNT Sports, we continue to build a strong portfolio of sports rights. In just the last 12 months, we added NASCAR, Roland Garros tennis, Big East men's and women's basketball, Mountain West football, as well as College Football Playoff games, all multi-year partnerships. These new rights will add scale and breadth to our existing Best in Class portfolio of Major League Baseball, NBA, NHL, U.S. Men's and Women's soccer, all spread across TBS, TNT, truTV, Max, House of Highlights, and Bleacher Report. And as a result of all this additional quality life sports, we are now also converting True TV to TNT Sports in prime in October.

David Zaslav: As a part of the growth plan we put in place at TNT sports, we continue to build a strong portfolio of sports. In just the last 12 months, we added NASCAR, and Roland Garros tennis. Big East Men's and Women's Basketball, Mountain West Football, as well as the College Football Playoffs. All multi-year partners. These new rights will add scale and breadth to our existing best-in-class portfolio of Major League Baseball, NBA, NHL, U.S. Men's and Women's Soccer, all spread across TBS, TNT, TruTV, Mac, and Google. House of Highlights, and Bleacher Report.

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

David Zaslav: There's also a lot of great stuff coming from DC studios across live action and animated film, television games and experiences. James and Peter are fully focused on delivering on their 10-year plan for DC. If you just look at the next six months, the new adult animated series, Kite Man, premiered on Max in July and is doing very well. The incredibly moving documentary, Superman, the Chris Reeve story, will have a brief run in theaters in September before coming to Max.

Speaker Change: in just the last 12 months.

Speaker Change: We added NASCAR, Roland Garros Tennis, Big East Men's and Women's Basketball, Mountain West Football, as well as college football playoff games.

Speaker Change: All multi-year partnerships.

Speaker Change: These new rights will add scale and breadth to our existing best-in-class portfolio of Major League Baseball, NBA, NHL, U.S. Men's and Women's Soccer, all spread across TBS, TNT, TruTV, Max.

David Zaslav: As I mentioned, the live action series, The Penguin, premieres in September, followed by the Joker in October. Then Creature Commandos, an original animated series from the mind of James Gunn, kicks off in December. And beyond that, James and Crew just wrapped on Superman, which is set for release in theaters on July 11th. We can't wait to show this amazing film to a whole new generation of moviegoers.

David Zaslav: And as a result of all this additional quality live sport, we are now also converting True TV to TNT Sports and Prime in October. And all of this will help support the upcoming launch of VenuSport when the service rolls out in the fall.

Speaker Change: House of Highlights and Bleacher Report.

Speaker Change: And as a result of all this additional quality live sports, we are now also converting True TV to TNT Sports and Prime in October .

David Zaslav: And all of this will help support the upcoming launch of Venue Sports. When the service rolls out in the fall, fans will have access to an extensive offering of live games and event coverage of all the major professional sports leagues and top college conferences, and popular studio shows and shoulder programming. And as we announced last week, the service will be available at a compelling price point that we're confident will appeal to the court cutter and court never fans, not currently served by existing pay TV packages. Needless to say, we're excited for the future of our sports business and the tremendous value we provide to fans and our partners.

Speaker Change: And all of this will help support the upcoming launch of Venue Sports.

David Zaslav: Fans will have access to an extensive offering of live games and event coverage of all the major professional sports leagues and top college conferences, as well as popular studio shows and after-hours programs. And, as we announced last week, this service will be available at a compelling price point that we're confident will appeal to Cord Cutter and Cord Never fans not currently served by existing pay TV packages. Needless to say, we're excited about the future of our sports business and the tremendous value we provide to fans and our partners. But I want to make one final comment. As you saw, this quarter we recorded a non-cash impairment of the goodwill attributed to our linear network.

Speaker Change: When the service rolls out in the fall.

Speaker Change: Fans will have access to an extensive offering of live games and event coverage of all the major professional sports leagues and top college conferences.

David Zaslav: On the Warner Bros. TV side, Channing and her team are currently producing close to 90 live-action scripted, unscripted and animated series for nearly 20 different platforms. In fact, Warner Bros. Television Group is the only studio with shows on every major platform industry-wide, including presumed innocent on Apple TV Plus, which is now the number one drama series in the history of the platform. This is one of our superpowers. We have the most prolific producer of content for ourselves, as well as third parties.

Speaker Change: and Popular Studio Shows and Shoulder Programming.

Speaker Change: And as we announced last week, this service will be available at a compelling price point that we're confident will appeal to the Cord Cutter and Cord Never fans not currently served by existing pay TV packages.

Speaker Change: Needless to say, we're excited for the future of our sports business and the tremendous value we provide to fans and our partners.

David Zaslav: I want to make one final point. As you saw, this quarter we recorded a non-cash impairment of the goodwill attributed to our linear networks. It's fair to say that even two years ago, market valuations and prevalent conditions for legacy media companies will be quite different than they are today. And this impairment acknowledges this and better aligns our carrying values with our future outlook. Gooner will have more to say on this in a month. We recognized early on this was a generational disruption impacting our industry, requiring us to take bold, necessary steps and to pursue opportunities we see across the media landscape, the best position Warner Bros Discovery for the future.

Speaker Change: I want to make one final point.

David Zaslav: As I've said many times, I believe the best content wins, and we've been working hard over the last few years to bolster our storytelling capability even further. We have the best talent, the best assets, and what confident this gives us a strong, maybe even the strongest, see that the tape.

Speaker Change: As you saw, this quarter we recorded a non-cash impairment of the goodwill attributed to our linear networks.

David Zaslav: It's fair to say that even two years ago, market valuations and prevailing conditions for legacy media companies were quite different than they are today, and this impairment acknowledges that and better aligns our carrying values with our future outlook. Gunnar will have more to say on this in a moment. We recognized early on this was a generational disruption impacting our industry, requiring us to take bold necessary steps and to pursue opportunities we see across the media landscape to best position Warner Bros. Discovery for the future.

Speaker Change: It's fair to say that even two years ago, market valuations and prevailing conditions for legacy media companies were quite different than they are today. And this impairment acknowledges this.

David Zaslav: Tiveting to sports, we're pleased with the growth and activity we're seeing across the business both in the US and abroad. I mentioned the Olympic Games which has been a huge driver of growth for us internationally. We also saw strong momentum leading into the Olympics with a record-breaking Roland Garros across all platforms and our best-ever swimming performance for Tour de France. We also have a strong sports presence in Latin America where we achieved record levels of engagement for Max during the knockout stages and finals of UEFA Champions League.

Speaker Change: and better aligns our carrying values with our future outlook.

Speaker Change: Gunnar will have more to say on this in a moment.

Gunnar: We recognized early on this was a generational disruption impacting our industry.

Gunnar: Requiring us to take bold necessary steps.

Gunnar: and to pursue what we see across the media landscape to best position Warner Bros. Discovery for the future.

David Zaslav: We are uniquely advantaged with globally scaled businesses and a capital structure that allow us to make these moves in a thoughtful and strategic way. We have finally launched Max globally and are pursuing bundling opportunities domestically and internationally, all to serve customers around the world with our unparalleled storytelling and content. We are positioned to grow, and while there's still lots to do, we are more confident than ever in our global strategy.

David Zaslav: We are uniquely advantaged. Globally scaled business, and a capital structure that allows us to make these moves in a thoughtful and strategic way. We have finally launched Maxx globally and are pursuing bundling opportunities domestically and internationally, all to serve customers around the world with our unparalleled storytelling and content. We are positioned to grow. And while there's still lots to do, we are more confident than ever in our global strategy, local content, local sports, Best in Class Library, and Quality Branded Storytelling. A unique recipe few can do. And with that, I'll turn it over to Gunnar.

Gunnar: We are uniquely advantaged.

Speaker Change: with globally scaled businesses and a capital structure that allow us to make these moves in a thoughtful and strategic way.

David Zaslav: Also of note, we rebranded BT and Euro Sport to TNT Sports, which is a leading at scale and growing sports platform in the UK. The strength and growth of TNT Sports will be helpful as we launch Max in the UK in early 2026. In the US, we had a big second quarter with especially strong performances by the NCAA's Men's March Madness National Championship on TBS and the NHL Stanley Cup playoffs on TNT.

Speaker Change: We have finally launched Max Globally.

Speaker Change: and are pursuing bundling opportunities domestically and internationally all to serve customers around the world with our unparalleled storytelling and content.

Speaker Change: We are positioned to grow and while there's still lots to do, we are more confident than ever in our global strategy.

David Zaslav: Local content, local sports, best in class library, and quality branded storytelling; a unique recipe you can do, and with that I'll turn it over to Gunnar.

Gunnar: Local content, local sports, best-in-class library, and quality branded storytelling.

David Zaslav: As a part of the growth plan, we put in place at TNT Sports. We continue to build a strong portfolio of sports rights. In just the last 12 months, we added NASCAR, Roland Garros Tennis, Big East Men's and Women's Basketball, Mountain West Football, as well as College Football Playoff Games, all multi-year partnerships. These new rights will add scale and breadth to our existing Best in Class portfolio of Major League Baseball, NBA, NHL, US Men's and Women's Soccer, all spread across TBS, TNT, True TV, Max, House of Highlights and Bleacher Report.

gouner: A unique recipe, few can do. And with that, I'll turn it over to Gunnar.

Gunnar Wiedenfels: Thank you, David, and good afternoon, everyone. I'd like to focus my remarks on a few key topics before I briefly run through the quarter. First, I want to highlight the progress we're making on paying down our debt balance. During the second quarter, we successfully executed a tender for $3.4 billion a debt, utilizing $2.6 billion a cash, capturing $800 million in value from the embedded discount. We funded this debt purchase with free cash flow and an upsized Euro bond offering of $1.5 billion Euros. We ended the quarter with $37.8 billion in net debt or around four times net leverage.

Gunnar Wiedenfels: Thank you, David. And good afternoon, everyone.

Gunnar Wiedenfels: I'd like to focus my remarks on a few key topics before I briefly run through the quarter. First, I want to highlight the progress we're making on paying down our debt bill. During the second quarter, we successfully executed a tender for $3.4 billion of debt, utilizing $2.6 billion of cash, and capturing $800 million in value from the embedded disk. We funded this debt purchase with free cash flow and an upsized Eurobond offering of 1.5 billion euros.

gouner: Thank you, David, and good afternoon, everyone. I'd like to focus my remarks on a few key topics before I briefly run through the quarter.

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

gouner: During the second quarter, we successfully executed a tender for $3.4 billion of debt, utilizing $2.6 billion of cash, capturing $800 million in value from the embedded discount.

Speaker Change: We funded this debt purchase with free cash flow and an upsized Eurobond offering of 1.5 billion euros.

Gunnar Wiedenfels: We ended the quarter with $37.8 billion of net debt, or around four times its net level. The primary use of our free cash flow will continue to be debt payday. We will maintain a balanced and flexible posture in weighing the benefits of purchasing debt that may be trading at a deeper discount versus the $3.8 billion that we have maturing through the end of 2025, including $800 million through the end of this year.

Speaker Change: We ended the quarter with $37.8 billion of net debt, or around four times net leverage.

David Zaslav: And as a result of all this additional quality life sports, we are now also converting True TV to TNT Sports in prime in October. And all of this will help support the upcoming launch of venue sports. When the service rolls out in the fall, fans will have access to an extensive offering of live games and event coverage of all the major professional sports leagues and top college conferences and popular studio shows and shoulder programming. And as we announced last week, the service will be available at a compelling price point that we're confident will appeal to the court cutter and court never fans, not currently served by existing pay TV packages.

Gunnar Wiedenfels: The primary use of our free cash flow will continue to be debt paid out. We will maintain the balance and flexible posture and weighing the benefits of purchasing debt that may be trading at a deeper discount versus the $3.8 billion that we have maturing through the end of 2025, including $800 million through the end of this year. With a weighted average maturity of nearly 14 years, and an average cost of 4.6 percent, and with our strong free cash flows significantly greater than our maturities in any given year for the foreseeable future, we have an advantageous capital structure to support our transformation and the growth opportunities ahead.

gouner: The primary use of our free cash flow will continue to be debt pay down.

Gunnar: We will maintain a balanced and flexible posture in weighing the benefits of purchasing debt that may be trading at a deeper discount versus the $3.8 billion that we have maturing through the end of 2025, including $800 million through the end of this year.

Gunnar Wiedenfels: With a weighted average maturity of nearly 14 years and an average cost of 4.6%, and with our strong free cash flows, significantly greater than our maturities in any given year for the foreseeable future, we have an advantageous capital structure to support our transformation and the growth opportunities ahead. I can't stress this point enough.

Gunnar: With a weighted average maturity of nearly 14 years and an average cost of 4.6% and with our strong free cash flows significantly greater than our maturities in any given year for the foreseeable future.

Gunnar: We have an advantageous capital structure to support our transformation and the growth opportunities ahead. I can't stress this point enough.

Gunnar Wiedenfels: I can't stress this point enough. Importantly, we have not wavered in our commitment to achieving our two and a half to three times growth leverage target, though admittedly on a longer time frame than initially anticipated. I am also firmly committed to maintaining our investment-grade rating. Second, I'd like to build on David's comments regarding the impairment charge for the network segment. To take a step back first, one of our other discoveries balanced; she carries significant amounts of goodwill, created over a series of past M&A transactions, including the formation of WBD in 2022. And of course, we regularly monitor the value and use of our assets.

Gunnar Wiedenfels: Importantly, we have not wavered in our commitment to achieving our two and a half to three times gross leverage target, though admittedly on a longer timeframe than initially anticipated. I am also firmly committed to maintaining our investment rate. Second, I'd like to build on David's comments regarding the impairment charge for the network. But to take a step back first, Warner Bros. Discovery's balance sheet carries significant amounts of goodwill created over a series of past M&A transactions, including the formation of WBD in 2022.

David Zaslav: Needless to say, we're excited for the future of our sports business and the tremendous value we provide to fans and our partners. I want to make one final point.

Gunnar: Importantly, we have not wavered in our commitment to achieving our two and a half to three times gross leverage target.

Gunnar: Though admittedly on a longer time frame than initially anticipated.

Gunnar Wiedenfels: As you saw, this quarter, we recorded a non cash impairment of the good well attributed to our linear networks. It's fair to say that even two years ago, market valuations and prevalent conditions for legacy media companies will quite different than they are today. And this impairment acknowledges this and better aligns our carrying values with our future outlook. Goon will have more to say on this in a month.

Gunnar: I am also firmly committed to maintaining our investment grade rating.

Gunnar: Second, I'd like to build on David's comments regarding the impairment charge for the network segment.

Gunnar: To take a step back first, Warner Bros Discovery's balance sheet carries significant amounts of goodwill created over a series of past M&A transactions, including the formation of WBD in 2022.

Gunnar Wiedenfels: And, of course, we regularly monitor the value and use of our assets. In the second quarter, a number of triggering events, including the difference between our current market cap and the book value of the company. The continued softness in the US ad market and uncertainty related to affiliate and sports rights renewals required us to adjust our planning assumptions and take a $9 billion non-cash impairment charge against the carrying values in the Network Six. While I am certainly not dismissive of the magnitude of this impairment.

Gunnar: And, of course, we regularly monitor the value and use of our assets.

Gunnar Wiedenfels: In the second quarter, a number of triggering events, including the difference between our current market cap and the book value of the company. Company. The continued softness in the US ad market, and uncertainty related to affiliate and sports rights renewals required us to adjust our planning assumptions and take a $9 billion non-cash impairment charge against the carrying values in the network segment. While I am certainly not dismissive of the magnitude of this impairment, I believe it's equally important to recognize that the flip side of this reflects the value shift across business models, and our conviction and confidence in the growth and value opportunity across studios and our global direct-to-consumer business have never been stronger.

Gunnar Wiedenfels: We recognized early on this was a generational disruption impacting our industry. Requiring us to take bold necessary steps and to pursue opportunities we see across the media landscape, the best position Warner Bros Discovery for the future. We are uniquely advantaged with globally scaled businesses and a capital structure that allow us to make these moves in a thoughtful and strategic way. We have finally launched Max globally and are pursuing bundling opportunities domestically and internationally, all to serve customers around the world with our unparalleled storytelling and content.

Gunnar: In the second quarter, a number of triggering events, including the difference between our current market cap and the book value of the company.

Gunnar: The continued softness in the U.S. ad market

Gunnar: And uncertainty related to affiliate and sports rights renewals required us to adjust our planning assumptions and take a $9 billion non-cash impairment charge against the carrying values in the network segment.

Speaker Change: While I am certainly not dismissive of the magnitude of this impairment,

Gunnar Wiedenfels: I believe it's equally important to recognize that the flip side of this reflects the value shift across business models, and our conviction and confidence in the growth and value opportunity across studios and our global direct-to-consumer business have never been stronger. Third, and to that point, I am very pleased with the progress we continue to make taking Macs around the globe, most recently with the successful rollout across Latin America and Europe. We have seen great momentum over the past quarter and even more so into the current one, with the Olympics serving as a fantastic launching pad.

Gunnar: I believe it's equally important to recognize that the flip side of this reflects the value shift across business models.

Gunnar: and our conviction and confidence in the growth and value opportunity across studios and our global direct-to-consumer business have never been stronger.

Gunnar Wiedenfels: We are positioned to grow and while there's still lots to do, we are more confident than ever in our global strategy, local content, local sports, best in class library, and quality branded storytelling, a unique recipe you can do.

Gunnar Wiedenfels: Third, and to that point, I am very pleased with the progress we continue to make taking Max around the globe, most recently with the successful rollout across Latin America and Europe. We have seen great momentum over the past quarter and even more so into the current, with the Olympic serving as a fantastic launching path. We have talked about the substantial investments we've made, the heavy lift, and the multi-year journey we're on, and it finally feels like we're beginning to see the fruits of that labor, both operationally and financially. And as David pointed out, with our strong content, both global and local, our global sports, our beloved brands, the state-of-the-art and scalable product platform now available across a rapidly expanding international footprint, and our promotional and operational infrastructure, and virtually every territory of the world, now fully aligned as one truly global team, we could not be more excited about what lies ahead for our streaming growth story for many years to come.

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

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

Gunnar Wiedenfels: And with that, I'll turn it over to Gunnar. Thank you, David, and good afternoon, everyone. I'd like to focus my remarks on a few key topics before I briefly run through the quarter. First, I want to highlight the progress we're making on paying down our debt balance. During the second quarter, we successfully executed a tender for $3.4 billion a debt, utilizing $2.6 billion a cash, capturing 800 million in value from the embedded discount.

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

Gunnar: We have talked about the substantial investments we've made, the heavy lift, and the multi-year journey we're on, and it finally feels like we're beginning to see the fruits of that labor, both operationally and financially.

Gunnar: And as David pointed out, with our strong content, both global and local, our global sports, our beloved brands, the state-of-the-art and scalable product platform now available across a rapidly expanding international footprint,

Gunnar Wiedenfels: We funded this debt purchase with free cash flow and an upsized euro bond offering of 1.5 billion euros. We ended the quarter with $37.8 billion a net debt or around four times net leverage. The primary use of our free cash flow will continue to be debt paid out. We will maintain the balance and flexible posture and weighing the benefits of purchasing debt that may be trading at a deeper discount versus the $3.8 billion that we have maturing through the end of 2025, including $800 million through the end of this year.

Speaker Change: And our promotional and operational infrastructure in virtually every territory of the world, now fully aligned as one truly global team, we could not be more excited about what lies ahead for our streaming growth story for many years to come.

Gunnar Wiedenfels: With a weighted average maturity of nearly 14 years and an average cost of 4.6% and with our strong free cash flows significantly greater than our maturities in any given year for the foreseeable future, we haven't advantageous capital structure to support our transformation and the growth opportunities ahead.

Gunnar Wiedenfels: Turning briefly to some of the key highlights from our second quarter results, which I will discuss, as always, on an XFX basis. Continuing with D2C, subscriber-related revenues grew 6% during Q2, largely due to the strong momentum in advertising revenues, while content revenue declined 70%, as we have previously noted, due to the timing of certain large licensing deals in the prior year. Domestic net add trends remain similar to the recent quarters; that is, continued growth in the retail max phase, which was slightly more than offset by linear wholesale headwinds. And as we expected, we did see a modest uptick in turn after March Madness and the conclusion of the NBA and NHL seasons.

Gunnar Wiedenfels: Turning briefly to some of the key highlights from our second quarter results, which I will discuss, as always, in an XFX space. Continuing with D2C, subscriber-related revenues grew 6% during Q2, largely due to the strong momentum in advertising revenues, while content revenue declined 70%, as we have previously noted, due to the timing of certain large licensing deals in the prior year. Domestic net ad trends remain similar to the recent quarters, that is, continued growth in the retail max base, which was slightly more than offset by linear wholesale hit.

Speaker Change: Turning briefly to some of the key highlights from our second quarter results, which I will discuss as always on an XFX basis.

Speaker Change: Continuing with D2C, subscriber-related revenues grew 6% during Q2, largely due to the strong momentum in advertising revenues, while content revenue declined 70%, as we have previously noted, due to the timing of certain large licensing deals in the prior year.

Speaker Change: Domestic net ad trends remain similar to the recent quarters, that is, continued growth in the retail max base, which was slightly more than offset by linear wholesale headwinds.

Gunnar Wiedenfels: And, as we expected, we did see a modest uptick in churn after March Madness and the conclusion of the NBA and NHL seasons. While we continue to expect the bulk of total subscriber growth to emanate from outside of the US, as evidenced by nearly 4 million net ads internationally during Q2, we do expect to see monetization gains from all regions, with perhaps the biggest upside opportunity domestically, at least in the nearer term.

Gunnar: And as we expected, we did see a modest uptick in churn after March Madness and the conclusion of the NBA and NHL seasons.

Gunnar Wiedenfels: I can't stress this point enough. Importantly, we have not wavered in our commitment to achieving our $2.5 to $3 times gross leverage target, though admittedly on a longer timeframe than initially anticipated. I am also firmly committed to maintaining our investment grade rating. Second, I'd like to build on David's comments regarding the impairment charge for the network segment. To take a step back first, Warner Brothers Discovery's balance sheet carries significant amounts of goodwill created over a series of past M&A transactions, including the formation of WBD in 2022.

Gunnar Wiedenfels: While we continue to expect the bulk of total subscriber growth to emanate from outside of the U.S., as evidenced by nearly 4 million net adds internationally during Q2, we do expect to see monetization gains from all regions, with perhaps the biggest off-site opportunity domestically, at least in the near return. We recently raised the domestic ad-free price by $1 and saw it better than expected charm during July, when the price increase rolled through the existing subscriber base. Streaming ad revenues doubled year-over-year on continued strong demand for maximum inventory and the addition of sports content, which drove healthy engagement.

Gunnar: While we continue to expect the bulk of total subscriber growth to emanate from outside of the U.S., as evidenced by nearly 4 million net ads internationally during Q2, we do expect to see monetization gains from all regions, with perhaps the biggest upside opportunity domestically.

Gunnar Wiedenfels: We recently raised the domestic ad-free price by $1 and saw better than expected turn during July when the price increase rolled through existing subscribers. Streaming ad revenues doubled year-over-year on continued strong demand for max inventory and the addition of sports content, which drove healthy engagement.

Gunnar: We recently raised the domestic ad-free price by $1 and saw a better-than-expected turn during July when the price increase rolled through the existing subscriber base.

Gunnar: Streaming ad revenues doubled year over year on continued strong demand for Mac's inventory and the addition of sports content, which drove healthy engagement.

Gunnar Wiedenfels: And of course, we regularly monitor the value and use of our assets. In the second quarter, a number of triggering events, including the difference between our current market cap and the book value of the company. Company, the continued softness in the US ad market, and uncertainty related to affiliate and sports rights renewals required us to adjust our planning assumptions and take a $9 billion non-cash impairment charge against the carrying values in the network segment.

Gunnar Wiedenfels: We expect meaningful growth ahead, as more subscribers opt for the AdLive tier, which represented over 40% of global gross ads last quarter. EBITDA was a negative $107 million, in part impacted by allocation of sports costs at the Cash Costs. All taken together, DTC is trekking better than our expectations, even with the investment-heavy first half of the year. And with key launches behind us, we should begin to pivot towards the second half of Evidav profitability driven by improving subscriber-related revenue trends, continued momentum behind our content's late, stronger engagement fueled by a more personalized content discovery experience, and continued expense discipline.

Gunnar Wiedenfels: We expect meaningful growth ahead as more subscribers opt for the AdLib tier, which represented over 40% of global gross ads last quarter. EBITDA was a negative $107 million, in part impacted by the allocation of sports costs at the EMEA launch. All taken together, DTC is tracking better than our expectations, even with the investment-heavy first half of the year. And with key launches behind us, we should begin to pivot towards second half Evita profitability driven by improving subscriber-related revenue trends and continued momentum behind our content slate. Stronger engagement fueled by a more personalized content discovery experience and Continued Spending

Gunnar: We expect meaningful growth ahead as more subscribers opt for the AdLib tier, which represented over 40% of global growth stats last quarter.

Gunnar: EBITDA was a negative $107 million, in part impacted by allocation of sports costs and EMEA launch costs.

Gunnar: All taken together, D2C is tracking better than our expectations, even with the investment-heavy first half of the year.

Gunnar Wiedenfels: While I am certainly not dismissive of the magnitude of this impairment, I believe it's equally important to recognize that the flip side of this reflects the value shift across business models, and our conviction and confidence in the growth and value opportunity across studios and our global direct-to-consumer business have never been stronger. Third, and to that point, I am very pleased with the progress we continue to make taking Max around the globe, most recently with the successful rollout across Latin America and Europe.

Gunnar: And with key launches behind us, we should begin to pivot towards second-half EBITDA profitability driven by improving subscriber-related revenue trends, continued momentum behind our content slate,

Gunnar: Stronger engagement, fueled by a more personalized content discovery experience, and continued expense discipline.

Gunnar Wiedenfels: In fact, I expect the DTC segment to be nicely profitable for the full year and with a strong ramp in the second half, which will represent a meaningful step towards our 2025 Evidav target of at least $1 billion. That said, as I've noted, we will always prioritize investing to secure profitable max subscribers versus maximizing near-term Evidav in any given quarter or year. Turning to networks, distribution revenues decreased 8% on a reported basis; excluding the impact of the AT&T sports nets, distribution revenues decreased 5% as pay TV subscribers declined 9% domestically, while domestic affiliate rates increased 5%.

Gunnar Wiedenfels: In fact, I expect the DTC segment to be nicely profitable for the full year, and with a strong ramp in the second half, which will represent a meaningful step towards our 2025 EBITDA target of at least $1 billion. That said, as I've noted, we will always prioritize investing to secure profitable max subscribers versus maximizing near-term EBITDA in any given quarter or year. Turning to networks, distribution revenues decreased 8% on a reported basis, excluding the impact of the AT&T sports nets. Distribution revenues decreased 5% as pay TV subscribers declined 9% domestically, while domestic affiliate rates increased 5%. Network ad revenue decreased 9% as domestic impressions declined 13% during the quarter and were partially offset by strong sports-related prices.

Gunnar: In fact, I expect the DTC segment to be nicely profitable for the full year and with a strong ramp in the second half, which will represent a meaningful step towards our 2025 EBITDA target of at least $1 billion.

Gunnar Wiedenfels: We have seen great momentum over the past quarter and even more so into the current, with the Olympic serving as a fantastic launching path. We have talked about the substantial investments we've made, the heavy lift, and the multi-year journey we're on, and it finally feels like we're beginning to see the fruits of that labor, both operationally and financially. And as David pointed out, with our strong content, both global and local, our global sports, our beloved brands, the state-of-the-art and scalable product platform now available across a rapidly expanding international footprint.

Gunnar: That said, as I've noted, we will always prioritize investing to secure profitable max subscribers versus maximizing near-term EBITDA in any given quarter or year.

Gunnar Wiedenfels: And our promotional and operational infrastructure, and virtually every territory of the world, now fully aligned as one truly global team, we could not be more excited about what lies ahead for our streaming growth story for many years to come.

Speaker Change: Turning to networks, distribution revenues decreased 8% on a reported basis, excluding the impact of the AT&T sports nets, distribution revenues decreased 5% as pay TV subscribers declined 9% domestically, while domestic affiliate rates increased 5%.

Gunnar Wiedenfels: Network ad revenue decreased 9% as domestic impressions declined 13% during the quarter and were partially offset by strong sports-related pricing. Emia continued to outperform and was up nicely during the quarter. I am also pleased that, on a total company basis, we enjoyed significant sequential improvement in advertising trends, down 3% in Q2 versus down 7% in Q1. Tying this back to the impairment conversation, this is another great example of how pressure in one segment goes hand-in-hand with tailwinds and another. Finally, on the Olympics, we expect just over $100 million of negative impact to Evidav, mostly at networks.

Gunnar: Network ad revenue decreased 9% as domestic impressions declined 13% during the quarter and were partially offset by strong sports-related pricing.

Gunnar Wiedenfels: EMEA continued to outperform and was up nicely during the quarter. I am also pleased that on a total company basis, we enjoyed significant sequential improvement in advertising trends, down 3% in Q2 versus down 7% in Q1. Tying this back to the impairment conversation, this is another great example of how pressure in one segment goes hand-in-hand with tailwinds in another.

Gunnar: EMEA continued to outperform and was up nicely during the quarter.

Gunnar: I am also pleased that on a total company basis...

Gunnar: We enjoyed significant sequential improvement in advertising trends, down 3% in Q2 versus down 7% in Q1.

Gunnar Wiedenfels: Turning briefly to some of the key highlights from our second quarter results, which I will discuss as always on an XFX basis. Continuing with D2C, subscriber-related revenues grew 6% during Q2 largely due to the strong momentum in advertising revenues, while content revenue declined 70%, as we have previously noted, due to the timing of certain large licensing deals in the prior year. Domestic net add trends remain similar to the recent quarters, that is, continued growth in the retail max phase, which was slightly more than offset by many or wholesale headwinds.

Gunnar: Tying this back to the impairment conversation, this is another great example of how pressure in one segment goes hand-in-hand with tailwinds in another.

Gunnar Wiedenfels: Finally, on the Olympics, we expect just over $100 million of negative impact on EBITDA, mostly at net. Recall, this is the final Olympics under the agreement we struck in 2015. And we are looking forward to our continued partnership with the IOC as our new Olympic rights agreement will begin with the 2026 Winter Games in Milano Cortina, and which is better aligned to our streaming and pay TV platform. Now turning to studios, we enjoyed healthy theatrical revenue growth despite underperformance of recent releases, and aided by strong carryover from Q1 releases, experiences, and consumer product revenues continue to perform nicely.

Gunnar: Finally, on the Olympics, we expect just over $100 million of negative impact to EBITDA, mostly at networks.

Gunnar Wiedenfels: We call, this is the final Olympic Games under the agreement we struck in 2015. And we are looking forward to our continued partnership with the IOC as our new Olympics Rides Agreement will begin with the 2026 Winter Games in Milano, Cortina, and which is better aligned to our streaming and pay TV platforms. Now turning to studios, we enjoyed healthy theatrical revenue growth despite underperformance of recent releases and aided by strong carryover from Q1 releases. Experiences in consumer product revenues continue to perform nicely, and we remain very upbeat about the opportunity we see in better coordinating processes around managing franchises.

Gunnar: Recall, this is the final Olympic Games under the agreement we struck in 2015.

Speaker Change: And we are looking forward to our continued partnership with the IOC, as our new Olympics rights agreement will begin with the 2026 Winter Games in Milano Cortina, and which is better aligned to our streaming and pay TV platforms.

Gunnar Wiedenfels: And as we expected, we did see a modest uptick in turn after March madness and the conclusion of the NBA and NHL seasons. While we continue to expect the bulk of total subscriber growth to emanate from outside of the U.S., as evidenced by nearly 4 million net adds internationally during Q2, we do expect to see monetization gains from all regions, with perhaps the biggest offsite opportunity domestically, at least in the near return.

Speaker Change: Now turning to studios, we enjoyed healthy theatrical revenue growth despite underperformance of recent releases and aided by strong carryover from Q1 releases.

Gunnar Wiedenfels: And we remain very upbeat about the opportunity we see in better coordinating processes around managing franchises. Television was down, particularly as we worked through the last of the strike-delayed delivery, which sets us up for a big swing up in the second half, while, as we've called out last quarter, games are still struggling against last year's Hogwarts Legacy comp and the muted response to Suicide Squad.

Gunnar: Experiences and consumer product revenues continue to perform nicely, and we remain very upbeat about the opportunity we see in better coordinating processes around managing franchises.

Gunnar Wiedenfels: Television was down, particularly as we work through the last of the strike-delayed delivery, which sets us up for a big swing up in the second half. While, as we've called out last quarter, our games are still struggling against last year's Hogwarts Legacy comp, and a muted response to suicide spot this year. From a modeling standpoint, one of the strike impacts will present the favorable year-over-year comp on Evidav during the second half of the year; it will be a headwind to cash content spent. Turning to free cash flow, regenerated million $1 billion during the quarter, representing a $750 million decrease year over year.

Gunnar: Television was down, particularly as we worked through the last of the strike-delayed delivery, which sets us up for a big swing up in the second half, while, as we've called out last quarter, games are still struggling against last year's Hogwarts Legacy comp and a muted response to Suicide Squad this year.

Gunnar Wiedenfels: We recently raised the domestic add-free price by $1 and saw it better than expected to turn during July when the price increase rolled through the existing subscriber base. Streaming add revenues doubled year-over-year on continued strong demand for maximum inventory and the addition of sports content which drove healthy engagement. We expect meaningful growth ahead, as more subscribers opt for the AdLive tier, which represented over 40% of global growth at last quarter. EBITDA was a negative $107 million in part impacted by allocation of sports costs at the All taken together, D to C is trekking better than our expectations, even with the investment heavy first half of the year.

Gunnar Wiedenfels: From a modeling standpoint, while the strike impact will present a favorable year-over-year comp on EBITDA during the second half of the year, it will be a headwind through cash content. Turning to free cash flow, we generated nearly $1 billion during the quarter, representing a $750 million decrease year over. This was largely driven by two key factors. First, an increase in net content investment against the modest cash savings with the start of the WGA strike in the prior year.

Gunnar: From a modeling standpoint, while the strike impact will present a favorable year-over-year comp on EBITDA during the second half of the year, it will be a headwind to cash content spend.

Gunnar: Turning to free cash flow, we generated nearly $1 billion during the quarter, representing a $750 million decrease year-over-year.

Gunnar Wiedenfels: This was largely driven by two key factors. First, an increase in net content investment against the modest cash savings with the start of the WGA strike in the prior year. And second, lower operating profits, partially offset by lower cash restructuring costs. Finally, a few puts and takes to consider for free cashflow during the second half of the year. Number one, like in Q1, we will have our normal semiannual cash interest payments during the third quarter. Number two, we will be comping against the most strike-impacted quarters last year. And number three, the Olympics will be a meaningful drag on free cash flow during the third quarter, including in part due to work in capital dynamics.

Gunnar Wiedenfels: And second, lower operating profits partially offset by lower cash restructuring costs. Finally, a few puts and takes to consider for free cash flow during the second half of the year. Number one, like in Q1, we will have our normal semi-annual cash interest payments during the third quarter. Number two, we will be comping against the most strike-impacted quarters last year. And number three, the Olympics will be a meaningful drag on free cash flow during the third quarter, including in part due to working capital. As such, cash conversion will certainly be lower than the very elevated levels last year.

Gunnar: This was largely driven by two key factors. First, an increase in net content investment against the modest cash savings with the start of the WGA strike in the prior year. And second, lower operating profits partially offset by lower cash restructuring costs.

Gunnar Wiedenfels: And with key launches behind us, we should begin to pivot towards second half Evidav profitability driven by improving subscriber-related revenue trends, continued momentum behind our contents late, stronger engagement fueled by a more personalized content discovery experience, and continued expense discipline. In fact, I expect the D to C segment to be nicely profitable for the full year, and with a strong ramp in the second half, which will represent a meaningful step towards our 2025 Evidav target of at least one billion dollars.

Gunnar: Finally, a few puts and takes to consider for free cash flow during the second half of the year. Number one, like in Q1, we will have our normal semi-annual cash interest payments during the third quarter. Number two, we will be comping against the most strike-impacted quarters last year.

Gunnar: And number three, the Olympics will be a meaningful drag on free cash flow during the third quarter, including in part due to working capital dynamics.

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

Gunnar Wiedenfels: That said, as I've noted, we will always prioritize investing to secure profitable max subscribers versus maximizing near-term Evidav in any given quarter or year. Turning to networks, distribution revenues decreased 8% on a reported basis, excluding the impact of the AT&T sports nets, distribution revenues decreased 5% as pay TV subscribers declined 9% domestically, while domestic affiliate rates increased 5%. Network ad revenue decreased 9% as domestic impressions declined 13% during the quarter, and were partially offset by strong sports-related pricing.

Gunnar: As such, cash conversion will certainly be lower than the very elevated levels last year. That said, I remain confident in our ability to continue to both generate meaningful free cash flow in the second half and pay down debt.

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

Gunnar: And we expect to finish the year at lower net leverage than at the start of the year.

Gunnar: I remain very proud of our organization's dedication, resiliency, and focus while maintaining the flexibility and adaptability within an industry going through so much change.

Gunnar: I feel confident with the path that we're on, and I believe we have made the right investments while better aligning our capital allocation with discipline to set the company up for long-term success.

Gunnar Wiedenfels: Emia continued to outperform and was up nicely during the quarter. I am also pleased that on a total company basis, we enjoyed significant sequential improvement in advertising trends, down 3% in Q2 versus down 7 in Q1. Tying this back to the impairment conversation, this is another great example of how pressure in one segment goes hand in hand with tailwinds and another. Finally, on the Olympics, we expect just over 100 million dollars of negative impact to Evidav, mostly at networks.

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

Operator: Now, I'd like to turn the call over to the operator, and David, JB, and I will take your question. Thank you. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. And once again, that is star in one if you would like to ask a question. And we'll take our first question from Robert Fishman.

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

Operator: Thank you. At this time, if you would like to ask a question, please press the star or end one of your telephone keypad. You may remove yourself from the queue at any time by pressing Start two. And once again, let us start in one if you would like to ask a question. And we'll take our first question from Robert Fishman with Moffitt Nathanson. Your line is now open. All right. Good afternoon. Thank you. I'm curious.

Operator: Thank you. At this time, if you would like to ask a question, please press star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. And once again, that is star in one.

Speaker Change: Thank you. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. And once again, that is star and one if you would like to ask a question. And we'll take our first question from Robert Fishman with Moffitt Nathanson. Your line is now open.

Operator: If you would like to ask a question, and we'll take our first question from Robert Fishman with Moffitt Nathanson. Your line is now open. Hi, good afternoon. Thank you. I'm curious, now with over 100 million DTG subscribers,

Gunnar Wiedenfels: We call, this is the final Olympic Games under the agreement we struck in 2015, and we are looking forward to our continued partnership with the IOC as our new Olympics Rides Agreement will begin with the 2026 Winter Games in Milano, Cortina, and which is better aligned to our streaming and pay TV platforms. Now turning to studios, we enjoyed healthy theatrical revenue growth despite underperformance of recent releases and aided by strong carryover from Q1 releases.

Robert Fishman: Now with over 100 million DTG subscribers, how do you think about the future of Max in the streaming marketplace, and whether you have a preference to exploring formal JVs, either in the US or internationally, or looking to expand the content offering through third-priority licensing deals. And then maybe for Gooner, you can help us think about the goodwill right down. Can you just talk a little bit more about the uncertainty with the outcome of the NBA, and how that led to any sensitivities around future affiliates in the association? Thank you. Thanks, Robert. As you know, we spent the last two years rebuilding Max, and we are at our core, a global media company.

Robert Fishman: Hi, good afternoon. Thank you. I'm curious, now with over 100 million DTT subscribers, how do you think about the future of Macs in the streaming marketplace?

Gunnar Wiedenfels: Experiences in consumer product revenues continue to perform nicely and we remain very upbeat about the opportunity we see in better coordinating processes around managing franchise television was down, particularly as we work through the last of the strike delayed delivery, which sets us up for a big swing up in the second half. While, as we've called out last quarter, our games are still struggling against last year's hardware legacy comp and a muted response to suicide spot this year.

David Zaslav: Thanks, Robert. As you know, we spent the last two years rebuilding Max, and we are, at our core, a global media company. We have infrastructure in every country, we have local content and sports in most countries, and we have relationships with distributors. So we've really been kind of chomping at the bit to get this product launched globally. In order to be competitive and, ultimately, to be long-term and have sustainable growth, I think one of the key advantages is that we are and can be a global leader.

David Zaslav: We have infrastructure in every country. We have content, local content, and sports in most countries, and we have relationships with the distributors. So we've really been kind of chomping at the bit to get this product launched globally. In order to be competitive and ultimately to be long-term and have sustainable growth, we think one of the key advantages is that we are and can be a global leader. And the fact that we're now launched in Latin America, and we launched in the second half of the quarter in Europe, we're off to a terrific start. It'll be a blend.

Gunnar Wiedenfels: From a modeling standpoint, one of the strike impact will present the favorable year over year comp on Evidav during the second half of the year, it will be a headwind to cash content spent. Turning to free cash though, we generated $1 billion during the quarter, representing a $750 million decrease year over year. This was largely driven by two key factors. First, an increase in net content investment against the modest cash savings with the start of the WGA strike in the prior year. And second, lower operating profits, partially offset by lower cash refructuring costs.

David Zaslav: And the fact that we're now launched in Latin America and we launched in the second half of the quarter in Europe means we're off to a terrific start. It'll be a blend. We're seeing real growth, as you've seen, almost 4 million subscribers internationally last quarter; we'll see more this quarter.

Gunnar Wiedenfels: We're seeing real growth, as you've seen, almost 4 million subscribers internationally. Last quarter; we'll see more this quarter. We're also in the US. We're off to a very good start with our Disney Bundle. And so I think this is all going to be driven by the consumer experience. The offering that we have and the content that we have is working very well in Europe and Latin America. And in some cases, like the example I gave in Brazil, or it's very early, but what we believe will be a very compelling consumer offering with Disney Plus and with Hulu, that all of those will add to sustainable and more accelerated.

Speaker Change: We're seeing real growth as you've seen almost 4 million subscribers internationally last quarter, we will see more this quarter.

David Zaslav: We're also in the U.S., and we're off to a very good start with our Disney bundle. And so I think this is all going to be driven by the consumer experience. The offering that we have and the content that we have is working very well in Europe and Latin America. And in some cases, like the example I gave in Brazil, it's very early, but we believe that we will have a very compelling consumer offering with Disney Plus and with Hulu, all of which will add to sustainable and more accelerated growth.

Speaker Change: We're also in the U S. We're off to a very good start with our Disney bundle and so I think this is all going to be driven by the consumer experience.

Gunnar Wiedenfels: Finally, a few puts and takes to consider for free cashflow during the second half of the year. Number one, like in Q1, we will have our normal semiannual cash interest payments during the third quarter. Number two, we will be comping against the most strike impacted quarters last year. And number three, the Olympics will be a meaningful drag on free cashflow during the third quarter, including in part due to work in capital dynamics.

Speaker Change: The offering that we have.

Speaker Change: The content that we have is is working very well in Europe, and Latin America and in some cases like the example, I gave in Brazil.

Speaker Change: Or will it is very early but what we believe will be a very compelling consumer offering with Disney plus and with Hulu that all of those will add to our sustainable.

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

Speaker Change: And and more.

Speaker Change: More accelerated.

J.P.: J P.

Gunnar Wiedenfels: JB, all right, we lost it for our lost it for a second. Look, echoing David's comments, we have, exciting thing about the international world allowed is we have more and more partners outside of the U.S. who are coming to us saying, hey, we'd love to figure out ways to do more things together, whether that be, as David said, on the traditional distribution side, whether that be other players in the streaming space, and particularly, which is important outside the U.S., local content players in a lot of markets who are looking for a partner and look at us as having a very strong platform capability and obviously an incredible international content offering and lineup that we can do something together.

Speaker Change: Alright, we lost your first our loss reserving.

J.B. Peretz: Sorry, I lost you for a second. Look, echoing David's comments, we have... The exciting thing about the international rollout is we have more and more partners outside of the U.S. who are coming to us saying, hey, we'd love to figure out ways to do more things together, whether that be, as David said, on the traditional distribution side, whether that be other players in the streaming space, and particularly, which is important outside the U.S., local content players in a lot of markets who are looking for a partner and look at us as having a very strong platform capability and obviously an incredible international content offering and lineup that we can do something together.

Speaker Change: Look I Echo David's comments, we have.

Speaker Change: Is there anything about the international rollout as we have more and more partners outside of the U S who are coming to us, saying, hey, we'd love to figure out ways to do more things together, whether that be as David said on the traditional distribution side, whether that be other players in the streaming space and particularly which is important outside the U S low.

Unknown Executive: Now, I'd like to turn the call over to the operator, and David, JB, and I will take your questions. Thank you. At this time, if you would like to ask a question, please press the start end one on your telephone keypad. You may remove yourself from the queue at any time by pressing start two.

J.P.: <unk> content players and a lot of markets, who are looking for a partner and look at us as a <unk>.

Speaker Change: Having a.

Speaker Change: A very strong platform capability, and obviously, an incredible international content offering and lineup that we can do something together and so.

Gunnar Wiedenfels: And so we've had a lot of strength already, as some of the examples David's shown, but we do have a lot of active conversations with additional partners that will help us scale and help us localize and get more local content into these offerings, as we will allow, which will certainly tell you more about over the weeks and months to come. Robert, and then it's going to a little more color on the goodwill impairment, and to get straight to the point here, there is no one factor that is driving this impairment. So the way this works is obviously with the amount of goodwill that we have, there's a systematic process that we go through every quarter and we're monitoring for so-called triggering events.

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

Unknown Executive: And once again, let us start in one, if you would like to ask a question, and we'll take our first question from Robert Fishman with Moffett Nathanson. Your line is now open. All right. Good afternoon. Thank you. I'm curious.

Speaker Change: We've had a lot of strength already has some of the examples David shown but we do have a lot of active conversations with additional partners that will help us scale and help us localize and get more local content.

Speaker Change: Into these offerings as we rollout, which will certainly tell you more about over the weeks and months to come.

Robert Fishman: Now with over 100 million DTG subscribers, how do you think about the future of Max in the streaming marketplace, and whether you have a preference to exploring formal JVs, either in the US or internationally, or looking to expand the content offering through third priority licensing deals. And then maybe for Gooner, you can help us think about the goodwill right down. Can you just talk a little bit more about the uncertainty with the outcome of the NBA, and how that led to any sensitivities around future affiliates in the negotiation?

Gunnar Wiedenfels: Okay, Robert, and then I'm going to give you a little more color on the goodwill impairment. And to get straight to the point here, there is no one factor that is driving this impairment.

Speaker Change: Okay, Robert and then it has gone up a little more color on the on the goodwill impairment and to get straight to the point here. There is no. One factor that is driving this impairment. So the way. This works is obviously with the amount of goodwill that we have there is a systematic process that we go.

Gunnar Wiedenfels: So the way this works is, you know, obviously, with the amount of goodwill that we have, there's a systematic process that we go through every quarter, and we're monitoring for so-called triggering events. And this is clearly where, you know, a sports rights discussion like the one with the NBA comes into play as a triggering event, which then compels us to reevaluate our business case in a strategic planning process, with the latest assumptions, the best view of where the industry is and how we play in that field.

Speaker Change: Through every quarter and we are monitoring for our so called triggering events and this is clearly we're a sports rights discussion like the one with the MBA comes into play as a triggering event, which then compels us to reevaluate our business case, and our strategic planning process with the latest assumptions the best view of where the industry is.

Gunnar Wiedenfels: And this is clearly where a sports rights discussion like the one with the NBA comes into play as a triggering event, which then compels us to reevaluate our business case in a strategic planning process with the latest assumptions, the best view of where the industry is and how we play in that field. And that's what then leads to evaluation, which in this second quarter happened to be $9.1 billion below what was on the books for the network segment. So it's really a full reevaluation, not a response to one individual factor. I do think that the outcome is, from my perspective, consistent with where the market is, where not only the linear television market, but also what, frankly, the investment community reflects in our current share price.

Robert Fishman: Thank you. Thanks, Robert. As you know, we've spent the last two years rebuilding Max, and we are at our core, a global media company. We have infrastructure in every country. We have content, local content, and sports in most countries, and we have relationships with the distributors. So we've really been kind of chomping at the bit to get this product launched globally. In order to be competitive and ultimately to be long term and have sustainable growth, we think one of the key advantages is that we are and can be a global leader.

Speaker Change: And how we play in that in that field and Thats. What then leads to evaluation, which in the second quarter happened to be $9 $1 billion below what was on the books for the for the network segment. So it's really a full a reevaluation not a response to one individual factor I do think that.

Gunnar Wiedenfels: And that's what then leads to evaluation, which in the second quarter happened to be $9.1 billion below what was on the books for the network segment. So it's really a full reevaluation, not a response to one individual factor. I do think that the outcome is, from my perspective, consistent with where the market is, not only in the linear television market but also what, frankly, the investment community reflects in our current share price. And I do want to go back to what I said a minute ago. There is a very significant other side of the coin here, right?

Robert Fishman: And the fact that we're now launched in Latin America, and we launched in the second half of the quarter in Europe, we're off to a terrific start. It'll be a blend. We're seeing real growth, as you've seen, almost four million subscribers internationally. Last quarter, we'll see more this quarter. We're also in the US. We're off to a very good start with our Disney bundle. And so I think this is all going to be driven by the consumer experience.

Speaker Change: The outcome is from my perspective, consistent with with with where the market is where.

Speaker Change: Not only the linear TV market, but also what frankly the investment community reflects in our current share price and I do want to go back to what I said a minute ago. There is a very significant other side of the coin here right.

Gunnar Wiedenfels: And I do want to go back to what I said a minute ago. So there is a very significant other side of the coin here, right? David mentioned the distribution deals that we're engaging in on a global basis. We're increasingly, we're talking about both sides of our business. This is really a distribution ecosystem in transition, not a content ecosystem in transition. And we're using our content increasingly and increasingly more successfully in the streaming space. And less so on the linear side, the the at sales, the outcomes of the upfront here in the US or another example, as I mentioned earlier. So I just want to stress that point as well.

Gunnar Wiedenfels: David mentioned the distribution deals that we're engaging in on a global basis where we're increasingly talking about both sides of our business. This is really a distribution ecosystem in transition, not a content ecosystem in transition. And we're using our content increasingly and increasingly more successfully in the streaming space, and less so on the linear side. The ad sales, the outcomes up front here in the US, or another example, as I mentioned earlier. So I just wanna stress that point as well.

Speaker Change: David mentioned the distribution deals that were engaging in on a global basis, where increasingly we're talking about both sides of our business. This is really a.

Robert Fishman: The offering that we have and the content that we have is working very well in Europe and Latin America. And in some cases, like the example I gave in Brazil, or it's very early, but what we believe will be a very compelling consumer offering with Disney Plus and with Hulu, that all of those will add to sustainable and more accelerated stuff. JB, all right, we lost it for our lost it for a second.

Speaker Change: Distribution ecosystem and transition not a content ecosystem in transition and we are using our content increasingly and increasingly more successfully in the streaming space.

Speaker Change: And less so on the on the linear side the AD sales.

Speaker Change: The outcomes of the upfront here in the U S or another example, as I mentioned earlier, so I just want to stress that point.

Speaker Change: As well there is a transition in the industry. There is a transformation of the company.

Gunnar Wiedenfels: There is a transition in the industry. There is a transformation of the company. We are actively driving that to some extent, and the goodwill impairment at the end of the day is the accounting reflection of that state of the industry and our strategy.

Michael Men: There is a transition in the industry. There is a transformation of the company. We are actively driving that to some extent, and the goodwill impairment at the end of the day is the accounting reflection of that state of the industry and our strategy. Great. Thank you all. Thank you for the next question. Thank you for the next question from Michael Men with Goldman Sachs. Your line is now open. Hey, good afternoon. Thank you for the question. I just have two.

Speaker Change: We are actively driving that to some extent.

Speaker Change: The goodwill impairment at the end of the day is the accounting reflection of that state of the industry and our strategy.

Speaker Change: Great. Thank you.

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

Speaker Change: Great next question. Thank.

Operator: Great, next question. Thank you. We'll take our next question from Michael Nen with Goldman Sachs. Your line is now open.

Speaker Change: Thank you we'll take our next question for Michael Mann with Goldman Sachs. Your line is now open.

Operator: Hey, good afternoon. Thank you for the question. I just have two.

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

Michael Mann: Hey, good afternoon. Thank you for the question I just have two.

JB: First one on video games, you know, Warner required player first games last month, but there's, you know, certainly been some uneven performance within games over the last couple of years, but clearly lots of potential as well. Could you just talk a little bit about the strategic value of video games for Warner Bros and whether you view it as a core part of the portfolio, and then I have a quick follow-up. JB. Yeah, look, I think we look at the evolution of a storytelling and interactive entertainment at the space and say it's the one of the unique areas and media that is growing, both growing in terms of time spent, growing in terms of engagement, and growing in terms of revenue.

Michael Mann: First one on <unk>.

Speaker Change: <unk> games.

Speaker Change: Warner required player first gains last month, but there's certainly been some uneven performance within games over the last couple of years, but clearly lots of potential as well.

Michael Mann: Can you just talk a little bit about the strategic value of video games for Warner Brothers, and whether you view it as a core part of the portfolio and then I have a quick follow up.

Jamie: Jamie Yes.

J.B. Peretz: Yeah, look, I think we look at the evolution of storytelling and interactive entertainment as a space and say, it's one of the unique areas in media that is growing, both growing in terms of time spent, growing in terms of engagement, and growing in terms of revenue. And so we still see this as a huge opportunity for us.

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

Jamie: Yes look I think we look at the evolution of our storytelling and interactive entertainment.

Speaker Change: As a space and say it's.

Jamie: It's the one of the unique areas in media that is growing both growing in terms of time spent growing in terms of engagement and growing in terms of revenue.

J.B. Peretz: We know that our franchises, particularly in a world where the gaming industry is getting harder and harder for a number of reasons, including IDFA deprecation and more challenges with marketing and customer acquisition. And that franchises like the ones that we have are in high demand and can help with launching games. But you still need a great game.

JB: And so we still see this as a huge opportunity for us. We know that our franchises, particularly in a world where the gaming industry launching brand new franchises is getting harder and harder for a number of reasons, including IDFA deprecation and more challenges with marketing and customer acquisition. And that franchises like the ones that we have are in high demand and can help in launching games. Now, you still need a great game, and the reality is we've had the unfortunate, in the short period of 12 months. We went from having the record year that we had in 2023 with Hogwarts Legacy to, unfortunately, having the opposite side of that spectrum with Suicide Squad.

Jamie: And so we see still see this as a huge opportunity for us we know that our franchises, particularly in a world where the gaming industry launching brand new franchises is getting harder and harder for a number of reasons, including DFA deprecation.

Gunnar Wiedenfels: Okay, Robert, and then it's going to a little more color on the goodwill impairment. And to get straight to the point here, there is no one factor that is driving this impairment. So the way this works is obviously with the amount of goodwill that we have. There's a systematic process that we go through every quarter and we're monitoring for so-called triggering events. And this is clearly where a sports rights discussion like the one with the NBA comes into play as a triggering event, which then compels us to re-evaluate our business case in a strategic planning process with the latest assumptions, the best view of where the industry is and how we play in that field.

Gunnar Wiedenfels: And that's what then leads to evaluation, which in this second quarter happened to be $9.1 billion below what was on the books for the network segment. So it's really a full re-evaluation not a response to one individual factor. I do think that the outcome is from my perspective consistent with where the market is, where not only the linear television market, but also what, frankly, the investment community reflects in our current share price.

Jamie: More challenges with with marketing and customer acquisition.

Jamie: And that franchise I would like the ones that we have are in high demand.

Jamie: And can help in launching.

Jamie: James now you still need a great game.

James: And the reality is we've had the unfortunate.

J.B. Peretz: And the reality is, in the short period of 12 months, we went from having the record year that we had in 2023 with Hogwarts Legacy to, unfortunately, having the opposite side of that spectrum with Suicide Squad. And it is still, there will still be a hit-driven nature of some of that business. But one of the areas that we are particularly leaning into is the, which is about half of the $200 billion games industry, the free-to-play space.

James: In a short period of 12 months, we went from having the record.

James: Record year that we had in 2023.

Speaker Change: With hogwash legacy.

Speaker Change: Unfortunately.

Speaker Change: Having the opposite side of that spectrum with suicide squad.

JB: And it is still there will still be a hit-driven nature of some of that business, but one of the areas that we are particularly leaning into is the, which is about half of the 200 billion dollar games business is the free-to-play space. And the player first deal was really about strengthening our capabilities in that space, because we do think we are sub scale and we have more opportunities to grow in that space, which is a big part of the market. And if we, when we do that, it will help also provide some more balance to our games business from the inevitable cyclicality of more console-based releases, which have, you know, a three to four year time arise and a little bit more lumpiness, even when you do get it right.

Speaker Change: And it is still there will still be a hit driven nature of some of that business, but one of the areas that were particularly leaning into it.

Speaker Change: Is the which is about half of the 200 billion our games business.

J.B. Peretz: And the player-first deal was really about strengthening our capabilities in that space because we do think we are subscale and we have more opportunities to grow in that space, which is a big part of the market. And when we do, it will also help provide some more balance to our games business from the inevitable cyclicality of more console-based releases, which have a three- to four-year time horizon and a little bit more lumpiness, even when you do get it right.

Speaker Change: Is the free to play space.

Speaker Change: And the player first deal was really about strengthening our capabilities in that space. Because we do think we are subscale and we have more opportunities to grow in that space, which is a big part of the market and if we when we do that it will help also provides some more balance to our games business.

Gunnar Wiedenfels: And I do want to go back to what I said a minute ago. There is a very significant other side of the coin here, right? David mentioned the distribution deals that we're engaging in on a global basis. We're increasingly, we're talking about both sides of our business. This is really a distribution ecosystem in transition, not a content ecosystem in transition. And we're using our content increasingly and increasingly more successfully in the streaming space.

Speaker Change: From the inevitable cyclicality of more console base releases, which have.

Speaker Change: A three to four year time horizon, and a little bit more lumpiness.

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

Speaker Change: Even when you do get it right and so we can seem to be strong believers in the game space, we want to continue to see and figure out how we lean into it.

JB: And so we continue to be strong believers in the game space. We want to continue to see and figure out how we lean into it and get bigger in that space. And we'll certainly tell you more about it as time goes on. You know, one of the strategic advantages of owning all of our IP is, you know, as the world has changed, it used to be you launch a movie or you launch a TV series and then you do a game. But one of the reasons that Hogwarts Legacy was so successful in the number one game last year is that you went to Hogwarts Legacy and you entered the game and you were able to become part of that world.

Speaker Change: And get bigger in that space and we.

Gunnar Wiedenfels: And less so on the linear side, the at sales, the outcomes of the upfront here in the US, or another example as I mentioned earlier, so I just want to stress that point as well. There is a transition in the industry. There is a transformation of the company. We are actively driving that to some extent. And the goodwill impairment at the end of the day is the accounting reflection of that state of the industry and our strategy.

Speaker Change: We'll certainly tell you more about it as time goes on one of the strategic advantages of owning all of our IP is.

David Zaslav: You know, one of the strategic advantages of owning all of our IP is, you know, as the world has changed, it used to be you launch a movie or you launch a TV series, and then you make a game. But one of the reasons that Hogwarts Legacy was so successful and the number one game last year is that you went to Hogwarts, you entered the game, and you were able to become part of that world.

Speaker Change: As the World has changed he used to be you launch a movie or you launched a TV series and then you do a game, but one of the reasons that Hogwarts legacy was so successful in the number one game last year is that you went to Hogwarts legacy and you entered the game and you were able to become part of that world.

Unknown Executive: Great. Thank you all.

Unknown Executive: Thank you for the next question.

JB: And that ultimately, I think, is a big piece of where this industry is going that will create a movie, whether it's Batman or Superman or Harry Potter. And then maybe there'll be a TV show, but the ability to go into that world and have that experience of spending time with all the characters is something that we still own. We have 11 studios here, and we have a lot of IP, and there's also a lot of interest among others in coming to take advantage of some of that IP for gaming, which we're looking at because, you know, as JB said, we need to get bigger.

David Zaslav: And that, ultimately, I think, is a big piece of where this industry is going. It will create a movie, whether it's Batman or Superman or Harry Potter, and then maybe there'll be a TV show, but the ability to go into that world and have that experience of spending time with all the characters is something that we still own. We have 11 studios here, and we have a lot of IP, and there's also a lot of interest among others in coming to take advantage of some of that IP for gaming, which we're looking at because, you know, as J.B. said, we need to get bigger, and the IP that we own and the value that it has in the gaming space is something we're looking to take advantage of.

Speaker Change: <unk>.

Speaker Change: That ultimately I think is a big piece of where this industry is going that will create a movie whether it's Batman or Superman or Harry Potter and then maybe there'll be a TV show, but the.

Michael Men: Thank you for the next question from Michael Men with Goldman Sachs. Your line is now open. Hey, good afternoon. Thank you for the question. I just have two. First one on video games, you know, Warner required player first games last month, but there's certainly been some uneven performance within games over the last couple of years, but clearly lots of potential as well. Could you just talk a little bit about the strategic value of video games for Warner Bros, and whether you view it as a core part of the portfolio, and then I have a quick follow up.

Speaker Change: The ability to go into that world and have that experience of spending time with all the characters.

Speaker Change: It's something that we still own we have 11 studios here and we have a lot of IP and Theres also a lot of interest among others and coming to take advantage of some of that IP for gaming, which we're looking at because as we as Jamie said, we need to get bigger and the IP that we own and the value that it has in the gaming space.

Michael Men: JB. Yeah, look, I think we look at the evolution of a storytelling and interactive entertainment at the space and say it's the one of the unique areas in media that is growing, both growing in terms of time spent, growing in terms of engagement and growing in terms of revenue. And so we still see this as a huge opportunity for us. We know that our franchises, particularly in a world where the gaming industry launching brand new franchises is getting harder and harder for a number of reasons, including IDFA deprecation and more challenges with marketing and customer acquisition.

JB: And the IP that we own and the value that it has in the gaming space is something we're looking to take advantage of. Great, thanks David, thanks JB.

Jamie: This is something we're looking to take advantage of it.

David Zaslav: Great. Thanks, David. Thanks, JB. And then second, I was just wondering if you could talk about the strategy around carriage negotiations, just given the potential changes related to MBA programming. You know, are there any changes in terms of the number of carriage deals that come up in the next year or so, just given the wide expectation of the MBA negotiation that just wrapped up? Thank you.

Speaker Change: Great. Thanks, David Thanks, Robby and then second I was just wondering if you could talk about the strategy around carriage negotiations just given the potential changes related to NBA programming.

Michael Men: And then second, I was just wondering if you could talk about the strategy around carriage negotiations, just given the potential changes related to MBA programming. Are there any changes in terms of the number of carriage deals that come up in the next year or so, just given the wide expectation of the MBA negotiation that just wrapped up? Thank you. Thanks, Michael. I'm not going to speak to any specific negotiation or specific piece of content or IP. But this is what we do for a living. You know, we're in 200 countries. Aside from the excitement and drive that we have around max in our studio business of being the biggest maker of TV content and our library business, is that we have free-to-air and cable channels all over the world.

Speaker Change: Are there.

Speaker Change: Any changes in terms of the number of carriage deals that come up in the next year or so just given.

Speaker Change: The wide expectation of the NBA negotiation that that just wrapped up thank you.

David Zaslav: Thanks, Michael. I'm not going to speak to any...

Michael Men: And that franchises like the ones that we have are in high demand and can help in launching games. Now you still need a great game, and the reality is we've had the unfortunate in the short period of 12 months. We went from having the record year that we had in 2023 with Hogwarts Legacy to unfortunately having the opposite side of that spectrum with Suicide Squad. And it is still there will still be a hit driven nature of some of that business, but one of the areas that we are particularly leaning into is the, which is about half of the 200 billion dollar games business is the free to play space.

Speaker Change: Thanks, Michael I'm, not going to speak to any specific negotiation or specific piece of content or IP.

David Zaslav: Specific negotiation or specific piece of content or IP. But this is what we do for a living. You know, we're in 200 countries, aside from the excitement and drive that we have around Macs and our studio business of being the biggest maker of TV content, and our library business, is that we have free-to-air and cable channels all over the world. And those channels are B2B businesses that require carriage agreements. And we've been in that business for 40 years.

Speaker Change: But this is what we do for a living.

Speaker Change: We're in 200 countries aside from the excitement and drive that we have around Max in our studio business of being the biggest maker of of TV content in our library business is that we have.

Speaker Change: Free to air and cable channels, all over the world and those channels are <unk> businesses. They require carriage agreements and we've been in that business for 40 years, we've been very effective in that business and it's our job.

David Zaslav: And those channels are B2B businesses. They require carriage agreements. And we've been in that business for 40 years. We've been very effective in that business, and it's our job, whether it's a food channel or an environment that nourishes and excites an audience, so that one, they want to spend a lot of time with us, so that we can monetize it with advertising. But two, that distributors get significant value by carrying that, and therefore pay us significant value. And we've been able to get meaningful increases for our content. And we've worked very hard here in the US and around the world, whether it be sports channels or other channels, to make sure that our offering is robust and meaningful.

David Zaslav: We've been very effective in that business, and it's our job, whether it's a food channel or an entertainment channel or a sports channel, to make sure that we have a very robust offering of content that nourishes and excites an audience so that, one, they want to spend a lot of time with us so that we can monetize it with advertising, but two, that distributors get significant value by carrying that and, therefore, So we've been able to get meaningful increases for our content, and we've worked very hard here in the U.S. and around the world, whether it be sports channels or other channels, to make sure that our offering is robust and meaningful. And as you look at our different sports services around the world, you'll see that we may be the leader, or we are one of the leaders in sports globally.

Speaker Change: Whether it's a food channel or an entertainment channel or a sports channel to make sure that we have a very robust offering of content that nourish isn't excites an audience. So that one they want to spend a lot of time with us so that we could monetize it with advertising, but two that distributors get significant value by carrying that and therefore.

Michael Men: And the player first deal was really about strengthening our capabilities in that space because we do think we are sub scale and we have more opportunities to grow in that space, which is a big part of the market. And if we when we do that it will help also provide some more balance to our games business, from the inevitable cyclicality of more console based releases, which have a three to four year time arise and a little bit more lumpiness, even when you do get it right.

Speaker Change: Pay us significant value and we've been able to get meaningful increases.

Speaker Change: For our content and we've worked very hard here in the U S and around the world, whether it be sports channels or other channels to make sure that our offering is robust and meaningful and.

Benjamin Twinburn: And you know, as you look at our different sports services around the world, you'll see that we're one of, we may be the leader or we are one of the leaders of sports globally. Excellent. Thank you, David. Thank you. And we'll take our next question from Benjamin Twinburn with Morgan Stanley. Your line is open. Thanks. Good afternoon.

Speaker Change: As you look at our different sports services around the world you'll see that we're one of we may be the leader of we are one of the leaders of sports globally.

Michael Men: And so we continue to be strong believers in the game space. We want to continue to see and figure out how we lean into it and get bigger in that space and we'll certainly tell you more about it as time goes on. You know, one of the strategic advantages of owning all of our IP is, you know, as the world has changed, it used to be you launch a movie or you launch a TV series and then you do a game.

Speaker Change: Excellent. Thank you David.

David Zaslav: Thank you, and we'll take our next question from Benjamin Swinburne with Morgan Stanley. Your line is open.

Speaker Change: Thank you and we'll take our next question from Benjamin Swinburne with Morgan Stanley. Your line is open.

Operator: Thanks, good afternoon. David, there's been a lot released in the press over the last few weeks or months about kind of unlocking value at the company through everything from kind of smaller asset sales to splitting the company up. You talked about, you and Gunnar talked about the strengths at D2C, you know, that's a business that could be pretty interesting as a standalone company in the public market. So I'm just wondering if you're considering more aggressive action to try to unlock some value in your stock price, just given all the press speculation out there.

Benjamin Swinburne: Thanks, Good afternoon.

David Zaslav: David, there's been a lot, at least in the press over the last few weeks or months about kind of unlocking value at the company through everything from kind of smaller asset sales to splitting the company up. You talked about you and Gunor talked about the strengths at D to C, you know, that's a business that could be pretty interesting as the standalone company in the public market. I'm just wondering if you're, you know, considering more aggressive action to try to unlock some value in your stock price, just given all the press speculation out there. And then, you know, I know it's a tough question, but certainly investors are wondering how to think about the potential impact of losing the NBA on your basic networks' EBITDA.

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

Michael Men: But one of the reasons that Hogwarts Legacy was so successful and the number one game last year is that you went to Hogwarts Legacy and you entered the game and you were able to become part of that world. And that ultimately I think is a big piece of where this industry is going that will create a movie, whether it's Batman or Superman or Harry Potter. And then maybe there'll be a TV show but the ability to go into that world and have that experience of spending time with all the characters is something that we still own.

Speaker Change: You talked about even qunar talked about the strength at DTC.

Speaker Change: That's a business that could be pretty interesting as a standalone company in the public market. So I'm just wondering if you are.

Speaker Change: Considering more aggressive action to try to unlock some value in your stock price.

Speaker Change: Just given all the press speculation out there.

Operator: And then, you know, I know it's a tough question, but certainly investors are wondering how to think about the potential impact of losing the NBA on your basic network EBITDA. So anything you or Gunnar can share with us as we think about that potential outcome into 2026 would be much appreciated. Thanks so much.

Speaker Change: And then I know, it's a tough question, but.

Speaker Change: Certainly investors are wondering how to think about the potential impact of losing the NBA on your basic networks EBITDA.

Michael Men: We have 11 studios here and we have a lot of IP and there's also a lot of interest among others in coming to take advantage of some of that IP for gaming, which we're looking at because, you know, as we, as JB said, we need to get bigger. And the IP that we own and the value that it has in the gaming space is something we're looking to take advantage.

Gunnar Wiedenfels: So anything you were Gunor can share with us as we think about that potential outcome into 2026 would be much appreciated. Thanks so much. Yeah, I mean, look, I've been on the last point. I mean, we have said in the past that the NBA is profitable, right? And we've been very clear about that. Again, as David said earlier, this is not the time to go into any level of detail, but obviously you should assume that whatever, you know, we just refreshing our analysis appropriately reflects the scenarios that we're seeing. So that's that's all I want to say about that.

Speaker Change: So anything you were going or can share with us as we think about that potential outcome into 2026 would be much appreciate it. Thanks so much.

Gunnar Wiedenfels: Yeah, I mean, look, Ben, on the last point. I mean, we have said in the past that the NBA is a profitable right. And we've been very clear about that. Again, as David said earlier, this is not the time to go into any level of detail. But obviously, you should assume that whatever we just refresh in our analysis appropriately reflects the scenarios that we're seeing. So that's, that's all I want to say about that.

Speaker Change: Yes, I mean look.

Speaker Change: Then on the last point I mean, we have said in the past that the MBA is a profitable right.

Speaker Change: We've been very clear about that again as David said earlier. This is not the time to go into any level of detail, but obviously you should assume that whatever we just refreshing our analysis appropriately reflects the scenarios that we're seeing so that's that's all I want to say about that and then on the on the strategic options.

David Zaslav: Great, thanks David, thanks JB.

Michael Men: And then second, I was just wondering if you could talk about the strategy around carriage negotiations, just given the potential changes related to MBA programming. Are there any changes in terms of the number of carriage deals that come up in the next year or so just given the wide expectation of the MBA negotiation that just wrapped up? Thank you. Thanks Michael. I'm not going to speak to any specific negotiation or specific piece of content or IP.

Gunnar Wiedenfels: And then on the strategic options, and I'll hand it back to David in a second, but just to make one thing clear. First of all, don't expect a specific answer on any individual speculation or rumors out there. But second, look, we're a public company. This is a public company management team, and we're very well aware of our responsibility to have a view on whatever strategic options are out there. And the same applies to the board. We are we are very clearly focused on evaluating everything beyond just running the operational business. So we've said before, you shouldn't be surprised to see us engaging in, you know, whatever M&A processes are going on out there.

Speaker Change: I'll hand, it back to David in a second but just just to make one thing clear first of all.

Gunnar Wiedenfels: And then on the strategic options, and I'll hand it back to David in a second. But just to make one thing clear, first of all, don't expect a specific answer to any individual speculation or rumors out there. But second, look, we're a public company. This is a public company management team. And we're very well aware of our responsibility to have an opinion on whatever strategic options are out there. And the same applies to the board. We are very clearly focused on evaluating everything beyond just running the operational business.

David: But don't expect a specific answer on any any individual's speculation or rumors out there but second.

David: Look we're a public company. This is a public company management team and we are very well aware of our responsibility to have a view on whatever strategic options are out there and the same applies to the board. We are we're very clearly focused on.

Michael Men: But this is what we do for a living. You know, we're in 200 countries aside from the excitement and drive that we have around max and our studio business of being the biggest maker of of TV content and our library business is that we have free to air and cable channels all over the world. And those channels are B to B businesses. They require carriage agreements and we've been in that business for 40 years.

Speaker Change: Evaluating everything beyond just running the operational business. So we've said before you shouldnt be surprised to see us engaging in whatever M&A processes are going on out there you shouldnt be surprised to see us engaging in partnership discussions David has been has been talking about this for for quite some time and where it makes sense you have seen us engage in those things.

Gunnar Wiedenfels: As we've said before, you shouldn't be surprised to see us engaging in whatever M&A processes are going on out there. You shouldn't be surprised to see us engaging in partnership discussions. David has been talking about this for quite some time, and where it makes sense, you have seen us engage in those things. Regarding our own portfolio, of course, we are constantly updating our views on the value of the assets in our portfolio and whether or not we believe that they are properly reflected in the valuation of the company.

Gunnar Wiedenfels: The strategic value of those. Yeah, yeah.

Gunnar Wiedenfels: You shouldn't be surprised to see us engaging in partnership discussions. David has been has been talking about this for quite some time and where it makes sense. You have seen us engage in those things regarding our own portfolio. Of course, we are constantly updating our views on the value of the assets in our portfolio. And whether or not we believe that they're properly reflected in the valuation of the company, this is all the world's strategic value of those. Yeah, yeah. So this is all, you know, ongoing, you know, professional management, I would say. And to your question, specifically, there have been rumors about potentially splitting up the company.

Michael Men: We've been very effective in that business and it's our job, whether it's a food channel or an entertainment channel or a sports channel to make sure that we have a very robust offering of content that nourishes and excites an audience so that one they want to spend a lot of time with us so that we could monetize it with advertising. But two that distributors get significant value by carrying that and therefore pay us significant value and we've been able to get meaningful increases for our content and we've worked very hard here in the US and around the world, whether it be sports channels or other channels to make sure that our offering is robust and meaningful. And you know, as you look at our different sports services around the world, you'll see that we may be the leader or we are one of the leaders of sports globally.

Speaker Change: Regarding our own portfolio of course, we are constantly updating our views on the value of the assets in our portfolio and whether or not we believe that they are properly reflected in the valuation of the company. This is all as well as the strategic value of those yes, yes. So this is all.

David Zaslav: Excellent. Thank you, David.

Speaker Change: Ongoing.

Speaker Change: Professional management I would say and to your question specifically there have been rumors about potentially splitting up.

Gunnar Wiedenfels: So this is all, you know, ongoing, you know, professional management, I would say. And, and to your question specifically, there have been rumors about potentially splitting up the company. Look, we have been operating under the one Warner Brothers Discovery strategy for the past two and a half years since creating Warner Bros. Discovery. And, you know, every day I'm seeing evidence everywhere in the business of the benefits of those strategies.

Speaker Change: The company look we have been operating under the <unk> Warner Brothers discovery.

Gunnar Wiedenfels: Look, we have been operating under the one Warner Brothers Discovery strategy for the past two and a half years since creating Warner Brothers Discovery. And you know, every day I'm seeing evidence everywhere in the business of the benefits of those strategies. David mentioned in a sentence earlier, the DC 10-year plan, just seeing how that team is now leveraging all of our assets, all of our IP, our very business units, all the cash registers that we can coordinate. I have no doubt that we're going to get great results, and it is important to be able to use all of that across distribution platforms and across business units.

Speaker Change: <unk> for the past two and a half years since since creating Warner brothers discovery and everyday I am seeing evidence everywhere in the business of the the benefits of those strategies David mentioned.

Unknown Executive: Thank you.

Gunnar Wiedenfels: David mentioned in a sentence earlier that the DC 10 year plan, just seeing how that team is now leveraging all of our assets, all of our IP, our various business units, all the cash registers that we can coordinate, I have no doubt that we're going to get great results. And it is important to be able to use all of that across distribution platforms and, and, and across business units.

Speaker Change: In a sentence earlier.

Speaker Change: The D C 10 year plan to seeing how that how that team is now leveraging all of our assets all of our IP our.

Benjamin Swinburne: And we'll take our next question from Benjamin Twinburn with Morgan Stanley. Your line is open. Thanks.

David Zaslav: Good afternoon. David, there's been a lot at least in the press over the last few weeks or months about kind of unlocking value at the company through everything from kind of smaller assets sales to splitting the company up. You talked about you and Gunor talked about the strengths at D to C, you know, that's a business that could be pretty interesting as the standalone company in the public market. I'm just wondering if you're, you know, considering more aggressive action to try to unlock some value in your stock price, just given all the press speculation out there.

Speaker Change: Various business units all the cash registers that we can coordinate I have no doubt that we're going to get great results.

Speaker Change: It is important to be able to use all of that across distribution platforms and cross business unit. So.

Gunnar Wiedenfels: So you know, the focus is on running the business; the focus is on making sure that we get the studio to where it should be. It's an incredibly valuable asset from my perspective. And, you know, unfortunately, that business, as JB alluded to, for the game space, the same is true for film and TV production; it takes a little longer to see the results of the very significant changes that the team has been making.

David Zaslav: So, you know, the focus is on running the business; the focus is on making sure that we get the studio to where it should be. It's an incredibly valuable asset from my perspective. And, you know, unfortunately, that business, as JB alluded to for the game space, the same as true for film and TV production, it takes a little longer to see the results of the very significant changes that the team has been making. And then a third, as you've heard us say multiple times on this call already, we're really starting to see the fruits of our labor in the DC space.

Speaker Change: The focus is on running the business. The focus is on making sure that we get the studio to where it should be it's an incredibly valuable asset from my perspective and <unk>.

Speaker Change: Unfortunately that business as Jamey alluded to for the game space. The same is true for film and television production. It takes a little longer to see the results of the very significant changes that the team has been made in making and then third as you heard us say multiple times on this call already we're really starting to see the fruits.

David Zaslav: And then, you know, I know it's a tough question, but certainly investors are wondering how to think about the potential impact of losing the NBA on your basic networks EBITDA. So anything you were Gunor can share with us as we think about that potential outcome into 2026 would be much appreciated. Thanks so much. Yeah, I mean, look, I've been on the last point. I mean, we have said in the past that the NBA is a profitable right.

Gunnar Wiedenfels: And then third, as you've heard us say multiple times on this call already, we're really starting to see the fruits of our labor in the DTC space. And the studio and the DTC segment have, from my perspective, tremendous, tremendous value opportunities. And once we start seeing more evidence for that and seeing more, you know, materialization of that value, I believe that corporate structure is actually a secondary consideration. I don't know, David, any, any...

Speaker Change: Of our labor in the <unk> space and the.

Gunnar Wiedenfels: And the studio and the DC segment have, from my perspective, tremendous, tremendous value opportunity. And once we start seeing more evidence for that and seeing more, you know, materialization of that value, I believe that corporate structure is actually a secondary consideration. David, I would just add that the market conditions within the traditional business are tough and they're challenging. But, you know, from our perspective, two years ago, we saw that the business was being generationally disrupted. And so we did an awful lot of work. They get our balance sheet in good shape. We have a terrific capital structure.

Speaker Change: The studio and the DTC segment have from my perspective tremendous tremendous value opportunity and once we start.

Speaker Change: Seeing more evidence for that and seeing more materials Asian of that value I believe that corporate structure has actually a secondary consideration I don't know David I would just add that the.

David Zaslav: And we've been very clear about that. Again, as David said earlier, this is not the time to go into any level of detail, but obviously you should assume that whatever, you know, we just refreshing our analysis appropriately reflects the scenarios that we're seeing. So that's that's all I want to say about that. And then on the on the strategic options and I'll hand it back to David in a second, but just just to make one thing clear.

David Zaslav: I would just add that, look, the market conditions within traditional business are tough, and they're challenging. But, you know, from our perspective, two years ago, we saw that the business was being generationally disrupted, and so we did an awful lot of work to get our balance sheet in good shape. We have a terrific capital structure. We view our debt as an asset.

David: Market conditions within the traditional business are tough and they are challenging.

David: But.

Speaker Change: From our perspective.

David: Two years ago, we saw that the business was being generationally disrupted and so we did an awful lot of work to get our balance sheet in good shape.

David Zaslav: First of all, don't expect a specific answer on any individual speculation or rumors out there. But second, look, we're a public company. This is a public company management team and we're very well aware of our responsibility to have a view on whatever strategic options are out there. And the same applies to the board. We are we are very clearly focused on evaluating everything beyond just running the operational business. So we've said before, you shouldn't be surprised to see us engaging in, you know, whatever M&A processes are going on out there.

David: We have a terrific capital structure.

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

Speaker Change: Our debt is we view our data as an asset.

Speaker Change: We're generating meaningful free cash flow, we're investing substantially in content, where storytelling company. The strength of this company is that we're a global storytelling company with content that works well all around the world local entertainment and sports.

David Zaslav: We're generating meaningful free cash flow, and we're investing substantially in content. We're a storytelling company. The strength of this company is that we're a global storytelling company with content that works well all around the world, in local, entertainment, and sports. And so, we feel very good about where we are. And we have to, as Gunnar said, look at all the options and consider all the options. But my number one priority is to run this company as effectively as possible.

Speaker Change: And.

Speaker Change: So.

Speaker Change: We feel very good about where we are and we have to as Gunnar said.

David Zaslav: You shouldn't be surprised to see us engaging in partnership discussions. David has been has been talking about this for for quite some time and where it makes sense. You have seen us engage in those things regarding our own portfolio. Of course, we are constantly updating our views on the value of the assets in our portfolio. And whether or not we believe that they're properly reflected in the valuation of the company, this is all the world's the strategic value of those. Yeah, yeah. So this is all, you know, ongoing, you know, professional management, I would say. And to your question, specifically, there have been rumors about potentially splitting up the company.

Gunnar: Look at a walk and consider all options, but the number one priority is to run this company as effectively as possible and you will see is our studio begins to grow and if are are global.

David Zaslav: And you will see as our studio begins to grow, and if our global direct-to-consumer business scales the way we believe it's going to, then that'll be very apparent to investors, and we expect that that'll create shareholder value. Thanks.

Speaker Change: Direct to consumer business scales. The way, we believe it's going to then that'll be very apparent to investors and we expect that that will create shareholder value.

Operator: Thanks, guys. Appreciate it. Thank you. We'll take our next question from Vijay Van Javant with Evercore ISI. Your line is open. Good afternoon, this is Kutgun Maral on behalf of VJ. Thanks for taking a question.

Jessica Cohen: Thanks, guys. I appreciate it to you, Arthur. Thank you. We'll take our next question from Vijay, then Jay Vant, with Evercore IFI. Your line is open. Good afternoon. This is Kutgun Maral on Preview Jay. Thanks for taking a question. Just one on the even thought outlook. I know that you're not providing guidance, and that it's tough to have a lot of visibility, given linear challenges, DTC investments, and the nature of the nature of the studio. But I want to see if you could help level set expectations a bit for the back half. The outlook you provide on DTC was certainly very encouraging.

Speaker Change: Thanks, guys I appreciate the answer.

Operator: Thank you. We'll take our next question from Vijay Vant with Evercore ISI. Your line is open.

Speaker Change: Thank you we'll take our next question from Vijay Dan J P. <unk> with Evercore ISI. Your line is open.

Speaker Change: Good afternoon. This is cut down morale on for Vijay. Thanks for taking the question just one on the EBITDA outlook I know that youre, not providing guidance, but it's tough to have a lot of visibility given linear challenges DTC investments and the hit driven nature of the studio, but I wanted to see if you could help level set expectations.

Gunnar Wiedenfels: Look, we have been operating under the one Warner Brothers Discovery strategy for the past two and a half years since since creating Warner Brothers Discovery. And you know, every day I'm seeing evidence everywhere in the business off the benefits of those strategies. David mentioned in a sentence earlier, the DC 10-year plan, just seeing how that, how that team is now leveraging all of our assets, all of our IP, our very business units, all the cash registers that we can coordinate.

Speaker Change: <unk> for the back half.

Speaker Change: The outlook you provided on DTC was certainly very encouraging can you help us.

Gunnar Wiedenfels: Can you help us, and maybe walk through some of the other new pieces? Thank you. So, again, if you said, I'm in a position to provide detailed guidance. But if we go through the segments a little bit here, again, we're expecting a very significant step forward on the CTC side. On the studio side, as I mentioned, we have two big films in the pipeline also. Generally speaking, if you compare the release schedules this year versus last year, I would say a little more beneficial, with only one film in December; whereas last year we took a lot of marketing expenses and didn't get a lot of the benefit of some of the late releases in December.

Speaker Change: Can you walk through some of that in pieces. Thank you.

Gunnar Wiedenfels: Again, as you said, I'm not in a position to provide detailed guidance, but if we go through the segments a little bit here, again, we're expecting a very significant step forward on the BBC side. On the studio side, as I mentioned, we have two big films in the pipeline. Also, generally speaking, if you compare the release schedules this year versus last year, I would say it is a little more beneficial with only one film in December, whereas last year, we took a lot of marketing expenses and didn't get a lot of the benefit of some of the late releases in December.

Speaker Change: Sure.

Speaker Change: So again I would just add them positioned to provide.

Gunnar Wiedenfels: I have no doubt that we're going to get great results and it is important to be able to use all of that across distribution platforms and and across business units. So, you know, the focus is on running the business, the focus is on making sure that we get the studio to where it should be. It's an incredibly valuable asset from my perspective. And, you know, unfortunately, that business as JB alluded to for the game space, the same as true for film and TV production, it takes a little longer to see the results of the very significant changes that the team has been making.

Speaker Change: Detailed guidance, but if we go through the segments.

Speaker Change: It'll bit here again, we're expecting a very significant step forward on the PC side.

Speaker Change: On the studio side as I mentioned, we have two big films.

Speaker Change: Also.

Speaker Change: Generally speaking if you compare the release schedules this year versus last year, I would say a little more beneficial with only one film in December whereas last year, we took a lot of marketing.

Speaker Change: Spencers and didn't get a lot of the benefit of some of the.

Speaker Change: The leases.

Speaker Change: And in December so so that's definitely a factor, but I also as you said want to point out that each one of those are hit driven.

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

Gunnar Wiedenfels: So that's definitely a factor, but I also, as you said, want to point out that each one of those are hit-driven and create some volatility as well. Out of where in the studio, certainly in the TV production business, things should get a lot better. We're now coming into the part of the year that was deeply impacted by the strike last year. So that should be a helper. On the network side, on the TV side, which is encouraging, there is quantifiably a lot less investment in the marketplace in purchasing TV content. And we're not really seeing that.

Gunnar Wiedenfels: And then a third, as you've heard us say multiple times on this call already, we're really starting to see the fruits of our labor in the DC space. And the studio and the DC segment have, from my perspective, tremendous, tremendous value opportunity. And once we start seeing more evidence for that and seeing more, you know, materialization of that value, I believe that corporate structure is actually a secondary consideration. David, I would just add that the market conditions within the traditional business are tough and they're challenging.

Speaker Change: It creates some volatility as well elsewhere in the studio.

Speaker Change: And the television production business things should get a lot better we're now coming into the part of the year that was deeply impacted by the strike last year, so that should be that should be a helper.

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

Speaker Change: On the network side on the TV side, which is encouraging.

Speaker Change: There is quantifiably a lot less investment in the marketplace.

Channing: In purchasing TV content, and we're not really seeing that I think it represents the fact that we have very high quality content. Our content is working very well we have strong IP, that's known and so channing and the team are seeing the numbers are are looking 383 ongoing productions on.

Gunnar Wiedenfels: I think it represents the fact that we have very high quality content. Our content is working very well. We have strong IP that's known. And so Channing and the team are seeing the numbers are looking... 83 ongoing productions on air, pretty much unaffected by any of those trends. On the network side, again, as I said, we're not seeing a lot of change in the linear ad market environment in the US. It's differentiated.

Gunnar Wiedenfels: I think it represents the fact that we have very high-quality content. Our content is working very well. We have strong IP that's known. And so Channing and the team are seeing the numbers are looking... Three, 83 ongoing productions on air, pretty much, you know, unaffected by many of those trends. On the network side, again, as I said, we're not seeing a lot of change in the linear ad market environment in the US. It's differentiated. I called out earlier that Europe is actually looking almost surprisingly strong in some of the markets. That's definitely a positive outlier.

Gunnar Wiedenfels: But, you know, from our perspective, two years ago, we saw that the business was being generationally disrupted. And so we did an awful lot of work. They get our balance sheet in good shape. We have a terrific capital structure. You know, our debt is, we view our debt as an asset with generating meaningful free cash flow. We're investing substantially in content. We're a storytelling company. The strength of this company is that we're a global storytelling company with content that works well all around the world, local and entertainment and sports.

Speaker Change: Pretty much.

Speaker Change: Unaffected.

Speaker Change: But in any of those trends.

Speaker Change: On the network side again, the as I said, we're not seeing a lot of change in the linear ad.

Gunnar Wiedenfels: I called out earlier that Europe is actually looking almost surprisingly strong in some of the markets. That's definitely a positive outlier. But to your point, visibility is not high in that market, and I don't want to make any predictions beyond the point that in the US, Q3 is typically also a little bit of a weaker quarter for us given the timing of our sports schedule. And remember, we have the Olympics in Europe, which is a smaller ad market relative to those rights. Whereas, in the US, if anything, we're taking a little bit of a hit from that event being ongoing. And so those are the building blocks that I'm happy to provide. And I hope that's helpful, BJ.

Speaker Change: Market environment in the U S.

Speaker Change: It's differentiated I called out earlier that Europe.

Gunnar Wiedenfels: And so... We feel very good about where we are, and we have to, as Gunnar said, look at all and consider all options. But the number one priority is to run this company as effectively as possible, and you will see as our studio begins to grow and if our global direct to consumer business scales the way we believe it's going to, then that'll be very apparent to investors, and we expect that that'll create shareholder value.

Speaker Change: Its actually looking.

Speaker Change: Looking almost surprisingly strong and some of the markets that's definitely a positive outlier.

Gunnar Wiedenfels: But to your point, visibility is not high in that market. And I don't want to make any predictions beyond the point that in the US, Q3 is typically also a little bit of a weaker quarter for us, given the timing of our sports schedule. And remember, we have the Olympics in Europe, which is a smaller ad market relative to those rights; whereas in the US, if anything, we're taking a little bit of a hit from that being ongoing. And so those are the building blocks that I'm happy to provide, and I hope that's helpful. On the motion picture side, it is a long-cycle business.

Speaker Change: But to your point visibility is is not high.

Speaker Change: And that market and I don't want to make any predictions beyond the point that in the US Q3 is typically also a little bit of a weaker quarter for us given the given the timing of our power sports schedule and remember we have the Olympics in Europe, which is a smaller AD market relative to those rights, whereas in.

Speaker Change: In the U S. If anything were to.

David Zaslav: Thanks guys, appreciate it to you, Arthur.

Speaker Change: A little bit of a hit from from the.

Unknown Executive: Thank you.

Speaker Change: Ongoing.

Vijay V. Jayant: We'll take our next question from Vijay, then Jay Vant with Evercore IFI, your line is open. Good afternoon.

Speaker Change: And so those are the building blocks that I'm that I am happy to provide and I hope that that's helpful. Vijay on the motion picture side. It is a long cycle business, but we have a really good team with.

Gunnar Wiedenfels: On the motion picture side, it is a long cycle business. But we have a really good team with Mike and Pam. And it is encouraging that we just have back-to-back movies this summer that are generating real value. We're rooting for that. As we launch Beetlejuice, which has some early, very positive data that we're getting, the idea that people seem to be going back to the theater for good movies that provide some compelling or unique storytelling. We also have Joker coming up.

Gunnar Wiedenfels: But we have a really good team with Mike and Pam, and it is encouraging that we just have back-to-back movies this summer that are generating real value. We're rooting for that. You know, as we launch Beetlejuice, which there's some early, very positive data that we're getting, the idea that people seem to be going back to the theater for good movies that provide some compelling or unique storytelling. We also have Joker coming up. And we've been really pushing to get Warner Brothers back aggressively into the motion picture business, whether it be DC and Warner. So we're encouraged by that, and we're encouraged by our slate ahead.

Gunnar Wiedenfels: This is Kutgun Maral on TVJ. Thanks for taking a question. Just one on the even thought outlook. I know that you're not providing guidance and that it's tough to have a lot of visibility given linear challenges, DTC investments, and the nature of the nature of the studio. But I want to see if you could help level set expectations a bit for the back half. The outlook you provide on DTC was certainly very encouraging.

Speaker Change: With Mike and Pam and.

Speaker Change: It is encouraging that we just have back to back movies. This summer that are generating real value, we're rooting for that.

Speaker Change: As we launch beetle juice, which there's some early very positive data that we're getting the idea that.

Speaker Change: Theyre seems people seem to be going back to the theater for for good movies that.

Gunnar Wiedenfels: Can you help us and maybe walk through some of our new pieces? Thank you. So again, if you said I'm in position to provide detailed guidance. But if we go through the segments a little bit here, again, we're expecting a very significant step forward on the CTC side. On the studio side, as I mentioned, we have two big films in the pipeline also generally speaking, if you compare the release schedules this year versus last year, I would say a little more beneficial with only one film in December, whereas last year we took a lot of marketing expenses and didn't get a lot of the benefit of some of the late releases in December.

Speaker Change: Provide some compelling a unique storytelling, we also have Joker coming up and we've been.

David Zaslav: And we've been really pushing to get Warner Brothers back aggressively into the motion picture business, whether it be DC and Warner, so we're encouraged by that. And we're encouraged by our slate ahead. We're still working our way through the slate that we inherited, and we're much more optimistic about what we have ahead.

Speaker Change: Really pushing to get Warner brothers back aggressively into the motion picture business.

Speaker Change: Whether it be D C and Warner So we're encouraged by that and we are encouraged by our slate ahead, we're still working our way through the slate that we inherited and we're much more optimistic about what we have ahead.

Jessica Cohen: We're still working our way through the slate that we inherited. And we're much more optimistic about what we have ahead. That's very helpful. Thank you both. Thank you, and we'll take our next question from Jessica, Ric, and Rich, with Bank of America's Securities. Mine is open. Thanks. I think we all appreciate the massive efforts that you guys are in to restore the studio's plural of Warner Bros. and DC as well as your TV operations, and also of course Max and HBO, but I guess at the end of the day with a steady decline in the PTV universe and obviously they'll let up and fight, is it or will it be enough to offset?

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

Operator: Thank you. And we'll take our next question from Jessica Ruth Enrich with Bank of America Securities. Your line is open.

Speaker Change: Thank you and we'll take our next question from Jessica Reif enrich with Banc of America Securities. Your line is now open.

Operator: Thanks. I think we all appreciate the massive efforts that you guys are putting in to restore the studios, plural, Warner Bros. NBC, as well as your TV operations, and also, of course, Max and HBO, but I guess, you know, at the end of the day with the steady decline in the pay TV universe and obviously no let up in sight. Is it or will it be enough to offset what you're doing? Is it enough, on a consolidated basis, to offset this?

Speaker Change: Thanks.

Speaker Change: So I think we all appreciate the massive efforts that you guys are.

Speaker Change: And to restore the studios plural Warner Brothers and D C as well as your television operations.

Gunnar Wiedenfels: So that's definitely a factor. But I also, as you said, want to point out that each one of those are hit driven and create some volatility as well. Out of where in the studio, certainly in the TV production business things should get a lot better. We're now coming into the part of the year that was deeply impacted by the strike last year. So that should be a helper on the network side on the TV side, which is encouraging.

Speaker Change: And also of course, that's an H b O, but I guess at the end of the day with a steady decline in the pay TV universe.

Speaker Change: No let up in sight.

Speaker Change: Is it or will it be enough to upset.

Speaker Change:

Jessica Cohen: What you're doing is, it's enough to, on a consolidated basis, is it enough to offset that. So David said earlier, your position for growth, Gunnar, I know you just got one WBD. When do you foresee consolidated earnings growing on a sustainable basis? So that's one thing. And the second thing on the NBA loss, if you don't win the matching rights lawsuit, are the more recent work acquisitions and maybe some upcoming rights enough to close the gap? I'm not, we can't really, you know, we're in a litigation. And at this point, we've handed it off to our lawyers.

Speaker Change: What you're doing is it enough to annexed in solid databases, there's just enough to offset that so David said earlier, you're positioned for growth going there I know you discussed one W. P D.

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

Gunnar Wiedenfels: There is quantifiably a lot less investment in the marketplace in purchasing TV content. And we're not really seeing that. I think it represents the fact that we have very high quality content. Our content is working very well. We have strong IP that's known. And so Channing and the team are seeing the numbers are looking. The three 83 ongoing productions on air pretty much, you know, unaffected by many of those trends. Yep.

Speaker Change: When do you foresee consolidated earnings growing on a sustainable basis. So that's one thing and the second thing on the NDA.

Speaker Change: Boss.

Speaker Change: You don't win the matching rights law suit.

Speaker Change: The more recent sports acquisitions, and maybe some upcoming rights enough to close the gap.

David Zaslav: I'm not we can't really you know we're in a litigation it and at this point we've handed it off to our lawyers we have confidence in our position we it the judge will decide whether our matching right which is 11 pages long represents a matter and whether our what we offered matched or not and I you know we'll see we're getting back to work and the lawyers will handle this and the judge is will will decide and off we'll go.

Speaker Change: I'm not we can't really.

Speaker Change: We're in a litigation.

Speaker Change: It.

Speaker Change: And at this point, we've handed it off to our lawyers.

Gunnar Wiedenfels: We have confidence in our position. We, the judge, will decide whether our matching right, which is 11 pages long, represents a match and whether our what we offered matched or not. And you know, we'll see; we're getting back to work, and the lawyers will handle this, and the judge will decide, and off we'll go. And Jessica, on your first question, look, there is no doubt to us as a management team that the answer to that question is yes. We believe there is tremendous upside opportunity both in the DBC business and in the studio business. And it is enough to offset what's happening on the linear side.

Speaker Change: We have.

Gunnar Wiedenfels: On the network side, again, the, as I said, we're not seeing a lot of change in the linear at market environment in the US. It's differentiated. I called out earlier that Europe is actually looking almost surprisingly strong in some of the markets. That's definitely a positive outlier. But to your point, visibility is not high in that market. And I don't want to make any predictions beyond the point that in the US, Q3 is typically also a little bit of a weaker quarter for us given the timing of our sports schedule.

Speaker Change: Confidence in our position.

Speaker Change: <unk>.

Speaker Change: The judge will decide whether our matching right, which is 11 pages long.

Speaker Change: [noise] represents a malware and whether our what we offered matched or not.

Speaker Change: We'll see we're getting back to work.

Speaker Change: And the lawyers will handle this and the judge is will decide and.

Speaker Change: Off will go.

Jessica Cohen: Jessica, on your first question, look, there is no doubt in our minds as a management team that the answer to that question is yes. We believe there's tremendous upside opportunity both in the BBC business and in the studio business, and it is enough to offset what's happening on the linear side. Again, as I said, we just went through another strategic discussion and strategic planning process with our board, and we have a strong plan that supports this. But I'm not in a position to perfectly predict when this is going to happen. Am I disappointed about the impairment?

Jessica: And Jessica on the.

Speaker Change: On your on your first question look the there is no doubt to us as a management team that the answer to that question is yes. We believe there is tremendous upside opportunity both in the DTC business and in the studio business and it is enough to offset what's happening.

Gunnar Wiedenfels: And remember, we have the Olympics in Europe, which is a smaller ad market relative to those rights, whereas in the US, if anything, we're taking a little bit of a hit from that, and I'm going. And so that, you know, those are the building blocks that I'm happy to provide. And I hope that's helpful, Vijay. On the motion picture side, it is a long cycle business. But we have a really good team with Mike and Pam.

Speaker Change: On the linear side again as I said, we just went through another strategic discussion strategic planning process with our board and we have a strong plan that supports this.

David Zaslav: Again, as I said, we just went through another strategic discussion, strategic planning process, you know, with our board. And we have a strong plan that supports this. I'm not in a position to perfectly predict when this is going to happen. Am I disappointed about the impairment? Yes. Am I disappointed that, you know, the trends in the linear business haven't been a little better. You know, there's been talk about recovery, you know, a year, a year and a half ago. It hasn't really happened. It is, it is what it is. We're managing this as best we can.

Speaker Change: I'm not in a position to perfectly predict when this is going to is going to happen am I disappointed about the impairment, yes am I disappointed that the.

Gunnar Wiedenfels: Yes. Am I disappointed that the trends in linear business haven't been a little better? There was talk about recovery a year, a year and a half ago, but it hasn't really happened. It is what it is.

Speaker Change: The trends in the linear business haven't been a little better.

Gunnar Wiedenfels: And it is encouraging that we just have back-to-back movies this summer that are generating real value. We're rooting for that. You know, as we launch Beetlejuice, which there's some early, very positive data that we're getting, the idea that people seem to be going back to the theater for good movies that provide some compelling or unique storytelling. We also have Joker coming up. And we've been really pushing to get Warner Brothers back aggressively into the motion picture business, whether it be DC and Warner. So we're encouraged by that, and we're encouraged by our slate ahead. We're still working our way through the slate that we inherited. And we're much more optimistic about what we have ahead.

Ben: Ben talk about recovery.

Speaker Change: Year year, and a half ago. It hasnt really happened. It is it is what it is we're managing this as best we can.

Gunnar Wiedenfels: We're managing this as best we can. The key point here is that on the BBC side, we're finally, after two years of heavy investment and hard work, at the point where we're ready to accelerate. As you heard from us, we believe we are going to see an acceleration on the top line, and we have significant opportunity across every driver of the business. We've been very clear. We've talked for a while about the $1 billion mark in EBITDA for 2025. But that is a starting point, not an ending point. We have a lot of confidence in that.

Gunnar Wiedenfels: That's very helpful. Thank you both.

David Zaslav: The key point here is that on the DBC side, we're finally, after two years of heavy investments, hard work at the point where, you know, we're ready to accelerate. And as you heard from us, you know, we believe we are going to see an acceleration, you know, on the top line, and we have significant opportunity across every driver of the business. And we've been very clear. We've talked for a while about the $1 billion mark and EBITDA for 2025. That is a starting point, not an ending point. So we have a lot of confidence, confidence in that.

Speaker Change: Key point here is that on the DTC side were finally after two years of heavy investments hard work at the point, where we're ready to accelerate and as you've heard from US. We believe we are going to see an acceleration on the top line and we have significant opportunity across every <unk>.

Speaker Change: <unk>.

Speaker Change: The business and we've been very clear we we've.

Speaker Change: We've talked for a while about the $1 billion Mark in EBITDA for 2025 that as a starting point not an ending point. So we have a lot of confidence confidence in that and on the studio side as well.

David Zaslav: And on the studio side as well, and you know, I can share a little bit more the level of and rigor that is going into virtually every step along the value chain in the studio from green light through the physical production, the windowing approach, the coordination between the various teams. It's a night-and-day difference. It takes a little while to become effective. 2025 is really going to be the year when, you know, the first films greenlit by Mike and Pam are going to, you know, dominate the slave. JB has talked about the long development cycles on the game side, etc.

Speaker Change: Share a little bit more the <unk>.

Gunnar Wiedenfels: On the studio side as well, I can share a little bit more. The level of effort and rigor that is going into virtually every step along the value chain in the studio, from green light through physical production, the windowing approach, the coordination between the various teams, it's a night and day difference. It takes a little while to become effective.

Jessica Cohen: Thank you, and we'll take our next question from Jessica, Ric and Rich, with Bank of America's Securities. Mine is open. Thanks.

Speaker Change: Level of.

Speaker Change: Effort and rigor.

Speaker Change: That is going into virtually every step along the value chain.

Speaker Change: In the studio from Green light through through the physical production.

David Zaslav: I think we all appreciate the massive efforts that you guys are in to restore the studio's plural of Warner Bros, and DC as well as your TV operations and also of course Max and HBO, but I guess at the end of the day with a steady decline in the pay TV universe and obviously they'll let up and fight, is it or will it be enough to offset? What you're doing is it's enough to on a consolidated basis is enough to offset that.

Speaker Change: The windowing approach.

Speaker Change: Coordination between the various teams.

Speaker Change: It's a night and day difference it takes a little while to become effective 2025 is really going to be the year. When the first film screen led by Mike and Pam are going to dominate the slate JV.

Gunnar Wiedenfels: 2025 is really going to be the year when the first films greenlit by Mike and Pam are going to dominate the slate. JB has talked about the long development cycles on the game side, etc. There's no question about it. The studio can operate at a significantly higher level of performance.

Speaker Change: <unk> talked about the long development cycles on the game side et cetera. So there is no question about it the studio can operate at a very very significantly higher level of performance.

JB: So there's no question about it. The studio can operate at a very, very significantly higher level of performance. And JB, I think it would be helpful. This is something that you and I are talking about every day. But we have an attack plan meeting every week, all hands on. Talk about layout the growth drivers for direct the consumer that it gives us now where what we're seeing and why we have, you know, some real substantial confidence in the acceleration of growth and the acceleration of profit in our direct consumer global business. Yeah, I mean, look, we've talked about our growth levers.

Gunnar Wiedenfels: So David said earlier, your position for growth, Gunnar, I know you just got one WBD, when do you foresee consolidated earnings growing on a sustainable basis? So that's one thing.

David Zaslav: And JB, I think it would be helpful. This is something that we talk about every day. But we have an ATT&CK plan meeting every week, all hands on, to discuss, lay out the growth drivers for direct-to-consumer that gives us now where we are, what we're seeing, and why we have, you know, some really substantial confidence in the acceleration of growth and the acceleration of profit in our direct-to-consumer global

JB: J B I think it would be helpful. This is something that you and I are.

Gunnar Wiedenfels: And the second thing on the NBA loss, if you don't win the matching rights lawsuit, are the more recent work acquisitions and maybe some upcoming rights enough to close the gap? We can't really, you know, we're in a litigation. And at this point, we've handed it off to our lawyers. We have confidence in our position. The judge will decide whether our matching right, which is 11 pages long, represents whether our what we offered matched or not. We'll see, we're getting back to work and the lawyers will handle this and the judge will decide and off we'll go.

Speaker Change: Talking about every day, but we have a a and.

Speaker Change: An attack plan meeting every week all hands on talk.

Speaker Change: Talk about lay out the growth drivers for direct to consumer that it gives us now.

Speaker Change: What we're seeing and why we have.

Speaker Change: Some real substantial confidence in the acceleration of growth and the acceleration of <unk>.

Speaker Change: Profit in our direct to consumer global business.

J.B. Peretz: Yeah, I mean, look, we've talked about our growth levers; obviously, international growth and rollouts in more markets are by far the biggest. So that's number one.

Speaker Change: I mean look we've talked about our growth levers, obviously international growth.

JB: Obviously, international growth and roll outs in more markets is by far the biggest. So that's number one. Number two is we have obviously a content slate, which is we talked about on prior calls. We unfortunately had one of our weakest content slates. We're now going to a period where, thanks to all the great work from Casey and his team, the improved pay one slate. The David and Gunnar have just talked about and more Max Originals as well as the great content from the US net side that we have probably one of the strongest content linings with all of our tent pools coming back starting without the drag and obviously this quarter, but over the next 18 months or so.

J.B. Peretz: Number two is, we obviously have a content slate, which we've talked about on prior calls. The first nine to 12 months post the US launch, between just the timing of some of our tentpole series being out of cycle, the strikes obviously didn't help. We unfortunately had one of our weakest content slates. We now go into a period where, thanks to all the great work from Casey and his team, the improved pay-per-view slate that David and Gunnar have just talked about, and more max originals, as well as the great content from the US net side, we have probably one of the strongest content lineups with all of our tentpoles coming back, starting with House of the Dragon this quarter, but over the next 18 months or so.

Speaker Change: Rollouts in more markets is by far the biggest so thats number one number two is we have obviously.

Speaker Change: Our content slate, which as we've talked about on prior calls.

Speaker Change: First nine to 12 months.

Speaker Change: Most of the U S launch.

David Zaslav: And Jessica, on your first question, look, there is no doubt to us as a management team that the answer to that question is yes. We believe there is tremendous upside opportunity both in the DC business and in the studio business. And it is enough to offset what's happening on the linear side. Again, as I said, we just went through another, you know, strategic discussion, strategic planning process, you know, with our board.

Speaker Change: <unk> just timing of some of our Tentpole series being out of cycle. The strikes obviously you didn't help.

Speaker Change: Fortunately had one of our weakest content slates, we now go into a period where.

David: Thanks to all the great work from Casey and his team the improved <unk> slate that David in Gruner I've just talked about.

Speaker Change: And more Max original as well as the great content from the U S net side.

Speaker Change: That we had probably one of the strongest.

David Zaslav: And we have a strong plan that supports this. I'm not in a position to perfectly predict when this is going to happen. Am I disappointed about the impairment? Yes. Am I disappointed that, you know, the trends in the linear business haven't been a little better? You know, there's been talk about recovery, you know, a year, a year and a half ago. It hasn't really happened. It is, it is what it is. We're managing this as best we can.

Speaker Change: Content lineup with all of our 10 pools coming back.

Speaker Change: Starting with the Dragon, obviously this quarter, but over the next 18 months or so and so we feel great about the content slate, which is clearly a massive driver of our success.

J.B. Peretz: And so we feel great about the content slate, which is clearly a massive driver of our success. Our proof story is a third one where you've seen us obviously raise prices in the US. We're raising prices outside the US. We're also changing rev shares outside the US, which historically in some of the wholesale agreements on the HBO side, we feel we're underpriced. So we're driving that. We're rolling out an AdLight product in many more markets. Previously AdLight on HBO; the old HBO Max was only in the US.

JB: And so we feel great about the content slate, which is clearly a massive driver of our success. Our our true story is a third one where you've seen us. Obviously raised price in the US. We're raising prices outside the US. We're also changing rev shares outside the US, which historically in some of the wholesale agreements on the HBO side. We feel we're underpriced. So we're driving that we're rolling out an ad light product in many more markets. Previously, ad light on HBO, the old HBO Max was only in the US. We've now rolled it out in 39 markets across Latin, a handful of markets across Europe.

Speaker Change: Our <unk> story.

Speaker Change: Is a third one where you've seen us.

Speaker Change: Obviously raise price in the U S.

Speaker Change: We are raising price outside the U S. We're also changing.

David Zaslav: The key point here is that on the DC side, we're finally after two years of heavy investments, hard work at the point where, you know, we're ready to accelerate. And as you heard from us, you know, we believe we are going to see an acceleration, you know, on the top line and we have significant opportunity across every driver of the business. And we've been very clear. We've talked for a while about the $1 billion mark and EBITDA for 2025.

Speaker Change: Rev shares outside the U S, which historically and some of the wholesale agreements in the HBO side, we feel we're underpriced. So we're driving that we're rolling out and add light product in many more markets previously add light on an H b the old HBO Max was only in the U S. We've now rolled it out in 39 markets across Latam a handful of markets.

J.B. Peretz: We've now rolled it out in 39 markets across LATAM and a handful of markets across Europe. We're looking to roll it out in more markets. So advertising will become a bigger and bigger play for us. The product experience is one that we've talked a lot about, but the reality is, we said a year ago when we rolled out Max in the US, the product went from not great to good, but it's still got a ways to get to world-class. And we're working every day to improve features, to improve the personalization of the product, and the recommendations in the product. And that takes time. It's a game of inches that we're continuously driving.

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

Speaker Change: Across Europe, we are looking at rolling out more markets. So advertising will become a bigger and bigger play for us. The product experience is one that we've talked a lot about but the reality is we set a year ago. When we rolled out <unk> in the U S. With the product went from Matt great to good but its not still got a ways to get to a world class and we're working everyday to improve feature.

David Zaslav: That is a starting point, not an ending point. So we have a lot of confidence, confidence in that. And on the studio side as well, and you know, I can share a little bit more the level of, and rigor that is going into virtually every step along the value chain in the studio from Greenlight through the physical production, the windowing approach, the coordination between the various teams. It's a night and day difference.

Speaker Change: <unk> to improve the personalization and the product the recommendation in the product and that takes time, it's a game of inches that we're continuously driving another lever as David talked about earlier is just the distribution agreements.

J.B. Peretz: Another lever, as David talked about earlier, is just the distribution agreements. We are partnering with more and more partners who can get us to market and in front of more customers and on more devices faster to accelerate our rollout and do it in a more efficient and effective way. And then, last but not least, we are rolling out our password sharing crackdown, which will, as we've said before, start towards the end of this year and bleed into 2025.

JB: Another lever is David talked about earlier is just the distribution agreements. We are partnering with more and more partners who can get us to market and in front of more customers and on more devices faster to accelerate our rollout and do it in a more efficient and effective way. And then the last but not least, we are rolling out obviously our password sharing track down, which will we said before will start toward the end of this year and bleed into 2025. And so that'll be another revenue driver. And so we look at the building blocks not as sort of a, you know, what if could it be business model exercise.

Speaker Change: As we are.

David: Partnering with more and more partners, who can get us to market and in front of more customers or more devices faster to accelerate our rollout and do it in a more efficient and effective way and then.

David Zaslav: It takes a little while to become effective. 2025 is really going to be the year when, you know, the first films Greenlight by Mike and Pam are going to, you know, dominate the the slave. JB has talked about the long development cycles on the game side, etc. So there's no question about it. The studio can operate at a very, very significantly higher level of performance.

Speaker Change: And then last but not least we are rolling out obviously, our password sharing.

Speaker Change: Down which will as we've said before we will start towards the end of this year and and bleed into 2025.

J.B. Peretz: And so that'll be another revenue driver. And so we look at the building blocks not as sort of a, you know, what if, could it be a business model exercise, but we see real fundamentals and momentum in our business case for D2C that make us very confident about the profitability in the second half of this year and also the billion plus going into 2025 and beyond. And look, this global disruption is being felt by everyone. Challenge.

Speaker Change: And so that'll be another.

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

Speaker Change: Revenue driver and so.

Speaker Change: We look at the building blocks not as sort of a.

Speaker Change: What if could it be bid.

Speaker Change: Business model exercise, but we see real fundamentals and momentum in our business case for <unk> to see that make us very confident about the profitability in the second half of this year and also the billion plus going into 2025 and beyond.

JB: But we see real fundamentals and momentum in our business case for D to see that make us very confident about the profitability in the second half of this year, and also the billion plus going into 2025. And look, this global disruption is being felt by everyone. It's a challenge. It's a transition. And as Guner said, this is a distribution disruption. People are consuming more content than ever. Our content is stronger than it's ever been. But the fact that it's being felt by so many. We've seen a lot of local markets, you know, some great content players that don't have platforms that are looking at us and saying, you know, you're starting to make money.

Speaker Change: And look this global disruption is being felt by everyone.

David Zaslav: It's a transition, and as Gunnar said, this is a distribution disruption. People are consuming more content than ever; our content is stronger than it's ever been. But the fact that it's being felt by so many, we've seen a lot of the local markets, you know, some great content players that don't have plans, that are looking at us and saying, "You're starting to make money." You're starting to climb.

Gunnar: Challenge, it's a transition and as Gunnar said, it's a dish. This is a distribution disruption if people are consuming more content than ever our content is stronger than it's ever been but the fact that it's being felt by so many we've seen a lot of the local markets. Some great content players that don't have platforms.

Gunnar Wiedenfels: Yeah, I mean, look, we've talked about our growth levers. Obviously, international growth and rollouts in more markets is by far the biggest. So that's number one. Number two is we have obviously a content slate, which is we talked about on prior calls. We unfortunately had one of our weakest content slides. We now go into a period where thanks to all the great work from Casey and his team, the improved pay one slate.

Speaker Change: That are there that are looking at us and saying.

Speaker Change: You're starting to make money youre starting to scale.

David Zaslav: You're starting to scale; you know, maybe I can be a part of you. And if I'm a part of you, then maybe I have a chance of being more successful and turning around the economics of the business that I'm in that's declining. You know, some of these discussions wouldn't that the challenge and the difficulty, you know, even though we're feeling that pain and we're fighting through it, is providing opportunity. Many of these bundles, there they wouldn't be happening if people felt that they were doing terrific on their own, but it's the challenge of the marketplace that's forcing people to say what makes sense.

David Zaslav: Maybe I can be a part of you. And if I'm a part of you, then maybe I have a chance of being more successful and turning around the economics of the business that I'm in, which is declining. Some of these discussions wouldn't, the challenge and the difficulty, even though we're feeling that pain and we're fighting through it, is providing opportunities. Many of these conversations wouldn't be happening if people felt that they were doing terrific on their own. But it's the challenge of the marketplace that's forcing people to say, what makes sense? How could this work better?

Speaker Change: And maybe it can be a part of you.

Speaker Change: And if I'm a part of you then maybe I have a chance of being more successful in turning around the economics of the business that I'm in Thats declining.

Speaker Change: Some of these discussions.

Gunnar Wiedenfels: The David and Gunnar have just talked about and more max originals as well as the great content from the US net side. That we have probably one of the strongest content linings with all of our tent pools coming back starting without the drag and obviously this quarter, but over the next 18 months or so. And so we feel great about the content slate, which is clearly a massive driver of our success.

Speaker Change: The challenge and the difficulty.

Dave: Even though we're feeling that pain and we're fighting through it is providing opportunity many of these bundles there Dave.

Dave: They wouldn't be happening if people felt that they were doing terrific on their own but its the challenge of the marketplace.

Speaker Change: Forcing people to say what makes sense, how could this work better and.

David Zaslav: How could this work better, and that what really works about this is the consumer experience right now is not good. And so we're all going to be driven toward it. Always works this way. What's the best consumer experience and what is the best content. And so we're being driven through bundling or through, you know, I think you're going to see a number of players become part of other players and players that are playing in markets in the US or markets outside the US that we're hoping that they can make it alone, you know, at least we believe that you need to be global.

David Zaslav: And what really works about this is that the consumer experience right now is not good. And so we're all going to be driven toward, it always works this way, what's the best consumer experience? And what is the best content?

Speaker Change: What really works about this is the consumer experience right now is not good.

Gunnar Wiedenfels: Our our true story is a third one where you've seen us obviously raise price in the US. We're raising price outside the US. We're also changing rev shares outside the US, which is historically in some of the wholesale agreements on the HBO side. We feel we're underpriced. So we're driving that we're rolling out an ad light product in many more markets previously add light on on HBO. The old HBO Max was only in the US. We've now rolled it out in 39 markets across Latin, a handful of markets across Europe. We're looking to roll it out more markets. So advertising will become a bigger and bigger play for us.

Speaker Change: And so we're all going to be driven toward it always works this way.

Speaker Change: The best consumer experience and what is the best content and so we're being driven through bundling.

David Zaslav: And so we're being driven through bundling or through, you know, I think you're going to see a number of players become part of other players and players that are playing in markets in the US or in markets outside the US, and we're hoping that they can make it alone. You know, at least we believe that you need to be global. And when you look around, and you say, "who's global?" And who can I be a part of?

Speaker Change: Or through.

Speaker Change: I think youre going to see a number of players become part of other players and players that are playing in markets in the U S or in markets outside the U S that we're hoping that they can make it alone at.

Speaker Change: At least we believe that you need to be global and when you look around and you say, who is global and who cannot be a part of because building a platform for one country no matter, how big is a huge challenge when you're competing against taking Harry Potter around the world to 1 billion people above the globe and so we've positioned ourselves I think with.

David Zaslav: And when you look around and you say who's global and who can I be a part of because building a platform for one country, no matter how big, is a huge challenge when you're competing against taking Harry Potter around the world to a billion people above the globe. And so we've positioned ourselves, I think, with to be profitable this year, to be now finally global and accelerating, and be in a position where each of these countries around the world and players that have been playing at this and losing money or being challenged can have, you know, there's only a few people they can reach out to and say, can I come along.

David Zaslav: Because building a platform for one country, no matter how big, is a huge challenge when you're competing against taking Harry Potter around the world to a billion people around the globe. And so we've positioned ourselves, I think, to be profitable this year, to be now finally global and accelerating, and to be in a position where each of these countries around the world, and players that have been playing this and losing money or being challenged, can have, you know, there's only a few people they can reach out to and say, "Can I come along?". And Jessica, just for the avoidance of doubt, I want to come back to your...

Gunnar Wiedenfels: The product experience is one that we've talked a lot about. But the reality is we said a year ago when we rolled out max in the US, so the product went from that great to good, but it's not still got a ways to get to world class. And we're working every day to improve features to improve the personalization in the product, the recommendation in the product. And that takes time. It's a game of inches that we're continuously driving.

Speaker Change: To be profitable this year to be now finally, global and accelerating and be in a position where each of these countries around the world and players that have been playing at this and losing money or being challenged Ken can have.

David Zaslav: Another lever is David talked about earlier is just the distribution agreements is we are partnering with more and more partners who can get us to market and in front of more customers and on more devices faster to accelerate our rollout and do it in a more efficient and effective way. And then last but not least, we are rolling out obviously our password sharing track down, which we said before will start toward the end of this year and and bleed into 2025.

Speaker Change: There's only a few people they can reach out to and say can.

Speaker Change: Can I come along and.

David Zaslav: Jessica, just for the avoidance of doubt, I want to come back to you to your original question. We have a plan for C's growth: top line growth, bottom line growth. There is a transformation period that we're working through very obviously, as you saw in the impairment that we took today. We have a very strong balance sheet. We're fully committed to maintaining that investment grade rating. We're going to generate tremendous free cash growth transformation period. And I have no doubt that we're going to come out as a strong and healthy and sustainably growing company on the other side of this.

Gunnar Wiedenfels: Jessica, just for the avoidance of doubt, I want to come back to your original question. We have a plan that foresees growth, top-line growth, and bottom-line growth. There is a transformation period that we're working through, very obviously, as you saw in the impairment that we took today. We have a very strong balance sheet. We're fully committed to maintaining that investment grade rating, and we're going to generate tremendous free cash flow through the transformation period.

Speaker Change: Yes, Jessica just for the avoidance of doubt I want to come back to your original question. We have a plan that foresees growth top line growth bottom line growth there.

Speaker Change: There is a transformation period that we're working through very obviously as you saw in the impairment that we took today.

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

David Zaslav: And so that'll be another revenue driver. And so we look at the building blocks, not as sort of a, you know, what if could it be business model exercise. But we see real fundamentals and momentum in our business case for D to C that make us very confident about the profitability in the second half of this year. And also the billion plus going into 2025. And look, this global disruption is being felt by everyone.

Gunnar Wiedenfels: And I have no doubt that we're going to come out as a strong and healthy and sustainably growing company on the other side of this. Next question. Thank you. And our final question for today will come from John Hodulik with UBS. Your line is open.

John Hodulik: Next question. Thank you. And our final question for today will come from John Hodulik with UBS. Your line is open. Yeah, thank you. I just wanted to follow up on JB's comments. You know, David, I think you mentioned 65 markets now for Max. I just how big could it be? I mean, can't imagine it will be everywhere. You know, you know, on the globe. But like, how many markets do you expect that to get to you? And then I would relate to the Olympics, you know, here in the third quarter, just any, you know, sort of more color on how that you expect that to drive the business in both in terms of advertising and DTC growth.

Speaker Change: Next question.

Speaker Change: Thank you and our final question for today will come from John Hodulik with UBS. Your line is open.

John Hodulik: Yes. Thank you I just wanted to follow up on Gabe's comments.

John Hodulik: David I think you mentioned 65 markets now for for Max just how big could it be I mean can you imagine it'll be everywhere.

David Zaslav: It's a challenge. It's a transition. And as Guner said, it's a, this is a distribution disruption. People are consuming more content than ever. Our content is stronger than it's ever been. But the fact that it's being felt by so many, we've seen a lot of local markets. You know, some great content players that don't have platforms that are looking at us and saying, you know, you're starting to make money, you're starting to scale, you know, maybe I can be a part of you. And if I'm a part of you, then maybe I have a chance of being more successful and turning around the economics of the business that I'm in that's declining.

Speaker Change: Sure.

Speaker Change: The globe, how many markets do you expect that to get to you and then.

Speaker Change: As it relates to the Olympics.

Speaker Change: Here in the third quarter, just any sort of more color on how that you expect that to drive the business.

Speaker Change: And both in terms of advertising and DTC growth. Thanks.

David Zaslav: Thanks. Well, let me just start by saying we're not in three of them biggest markets where our content is has huge appeal. And we see it in the viewership numbers in the UK and in Germany and in Italy. You know, it so you know, at the end of 25, which is coming up soon, we'll be launching our own product in the UK. We're also a leader in our own sports product with TNT Sport, which gives us an advantage. And so to come out in those three markets, I think you're going to see real scale. JB, if you could talk to we talked a little bit about Japan and some of our other markets, but more than 50% are markets we're not in yet.

Operator: Well, let me just start by saying we're not in three of the biggest markets where our content has huge appeal. And we see it in the viewership numbers in the UK and in Germany and in Italy. So, at the end of 25, which is coming up soon, we'll be launching our own product in the UK. We're also a leader in our own sports product with TNT Sport, which gives us an advantage.

Speaker Change: Well, let me just start by saying, we're we're not in three of the biggest markets, where our content had.

Speaker Change: Is is.

Speaker Change: Has huge appeal and we see it in the viewership numbers in the UK and in Germany and in Italy.

David Zaslav: You know, some of these discussions wouldn't that the challenge and the difficulty, you know, even though we're feeling that pain and we're fighting through it is providing opportunity. Many of these bundles, they wouldn't be happening if people felt that they were doing terrific on their own. But it's the challenge of the marketplace that forcing people to say, what makes sense? How could this work better?

Speaker Change: So at the end of 'twenty, five which is coming up soon.

Speaker Change: Launching our own product in the U K. We're also a leader in our own sports product with TNT sport, which gives us an advantage and so to come out in those three markets.

Operator: And so, to come out in those three markets, I think you're going to see real scale, JB. We talked a little bit about Japan and some of our other markets, but more than 50% are markets we're not in yet.

Speaker Change: I think youre going to see real scale JV and you could talk to we talked a little bit about Japan, and some of our other markets, but more than 50%.

David Zaslav: And that what really works about this is the consumer experience right now is not good. And so we're all going to be driven toward it always works this way. What's the best consumer experience and what is the best content. And so we're being driven through bundling or through, you know, I think you're going to see a number of players become part of other players and players that are playing in markets in the US or markets outside the US that we're hoping that they can make it alone, you know, at least we believe that you need to be global.

Speaker Change: Our markets were not in yet Jamie.

David Zaslav: I think that's exactly the best way to think about the scaling. And we talked about the 18 to 24-month time frame, but the reality is, by, you know, the first half of 26, the vast majority of our rollout will be underway and will have taken place. And David mentioned, you know, we talk about the addressable market and the fact that our two bigger peers are in, if you measure theirs, 100% of those addressable markets.

JB: Yes, exactly the best way to think about the scaling, and we talked about the 18 to 24 month timeframe, but the reality is by, you know, first half of 26, the vast majority of our will will will be underway and we will take in place. And David mentioned, you know, we talk about a dressable market and the fact that our two bigger peers are in if you measure there is 100% of those addressable markets. We're in just over 50% of them today, and we're at over 100 million subs. So you have to do your own thinking of what our penetration and opportunity could be, but we're about half of the addressable market today at 100 million, 103 million subs.

Speaker Change: It's exactly the best way to think about the scaling and we've talked about the 18 to 24 month timeframe, but the reality is by.

Speaker Change: First half of 2006, the vast majority of our rollout will.

Speaker Change: Will be underway and we will have taken place and David mentioned.

Speaker Change: We talk about addressable market and the fact that our two bigger peers are in if you measure there is a 100% of those addressable markets were in just over 50% of them today and we're at over 100 million subs. So you have to do your own thinking of what our penetration and opportunity it could be but we're about half of.

David Zaslav: We're in just over 50% of them today, and we're at over 100 million subscribers. So you have to do your own thinking of what our penetration and opportunity could be, but we're about half of the addressable market today at 100 million, 103 million subscribers. And we think the opportunity, to David's point, in some of those markets is big markets where we know our content and our audiences, we know the size of them is significant. And so... We think in the next 18 to 24 months, the opportunity is, you know, certainly in the tens and tens of millions of subscribers on top of where we are today.

David Zaslav: And when you look around and you say, who's global and who can I be a part of because building a platform for one country, no matter how big, is a huge challenge when you're competing against taking Harry Potter around the world to a billion people above the globe. And so we've positioned ourselves, I think, to be profitable this year, to be now finally global and accelerating and be in a position where each of these countries around the world and players that have been playing at this and losing money or being challenged can have, you know, there's only a few people they can reach out to and say, can I come along?

Speaker Change: The addressable market today at a $100 million of 103 million subs.

JB: We think the opportunity to David's point in some of those markets are big markets where we know our content and our audiences; we know the size of them is significant. And so we think in the next 18 to 24 months, the opportunity is, you know, certainly easily in the tens and tens of millions of subscribers on top of where we are today. And look, that's 50% that we're going to be attacking. We just launched in Europe and Latin America. We launched last quarter, and in Europe, it's we launched in the middle of last quarter. So we're, we're a couple of weeks in.

Speaker Change: We think the opportunity to David's point in some of those markets or big markets, where we know our content and our audiences. We know the size of them is significant and so.

Speaker Change: We think in the next 18 to 24 months the opportunity is.

David: Certainly easily in the tens and tens of millions of subscribers on top of where we are today.

J.B. Peretz: And look, that's 50% that we're going to be attacking. We just won't in Europe and Latin America. We launched last quarter, and in Europe, we launched in the middle of last quarter, so we're a couple of weeks in. So we haven't had the yield, which you're going to start to see from those markets over the next several months, and you'll see it this coming quarter.

Speaker Change: And look that's 50% that we that we're going to be attacking we just launched it.

Gunnar Wiedenfels: Jessica, just for the avoidance of doubt, I want to come back to your original question. We have a plan that for C's growth, top line growth, bottom line growth. There is a transformation period that we're working through very obviously as you saw in the impairment that we took today. We have a very strong balance sheet. We're fully committed to maintaining that investment grade rating. We're going to generate tremendous free cash growth transformation period. And I have no doubt that we're going to come out as a strong and healthy and sustainably growing company on the other side of this.

Speaker Change: In in Europe, and in Latin America, we launched last quarter and in Europe. Its we launched it in the middle of last quarter. So we're we're a couple of weeks in so we haven't had the yield which youre going to start to see.

Unknown Executive: Next question.

David Zaslav: So we haven't had the yield, which you're going to start to see from those markets over the next several months, and you'll see it this coming quarter. New Olympics. This is the last set of Olympic Games under our old contract that we struck in 2015. And that was a wholesale contract. It had various business benefits for us. There is a large supply sense and components in both markets where we don't meet the broadcast and free-to-air requirements. There was a big, obviously, digital push to at the time, rollout to drive the your sport player. And it's very, very helpful today in the Max rollout.

Speaker Change: From those markets over the next several months and you'll see it this coming quarter.

Speaker Change: Great and the Olympics.

Speaker Change: Oh.

David Zaslav: Well, uh, the, the, Olympics... This is the last set of Olympic Games under our old contract that we struck in 2015, and that was a wholesale contract. It had various business benefits for us. There is a large sub-licensing component in both markets where we don't meet the broadcast and free-to-air requirements. There was a big, obviously, digital push to, at the time, roll out to drive the Eurosport player, and it's very, very helpful today in the max rollout.

Speaker Change: Oh, yes.

Speaker Change: The Olympics.

Speaker Change: This is the last set of Olympic games under our old contract that was struck in 2012 2015 and that was a wholesale contract that had various business benefits for US. There is a there is a large sub licensing components in those markets, where we don't meet the broadcast and free to air.

John Hodulik: Thank you. And our final question for today will come from John Hodulik with UBS, your line is open. Yeah, thank you. I just wanted to follow up on JB's comments, you know, David, I think you mentioned 65 markets now for, for Max, just how big could it be? I mean, can't imagine it will be everywhere. You know, you know, on the globe, but like how many markets you expect that to get to you?

Speaker Change: Our requirements there was a big.

Speaker Change: Digital push to at the time rollout to drive the Eurosport player and it's very very helpful. Today.

Speaker Change: And the Maxx rollout and then over the past eight years, we have benefited very significantly from having these rights in all of our affiliate discussions and renewals. The one thing to keep in mind. We've talked about this in past Olympics years is that all of the costs are essentially recognized in the quarter where the games.

David Zaslav: And then, over the past eight years, we have benefited very significantly from having these rights in all of our affiliate discussions and renewals. The one thing to keep in mind, we've talked about this in past Olympics years, is that all of the costs are essentially recognized in the quarter where the games take place. That's why in this individual quarter, you're going to see a loss from the Olympics, and the more pronounced free cash flow impact on the negative side, as I called out. Because a lot of the benefits are generated over the entire eight-year period.

Gunnar Wiedenfels: And then over the past eight years, we have benefited very significantly from having these rights in all of our affiliate discussions and renewals. The one thing to keep in mind, as we've talked about this in previous Olympic years, is that all of the costs are essentially recognized in the quarter where the Games take place. That's why in this individual quarter, you're going to see a loss from the Olympics and a little more pronounced free cash flow impact on the negative side, as I called out, because a lot of the benefits are generated over the entire eight-year period.

John Hodulik: And then I would relate to the Olympics, you know, here in the third quarter, just any, you know, sort of more color on how that you expect that to drive the business in both in terms of advertising and DTC growth. Thanks.

David Zaslav: Well, let me just start by saying we're we're not in three of them biggest markets where our content is is has huge appeal. And we see it in the viewership numbers in the UK and in Germany and in Italy. You know, it so, you know, at the end of 25, which is coming up soon, we'll be launching our own product in the UK. We're also a leader in our own sports product with TNT sport, which gives us an advantage.

Speaker Change: Take place that's why.

Speaker Change: Individual quarter Youre going to see a loss.

Speaker Change: From the Olympics.

Speaker Change: A little more pronounced free cash flow impact on the negative side as I called out because a lot of the benefits are generated over the entire eight year period and again. The next games are going to be taking place under a new arrangement, which is much more focused on the pay TV.

David Zaslav: And again, the next games are going to be taking place under our new arrangement, which is much more focused on the pay TV. And most importantly, the streaming rights and opportunity. And we believe, based on the numbers that we're seeing, that it's going to continue to be a phenomenal driver for engagement and subscriber acquisition. Thank you. And that does conclude today's question-and-answer session. And this does conclude today's program. We thank you for your participation.

Gunnar Wiedenfels: And again, the next Games are going to be taking place under our new arrangement, which is much more focused on pay TV and, most importantly, the streaming rights and opportunity. And we believe, based on the numbers that we're seeing, that it's going to continue to be a phenomenal driver for engagement and subscriber acquisition.

Speaker Change: And most importantly, the streaming rights and opportunity.

Speaker Change: We believe based on the numbers that we're seeing that it is going to continue to be a phenomenal driver for engagement and subscriber acquisition.

David Zaslav: And so to to come out in those three markets, I think you're going to see real scale JB, you could talk to we talked a little bit about Japan. And some of our other markets, but more than 50% are markets. We're not in yet, JB. Yes, exactly the best way to think about the scaling and we talked about the 18 to 24 month timeframe, but the reality is by, you know, first half of 26, the vast majority of our will will be underway and we will take in place.

Speaker Change: Okay. Thanks, guys.

Operator: Thank you. And that does conclude today's question and answer session. And this does conclude today's program. We thank you for your participation. Have a wonderful day.

Speaker Change: Thank you and that does conclude today's question and answer session.

Speaker Change: And this does conclude today's program we thank you for your participation.

Speaker Change: And could you. Please disconnect at anytime and have a wonderful day.

David Zaslav: And David mentioned, you know, we talk about addressable market and the fact that our two bigger peers are in if you measure there is 100% of those addressable markets, we're in just over 50% of them today and we're at over 100 million subs. So you have to do your own thinking of what our penetration and opportunity could be, but we're about half of of the addressable market today at 100 million 103 million subs.

David Zaslav: We think the opportunity to David's point in some of those markets are big markets where we know our content and our audiences. We know the size of them is significant. And so we think in the next 18 to 24 months, the opportunity is, you know, certainly easily in the 10s and 10s of millions of subscribers on top of where we are today and look, that's 50% that we that we're going to be attacking.

David Zaslav: We just launched in in Europe and Latin America. We launched last quarter and in Europe, it's, we launched in the middle of last quarter. So we're, we're a couple of weeks in so we haven't had the yield, which you're going to start to see from those markets over the next several months and you'll see it this coming quarter.

David Zaslav: And the Olympics. Well, the Olympics. This is the last set of Olympic games under our old contract that we struck in 2015. And that was a wholesale contract. It had various business benefits for us. There is a large sub licensing components in both markets where we don't meet the broadcast and free to air. Requirements. There was a big, obviously, digital push to at the time rollout and drive to the your sport player.

David Zaslav: And it's it's very, very helpful today in the in the max rollout. And then over the past eight years, we have benefited very significantly from having these rights in all of our affiliate discussions and renewals. The one thing to keep in mind, we've talked about this in past Olympics years, is that all of the costs are essentially recognized in the quarter where the games take place. That's why in this individual quarter, you're going to see a loss from from the Olympics and they, the more pronounced free cash flow impact on the negative side as I called out because a lot of the benefits are generated over the entire eight year period.

David Zaslav: And again, the next games are going to be taking place under our new arrangement, which is much more focused on the pay TV and most importantly, the streaming rights and opportunity. And we believe based on the numbers that we're seeing that it's going to continue to be a phenomenal driver for engagement and subscribe acquisition.

Unknown Executive: Thank you. And that does conclude today's question and answer session. And this does conclude today's program. We thank you for your participation.