Q3 2024 Warner Bros Discovery Inc Earnings Call
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Speaker Change: Ladies and gentlemen, welcome to the Warner Brothers Discovery third quarter 2024 earnings Conference call.
At this time all participants 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.
Speaker Change: I would now like to hand, the conference over to Mr. Andrew Slaven Executive Vice President Global Investor strategy, Sir you May now begin.
Andrew Slaven: Good morning, and thank you for joining us for Warner Brothers discoveries Q3 earnings call. Joining me today is David Zaslav, President and Chief Executive Officer, Gunnar beaten cells, Chief Financial Officer, and JB, Perrette, CEO and President global streaming games.
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 before.
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.
Speaker Change: On Form 10-K, and its reports on Form 10-Q and form 8-K.
Speaker Change: In addition, we will discuss non-GAAP financial measures on this call reconciliations 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: Good morning, everyone and thank you for joining us.
David: I want to start my remarks by providing a broad overview of where Warner brothers discovery is on our journey today.
And how we are moving the company forward.
With an ultimate focus on creating value for our shareholders.
David: It is well known that our environment is being reshaped by generational disruption.
Which is creating both challenges and opportunities.
David: Well, we are confronting challenges, we are addressing them directly.
David: And where we see opportunities we are seizing them with discipline and determination.
Right now there are several important dynamics playing out in our business.
David: First we believe that many of the assets that comprise our business are currently undervalued and.
David: And we are working to both demonstrate the fundamental strength.
David: And enhance their value.
David: Part of that effort has involved acting aggressively to reduce our expense base and lift our free cash flow conversion.
David: To date, we have paid down more than $16 billion in debt with our strongest cash generation quarter of this year still ahead.
David: Our team is highly focused on identifying and advancing a range of initiatives that aim to enhance the value of our company.
David: As these initiatives mature.
I'm confident our shareholders will both see and feel significant upside.
David: Second we.
We are making strong progress in executing our strategy and creating what's next for Warner Brothers discovery.
David: Over the last two five years, we have invested meaningfully in new technologies and platforms partnerships and creative talent.
And driven changes in our structure to accelerate growth.
David: Today, those investments are delivering clear bottom line results in our direct to consumer segment.
David: We are making substantial progress at Max where as I will describe in more detail shortly.
David: Strong subscriber growth is driving increased revenue and profitability.
David: And while we are encouraged by our progress.
David: We have more work to do to deliver the kind of results we have.
David: And you expect.
David: But.
David: To be clear.
David: Can assure you we are doing the work necessary to evaluate all steps operationally and strategically.
David: To improve performance and unlock shareholder value.
David: As I have conveyed to our employees there are three pronged attack to deliver expected shareholder gains.
David: Deploying macs globally, as a distribution and storytelling platform.
David: Enabling it to achieve its full potential in both reach and profit.
David: Second optimizing our networks business, including our U S linear TV business.
David: And third returning our studios to industry leadership.
David: I will briefly address our performance and outlook in each of these areas and Gunnar will then share more financial detail by segment.
David: It has been a very important and successful quarter in matches development and deployment.
David: Anyone who has listened to one of our earnings calls over the last two years knows Max's importance to Warner Brothers discovery.
David: We possess and produced tremendous content film television news and sports.
David: Building, a leading fully global direct to consumer platform to make that content available has been a clear strategic initiative.
David: Getting Max right is required patience discipline and substantial investment.
David: Today, those investments are delivering clear results both in terms of subscriber related revenue growth and bottom line impact.
David: At the beginning of the year Max It only launched in the U S.
David: Nine months later Max was available in 65 markets.
David: We have added 13 million subscribers. Thanks in part to $7 2 million additional subscribers in the third quarter alone.
David: And now have more than 110 million subscribers globally.
David: Equity encouraging we're beginning to see real acceleration in subscriber related revenue growth and significant profitability growth.
David: Overall, our direct to consumer revenue of $2 6 billion is up 9% year over year.
David: And EBITDA of $290 million is up more than 175% year over year.
David: And in the fourth quarter, we will enjoy another quarter of strong revenue profit and subscriber growth.
David: What's driving this success.
David: First of course, we have great content.
David: While technological advancements have placed emphasis and attention on distribution.
David: The history of entertainment shows great content always wins.
David: We are also improving the cadence with which we put the content people most want to see in front of them.
David: Beginning this past June with season, two of house of the Dragon will continuing now with the Penguin and extending forward with titles like doing prophecy White Lotus the last of us and peacemaker just to name a few.
David: <unk> is delivering 10 pulse shows new originals and feature films on an even more consistent basis.
David: Internationally, our success is being driven by delivering that beloved content as well as new originals with local sports in most international markets and 15 plus years of local language content all on our streaming platform throughout Europe, and Latin America in a way that few others can.
David: But the critical role <unk> played in being the home of the Olympics in many markets across Europe. In Q3 is just one example.
David: Even without the Olympics, we expect our momentum in driving match subscriber growth to continue going forward.
David: This month Maxwell launch in seven markets across Southeast Asia, and next year Maxwell launch in Australia and over a dozen other markets with more to come including three of the biggest markets in Europe in 2026.
David: Long term, we believe our content will continue to provide us a meaningful competitive advantage.
David: We are only scratching the surface of what we can achieve through added scale.
David: Based on everything we are seeing.
David: We are highly confident we are on track to meaningfully exceed our target of $1 billion in EBITDA through 2025.
David: Next I want to talk about our networks business, while the challenges and headwinds we face in our U S. Linear TV business are well known this is still an extraordinarily important part of our business.
David: Linear television is a core vehicle to deliver W. BD storytelling to hundreds of millions of fans worldwide and the <unk>.
David: Significant profits it generates helps fund building investments that will carry one of brothers discovery into the future.
David: The best evidence of the important role our linear business continues to play for Warner Brothers Discovery is in the renewal agreement, we struck with charter communications with September.
David: This agreement was a victory for both companies and represents an innovative way to best serve customers as our industry continues to transform.
David: And extending charters carriage of our linear networks, while also giving their subscribers AD light access to Max our company's struck a deal that is mutually beneficial with a consumer wins most of all.
David: And their Q3 earnings communications.
David: To discuss plans to lean more aggressively into its video product, which they attributed to providing enhanced value to their customers with increased access to streaming services like Max.
David: We are optimistic this is a sign that these types of agreements will create more stability in our industry Lastly.
David: Lastly, I want to address the work that obviously needs to be done to return our studios business to industry leadership.
David: There have been some real bright spots in our studios business. Our TV studio is on track to have its most profitable year in scripted content and the last five years.
David: It is currently making over 80 live action scripted unscripted and animated series.
David: Nearly 20 platforms.
David: <unk> all the major U S broadcast networks in key U S. S Vod platforms.
David: And on the motion picture side, our third quarter saw a strong success with <unk>.
David: But even in an industry of hits and misses we must acknowledge that our studios business must deliver more consistency.
David: This applies to our games business, which we recognized as substantially underperforming its potential right now.
David: We are for strong and profitable game franchises with loyal global plans.
David: <unk> legacy.
David: <unk> combat.
David: Game of Thrones and DC in particular Batman.
David: Were focusing our development efforts on those core franchises with proven studios to improve our success ratio.
David: And consistency also remains an issue at our motion picture studio as reinforced recently by the disappointing results of Joker too.
David: For the past two years, we've been driving changes within our motion picture studio to improve Greenlight governance and franchise management, which remained focal points going forward.
David: This is a business with translating operational changes into results takes time, but I believe we will see those strategic shifts to deliver improved outcomes in the coming years.
David: Overall, we anticipate improved profit results for our studios in Q4, thanks to what we expect will be another successful quarter for Warner Brothers television.
David: Gunnar will take you through some decisions we made in content licensing that have negatively impacted this year's financial results.
David: Significant growth opportunities in the future.
David: And over the next several years, we expect our gains in motion picture businesses to deliver more consistency resume.
David: History, leading performance and contribute substantially to Warner brothers discoveries business' success.
David: Before I turn it to Gunnar to provide more detail on our financial results.
David: I want to offer a final thought on the power of what we are building by leveraging our storytelling abilities with our abundance of beloved content.
David: Utilizing our distribution platforms, we can deliver real differentiation that leads to growth look no further than the Penguin.
David: Penguin, which spotlights are well known DC comic character building on the success of the Batman.
David: As envisioned by HBO with creative talents like Matt leaves.
David: Lauren Lafrance.
David: Collyn file.
David: Produced by Warner Brothers television distributed on HBO Max to viewers all over the world promoted.
David: Promoted across the Warner Brothers discovery landscape critically acclaimed commercially successful.
David: Stories like the Penguin that can shape culture spark conversations and become appointment viewing always win over time when you look at our unique ability to create great content distribute great content.
David: And market great content. It reinforces why we are so well positioned to stand apart from the pack over the long term.
David: So I will conclude by saying two things are true.
David: Our industry is experiencing generational disruption.
David: Presenting us with both challenges and opportunities.
David: At the same time, our strategy is succeeding in important ways.
David: When this period of extraordinary disruptions settles based on the momentum we are seeing in our direct to consumer segment.
David: The work, we've done to sustain our linear TV business.
David: What we're doing to return our studios to peak performance.
David: I remain confident that Warner brothers discovery will be one of the companies, leading the global media industry into the future.
Speaker Change: Thank you David and good morning, everyone.
David: Like to begin my remarks, with some comments on direct to consumer while we are seeing strong momentum across key operating and financial metrics net.
David: Net subscriber ads subscriber related revenues and EBITDA.
David: Reaching this inflection point has clearly been a priority and I am excited about the traction we've seen in food with what we expect for the quarters ahead.
David: Over 7 million net adds and 50% DTC advertising growth drove double digit subscriber related revenue growth and acceleration from 6% in Q2, leading to nearly $300 million in EBITDA.
David: And we expect similar levels of subscriber related revenue growth and EBITDA contribution in the fourth quarter.
David: Subscriber growth was driven by a combination of factors, including the Olympics in Europe traction from recent international launches.
David: Mentum unbundled like the Disney Max Hulu, offering and a more consistent and resident content lineup.
David: There will continue to be a variety of paths to scale, Max, particularly as we expand our reach internationally.
David: We clearly saw that this quarter.
David: It is also clear that the many options to reach consumers directly bundle in partnership or a more traditional wholesale arrangements, we will naturally have implications for certain kpis.
David: That said the financial framework in which we are managing the DTC business has not changed.
David: First we will always be guided by our core focus on lifetime value relative to subscriber acquisition costs.
David: Whether it's evaluating a specific market or the model employed to launch in the market partnership or direct retail.
David: This means that we will make trade off decisions between various distribution channels and operating models across markets.
David: Some will have inherently lower ARPA, but lower upfront investment or sac and better churn dynamics.
David: Others may require higher levels of initial spend but may have commensurately higher articles.
David: We have and will continue to evaluate all subscriber options through this filter with the goal to maximize value creation second.
David: Second we are focused on subscriber related revenue that is subscription and advertising revenue as the best measure for the progress we're making in scaling the DTC business.
David: Importantly, given the cadence of Max's rollout over the next 18 months or so in international markets and the launch of our lower priced advertising supported offering in many more markets. We expect to see ARPA trend lower in the near term, reflecting the growth of the Max AD supported footprint from only one market up until this year to now over 45.
David: However, we expect further strong subscriber related revenue growth and EBITDA going forward as well as enhanced retention, the cadence of which will reflect when where and how heavily we invest in subscriber acquisition.
David: Turning now to total company advertising, which declined 7% ex FX during the third quarter.
David: The sequential step down was as expected.
David: And was in large part due to our seasonally slower sports schedule with networks advertising down 13% ex FX.
David: Additionally, while we benefited modestly from the Olympics in Europe are much larger U S business was adversely impacted by the Olympics DTC advertising. However continued to grow at a nice pace up over 50% ex FX behind healthy demand for Max and the U S.
David: Global AD light subscribers grew over 70% year over year with approximately 40% of global gross adds taking the AD like here in Q3.
David: While the international contribution to DTC advertising is still quite small we see opportunity ahead, as we scale the subscriber base and drive monetization.
David: Networks distribution revenue was down 7% ex FX and down 5%, excluding the impact of the AT&T sports nets.
David: Our affiliate renewal pipeline is active and we remain focused on working with our partners across the fluid distribution landscape.
David: The recent charter deal we'd referenced is a great example of both the great value of our content to affiliate partners as much as to consumers.
David: And the greater flexibility in the industry to come up with forward facing new deal structures with the potential to have a meaningful positive impact on the trajectory of our linear and DTC business.
David: We are seeing strong evidence of the great financial benefits of these new deal structures across our international footprint as the long list of our international distribution renewals. This year has shown we have indeed enjoyed net growth in total revenue to Warner brothers discovery across these partnerships as our concessions on the linear side have been.
David: More than offset by strong gains at PTC.
David: Turning to studios performance in the quarter was subpar relative to our internal expectations, notwithstanding the difficult comparisons with Barbie last year.
David: Results were impacted by games for which we took another $100 million plus impairment due to the underperforming releases.
David: Primarily multi versus this quarter, bringing total write downs year to date to over $300 million in our games business.
David: A key factor in this year's studio profit decline.
David: In Q4, we expect games to be flat to modestly better year over year as last year's launch of Heartless legacy on the switch platform in November is offset by lower costs.
David: Film results performed relatively well in the quarter largely driven by Betelgeuse Betelgeuse. So as noted Barbie in the prior year and the bulk of the marketing spending for the Joker fully at or ahead of its October release wait on year over year trends.
David: Despite jokers underperformance, which will indeed weigh on Q4 profitability. We currently forecast the film business to perform more or less in line with Q4 of last year.
David: As a reminder, we had three theatrical releases in the last two weeks of 2023, which we realized hefty marketing spend with a relatively limited amount of revenue.
David: We have only one release remaining in Q4, which is the modestly budgeted Lord of the rings animated movie or if there were zero.
David: One of our CV on the other hand is going from strength to strength.
David: While TV did have a favorable year over year comp against the impact of the strikes last year. The underlying performance remains robust within the marketplace and during some headwinds. We believe we are benefiting from a flight to quality. We expect this momentum to continue in Q4, and TV is expected to be up significantly year over year.
David: All in we expect studio Q4, EBITDA to be up a few hundred million dollars year over year, depending on the timing of certain content licensing deals.
Speaker Change: As David noted, we are committed to improving overall performance and consistency of results with an eye towards reestablishing the studio as an industry leader in the near term. Our film slate is one that I would characterize as more balanced both creatively and financially and we have sharpened our focus on budget discipline and accountability across all processes across.
David: Green lighting marketing production and resource prioritization I expect this will help enhance both top and bottom line results.
David: Further I would like to take a step back and discuss the roll in impact of content licensing for our studio business. As I've mentioned previously we are continuously evaluating how to best monetize our content be it an internal or external platforms.
David: And we make those decisions on a case by case basis and they are informed by an increasing amount of data and intelligence collected across our business units 2024 will be characterized by two factors number one generally relatively low avails for library licensing and number two a significant year over year increase in internal.
David: Licensing to support the rollout and growth of our global DTC product.
David: And those are revenues that get eliminated at the <unk> consolidated level.
David: While these factors have no doubt burden consolidated EBITDA and free cash flow in 2024 in a material way they will clearly benefit our future financial performance.
David: For the former we see a return to more normalized availability levels. Starting next year for the latter we know we have significantly added to our valuable asset base that will pay dividends in top and bottom line performance of our DTC business for years to come.
David: Finally, turning to free cash flow, we generated roughly $630 million in free cash flow the nearly $1 $4 billion year over year decline was largely due to higher net cash content spend as we lapped last year's Q3 strike impact and unfavorable Olympics related working capital dynamic looking to Q4, while we expect enel.
David: Other year over year increase in net cash content spend in Q4 free cash flow should again represent a healthy conversion of EBITDA.
David: Net leverage at the end of Q3 was four two times a slight sequential increase in Directionally in line with expectations, given the seasonality of free cash flow and Olympics related to free cash flow headwinds.
David: In the quarter, we repurchased and repaid nearly $900 million of debt and have about $300 million maturing next week.
David: We continue to expect to delever year over year, albeit much more modestly than initially planned in part due to the studio shortfalls in impairment.
David: And we will continue to use virtually all of our free cash flow to retire debt as we continue to target two five to three times gross leverage for the longer term.
Speaker Change: Lastly, I'd like to finish off where David began and that is to reemphasize. The high degree of focus that we as a management team and the board have been placing on driving shareholder value. We continue to focus on executing our strategy and as part of this examining every angle and possible path to realize the longer term value creation opportunity.
David: We see ahead for one above us discovery.
David: With that David JB, and I will be happy to take your questions.
Speaker Change: The floor is now open for questions. If you have a question or comment at this time. Please press star one on your telephone keypad.
David: If you find that your question has been answered you may remove yourself by pressing star two.
David: Once again to ask a question please press star one.
David: Our first question will come from Steven <unk> with Wells Fargo. Please go ahead.
Speaker Change: Thank you.
Steven <unk>: Gunnar and JV I think you've talked about the opportunity to continue to acquire subs at DTC, if they remain attractive and youre not going to be shy about making those investments and then <unk> also.
Speaker Change: Kind of quality qualitatively upgraded your expectation for DTC EBITDA and its ability to improve in 2025 to I think meaningfully above 1 billion. Now. So can you just talk about how those two things work together it sounds like the investment is accelerating but your EBITDA expectation is also accelerating.
David: Would just love some more color on how we tie all of that and then David Gunnar you've talked about reducing your expense base and you've got a lot of that on this journey. It seems like DTC is kind of through the cuts and back into growth mode.
David: When do you think that studios and networks may sort of get through a period of efficiency and cost reduction to where you are talking more about maybe investments in growth in those businesses again at the bottom line. Thank you.
Speaker Change: Yes, good morning, Steve.
David: Take those two so one.
David: One of the great things about the way the DTC business and our global rollout has.
David: Has it been sequence is that we are enjoying two things at the same time growth from new markets and rollout in new territories, which inevitably lead to investments initially in start up losses, but at the same time.
David: Fitting from the majority of our business and established market. That's why we have been able to get to this combination as David called out in his prepared remarks of sub growth revenue growth and EBITDA growth at the same time, if you double click into there. Obviously there are markets that are very profitable right now and others that are still loss, making but I am.
David: Confident that we will be able to continue executing.
David: With that kind of a profile.
Speaker Change: In terms of your question on the on the expense base.
David: As you heard us both talked about earlier for the studio we got to remember that this is a long cycle business a lot of the changes that we have put in place and while they have been have been as transformational as for example in the DTC space or our networks.
David: It's going to take a little longer for it for the financial impact to become visible in what we are going to continue doing across all of these segments is operate.
David: With a very clear focus and discipline when it comes to making sure that we invest the right amount and that we cut back where we don't see the returns.
David: Just to address.
David: This moment of.
David: Of growth that we're seeing on Max.
David: A meaningful moment for us we spent over two years.
David: Building this platform Max was losing several billion dollars.
David: We have been focused on finding the right mix of content local sport.
David: Collector attainment together with the great content from Max and HBO, making sure that that lineup on Max and HBO is substantial and then finally.
David: Launching it but we didn't launch really until two thirds through the first quarter and so.
David: Content cadence and content strength as we look forward bolstered also by as we rollout internationally. The fact that we've been investing in local content for decades, and a lot of the biggest markets outside the U S and so it's both the combination of the great English language content coming out of the U S as well as local content that we are already invested in.
David: These international markets. The international rollout is a huge than other big driver when just to remember that we are still in just over half of the addressable broadband markets around the world and Thats, excluding markets like China, Russia, and even India very low bar market. So.
David: That's a huge driver and then third.
David: <unk>.
David: We're in active conversations and we have great partnerships with distributors around the world.
David: Our polling for this product and want to be with us and you've seen some of those as we've launched in markets like France.
David: In Spain and Japan.
David: And we're having very good conversations with distributors, who want to help us accelerate the rollout of Max in very profitable, an economically smart way and thats not to mention the drivers that we haven't even yet touch on things like password sharing cracked down still better product experience, where we've gotten better but are not great yet.
David: So we have a lot of growth drivers are still ahead of us.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question will come from David Karnofsky with J P. Morgan. Please go ahead.
David Karnofsky: Hey, Thank you for the questions.
David Karnofsky: Post reaching agreement with charter in September interested to know if you've had discussions on similar structures with other distributors, whether you think that model is applicable elsewhere and just following up on the studio comments you pointed out in the past the gastro slate is one that you've largely inherited from the prior management how should investors view the differences from this point what's notable.
Speaker Change: In terms of the approach the current team has brought thank you.
Speaker Change: Thanks, David look on the studio side.
Speaker Change: We have an industry, leading TV production business that Channing Dungey runs it's quite substantial we have some of the best writers directors.
Speaker Change: And we're seeing that even in a market that's down substantially we're really growing with brands.
Speaker Change: With content that is carried out almost every platform.
David Karnofsky: And generating real economic value.
David Karnofsky: The studio business, it's a long cycle business, we've talked about for a long time.
David Karnofsky: I think we've made real progress in terms of our focus.
David Karnofsky: We're going to see we're going to start to see the lineup from from James and Peter with <unk> there'll be rolling out of the first part of a five to 10 year plan on DC This summer with Superman.
David Karnofsky: And it's quite exciting what they have in store.
David Karnofsky: Because I think DC has a lot of potential and we've been working on that for two years and Mike and Pam.
David Karnofsky: We'll start to see their lineup this year.
David Karnofsky: So this year and next year, we'll start to see the films.
David Karnofsky: We will continue to be incredibly disciplined and focus here, we have taken out billions of dollars out of our reported cost base. Despite operating in a highly inflationary environment for for the past three years and we will continue to work on that we still have some structural measures.
David Karnofsky: That took a little longer to implement.
David Karnofsky: Those are infrastructure measures in broadcast technology and operations measures et cetera, those are still going to flow through over the next year and beyond.
David Karnofsky: So the long term big opportunity on the content side from my perspective is and we've talked about this before that so far it's pretty much a one way street companies supporting DTC with with content as that product scales, and JV and Casey and Gerhard internationally.
David Karnofsky: More and more fresh content for that platform.
David Karnofsky: At some point need to greater library opportunities for the linear business as well, it's a little it's a little more longer term, but there will definitely be opportunities and then on the other hand.
David Karnofsky: Our investing more on sports as you know we lit.
David Karnofsky: <unk>.
David Karnofsky: Our new rights and.
David Karnofsky: High margin business with the largely fixed cost base. So I don't want you to takeaway that we're going to be able to fully offset the pressures that we're expecting on the revenue side, but the.
David Karnofsky: But the economics that we're seeing we have held back as a $1 billion.
David Karnofsky: Of additional content that we could have sold in or that were less than the prior year that you can really see as an investment in our our Max and HBO streaming service to have something.
David Karnofsky: That's right and as I said in my prepared remarks, it's mostly affecting the studio obviously, but.
Speaker Change: David is right I mean this is this is several hundred million dollars.
Speaker Change: Depending on where you normalize.
Speaker Change: Licensing is a revenue stream, but we have had as I said lower availabilities.
David Karnofsky: And we have deliberately.
David Karnofsky: A lot of that internally, which is it.
David Karnofsky: <unk>.
David Karnofsky: Hence the impact on profitability, because we are paying our participants on the basis of internal revenues not the consolidated <unk> revenue number and Youre right that is an investment that we're hoping to get great returns on over the next few years.
David Karnofsky: To see business, but we do have a number of.
David Karnofsky: Every few year products coming up next year that will be.
David Karnofsky: Maybe next year.
David Karnofsky: Essentially all of the coming years are going to be better than what we saw this year.
Speaker Change: Thank you very much.
Speaker Change: Thank you. Our next question will come from Benjamin Swinburne with Morgan Stanley. Please go ahead.
Benjamin Swinburne: Thanks, Good morning.
Speaker Change: Just to maybe finish up that comment as we think about the studio seems like it's poised to a bounce back profit wise next year nicely. So you gave us the write downs on the games are there anymore, maybe in theatrical that you could quantify and just want to confirm you think TV licensing still has healthy growth in <unk> 25 versus 24 after the kind of post strike.
Speaker Change: Snapback and then.
David Karnofsky: David just kind of going back to strategic stuff.
Speaker Change: I think everybody would agree your stock is trading like a company that's.
Speaker Change: That's declining in earnings sort of for the foreseeable future.
Speaker Change: I think some look at your company and so you've got a growth business for growth businesses in the studio and screaming and you have businesses that are declining in networks and so why not separate those so my question to you is you've talked a lot about kind of one discovery of one Warner brothers discoveries since the merger.
Speaker Change: What are the benefits of owning all of these businesses inside of one company and and do you see those as substantial and meaningful and important in sort of a long term investment.
Speaker Change: Opportunity at <unk>.
Speaker Change: Or are you open to changing your mind or thinking about different permutations that might make sense to unlock value.
Speaker Change: Thank you both.
David Karnofsky: Okay.
David Karnofsky: Look.
David Karnofsky: Youre, 100% right about the studio bounce back.
David Karnofsky: It's really.
David Karnofsky: Across the board I do think.
David Karnofsky: As we discussed at length I think the film group is going to see better results, we do think that channel.
David Karnofsky: <unk> business at WPZ WB TV production is going to continue this momentum we have made investments on the tours on retail side franchises in area that we still think is going to have significant opportunity.
David Karnofsky: <unk> to your point is definitely set to recover and content licensing.
David Karnofsky: As we just discussed a minute ago is certainly going to be higher from a from a 2024 starting base. So that's why we have been so confident.
David Karnofsky: Our statement that we're going to see $3 billion and then growth from there now is that all going to materialize in 2025, we will see a lot of those.
David Karnofsky: Decisions will still need to make.
David Karnofsky: Going to depend on on the individual business unit, but I think we have a very sustainable long term growth story had here for this for the studio from here on the one double your BD point, especially when it comes to content. This is an area, where we see the benefits of running this company on an integrated basis every single day, David head of <unk>.
David Karnofsky: His prepared remarks, the Penguin example, and again, we've made a ton of progress we're also still.
David Karnofsky: Still in the early inning. So we are definitely getting getting a return here from running W. BD as one integrated company.
Speaker Change: Okay. Thank you everybody that concludes our formal remarks today and we appreciate you taking the time to join us.
Speaker Change: Thank you once again this does conclude the Warner Brothers Discovery third quarter 2024 earnings Conference call. You may disconnect. Your line at this time and have a wonderful day.
David Karnofsky: [music].
David Karnofsky: Hum.
David Karnofsky: Goodbye.
David Karnofsky: [music].