Q2 2025 Warner Bros Discovery Inc Earnings Call
Ladies and gentlemen, welcome to the Warner Brothers Discovery. Second quarter 2025 earnings conference call.
At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session.
Additionally, please be advised that today's conference call is being recorded.
I would now like to hand the conference over to Mr. Andrew Sabin, Executive Vice President, Global Investor Strategy. You may now begin.
Is Davis, azov, president and chief executive officer gunar of edenfeld Chief Financial Officer and JB, Brett, CEO and president Global streaming and 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, 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.
For additional information on factors that could affect these expectations, please. See the company's filings with the US Securities and Exchange Commission, including but not limited to the company's most recent annual report on form 10K and its reports on form 10 q and form AK.
In addition, we will discuss non-gaap Financial measures on this call. Reconciliations of these non-gaap Financial measures to the closest.
Can be found in our earnings release and in our training schedules, which can be found in the best relations section of our website. And with that, I'm pleased to turn the call over to David.
Good morning, and thank you all for joining us.
Our top strategic objectives have always been clear.
To be the premier home for the world's most creative Talent.
Both in front of and behind the camera.
Operate as the world's largest, highest quality maker and producer of film and television.
And to distribute those stories to audiences worldwide through a globally, scaled profitable streaming service.
In the second quarter and in the early weeks of the third quarter.
Warner Brothers LED with strong momentum in, delivering on all 3 of those objectives.
We're seeing that momentum at Motion Pictures.
Where Warner Brothers became the first Studio, ever to open 5 consecutive films with more than 45 million in domestic box office.
We're seeing that at the Emmys.
Where Warner Brothers TV LED all studios in nominations?
And HBO set a new record with 142 nominations.
We're seeing it in the strong critical and fan response to Superman.
Which begins in exciting New Era for DC Studios. And we're thrilled to share that. James Gunn is already riding and preparing to direct the next installment within the super family.
And we're seeing it at HBO Max.
Which again added more than 3.4 million subscribers in Q2.
As it continues to launch in markets around the world.
This pattern of creative success.
Is the result of a 3 plus year. Attack plan aimed at enhancing every dimension of our creative culture and storytelling business.
From HBO to Warner Brothers television to Warner Brothers, Pictures, and from animation to DC Studios. We've invested in our Studios creative and operational capabilities
As a result, our Studios business is now on track to deliver at least 2.4 billion in adjusted. Evita in 2025.
With our site set on our 3 billion dollar goal.
We have transformed HBO, Max and have our streaming business on track to exceed 1.3 billion in adjusted. Evida in 2025
And reach over 150 million subscribers by the end of 2026.
And from CNN to TNT Sports.
We are bringing Innovation to News sports and unscripted programming as we work to optimize our Global Networks.
All the while with dramatically, deliberate our balance sheet from over 5 times, net Leverage.
To 3.3 times. Now.
The lowest since our merger closed.
As we continue to navigate generational disruption and move forward with splitting into 2 independent publicly traded companies in 2026.
Our current momentum will help position both future organizations. The long-term success with that, we look forward to your questions.
Thank you, ladies and gentlemen. We will now begin the question-and-answer session.
Should you have a question please press star. Followed by 1 on your touchtone phone.
You will hear a prompt that your hand has been raised.
Should you wish to remove your hand from the queue? Please. Press star. Followed by 2.
And the first question comes from Robert Fishman with Moffett Nathanson. Please go ahead.
Good morning. Um, I have 1 question for each Company. Warner Brothers. And Discovery can can you reach to talk about your content licensing, strategies? Um, David you shared in the letter that the 5 billion annual Library revenues from Warner Brothers TV and film.
And balancing that trade-off. So, would you be more open to licensing? The Warner Brothers and HBO content. The third party streamers now, going forward. And then for gooner, um, can you talk about your approach? So, overall content licensing but especially with regards to your sports rights, especially in light of um the potential of sub-licensing these rights to ESPN or other streamers. Thanks so much.
Um, thanks Robert. Uh well, look, 1 of the, the great building blocks of our studio business, is we have the largest TV in motion, picture library in the world and um, that is like a long cycle business that we can look at as a steady stream. Having said that um, we've made a number of judgments including this year where we've opted to sell significantly less than we could into the streaming Market as well as the traditional Market because we're seeing such growth.
And, and, and we're we're driving towards such growth for our studio business which includes our streaming, uh, HBO Max. And so, we think in order to differentiate HBO Max, it's important that there, there are a, a wealth of properties, quality properties. That reinforce you only get this at, uh, at HBO Max and that's working for us, in terms of driving growth. It's working for us as as people more more and more seeing HBO Max as the premier quality service around the world and storytelling. And so, um it's it's really a decision to fight for asset value and growth, rather than near-term value, and we did walk away and I expect that we will continue to because we're seeing very good Trends as we grow around the world. Yeah. Uh, and Robert maybe just to add 1 Point, uh, to what David said. Uh, you know, and, and we, we, we try to shed a little bit of light on this, uh, in in our letter, uh, this quarter as well.
It is important to understand that we have uh a very significantly shifted. The mix between external and internal content sales over over the the past 3 years and that has sort of uh uh put pressure on our near-term financial results. But we have put a 10 digit figure of value. In terms of in our company profits, parked on the balance sheet, that's going to come back into the p&l over the next uh over the next few years. As as JB utilizes this content. Uh and and and Casey utilizes content on the HBO, Max
Platform. So there's we have taken a short-term Financial hit for some, some real value that's going to flow through. And that's a, that's a significant amount. Um, the, um, 1 of the real. Uh, I think advantages of of running Warner as 1 company is HBO, was the premier producer of quality, uh, storytelling and Warner Brothers. Television was the premier producer of TV, uh, series, uh, but they didn't work together. Very much.
We now have Channing and Casey working together. So we innovated with the pit as a procedural. That was, you know, very, very successful for us and that'll be coming back on January 9th after 15 episodes came off. Um, they're working together with J.K. Rowling on Harry Potter, which is extremely promising and is already in production, and we'll be doing 10 consecutive years. So this idea of aligning,
The best, the best TV production, quality production company in the world and, and having some of that best work, not all of it, you know, Ted lasso shrinking Presumed Innocent, if we do a lot of of content for others. But, but more coordination going to HBO Max for a net value and a net positive that will drive sustainable growth at HBO Max. All right, all right, and then Robert for a discovery Global. Um, there were really
Certainly all monetization forms, will play a, uh, a a greater role. And and content licensing is definitely 1 uh 1 factor or 1 tool in the in the Box here. So it is it's going to be a meaningful contribution going forward. Um, as we as we think about, uh, you know, recovering our, our content Investments. I, I will say that, uh, for for the current trends, uh, 2024 was a year where we really started, you know, firing that up, uh, a little bit in 2024, also, had some unusually high content, licensing numbers and that's a factor that I also wanted to call out for the second half here. Uh, you know, we had 580 million dollars of networks content sales in in the second half of 2024. That's above what you know, a more normalized run rate of, you know, roughly 200 million a quarter or so. So that's definitely a a factor uh as as we think about the rest of the year and and and going forward on the sports side. Um again never say never but I I I will say the following uh you know we love the sports portfolio that we have uh Louise and the team.
Have done, great work, uh, restructuring, uh, this over the past 2 years, and we've got a very, very strong portfolio. Uh, you know, all the, the, the key franchises and it's going to be even more important. Uh, as we look at Discovery, Global as a separate uh, Standalone entity. So, uh, we will continue, uh, with a a, uh, a an important Sports strategy. We will continue to be looking at, uh, Investments with with the same discipline that we have in the past. And with that, you know, I think it's unlikely that, uh,
That we will uh sub license uh writes out. Uh, in fact, if you look at what we've done recently with the college football playoffs, you know, the 2 games this year, growing to 5, uh, games next year, we have, uh, if if anything, uh, taken on a little more and then the final thing I'll say is, uh, I don't think there is a, uh, a need to sub license. Um, you know, if, if that's sort of the direction of your question, uh, in fact, Louise, at the team are working hard on on, uh, uh, developing the, the go to market approach, uh, to utilize our streaming rights going forward. And, uh, you know, the the the the broad Strokes are it's going to be a uh a standalone product that we will be able to take direct to the consumer. Uh but also uh bundle, you know, with HBO Max with Discovery plus potentially third parties. Again, all in the spirit of making our content available to as many people as possible. So you know, lots to work through and uh, stay tuned.
Great. Let's go to the next question, please.
Your next question comes from Jessica reif erlick with Bank of America Securities. Please go ahead
2 questions also, um, for David like, you've been developing a lot of and have a lot of franchises. You mentioned Harry Potter. It's now Superman. Can you talk about? What else you see? As, as as future franchises and kind of like
The halo effect that the success can have on the entire organization from theatrical licensing. Streaming games, merchandise, Etc. And then gonna like, now that you're becoming the CEO of global networks. It's a it's a segment that's obviously been challenged. Um from just the secular challenges. Can you talk about what you see is the like underappreciated opportunity for growth in this business?
Hey, thanks. Jessica. Um
No, I I I've said all along that, uh, 1 of the assets that we have at this company is that we have such, uh, so much compelling. Uh, storytelling IP that people know everywhere in the world, whether it's Batman. Superman Wonder Woman, Lord of the Rings. Um, you know, and, and then we'll call those the big, the big 10 polls Harry Potter and then, you know, smaller 10 polls, like The Fugitive Goonies Gremlins that everybody knows. Um, and a, a piece of our strategy is light up uh strategically uh, those big tent poles. So that we have 2 or 3 of those a year, which provide real stability, we got a great script on Lord of the Rings with Peter Jackson that we're already that that we're moving forward on and we'll be giving you more detail on that. Um, we're working very hard on on Wonder Woman. We all, you know, we already have a big piece of the DC uh, strategy laid out but
We effectively have 4 studios.
You that that that have a free moment this weekend, you know? Uh,
it go see weapons and uh, just hold on to your seat because it's uh
It's it's, it's an incredible ride, um, but they're having uh, new line is back in its Lane and we expect to do a number of those a year together with some comedies, which is part of the great heritage of new line and then animation, we have cat and the hat coming in January. Uh, we build the Mankey. Um and so we have a very balanced portfolio. That's much more focused on the economics of each of these and having that and and since our IP is been underused, no Superman and 14 years. No, Lord of the Rings in 13 years you know, that to go back and and to to be able to bring a lot of those franchises back to life and also tell new and original story. So we feel really good about where we are. Um, and when we project this year, for the motion picture group, we're conservative, we understand that the motion picture business, you know, in the end, the audience will decide. Um, we've had a, you know, an extraordinary run
Um, you know, we were, uh, you know, in last place and we came in Mike, and Pam and, and DC and new line together went from last to first, you know, Disney's a little bit ahead right now and we're looking forward to we think what we think will be a good weekend but we're having uh we're really making the turn. It's been 3 years of investment and you're going to start to see these products roll out and you'll see them roll out strategically and with real focus on on on cost. And finally,
We have a big Advantage, I think. In the way that we're marketing these films, you know, we've spent years getting getting them ready. Um, and, uh, we have a real Global attack that you saw with Barbie. You saw with Wonka.
You saw with Superman. Um you saw it with F1 when Apple came to us uniquely and wanted us to take it on. And so I think that we have real momentum there,
Okay. And Jessica on the on the global Network side. Uh, look, this it's, it's a legitimate question, of course, and and the number 1 question. Maybe I have to, uh, tell you the thing that excites me the most, uh, about the, uh, the, the future here is, I will have the privilege to work with, you know, maybe the greatest team I've ever. Uh, I've ever seen in my career, I've known many of, uh, these people for, for years and it's a team that has a track record of of fighting to win. Um, and it's a team that's that's, uh, everywhere in the world. And uh, I've spent a good part of my time over the past 8 weeks, uh, you know, track.
Traveling around and, and, and meeting a lot of the people, the discovery Global footprint. And I I, uh, I can tell you the, the level of excitement, creativity and energy. That's, uh, that's coming through in these meetings is is off the charts and 1, uh, 1 big factor here. Is that people understand that we're building a, uh, a group of assets here that is set up to thrive and, and, and, uh, continue to prosper on a standalone basis. You know, we've already talked about the changes, we're making to the perimeter, all of us Sports coming uh with Discovery, Global Discovery plus moving over. We have uh, Bleacher Report and we have a, an international free day are footprint with very different, uh, secular Trends and what you're seeing, uh, here in the US, so, and the ability to focus on these assets and and nothing else. Uh, you know, is, is exciting. Me and is exciting the team, um, you know, every everywhere and and with everybody of uh, have spoken so far and it it won't mean that we're going to change the uh, secular Trends. But I do I
Do believe that there are, uh, very significant pockets of growth, and, and opportunity. And we'll work really hard over the next half year here to, uh, you know, identify those and and get in position, uh, to to, to deliver what I think is going to be a much, a, a business with much more longevity than what the market, uh, sees right now.
Great. Thanks. Jessica next question, please.
Your next question comes from Michael engh with Goldman Sachs. Please go ahead.
Hi, good morning. Uh, thank you for the question. I just have 2, um, first on, on studio and, and Live Events. Um, I was just wondering, um, given all the Investments that you're making in, in DC and the early success of the, the DC reboot. Um, are you would, would you, are you revisiting, um, what DC is doing in terms of theme parks and and Live Events. I know, uh, there's the, the licensing deal with, uh, 6 Flags, but against the backdrop of something like the success of, uh, you know, Harry Potter our Universal. I was just wondering if there was an opportunity to, um, you know, re re revisit what you're doing with the DVC franchises, uh, in parks and then have a quick follow-up.
app value, um, first, you know, generically, uh, we have a lot of upside, we make about
When when we took over 3 years ago, about 22 cents for every dollar that Disney makes in circulating their IP through the system. We're up to about 30 cents. Now, um, Harry Potter is different where we're extremely effective in, in monetizing that through gaming and, uh, and through a very, um, mutually beneficial deal with universal and the hairy and the Harry Potter, uh, parks that we have. Um, and that was kind of a framework for us to go on the attack. Um, Bruce Campbell's running that business. He's he, you know, we announced he will be the COO of our new business and we think that's a real growth opportunity for us. We've gotten back some of our rights that were given to 6 Flags and freed up DC in a way that we think can be very compelling. Um, a lot of those rights weren't tied up at all outside the US and they're we're we're in different stages of, uh, deploying. Um, those assets. Um,
We're not going to uh, we're not going to build theme parks ourselves, but there are some like Harry Potter those, those are, it's not a theme park. But it's that's a, uh, that's where if you look at Leon or we we, we, we went into Japan. Japan is both of those are sold out for over a year. We're looking at expanding that, um, and some of it will be either a little bit of ownership.
For licensing. We're already doing something like that in Saudi Arabia, which, which is quite lucrative. So the answer is, uh, yes. And there's more than just DC and Harry Potter and you saw it with Superman, the way Bruce, and the team deployed, Superman across all the merchandising elements. Um and it was quite effective and we ended up with a with a lot more economic value.
Right. Thank you, David. That's that's very helpful. Um, and then for for gooner, um, I was just wondering if you could talk about the um, comments in the letter related to the um, HBO Max uh, Us distribution deal. Restructuring. Um, you know, what was the, the nature of that and um, you know what? What drives the the re acceleration. Um, you know, after uh, after the, after the first half of 26, thank you.
Yeah, um, uh Michael. It's it's it's actually as we laid out, uh, in the letter. We had a, uh, a, a legacy deal with, with a former Affiliated party. And you know, it's not unusual once those come up for Renewal that, you know, priorities shift. Uh, and you know, we we've taken a bit of an adjustment, uh, of the rates. And that's what we wanted to call it out. Because it's, it's going to have a meaningful impact on, uh, on on our Revenue growth for for a 12-month period, until we left this deal. But it's also important to note that, you know, we expect a re-execution, uh, not only once we left this deal. But also from the various Market, launches that we have in the pipeline, um, beginning, uh, you know, beginning,
Q1 of 2026. I don't know if they want it to add to that 1 1 quick thing. It it's uh, it it's not Saudi Arabia, its Abu Dhabi. So sorry about that, but go ahead.
I think, in terms of the HBO Max and the streaming profile, it's doing what I said. Um, it it will certainly dampen, uh, the growth rates for the second half of 25 to re acceleration. Drivers are going to be starting in the first half of 25. I mean, the big new international launches coming from Europe. So on a global basis we'll start to see Revenue we accelerate in the first half and really in the first quarter of of 26 and then the US growth where we accelerate starting. Uh, in the second half of 26. As we lap that reset
Great, thank you very much.
Great, next question, please. Thanks, Michael.
Your next question comes from John. Hodulik with UBS. Please go ahead.
All right, thanks. See if I could first. Um, can you talk a little bit about some of the underlying drivers of RP? Who you see some, some more dilution as we move through the year here and, and David, it's just your thoughts around pricing power of the of the max product and then, uh, maybe secondly for for, uh, gooner just, you know, with the NBA law coming up in the fourth quarter, you you call at the impact there. Just any other sort of color you can give us from either a revenue or overall profitability standpoint as as you as you lap. That contract. Thanks.
so, let me just start, um,
And consumers are seeing it. And it's it's it's translating into real demand, um, and and growth. Um, but our strategy hasn't been to try and raise. A lot of price we want to, we want the market to accept the product to recognize it as as high quality. Um, and then first to start to, uh, narrow down the ability for for multiple users, to be using the product. But yes, that when you have the highest quality product in the market with with big branded stories that people want to come back to that, that they feel very passionate about um that gives us what we think is a very big upside over time um to raise price on the highest quality service. But JB why don't you talk a little bit about what you're seeing in the market and how that will lay out? Yeah, I think the, the to add on to it. I think the exciting thing for us is that obviously post, uh, both Co and then the stripes, uh,
I mean, look, we've all taken a little while to get our uh, sea legs back, and more consistent, and the combination of those being through, uh, and a refined and much more rigorous content strategy, that's based on 52 weeks, a year of programming, uh, with a constantly iterating and better data sets to look at what's working and what's not working. Um, we feel as we look ahead at the next 24 months of our slate, you know, 25 as we said and think on, on previous calls the Slate was stronger than 24.
26 looks stronger than 25. And as we look at 27, the early parts of 27, uh, the engine just keeps getting better. Uh, and so, uh, a lot of that to David's point, we want to be smart around, still making the product. We think there's still a lot of upside in terms of the scale and penetration of the product. So we want to keep it affordable, uh, and uh, and grow penetration in in these markets. But at the same time, uh, with the quality of the Slate, uh, the return. Obviously, to HBO Max is a brand and what that stands for from a premium standpoint. We do think there's, uh, obviously meaningful, uh, growth also coming from Price acceleration, uh, over the next couple years.
Right. And then on the, um, on, on the NBA, uh, uh deal. Uh, look, as, as a reminder, obviously, for many of these Sports rides, the, the, the main monetization engine is, is the affiliate Revenue. So, you know, if you look at just, uh, you know, advertising and uh, content cost as a differential, you know, those deals are are loss-making from that perspective, right? So there is going to be a benefit from the NBA coming out of our, uh, financials. Um, you know, if you think about, uh, how how the season, uh, uh, plays typically over the quarters, it's important to note that Q2 with with the playoffs is by far the biggest chunk. Uh, both of uh uh, you know, content costs and uh and revenue generation on the ad at sales side, uh followed by Q uh, q1. And then the smallest quarter is is is Q4
So, with that in mind, and the fact that we have reinvested, some of the savings into other sports rights, we mentioned, uh, uh, called football playoffs already, Big 12 and in the fourth quarter now, um, the what you can expect is, you know, roughly a hundred million dollars Sports cost benefit in in in the fourth quarter. And then as we turn to 2026, there will be a, uh, a net benefit of, of hundreds of millions of dollars from the the, the rights cost coming out. And uh and and some offsetting uh, revenue losses um, uh, from from an Eva perspective. So you know, uh uh very significant Improvement
Thanks John. Let's move up.
Your next question comes from Richard. Greenfield with light shed P Partners. Please go ahead.
Thanks for taking the question. Um, you know, I wanted to ask JB as we look at the streaming landscape. There's been a, a clear push towards wholesaling to MVPs and curious. That is the engagement. Look for those ad, supported Subs, that you're bringing on versus those that sign up for HBO Max directly. And are you thinking about how you Market to those subscribers, who may not even realize, they have Max, because it seems like there's a, a substantial advertising opportunity. If you can engage those, wholesale Subs in the service, and certainly in the app and then just for David 1 of your oldest pieces of Ip that probably doesn't generate a lot of Revenue is going to be getting a pretty big makeover in a few.
Few weeks. I'm curious whether you've seen Wizard of Oz in the sphere and any thoughts would be great.
Um, let me just start with Wizard of Oz. Uh,
Um the the Wizard of Oz, we work together with them, they really get the credit. Um, it's a credit to Warner Brothers and and the library that we have. Um, we're also we're also looking at our own project around, uh, Wizard of Oz, um, that we'll talk about, uh, at some point. But uh, it feels really great. It's very exciting. It's very Innovative. Um, and it premieres at the sphere on the 28th. So very exciting. Uh, JB
Yeah, Richard it relates to the wholesale Partnerships. I guess a couple thoughts. Number 1 is when we look at any of those deals, we always look at it. Um, as on an lcv basis, uh, uh, and sort of a net RP basis when you expect the N National saac, we would do use to try and actually acquire those retail subscribers. And so every deal starts with, uh, a very healthy, uh, LTV profile of a wholesale, some, um, versus what we think we can get and what we have to spend to get on a retail basis. So, that's kind of the underlying, then we do work for your point, uh, increasingly on, uh, partnering, uh, with our, uh, uh, with the different mbds and non mvpd Partners on activation, uh, and we spend more and more time with them with their customer service teams with their ux and experienced teams on activation, uh, of the product. And we have seen great strides and improvements on activation across the board. And frankly, in all of the, some of our biggest, most recent Partnerships will
In the US and outside the US, we are trending above what we expect in terms of activation, um, uh, obviously then once we're activated the engagement, uh, is subject to both in-app, uh, marketing and Merchandising, uh, as well as continued partnership marketing through, uh, through the different partners. And then the other thing that we've seen that has been very healthy and also leads to better. Our crew, uh, is in most, all those deals, we have upsells, uh, capabilities. And so, we go from an ad ad lights, uh, uh, uh, uh, product to an ability that actually upsell the customer where we take the majority of the economics on the upsell to an ad free, which also has an ability to drive more, our food for us. Um, particularly outside the US, um, where ad sales obviously is still a growth business but is all starting off a lower base. So, um, we have a full attack plan. We have a team actually that we put around the world globally to go after, uh, trademarking and Partnerships to try and drive.
Activation and engagement. Uh, and we're seeing nice pickup, and, and growth, and acceleration of those, uh, as we do those deals around the world. The only thing I would add is that it's different in different markets, you know, for instance, in the UK, um, a huge uh,
Majority of programming outside of sports on sky. That was loved was HBO programming. So there's some markets where people have been watching The Last of Us, Euphoria White Lotus House of the dragon and it was on a different platform and now it's going to move to HBO Max.
And so, you'd expect in that case, when you have a huge engaged population, that has been watching through um that that that group um will be spending a lot more time watching. It was seeing that in Australia and then when when, when it's available on a on a platform as HBO, Max
The retail picks up significantly because it's like a marketing vehicle to say, oh HBO Max is here. And so, you know, JB has been seeing that, uh, in Australia. Um, and we're getting very powerful, uh, um, uh, pull through in terms of consumer demand in the UK, Germany and Italy. Um, and uh, we're in a lot of discussions in in, in Italy and Germany, as well as we're non-exclusive in the UK. So you'll be seeing those markets as quite powerful coming into next year because it has that unusual Dynamic of an embedded audience, JB. I don't know if you want to add, you know, what a little more to that on Australia. What we're seeing practically? No, that's right. I mean, you know, Australia the launch was essentially a dual uh uh track launch. But we're going to obviously retail as well as through our partnership uh, with foxel which is
David mentioned our long-standing licensing partner and so, we love that double track of fishing in a pond that's already stocked with our wholesale Partners, um, with good economics. Um, and at the same time going direct, uh, in a smart way to expand, uh, the reach of the product. And, uh, Australia has been a great success story for us, uh, in these early months and we exceeded our expectations. So, uh, we're, it makes us even more bullish of what we expect to see in, in the beginning of next year, as we launch these big European markets,
Your next question comes from David Joyce. With Seaport research Partners, please, go ahead.
Thank you, uh, as you went through your upfront, advertising negotiations. Granted, you still have the combined company for the next year, but how are you contemplating? Uh, addressing, you know, marketers, uh, desire to, you know, advertise across platforms. Uh, do you have, uh, something some structure in place to sell the advertising on streaming and your, uh, Global Networks?
Yes. Uh, David that is it's a great point and that that's 1 of the areas that we looked at uh, really hard as we contemplated the separation and we concluded and we've said publicly, we're going to continue to go to the market as business as usual. Uh, we will have a structure in place, you know, this is 1 of the the areas where there are significant Synergy, we we, when we announced the separation, we made. Clear that you know, after all that hard work went into generating the Synergy, we're going to continue to work as hard uh to maintain uh a Synergy opportunity where it is present at sales is definitely 1 uh, 1 of those areas. So, nothing is going to change from an Advertiser perspective. And we're, you know, working through the process to set that up, uh, internally and with The Upfront in general, uh, since you mentioned it, um, you know, we we obviously had some concerns going into the into the year, with the the macroeconomic and geopolitical uh, environment. And the fact of the matter is, uh, you know, the market has held up, uh, very well. We've seen prices up across all categories. Um, you know, more more so in sports than in, in general entertainment.
Payment, uh, on the digital side. Uh, there is some, some price pressure but, but, uh, you know, we've, uh, We've maintained a very strong, uh, price premium for for the quality of, uh, inventory. That, that we're delivering so, uh, net net. I'm, I'm very happy with the outcome.
Thanks, David next question, please.
Your next question comes from Brian, craft with Deutsche Bank, please go ahead.
Hi, good morning. Um, JP. I was wondering if you would comment on where the business is and and bring insurance down to what you use, you as a healthy, sustainable level. And also um you know how you're going about driving that turn down. And then I guess somewhat related is hoping you could provide an update on where you are on the effort to convert unauthorized account shares into paying customers, you know what, ending would you say? You're you're in there and how meaningful do you see that opportunity as you go forward? Thank you.
Yeah, I'll start with the second, which is on, on the, uh, sort of account sharing. I say we're, uh, just in the first inning. The reality is we've done. We've spent a lot of the last several months making sure that our, uh, our data sets on figuring out, who is a, uh, a legitimate user and who may not be legitimate user and making sure that we test the sufficiently. So that when we turn on the more, uh, uh, aggressive languaging around, what needs to happen that we were actually, uh, you know, putting the net in the right place so to speak. Um, and uh,
And we feel great about where we are starting September. It'll actually start to see the messaging, which right now has been a fairly soft, um, cancellable messaging, um, uh, start to get more, uh, fixed and such that people will have to take action, as opposed to right now sort of having to be a voluntary process. Um, and so, uh, the real benefits will start probably in the fourth quarter and then kick in in 2026. Uh, as we tighten, uh, the message in, uh, and, uh, and drive that in a much more aggressive fashion, uh, starting, uh, in the fourth quarter this year, as it relates to churn.
Look, we we continue to uh, uh Drive churn, uh, I think 1 of the things in, in terms of the levers of how we go after it. There's a number of different ways. First thing, obviously, you've heard David, uh, and uh, and all of us talk with the importance of bundles. Um, we've been very successful obviously, um, and you'll see this more over the next few months. And as we prepare to roll out in Europe, uh, obviously we've had a very successful relationship with Disney here in the US. We're in active conversations with a number of other uh leading streamers uh in international markets around bundles and the profiles of those users. See in some cases you know uh sharing cut in half if not greater and LTV is double or more. Um and so bundles is 1 uh way we've seen great uh uh uh expansion of of LTV and and
Between Casey slate uh, the theatrical slate, um, uh, some third-party Acquisitions. Uh, we have a much more consistent 52 weeks a year schedule, where we're doing much better job of handing off uh, consumers and subscribers to from 1 set of content to other set of content. And so uh, we're doing a much more, uh, aggressive job on managing the programming and scheduling throughout the year to reduce that. And then there's enormous amount of work still to go on the product itself and the personalization of the product. Um, which as I've said on previous calls, we went from not good to, uh, good. But we're still have a ways to go in terms of the feature set, um, and we're developing and launching, you know, small and new features and add testing a bunch of features every month, uh, to try and get to the product from good to great. And we know we still have progress there, which is both obviously a challenge, but also an opportunity uh that will help us drive that engagement. Um and so uh it's a on the over
Overall term. We feel like we are and we actually saw in the early uh the sort of met the March April May June time frame, some really positive improvements uh, on the term side. Um, but we're not satisfied with where we are and we'll continue to attack it aggressively across product content, uh, marketing, um, uh, all the marketing levers that we have.
Thank you. Thank you.
Your final question comes from Peter, subpoena, with Wolf Research. Please go ahead.
Good morning everybody. Uh, wanted to ask you, uh, David pleased about your Better Together view for DTC at this point. It seems like it was prescient as the industry has continued to expand bundling. So could you discuss the contribution to growth ads and maybe to churn of your wholesale or through third-party strategy and contrast that to your retail strategy and and maybe comment on how the partnership was Disney has tracked versus your expectations. Thank you.
Thanks Peter.
Um,
look, I I think 1 of the things that really drives better together,
Uh, is common sense, a more robust bust slate that appeals to um, to more consumers. But most importantly, the consumer experience.
You put the TV set on and, or you put on your device and there's 18 apps. And you're, you're Googling to find out where your show is, the way your sport is or where the movie you want to watch is. Um and in all the research we do it's people have adapted to it but it's a very clumsy consumer experience and 1 of the reasons, we have fought so hard over the last 3 years to be a to, to be a truly Global player. And there's really only, you know, 4 or 5.
Global players right now. Um, truly Global players. Um, Amazon Netflix, uh, um, uh, Disney, um, uh, YouTube. Um, and us
And uh YouTube's in a little is in a different business now, um but they do have a very powerful Global uh attack and um being Global really allows us to take things like Harry Potter to billions of of people around the world and as more and more these Regional players are looking at the cost of building a platform, the engineers, the marketing and also how differentiated in many cases. Um, we are from them and how much stronger we are together. That it's a much better consumer experience. If we're together in in Latin America, with global, we have local content in Brazil. We have local sports but they have a huge amount of local content and we have tremendous quality with content that's loved down there and that's true as you go across Europe. Um, and so, uh, I think a big piece of this will be cleaning up the consumer experience. We really expect or I, at least expect that. We'll look at this business.
And I want to get back to what, you know, a lot of companies want to get back to what they do, which is just produce content, and leave the direct to Consumer fight, you know, to that, that Global fight to others.
So, um, great. Thanks. David.
Thanks Peter.
Operator.
Ladies and gentlemen, this concludes today's conference call. We thank you so much for your participation. You may now disconnect