Warner Bros. Discovery (WBD) 5 May 232023 Q1 Earnings call transcript

Ladies and gentlemen, welcome to the Warner Bros. Discovery, Inc.

First Quarter 2023 Earnings Conference Call. [Operator Instructions] Additionally, please be advised that today’s conference call is being recorded. I would like to hand the conference over to Mr. President, Strategy. Vice Executive Slabin, Global Investor Andrew Sir, now begin. you may

Gunnar welcome Good David Discovery’s CEO; and and Games. to Global QX and and Perrette, Zaslav, our CEO JB earnings and is Bros. Streaming today Warner morning President, CFO; me call. President Wiedenfels, With

The conference performance. the Act make Before In the pursuant I’d These today’s Safe involve remind them. statements Private and risks forward-looking based projections Reform statements, include forward-looking forward-looking providing materially actual Harbor you disclaims to management’s and assumptions that start, uncertainties will regarding XXXX. current and statements differ could future cause and intent of Securities comments to of Litigation update plans, we business other statements knowledge to are that financial company or provisions the made obligation and results like call the include that we company’s events expectations. about any our future to on from prospects

information including, For report Commission see the Exchange and on expectations, to annual company’s U.S. Securities most filings please affect the the recent company’s these not with additional limited but that could factors and Form slide on QX reports on its Form X-K. at ir.wbd.com. and on website our our and copy A deck of earnings XX-Q schedule XX-K trending available release Form accompanying is

to And pleased turn David. over with am call I that, the to

and for you joining thank everyone Hello, us.

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the call to and I turn With David, and back like will your take I’d questions. to that, JB operator, the

Thank Please of you. ahead. the comes Mitchelson Your Suisse. Instructions] [Operator from Doug Credit first line question go with

how taking you I ultimate choosing lineup, for and actively I’m to or Max, to much Max should of or most coming cash terms I investors you strong Thanks the your relaunch define it? in and whether prepared and remarks, investor Max’s about think think flow what success obviously, lot think And is in gives I sheet targets And of of the the with the Gunnar, need what’s engagement, for news the statements launch in rebuild you guess so the balance David, the build sheet think as in much. JB, David question. what profitability, sports for include you some a a confidence just of expect in I focus Max curious it’s confidence, of you to so discussion free the of just quarters? year back-end it’s your is the over define subscribers, whether level so Thanks mentioned weighted? to generation that. general it’s next brand of couple and being that and would and whether want years how here. made there on interesting, question balance the that lot especially but trying

Doug. Thanks,

business, profitability. different and excited with focused the XXrd. we we what the it. We’ve very starts corner will strong streaming think hard, We had a and on we’re our turned view about So business. very a independent it be it on built we’ve of Look,

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Yes.

Doug, just on add I think, David. to to

that come. getting awareness. everybody will new think And family. Number and is who that be brand engagement. now in successfully has different three, fourth something proposition other migrated a be that three near-term, with the a building satisfaction. proposition, Obviously, The for the two, Number for are broader on customers a very there would metrics we’re success the customer in is sort brand Max then to one three over of I over time, migration a metric, today Max key Max. HBO will

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at success. look the we So that those are ways will

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Thank you all.

of with comes ahead. Your go Fishman next MoffettNathanson. from Please line question Robert the

for and one Gunner. one have I morning. J.B. David good Hi, for or

expand content strategy your you discussed? pressure I of if you mentioned you First, and dragged the your those balance the trends? deals in of outside the David, the to licensing when maybe launch year? how Max remarks on the Warner you wholesale And throughout overall And with U.S., prepared on retail internationally, for those Thank then share some and can you deals you can anything ambitions continue licensing you. the in do whether and benefits that your scale financial noticed Gunnar, Bros. DTC the and down DTC, HBO library revenue choose versus just revenues, about wholesale DTC J.B. to should markets? and wholesale

Thanks, Robert.

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the it as to just so the for makes And table in us as perfect much sense money take off meantime, possible.

so And that’s the thinking.

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to in more our So launch, can of ready back the we’re deals, those content assume markets we’re when immediately. actually launch end of to we we get we – if at going those

with your in the pointed isn’t growth mind. revenue right wholesale content I side ad greatest market Robert, two the and of the a remarks, is now. also as we things had on would prepared QX one, digital sales And revenues. the Number in add an overlay out bit keep question, to the only on obviously, the thing

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to Needless business. be expect to say, a the growing we total

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to the We will half for growth But definitely many out. of see come. revenue the how those looking year in we’re for second years and wash

Great.

question. Next

with Fargo. Cahall ahead. Wells from Please the comes question go next Steven of Your line

ahead. morning. Hi, first, David good DTC Maybe are J.B., profits that and tracking on

Is think revenue? cost David, And Just performing the know more I’m you’re just launch into subscribers think, but were implies guidance for early but the different expectations morning, profits. talking that’s about year, kind is wondering you’re billion. HBO CNBC still be macro Max those if new it about incremental seeing still the like on which then, of But comments, bullish From $XX I curious sounds so you there. of domestically, ahead your I a the there? the trends the seeing U.S. DTC curious what’s what folks it And adjusted seeing kind know low, the engage the it it and it’s I just on Gunnar, with genres? with EBITDA Is the you’re of I your subscribers, you’re legacy this might little if reduction? content, tough, hope, you Discovery

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great is few markets. the on a much well And price had as the rises seen in as obviously American ARPU we retention the those news as well increases markets. better reality second Latin better we’ve is The in is reaction there of U.S. the and much

in seen And time, so talked Gunnar we’ve in our across over board of been And the obviously, seen that the we’ve scaling, but been about. a then some scaling. – that’s positive. efficiencies We’ve items some in measured

that’s great. so And been

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to feel Discovery+ we positive outside reception means. what content. content cross-pollinated reaction of great so Max the we’ve that And consumers And very U.S., and from similar seen the about as trends of we’ve HBO

very with it full when when we we throttle So optimistic. together, go feel comes Max

we if DXC guidance around developing. the Steve, outlook longer-term gave just ago add see here, perspective we of year again, a this how I the from thing business can one

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full going a important hitting year be period, to So this and needless the full this to breakeven super actually say, ahead. happening U.S. but is profitability year, for year the with

the are the have of the before, we But many markets, of learning as product got the said on earlier for are in XXXX we we earlier, launching markets to are obviously the $X is business in maturity and international remember, and basis guidance Now billion-plus in we business, the we I losing that’s the as that as market. that we for money have curve the will said going are combined internationally in and entire what continue. we once update as

Great. Thank you.

ahead. go with question comes Supino from Please next Wolfe Research. Your line of the Peter

Hi. Good thank morning you. and

last free of cash a subject one-time of produced XX months, for the company to of the adjusted one-time charges, On the had billion adding free cash, mentioned flow, charges over underlying. X-plus that $X X-plus that of you little the

billion, guidance will that seems add puts the would if today, you ‘XX, easy within to expectation is your significant in has to your just idea synergies like contribute which is be I in than EBITDA I cash will is upside laid your or If you And am wondering that flow ‘XX, that better takes it free $X $X the to range. an billion any specifically, the DTC billion that out. Thank incremental described expected $X analysis. you. previously math path

that laid in – the Peter, wouldn’t as characterize easy. the anything high But environment, very confidence out. again, range very, I current I we in have I

in confidence synergies. We generate these ability to the have

XX-month on right are work. lot it’s number, You trailing but a of the

it our to upgrade from there. we flow guidance. We of don’t cash and have take to will sight, line an I this want take you

were market We that to facing was among – the we starting think first were say to I the advertising challenging. – was the be

advertising been have is we an when to pretty how in it’s turn and market can’t, careful you so to projecting going turn. And because going

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question. Next

Bank. Please Kraft line the Bryan next of Your Deutsche from with go question ahead. comes

I marketing wanted much and and first millions less there today? of of I could Xbox PSX also, I how just and is Because billion. ask through strong have next, perspective say, lot the think to-date, obviously – running available wanted lift to-date. Hi. look you become Can quarter sales which amortization for margin expect of to sales Hogwarts in a be of been assume Good a Legacy. that I the extremely Sales to about morning. versions, And you dollars would of would the you to relative about how you One second $X a Maybe ask get? sales what talk from ex-hundreds beyond. relative to would that

think about as you wanted that we Thank So, studio for to the about profitability I just going forward. ask you.

Brian. Thanks

to studios business, have are we may you to Because it But real But with that for game develop IP that that’s all Universe, as a the only that piece the good Thrones, XX cases, of us And And we a decide talented to may developing it. real belongs the different us think company. for Legacy, big very go DC In game a look Potter, strategically Hogwarts that’s with our own, and media us, own IP. company and We particularly gaming differentiator is is of if we deploy. success it’s we that third-party content Game the Harry I the we it. whether be a capability. owns, some company into important. technology you of the at

you are that a go that game concept. into of you player, kind you and If are world, that’s new a in

it the look the quite be be are amount universe. as Superman the – was business out or something anyone’s that going think was what don’t game, develops But want to we And as Tweener, game now really technology it’s a next ahead. people But – launched that it and profitable going years difficult important we in of figure and worlds, is. the gaming, years with worlds, story of be long-form a picture motion the it storytelling. story this in more have those and I there And really motion the to we we is for own long-form all the is then it somebody then that movie. because I for may that to of spend I out more fact and we – in very metaverse product as be is in now, world when definition – launch or in Max think people on and picture that a is whether our there to spend out don’t gaming Before to and was belongs else the we couple on Superman is which HBO, people those business time just us. given of economics time hanging in and have and a storytelling hanging And

Brian, the Hogwarts And the going in a consoles obviously, you important. back out, we than are to those right, that are smaller the generation Gen February. Legacy, obviously, base release much today is I released that’s X say, would current consoles

of the whole, So, it’s but smaller obviously portion important. much a nonetheless

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see next over months. the of kind we rollout that’s So, the how few

And going to materially. is change the profile, margin Brian, not

points a retail Obviously, gross bit We little so perspective, marketing. lower, material margin change. will no but on price headwind, little are be from a a lighter a little a of

Thanks very much. Appreciate it.

Jessica comes question go ahead. Reif of next of from line with the Bank Ehrlich Your Securities. Please America

questions. Two Thanks.

operating you the timing maybe on about the think existing see is and done, if opportunity? the David, touch focus the businesses, and back integration, the is on restructuring where where building can the So you beyond heavy and your And lifting you – now business. step do last most you year,

sure I of the your you deeper. but a plan. games, mentioned is on about FAST, driving bigger business touched you past, ahead are you you talking mentioned there animation, You franchises In in hired just am have animation.

a that’s huge driver and So – Universal. for

secondly, then there So, that. about And can something Max. sports, you players contract maybe kind alluded ways so to the it’s and round? it the what you ensure touch slice – don’t you that ways the more to could a to do if coming the maybe And say is of on think among next am to I anything if the slice I various maybe is know on you timing and there in profitable dice rates you NBA, – missing. are

opportunity. still falls businesses year. which – and have a next got well. aren’t Yes, at new turns we Bros. lot back the And be built closets have and structured but every of exactly a when this you Jessica, level this two of worst future today. layers. chance doing years should had business there out, was opening is we what lot if are And reset still terms and of through that up – – look very leadership each some have is XXX, what it how benefits be in the company stuff some good the team, Very Warner in looking look flowing at think more we for are – right, to come will we finding took thing, the out. the for still we by that they a are of we have of the We was Warner and – at on Bros., you year out turned best saying sustainable this we business, really should the just difficult. difficult We growth I

And we so we on think the turned corner have that.

a for to DC, James, company. in very very big on working We place is and going Peter be We strong a Gunn team have leadership very now. this driver growth got got hard which

on is And And prove And is is a and – better. it’s to bullish he us Gunn so out some on I we for Superman coming draft really got are from moment it done, more for globally the up that We growth. Mission DC, think the on got good how script are strong what movies God. very is sustainable DC. we first long-term

working hard movies, We and Barbie strong. before investing. and said good And movie very on them We have with two time. June enhancing have and we very Flash, no fixing been them its X,

slate difference. make think coming up a I And big now, so the that will

a animation, done market a Continuing animation The We at that share. much terms on this studios haven’t lot not making productive in business – if we take build have have in lost it’s of critical Max, of three it’s Tunes. – of with turn in and of of to company. is in of we growth. It’s terms Hanna-Barbera, not and a productive important. production you flow. cash own We don’t the – we lot Looney animation money productive terms in look picture at and have a It’s terms not free motion

And a have really so leader. driving strong and that, now we

it’s in a leadership the challenge. very wet place. This is was Our raining and with we team Formula track One environment, are dealing difficult and is a and it’s and

have racecar here, We every team leadership got in drivers case. a of

now. of And and just is Pam in the company the games this important this is on. lot maybe And diversity And the the we we have to. most a to that we what’s restructured attention have predict got Bros. hard go great of pay people to confidence going side. assets. really think that on lot portion have fact started, is which Mike so something Warner of getting business It’s a didn’t I But

We are tight. really

right at continuing of figure we do now, really in things as more And But you storytelling. this to the start challenged. can’t challenged, company. tight are in when, are they productivity environment predict it’s we do. are challenged, see quick pick and to exactly and so and That’s We to areas – will, is invest out turn up, how going we we drive different all very a sort can we

drive acceleration. improve business, tight love with world, less brands will end be Xx a we of you towards strong then year, sudden, of – that command levered an with cost can this people this structure, and very to idea the all around than with bit, the see So, control a little a things and and that

yes. NBA,

with Nick doing a for just team with Shack, that the time Look, we on, days saw I setting programming are ago we game. the at NBA. Adam terrific were the and we have I look When waiting Barclay Go and that Nicks. the the are Wow, putting records and And at NBA. long you – job at Ernie two NBA. one. been Garden. night The Big a

We records are hockey. setting with

just Madness, March football to We is able where also was couldn’t happening to up March long-term our marketplace we you we for promote sports that And hockey, XX% the have but to the is And of soft, the just do in sport, economics Jassy. us, Champions NBA. time. could industry. of well. that’s they we between The used well that able rest And true them. because Andy strong We playoffs, Eurosport so the Madness, and as the – of for got baseball the with it take for that ‘XX. quite market deals deal We did the a We with less League more the UK XX% have soccer of business. are Amazon long And we games. a advantage got also and to be the like able relatively that was to enough very And did the BT than were ways content be but ended promote games to us. lots We coming very us. favorable sports the favorable the think re-conjugated. favorable produce that the advantage take deals But help was where with in deal difficult. There of very quite piggyback weren’t in up of It with business, are halo. we of strong, that we to I

balance like so we That’s is great cash company, flow. long-term sheet, strong a get that of company any free have of the hard to disciplined. ways And going very to NBA. we not of drive jeopardize be the build We very real We and nature we to this sustainable IP. but for real hope are there, going to re-conjugate provide to can profitability, and are work piece there this growth it. We lots to to

lot super through to mindset strategic, add systems, for more important, arguments, many is a A would content. $XX one the nonetheless, the of of – siloed of point less that that, spending through are processes. that’s Jessica. in And still still I imperfect I very cases, think business operational unit-oriented. that billion we sake like slightly is And goes our still

we talked no financially. it So, are looking the discontinued a doubt But at Bros. stuff make that the innings content. of I as about early one in sense very Warner have lot we this didn’t we Discovery because

I well. think the opposite as is true

so. passed place company the also some very, and wasn’t budget our interesting or in think on investment I just very and company attractive – because opportunities

to going All of is that change.

will capital teams fragmented. of day-to-day a company. that were better and much allocating those better much as centralized just of get get will in operational in And cash. that those the all We management processes we We spending harmonized

So, our looking growing improve, billion, is ROI in that. set at and $XX the to hopefully on next over years, capital, full ballpark that, of conviction the the in I have few

our campaign, talk bear now. a of marketing That one platforms is the are really focused. to in we we wasn’t mind things about using we happening hyper When in are –

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the are we HBO on promote our are we yes, so a ability are deploying savings. for one and company, it. and campaigns own we and big platforms savings a But are bigger. the So, – to is us big internationally, It’s

Great.

the Let’s go to last question, please.

go question Truist Thornton Your comes line Please ahead. Securities. of from Matthew with the last

how later thoughts you taking and there for any Max, Could to of just managing I migration on a thinking any couple Hey. from how you app you friction one month, just everyone. on potential the Latest question. go if about in update the that. Good folks terms friction could. next? are are Thanks as us this morning Maybe

talked here, and top then about just Any that also HBO how those that about you color funnel, of incremental Max, users I great point Any think Max, much. help about And attacking help those FAST well. there thoughts don’t and Thanks to have around deep service? but FAST prior any question, how library? this Secondly, monetize here updated drive Max just a the are one, help was advertising, around on would to Discovery+ to as just of the trying overlap final higher price there? – the a what you more up-sell think be drive mentioned color so

Yes. Thanks Matthew.

remember, first, Just things. of the on a the point been process. no has change is, one in couple there billing migration Number

So, there revenue, it as it to is to and relates change there relates billings. is no no migration as

revenue new do where nothing, absolutely need downloaded at will as the exactly you event, whether use convert. “migrated”, billing will is, accepted the new there of same is we accepted they app will have or irrespective that if app running. actually a So, and off app be Number to two the has said somebody terms i.e., and the continues XXth April automatically we portion to. again, streaming of And to large and the base you of the will be have upon the

video For seamless base it input be to of as the not to again to get – to done including we clicks to that the has – basically everything we as the to your portion actually possible, have make two having can download streaming content. re-download, the

migrated. be need be your have password watch your – history will You user to your no migrated, name, list. All will

as possible. And so try to make we everything

you terms subscriber it’s fairly limited migration. in Now, of the some But processes, to going the inevitably friction. to we these think risk find in are associated

feel we into very going so it. good And

it. tested We have

then the on the to Discovery+. ready side the are for We all And switching migration. flip is

subs them the try subscriber we that largely will the going and doing to it. too there. maintain about to continue going that marketing are Discovery+ that get is of said, some face profitable as At sample if we and the U.S., million in there initially but the end them over can to But two we will efforts, through we it environment in day, internationally of time, stay we the if As flip we But see do and Gunnar can see people and we of in services. come itself is X their that about it. want we obviously, between well are serve business to again, everything overlap and that’s And to those they as by prefer, not be to are the up-sell is be said side not subscribed.

will have on time we for We be sample see offers incentivize at we it can period that in economics. Oh, successful upgrading them. some to FAST. will of favorable them And how

gotten So, strategy, have call, and which a we and of who the and we channel distributors always ultimately, size, we Tubi. advertising the were and which we a audience that And foremost, on syndication, out have channel is with a call platforms want And hybrid in already initial out what a of handful viewed. our it’s FAST, there, there very Roku the with been and we have get we small, an very there first look, aggregation and kind is out believe the realize success that what many we ultimately, since – there out and are to scale pleased the channels with already. portfolio but business,

content. operated can see increase third, And for look we volume, then operated at to point, to to WB if and we point some second, We this an see your continuing to explore environment. platform to for a time, owned certain strategy. that fourth we will continue monetization windows brand are in exist in And and the for longer owned this and TV do opportunity term,

with want sufficient. we that some this business then channels of make right But come over and time, syndicated time strategy service. time, continue I the state market will right we think when at demand our the we be the dovetailed at to launch advertising the is at will point, to sure own the And to initially. of execute hybrid

Great.

you much that’s it. And you very will Thank I with speak for we soon. think joining.

call. conference today’s concludes this gentlemen, and Ladies

may disconnect You your lines. now