Summary of Warner Bros. Discovery (WBD) 2025 Conference Call Company Overview - **Company**: Warner Bros. Discovery (WBD) - **Event**: 2025 Conference Call - **Date**: September 03, 2025 Key Points Company Split and Structure - WBD plans to split into two entities: Warner Brothers and Discovery Global, with a target completion in Q2 2026 [2][3][4] - The split is seen as a significant value creation opportunity, with ongoing momentum in business fundamentals [4][5] Financial Performance and Debt Management - Current net debt stands at approximately $30 billion, with expectations to reduce this significantly by year-end [5] - The company has successfully executed a tender offer to aid in deleveraging [5] - Financial guidance includes at least $2.4 billion for the studio and $1.3 billion for streaming for the year [9] Creative and Operational Success - The film division has achieved six successful openings, generating around $40 million each [8] - The studio aims for a target of $3 billion in EBITDA potential, indicating room for further growth beyond this interim goal [15][16] - The management emphasizes a disciplined approach to budgeting and production, leading to cost savings and improved profitability [21][23] Streaming and Content Strategy - HBO Max is expected to achieve a long-term margin potential of over 20%, with a focus on customer lifetime value versus subscriber acquisition cost [29] - The company is exploring various pricing strategies, including wholesale agreements to drive subscriber growth [35] - There is a significant opportunity in advertising, particularly in international markets [44] Future Opportunities and Market Position - The company sees potential in international markets, particularly in Europe, where it has established strong positions [52][64] - WBD is focused on leveraging its valuable content brands beyond traditional linear networks, exploring digital expansion and new monetization strategies [51][52] - The management is optimistic about the DC franchise, viewing it as undervalued with significant potential for growth [24][26] Challenges and Industry Trends - The industry is shifting towards profitability, which is seen as a positive trend for sustainability [27] - There are anticipated increases in sports rights costs, with an expected $300 million increase in 2025 [65] - The company is cautious about potential consolidation in the direct-to-consumer (DTC) space, emphasizing a disciplined approach to any opportunities [39][63] Upcoming Milestones - Key milestones for investors include the completion of the company split and the launch of new streaming products, particularly in the UK, Italy, and Germany [38][70] - The management plans to provide more detailed strategies and financial projections closer to the separation date in Q2 2026 [72] Additional Insights - The management team expresses high energy and excitement about the future, focusing on growth opportunities that were previously overlooked as part of a larger conglomerate [49] - The emphasis on quality over quantity in content production is a core part of the strategy moving forward [42]

Financial Data and Key Metrics Changes - Warner Bros. Discovery reported strong momentum in its financial performance, with the Studios business on track to deliver at least $2.4 billion in adjusted EBITDA in 2025, aiming for a $3 billion goal [8] - The streaming business is projected to exceed $1.3 billion in adjusted EBITDA in 2025, with a target of over 150 million subscribers by 2026 [8][9] - The company has significantly reduced its net leverage from over five times to 3.3 times, the lowest since the merger [9] Business Line Data and Key Metrics Changes - The Motion Pictures segment achieved a milestone by opening five consecutive films with over $45 million in domestic box office [7] - HBO Max added more than 3.4 million subscribers in Q2, continuing its global expansion [8] - Warner Bros. TV led all studios in Emmy nominations, with HBO setting a new record of 142 nominations [7] Market Data and Key Metrics Changes - The company is focusing on optimizing its global networks, including CNN and TNT Sports, to drive innovation in news, sports, and unscripted programming [9] - The U.S. networks portfolio is being reimagined as a content engine around strong unscripted brands, with content licensing expected to play a significant role in monetization [20] Company Strategy and Development Direction - The strategic objectives include being the premier home for creative talent, operating as the largest producer of film and television, and distributing content through a profitable streaming service [6] - The company is investing in its creative and operational capabilities across various segments, including HBO, Warner Bros. television, and DC studios [8] - Warner Bros. Discovery plans to split into two independent publicly traded companies in 2026, positioning both for long-term success [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's creative success and the positive trends in subscriber growth and content quality [8] - The company is focused on enhancing the consumer experience and addressing the challenges in the streaming landscape, including churn reduction and account sharing [88][89] Other Important Information - The company is exploring opportunities in theme parks and live events related to its franchises, with a focus on maximizing the value of its intellectual property [40][44] - The restructuring of the HBO Max U.S. distribution deal is expected to impact revenue growth positively after 2026 [46][49] Q&A Session Summary Question: Can you talk about your content licensing strategies? - Management highlighted the importance of maintaining a strong internal content library while balancing external licensing opportunities to drive growth [13][15] Question: What future franchises do you see as having a halo effect on the organization? - The company is focusing on leveraging its well-known IP, such as Harry Potter and DC characters, to create stability and growth across various revenue streams [27][30] Question: Can you comment on the restructuring of the HBO Max U.S. distribution deal? - The legacy deal adjustments are expected to have a meaningful impact on revenue growth, with a reacceleration anticipated after 2026 [46][49] Question: How are you addressing churn and unauthorized account sharing? - Management indicated that they are in the early stages of addressing account sharing and are implementing strategies to reduce churn through improved content scheduling and bundling [84][88] Question: How does the engagement look for ad-supported subscribers versus direct sign-ups? - The company is focusing on activation and engagement strategies for wholesale subscribers, with positive trends observed in recent partnerships [66][70]

Core Points - Warner Bros. Discovery is splitting into two separate public companies: Streaming & Studios and Global Networks [2][4] - The split is expected to be completed by 2026, following the merger that occurred in 2022 [4] - Streaming & Studios will include HBO Max, Warner Bros. movies, gaming, and DC, while Global Networks will encompass Discovery Plus, CNN, Bleacher Report, and TNT Sports [3] Company Structure - Streaming & Studios will focus on streaming services and studio operations, including the newly renamed HBO Max [3] - Global Networks will manage traditional media assets and networks, including CNN and Discovery Plus [3] Consumer Impact - It remains unclear how the split will affect existing subscribers, particularly regarding content access and potential pricing changes [4][5] - Current services are not expected to undergo major changes immediately, with a focus on shareholder value and new ventures [5]

Core Points - Warner Bros. Discovery is splitting into two separate public companies: Streaming & Studios and Global Networks [2][4] - Streaming & Studios will encompass HBO Max, Warner Bros. movies, gaming, and DC properties, while Global Networks will include Discovery Plus, CNN, Bleacher Report, and TNT Sports [3] - The split is expected to be completed by 2026, following the merger that occurred in 2022 [4] Company Impact - The split may create confusion among streaming customers due to the generic nature of the new company names [2] - There is uncertainty regarding whether the split will affect consumer access to content on existing subscriptions, such as HBO Max [4] - Current services are not anticipated to undergo major changes, with a focus on shareholder value and new ventures rather than customer impact [5]