Ladies and gentlemen, thank you for standing by and welcome to the Discovery, Inc. fourth quarter and full year 2020 earnings conference call. At this time, all participants' lines are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and then one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star and then zero. I would now like to hand the conference over to your speaker today, Mr. Andrew Slabin, Executive Vice President, Global Investor Strategy. Sir, you may begin. Good morning, everyone. Thank you for joining us for Discovery's Q4 earnings call. Joining me today are David Zaslav, President and Chief Executive Officer, Gunnar Wiedenfels, Chief Financial Officer, and JB Perrette, President and CEO of Discovery Networks International. You should have received our earnings release, but if not, feel free to access it on our website at www.corporate.discovery.com. On today's call, we will begin with some opening comments from David and Gunnar, and then we will open the call to take questions. Before we start, I'd like to remind you that comments today regarding the company's future business plans, prospects, and financial performance are forward-looking statements that we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are made based on management's current knowledge and assumptions about future events, and they involve risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, the company disclaims any intent or obligation to update them. For additional information on important factors that could affect these expectations, please see our Form 10-K and our subsequent filings made with the U.S. Securities and Exchange Commission. With that, I'd like to turn the call over to David. Good morning, I hope everyone is having a great start to 2021. We thank you all for joining us here today. This is a dynamic time for Discovery. The past year has been one of change, challenge, and opportunity, during which we've shown incredible resilience, creativity, and focus as one global team. From navigating the pandemic to generating meaningful momentum towards our strategic pivot, Discovery has responded with drive and determination. This is also a unique time for us because as we are working hard to solidify our core linear business, in which we continue to meaningfully outperform, we are repositioning the company against a massive new opportunity in streaming, where we already see very positive signals and signs that, taken together with the durability of our core business, will nicely position the company for sustainable long-term growth. Sustainable long-term growth. That is our mission, and we are laser-focused on delivering. We finished 2020 with strong operating momentum and great command and control across our global businesses, delivering top-line improvements across virtually every key operating metric since the pandemic hit while maintaining strong discipline over our expenses without sacrificing quality or missing a beat in our creative execution. We were even able to return nearly $1 billion of capital to shareholders in equity buybacks. We learned a lot as we managed through 2020, and our tenacity and agility, which is truly at the heart of Discovery, took center stage. The impact of our content, either as measured in terms of global share growth or simply in the way people sought us out for comfort and nourishment during a difficult time, became more relevant and more of the moment like never before. We encouraged our talent to bring us into their kitchens, gardens, living rooms with iPhones and GoPros, and it was a game changer. When most of our peers showed older repeats, we became closer to real and more authentic on air, and that provided a great boost of adrenaline across the company and our talent partners and refined our IP all around the globe. I'm even more excited about 2021 and the meaningful progress we are making in our strategic pivot, while at the same time working hard to support our core linear networks business and reinforcing its importance as a critical part of our total consumer offering. Discovery+ is off to a fantastic start, and we couldn't be more encouraged by all the early metrics. After seven weeks since launching here in the U.S., we have over 11 million paying direct-to-consumer subscribers across our entire portfolio, we will hit 12 million by the end of this month of February, an increase of 7 million net adds as compared to 5 million subs we reported in December. The vast majority of this increase is attributable to Discovery+ and substantially more than half of the 7 million adds are paying Discovery+ subscribers in the U.S. We are really just getting started internationally. This comes without adding any new markets other than our previous Dplay markets that we rebranded to Discovery+. For example, we relaunched Italy just a few weeks ago and the U.K. in Q4 2020, both of which are off to a strong start. Given our ownership and control of all of our content, our increasingly relevant content, expect us to light up markets globally over the next 18 months or so. In many key markets, we intend to partner with key distributors such as we did with Vodafone and Sky. These discussions are active and going very well. Our existing momentum is helping facilitate these conversations as distributors remain keen to provide incremental value to their subscribers as a means of leveraging their pipe and de-commoditizing their offering. In both regards, we are a fantastic partner. We bring strong global and local IP at really superior value. We are by far the best value to consumers and distributors in a global SVOD service in the marketplace, helped by our financial model and the fact that we own all of our global IP. The rollout of the Discovery+ platform has been nearly flawless, without any technological disruptions or outages. The Discovery+ product launched with all major platforms and devices, Roku, Fire, Android, Apple, Samsung. There's more to come. We came to market with an ambitious slate of over 1,000 original hours over the coming year. Stay tuned for further delivery partnerships, such as partnerships with cable operators and other connected TV platforms, all of which move us further along as our goal to be among the most widely available platforms to consumers everywhere on the globe, with easy access to consumers in every language. Importantly, consumers love the Discovery+ product. It shows with all key operating metrics pointing in the right direction. We're seeing very high consumer engagement and high video starts. An incredible 93% of our entire 55,000-episode library has been watched, indicating a very healthy long tail of content that has immense value to consumers now that we've made it available. We're also seeing high retention over the first 60 days, as well as strong monetization that is already translating into incremental value. Gunnar will provide some additional details and financial context. In short, stronger operating performance across the board is contributing to a better-than-expected financial profile and accelerating next-gen revenue growth in Q1 and thereafter. Very healthy roll to pay and initial signs of lower churn than we initially modeled will drive accelerating sequential domestic affiliate fee growth. Even over Q4's impressive 5% growth rate as we begin to layer Discovery+ on top of our core base, resulting in at least high single, if not double-digit affiliate growth in the following quarter. We now have over 100 advertisers and brands on the platform in the U.S. We expect to double that by the end of Q2. Our team is working hard at implementing our feature-rich product roadmap. We are now offering contextual keyword targeting. Interactive ads will roll out by the end of Q1 with pause and binge ads scheduled for Q2. As the subscriber base further scales, the benefits of combining the intelligence and data mining capabilities on our end together with advertiser first-party data will represent a significant opportunity for us and our advertising partners. We are already an industry leader when it comes to time spent with our linear portfolio. Yet watch time on Discovery+ in the U.S. is nearly twice that. This naturally has been extremely well-received by our advertising and brand partners, which coupled with initial signs that Discovery+ extends effective reach to non-pay TV viewers gives us even more conviction and confidence in the long-term ARPU trajectory. In fact, our ad- lite ARPU in the U.S. is already above linear. We are just getting started. As we scale and usage continues, we are confident our ARPU will grow meaningfully. Internationally, JB and our product and engineering teams are hard at work transitioning our former Dplay and Eurosport Player platforms to our new Discovery+ global product in time for the Tokyo Olympics and the Beijing Games not long thereafter. Discovery+ will be the streaming home of the games in Europe with access to every minute, every medal, and every hero, live and on demand. Having this product integration completed will enable us to then execute more of our ambitious international expansion plan in the back half of the year, as I previously noted. Taken together, Discovery+ has successfully launched as a truly differentiated product with a fantastic consumer experience, best-in-class product reviews, and terrific word of mouth, which is ultimately the most effective form of marketing. We are being educated every day on what's working and what's not, and are responding rapidly to iterate and experiment. We are utilizing all of our levers to effectively and efficiently acquire and retain subscribers, including a growing list of global partnerships with many of the world's leading distributors, an exciting pipeline of originals that we believe will surprise and delight consumers, and a brand campaign that is unrivaled in our history. The team is doing a lot right, and we are seeing the payoff in subscriber additions and engagement, for which we believe there is no better use of our capital and resources than to continue to support these efforts as a means to drive shareholder value. With the very healthy metrics we've seen thus far, scaling our Discovery+ subscriber base as quickly as possible is the best use of our free cash flow as we eye sustainable long-term financial growth for the overall Discovery company. Our first and foremost priority has always been, and will always be, to reinvest in our business to drive organic growth. Our powerful launch serves as a strong confirmation of what we have been hard at work building over the last many years, and that which the acquisition of Scripps helped to accelerate. We have spent years amassing and cultivating the most popular real-life entertainment content, brands, and personalities, all with a focus on nurturing and delighting our fans across multiple video ecosystems: pay, free, and streaming. It's having a real impact and an impact we expect will continue to grow. Investing in high-quality premium programming across the entirety of our platforms has always been our North Star. In fact, at a time when many of our peers are taking their foot off the gas, we expect to increase our spend on fresh content to support our linear networks this year. This further reinforces our strong value proposition to our distribution partners. Indeed, we believe the basic pay TV bundle is integral and relevant and offers an incredible value proposition to an important and large segment of consumers. Discovery is a true global IP company in every sense of the word, one of the very few true global IP companies. Growing our vault of great stories and series has laid the groundwork for the critical next steps we are taking, evolving from a pay TV and free to air company into a scaling global streaming player. Discovery's mission is to play hard in traditional free to air and cable with fantastic margins and free cash flow, and play harder in direct to consumer while we are uniquely positioned to achieve long-term sustainable growth. With that, let me now turn it over to Gunnar. Thank you, David, and good morning, everyone. Echoing David's comments, 2020 was indeed a year that presented its fair share of challenges. Likewise, it stress-tested our company in unprecedented ways. Looking back, I'm extraordinarily proud of both how our team reacted to such disruption, as well as how we proactively leaned forward into our strategic pivot. I do believe we accomplished a tremendous amount in 2020, operationally, financially, managerially, and strategically. It set us up for a great start to 2021 and beyond, which I will discuss in more detail shortly. First, to briefly recap Q4, a very solid set of results across the board. Starting with U.S. networks, advertising revenues were consistent with the prior year, supported by an ad market that continued to show signs of recovery, as well as a general tightening of the marketplace due to political spend. Following a generally advantageous upfront market, we saw extremely healthy scatter CPMs up in the high 20% range versus upfront and up high single digits year-over-year. That trend has continued into the first quarter with scatter CPMs up around 40% versus upfront and up mid-teens year-over-year. While on balance, demand has returned in most categories to year-ago levels, a number of verticals such as travel, movie studios, and restaurant chains still remain challenged. U.S. distribution revenues increased a very solid 5% year-over-year during the fourth quarter as pricing more than offset subscriber declines, supporting a nice acceleration from Q3. We benefited from a combination of a slower pace of subscriber declines, the impact from recent renewals, and our continued strength across virtual MVPDs. Subscribers to our core fully distributed networks declined by 3%, while our total portfolio subscribers declined by 5%. Now turning to the international networks for the fourth quarter, which I will discuss on a constant currency basis. Advertising revenues decreased 1% year-over-year, led primarily by continuing sequential improvements across many of our key markets. Some, like the U.K., Germany, Poland, and certain APAC countries, finished the fourth quarter with positive growth. While other markets, such as across Latin America, are still exhibiting COVID-related weakness. Distribution revenues decreased 4% year-over-year. We continue to see modest subscriber churn from more economically challenged countries in Latin America. Furthermore, COVID-related disruption in the sports schedule throughout 2020 continued to impact our Eurosport performance in the fourth quarter, as well as continued headwinds in overall pricing, primarily in EMEA. Total operating expenses were up 5% during the quarter. Cost of revenues were up 6%, largely due to the condensing of the sports schedule into the back half of the year, and continued ramp and content investments to support our next generation initiatives. SG&A increased 3% as we invested in marketing and branding promotion ahead of the launch of Discovery+, as well as personnel and technology spending to support our initiatives. As we guided, we finished 2020 with total operating expenses flat year-over-year ex- FX, as we reallocated spend and we continued to target a low to mid-single-digit percentage reduction in our core linear businesses as we support our next gen endeavors. Turning to free cash flow. We finished 2020 with over $2.3 billion in free cash flow, a 56% AOIBDA to free cash flow conversion rate. A great finish considering the volatility and headwinds we faced this past year, and still do to an extent from disruptions related to COVID, while at the same time having absorbed a meaningful step-up in D2C investments. As we guided to at our December investor day, we continue to expect to convert at least 50% of our AOIBDA to free cash flow this year. Now turning to Discovery+, which is off to a very impressive start. Though it's early in our launch and global rollout, we are very pleased with all of the early metrics. First, we have now surpassed 11 million total global paying direct-to-consumer subscribers after less than 60 days since the launch in the U.S., the majority of which are attributed to Discovery+, and more than half of the subscriber additions were in the U.S. As David mentioned, we will hit 12 million global paying subscribers by the end of the month. Second, importantly, both roll-to-pay and churn have been better than planned, and while early, these represent critical variables in our modeling. Third, engagement, as measured by average watch time per active viewer, has been robust and already significantly ahead of linear. Fourth, this engagement, along with advertisers and brands eager to embrace our subscriber base, is driving higher CPMs. It is worth pointing out the value our advertisers see in the portion of our subscriber base that are not currently pay TV subscribers, delivering much-needed incremental reach to the video advertising ecosystem. This, as well, has contributed to very healthy ad monetization that is already well ahead of plan. Number five, this has led to ARPU for our ad light product that has already surpassed average linear ARPU, and we see further upside as we drive scale and subscribers, a key tenet we laid out for you in early December. Number six, early signs of churn are within our expectations, if not better, which taken together with the monetization framework I provided, are contributing to a higher implied customer lifetime value than our initial modeling. Number seven, finally, subscriber acquisition costs have so far come in very favorably, especially compared with the evolving customer lifetime value. Consequently, taking these early data points together, we see both a very strong start to next gen revenue growth in 2021, with Q1 poised to grow around 50% with meaningful acceleration in the quarters thereafter, and a much more attractive investment opportunity around subscriber growth. Given Discovery+ net adds, the majority of which are in the U.S., we should also enjoy a more direct tailwind to our domestic distribution growth profile this quarter. As such, we expect Q1 domestic distribution revenue to increase at least high single digits, if not low double digits year-over-year, a meaningful acceleration from the last quarters. I must say, I like the sound of that. Candidly, it's been a while since we have had a growth profile like that for domestic distribution. While the advertisers embrace for Discovery+ has been great and will help to support our overall advertising profile as we scale, we expect a modest sequential headwind to Q1 U.S. advertising revenues, in part related to macro factors as well as the launch of Discovery+, where we are leaning in with more of our inventory to promote the service. We have embarked on an aggressive branding and performance marketing campaign, and we are seeing efficient SAC. As I noted earlier, with SAC so favorable to CLV, we expect to lean into this opportunity in a greater way, and we now expect to see greater incremental next generation losses than the $200 million-$300 million initially described. This could potentially be $200 million more, but it's too early to pinpoint a finer range. I am very confident to categorize this as success-based spending. We do, however, still see 2021 as representing the peak year for losses from our investment initiatives. Which brings us to capital allocation, where our first priority is to reinvest in our business to drive long-term growth and shareholder value. For the near term, the most productive use of our free cash flow will be to drive Discovery+ subscribers. You should not expect us to be in the market buying back our equity in the near term, though as we gain additional clarity around requisite spend to support our rollout, we will of course revisit the buyback. We finished 2020 at approximately 3.3 x net leverage. Through 2021, due to timing factors around spend and the Olympic Games, our leverage may at times trend above our target range, though we and the rating agencies are comfortable with this outlook, particularly as we remain committed to our investment-grade rating. Turning to a couple of housekeeping items to help you with forecasting 2021. We expect our effective book tax rate to remain in the low 20% range, while our cash tax rate, excluding PPA, will be in the mid-20% range. Finally, we are budgeting FX to have a positive $170 million year-over-year impact on revenues and a neutral year-over-year impact on OIBDA. In closing, we are incredibly excited by the initial success of Discovery+ and remain as enthusiastic as ever as we position the company for long-term sustained growth. Clearly, lots more to accomplish given only a few months in, and we look forward to updating you on our progress. Thank you again for joining us. With that, I'd like to turn it over to the operator for the Q&A portion of the call, and David, JB, and I will be happy to take your questions. Thank you. Ladies and gentlemen, to ask a question, please press star and then one on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Once again, to ask a question, please press star and then one at this time. Our first question comes from Robert Fishman from MoffettNathanson. Your line is open. Hi, good morning. Can you be a little bit more specific about the cadence of the international rollout for Discovery+ in the next few months? Have your partners, like Vodafone, really started to ramp up on the marketing to their sub-base yet? While clearly still early, anything you can help share on the international monetization of the subscriber base and if you're seeing higher ARPU levels there relative to your linear subscriber base. Thank you very much. Thanks, Robert. As I mentioned, we're really just getting started. We've built a robust platform, in order to roll it out globally, it needs to be modified. It needs to be modified to be embedded with Vodafone, to be embedded with Telecom Italia, each of the different distributors. We're working on getting it embedded with a number of the cable players domestically and around the world. We have rebranded Dplay Discovery+. As you know, our strategy outside the U.S., which we think is really unique, is local entertainment, local nonfiction, local sport in Europe, and local entertainment, local nonfiction around the world. That library from the last 25 - 30 years of local content really differentiates us from Netflix and Disney and makes us a great companion if you're putting together a bundle. We are seeing some real growth in the few markets that we've launched in. We're using the Olympics as a forcing mechanism, where we're looking to rebuild the platform so that we're ready with the Olympics all across Europe. Then coming out of that, we'll be able to roll out. For instance, Vodafone will not be for a little while. JB, why don't you give some more specifics? Yeah. Robert, as David mentioned, we are obviously undergoing a significant amount of work to re-platform. Basically what that means is our front-end product that was the former Dplay product in Europe was built on a different front-end platform than our U.S. product. As we do two things, one is migrate the U.S. product to be our global product. We have some important kind of infrastructure work to get done here in advance of the Olympics. Number two, as we talked about back in December, we will be collapsing our U.S. player product into Discovery+. We need to also do some work to incorporate that product into Discovery+. Both of those things are our primary focus and taking up a fair amount of our engineering and product bandwidth over the course of the next four or five months pre-Olympics. That's going to be the primary focus in getting that right in the first half of this year. As we come out of the Olympics and go into the second half of the year, that's when you're going to see the acceleration of the international rollouts. That's the timeframe I think about. Using Vodafone specifically since you mentioned it, really that will be a back half of 2021, and even bleeding several markets into 2022 as well as we launch with them. Then the third thing in terms of ARPU, the only thing I'd say there is what we do know and what we've seen so far is these retail partnerships with the Vodafone and others, as well as our direct-to-consumer, the premium and the multiples over our wholesale model internationally are still easily 3x-4x the pricing that we see in our existing wholesale model. We see a lot of pricing advantage in the Discovery+ model and the partnerships we have versus our existing business. Great. Thank you both. Thank you. Our next question comes from Steven Cahall from Wells Fargo. Yeah, thanks. Maybe first just wondering if you could update us on what sort of ARPU trends you're seeing on Discovery+, how those are performing versus your expectation, and maybe how those split between U.S. and international and subscription versus advertising. Then David, I was wondering if you could give us an update on Magnolia in terms of timing. You mentioned the Olympics and the golf season, but are there any other big content events that we should be mindful of during the year that might drive subscriber acquisition on Discovery+? Thanks. Sure. Why don't I start? I'll start with Magnolia. Chip and Jo have been huge supporters of Discovery+. For the audience around the world, and particularly here in the U.S., the delight with the fact that Fixer Upper is back, Magnolia Table with Jo, really strong and all exclusive to Discovery+, as well as the slate that we've been developing and they as Chief Creative Officers have been creating is on Discovery+. The good news is there's a huge amount of incremental content coming from them, as well as all the content that we were putting on Magnolia. All of that will continue to be on Discovery+. We've come up with a really creative partnership because Magnolia itself is a huge business for them, and a transactional business. We will be launching an app together where people can go and take all kinds of classes. They could do workshops, they can transact business with the Magnolia product. They can transact business with a number of things that Chip and Jo will be curating. All the content that's developed will be on Discovery+. Effectively, when it launches, whatever number of subs that we have will be subs that'll have the Magnolia app available to it. It's really a win-win. It becomes effectively part of us, and we become part of them, they become part of us, and it's one and one equals two. Okay. Steven, let me take the question on ARPU. A couple of points. What we're seeing so far, and remember, it's early days, but starting with the U.S., I think the most important point that I've looked at is our ability to monetize the advertising side for the ad light subscribers, and I'm super pleased with what we're seeing there. We have this bogey of getting 3x the CPM compared to linear. We're on a very good track here. We're already making more on a per sub basis altogether with these ad light subscribers compared to the linear ecosystem. That's great. Obviously, the price points for the ad free product, and I should say that the subscriber base is skewing a little more towards ad free given the relative attractiveness of the price point here, I think. For the U.S. side, so far ahead of expectations. Internationally, as JB said, the most important point is, we're expecting a multiple delta between what we're achieving here on the direct-to-consumer side compared with linear. I also want to say it's early days and especially on the international side driven by the deal cadence, et cetera, that number could move around a little. That's why you're not going to hear us talk a lot about ARPU specifically. I would like you guys to focus on the next generation revenue. That's why we gave the growth guidance there, and it's a very compelling story, I think. We grew 18% in 2020. Fourth quarter was up 26% for next generation revenue. We're now looking at roughly 50% for the first quarter, and I expect that number, that growth, to further accelerate as we go through the year. Top to bottom, I think very encouraging for first results here. The one other thing, Gunnar, that I might add just on for the international is that, based on the success we've seen in the last 45 days on the U.S. ad light product, that's really not a product that we've rolled out anywhere internationally. We see an opportunity there to take that same model with the same higher ARPU and take it around the world. As we part of the re-platforming we talked about just a minute ago is going to enable us to offer an ad light and an ad free product as we take Discovery+ around the world. I think in a number of markets, particularly in Europe with our big advertising footprint there, that we think there's going to be additional opportunity for higher ARPU growth with both products and both tiers in market at the same time. Great. Thank you. Thank you. Our next question comes from Doug Mitchelson from Credit Suisse. Your line is open. Well, thanks so much. Congratulations to David and the team on the successful launch. Couple questions for Gunnar and a couple for David. Gunnar, one of the things that seemed pretty conservative at the analyst day was your target margin of 20% for streaming. Is it fair to say you're pacing well beyond that given some of the metrics you laid out? If you threw all this into a blender, what kind of margins would you get on sort of a terminal basis for streaming? A clarification, Gunnar. You said CPMs were up 40% over the upfront 1Q. You said up mid-teens year-over-year. Not to be sort of too in the weeds, is that sort of booked to date, or is that your anticipation of how the quarter is tracking, including the March period last year where it fell off? For David, when you think about the usage of the research you've done so far, I know it's early days. How do you feel about the idea? Is this super fans coming in and racing to try your streaming service? Is this just a mix of subscribers that you think is sustainable and normal and not overly driven by super fans? What's your anticipation there? Lastly, David, if you wouldn't mind on content and investment. It seems like, at least our tracking, you'll tell me how far off we are. It seems like shows representing about 9% of your linear viewing has seen their originals debut on streaming. Is that sort of the right mix, or are you thinking of ramping that more aggressively? Is the originals that you have coming means that the linear is going to sort of stay with the content level that it has right now? Anyways, thanks for all that. Sure. Thanks, Doug. Right now it seems quite broad. We're getting subscribers from our broad marketing. We're seeing subscribers coming in from our own marketing on our own platforms. We're seeing a lot of digital. The age is really across the board. A lot of that has to do, I think, with the great work that Disney has done in acclimating people. The encouraging thing is that we see good numbers about people once they know about the product, wanting to have the product. One of the reasons that we're marketing is we think we got a great product, and we need more people to understand what it is. For 60 days in, with a product called Discovery+, we've had to do a lot of work. It's a great brand that people love, but we had to explain that it's home, food, Chip and Jo, crime, Oprah Winfrey. There's all the stuff that people like. That was number one. The roll to pay has been terrific. The amount of time people have been spending on is terrific. Right now, it looks good. We can't tell you how big the market is, but right now it feels like we're off and running. In terms of the content that we're moving around, we're really experimenting. The interesting thing is, the way our product works so far is it's very different than Disney or Netflix. We have this massive library, and when we say what's trending, if you took all the top shows that are trending and put them all together, it represents less than 10% of what people are watching. We have such a diversity of content. When you talk about scripted series and scripted movies, where you have eight people playing that game, they're going there for a scripted series, or they're going there for a movie. For us, since we've pulled together that other 50%, they're watching Discovery stuff. They're going in and watching Prince William in an environmental documentary. Other people are going in there and watching the fact that we have the largest crime library or paranormal or food fans. We're just experimenting. We're moving things around, but we still have a full commitment to the existing bundle. We are the bundle. It's basically news, sports, and us. A lot of the other players are now in repeat mode. For us, we have a real equitable argument. I was talking with some of our operators over the weekend about the amount of original content that we're still doing and the amount of viewership that we're getting on the platform. We think we could do both, and we're experimenting, moving things between the two. All right. Doug, on your other two financial questions here. The margin, look, I gave that at least 20% number because I was very confident that we'd be able to hit it. If you look at what we've learned since then, every metric has come in better. I think it's safe to say that that's even more conservative from today's perspective. At the same time, there may be some sort of pulling impact forward or so. I'm not in a position to give a new estimate now. We're focused on building this product out and optimizing this now. I feel very good about the margin potential in the long run. On the CPM side, just to clarify that the 40% are based on what we're seeing in our bookings. I think that was your other question, right? Yeah. Also the mid-teens year-over-year, is that pacing against the full 1Q of last year or just bookings to date for the quarter? That's based on what's on the books right now for the same period of last year. As I said a couple of minutes ago, we do expect a modest headwind because we're using some of our inventory for our own promotion. We still have somewhat limited visibility, et cetera. Keep that in mind as well, please. Thank you all. Thank you. Our next question comes from Kutgun Maral from RBC Capital Markets. Your line is open. Great. Thank you for taking the questions. First, you're clearly more bullish on DTC today than you were maybe just a few months ago. You're ramping investments even more. Early subscriber KPIs sound very attractive, whether it's CPMs or churn. I guess I'll give it another shot and ask if you'd be willing to provide any thoughts on what DTC subscriber levels you expect to achieve, whether it's U.S. or international or 2021 or even looking out further. Just any framework would be helpful. Secondly, how do we think about the GO apps and what that business looks like going forward as you ramp and pivot even more into Discovery+? Thanks. Let me talk about GO, which is really our AVOD, where we're getting terrific CPMs. It's been a great feeder, a really terrific feeder for us, which is really an efficient conversion. It's really we have a holistic view here. We have our traditional business with great margins where we continue to. Which we think outside the U.S., it's declining but at a much slower rate than in the U.S. In the U.S., we're seeing some stability. We expect that it'll decline, but we really like our position there. We have the GO AVOD, where we have a very young demo with very good economics. People continue to go there. The more people can get to go there, the more people can come over that want to get our SVOD service, which has a lot more stuff. We think it's really a great one, two, three combo. For advertisers, it's terrific. We're going to continue to look at the market. As JB said, we're evolving. We have a very low-priced product. Given the marketplace, it's an unbelievable value. If you look at the value of us at $4.99 in ad light versus everyone else, with the library we have and the originals, it's terrific. Outside the U.S., we can go a lot cheaper than that and still have a multiple of the ARPU that we get. As JB said, we're learning. We've been at this for five years. That's how I think we took so much time to launch to figure out how do we get everything aligned. The idea of AVOD, SVOD, ad light, now we're going to add SVOD with low commercials, but we'll also in some markets, we might want to put in a big front porch of AVOD. We've been doing that in a couple of markets already and finding that that's a real feeder. The fact that we have advertisers in GO, that's one of the reasons we have 100 advertisers in Discovery+ right now. Who knows where all this will be in five years. Right now, we have great ARPU on our existing business. Domestically and around the world, we're getting started. We're way ahead of where we were, and we like the metrics, and we'll just follow the consumer need. I don't know, JB, just maybe a little on AVOD from your perspective. Yeah. I think the interesting thing, back to David's experimentation point, is that we have done some things, even in the course of the last 60 days, where we initially took down some content that was originally on GO and then put it back up. I guess the point would be generally, to David's point of, these are just incredibly additive customer segments. I think we look at each of these as being very additive customer segments. The GO performance so far, even in the course of Discovery+, has continued to see the same high level of engagement as we had pre-Discovery+ launch as we have post-Discovery+ launch. From an engagement perspective, all indications are, which was again, a little bit of our thesis back in December, which we obviously didn't know 100%, but that this could be not an either/or, but an and. That so far it is looking a lot more like an and even than we might have expected back in December. On GO, we're still very pleased with the engagement and the level of usage that that platform is getting. We have some new product innovations that we're going to be rolling out over the course of the next couple of months that we think will continue to make that product ever more compelling. We feel comfortable with that business continuing to be a good growth, a healthy growth driver for us going forward. Maybe just to close out that last question, we're still not in the position to give a long-term or short-term subscriber guidance here. We're super happy with what we're seeing. Again, top to bottom ahead of expectations. We have a lot of distribution still coming down the pipe. We're really just getting started internationally. That's on the positive side. We'll see. I don't think there's a lot of value of us sort of discussing scenarios here. Understood. Thank you all. Thank you. Our next question comes from Ben Swinburne from Morgan Stanley. Your line is open. Good morning. David, I wanted to ask you about your sort of content plans as you look at linear versus streaming in the U.S. I mean, I think of Discovery, you've been probably the most deliberate, I think, in balancing what you deliver to your MVPD partners with what you're now building in streaming. As I'm sure you'd agree, others have gone much further sort of creating competitive products. Given the success so far in the U.S., I know it's early, but also you hinted at a cable partnership in your prepared remarks. Are you feeling more kind of optimistic or comfortable putting your best IP on D2C versus linear in terms of exclusives, other things? Just give us a sense of your mindset sitting here today. Gunnar, you gave some advertising commentary for Q1. I'm just wondering if you could talk about the shape of the year. Obviously, the comps get pretty easy in Q2, Q3. Would you be willing to give us what the next gen revenues were in $ last year? Thank you, everybody. Thanks, Ben. One of the great things is we get to see what people watch and how they watch it and what they like. I wouldn't say best, I would say different. We're continuing to invest in our traditional channels around the world, and that's building our global IP library. We'll continue to do that. It's still a great model, and we think it's going to go on for quite some time. It's also a terrific feeder. The people that are watching our cable channels are buying the product. People that are going to GO and seeing some of the product that they've downloaded and they like, they're buying the product. We think it's really advantageous to us to keep that nourished. It's good for us with our existing distributors because they appreciate that, and that we're key to the bundle and we're supporting it. Having said that, there are a number of things that we're learning, like if we do a big crime documentary. A big crime documentary, we could put it on ID, and we have put it on ID. Some of those things are, they want to watch it when they want to watch it. When we did the Prince William documentary on the environment, on Discovery, I think it would've done well. It did unbelievably well on Discovery+. Everybody wanted to see it. Same thing with Attenborough. I think a lot of the stuff that we have, some of it is different, but we are starting to get some clues on the kind of things that people like to have on a platform and watch whenever they want. We also have seen that we're getting a lot of comments that this is a service that people could watch sort of in two ways. One is while they're cooking. We added a feature where you can, almost like a synthetic channel, where if you love Fixer Upper and you love the Property Brothers and you love Guy Fieri, you can just put that into the app, and that's what'll run all day long. On the one hand, you may really want to watch the Attenborough or this great crime documentary or Ina Garten is doing a great show with Melissa McCarthy. You also may want to just put it on so you have something really fun that you love to watch while you're cooking or while you're homeschooling the kids or while you're working. A lot of the SVOD products are there for intention, where you have a full on focused intent to view, which we have, and we have great content, great characters, great brands, but we also have this ability to be a companion. The content is on, and it's a great companion for you when you're home, or it's a great companion. We have your favorite show. It's a balance. We think we could do both, fantastic differentiated content that people love, and also the content and characters that they love that they can hang around with all day. Remember, Food and HG and ID, together with Fox News, are the four longest length of view cable networks in America, with our three being women and Fox News being men. There's a reason for that, behaviorally. People sometimes want to have that on during the day, and they can do that with our app. We think both of those provide a value equation. Ben, in terms of advertising, visibility is still limited. I'm not in a position to come up with a full-year outlook here. Obviously you're right that the comps should start looking a little better from Q2 on. We've seen the sequential improvement, and as I said earlier, some of the international markets have actually already been up in Q4 and we see strong momentum into Q1. It is early. I told you about pricing. We do have a great upfront deal in place. Option cancellations are looking good right now, but again, we don't have a ton of visibility. We'll see. Hopefully, the balance is going to skew positively starting Q2 here. In terms of the next gen revenue. We were able to make two meaningful hires that have really been helping us. One is we hired the head of sales for Hulu. Jim Keller, yeah. Jim Keller, who's really terrific. We have a great team, but how do we take ourselves to the next level? We just hired last week the head of- Pato, the CMO from Hulu. Yeah. The CMO from Hulu to come over. We've brought over a lot of expertise here that we think in terms of selling our product, selling the digital product. Getting someone that has years and years of experience of just doing that together with the very strong team that we have, and Steinlauf's doing a fantastic job. Take the great marketing team that we have with all the strength, and you've seen the campaign, and bring someone who's been doing just subscriber acquisition for the last eight years, is going to help this company really grow. Okay. Again, next generation revenue is roughly $850 million in 2020. Again, that was a growth of 18% versus 2019, accelerating in the fourth quarter to 26%, accelerating in the first quarter now to roughly 50%, and then accelerating from there, and to be quantified. It's a great story, I think. Thank you. Thanks. Thank you. Our next question comes from John Hodulik from UBS. Your line is open. Okay, great. Thanks, guys. Maybe for Gunnar, just some clarifications on some of the cost items. You talked about spending some more on the content spend. I think you guys have spent about $3 billion a year the last couple of years here. Can you give us a sense of the magnitude of the increase there? Then on the guide, any chance you could sort of bucket some of the areas that you might spend leaning into D2C with that incremental up to $200 million in EBITDA? That'd be great. Thanks. Starting with content spend, two things to keep in mind for this year. One is the Olympics is going to flow through with a very significant license fee, of course, in the third quarter. Other than that, the content spend on a consolidated basis for the entire company is growing significantly. That's part of that guide that we have given. Obviously, with a focus on direct-to-consumer first products. Keep in mind, as David said, we're experimenting with those windows for our content. I think one of our great advantages has always been our ability to use that content across territories, across platforms, and thereby further driving that efficiency. That's one of the chunks that has always been part of this guidance. I think in terms of what we see additional spend right now, first and foremost, it's marketing. Again, I said it earlier, but given how our engagement and churn metrics and the monetization metrics are trending, our customer lifetime value looks much better than what we thought it was going to be in December. At the same time, subscriber acquisition has been incredibly efficient. A little better than what we planned for. That gap between customer lifetime value and SAC is just very compelling, and that's the largest driver for us to really lean in and spend more on the marketing side all the way through the funnel. Initially, a lot of top of the funnel marketing, but we'll definitely keep firing on that performance marketing side as we go through the year here. Then in addition to that, on the technology side as well, there is a lot of fast follow features that are in the pipeline. The team is working hard. JB already spoke about re-platforming. There's some work to do internationally as well. Again, all of that is going to help us accelerate the rollout here. It's going to help us accelerate the advertising growth. David already mentioned binge ads and pause ads and interactive ads, et cetera, that are coming down the pipe as early as March, April, May, et cetera. It's very exciting. Again, from the CFO perspective, what gives me a lot of comfort is this is success-based spend. We're going to toggle it up and down with what we see in terms of the performance of the product. Again, I could not be more excited about this being the best use of our free cash flow right now. Okay. Thanks, Gunnar. Thank you. Our next question comes from Rich Greenfield from LightShed Partners. Your line is open. Hi, thanks for taking the question. This is sort of a follow-up to a couple of questions that have been asked. When you think about the Discovery+ product to date, when we look at it, 12 of the top 13 shows have been shows that are on TV or on linear TV, led by Travel Channel's Ghost Adventures. The only one that's been exclusive to Discovery+ has been actually Fixer Upper from Chip and Joanna. I guess two thoughts come to mind. One, do you think your service is uniquely less exposed or need less original programming than other streaming services because people like watching your catalog content over and over? Two, do you think that Fixer Upper sort of points you in the direction of maybe Chip and Joanna shouldn't be launching a cable network, and their content should stay exclusive to Discovery+? Just the last piece of that, you mentioned pausing the share buyback to invest in Discovery+. I guess, just given investor excitement over your stock and the huge move you've seen in your stock year to date, why not take advantage of it, actually sell stock, strengthen the balance sheet, and actually invest even more in programming? Again, maybe you don't need to spend that much on programming given what I mentioned before. I'd just love your views on that whole subject. Let me start with the content. We've never made our entire library available before. One is, there's a lot of excitement about being able to sit down and watch old MythBusters, look at all the seasons of Deadliest Catch, Ice Road Truckers. Go back and watch a bunch of Lifetime movies all in one sitting. We're making available this whole bucket of content. Go back, Guy Fieri, spend an afternoon watching Diners, Drive-Ins and Dives. There's a lot of appeal in our full library. Two, there's a huge amount of original content that is on there that's doing really well. The metrics are really not the same for us. If you take those top 12 shows, that's less than 10% of what's viewed on the platform. I'm not on the inside of these other SVOD platforms, but when they launch a big movie or they launch a big series, if they name three, it might be 30% of the viewing or 40% of viewing. For us, it's less than 10%. Our product is a lot of long tail, and a lot of the original content is very helpful, I think, because it is clear that it's differentiated. One of the reasons why a lot of people that have GO are moving over and paying for this product is there's more there and there's a ton of original content. We think we're onto something with the mix. We're not being guided that much by seeing that they're watching this show or that show, because when we actually look at the full numbers, the answer is that we've represented 50% of what people watch on TV, and that's not available anywhere else. You go to the others for scripted series and scripted movies, and the big takeaway for us is people are willing to pay for that other 50% so far, and that could be a yellow brick road for us. Rich, on the share buyback side, remember, we have so much free cash flow coming in. That generates a lot of firepower to fund our organic acquisitions. On the leverage side, as I said before, I'm feeling very good. Not only I'm feeling very good, agencies are supportive as well. The reality is we have less than $4 billion coming due over the next five years after our prepayment here that's going on in March right now. I think we're in a very good position. We are prioritizing the reinvestment into our own company right now, but not in the form of buybacks, but in the form of future growth. What about Chip and Joanna? Oh. As I said, we've done a very innovative alignment together, and you're going to continue to see content on Discovery+ exclusively. There may be a window. We think linear is still valuable. They've produced a lot of good content. You'll be seeing a tremendous amount of content coming from them and coming from their creative factory that'll be on Discovery+ exclusively or exclusively for a period of time before it shows up somewhere else. I think the only other thing I'd add, Rich, to your comment about the franchises is that I think one of the successes we've found, you mentioned the top shows and how many. There's a lot of the top shows on Discovery+ right now that are existing talent or known talent or known franchise base. You take a Magnolia Table or a Bobby and Giada in Italy, or even some of the offshoots of the 90 Day franchise. I think that's one of the things we see as a great success is ultimately being able to super serve and give people even more. That stuff is exclusive to Discovery+. While it could fit naturally in a second window or down the line back on a network, because it's very complementary to the existing franchises. They are exclusive to Discovery+. We do think in order to continue to expand the base also, that will be important to have a right balance of certainly some of the library and the depth of the library is incredibly important, but also some of the exclusive content, even if it is based on some IP and franchises that come from the television networks. Outside the U.S., we're finding that with our local language, local sports strategy, that having a particularly compelling piece of local IP that's available exclusively is driving. Speak to that a little bit, JB We're seeing real growth in Poland when we take a particular piece of compelling local IP and put it just on our Discovery+ product. Yeah. Consistent with what we did think in our hypothesis and what we outlined is what we thought was sort of part of our secret sauce back in December of this combination of great local IP with the strength of the global library. We are seeing that bear fruit, which is a lot of the local IP, whether it be in Poland, the Nordics, the U.K., Italy, is what's driving a significant amount of volume to the service and in terms of the acquisitions. Then coming into the service, finding and discovering all this new and great content that people had never seen. I think the other thing, this is true about international, it is also true about the U.S., is the reality is the 55,000 hours is such a large volume of content in the genres and passion areas that people love, that without a digital algorithmic recommendation engine to surface that stuff to people, it is just never something that could've been perfectly exploited on linear television when you have a 24/7 channel and you are limited by capacity. By the way, that re-platforming that we are doing internationally is partly to take advantage of the more sophisticated recommendation engine that we have on Discovery+ that currently doesn't exist in Discovery+ outside the U.S., but will once we finish the re-platform. That surfacing of new content, even if it is out of the library, that feels new to so many viewers, we think is also a big opportunity to satisfy the consumers. Very helpful. Thanks for the details. Thank you. Our next question comes from Alexia Quadrani from JP Morgan. Your line is open. Thank you. Just two quick questions, if I may. The first one is, can we expect you guys can even get a higher proportion of advertising budgets given the incremental reach of Disney+? It just sounds like it's a very attractive overall offering you can provide as Discovery, the company, to advertise. I'm curious if the incremental paths are there. The second question is just really on local international production. Are you seeing that getting a bit harder or get a bit more expensive now that Discovery+ and a lot of other streaming services are trying to build up on local content? Thanks, Alexia Quadrani. On the ad budgets. Getting back to even before we get to Discovery+, with our traditional business, what Steinlauf and his team have very effectively done, and he and I have been on the road with all the big agencies at least three times since the Scripps deal, is dealing with the fact that the broadcasters are getting over $60 in CPM, and we were getting a third of that. We're the number one player for women or the number two player for women, and we have the number one network with TLC. We have the number one show with "90 Day Fiancé." We've been pushing that rock uphill, and you see in our numbers how we've been driving that CPM, but now we have a whole basket where we have this win-win of come in with us for $40 + CPM. Why are you going to get a repeat on a broadcast network when you could buy original content on us? We get a huge premium on our CPM. We believe that this should ultimately flip. That aside from sports, we should be getting a premium versus the broadcasters because we have length of view. We have an audience that's engaged. We have endemics with food and home where advertisers want to be. We think we have some real momentum there, and we're going to push on it because we think from an equitable perspective and from a performance perspective, we should see much more of that money with much more CPM, with better returns. We think advertisers are starting to agree with us, and you should see that flowing through over a period of time. With GO and Discovery+, we do have a lot more opportunity because with Discovery+ bigger than we thought, with GO continuing to perform, we have more capacity. We're seeing that the attractiveness of that capacity in terms of the kind of premiums that we're getting in CPM on Discovery+ where there's only a few ads, is really terrific. It's incremental reach. Real incremental reach for us. Non-cable. Which is quite helpful. On the local, leaning in, we do need original content. We have been doing it. JB's been producing a lot of it in every language. We have the factory that converts all of our content into every language, but we are doing more original because it's helping us, both on linear and direct-to-consumer. JB, talk about how we've kind of pivoted this year to lean in even harder. I think certainly in the core markets with the biggest scale, we'll continue to sort of pivot on and focus on the right level of local content to drive the acquisitions. I think the other thing that's exciting for us that we've never been able to take advantage of in a material way is we have now, even in the last 90 days, examples of shows that originate out of one market that are top 10 or top five, in some cases, drivers in other international markets. When we talk about local content, local content used to only mean monetization in one market. The reality is now we're starting to see more value and benefit being driven out of local content multi-market. We did an Estonia documentary on the terrible and tragic capsizing, the largest ferry disaster in the Nordics that was originated out of our Nordics business. It's now a top performer in the U.K., a top performer in Italy. Local content investment doesn't just mean local. It means local with value now to travel, which is something that we never had. We're excited about that opportunity as well. Thank you. Thank you. We'll take our last question from Michael Morris from Guggenheim. Your line is open. Hey, thanks, guys. Good morning. I'll try to sneak a couple in here if I could. First, can we talk a little bit about the affiliate pace domestically and especially the strength you're talking about in the first quarter? The 5% that you saw in the fourth quarter, that seems to all be coming from the linear business. I'd appreciate if you could talk about what drove that acceleration. I know we talked about a little bit of the improvement in subscribers, but really it seems like you would've had to have some kind of pricing, discrete pricing improvement there. Can you just help with that and how much that impacts that underlying pace as we go into the new year and that growth you're expecting? Just a couple on international digital, if I could. Of the 5 million subscribers, next-gen subscribers you discussed in the fourth quarter, how many of those were Dplay subs that sort of became Discovery+ subs on the conversion? The last thing, can you talk about India and your product in that market at all, where you are on that, and if that contributed to your reported numbers this quarter? Thanks for taking the questions. Okay. Michael, let me start with the distribution guidance. You may have noted that I deliberately said distribution rather than affiliate because I do not want to create the perception that our traditional affiliate number is accelerating by 100% here. You're 100% right. We were up 5% in the fourth quarter and that was almost completely traditional business driven. It's a combination of pricing, slightly better subscriber trends. We've lost less than in prior quarters. Also we've done very well on the side of the virtual MVPDs. That's the Q4 number, mostly linear. For Q1, we're talking about high single digit, potentially double digit. A lot of that acceleration is obviously coming from the D2C trends given the subscriber success that we've seen so far. That is going to start very materially contributing to that number. That's why I started talking about distribution the way we lay it out in our financial statements as well rather than just affiliate. Well- Yeah. Yeah. Why don't you, JB? Yeah. On the international, Michael, to your question on international, the vast majority of those subscribers are Discovery+. If you add in the Eurosport Player, which will convert, it's really vast majority of subscribers. That's number one. Number two, on India, look, it's been a nice business. It's grown for us nicely. It remains, in terms of obviously the logical questions of that being a lower ARPU market, it remains a small piece of the overall kind of single digit level percentage of our international portfolio today. It's grown nicely, but it remains a smaller part of the overall international subscriber story. JB, just to be clear, I'm trying to reconcile the 5 million subs and the part that you said the vast majority were Discovery+. I guess, are you saying the majority of the 5 million that you guys discussed in December converted to become Discovery+, so more than half of those 5 million? Correct. Okay. That's great. Thank you very much for that. Thank you. Ladies and gentlemen, that does conclude the question and answer session for today's conference. Ladies and gentlemen, this now concludes today's conference call. Thank you for your participation, and you may now disconnect. Everyone, have a wonderful day.