Gentlemen, thank you for standing by, and welcome to Warner Bros. Discovery and Fourth Quarter 2022 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Additionally, please be advised that today's conference call is being recorded. I would now like to hand the call over to Mr. Andrew Slabin, Executive Vice President of Global Investor Strategy. Sir, you may now begin. Good afternoon, and welcome to Warner Bros. Discovery's Q4 earnings call. With me today is David Zaslav, President and CEO, Gunnar Wiedenfels, our CFO, and JB Perrette, CEO and President, Global Streaming and Games. Before we start, I'd like to remind you that today's conference call will include forward-looking statements that we make pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include comments regarding the company's future business plans, prospects, and financial performance. These statements are made based on management's current knowledge and assumptions about future events and about 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 the company's filings with the US Securities and Exchange Commission, including, but not limited to, the company's most recent annual report on Form 10-K and its reports on Form 10-Q and Form 8-K. A copy of our Q4 earnings release, trending schedule, and accompanying slide deck is available on our website at ir.wbd.com. With that, I am pleased to turn the call over to David. Hello, everyone. Thank you for joining us. We've been hard at work since our last call and look forward to updating you on our progress. First, let me say this promises to be a very exciting year for our company. We took bold, decisive action over the last 10 months. The bulk of our restructuring is behind us. We have full command and control of our business. We are one company now. We have a fantastic leadership team moving us forward, everyone rowing in the same direction. Together we are focused on making our businesses better and stronger. Last year was a year of restructuring. 2023 will be a year of building. Off we go. In today's increasingly dynamic and crowded media environment, the best hand has great storytelling IP, brilliant creatives, a full slate of production and distribution capabilities, and broad global reach that stretches across premium, pay TV, free-to-air, theatrical, streaming, licensing, and gaming, the entirety of the ecosystem. That is exactly the hand that we have, and we intend to play it decisively and with a focus on free cash flow and an eye towards sustainable future growth. Warner Bros. Discovery is a storytelling company, and we are very fortunate to have a huge share of the most beloved and globally recognized storytelling IP in the world, including Harry Potter, Game of Thrones, Superman, Batman, Lord of the Rings, and we intend to take full advantage of these one-of-a-kind franchises across our various platforms. In all that we do, we are guided by three strategic pillars. We want to tell the best stories, share them with the broadest audience possible, we do that by working together as one team, one company. The decisions we've made and the strategies we've set in motion 10 months ago have created a solid foundation, we're starting to see strong momentum. It's working. In an increasingly challenging environment, we were able to deliver over $3.3 billion of reported free cash flow in 2022. A healthy conversion notwithstanding significant merger and integration related expenses. Gunnar and the team are laser-focused on driving transformation throughout the organization, supporting our ability to further generate real free cash flow. Gunnar will take you through all of the financials in our outlook, I'm very pleased that we see our net leverage clearly below 4x by the end of this year. Below 4x by the end of this year. It's working. On direct to consumer, we are making meaningful progress on our goal to achieve real profitability in streaming, a key and powerful segment of our company. We brought our losses down considerably and are even more confident in the financial targets we laid out a few quarters ago. We reduced EBITDA losses by $500 million year-over-year to $200 million in Q4, supported by 1.1 million net sub adds in the quarter. Most importantly, we saw improvement across key KPIs. More on this from Gunnar in a minute, but I'm pleased with the trend line we see in Q1, particularly as we are managing towards close to break even segment EBITDA in the quarter. Consistent with what we told you last August, we are getting ready to launch our combined streaming service here in the U.S. in a few months. With Latin America to follow later this year and markets in EMEA and APAC in 2024. The product will offer compelling content for every member of the household, SVOD and ad- light tiers, and a significantly enhanced product platform to drive better performance, improved user experience, and stronger engagement. We're excited about the upcoming launch of the enhanced product and look forward to sharing more details at a press event on April 12th. In the meantime, we completed a new distribution agreement that puts HBO Max back on Amazon Prime Video channels. On the traditional side, we renewed agreements representing 30% of our U.S. affiliate revenues, and we're able to align our networks on a co-terminus basis with these distributors. We also signed FAST content deals with Roku and Tubi, adding to these popular platforms hundreds of our TV shows and movies while maximizing the reach and overall value of our content. It's working, and our new studio heads are hard at work putting their unmatched creative stamp on our future slate. We believe strongly in the importance of the motion picture window and having that shared experience with other people. I'll talk more about that in a minute. This year, we celebrate the storied Warner Bros. Studios 100th anniversary with a deepened commitment to telling quality, diverse stories with the power to entertain, inspire, and when we are at our best, impact or even change the culture. We are excited for Mike and Pam to lead the studio into its next chapter, which in 2023, will see output more than double. Today, I'm thrilled to announce that Mike and Pam signed a deal to make multiple Lord of the Rings movies. Lord of the Rings is one of the most iconic storytelling franchises of all time, and we're so excited. Stay tuned for more to come on this front. A few weeks ago, James and Peter rolled out phase one of their highly anticipated multi-year plan for DC Studios across film, television, and animation. With five films and five television series already in the works, the new era for DC under a single creative vision is in full swing, and we are especially eager to thrill fans with new Superman and Batman movies in 2025. There hasn't been a standalone Superman movie in a decade. This is some of the most recognized and beloved storytelling IP in the world, we're excited to tell even more of those stories. We're also excited for the release of four DC films this year, starting with Shazam! in two weeks and followed by The Flash, which James Gunn called one of the greatest superhero movies ever made, a masterpiece. I saw it and loved it. It's a wow. I can't wait for The Flash to hit the theaters in June. We're also thrilled by what we're seeing coming out of our games business, which represents a core part of our overall strategy. As the only studio scaled in gaming, we see it as a meaningful differentiator with substantial opportunity. With the successful launch of Hogwarts Legacy two weeks ago, we reimagined one of the biggest global franchises in the world. The game was one of the most highly anticipated of 2023. Consistent with our overall commitment to great storytelling, we delayed the launch to get it right, and the response from consumers has been overwhelmingly positive. We've already seen more than $850 million in retail sales, and we still have more platforms launching over the next few months. There's lots more to come, including the highly anticipated Mortal Kombat 12 and Suicide Squad: Kill the Justice League. Games also set for release this year with ambitious launch projections. We have a great hand, and we're doing a lot right. That said, there's still more that we need to get right, and we are hard at work. To that end, linear ad sales is a top priority at the moment, particularly as we balance both cyclical headwinds and ongoing secular challenges, much of which we've dealt with for the last several years. It was a heavy lift to bring two teams together, notwithstanding the economy being what it was, and we are now drilling down on all facets of the business. We've contended with recent share shifts away from our portfolio during the NFL and college football season and the World Cup. We are still in the early stages of bringing this comprehensive portfolio together and harnessing all that it can deliver. I am confident that we will get there, particularly with some of the operational and content-driven initiatives implemented by Kathleen Finch and her team. They have great plans to revitalize the nets and have also begun to use our exceptional library of film and television content in a way that will benefit our linear and cable networks. We are also advantaged by the fact that our U.S. Networks average 30% of all nightly cable viewers in the key 25-54 demo. There are times when our share is significantly higher with marquee events such as March Madness and the MLB and NBA playoffs. On the news side, we are fighting hard and making real progress. CNN stands as a premier global news organization, and we want it to be the place for fact-based reporting and thoughtful discourse that is broader than politics or sport. We are already seeing a more inclusive range of voices and viewpoints. As demonstrated last month when over 70 Republicans came on our air during the congressional speaker election process, a first in a very long time. We intend to continue advancing on this balanced strategy. Chris Licht and the team are focused on building an asset for the long term across cable and digital that is worthy of that great global brand. We must get it right. Nowhere is this more important in my view, and it isn't gonna happen overnight. I believe we are on the right path. The efforts ongoing enterprise-wide are helping to turn the flywheel and grow and improve our businesses. We see so much opportunity ahead. We continue to be the place creatives are choosing to bring their visions to life. In recent weeks, we signed new deals with a number of the most prolific and celebrated creatives in the industry, including Greg Berlanti, Baz Luhrmann, M. Night Shyamalan, Akiva Goldsman, and Zach Cregger, with more to come. Warner Bros. Television Group has more than 110 shows currently in production across our own platforms, as well as third-party broadcast, cable, and streaming outlets, including Emmy winners Ted Lasso and Abbott Elementary, Young Sheldon, network TV's number one comedy, The Voice, the number one most-watched unscripted show on network TV, and the newest hits, Night Court on NBC and Shrinking on Apple TV. I believe Warner Bros. TV is the greatest quality maker of content in the world. We're committed to creating shows that people really wanna watch, and they also want to experience them with other people. That is exactly what we see happening at HBO. HBO has never been stronger and is firing on all cylinders behind the recent successes of HBO originals Euphoria, House of the Dragon, The White Lotus and our newest mega hit, The Last of Us. These shows have averaged as many as 20 million viewers an episode with strong week-over-week growth. The Last of Us, for example, grew its Sunday premiere night viewership by about 1 million with each episode over the first four weeks. After just five weeks, an astounding 35 million people have watched episode one. These are huge numbers, particularly in today's day and age of binge viewing, when there is so much content to choose from. It all stems from great storytelling. Again, creating shows that people want to watch. It reminds me of my time at NBC when Thursday night was must-see TV. Those shows had a supersized effect on people and culture. Back then, you had to watch the show on Thursday night. Today, with direct-to-consumer, more and more people are joining the party. That's the power of streaming. HBO is streaming's new must-see TV with all of its cultural impact and excitement. Every week, a new episode comes out, and by the time the next one airs a week later, tens of millions of people have watched the last episode. Social media explodes, and people are calling their family and friends to talk about what they saw. This phenomenon can go for eight, 10± weeks for each series. That's the power of curation. We believe that when you have content that is so good that it hits the zeitgeist, the best way to drive interest and engagement is not by dropping the entire season on a platform all at once, but by allowing the buzz and anticipation to build over time. It's the same principle with theatrical. Perceived value of content increases when there's a great expectancy and excitement. People wanna be part of something. When you tell them a great story and they get to experience it with others, either in a packed theater or on a Sunday night, it really is magic. At Warner Bros. Discovery, we believe we have the strongest hand in the industry with the most complete portfolio of assets and globally renowned franchises, personalities, and storytelling IP across sports, news, nonfiction, and entertainment in virtually every region of the globe and in every language. We have an exceptional leadership team that is truly aligned across a common set of strategic, operational, and financial goals and metrics. While we've got lots more to do, we are increasingly seeing positive traction and strong proof points. For us, 2023 is a year of building. We are more confident than ever that we have the right strategy to be successful and ultimately achieve our goal of being the greatest media and entertainment company in the world. With that, I'll turn it over to Gunnar, and he'll walk you through the financials for the quarter. Thank you, David. The fourth quarter marked the end of a first and very defining chapter for Warner Bros. Discovery, in which we took some pivotal initial steps. Among them, the integration and repositioning of our global finance organization through which we implemented a number of initiatives to drive efficiency and better support the company's long-term sustainable growth. We've accomplished a significant amount in 2022, and I'd like to take this opportunity to thank the entire finance team for their persistence and resolve in working through these very difficult but necessary first steps, which has resulted in greater command, control, and precision across the enterprise and laid the foundation on which we are positioning the company. This is, in part, a function of a successfully executed synergy program and ongoing continuous improvement efforts. With respect to these initiatives, we are working on a total potential opportunity of $5 billion over the next few years. That is what we're tracking in our system today, specific initiatives with associated direct financial impact, responsible owner, and detailed milestone plans. Naturally, and as I have said before, not all of these initiatives will come to fruition or get realized to the full extent, but this represents a significant pipeline for us as components of both near-term cost out and longer-term continuous improvement. To that end, we're now confident in a path to at least $4 billion of savings, largely addressable through 2024, representing an increase of $500 million over our prior estimate. Through the end of 2022, we've already realized over $1 billion of synergy, inclusive of a couple hundred million dollars of course- corrective measures that we undertook early after launching Warner Bros. Discovery in April last year. We are laser focused on delivering against our high-level strategic, operational, and financial targets and the three pillars that comprise our core principles. As we look to 2023, my near-term key financial priorities remain. Number one, delivering against our synergy and transformation targets, where we are managing towards an incremental $2 billion of cost capture in 2023 and the larger opportunity I mentioned previously. Number two, partnering with our business leaders to embrace a more rigorous analytical framework through which capital allocation decisions will be viewed, particularly as we refine how our content is monetized and windowed. Echoing some of what David said, the leadership team is ever more aligned on strategic decision-making that benefits the company as a whole versus one segment or another and is incentivized as such. I believe we've barely begun to scratch the surface in terms of the potential here, and I'm excited about the benefits as this cascades throughout the organization. Number three, evaluating capital allocation opportunities with rigor so that we can both achieve near-term efficiency and enhance long-term asset value and growth. Number four, driving overall efficiency and free cash flow conversion towards our near-term goal of 1/3 to 1/2 conversion of adjusted EBITDA, with longer-term upside towards our 60% goal. Naturally, we are laser focused on delevering the balance sheet, where I see net leverage very comfortably inside of 4x by the end of 2023 and reiterate our prior guidance to be within the investment grade range by mid-2024 and within our gross leverage target of 2.5x- 3x by the end of 2024. I am proud of what we achieved in 2022 against the targets we set out in the summer and against an increasingly challenging environment in the second half of the year. I'm proud of the momentum we have built exiting the year. Turning to the quarter, I'd like to quickly take you through some of the puts it takes impacting performance. Given we're still in the first year following the closing of our acquisition, I will discuss the P&L impacts on a pro forma XFX basis. Starting with the studio segment, as expected, performance was negatively impacted by lower TV licensing revenues against a very tough comp last year. Something we'll face again in the first quarter of 2023. Games and home entertainment faced difficult year-over-year comps as well due to last year's COVID-induced tailwind for library content. In addition to less activity in home entertainment, given the leaner theatrical release schedule in 2022, which was very much a result of deliberate decisions we made about specific titles and overall release dates. Partially offsetting revenue headwinds were lower content expenses, distribution fees, and marketing costs. Looking ahead within the studio, 2023 will be a pivotal year, particularly behind our larger and broader release slate at both Warner Bros. Pictures and at DC. Not to mention a wonderful start with Hogwarts Legacy on the game side. Turning to networks, revenue decreased 6% as global advertising revenues declined 14% and distribution revenues decreased 2%. Adjusted EBITDA decreased 7% as revenue declines were partially offset by lower content expenses as well as lower personnel and marketing costs, in part reflecting our cost synergy efforts. Clearly, as we have pointed out as a key risk since the summer, underlying advertising trends, particularly in the U.S., have continued to soften through the fourth quarter. That was further exacerbated by general entertainment audience declines. While visibility remains limited, we are seeing revenue trends very modestly improving sequentially in certain pockets. While this is indeed encouraging, we're hesitant to forecast any meaningful near-term revenue improvement. International markets continue to perform relatively better. Stronger markets such as Poland and Italy were in part offset by weaknesses in the U.K., Nordics, and certain Latin American countries. While we're comping the Winter Olympic Games in Q1, which we expect will account for roughly 100 basis point headwind to our global advertising growth rate, we see underlying international trends modestly improving. Though, like in the U.S. we're being mindful about overall visibility and regional macro and political influences. Distribution revenues on the whole were impacted primarily by subscriber declines in the US and lower affiliate rates in certain European countries. While larger contractual rate increases in the U.S. and premium sports packages in Latin America helped to offset part of this impact. Importantly, we successfully completed affiliate renegotiations, which accounted for more than 30% of U.S. distribution revenues and which brought our portfolio together coterminously. An important reference point for the value of our combined portfolio of networks to our distribution partners. I'm especially happy about the development in our D2C segment, where we delivered a market improvement across a number of key operational KPIs, leading to a healthy sequential improvement to financial performance. Moreover, the exit rate coming out of the fourth quarter lends confidence in continued very strong financial performance thus far in Q1 and into our soon-to-be-relaunched D2C offering. Casey and the team continue to fuel critical and audience acclaim with globally resonant content, driving improvements in engagement and churn, which is setting up a nice tailwind into the relaunch. Q4 revenue growth of 6% against a 12% decrease in combined operating expenses led to a significantly reduced EBITDA loss of roughly $200 million, a $500+ million improvement year-over-year, notwithstanding a largely content-driven 6% increase in cost of revenue. Global core subscribers increased 1.1 million sequentially and 10 million year-on-year, while global ARPU increased as well modestly to $7.58. This doesn't yet reflect the $1 price increase on the ad-free retail tier in the US that was implemented in January and which has been digested quite well. Moreover, we're analyzing our pricing strategy in a number of key international markets, particularly in LATAM, where we believe our service has significant pricing upside. Based on the traction we're seeing across the broad spectrum of operational and financial KPIs, we expect segment EBITDA to be more or less break even in Q1, which implies another $500 million improvement year-over-year, roughly in line with the improvement seen in Q4. Naturally, our domestic relaunch of the combined product offering in the spring will result in a sequential step-up in P&L investments in Q2 behind a requisite increase in marketing spend support and premier content launches. We remain very enthused about the trend line here, and I have greater and greater confidence in our ability to achieve our long-term segment targets of break even in the U.S. in 2024 and $1 billion of profitability in 2025 globally. We continue to track above our internal plans. Turning to consolidated results and free cash flow. Q4 revenues decreased 9% year-over-year, while adjusted EBITDA decreased 2%, helped by a reduction in consolidated SG&A by 22%, a bit more than we guided to. Currency was an approximate $100 million headwind to EBITDA for the quarter and near $200 million headwind for the full year. A year-over-year increase in corporate expenses were due to a number of factors almost exclusively related to external market factors, such as an incremental $120 million related to underlying rates on our securitization facility. We generated two and a half billion dollars of free cash flow in Q4, bringing the reported full year free cash flow to $3.3 billion. Note that merger and integration related cash costs totaled nearly $150 million in Q4 and nearly $800 million for the year. In addition to a nearly $350 million headwind from securitization and factoring since the closing of the deal in early April. The sequential improvement in Q4 free cash flow versus Q3 was the result of greater EBITDA, the timing of interest payments on acquisition debt, and some first improvements from working capital initiatives. We repaid $1 billion of debt during Q4, bringing the total debt repaid since the closing of the transaction to $7 billion. We ended the quarter with $49.5 billion of gross debt and nearly $4 billion of cash on hand, implying net leverage just below 5x. Turning to the total company EBITDA outlook. Reiterating my earlier point, I'm very pleased with where we ended the year and encouraged with our ability to balance choppy macro tides with success in repositioning the company for future growth. I remain very optimistic about the range of potential outcomes in 2023 and beyond. These outcomes will reflect an incremental $2 billion of synergy and transformation efficiency capture, while additional puts and takes to consider include positive revenue inflation in D2C, the broader release slate at Warner Bros. Pictures and games, balanced by cyclical advertising headwinds. We expect 2023 pro forma adjusted EBITDA to be in the low to mid $11 billion range, representing growth of low to mid 20% against pro forma adjusted EBITDA of $9.2 billion in 2022. We continue to expect to convert a third to a half of EBITDA into free cash flow, as I stated earlier, with the key determinants and drivers of growth being the magnitude of EBITDA, net cash content spend, the impact of working capital initiatives and the timing and magnitude of a trend change in the advertising market. We do expect the cash cost to achieve synergy and transformation efforts will be around the higher end of our $1 billion-$1.5 billion guide, given the expanded synergy target, some of which possibly hitting in 2024. With respect to the cadence of free cash flow, as is historically the case for both legacy Discovery and WarnerMedia, Q1 free cash flow will represent the low point for the year, given the timing of sports rights payments, timing of content outlays, and cash interest payments on a large portion of the acquisition debt. We expect free cash flow in the first quarter to be negative. The long-term earnings and free cash flow generation potential of this company are stronger than ever, particularly after having taken some courageous and crucial first steps this past year. We are committed to continue executing our strategic initiatives to drive top-line performance. With much repositioning behind us, we are beginning to fully lean into the opportunities ahead of us. As always, we are not managing this company for short-term financial performance, but rather with the next 100 years of this vibrant, creative organization in mind. With that, I'd now like to turn it back to the operator, and David, JB, and I will take your questions. At this time, I would like to remind everyone in order to ask a question, please press star and then the number one on your telephone keypad. Our first question comes from Jessica Reif Ehrlich with Bank of America. Thank you. Hi. David, as you said, 2022 was a year of really heavy lifting, and you had challenges really in every division, whether it was film, advertising, CNN, et cetera, I mean, macro, et cetera, D2C. As you look out to 2023, I think Gunnar kind of touched on some of the potential tailwinds, but it sounds like you're walking away from close to $12 billion in EBITDA to maybe low to mid $11 billion in EBITDA. I'm just wondering if you can, you know, talk about some of these assumptions. Clearly, you still have some macro challenges, but, you know, what could go right? What's in there for FAST upside, which is something, you know, that you didn't really talk about that much, but it's new. On the potential for the balance sheet, the balance sheet improvement is very encouraging. Does that include any potential asset sales, like non-strategic asset sales? You have so many hidden assets within the company. What are you considering? All right. Thank you, Jessica. Let me start with the second question. The guidance does not include any asset sales. There are some opportunities that I'm looking at below deck, as we say, but none of that would be baked into this leverage guidance. On the 2020- Non-strategic assets. Yeah. Yeah. On the 2023 outlook, it's early in the year and there's a number of uncertainties as you wouldn't be surprised to hear. You know, I'm very, very glad that we put out some targets in the summer of last year, and we were able to hit those targets. We're putting these targets here out for 2023 with the same mindset that we wanna hit or outperform that guidance. We've gone through a couple of the puts and takes here. The biggest unknown continues to be the ad sales environment. We have a lot of points to be very excited about. We're gonna be releasing 12 films, six games. One of them is off to a very good start. A lot to be looking forward to. We're excited about JB's product relaunch in the second quarter. Those are uncertain factors. It's very early in the year. I'm not taking anything off the table here, but I just wanna be realistic as well about what we're seeing today. Yeah. We hit this year with full leadership team in place. We met with 186 of the top leaders in for a week in early January. This is one team now. Everybody has a strategic focus on improving free cash flow, market share for each of the businesses. We have command and control of each of the businesses. I think our diversity, we have all these different assets that are different. Some are advertiser driven. The gaming business is all consumer product driven. I think that diversity is strength. Thank you. The next question, please. Our next question comes from Michael Morris with Guggenheim Partners. Thank you, guys. Good afternoon. Appreciate all the information you just shared. I'd like to ask about advertising trends you're seeing and maybe kind of advance this discussion a bit more. Really trying to understand how much of the ad impact that you're seeing is kinda coming from the macro environment, how much you feel like is more reflective of some of the underlying trends that just have to do with ratings declines or cord cutting, and those types of trends. If you could share your view on, you know, those two impacts, that would be very helpful. My second question is about this pending Relaunch Max product. Is there any of your content that's definitely off the table to be included in that service? I think of the investments that you make in live sports content on Turner, live content on CNN, are those types of things definitely off? Are they structurally not able to be put on the service, or is that something that might fuel that service? Thank you. Let me start with the second. In addition to all of our entertainment and nonfiction, we do have all of our news and sports. That gives us real optionality in terms of nourishing an audience for growth and for reduction in churn and for overall price value. We'll do a full presentation on April 12th, which will lay out this significantly improved product, the launch, what will be on it. JB, anything to add to that? I think the focus right now is obviously continuing to on the expanded entertainment offering. We think the complementarity of the HBO Max and discovery+ entertainment offering is significant and will be, you know, a major step forward for consumers who are looking for simplified number of choices, more breadth of options in terms of content all in one place and for good value. That's what we're looking to primarily deliver. As David said, we've got sports and news that today are really untapped in the streaming world, and those are optionality for what we might be willing to do in the future. We'll share more of that on the twelfth with you with more details. In fact, we've used news and sports quite effectively in Europe, and we've learned a lot about when it does work and when it doesn't. On the advertising side, it's kind of a complex answer. I'll just take a swing at it, Gunnar and you can follow. The macro environment is very challenging. It's significantly better outside the US right now, which is a surprise. The sentiment is not terrific. The scatter market overall is very slow. I would say steady to maybe a little bit better than it was in the fourth quarter. The digital inventory, which really held up in the fourth quarter, has also softened. We have an unusual situation. On the one hand, we have tremendous breadth with live news, live sports, entertainment, nonfiction, a tremendous share and reach. Having said that, we closed this deal right before the upfront. We're first bringing our teams together. We've effectively done that now, but we had to take two different sales teams and pull them together. I think that I'm hyper-focused on this, meeting once a week with the team, but getting our stride as a new working team, and I feel like we're starting to get some momentum on that. We also made a decision in the upfront to drive price rather than extra volume. I believe in that. Having been in this business for 30 years, I think in order to really drive asset value, you need to drive price. We were able in the upfront to drive price significantly more than all of our peers. In order to do that, we took less volume than we could have. Now you see a very soft scatter market, so that is having some impact on us versus others that took a much bigger position in the upfront. Having said that, as we face this next upfront, which is coming up in two months, I think the breadth of our content, together with where we go in on price, positions us very well. We'll keep in mind this balance of volume versus price. I always would err toward price because I think that's where you really build asset value. We've also introduced, digital advertising on HBO, which advertisers are very excited about being able to be in these, marquee shows. We're doing it in a very tasteful way by putting it on the very front end. Gunnar? Yeah, no, only thing I would add is from the perspective of cyclical versus secular, there's no doubt. I mean, POT levels in the industry, I think were down 14% in the quarter. You know, arguably, we've done a little worse than that, partly driven by the scheduling or the sports schedules that David mentioned a couple of minutes ago. I also think we're very well positioned to grow from here. You know, Kathleen is doing a lot of work getting the enormous value of our library on screen. We've got some tests going on, and it's very early, but some of the numbers that are coming in are looking exciting. She's also restructured the team with the, you know, development-focused doers who are running this portfolio as one integrated portfolio. We've got a time-tested approach to cross-promotion, and we're adjusting that right now to the larger portfolio and the larger number of assets that we're promoting. We were able to put that to work behind some of Casey's launches, behind some of our film launches. We're seeing some real opportunity here. I think we're very well positioned. In terms of the market itself, you know, it's as I've said before, it's not a good environment. We do see, you know, the weekly bookings right now ticking up slightly. If you compare January and February with maybe the November, December timeframe, looking a little better. Retail, fast food, entertainment, little better. telecom, small, but coming back. You've got other areas like technology still, you know, completely depressed. Again, as I said, similar picture with more diversity international. Some areas actually, you know, trending up now, others still difficult. It's just too early to really, call a trend change here. We are assuming that things will get better in the second half. Yeah. we're assuming that and I have no doubt that when the market turns, we're gonna be in a very, very good position to capture that upswing as well, especially as David mentioned, with more inventory on the digital side, becoming available here, which last year was a bit of a limiting factor for us. Thank you very much. Next question. Our next question comes from Brett Feldman with Goldman Sachs. Great. Thanks for taking the question. You know, there's been an increasing discussion recently about what the right general entertainment content strategy is supposed to be for media companies as your models continue to pivot and become more streaming centric. You know, we've heard the word curated. I think you used it during your script. We also hear a bigger discussion around how you decide when something should be exclusive to your platforms and when maybe you should be licensing. I was hoping you could just give us your most updated thoughts so we kinda have that framework for assessing the new product when you roll it out on April 12th. Thank you. Sure. Well, you know, one of the big advantages that we have, Brad, is that we have this diversity of content. As we think about where we put content, you know, as Casey looked at HBO, we were able to see which content are people spending time watching, what content is really powerful to us in terms of reducing churn. There was a lot of content that just wasn't being viewed. We were able in many ways to Monday morning quarterback. That's what led us to the conclusion that director streaming movies were providing really no value to us. So where we pivoted and said we were going, pushing to move all of our films back out with real windows in order to optimize those products. You know, we were excited about the fact that we're gonna take all of the Discovery content and put it together with the HBO Max content in a much better platform. You know, the key to this company is, as a storytelling company, we have this diversity. We have storytelling in games with Hogwarts, which is really off to a tremendous start for us. We have Channing and her team right now with the number one or two show on almost every platform in America, where we're selling to all of our to our peers in the business. Then we have the ability to pick from all of these different baskets to build really what's maybe most important for us, which is a successful and profitable streaming business. That HBO Max, whatever we call it on the launch, is a product that we take around the world and that has a real impact on how people consume content. We believe in it because we believe we have the best menu of content, the best portfolio, the best quality, and we're curating now in a way that's having an impact on America. I think that is key to us in terms of building the long-term strength. The other key is that we have the largest TV and motion picture library, and we're the biggest producer of quality content in the world. Selling that to drive free cash flow and to nourish the overall segment so that we as a media segment can be successful is important. In answering that question, you reiterated something you said before, which was an intent to fold the Discovery content into the new product. There had been some media reports a few weeks ago that you were gonna actually keep Discovery as a standalone product. Is that something you're able to comment on now? I mean, just simply that, for those that have Discovery right now, the churn is very low and it's profitable, discovery+. Many of those people are gonna wanna move up to a bigger product, more robust with a bigger offering. For those that are happy paying $5 or $7 and having you know, home, food, Discovery and OWN type content, our strategy is no sub left behind. We have profitable subscribers that are very happy with the product offering of discovery+, why would we shut that off? Thank you. It is a shared... The platform itself for discovery+ will be a shared platform. We have all this work that we've done to build this platform will be taken, you know, so that's to the benefit of all of our subscribers on all of our different products. Brad, just to be clear, the Discovery content would still be available on the bigger relaunched combined product. No question about that. Understood. Thank you. Great. Let's go to the next question, please. Our next question comes from Ben Swinburne with Morgan Stanley. Thanks. Good afternoon. Two questions. David, if James and his DC strategy is successful, which I'm sure is your expectation, you know, what does that mean for the company overall over the long term? You know, obviously, successful films will help your studio segment earnings. But I know it's a tough question to put numbers around, but just as you think about the impact of DC, you know, sort of fully realizing the opportunity over the next, you know, 5+ years, what could that mean to Warner Bros. Discovery and sort of the earnings power of the organization? Then Gunnar, you sound very bullish and confident on the DTC targets, the $1 billion of EBITDA in 2025. Can you talk a little bit about the revenue outlook for D2C? You had 6% growth this quarter, a lot of that from advertising and content, but do you need revenue growth to accelerate in order to deliver that $1 billion? Maybe help us think about the levers you have and your expectations around top line over the next few years. Thank you, guys. Yeah. Thanks, Ben. Well, look, we were laser focused on building this DC 10-year plan. James was writing Superman. We were spending time with him and Peter. He had a vision for DC that we are all in on and believe in. He presented that to you and the press about a month ago. It's one of the biggest value creation opportunities for us. I think it could and should be huge because it wasn't being pushed on. If you look at DC, Harry Potter, and Lord of the Rings, you take a look at Warner as a company without those three, okay? It's those three are the tent-pole products that when someone's at dinner anywhere in the world. They look at their watch at eight o'clock, you mention Batman, Superman, Wonder Woman, Harry Potter, Lord of the Rings. In every country, they leave dinner, and they got to go home to view that product that they love. It gives a huge advantage with those tentpoles. We are a storytelling company, but I believe we, you know, that we have an overwhelming advantage in the marketplace with the IP that we own. But to get that advantage, we have to create great content with that IP. That storytelling IP. We haven't done a Superman movie in 10 years. We haven't done new Harry Potter content in over a decade. Lord of the Rings, which is a fantastic franchise, you know, Andy Jassy was pushing on it at Amazon with a lot of success. Well, we own those movie rights. We want to optimize that as a unified strategy for the company. We take that across film, TV, even, you know, to sell to third parties because we have a treasure that no one else has. You know, for us, DC alone will be a game could and should be a game changer. I think there was a lot left on the table. We got to take those swings. We got some of the best creatives in the industry right now focused on those swings. Yeah. Ben, on the D2C question, let me start with the revenue side of it. We definitely are planning for an inflection on the revenue side. Keep one thing in mind, the entire last year was impacted by this headwind from coming off of Amazon, and we've lapped that now and, you know, we're seeing some growth now. We'll always be a little lower maybe than sort of a pure play D2C product just because of the HBO linear trends that are... Mm-hmm ... that are baked into our revenue number. We're definitely planning for revenue improvement. On the cost side, all of the trends are pointing in the right direction. We see better engagement, better churn, which makes marketing e-efficiencies come up. We've right-sized the content investment, and we have high hopes for all of these metrics after the combined product launches to further improve. You know, later down the road, we're also obviously, you know, going to start looking at new market launches again. The only other thing I'd add, Ben, is for us it's not just a question of subscriber scaling. Yes, that's 1 important ingredient, so we do see subscriber scale as one part of the revenue growth story. We see price as a very important second part. Internationally, as we said before, we look at our pricing as significantly under where we think the market is. We see churn as a 3rd important variable, that historically has been, you know, relatively higher on the HBO Max product that with the two products coming together, that ultimately coming down is important. Obviously with the new product, we just look at some of the features that we're gonna be rolling out and some of the improved and enhancements from a performance standpoint in the product at a much higher engagement, which will help both our ad light monetization, including, as David mentioned earlier, the fact that we're now putting ads in all the content on HBO Max as opposed to just some of the content on HBO Max. All those will be part of the revenue drivers. In addition to obviously having the rights, like we talked about before, for all of our sports in the U.S. and news content eventually, that could also help us drive further scale and pricing in the years ahead. Thanks, JB. Thanks, guys. Next question. Our next question comes from Robert Fishman with SVB MoffettNathanson. Hi, good afternoon. I have one for David and then one for JB or Gunnar. First for David. As part of the upcoming D2C relaunch, can you just talk a little bit about how you plan to balance protecting the HBO brand while at the same time leaning on the HBO premium content to help drive the new service going forward? For Gunnar or JB, can you maybe just expand upon your FAST strategy and why you chose to do the deal with Roku and Tubi, and maybe how that might impact the launch or timing of your own FAST service? Sure. The symmetry of the discovery+ content, which is heavily viewed for hours a day, mostly during the day and infringe against the HBO content, which is watched more, discovery+ maybe more passively, HBO more with family, the more research we do, the more we look at it, the more we think these fit together very well with appealing content to everybody in the family. We're feeling more and more confident about that. On the 12th, we'll lay out to you. We have a clear attack plan where we'll drive this really across the country and into markets around the world with conviction. We'll take you through what that plan is and how we intend to do it on the twelfth. We're locked and loaded. FAST. Oh, on FAST. Sorry, Robert. On FAST, look, the strategy is, I think back to some of the questions earlier. At the end of the day, one of the advantages we feel like we have is the question keeps coming up about windowing. The reality is, in today's environment, I think it would be, you wouldn't want us to say we have a static A 100% defined windowing strategy. The reality is the market is evolving so dynamically that what we are doing is, as one team, looking at all the different windows and what our real asset is having actual distribution assets in almost every form of media, whether it be, you know, linear television, on-demand television through streaming, games, theatrical distribution, free-to-air, pay TV. Having all those distribution outlets gives us the optionality to look at what the data shows us and see where we need to lean in further or not. FAST is one area that as we look at the evolution of consumer behavior, we look at obviously a lot of the free-to-air viewing moving to what we call free-to-view online. We don't yet have, we think, a strong enough position in that market. The Roku and the Tubi deal was really just a toe in the water, if you will, 14 channels, a beginning for us, but there'll be more to come as we go through the year. We do wanna have a bigger presence in that space because we do see consumer behavior continuing to shift and having a very robust amount of consumers around the world who will wanna consume ad-supported content. With the breadth and depth of content that we have across the company, we think we're very uniquely able to do that without jeopardizing or risking the subscription business, the theatrical business or some of our upstream windows, which we'll obviously continue to focus on. Great. Thank you all. Our next question comes from Kutgun Maral with RBC Capital Markets. Good afternoon, thanks for taking the question. I wanted to follow up on the streaming discussion. You've been ahead of the curve here, it seems like everyone these days is reshaping their streaming strategy in pretty profound ways, whether it's their org structure to content spend, types of content investments, philosophy around content exclusivity and licensing, international pricing it, and just so much more. I think the focus for many of us is usually each company's path to profitability, maybe there's not enough attention to the fact that each of these moves could have pretty dramatic impacts to the industry and competitive landscape. I know it's a pretty open-ended question, can you talk about how you see the streaming industry evolving overall with these changes, and where does WBD fit in that? Thank you. Well, for us, the market right now, our focus is building a best-of-class product and putting all of our content together in so that it's easy to consume and that people are aware of all the different content that we have. I do believe, as JB said, and we do believe as a company, that we'll sort of recreate this, the streaming service which is ad-free, then there'll be ad light, and then we ourselves will run our own FAST service. Effectively, whether you wanna look at content for free, you wanna look at with ads, you want a premium, that you would have all that opportunity with us. It makes sense 'cause we have the largest TV and motion picture library in the world, and we can create a Tubi or a Pluto without buying content from anybody by just being able to put it on ourselves. You know, we, you know, as the largest owner and producer of content in the world, we wanna super serve effectively our streaming service, which is a top priority, as well as an AVOD service so that we could reach everyone in every country everywhere in the world. In addition, we wanna run this company to drive free cash flow. The ability to monetize a lot of the content that isn't critical to subscriber growth and that isn't critical to or helpful to churn, having some of that content appear on our platform and sell it non-exclusively to others, is very economically beneficial. The good news is we've had a real chance to look at content, you know, on each of the platforms over the last 2 years, we could see, for instance, at HBO, the majority of viewership of content on HBO was only 40% of the content. There was 60% that was hardly being viewed. Why should we need to monetize that in order to drive shareholder value? Once we establish this funnel, then we can take things like the first season of Succession or the second season. We could put that down on our AVOD service. Then if you loved it, you can come up and you could then pay for on ad light or in subscription. Basically, we create a flywheel of our own where we own the full ecosystem, the subscription, the ad light, and the ad free. We take advantage of all the content that we have. I think I'd just only add that. Oh, go ahead. Yeah. No, I was just gonna say that, you know, as David Zaslav has said before, I think the industry obviously was at a scale at any cost. We said starting last August, we believe in profitable scale. The industry was in a quantity of content over quality. We believe in a quality over quantity, therefore spend-wise, spend needs to get rationalized. At the end of the day, you know, the consumer is at a point in time where they want more choice and better breadth of choice from fewer services because they just don't have either share of wallet to be able to spending on 5, 6, 7 services anymore. You put the discovery+ and HBO Max propositions together at a great value, and we think we deliver something that ultimately has something for everybody in the household, which will help us on scale and help us on churn, which are the two major ingredients we're focused on, as well as obviously engagement. The other point where is front and center for us is curation. There's loads of content out there, but curation, creating content at a time when people can watch it, creating a community conversation. If you look at The Last of Us, it was growing every week. Euphoria. You know, to be able to deliver, you know, 20, 30, 35 million people in America watching and to have it be a conversation. Storytelling content is most powerful when you're watching it and then you're with others, either in a theater or you're able to talk about it, either online or with your friends. That's the power of content. Not when you're viewing content alone. Content alone is really only half of the equation. Curating content so that people can watch it and have a shared experience is a very big piece of the Warner Bros. Discovery advantage. We can take you into the theater around the world. We can put you on HBO on a Sunday or Monday night where it's must-see streaming TV. or, you know, after we've launched your movie, we can put you right on HBO on Sunday night with the biggest audience in America tuning right into you. I think that's something that's really resonating with the creative community, that their content is seen, it's curated, and it's elevated, and that it's part of the cultural conversation, both in the theater and on the platform. you know, that is what all great talent wants. They wanna have an opportunity for their content to be seen, to be talked about, and they wanna feel respected. You know, that is the culture here at Warner Bros. Discovery. The best thing that we have going for us right now is all of that hard work that we did, and it was probably two years of work that we did in 10 months, it's now overwhelmingly behind us. All the meetings that I've had in the last two weeks are about great content that we're producing, meeting with creatives that wanna come here, what more shows, what are we gonna be selling, what more shows are we gonna be keeping on our platform, and getting ready for our new launch. Yeah, I think this is an exciting time because I think we made some tough decisions. Some of them we may find we need to adjust, but we feel really good about where we are, and we're accelerating forward. Great. Last question. Our final question comes from John Hodulik with UBS. Great. Thank you, guys. David, maybe just to sort of wrap up that on the content side. You know, a number of your competitors have cut back on the total amount that they're spending on cash content in 2023 versus 2022. You know, it sounds like there's you guys have, you know, on the one hand, a lot of new, you know, programs, a lot of new movies, and a lot of new initiatives, but at the same time, pulling some content off the platform. Just what should we expect, you know, in terms of 2023 versus 2022? Then on the affiliate side, you know, renewing 30% of the of your affiliate deals. I mean, just how should we think of sort of pricing and, you know, how should that translate into sort of results as we look out into 2023? Thanks. Okay. Guru, you wanna start? Yeah. Look, I mean, on the content spend, remember, you know, all our strategy changes leading to the content, restructuring and write-offs over the course of last year, obviously that's gonna flow through cash as well as we adjust. You know, that said, there's always gonna be a place for quality content, and we're open for business. It's the backbone of what we're doing and we'll keep investing. David? One of the tenets is we're not gonna launch any content before it's time. We have a lot of motion picture content that we're reworking and making a lot of progress with. The Hogwarts game, we took several additional months to rework it to get it right. It's not about getting it out quick. It's not about getting it out for a certain date. It's about telling the best story. Casey is the best example of that. Channing is the best example of that. You know, this year you're gonna see us fighting on DC. You're gonna see us fighting at Warner Bros. on the motion picture side in order to really. I think there's a huge opportunity on the Warner Bros. motion picture side for investment in quality content and storytelling. We're not gonna tell any story before it's time. I think you're gonna see a big difference that when we release something, it's gonna be a product that we think is the best it could be. Regarding the linear affiliate renewals, as we've said a couple times that we're very happy with how those discussions went. A clear testament to the importance and the value that our network portfolio is delivering to our affiliates. Taking a step back here, though, I mean, the reason why one of the reasons why we carved out the linear business, the network business as one separate segment is to be completely transparent about where those trends are moving. As I've said before, you know, net, that's not a segment, you know, where I would expect a sustained revenue growth. That's not the point. It's about the sustainability and the longevity of the free cash flow being delivered by that segment. You know, to that point, I have no doubt that we have, you know, years and years of that coming our way. Great. Thank you, two. Q&A session is now closed, which concludes today's conference. Thank you for attending today's presentation. You may now disconnect.