Good afternoon. I'd just like to remind everybody that today's presentation may include forward-looking statements regarding the company's future business prospects, plans, and financial information. The company's actual results could differ materially from those stated or implied due to risks and uncertainties associated with our business. For additional information, please see the company's filings with the U.S. Securities and Exchange Commission and the investor relations page of our website for our complete safe harbor statement. All right, thank you for that. Thanks, everybody. We're going to get started here with our next session. It's a real joy to welcome back to our Communicopia + Technology Conference, that's what we're calling it now, David Zaslav, the President and CEO of Warner Bros. Discovery. David, thank you so much for being here. Good to be here, Brett. I actually wanted to call it Cennicopia this year, but apparently there was a copyright thing that we couldn't do. So, all right, listen, let's jump into some of the most recent news. So earlier this week, you updated your 2023 guidance, which now assumes financial impacts from the writers and actors strikes will persist through the year. So you trimmed your EBITDA outlook to account for $300 million $500 million of impacts. You actually raised your outlook for cash flow to at least $5 billion. Assuming these strikes are indeed resolved by year-end, how should investors think about the impact from Warner Bros. going forward, for example, in 2024? And how long is it going to take to resume normal film and TV production? Great. Thank you. Good to see everyone. First, before we talk about the strike, because we talk about it in terms of economics, it's really about people and writers and actors that have been out for a very long period of time. And we're a content company. We're a storytelling company. We need to do everything we can to get people back to work. But more importantly, it's true of creative people, but it's true for all of us. People need to be compensated fairly, and they need to feel valued. And I was in L.A. the last two days, and we really have to focus as an industry, and we are, on trying to get this resolved in a way that's really fair and everyone feels fairly treated. Having said that, in our guidance, we said that this would be resolved by September, and here we are in September, and this is really a very unusual event to have. The last time it happened was 1960. And so what we did is we just said, "We're going to really fight to try and get this resolved sooner." But the impact of it for the rest of this year, and it could, if it happened sooner, it could get diminished, but that there would be significant increase in free cash flow and a reduction of 300-500 in EBIT. On the free cash flow side, instead of $1.7 billion, which is what we had guided to, it'll be meaningfully more than 1.7. That's for the Q3? For the Q3. Right. We had said it would be $4.5 billion $5 billion in free cash flow for the year, and it'll be meaningfully more than the $5 billion. And so, that's it. That was really, all that was, and we're just hopeful, as a company, and I'm very hopeful that we can get that resolved. If we can get it resolved soon, then the longer-term impacts will be minimized. But there is real industry challenges here. We haven't fully recovered from COVID, and particularly on the motion picture side, and so we've put off some movies. We put off Dune and some other movies, and so we're very focused on how do we get this industry, this great industry back. How quickly do you think you could get back to a normal slate of production around your TV shows and films if you were indeed back to work very early next year? Oh, very quickly. We're ready and raring. So as soon as these strikes are resolved, everybody is ready to get back to work, us in particular, to just, you know, activate. All right. I'm going to go to the second recent news item, which is the programming dispute that has emerged between Disney and Charter. So as everyone here knows, anyone who's a Spectrum customer is not able to see any Disney channels, most notably ESPN. In framing the dispute, Charter signaled that the video ecosystem is broken and that the model they have proposed for Disney is the model they're going to propose with all of their programmers going forward. How do you think about the relationship that you have with the pay TV providers? How do you see it evolving, and what do you think is the right win-win here? Well, first, I don't know that much in particular about that dispute. But it feels like this is a moment. It's not clear whether this is a moment that gets resolved very quickly, and we're back to having an industry that's in secular decline, and it's anybody's guess of how long that takes or whether this is a more meaningful moment. But we have been. We closed on this company a little over 16 months ago, and we have been on a relentless operating mission about this company to reinvent this company for the future, to structure it, and as we sat down, what does each business look like so it's best equipped, and best structured for the world we live in today? Here we are, 16 months later, we have a company that's generating over $5 billion in free cash flow. We had Max, which we needed to launch a new platform, which we did. It's robust. It could take live news, live sports, and it's making money. It was losing significant money. We've restructured each of our businesses, and we have real command and control of each of those businesses. All of that work was to put ourselves in a position where we were ready for a moment just like this. So, it's hard to figure out exactly how this, what direction this takes, but to be at a company now where our balance sheet is delevering, where we have real command and control of our assets. We have a good sense of the IP that we have, and we're on our way with our direct-to-consumer business. I think we have a lot of weapons, and a lot of optionality in order to take advantage of this and build sustainable growth out of it. Our focus is sustainable growth, and at the same time, this feels that it's disruptive, and it may be, it may resolve and not be disruptive at all, or it may be very disruptive. But coming out of that, from our perspective, is opportunity. This industry is being disrupted, and that's why we have been aggressive and relentless about making a lot of difficult decisions in order to restructure this company for the future, where we're spending money in the right way, where we're generating real value out of all of our investments. So, we are looking at how do we use this? There's a lot that needs to happen with this industry, and more conflict, more challenge is all around one thing: There's disruption. And how do we create an environment that's better for consumers? People are spending time on linear, a lot of time, and I still believe in linear. People over 40 are spending most of their time still with linear television. But there's lots of consumption. We need to have content everywhere, and we need to create an ecosystem that works for everyone. All right, well, let's talk about one of the things that you're doing to improve the experience for consumers, which is you launched Max. You rolled it out in the U.S. in May. You're going to start doing your international rollouts beginning in the fourth quarter with Latin America. How has the service performed in the U.S. so far versus your expectations? So, like, what's working as planned, maybe where are you fine-tuning? The platform is really terrific. It's able to support all of our entertainment and nonfiction content. It's a platform that will roll out next year and later this year around the world. The engagement on the platform is up. More than 20% of what people are consuming on the content is content that was on Discovery, home, food, crime. And so the idea of a broader menu of content seems to be working. We need to work through the transition of getting people on Max, and that's worked really quite well. And now we got to focus on how do we grow it. In the next 2-3 weeks, we'll launch CNN Max, which I think is a big moment. CNN is the most recognizable brand in news around the world. It's a strong linear asset, but we'll be launching a new live news product. So when you're on Max, not only are you in your own world, where you might be watching White Lotus or Succession or Fixer Upper, but you could also tune to live news, and if something is happening in the world, you'll see it. So the product is alive. And then we'll add sports. We said that we will put sports on Max, and in the near term, we'll get to you with more detail. But this is one of the strengths of this company. Leader in news, leader in entertainment, where we own all of our IP, and leader in sports, domestically and around the world, where we have a lot of great content. And all of that we could bring to bear, and we just need to figure out exactly how to offer it to create value for the consumer and sustainable growth for shareholders. Stick with news for a minute. That is an area of content that really hasn't been embraced yet on streaming. Why do you think that this is the right time, that Max is the right platform, and how's this going to be different than what was briefly tried through CNN+? Well, first, CNN Max will be primarily a live product, live news. So when people see CNN, the first thing they want to know is, What is going on in the world? Max's demographic is about 30 years younger than linear television, and so there's a whole different group of people that are on Max, and there are a lot of people that are on Max that don't have linear television. So creating a 24-hour news product that's geared more toward that generation, a younger generation, is... I think it's compelling. We might have 70 million homes right now on linear in the U.S., and now you add to that all the subscribers that we have for Max that we could reach. And in addition to that, we had a great hire last week in Mark Thompson. I met Mark about 20 years ago when he was at the BBC, and I was at Discovery, and we were doing things like Planet Earth together. He's a superb executive, but he not only did he run the BBC, but he also turned around The New York Times by running their digital business. So we have CNN proper, a global linear asset, but how do we take CNN News and make it a product long term for the future on every platform? One is to get it on Max. And Mark and the team will be figuring out exactly how to build that over the next couple of months and years to make it really compelling. But we're also the number one digital site for news in the world. In any given month, we have about 150 million people that come to us. One of the things that Mark is going to focus on is, how do you take that huge funnel, together with Bleacher Report and House of Highlights, a huge funnel of another 100 or 150 million younger people with sports news, together with all the other content we have, food, and figure out how do we take CNN on linear, how do we take CNN on SVOD, and then how do we take CNN digital as a brand and build that, whether it's subscription, whether some of it is just a funnel, but how do we build that? We have a terrific executive that'll be leading that and figuring out how to make that happen. And, you know, I can't wait to see what Mark and that team is going to do because it is an extraordinary asset for us. It is the leading news organization in the world, and, and I think Mark is just the right guy at the right time. I believe that once, CNN is included, you're not necessarily going to raise the price, so you're essentially making the product better for the existing Max consumers. We've seen a lot of price increases across the streaming landscape. You raised the price of Max when you launched it. You, of course, put a lot more into Max at the launch. How is your pricing strategy evolving, and how are you thinking about driving growth in your streaming business through price versus volume? Well, our first focus was how do we transition HBO Max into Max and have a product that's loved, where people spend more time, more people in the family are on Max? How do we transition it, sort of, do no harm? We have almost 100 million homes. We have 95+ million homes, which is a lot of scale and a big advantage in the marketplace, and we have an asset that's making money domestically, and by the... And our whole business will make money this year. And so that piece of it is a very big deal for us to get started with. How does advertising factor into the ARPU strategy in your DTC segment? Well, the great thing about digital advertising in general is on cable, we get paid for people 25-54. The audiences for a lot of our cable channels, whether it's Discovery, HG, Food, sometimes 50, 60, 70, 75% of our audience is over 54. So we're only getting paid on a smaller piece of our audience. It's still quite a good business. But on digital, we have much better data, and we get paid on every subscriber, and the CPM is higher. And so we're generating a lot of value in the ad light product. We were one of the first companies to say that ad light is going to be critical to the future of the direct-to-consumer business. It's turned out to be even more valuable because as you scale these businesses up, and that's one of our main objectives here, is to scale with ad-light, the data gets better, and as the scale gets better, the economics get better. So the ability to generate $6, $7, $8, $9 per subscriber with less advertising because you get paid on all of them. So, you know, for instance, if your CPM is $40 on cable and you're able to get $60 on digital, but you're getting paid on every single person that views it. So it's quite compelling, and it's one of the reasons I think you've seen a lot of people move into that market. What do you think is going to be the right mix over time as you scale the ad product alongside the ad-free product? Are you assuming it's going to be about 50/50, or are you targeting something else? You know, the consumer, what we're trying to figure out now is how do we offer our content in a way that nourishes consumers and makes it easy for them? And so ultimately, the consumer is going to decide. We do have a marketplace that is a bit challenged, and it's one of the reasons why, you know, you look at the marketplace, and you see a lot of players in the market losing a lot of money. You know, we have 15, 16, 20 apps that offer content. If you're a consumer, imagine 10 years ago, you're watching TV, and you're watching Discovery, and you want to watch ESPN, you got to download another app and put in a verification. And then you wanted to watch a show, you have to Google where that show is and then go and put that. In the long term, it's not a great consumer experience. Consumers have adapted to it, but in the long term, I've been a big advocate for bundling. This, the idea that you bundle together. Cable-based, basic cable was a bundle and is a bundle, and it was quite a good and nourishing experience for consumers. Whereas, you know, downloading all these different apps, you know, as we talk to consumers, they find it difficult. And so, I think one of the things that we're going to see as we look into the future is bundling. And some of this disruption and some of these moments of what's going to happen may activate, you know, a quicker transition to things like some of us in the content business bundling together, as a way to create more value and create a better consumer experience. Sometimes this disruption and tension, you know, creates more value. We have worked really hard to put ourselves in a position where knowing that this tension is going to come, how do we use this as a moment of opportunity with all the diverse assets that we have? We've heard people talk a lot about this. Are there real conversations going on behind the scenes about actually doing it? There is, and it's much more so in the last few months than it was in the last few years. It's because the marketplace. You know, we did an experiment that started two weeks ago, where we put all of AMC's best content on HBO Max for the next 60 days. So that was Kristin Dolan and JB getting together and saying: Why don't we try this? Let's see how it goes, works on HBO Max. Let's see whether when it transitions, whether that helps you grow your AMC direct-to-consumer product. There are, you know, there are a lot of products in the market, and, you know, the sustainability of losing $ billions, and in some cases, losing $ billions and lowering price. As you talked about price, you know, price has significantly come down in the last few years for premium content, and the investment in premium content has gone up. If you talk to consumers, they're getting better content, they're spending a lot less, but it's a lot more cumbersome to find. We think that there's meaningful opportunity, you know, as we add quality content to Max and as we launch it around the world, to move on price. We think that the value that we're creating and the amount of, the amount of value we're creating, that we, that, that we can get more price. When we have risen-... price. We haven't found any, you know, we've found that almost the, the, the loss to us has been very minimal. As we were talking about earlier, you're putting CNN into Max at the current price point. You're also intending to put sports into the product. Is that something you would also think about putting in at the same price? Or you think about that being something that can be more of an ARPU tool along the lines of what you were just talking about? You know, we have a very comprehensive strategic attack plan on sport. With TNT in the U.S., we have great sport with the NBA and the NHL and March Madness, baseball playoffs starting in October. And so we've been hard at work, and in the next few weeks, we'll lay out a plan. But we think it's a big advantage to us to have sport together with live sport, live news, together with our bouquet of entertainment, nonfiction, library, and movies. Is that true on both linear and streaming platforms and both domestically and internationally, or does it vary? Well, we've been experimenting with sport and news outside the U.S. for some time. We put news on our platform in Poland, where we're the leading provider of news, and we found that it reduced churn, and we actually found that we were able to grow. So that gave us some encouragement and was helpful in our decision to put CNN Max on Max. Sports is. We've offered it different ways. In the U.K., where us and Sky are the leader in sport, we have BT Eurosport, and we offer that as, in many cases, as an add-on. And in Europe, that's mostly the way that it's offered. I mean, one of the challenges that the industry is facing is the U.S. is different than most markets. In almost every market in Europe, you can get multi-channel to the home for $10, $20, $30, and then if you want sport, you opt for it. Some of the tension in the market is that the price of sport has gone up significantly, and the cost to consumers have gone up as it's been, as every consumer has had to pay for it. You've seen it in, with regional sports over the last few years, and particularly in the last year and a half, that tension has really erupted, and a lot of distributors have said, "I'll do without it." And this is the first situation when there's real tension around a broad national sports platform. And we'll see how, you know, we'll see how that plays out and the impact that it has on the marketplace. Are you expecting that sports is likely to end up being more a la carte in the U.S., or are you just not sure at this point? You know, it's hard to tell. Our stuff is we're in news, nonfiction, entertainment, and sport, and our content is, in the aggregate, reasonably priced. We've redone a number of deals, including deals recently, where we've been very effective, and I think we've created deals that have value for both parties, and we've gotten meaningful increases. The cost of our overall content is perceived as reasonable. We still produce a lot of content, and we've increased our investment in production for food, HG, because nonfiction, we can produce content now. And when you look at our overall package of news and sport, I think it works very well. On any given night, we're between 25% and 40%-50% of viewership on cable with all of our channels. I think the view is that we provide real value, and we're really investing in it, so we'll have to see. All right. Let's talk a little bit about your films business. So we've seen, broadly speaking- Just one more point. However this transpires, at least for us, when it comes to our, to Turner, our sports assets, we don't have any deals coming up or any that... We'll be facing this issue of where the industry goes and what the preferences are for consumers and distributors and content owners in 25. And so we're on the sidelines of this. I think we're one of the good actors in the industry that's produced, spending a lot of money still in linear because we believe in it, and I think we're good value, and in 25, we'll see where this is. Just as a follow-up on that, the NBA contract obviously is coming up sooner than 25. How are you approaching sports contract renewals in general? What boxes do they need to check to be relationships you want to stick with? Well, the good news is, the sports that we have in the U.S., we do very well with, so, and our deals go long. So we have, we have March Madness into the 2030s, we have hockey into the 2030s, we have baseball through 2028. And the deal that's coming up is the NBA through 2025. But those deals are attractive to us. We're doing well with those deals. We have rights, we have the rights to put it on linear. We also have all those sports rights for no incremental fee to put on digital, which is what makes the business itself, really, as cable has declined, the ability to recapture audience on digital with no incremental cost of sports rights is quite attractive. And so, our current position is very strong. We like the NBA a lot. Inside the NBA is probably the best sports program, we think, on television. Our shoulder programming does really, really well on social media and in ratings. We've been talking to Adam. We also have Bleacher and House of Highlights, and we have a big international platform, so I think the relationship has been quite strong. We'll see whether we're beginning to have that discussion now. I'd like to hold on to the NBA, but we've spent a lot of focus refocusing this company for the future, and one of the key elements of having a sustainable growth company is to have free cash flow. That's the real health of a company, how much money are you making? We'll be generating over $5 billion in free cash flow. We will be below 4x levered at the end of this year... and we will be between 2.5x and 3x levered on a gross basis by the end of next year. This will be a company that will have a strong balance sheet, real cash. This is a real company with real creative talent, and we own all of our IP. And so that is our focus. And, you know, in order to buy any piece of IP, you know, we're not going to sacrifice the health of the company. What's most important to us is that we have a great balance sheet, we have optionality, that we own our content, and we own our content in a way that we think we can make money. It's not going to make sense to do a deal for anything, and jeopardize the economic trend we have at this company in order to own another piece of IP. All right, I want to come back to the balance sheet in a few moments, but I want to come back to film. So if just generally across the industry, we've seen some of the longer tenured franchises have a little bit more mixed success at the box office this summer. But Barbie has been just an absolute phenomenal film. What did you get right with Barbie, and how do you think about the ability to replicate those learnings in your film slate going forward? Well, first, Greta Gerwig gets the most credit. She's an extraordinary genius, and she worked very effectively, I think, with the best creative team in the business. I'm biased, the Warner Bros. Motion Picture team right down to the wire to make that the best product possible. But we were able to do something that I don't think any other company can do. We have 10-12 channels in every country, and when we said we're going to run this as one company, we meant it. Every division of this company got behind Barbie. Shaq and Barkley and Ernie were talking about Barbie. If you went to Sweden and you were watching a football match, at halftime, the field turned pink, and you saw Barbie. Every asset that we had was turned pink, talking about the strength of Barbie. We had shows on HG. Every cake on Food Network for a month was pink. Anywhere you went, you saw it, and this is the power of Warner Bros. If we see a piece of IP that we really believe in, and we operate as one company, and a lot of that is at no cost, we could be promoting on all of our platforms everywhere in the world. Those are our platforms. We're one of the top marketing companies because we have channels everywhere in the world. And so when we get something we believe in, we can really drive it. We did the same thing with House of the Dragon. We did it with The Last of Us. And so I think that's one of the strengths of us as one company, all of our creatives meeting together every week. But one of the other real strengths of Warner Bros. is we talk about the great IP that Warner Bros. owns. But for us, the challenge is that our content, our great IP, Harry Potter, DC, Lord of the Rings, that content has been underused. We haven't done long-form Superman in over 10 years. We haven't done anything with Harry Potter for more than a decade. We haven't done anything with Lord of the Rings. And so, you know, one of the big differentiators of this company is that we own content that in any language, anywhere in the world, you say Batman, and people look at... Batman 8 o'clock, and you look at your watch, "I got to go." And we need to generate that, and we got to be careful not to overuse the content. But now we want, we think there's a lot of shareholder value in attacking a 10-year DC, a real plan around DC, bringing Harry Potter back to HBO for 10 consecutive years, doing multiple movies of Lord of the Rings. If you look at the performance over the last 20 years of Warner Bros., when you take those franchises out, Warner Bros., it's relatively flat. When you put those franchises in, it's the best-performing studio in the world. We need to deploy our best capital, and we need to do it with the best creative people in the world. And when people see what we did with Barbie and what we're doing with HBO, which is the only platform that, like must-see TV, aggregates audiences every Sunday night, and people come together not just to see the content, but then it explodes on Twitter. So Musk is calling me going, "What do we do with this? Everyone's on Twitter talking about White Lotus." It's because we--it's about a shared experience. We get it in the theater, we get it on HBO, and talent wants... And great writers, directors, actors, they want their content to be seen. They want to have a chance to have an impact on the culture. They want to have a chance to have an impact on how people see themselves and see the world, and that's what we get to do in this business, but only if we do it together. And, you know, we're very proud of Barbie, but the motion picture business, Barbie, HBO, it gives us a great hand in attracting, in, in getting Warner back to what it was. This was the place that all the great talent wanted to be. Who wouldn't want to be with this great, you know, with this great company, where you, you could be on, we could take you around the world, we could put you on, on Sunday night, on, or Monday night on HBO. If you do a movie, we could put you on right after Euphoria, and we could deliver an audience. It seems old-fashioned, but it's not. People still want to watch content together, and they want to feel that their content was valued and seen. I, I want to talk a bit about advertising. This is one of the areas that comes up a lot in our conversations with investors because they look at the linear business, and they say, "We've got the secular dynamic of cord-cutting that is creating some structural pressure. We obviously have the cyclical issues that we've been dealing with." How do you feel about the company's position for eventual, how it's positioned for eventual recovery in TV advertising? And then longer term, what's your strategy for ensuring that as more of that in, ad inventory moves to the streaming world, that it's gonna be resurfacing on your platforms? Well, look, the advertising market has been tough. We saw a little improvement last quarter. I think you'll see a little improvement this quarter, but not a lot. For the first time, we get a sense that the sentiment is changing. There's real discussion at companies and at agencies about fourth quarter being a moment that they're that things are gonna begin to turn around. We got our fingers crossed. We haven't seen it yet, but there is a feeling that the sentiment is changing. We had a very good Upfront. We were able to move a lot of our inventory. We did very well. In particular, our digital inventory on HBO, on Max, and some of our digital inventory has gotten very big increases. We were still able to get increases, low single, but increases on a number of our better-known channels, like HG and Food and Discovery. And we took a little bit of a reduction in some of our others. But if the market comes back, we're really well positioned to take advantage of it. And our ratings are doing very well. The fact that a lot of people are out of the market right now, we're doubling down. If you watch HG, Food, ID, and Discovery, a lot of those networks are actually up year-over-year. We were lagging the industry for a period of time, and now for the last three months, we're starting to really accelerate, where we're doing much better than the industry. And so we're producing a lot more content there, and we're producing a lot more content internationally where we can, and we're starting to pick up some share. So I think we're well positioned. We need to grow Max. We, we need to grow Max ad light. HBO's been around for 50 years, and this idea of a shared experience, 20, 30, 35, over a period of time, 40 million people watched The Last of Us, House of the Dragon. And we get big audiences on Sunday night. And so and no one's been able to advertise inside of an HBO show. Just simply putting a 60-second spot in front of The White Lotus is, it's generating a tremendous amount of economic value and a lot of excitement. And so what we need to do is get that bigger, so we could take advantage of that. And we've started to move into the AVOD space because we have the largest TV and motion picture library. And, you know, getting it out there to monetize, particularly the content that's not being consumed on SVOD, is something we're getting started with, and you'll see us move more aggressively in. And all of that should give us more help on the advertising side. But on the international side, things are a little bit better. So you know, we're seeing a little bit of a better improvement on the international side on advertising than we are domestically. The trend is slowly better. The hope is that it gets a lot better soon. All right, squeeze in one last question here. Assuming you do meet those financial targets that you set, particularly your balance sheet targets for the end of next year, how are you going to evolve your capital allocation priorities, and where does M&A fit in? Well, you know, as, as we've laid out, our objective is to be between 2.5 and 3 times levered on a gross basis by the end of next year. But we'll have real money next year. And the first thing we're gonna look at is: How do we invest in this great business? We have a broadly diversified business. Gaming, we're the largest maker of content in the world. We got our motion picture business, which hasn't performed well over the last couple of years. So we got some real work to do. When we have a balance sheet where we can invest in ourselves, and we have a balance sheet that we could take out and purchase things that we need, I don't think we need other big assets, but I think the opportunity to look at IP and also the opportunity to have a balance sheet where we could buy things if we feel that we need them, will make us really unusual in a crowded media space where free cash flow and real growth is hard to find. David, that's a great place to stop. Thank you so much for being here. Fantastic. Thank you very much.