Ladies and gentlemen, welcome to the Warner Brothers. Discovery third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. Additionally, please be advised that today's conference call is being recorded. I would now like to hand the conference over to Mr. Andrew Slabin, Executive Vice President, Global Investor Strategy. Sir, you may now begin. Good morning, and thank you for joining us for Warner Bros. Discovery's Q3 earnings call. Joining me today is David Zaslav, President and Chief Executive Officer, Gunnar Wiedenfels, Chief Financial Officer, and JB Perrette, CEO and President, Global Streaming and Games. Today's presentation will include forward-looking statements that we made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements may include comments regarding the company's future business plans, prospects, and financial performance, and involve risks and uncertainties that could cause actual results to differ materially from our expectations. For additional information on factors that could affect these expectations, please see the company's filings with the U.S. 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. In addition, we will discuss non-GAAP financial measures on this call. Reconciliations of these non-GAAP financial measures to the closest GAAP financial measure can be found in our earnings release and in our trending schedules, which can be found in the Investor Relations section of our website, and with that, I'd like to turn the call over to David. Good morning, everyone, and thank you for joining us. I want to start my remarks by providing a broad overview of where Warner Brothers. Discovery is on our journey today and how we are moving the company forward with an ultimate focus on creating value for our shareholders. It is well known that our environment is being reshaped by generational disruption, which is creating both challenges and opportunities. Where we are confronting challenges, we are addressing them directly. And where we see opportunities, we are seizing them with discipline and determination. Right now, there are several important dynamics playing out in our business. First, we believe that many of the assets that comprise our business are currently undervalued, and we are working to both demonstrate their fundamental strength and enhance their value. Part of that effort has involved acting aggressively to reduce our expense base and lift our free cash flow conversion. To date, we have paid down more than $16 billion in debt, with our strongest cash generation quarter of this year still ahead. Our team is highly focused on identifying and advancing a range of initiatives that aim to enhance the value of our company. As these initiatives mature, I am confident our shareholders will both see and feel significant upside. Second, we are making strong progress in executing our strategy and creating what's next for Warner Brothers. Discovery. Over the last two and a half years, we have invested meaningfully in new technologies and platforms, partnerships, and creative talent, and driven changes in our structure to accelerate growth. Today, those investments are delivering clear bottom-line results in our direct-to-consumer segment. We are making substantial progress at Max, where, as I will describe in more detail shortly, strong subscriber growth is driving increased revenue and profitability. And while we are encouraged by our progress, we have more work to do to deliver the kind of results we and you expect. But to be clear, I can assure you we are doing the work necessary to evaluate all steps, operationally and strategically, to improve performance and unlock shareholder value. As I have conveyed to our employees, there are three prongs of attack to deliver expected shareholder gains. First, deploying Max globally as a distribution and storytelling platform, enabling it to achieve its full potential in both reach and profit. Second, optimizing our networks business, including our U.S. linear television business. And third, returning our studios to industry leadership. I will briefly address our performance and outlook in each of these areas, and Gunnar will then share more financial detail by segment. First, it has been a very important and successful quarter in Max's development and deployment. Anyone who has listened to one of our earnings calls over the last two years knows Max's importance to Warner Brothers. Discovery. We possess and produce tremendous content: film, TV, news, and sports. Building a leading, fully global direct-to-consumer platform to make that content available has been a clear strategic initiative. Getting Max right has required patience, discipline, and substantial investment. Today, those investments are delivering clear results, both in terms of subscriber-related revenue growth and bottom-line impact. At the beginning of the year, Max had only launched in the U.S. Nine months later, Max was available in 65 markets. We have added 13 million subscribers, thanks in part to 7.2 million additional subscribers in the third quarter alone, and now have more than 110 million subscribers globally. Equally encouraging, we're beginning to see real acceleration in subscriber-related revenue growth and significant profitability growth. Overall, our direct-to-consumer revenue of $2.6 billion is up 9% year- over- year, and EBITDA of $290 million is up more than 175% year- over- year, and in the fourth quarter, we will enjoy another quarter of strong revenue, profit, and subscriber growth. What's driving this success? First, of course, we have great content. While technological advancements have placed emphasis and attention on distribution, the history of entertainment shows great content always wins. We are also improving the cadence with which we put the content people most want to see in front of them. Beginning this past June with Season 2 of House of the Dragon, and continuing now with The Penguin, and extending forward with titles like Dune: Prophecy, White Lotus, The Last of Us, and Peacemaker, just to name a few. Max is delivering tentpole shows, new originals, and feature films on an even more consistent basis. Internationally, our success is being driven by delivering that beloved content, as well as new originals with local sports in most international markets and 15-plus years of local language content, all on our streaming platform throughout Europe and Latin America in a way that few others can rival. The critical role Max played in being the home of the Olympics in many markets across Europe in Q3 is just one example. Even without the Olympics, we expect our momentum in driving Max's subscriber growth to continue going forward. Later this month, Max will launch in seven markets across Southeast Asia, and next year, Max will launch in Australia and over a dozen other markets, with more to come, including three of the biggest markets in Europe in 2026. Long-term, we believe our content will continue to provide us a meaningful competitive advantage, and we are only scratching the surface of what we can achieve through added scale. Based on everything we are seeing, we are highly confident we are on track to meaningfully exceed our target of $1 billion in EBITDA in 2025. Next, I want to talk about our networks business. While the challenges and headwinds we face in our U.S. linear television business are well known, this is still an extraordinarily important part of our business. Linear TV is a core vehicle to deliver WBD storytelling to hundreds of millions of fans worldwide, and the significant profits it generates help fund building the investments that will carry Warner Brothers. Discovery into the future. The best evidence of the important role our linear business continues to play for Warner Bros. Discovery is in the renewal agreement we struck with Charter Communications in September. This agreement was a victory for both companies and represents an innovative way to best serve customers as our industry continues to transform. In extending Charter's carriage of our linear networks, while also giving their subscribers Ad-Lite access to Max, our company struck a deal that's mutually beneficial, with the consumer wins most of all. In their Q3 earnings communications, Charter discussed plans to lean more aggressively into its video product, which they attributed to providing enhanced value to their customers with increased access to streaming services like Max. We are optimistic this is a sign that these types of agreements will create more stability in our industry. Lastly, I want to address the work that obviously needs to be done to return our studios business to industry leadership. There have been some real bright spots in our studios business. Our TV studio is on track to have its most profitable year in scripted content in the last five years. It's currently making over 80 live-action scripted, unscripted, and animated series for nearly 20 platforms, including all the major U.S. broadcast networks and key U.S. SVOD platforms, and on the motion picture side, our third quarter saw strong success with Beetlejuice Beetlejuice. But even in an industry of hits and misses, we must acknowledge that our studios business must deliver more consistency. This applies to our games business, which we recognize is substantially underperforming its potential right now. We have four strong and profitable game franchises with loyal global fans: Hogwarts Legacy, Mortal Kombat, Game of Thrones, and DC, in particular, Batman. We are focusing our development efforts on those core franchises with proven studios to improve our success ratio. Inconsistency also remains an issue at our motion picture studio, as reinforced recently by the disappointing results of Joker 2. For the past two years, we've been driving changes within our motion picture studio to improve green light governance and franchise management, which remain focal points going forward. This is a business where translating operational changes into results takes time, but I believe we'll see those strategic shifts deliver improved outcomes in the coming years. Overall, we anticipate improved profit results for our studios in Q4, thanks to what we expect will be another successful quarter for Warner Bros. TV. Gunnar will take you through some decisions we made in content licensing that have negatively impacted this year's financial results and significant growth opportunities in the future, and over the next several years, we expect our games and motion picture businesses to deliver more consistency, resume industry-leading performance, and contribute substantially to Warner Brothers. Discovery's business success. Before I turn it to Gunnar to provide more detail on our financial results, I want to offer a final thought on the power of what we are building. By leveraging our storytelling abilities with our abundance of beloved content and utilizing our distribution platforms, we can deliver real differentiation that leads to growth. Look no further than The Penguin. The Penguin, which spotlights a well-known DC Comics character building on the success of The Batman, was envisioned by HBO with creative talents like Matt Reeves, Lauren LeFranc, and Colin Farrell. Produced by Warner Bros. Television, distributed on HBO and Max to viewers all over the world, promoted across the Warner Brothers. Discovery landscape, critically acclaimed, commercially successful. Stories like The Penguin that can shape culture, spark conversations, and become appointment viewing always win over time. When you look at our unique ability to create great content, distribute great content, and market great content, it reinforces why we are so well-positioned to stand apart from the pack over the long term. So I will conclude by saying two things are true. Our industry is experiencing generational disruption, presenting us with both challenges and opportunities. At the same time, our strategy is succeeding in important ways. When this period of extraordinary disruption settles, based on the momentum we are seeing in our direct-to-consumer segment, the work we've done to sustain our linear TV business, and what we're doing to return our studios to peak performance, I remain confident that Warner Brothers. Discovery will be one of the companies leading the global media industry into the future. Thank you, David, and good morning, everyone. I'd like to begin my remarks with some comments on direct-to-consumer, where we are seeing strong momentum across key operating and financial metrics: net subscriber adds, subscriber-related revenues, and EBITDA. Reaching this inflection point has clearly been a priority, and I'm excited about the traction we've seen and enthused with what we expect for the quarters ahead. Over seven million net adds and 50% DTC advertising growth drove double-digit subscriber-related revenue growth and acceleration from 6% in Q2, leading to nearly $300 million in EBITDA, and we expect similar levels of subscriber-related revenue growth and EBITDA contribution in the fourth quarter. Subscriber growth was driven by a combination of factors, including the Olympics in Europe, traction from recent international launches, momentum on bundles like the Disney Max Hulu offering, and a more consistent and resonant content lineup. There will continue to be a variety of paths to scale Max, particularly as we expand our reach internationally. We clearly saw that this quarter. It is also clear that the many options to reach consumers directly, bundled, in partnership, or more traditional wholesale arrangements will naturally have implications for certain KPIs. That said, the financial framework in which we are managing the DTC business has not changed. First, we will always be guided by a core focus on lifetime value relative to subscriber acquisition costs, whether it's evaluating a specific market or the model employed to launch in a market, partnership, or direct retail. This means that we will make trade-off decisions between various distribution channels and operating models across markets. Some will have inherently lower ARPU, but lower upfront investment or SAC, and better churn dynamics. Others may require higher levels of initial spend but may have commensurately higher ARPUs. We have and will continue to evaluate all subscriber options through this filter with a goal to maximize value creation. Second, we are focused on subscriber-related revenue, that is, subscription and advertising revenue, as the best measure for the progress we are making in scaling the DTC business. Importantly, given the cadence of Max's rollout over the next 18 months or so in international markets and the launch of a lower-priced advertising-supported offering in many more markets, we expect to see ARPU trend lower in the near term, reflecting the growth of the Max ad-supported footprint from only one market up until this year to now over 45 markets. However, we expect further strong subscriber-related revenue growth and EBITDA going forward, as well as enhanced retention, the cadence of which will reflect when, where, and how heavily we invest in subscriber acquisition. Turning now to total company advertising, which declined 7% ex-FX during the third quarter. The sequential step-down was as expected and was in large part due to our seasonally slower sports schedule, with networks advertising down 13% ex-FX. Additionally, while we benefited modestly from the Olympics in Europe, our much larger U.S. business was adversely impacted by the Olympics. DTC advertising, however, continued to grow at a nice pace, up over 50% ex-FX, behind healthy demand for Max in the U.S. Global Ad-Lite subscribers grew over 70% year- over- year, with approximately 40% of global gross adds taking the Ad-Lite tier in Q3. While the international contribution to DTC advertising is still quite small, we see opportunity ahead as we scale the subscriber base and drive monetization. Networks distribution revenue was down 7% ex-FX and down 5%, excluding the impact of the AT&T SportsNets. Our affiliate renewal pipeline is active, and we remain focused on working with our partners across the fluid distribution landscape. The recent Charter deal we've referenced is a great example of both the great value of our content to affiliate partners as much as to consumers and the greater flexibility in the industry to come up with forward-facing new deal structures, with the potential to have a meaningful positive impact on the trajectory of our linear and DTC businesses. We are seeing strong evidence of the great financial benefits of these new deal structures across our international footprint. As the long list of our international distribution renewals this year has shown, we have indeed enjoyed net growth in total revenue to Warner Brothers. Discovery across these partnerships, as our concessions on the linear side have been more than offset by strong gains at DTC. Turning to studios, performance in the quarter was subpar relative to our internal expectations, notwithstanding the difficult comparisons with Barbie last year. Results were impacted by games, for which we took another $100 million-plus impairment due to the underperforming releases, primarily MultiVersus this quarter, bringing total write-downs year-to-date to over $300 million in our games business, a key factor in this year's studio profit decline. In Q4, we expect games to be flat to modestly better year- over- year, as last year's launch of Hogwarts Legacy on the Switch platform in November is offset by lower costs. Film results performed relatively well in the quarter, largely driven by Beetlejuice Beetlejuice, though, as noted, Barbie in the prior year and the bulk of the marketing spending for The Joker fully amortized ahead of its October release weighed on year-over-year trends. Despite Joker's underperformance, which will indeed weigh on Q4 profitability, we currently forecast the film business to perform more or less in line with Q4 of last year. As a reminder, we had three theatrical releases in the last two weeks of 2023, for which we realized hefty marketing spend with a relatively limited amount of revenue. We have only one release remaining in Q4, which is the modestly budgeted Lord of the Rings animated movie, War of the Rohirrim. Warner Brothers. TV, on the other hand, is going from strength to strength. While TV did have a favorable year-over-year comp against the impact of strikes last year, the underlying performance remains robust. Within a marketplace enduring some headwinds, we believe we're benefiting from a flight to quality. We expect this momentum to continue in Q4, and TV is expected to be up significantly year- over- year. All in, we expect studio Q4 EBITDA to be up a few hundred million dollars year- over- year, depending on the timing of certain content licensing deals. As David noted, we are committed to improving overall performance and consistency of results, with an eye towards reestablishing the studio as an industry leader. In the near term, our film slate is one that I would characterize as more balanced, both creatively and financially, and we've sharpened our focus on budget discipline and accountability across all processes, across greenlighting, marketing, production, and resource prioritization. I expect this will help enhance both top-line and bottom-line results. Further, I'd like to take a step back and discuss the role and impact of content licensing for our studio business. As I've mentioned previously, we are continuously evaluating how to best monetize our content, be it on internal or external platforms, and we make those decisions on a case-by-case basis, and they are informed by an increasing amount of data and intelligence collected across our business units. 2024 will be characterized by two factors. Number one, generally relatively low avails for library licensing, and number two, a significant year-over-year increase in internal licensing to support the rollout and growth of our global DTC product, and those are revenues that get eliminated at the WBD consolidated level. While these factors have no doubt burdened consolidated EBITDA and free cash flow in 2024 in a material way, they will clearly benefit our future financial performance. For the former, we see a return to more normalized availability levels starting next year. For the latter, we know we have significantly added to a valuable asset base that will pay dividends in top and bottom-line performance of our DTC business for years to come. Finally, turning to free cash flow, we generated roughly $630 million in free cash flow. The nearly $1.4 billion year-over-year decline was largely due to higher net cash content spend, as we left last year's Q3 strike impact, and unfavorable Olympics-related working capital dynamics. Looking to Q4, while we expect another year-over-year increase in net cash content spend in Q4, free cash flow should again represent a healthy conversion of EBITDA. Net leverage at the end of Q3 was 4.2 times, a slight sequential increase and directionally in line with expectations, given the seasonality of free cash flow and Olympics-related free cash flow headwinds. In the quarter, we repurchased and repaid nearly $900 million in debt and have about $300 million maturing next week. We continue to expect to delever year-over-year, a bit much more modestly than initially planned, in part due to the studio shortfalls and impairments. We will continue to use virtually all of our free cash flow to retire debt, as we continue to target two and a half to three times gross leverage for the longer term. Lastly, I'd like to finish off where David began, and that is to reemphasize the high degree of focus that we as a management team and the board have been placing on driving shareholder value. We continue to focus on executing our strategy and, as part of this, examining every angle and possible path to realize the longer-term value creation opportunity we see ahead for Warner Brothers. Discovery. With that, David, JB, and I will be happy to take your questions. The floor is now open for questions. If you have a question or comment at this time, please press Star 1 on your telephone keypad. If you find that your question has been answered, you may remove yourself by pressing Star 2. Once again, to ask a question, please press Star 1. Our first question will come from Steven Cahall with Wells Fargo. Please go ahead. Thank you. So, Gunnar and JB, I think you've talked about the opportunity to continue to acquire subs at DTC if they remain attractive, and you're not going to be shy about making those investments. And then you've also kind of qualitatively upgraded your expectation for DTC EBITDA and its ability to improve in 2025 to, I think, meaningfully above $1 billion now. So can you just talk about how those two things work together? It sounds like the investment is accelerating, but your EBITDA expectation is also accelerating. So we'd just love some more color on how we tie all that. And then, David and Gunnar, you've talked about reducing your expense base, and you've done a lot of that on this journey. It seems like DTC has kind of threw the cuts and back into growth mode. When do you think that studios and networks may sort of get through a period of efficiency and cost reduction to where you're talking more about maybe investments in growth in those businesses again at the bottom line? Thank you. Yeah. Morning, Steve. Let me take those two. So one of the great things about the way the DTC business and our global rollout has been sequenced is that we are enjoying two things at the same time: growth from new markets and rollout in new territories, which inevitably lead to investments initially and startup losses. But at the same time, we're benefiting from the maturity of our business in established markets. That's why we have been able to get to this combination, as David called out in his prepared remarks, of subgrowth, revenue growth, and EBITDA growth at the same time. If you double-click into there, obviously, there are markets that are very profitable right now and others that are still loss-making. But I'm very confident that we will be able to continue executing with that kind of a profile. In terms of your question on the expense base, as you heard us both talk about earlier, for the studio, we got to remember that this is a long-cycle business. A lot of the changes that we have put in place, while they have been as transformational as, for example, in the DTC space or networks, it's going to take a little longer for the financial impact to become visible. And what we are going to continue doing across all of these segments is operate with a very clear focus and discipline when it comes to making sure that we invest the right amounts and that we cut back where we don't see the returns. Just to address this moment of growth that we're seeing on Max, it's a meaningful moment for us. We spent over two years building this platform. Max was losing several billion dollars. We have been focused on finding the right mix of content, local sport, local entertainment, together with the great content from Max and HBO, making sure that that lineup on Max and HBO is substantial. And then finally, launching it. And we didn't launch really until two-thirds through the first quarter. And so seeing this kind of growth, while at the same time having subscriber growth, profit growth, it's a meaningful moment. And JB, you are on the ground. We expect that very substantial growth to continue. We expect every quarter that we're going to be seeing revenue growth, profit growth, and subscriber growth, really because the offering that we have is being very well received, and it's demonstrated by the subscribers. So just talk a little bit about what you're seeing, JB. Yes, Steven, it's a material inflection point this quarter because, as David said, it's been a long road over the last two years preparing to get to this point. And really, the most exciting part is this is still very early innings. We have two-plus years of growth ahead of us, driven by a number of different growth vectors. First and foremost, as David said, is our content lineup has gotten a lot stronger, more consistent, better cadence, helped by the fact that when we launched Max in the U.S., unfortunately, we were at a low point in our tentpole release schedule just based on timing, the strikes we had to push stuff out last year. And so 2024 and well into 2025 and 2026, we have a much better content cadence and content strength as we look forward, bolstered also by, as we roll out internationally, the fact that we've been investing in local content for decades in a lot of the biggest markets outside the U.S. And so it's both the combination of the great English-language content coming out of the U.S. as well as local content that we are already invested in in these international markets. The international rollout is a huge then other big driver, and just to remember that we are still in just over half of the addressable broadband markets around the world, and that's excluding markets like China, Russia, and even India, very low-ARPU markets, so that's a huge driver, and then third, we're in active conversations, and we have great partnerships with distributors around the world who are pulling for this product and want to be with us, and you've seen some of those as we've launched in markets like France, in Spain, in Japan, and we're having very good conversations with distributors who want to help us accelerate the rollout of Max in very profitable and economically smart ways. That's not to mention the drivers that we haven't even yet touched on, things like password sharing crackdown, still better product experience where we've gotten better but are not great yet. And so we have a lot of growth drivers still ahead of us. Thank you. Thank you. Our next question will come from David Karnovsky with JP Morgan. Please go ahead. Hey, thank you for the questions. After reaching your agreement with Charter in September, I'm interested to know if you've had discussions on similar structures with other distributors, whether you think that model is applicable elsewhere. And just following up on the studio comments, you pointed out in the past theatrical slate is one that you've largely inherited from the prior management. How should investors view the differences from this point? What's notable in terms of the approach the current team has brought? Thank you. Thanks, David. Look, on the studio side, we have an industry-leading TV production business that Channing Dungey runs. It's quite substantial. We have some of the best writers, directors. And we're seeing that even in a market that's down substantially, we're really growing with brands, with content that is carried on almost every platform and generating real economic value. The studio business, it's a long-cycle business. We've talked about it for a long time. I think we've made real progress in terms of our focus. We're going to start to see the lineup from James and Peter with they'll be rolling out the first part of a 5-10-year plan on DC this summer with Superman. And it's quite exciting what they have in store because I think DC has a lot of potential. And we've been working on that for two years. Mike and Pam will start to see their lineup this year. This year and next year, we'll start to see the films that they had from start to finish with the talent that they believe was going to generate the most value and the most opportunity for growth for the company. Finally, I think we're through some of the worst, and it hasn't been pretty on the gaming business. We have four games that are really powerful and have a real constituency that love them. We're going to focus on those four primarily. We're going to go away from trying to launch 10, 12, 15, 20 different games. I think we have a real chance now with focus to have the gaming business be steadier. I'm very encouraged. You know our ambition to get back to at least $3 billion and then start growing. And there's a lot of building blocks with wind at our back in order to get there. So thank you. On Charter, we love Chris Winfrey's strategy. It's a strategy of embracing multichannel to the home through the cable distributors and at the same time giving a very contemporary consumer experience. You could watch it on cable, you have your broadband, and you could watch it in streaming. I was encouraged to hear their earnings call and hear Chris talk about investing significantly more money in marketing it because it's all about the consumer. And Charter driving to have a more contemporary consumer experience where if you're in the home and you want to watch streaming, you can do it. If you want to watch traditional, which television on free-to-air and cable, you could do it. And there were two parts to that deal. There were our networks where we make up the majority or a very big portion of basic cable. And we've been investing in those networks, whether it's CNN or Food or HG or ID. We still believe we produce a lot of content that gets used on those channels around the world and on Max. And we were able to get meaningful value for those networks because Chris really still values the traditional multichannel business. And we expect and we will drive to maintain those kinds of economics across the board. And we're finding real value in our distribution deals domestically and around the world. So that was really an innovative deal. We hope other distributors will do it. We're in some discussions with some that are quite interested in doing it. And we'll just have to see. Thank you. Our next question will come from Michael Nathanson with MoffettNathanson. Please go ahead. Thanks. Hey, good morning, guys. I have two. One is when you dig into the U.S. subscriber number, and it's really like 53 million. Look at where Netflix is. I know they have years ahead of you. What do you think have been the gating factors? What will be the factors that can help you close that gap over time? So where do you think you're underpenetrated, and what are you doing about that? And then internationally, David, there's definitely been some chatter that some of your competitors are thinking about partnering internationally or would be open to it. How do you see, given your strength internationally, the interest or potential in partnering with some other streaming competitors to get more scale? So how do you think about that philosophically? Thanks. I'm going to have JB talk about the U.S. subscriber piece. Look, for a very long time, I've been talking about bundling. And bundling originally was a better consumer opportunity on the economic side. But what we've learned is it really needs to be a better product so that that consumer can come in and not just pay less for two products or for three products together, but also can navigate seamlessly between those products. And we're seeing a lot of strength in this partnership with Disney and Hulu. And it's early, but the subscriber growth is significant, and the consumer satisfaction is quite high. We're doing that in a number of markets. I think getting into these markets with local sport, local entertainment, and the HBO and Max content, together with the relationships we have in each of these markets internationally, I think is giving JB and our company a big advantage. JB, just talk to that a little bit and then the U.S. Yeah. I mean, look, the demand for Max as a product in every conversation we have with partners outside the U.S. and in the U.S. is very high and growing. And I'd say, particularly as it may seem like we're coming later to the market, the flip side is they've learned a lot over the last few years about some of the other products that are in market and the specialty products that may be in market that they originally partnered with and ultimately saying, "We need something that's broader and that's higher quality." And the flight to quality that Gunnar mentioned in his comments, I think, is true also about the consumer where ultimately people are looking more and more for the service that has a curated, higher quality experience. And Max delivers that in spades. And so the demand on the partner side to find innovative ways to help us drive distribution is very high and is key as we're seeing our international rollout accelerate and is part of what's driving that growth. And it ties back to your question on the U.S., Michael. The reality is, I think there's two things in the U.S. you got to remember. Number one is our mix is changing, and we are growing on a retail and a hybrid basis based on the fact that we're still facing the headwinds of wholesale decline, just like the pay-TV universe based on the legacy HBO model. And so while that bucket is continuing to drain a bit, we are refilling it, and in some cases, more than refilling it with retail subs. So we are seeing growth there. The penetration gap, as you mentioned, is largely in lower-income, more price-sensitive households, sub-$100,000 households where naturally the fact that they already have maybe one or two other streaming services, we become an in-demand but harder-to-finance proposition. The solution there we look at is really three things in particular. The Ad-Lite SKU is obviously very important to us, and that one, I think, is obviously the best way we can penetrate those more price-sensitive consumers. The bundles you're seeing us do with the likes of Disney and Hulu, we're seeing very early but very good progress on trying to figure out how to figure out new ways to grow with more price-sensitive consumers. The partnerships that David mentioned earlier with the likes of Charter, with the likes of DoorDash, and some of the other partnerships we've done in the marketplace are helping us find new angles and new paths to get to those more price-sensitive consumers. Finally, Michael, I've been saying for a long time, this is an industry that really needs to meaningfully consolidate. And it's really driven by the consumer experience. Consumers put on a TV set, and they see 16 apps. And each of those are doing different pricing, and you're sitting there with your phone and Googling where a show is or where a sport is, and you're going from one to another, and there's so many that you have to go to a separate page. It's just not a good consumer experience. It's not sustainable. And there probably should have been more meaningful consolidation, whether that's through, and you're starting to see it now. You're starting to see fairly large players saying, "Hey, maybe I should be a part of you," or, "Maybe I should be a part of somebody else." But also, and that can happen by one could be bundling. The other could be actually coming together where some of these players will not have independent offerings but will only be offered domestically or internationally as a pairing, or where you would maybe give a little bit of equity to some of the players depending on the market. And finally, just outright consolidation of an industry that is in a generational disruption that's facing real challenges. And we have an upcoming new administration, and it's too early to tell, but it may offer a pace of change and an opportunity for consolidation that may be quite different that would provide a real positive and accelerated impact on this industry that's needed. These are great companies. And if the best content is going to win, there needs to be some consolidation in order to have these businesses be stronger and to have a better consumer experience. Thanks, guys. Thank you. Our next question will come from Rich Greenfield with LightShed Partners. Please go ahead. Hi. Thanks for taking the question. I know you all don't usually comment on specific upcoming renewals, but I think you have a host of deals coming up for renewal with Comcast, both domestically as well as abroad with their Sky division. And I guess, what gives you confidence as you head into this global renewal with Comcast and Sky, especially without the NBA? And I realize there's a lawsuit still in process there, but investors certainly view the renewal as critical to the sustainability of the cable network cash flows. And I think just relating to your consolidation point a minute ago, David, I think the sustainability of those cable networks plays a lot into how people think about the potential of longer-term strategic maneuvers. Anything you could say to help us understand how you're thinking about that renewal would be great. Thanks. We don't talk about timing or really about specific deals. Brian and I have been in business together for almost 40 years. We've been doing deals together domestically. We did deals. We're together with Sky in the U.K., Germany, and Italy. We've done all kinds of deals on AdTech, on advertising in order to create value for both companies. As I look to the future, I think, one, that we have content that's highly valued and that provides a very big portion of the value of the basic cable bundle because we're investing so much in providing unique content. I think that's recognized by all distributors. And we look forward, as we were even in business with Comcast with Harry Potter, which has been hugely successful for them and very successful for us. And so I expect that we'll be doing a lot more stuff together in the future. Thank you. Thank you. Thank you. Our next question will come from Jessica Reif Erlich with Bank of America Securities. Please go ahead. Hi. A couple of questions. David, you kind of just alluded to this, but there's been big news flow recently with the best outcome politically, you would think, for M&A with the Republican sweep. One of your competitors said on their call last week that they were considering spinning out cable networks and/or merging streaming. Another competitor said in their proxy, you guys were in discussion. So given all of that as a backdrop, can you give us your current views of a sale or spin of some assets and/or acquiring other assets? And maybe your views of a possibility of someone rolling up cable networks. And then a completely separate question. JB just alluded to this, but what do you consider in DTC? What do you consider advertising scale? And can you give us kind of the benchmark of how you plan on getting there and when you think you'll get there? Thank you. Thanks, Jessica. Look, I don't really have that much more to add to the prepared remarks, but we believe strongly that the current stock price doesn't adequately reflect the underlying value of these great assets that we have. We're hard at work, which you are beginning to see, and we are seeing the results of executing operationally, domestically and around the world, to drive significant transformation of this company and meaningful growth. Of course, as you would expect, we're always looking at ways to enhance shareholder value. That's our focus. That's our board's focus every day. And that's what we're doing. Jessica, on the ad side, look, the shortest way to answer that, I think, is that we are, again, in the very early innings of what we call ad scale. And the levers are primarily driven by three things. Obviously, the reach of our ad-supported SKU, which, as David and Gunnar mentioned in their prepared remarks, we were in one market as of a year ago. We're now in over 45, but that's less than six months old. And so we believe on the reach side, we still have an enormous runway in the quarters ahead. On the ad load side, we are light. We don't put any ads today in the HBO current series, as an example. We don't break up the content. We have some pre-roll content that we make in sponsorship, but we don't put anything in there. We have very light ad load compared to most of our competitors in the market. So there is room to grow in the capacity side. And then on the pricing and, I'd say, ad capability side, we're, again, very early in terms of ad format innovation to try and drive more innovative, creative formats for partners and marketers to work with us. And so those three levers are going to provide a great amount of scale. So I think we're in the early innings of the advertising revenue growth stream. Look, we have seen on cable that too much advertising really presents consumer challenges in terms of how nourished they are and how much they like the platform. And it's one of the reasons why, as we build a quality platform globally with the best content, the best local content in the sport, that we don't want to make that same mistake that this industry made. And as others add a lot of inventory, we really like the idea that we're not doing that. You're not going to be interrupted watching House of the Dragon or White Lotus, at least for the foreseeable future. We think part of the quality is the quality of the experience. Thank you. Our next question will come from Bryan Kraft with Deutsche Bank. Please go ahead. Hi. Good morning. I guess I wanted to ask too if I could, just first on pricing, how much of a DTC revenue driver do you anticipate price increases will be over the next couple of years? Can you talk about how much pricing power you think you have today and how important growing engagement is in order to sustain that going forward? And then I just had one on the cost side. Gunnar, can you talk about the opportunity you see to lower cost in the linear networks business next year in order to mitigate the obvious continued secular revenue declines in advertising and affiliate? Thank you. Yeah. Thanks, Bryan. Look, on the pricing side, I'd say we've, from what we've seen over the last two years in the U.S., we've done two price rises. We think the premium nature of our product in particular lends us to have a fair amount of room to continue to push price. We've been judicious about it, but every price rise we've done so far, the churn has actually been lower than we projected and expected, and the retention continues to be strong. The other thing that we haven't seen, which is sort of a form of a price rise, if you will, and I mentioned it earlier, is that we haven't done anything. We will kick off some very soft messaging later this quarter around password sharing, and as we kick into 2025 and into 2026, you'll see more and more progress on that, which in effect is a form of a price rise. We're obviously asking members who have not signed up or multi-household members to pay a little bit more. And so you're going to see that as an additional kicker. And then internationally, I'd say, is a place where we haven't actually, we've been more judicious, I'd say, on pricing as we get the product rolled out. Remember, we're only barely six months into the rollout internationally, that we see additional opportunity. Not to mention, the last thing I'd say is, as Gunnar said, we're focusing on LTV as well. And so the price is critical, clearly, but the retention dynamics and some of the value, even at a slightly lower price in the absolute RPU level of these bundles, we're starting to see really, really positive signs in the retention that make us much more confident on the growing LTV of those subscribers at the same time. One of the advantages of the bundles is it's a true direct-to-consumer offering. So there is no shared revenue with any of these, the channel stores that have been effective in building the service, so that you can actually do a consumer discount, and you could still have your RPU higher because all the economics are coming to each of the bundled products. And then, Bryan, on the cost side, look, we'll continue to be incredibly disciplined and focused here. We have taken out billions of dollars out of our reported cost base despite operating in a highly inflationary environment for the past three years. And we'll continue to work on that. We still have some structural measures that took a little longer to implement. Those are infrastructure measures, broadcast technology, and operations measures, et cetera. And those are still going to flow through over the next year and beyond. The long-term big opportunity on the content side, from my perspective, is, and we've talked about this before, that so far it's pretty much a one-way street of the company supporting DTC with content as that product scales, and JB and Casey and Gerhard internationally produce more and more fresh content for that platform that may, at some point, lead to greater library opportunities for the linear business as well. It's a little more longer terms, but there will definitely be opportunities, and then, on the other hand, we are investing more in sports. As you know, we've lit up a number of new rights. And this is a high-margin business with a largely fixed cost base. So I don't want you to take away that we're going to be able to fully offset the pressures that we're expecting on the revenue side. But the economics that we're seeing, we have held back—is it $1 billion of additional content that we could have sold or that less than the prior year—that you can really see as an investment in our Max and HBO streaming service to have something. That's right. As I said in my prepared remarks, this is mostly affecting the studio, obviously. But David's right. I mean, this is several hundred million, $1 billion, depending on where you normalize content licensing as a revenue stream. But we have had, as I said, lower availabilities this year. And we have deliberately sold a lot of that internally, which is a pretty hefty impact on profitability because we're paying our participants on the basis of internal revenues, not the consolidated WBD revenue number. And you're right. That is an investment that we're hoping to get great returns on over the next few years in our DTC business. But we do have a number of every few-year products coming up next year that will be meaningful. Next year and next year. Essentially, all of the coming years are going to be better than what we saw this year. Thank you very much. Thank you. Our next question will come from Benjamin Swinburne with Morgan Stanley. Please go ahead. Thanks. Good morning. Gunnar, just to maybe finish up that comment. As we think about the studio, it seems like it's poised to bounce back profit-wise next year nicely. So you gave us the write-downs on the games. Are there any more, maybe in theatrical, that you could quantify? And just want to confirm, you think TV licensing still has healthy growth in 2025 versus 2024 after the kind of post-strikes snapback? And then, David, just kind of going back to strategic stuff, I think everybody would agree your stock is trading like a company that's declining in earnings sort of for the foreseeable future. I think some look at your company and say, "You've got a growth business or growth businesses in the studio and streaming, and you have businesses that are declining in networks, and so why not separate those?" So my question to you is, you've talked a lot about kind of one Discovery or one Warner Brothers. Discovery since the merger. What are the benefits of owning all these businesses inside of one company? And do you see those as substantial and meaningful and important in sort of a long-term investment opportunity at WBD? Or are you open to changing your mind or thinking about different permutations that might make sense to unlock value? Thank you both. Okay, Ben. So look, you're 100% right about the studio bounce back. And it's really across the board. I do think, as we've discussed at length, I think the film group is going to see better results. We do think that Channing's business, the WBTV production, is going to continue this momentum. We have made investments on the tours and retail side franchises, an area that we still think is going to have significant opportunity. Games, to your point, is definitely set to recover. And content licensing, as we just discussed a minute ago, is certainly going to be higher from a 2024 starting base. That's why we have been so confident in our statement that we're going to see $3 billion and then growth from there. Now, is that all going to materialize in 2025? We'll see. A lot of those decisions we'll still need to make, and it's going to depend on the individual business units. But I think we have a very sustainable long-term growth story ahead here for the studio from here. On the one WBD point, look, especially when it comes to content, this is an area where we see the benefits of running this company on an integrated basis every single day. David had it in his prepared remarks, The Penguin example. And again, we've made a ton of progress. We're also still in the early innings. So we are definitely getting a return here from running WBD as one integrated company. Okay. Thank you, everybody. That concludes our formal remarks today, and we appreciate you taking the time to join us. Thank you. Once again, this does conclude the Warner Brothers. Discovery third quarter 2024 earnings conference call. You may disconnect your line at this time and have a wonderful day.