Great. Thank you, everybody. Welcome to the Warner Bros. Discovery Fireside Chat at the Goldman Sachs Communacopia and Technology Conference. I have the privilege of introducing and hosting David Zaslav, who's the President and CEO at Warner Bros. Discovery. My name is Mike Yang, and I cover media here at Goldman Sachs. We have about 35 minutes for today's presentation. Thank you so much for being here, David. I'll kick it off over to you for some introductory remarks. Great. Thanks, Mike. It's a great time for us to be here at Goldman, a little over three and a half years in. I just thought I'd start off by talking about where we are, because I think we're in a really good place. It's a long-cycle business, the creative business. I've said for a long time, we're just a storytelling company. Over the last three and a half years, we've invested an enormous effort in getting the best creative people at the company, behind the screen, in front of the screen, with the idea that we're already the biggest maker of TV content. We need to really build that studio up. We need to build HBO. We need to rebuild the motion- picture studio. When we got there three and a half years ago, AT&T had a different strategy, direct-to-streaming of movies. Here we are three and a half years later, where we have strategically repositioned our assets. Our primary focus was to launch HBO globally. It was losing $2.5 billion. Across the company, this creative focus of it's not how much, it's how good. Here we are three and a half years later. We're going into Emmy weekend, with HBO having more hits than it's ever had. Casey and the creative team there are superb. The business will make $1.3 billion or more this year. We're global with, I think, the best kind of growth metrics to come as we launch in the U.K., Germany, and Italy, and around the world for next year. Our TV business, which Channing runs, is very strong, also the most Emmy nominations they've ever had. We haven't lost any talent at the company. We've brought a lot of great people along for the ride. We have the motion picture business, which was in last place for many years. It is a long-cycle business. We're going to talk more about how we've attacked it, because I think we've really built a very strong infrastructure there that takes advantage of the great creative people we have and the great IP. We're the number one studio domestically and globally now. We've had eight hits this year. There's a lot of confidence and a lot of excitement about what's to come there, all of this happening when we paid $20 billion of debt down. We kind of viewed the company as in half. The left side is all of our costs and infrastructure that's not related to platform or actually storytelling and creative. The right side is the growth, creative, storytelling, and platform. We've paid down $20 billion in debt. As of last quarter, we were net $3.3 billion of debt, with $20 billion paid down. I think that puts us now in a really formidable position to split the company. The two companies, as we split, will be self-funding, the Streaming & Studios business with very strong growth metrics and some real momentum, and the Global Networks business as a really diversified global set of assets, news, sports, free-to-air, cable. I think there'll be a lot of shareholder value creation as we split. Things are going terrifically well. We expect that that'll happen, as we discussed, in the second quarter. There are no approvals required. We need certified financials. Gunnar and the team have been working very hard on that. The structure, I think, is quite compelling. The objective is that up to 20% will go to the global streaming business in terms of a starter interest. Some or all of that might get sold before we split. The intention is that that would be short-term, and that would be a meaningfully de-levering event for global networks to give even more acceleration to a business that has very good free cash flow metrics. The overwhelming amount of debt will be going over to there. Finally, our business is really, it's about storytelling, but it's about people. I think we got the best creative people at the company. We got some of the best business leaders in the business. Brad Singer, he's here today. He's joining us. It's not a small thing. Brad and I, we're a team for many years together. We created a tremendous amount of shareholder value together at Discovery. He spent a month and a half looking at the business. I kept saying, are you coming? He said, let me spend some more time. I'm looking at the business. He's here now. He was at the studio last week. I think he's going to add a lot of value as we embark on this split. Once we do, we'll be looking to show you guys how this could be a meaningful growth company that's really unique. That's where we are. Our guidance for the streaming business is $1.3 billion or more. We're doing very well with that business. Our guidance was $2.4 billion for the Studio. It was as low as $1.4 billion. We said we were going to get it to $3 billion and growing. We're more confident than that. You should expect that we'll meaningfully outperform the $2.4 billion on the studio- side with the success that we're having at the motion picture studio, including Conjuring and Weapons that are hugely over-delivering. That's it as a starter. That's a fantastic overview. There's a lot that I would really love to dig in there. Let's start with Studios. As you mentioned, the Studios business is on its way to over $2.4 billion of EBITDA this year. That's a result of several years of operational transformation, a more analytically rigorous greenlighting process, more marketing, more distribution. The company is targeting 12 - 14 theatrical releases annually in future years. Could you just talk a little bit more about those operational initiatives that the company has instituted in studios and the momentum in the business? Sure. First, we restructured the Studio business to put a real emphasis on the Motion Picture business. At a time when many didn't think the Motion Picture business was coming back, for us, it's about the Motion Picture business. It's really the top of the creative funnel, getting the best creative people working with us on the Motion Picture side. Then we can move them uniquely with our set of assets onto HBO Max, which we've done in many cases. I'll take you through that. We did a number of things, I think, to increase the likelihood of long-term sustainable growth and taking advantage of what we have. One is we broke it into four studios. New Line has been historically the most successful horror studio. Instead, they were doing things like The Flash and Aquaman. We said, get back to what you do really well. You have the great IP in that area, whether it's Conjuring or Nun. Let's get back to what you do. That's what they've been doing. They're having a great year. They have a ton of great stuff coming up next year. I think we have the best team there. We're also going to be doing some of the younger comedies. They did the Hangover franchises and Wedding Crashers. You'll see some of that. All of those are for a price. We're very focused on the economics, and we've changed the whole greenlight. We could do those movies for between $10 million and $50 million. Many of them are known, and we can make real economics on it. Two is animation. We brought in Bill Damaschke, who ran Pixar. You'll see the hard work. This is a long-cycle business, but Cat in the Hat next year and The Places You Go, and we're working on Little Kitty. We have a whole group of that we think are broad-appeal family films coming out of that. James Gunn and Peter Safran have been working on DC now for two and a half years. We did Superman, which was a great triumph for James and for the whole team. We have another Superman coming in 2027. We have Batman coming, Supergirl next week, next year, Clayface. We did The Penguin with great success on HBO. DC is off to a great start. I think the value creation of DC could be really enormous for us with James Gunn and what he has in the pipeline. Finally, the Warner Studio itself. We purposely said we're the place for original stories. That's what Warner has always been, and Warner will always be that. That's how we get Paul Thomas Anderson and Ryan Coogler. There were a lot of people looking at those films and saying, you know, they may be too expensive. Maybe some of them we did put too much money against. We wanted to get the best creative people back with us. We wanted them to become part of the Warner Bros. family. Of all the movies we did this year, we've made a lot of money on all of them. Sinners was a big hit for us. Minecraft was a big hit for us. On top of that, we're doing tentpole movies, with things like Practical Magic and Minecraft. Simplistically, we've divided them into four for diversity, and that's working for us. We've been really aggressive about the greenlighting process. We completely changed the marketing team, and we're now marketing these movies for a lot less money. We're using the contemporary platforms. We saw companies like NEON and A24 promoting movies with five-second spots and only five-second spots, and getting as many people to come to some of the horror films as us when we were spending 10x as much money. We have a new team. They're working very well, enormously creative. Finally, we have some of the greatest storytelling IP in the world, and we have the advantage that a lot of it hasn't been—most of it is underused. We set out, how do we take advantage of DC, Lord of the Rings, Harry Potter? How do we deploy it strategically? For Mike and Pam, you should expect to see we have a very good slate next year. There'll be two or three tentpoles, with James Gunn working with us. It'll be either Batman, Superman, Wonder Woman, Supergirl. Those are our—or Lord of the Rings. There'll be big tentpole movies, then mini tentpoles, whether it's Practical Magic or The Fugitive, movies that you've heard about, and finally originals. With all that, the studio is going to have a hell of a year. We think we're onto something. It is an up-and-down business. We got the best creative people, and we got a great pipeline. We've worked on it for the last two and a half years, and I'm quite confident that we'll get to that $3 billion pretty quickly. You're going to see that there's real upside on the motion picture side and the whole studio as we take advantage of all the work we've done. That's great. Studios & Streaming have been very closely tied together, whether that's the Warner Bros. Studio content that goes to HBO or the very valuable pay-one relationship that HBO has with Studios. Over the first half of 2025, more than 50% of the global streaming content on HBO or the viewing hours came from Warner Bros. Could you just talk a little bit about how Warner Bros. approaches this relationship between Streaming & Studios and the synergies there, how do investments in Studios help streaming? Sure. Look, we're the biggest maker of TV and Motion Picture content in the world. It used to be run, and it was a different time. It might have made a lot of sense that each of them be completely separate. Channing runs a business that does almost 100 TV shows, series. Many of them we sell to Apple, Shrinking, Ted Lasso. We sell to ABC, Abbott Elementary. We sell a lot to Netflix. They didn't do much business with HBO. They were primarily a third-party high-quality vendor. We brought them together. The relationship between Casey and Channing is very strong. They're working together with J.K. Rowling on Harry Potter, which is coming along great, which you'll see soon. Channing and Casey envisioned this idea of The Pitt with Noah Wyle and John Wells. That's a Warner Bros. production. A lot of what you see—The Penguin is a Warner Bros. and HBO collaboration. We have this great amount of talent at Warner. A lot of that is, it might be Chuck Lorre, Bill Lawrence, Mindy Kaling. Why shouldn't a lot of their great content also be on HBO? It gives us real optional leverage going forward. As HBO Max continues to grow, which it is growing in a meaningful way, and as we roll it out globally, the ability to just decide, all right, the next Bill Lawrence show is going to be on HBO, and it looks terrific. We can make that decision. Should we take that out to market, or do we use it for ourselves? Having that ability to make content is something that very few companies have, and that ability to make it and then decide where we're going to put it. I'm very happy about how Warner Bros. TV production is working with HBO. HBO is close to 150 Emmy nominations. Channing had over 60. We decide where all that stuff goes. They have a creative meeting once a week, all the creative people at the company, which I go to often. It's about what are we doing, who do we have, what are the stories we're telling, what's the best place for it to go, and where could we create the most value? Sometimes it's asset value with HBO Max. Where could we create the best economics? Yeah. When I look at HBO, I see a tremendous amount of visibility over the next couple of years because of, in part, the international expansion. Earlier this year, HBO Max launched in Australia. As we head into 2026, I think it's Germany and Italy, and then U.K. and Ireland. Could you talk a little bit about the learnings from the Australia launch that you can apply to the rest of the international expansion that's coming over time? Maybe just talk more broadly about the global distribution strategy for HBO Max. We have a firm belief, and we spent almost three years driving this internally aggressively, that to get real sustainable growth as a streaming service and to be able to really accelerate and take advantage of great content, you need to be global. It took way too long. We had to fight really hard internally to get the right platform and get it working. Right now, we added 3.5 million subs last quarter. 3.3 million were outside the U.S. It's going to be a big year for us next year. We're going to launch in markets where our content is loved. In many markets, we're launching new. In markets like the U.K., Italy, and Germany, we've been in those markets for many years. If you take away sports, 50% of the viewing on Sky is HBO content. Within those markets, people are waiting for Euphoria to come back. They want to see the next season of Gilded Age. They want to see the next season of Last of Us. They've loved watching our content, and it's been branded at the end as HBO. We're non-exclusive in all three of those markets. We'll be in over 150 million homes next year. It could be a lot more than that. We're seeing tremendous demand in a lot of those markets as we roll out. It feels really powerful. Maybe what the biggest accelerant, I believe, is going to be that the marketplace is really challenged with too many players in the market. When people turn on, the consumers put on their TV, it's a terrible consumer experience. In almost every market in the world, there's just way too many choices, and you're googling, where is it? How do I get from one to the other? How do I get into that platform? I believe over time, it's going to rationalize. A lot of our internal strategic drive is that there's going to be a table on this. Right now, there's only five global players. There's Amazon, Netflix, Disney, us, and YouTube, which is a slightly different business, but very strong company and very powerful. Maybe that'll be six. Maybe it'll be seven. It's not going to be 20. You start to see the challenge of being a local player. It's one of the reasons why you see us market by market starting to bundle, because some of those local players, whether it's Globo or Televisa or all across Europe, that were on their own building platforms with engineers, Netflix is accelerating away. Many are looking to us or other players to say, let's bundle together. I think bundling will be one piece. We have had a lot of offers, many of which we've taken, many of which we haven't, where people have raised their hands saying, I'd rather be part of a global platform. Can I be part of you? Because I'm losing a lot of money just trying to play this game in my own market. I think you'll see different types of consolidation. The fact that we're now global, profitable, and growing, and this idea of splitting the company at this time, we think will bring a tremendous amount of shareholder value, because the ability to look at a set of growth assets on one side, gaming, streaming, biggest studio in the world, biggest maker of content, great IP in one company gives a chance, I think, for real multiple expansion, particularly if we could prove that this has real sustainable growth. Yeah. Warner Bros. Discovery, HBO, traditionally viewed largely as a content company, increasingly, it's becoming a content distribution and technology company. Maybe you can just talk a little bit about some of the technology initiatives and some of the distribution efforts for HBO in terms of bundling, paid sharing, recommendation engines that the company is pursuing to help improve lifetime value, churn. Sure. Some of it we're doing on our own. These bundles, like the bundle we have with Disney here in the U.S., the churn is extremely low. Usage is much higher for both of us, and overall consumer satisfaction with the product is much higher. I think you're going to see a lot more of that. I think building a stronger platform and recommendation engine is all important. I'm really a believer that the best content wins. The fact that we're seen as the highest quality streaming service in almost every market, and that when people see that brand, HBO Max, whether it's distributors that feel aligning with us could really help them hold customers or grow customers or consumers wanting to watch us, our strategy has evolved a little bit. I would say Netflix has been very, very successful in being everything for consumers. People may go to Netflix, but ultimately, they come to HBO Max when they want to watch something really special at 7:00 P.M. or 8:00 P.M. or 9:00 P.M. at night with their family, and they're finding real satisfaction. I'd say the biggest push for us has been get the quality of the content up, which Casey and the team is doing. We have a lot of local content around the world that's helping us. We have local sports in language, which is helping us. The overall menu of global recognized high-quality content together with local content, together with local sports, we're finding is just a very powerful consumer offering. It works well in almost every market with its peers. We're not trying to be everything to everybody. The fact that this is quality, and that's true across our company, motion picture, TV production, and streaming, quality. We think that gives us a chance to raise price. We think we're way underpriced. We're going to take our time, because we're really growing now, and people are spending more and more time with us. We think that there's real upside to that. It's hard to replace quality content that people love. We're less and less dependent on sport. I think the more we could be dependent on our IP, when we launch Harry Potter, it's ours. When we launch Lord of the Rings, it's ours. If we just did Conjuring, there's going to be a Conjuring series on HBO. It's ours. I think that's a big differentiator in terms of our ability to capture margin and growth, because no one's going to come back four years later, like in sport, and say, okay, we need more for Conjuring, or we need more for Batman or Superman, because it's doing so much better. Bringing it back to the financials, as you mentioned earlier, streaming profitability is on track to exceed $1.3 billion this year. The segment has shown very good operating leverage, margin expansion, and should continue to do so. We haven't been pushing on the password sharing and the economics yet. People are really starting to love HBO Max. That's the key. We want them to fall in love with our content, with our series, with the differentiated offering outside the U.S. Over time, and it's a little tricky with the password sharing, we're going to begin to push on that. I think our ability to raise price as people become more and more in love with the quality that we have and the series that we have and the offering that we have will have, I think, a real ability, because I think the pricing across the board, not only is there too many players, but in order to stay alive, a lot of the players have just decided to drop price aggressively. Consumers in America were paying twice as much 10 years ago for content. People were spending on average $55 for content 10 years ago. The amount of content they were getting, the spend is up like 10 or 12-fold, and they're paying dramatically less. I think we want a good deal for consumers. I think over time, there's real opportunity, particularly for us in that quality area, to raise price. Great. Let's go back to some of the comments that you made earlier on around the company pursuing a separation between Warner Bros. and Discovery Global. How is the progress towards setting the company up for separation going? You talked about the appointment of Brad, which is a big win. Would everybody agree with Brad being a big win? He's here, so maybe you can talk about the separation progress and what else do you have on the timeline? Everything is going very well. We've been working super hard. Everything's on track for it to be in the second quarter. We expect sometime in April that the companies will be split. There's no approvals required. The company is outperforming pretty aggressively, which I think will help us. We'll have more debt that we'll pay down before we go. We're working hard now on having the trajectory of the businesses being stronger. I think by being split, there'll be a real focus, like the focus on CNN, for instance. Mark Thompson has hired a huge team from The New York Times and from Amazon and from Google. We've been hard at work quietly for the last two years. We have a new product that's going to launch in the next six weeks. We've got two more products out of CNN. Take advantage of CNN as the globally most trusted vehicle to get your news. Pretty soon, within the next couple of months, you'll be able to get CNN for a price. It'll start first here in the U.S., but you'll be able to get it everywhere in the world for a price, as well as some of these other products. I think they've got a lot of upside, Gunnar does, with their sports portfolio and how they put that together with TNT Sports, Discovery+. There are a lot of businesses that we just, we were really focused on how do we turn around HBO, it was domestic only and losing $2.5 billion. How do we rebuild the creative culture? How do we rebuild the Motion Picture slate? How do we do all of our carriage deals? The good news is all those carriage deals are done for Gunnar and for that business. They could focus on what's the future of food and HG? People still love that, love that content. We're the dominant player in natural history around the world. What's the future for that? A lot of the free-to-air business in Europe and the cable business is actually quite good still and is on a different trajectory. I think that's a diversified group of diversified assets that'll do well. Our job is to, when they split sometime in the second quarter, to have the businesses in a position where strategically they're both taking advantage of all the assets they have. The overwhelming majority of debt, as I've said, will go with the Global Networks business, which has huge free cash flow still. There'll be a low debt on the Streaming & Studios business, which will allow Brad and Bruce Campbell and JB and the whole creative team to spend a real focus on just how do we continue to be the best high-quality storytelling company. It's an exciting time as we become really global, global in terms of production and global in terms of streaming. Let's dig a little bit deeper into Discovery Global, the global linear networks business. Once it's spun off and separated, how does it effectively navigate some of the challenges in the linear media ecosystem, which I think is well understood? What are some of the things that it could do more effectively relative to being part of the larger organization? Do you see the need for a more reordering of assets and consolidation within linear media? First, I would say focus, being able to really focus on these assets. What is Food Network in the future? How does CNN become a global business? How do we create a future on streaming for sports that really takes advantage of all the global sports that we have? I think focus, it's a global diversified business. Some of the businesses like free-to-air in Europe are doing really well. If there were free-to-air channels trading at low multiples, when we're one big company, would we buy a couple of those businesses and take advantage of the synergy and the fact that that may have a more sustainable, longer, more sure future? Maybe not, because we're figuring out how to rebundle businesses that might be trading at 15x, 20x, 25x. I think they'll be able to really focus on taking advantage of their assets, rebuilding them for the future, but also maybe buying some low multiple assets that could further solidify their ability to generate a lot of free cash flow long into the future. On advertising, there was a lot of concern earlier this year about the macroeconomic environment, the impact on ad demand from tariffs. I think the ad market has been much more resilient than feared. Could you just give us an update on what you're seeing on the advertising market? Sure. The advertising market has a lot to do with the type of content that you have. Sports is super strong, and it's pretty strong globally. Particularly in the U.S., it's really strong. We've taken on a lot more sport. We did that, I think, one, because we were able to get it for a good price. We walked away from the NBA, and we were able to replace it with a lot of good stuff. We recently picked up one of the semifinals of college football playoffs. Things like March Madness and the Big 12, and we're just having the baseball playoffs are sold out. We're doing quite well. I would say that's picked up over the last year or two to really be an advantage with the sports that we have. Our free-to-air across Europe has been quite strong. Some of the traditional entertainment on linear cable has been softer. It helps to have the diversity of live news, live sports, and be able to offer a broader package. On the other hand, HBO Max is just doing really very strong, very high sellout, very high pricing. We've kept it very limited. If you want to be in front of White Lotus, The Last of Us, Gilded Age, and we've been able to get advertisers that really want to pay a premium to be part of that, as well as some of the high-quality, broader series that we have that are things like Friends or Big Bang Theory. Max has been, I'd say, sports and streaming really strong. Some of the other areas weak are free-to-air strong. I'd say it's a mixed bag, but overall dramatically better than we thought, much more stable than we thought. Even the ones that are a little soft are doing better today than they were doing one month, two months, three months ago. Yeah. As we wrap up our conversation, I was wondering if you could just talk a little bit about where you see the industry heading through the end of the decade and how Warner Bros. Discovery is positioning themselves to make sure they succeed in that new environment. Our journey really is about having people see that Warner Bros. shield and see HBO Max and the HBO brand as the place to come when at 7:00 P.M. or 8:00 P.M. after a tough day, and you want to watch something where we could tell you a story, and it could be an escape. It could change the way you see the world. We do it differently than almost everyone else. I remember when I was at NBC and we did Must See TV, we built that entire network around people coming to us on Thursday night. We built the entire network around that and football. This idea of story shared in the community, that's what we believe on the motion picture side. That's a real impact when you go into the theater and you're surrounded by friends and people you know. The lights go out, and we tell you a story. You see that shield, and you have a chance to have an impact on how people see themselves and see the world. At HBO, you saw it with White Lotus. You saw it with The Last of Us. You saw it with Gilded Age for eight weeks, 10 weeks, with The Pitt, 15 weeks. It becomes something people look forward to. It's a different philosophy. The Silicon Valley philosophy and a lot of other companies are get people what they want as fast as you can. We don't have that philosophy. We want you to wait and see the next episode of The Pitt, of White Lotus. It explodes on social media. People are talking about it. They go into friends' houses to watch it. It creates this energy and excitement about a differentiated, shared experience. Most of what we do in the world today, we do alone. A lot of content consumption now, it's more than ever, but a lot of it is alone. There's nothing more powerful than a great story with great friends or a great story with community. I think that's why you see Warner Bros. Motion Picture's as the number one studio in the world. We believed in that. We fought for it. We wanted to get people back into the theaters on Main Street. We thought if we could tell the best stories with the best filmmakers, with the best talent, the people are going to come back because we want to be together. They came back for Sinners. They came back for Minecraft four, five, six times, made almost $1 billion. They came for Willy Wonka. They came for Barbie. We believe in it so much, we built a global marketing team to drive that. It goes on to HBO, and it drives HBO. For us, I think the future is be the best storyteller, take advantage of Harry Potter and DC and Lord of the Rings and The Fugitive, and be the place that people want to turn to when they want to tell a great story. Whatever happens in the world, if we can do that globally, we're going to be a force. In many ways, we'll be a force for good, because that's what Warner Bros. was doing 100 years ago, and that's what we're doing today. It may be old-fashioned, but we still all love a great story. David, it's been such a pleasure and a privilege to have you on stage here with us. Thank you so much. Thank you.