Ladies and gentlemen, welcome to the Warner Bros. Discovery second quarter 2026 earnings conference call. At this time, all participant lines are in listen only mode. After the speaker's presentation, there will be a question and answer session. Additionally, please be advised that today's conference call is being recorded. I would now like to hand the conference over to Mr. Peter Lee, Senior Vice President in Investor Relations. You may begin. Good morning. Thank you for joining us for our Q2 2026 earnings call. Joining me today from Warner Bros. Discovery's management is David Zaslav, President and Chief Executive Officer, Gunnar Wiedenfels, our Chief Financial Officer, and JB Perrette, CEO and President, Global Streaming and Games. This morning, we issued our earnings release, shareholder letter, and trending schedule. These materials can be found on our website at ir.wbd.com. Today's presentation will include forward-looking statements that we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements about the benefits of the proposed transaction between Warner Bros. Discovery and Paramount Skydance, future financial and operating results, the combined companies' plans, objectives, expectations, and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of WBD's management and are subject to significant risks and uncertainties outside of our control that could cause actual results to differ materially from our current 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. WBD is not under any obligation and expressly disclaims any obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise, except to the extent required by applicable law. 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 schedule, which can be found in the investor relations section of our website. I will turn the call over to David for some brief remarks, after which we will take your questions. Before doing so, I ask that you limit your questions to topics related to our Q2 results and related business and financial topics. As noted in our shareholder letter, management will not be taking questions regarding the proposed Paramount Skydance transaction. With that, I'll turn it over to David. Good morning, everyone. From the beginning, we've said that our plan strategy is to build the world's leading storytelling company, one that attracts and retains the best creative talent, reaches global audiences, and ultimately creates shareholder value. For all that's changing in how people consume entertainment, we have held firm to our conviction that there is no substitute for creative excellence and quality storytelling. It's driving strong results. Nowhere is it more evident than our streaming business, where the breadth, artistry, and cultural influence of HBO programming across the globe is translating into great financial progress for HBO Max as a streaming offering. In Q2, our streaming segment delivered more than $3 billion in revenues for the first time ever as subscriber-related revenue growth accelerated 200 basis points sequentially to 10% ex FX with positive engagement and subscriber trends. Just as important, streaming generated $512 million in adjusted EBITDA, a more than 60% EBITDA improvement over the same period in 2025 and a nearly 17% adjusted EBITDA margin. This all together represents a powerful and impressive business turnaround from a predominantly U.S.-only HBO streaming business, losing $2+ billion in 2022 to a global high growth asset where HBO is globally recognized as the highest quality streaming service in the world. HBO series are finding a bigger global audience more consistently than ever before. So far in 2026, "The Pitt," "A Knight of the Seven Kingdoms," "House of the Dragon," and "Euphoria" have each averaged at least 25 million global viewers per episode, with several programs exceeding 30 million average viewers. With the new season of "The Gilded Age" and the debuts of "Lanterns" and "Harry Potter" coming soon, as well as our strong content pipeline in 2027, we expect that momentum to continue. This year's Emmy Awards also attest to our commitment to storytelling excellence with WBD leading the industry with 150 nominations. HBO Max alone led the industry and garnered 122 Emmy nominations, spanning 21 individual programs, including 26 for season two of "The Pitt" and 25 for the final season of "Hacks." Warner Bros. Television again showed that it is among the world's best television producers with 52 Emmy nominations including 28 for programs that we produce for third-party platforms like "Shrinking" and "Abbott Elementary." Our quality programming is also fueling our global networks' resilience as they contend with continued headwinds. In Q2, our roster of premium sports properties showed its value as we saw the highest-rated national championship basketball game ever on TNT Sports, a more than 20% increase in viewership for the MLB regular season thus far, and a 50% viewership increase for the NHL playoffs. In a turbulent geopolitical moment, the quality, trustworthiness, and reliability of CNN's journalism again proved itself. In Q2, CNN linear viewership increased 24% over the previous year, and minutes spent across all CNN platforms increased 19%. Our network brands were home to four of the top 10 shows in general entertainment across all cable networks during the second quarter. Just recently, Discovery's "Shark Week" saw its highest year-over-year growth in more than a decade, with Discovery ranked as the number one cable network in prime time among people aged 25- 54 across Shark Week's first three nights. There's no question that media is by nature a business full of hits and misses, you see that reflected in our studio's results. While a handful of recent films have underperformed expectations, importantly, we've spent years transforming and diversifying our studio segment to better manage risk and volatility. The breadth of this business today across theatrical, television, licensing, games, experiences, retail, and consumer products has greatly improved its resilience and ability to generate consistent shareholder value. We are excited by what's in the pipeline from our remaining 2026 and 2027 film slate to "Ted Lasso" to opportunities generated by "Harry Potter." Over the long term, we continue to expect this segment to deliver our goal of generating over $3 billion in adjusted EBITDA. Taken together, our results this quarter show how much we've readied each segment of our business for the future. We've succeeded in making HBO Max a highly valuable global streaming service, are seeing strong financial returns now after years of heavy investment. We've optimized our global networks and continue to invest in general entertainment, sports, and news that serve tens of millions of global viewers. Over the last year, we've shown our studios remain the industry's creative leader while simultaneously transforming its operating model and financial profile. As stated in our shareholder letter, we remain confident that our agreed-upon sale to Paramount Skydance will be completed. We are excited for what's ahead in the remainder of 2026 and beyond, with that, we welcome your questions. We will now begin the question and answer session. If you would like to ask a question, just press star followed by the number one on your telephone keypad. If you would like to withdraw your question, just press star one again. We'll pause for a moment to compile the Q&A roster. Our first question comes from the line of Steven Cahall with Wells Fargo. Steven, please go ahead. Thank you. David, can you speak a little more to the scripted show pipeline you've got upcoming on HBO? I think you've recently finished some big series, including "Hacks" and "Euphoria," maybe "The White Lotus" and "A Knight of the Seven Kingdoms" fall into there. Will there be fewer returning shows in 2027? Are there any big IP shows that we should be aware of now that you've expanded into more territories globally to drive the growth in the segment? Then on the studio, I know you had a remarkable year last year. You talked about how it's a lumpy business, understandably a little lighter this year. As we just think about a path to getting back to $3 billion in EBITDA, I'm struggling a little bit to get there. You weren't quite there in 2025 when kind of everything went well. Help us understand how you can get back to that $3 billion in EBITDA level with the studio longer term. Thanks. Thanks so much, Steven. Let me just start with HBO. Casey Bloys and Amy and Franny, the whole team over there have done a remarkable job. In 2022, HBO was basically producing almost all of its content, but they weren't using Warner Bros. We've teamed them up together, we've invested significantly in driving the overall quality of the content. Casey and his team now have the strongest HBO we've ever had. Together with all of the tent-pole shows, we also have local content around the world. We have "Lanterns" coming up. "The White Lotus" is coming back. "The Gilded Age" is coming soon. We greenlit "Harry Potter" for the next 10 consecutive years. I've already seen the first three episodes. It's very strong. We'll be debuting that on Christmas Day. We have a very strong HBO, and we're seeing it in the engagement, we're seeing it in the overall growth, and we're seeing it in how people see HBO as a quality service that they can rely on with their family. Before we get to the free cash flow, JB, we've seen a lot of real growth across Europe. Just talk about what we're seeing with Max, because not only is it a terrific turnaround, it's a high-growth business now, and next quarter will even be stronger. Yeah. Steven, on the content side, just to echo what David said, we actually have 2027 as arguably our best year yet. We obviously have "White Lotus" coming back. We've got "Knight of the Seven Kingdoms," which is obviously a breakthrough series that came out this year that didn't exist 12 months ago, and that Casey and the team came up with to be able to be repeatable on a frequent basis. We got "The Pitt" coming back, got "The Last of Us" coming back. We feel actually even better about 2027 than we already did about 2026. We feel very strongly about that. Our original content efforts around the world, as David said, we're starting to see real traction with more and more shows from the international markets, particularly as Casey and his team have continued to get closer to the development in those markets. We're excited about the local content coming out of the international markets. We're starting to see it because not only did you see, obviously, us return double-digit distribution growth this quarter, but we still were lapping for part of the quarter, this related party deal that we disclosed a while back. If you looked at it excluding that related party deal, our distribution growth would actually have been in the low teens. That trajectory looks very solid for the remainder of the year. A return to not only double-digit, but sort of teens level growth on distribution is a testament to both distribution and subscriber growth led, as well as monetization on ad sales, engagement, and all the other levers that we're continuing to push. All right. Thank you, JB. Steve, this is Gunnar. For the studio, look, I have zero doubts about our long-term $3 billion EBITDA target for the studio. What's important here. Let me go through a couple of points. Number one, the quarter, obviously, in the film business, wasn't what we expected. At the same time, you already mentioned this, Q2 of 2025 was an outstanding quarter. We had massive content licensing deals, one very big one internal, then we had "Sinners" and "Minecraft." It was a tough comp. Nonetheless, against that year, the film business is going to have a harder time this year, no doubt. What matters here is we have invested significant amounts of money, time, management attention into diversifying and transforming the studio so that we're in a position to be able to digest a quarter like this. These investments are going to pay off. If we go through business by business, we've always said that we're really looking forward to 2027 for the film business. The lineup is fantastic. It's a richer scale and more promising tent-pole IP in there relative to 2026. That's really something to look forward to, and our plan longer term assumes a larger number of films than what we're seeing this year. Warner Bros. TV, as David said a minute ago, is performing really well. More than 80 shows on air across every platform with all of the key buyers. One thing that's going to help us going forward, if you take a step back, we're going to start benefiting from SVOD shows coming back to replenish our library. We've gone through a bit of an adjustment if you look at a decade worth of this business going from predominantly broadcast-focused production to more and more SVOD production with longer windows and a larger upfront margin and fee. That's going to come back and start replenishing and driving library and associated licensing and downstream revenues going forward. There's a really positive outlook there for that business. I mentioned the investments that we have made in the ancillary areas like consumer products, retail, our tours business. Those are things that were underdeveloped in Warner Bros. We have spent years deploying the capital and setting the company up for great returns with a very predictable high margin, highly cash generative returns. We're approaching this in a much more integrated way now, where these things are not an afterthought but part of the planning from the outset with every new story that we're developing. Then finally, games, where JB and the team have restructured the portfolio. LEGO Batman launching this year, very encouraging as sort of first installment in that new strategy. Here we see growth opportunities down the line as well. The biggest individual title to look forward to, obviously, here is the second installment of Hogwarts Legacy. Taking all these together, we have a detailed plan for the next three to five years with a lot to look forward to. Thank you, Steve. Next question. Your next question comes from the line of Rich Greenfield with LightShed Partners. Rich, please go ahead. Thanks, guys. You appear pretty confident on the studio side about the future. Could you just comment, Gunnar, I just want to elaborate. You made a comment about ramping up film production or the number of films. How many films are you making this year? How many films next year? How confident are you about maintaining that level of theatrical output from 2027 and beyond? That would be really helpful. Then, Gunnar, in a worst-case scenario where the Paramount deal didn't happen, and I know you're planning on closing the transaction, but if it didn't happen, given all of the work you did before the transaction to split the companies How many months or how much time do you think it would take to actually effectuate a split of the company if a deal didn't happen? Thank you. Rich, just first and foremost, we're confident this transaction will close. We've been trying to drive the value of the company to deliver to P SKY and to David the best company possible. The company is performing at a very high level, and we have every expectation that the transaction will close and that the company will be performing even better than the plan that we presented to PSKY when we did our deal. Great. Look, Rich, to your question on the studios, we're making 14 films this year, ramping up to 19 next year, and we're very confident that we're going to be able to maintain that larger number. We have the unique benefit of a great creative team, great relationships in the talent communities, and an enormous amount of IP. The way Mike and Pam and Peter and James are running this strategically is to find the right mix between original films, leveraging our IP to make the right number of tentpole IP-driven films. We're ramping up the animation output. We've got a great label with New Line. This allows us to put together a really nicely balanced slate, which I think from a financial perspective is going to help us manage the inevitable risk in this business pretty well also. I'm really looking forward to these upcoming years. One of the issues that we see this year, we really were striving to have both original content and big tentpoles and mid-size tentpoles for this year. Next year, we're going to have "Lord of the Rings," "Batman," "Superman," "Minecraft" too. It's just because of our overall philosophy of making sure that we bring the motion picture to the market when the film is ready. We're a little light on those tentpoles. We do have "Cat in the Hat" coming. We got "Practical Magic," and we think the back end of the year is going to be good for us. When you compare that with what we have coming next year and the amount of tentpoles, if we had to do it, we would have spread those a little bit more over this year and next year. I think you'll see next year and in the years ahead that we're really taking advantage of the big tentpoles and the great IP that Warner Bros. has to balance out the original content as we develop more bigger movies from scratch. Thank you, Rich. Next question. Your next question comes from the line of Sean Diffley with Morgan Stanley. Sean, please go ahead. Great. Thanks very much, team. Two if I may. First on linear advertising, down nearly 30%, obviously NBA 20 points. Just comment on the underlying ad market, any categories you'd call out as weak, any crowding out from the World Cup. Second question on the licensing front. How would you describe the demand environment right now from other streamers? Obviously, you mentioned "Ted Lasso," and then on the $5 billion of library revenue that you've generated on average, any help with how to think about margins there? Obviously, pretty high as you guys referenced, but any help there would be appreciated. Thanks very much. Sure. Hey, Sean. Let me start with the licensing side quickly. We're seeing very healthy demand. This goes back to the enormous value of our library. We're getting healthy demand even for shows that are a decade old, and it's a healthy marketplace right now. As you said, the margins are great. You could almost look at the studios business as a library-driven content licensing business, which we replenish with new creative every year. That's certainly the way from a financial perspective how it works, that business is in very good shape right now, I see no reason why that should change. As we said before, we have shifted a little bit, we're utilizing a lot more of that content internally now, which obviously, it doesn't drive the immediate profits that an external sale would generate. You can see in this quarter how the consolidated profits are benefiting from some of those licensing deals that we've done over the year as we're utilizing content in JB's business and to some extent on our linear networks that we have self-created and that way internalized the margins. For linear advertising, you mentioned the biggest adjustment factor here with the NBA. That's been obviously a negative driver on ad revenues, a positive driver on profits in the second quarter as much as or more so even than in the first quarter. On an underlying basis, if we take it market by market here, in the U.S., trends are pretty consistent with what we've seen in the first quarter or into the end of last year. As David said earlier, we're very pleased with how our viewership is developing. We're up in general entertainment and very significantly up in news and sports, on the advertising side, we've held a similar rate as early in the year. From that perspective, no trend change here. The picture is slightly different internationally, where Q2 was worse than Q1. Across all of our markets, we are seeing indications of just some caution, consumer weakness in the understandably difficult geopolitical environment. The trends are slightly different from market to market, Q2 a little weaker than Q1, what we're seeing so far into Q3 in terms of July and August is also a mixed picture. Some markets looking better, others continue to look similar to the second quarter. Visibility is not great looking out into the rest of the year, we'll see. You already mentioned the World Cup, obviously, everywhere in the world, especially with the broader field this year, has had an impact on everybody who's not sort of been benefiting from that viewership. One of the things that we're seeing, and it varies by market, but the benefit of the work that Casey and JB and the team have done in driving HBO Max globally, where, as you look at it, a number of countries were outrunning the decline by the significant growth that we're seeing at HBO Max. That's not true for all markets. We're seeing it meaningfully in a number of markets, which is encouraging, and the continued growth of HBO Max becoming a critical element of us as a growth engine, and countering the cyclical decline that we're seeing. Thank you. Thank you, Sean. Your next question comes from the line of Jessica Reif Ehrlich with Bank of America. Jessica, please go ahead. Hi, I think that's me. A couple things. One, it seems like one of the most challenging things right now, given that the deal has been pushed out and pushed out, is maintaining focus. Can you just talk about how you kind of manage the troops and keep everybody aligned at this, I guess, challenging time? Second, you haven't talked about DC for a while. I know what films, sometimes they perform, sometimes they don't. Is there any change in strategy, and can you talk about kind of the cadence from here? Finally, on HBO Max. Disney mentioned on their call yesterday that the bundle is really working for both of you. Can you talk about what you've seen from bundling in general or specifically with the Disney bundle? How much churn has come down? Can you talk about the magnitude of the benefits? That would be great. Thank you. Thanks, Jessica. The overall culture of this company, and the work ethic of the company has been inspiring. It has been challenging. Our focus has been how do we drive a stronger company, meet and exceed our business plan, and deliver a stronger and higher growth company to PSKY, and David so that Paramount coming together with Warner Bros. is even stronger. I thought it was going to be quite challenging. When you look at the way this company is performing and you look at the close to 40,000 people coming in every day, I went all across Europe in the last six weeks and was in most of those countries meeting with people. They're working extremely hard. The focus has been that this is a great company, and that how do we take advantage of every day we're here and try and focus on best performance possible, but also this idea of what stories will we tell and the drive to continue to tell great stories at HBO, at Warner Bros. On the motion picture side, at each of our cable channels around the world, on our free-to-air and cable channels everywhere. I'm quite inspired by the culture here and the drive to continue to put points on the board and take pride in the fact that this is a great company and we want to deliver a great company. I do think it's unusual when you look at the overall performance of the company and how hard people are working. We're lucky, I think we have an unusual set of employees that really love these assets. As long as we're here, we're going to be working hard every day, to continue to honor Warner and HBO and Discovery and all the great assets. On the DC side, James is focused on "Man of Tomorrow." I saw some pictures yesterday that looked amazing. Actually, yesterday was James' birthday, and he's out working. He's working 16, 18 hours a day. It looks fantastic. We're super excited about it. Matt Reeves, I spoke to over the weekend, and he's working very hard on "Batman." We have "Clayface" coming up soon, which looks terrific. We got "Lanterns" launching in the next few weeks on HBO, which Casey and Sarah are super excited about. DC feels very good. We have a robust pipeline, and Peter and James are hard at work. JB, you want to talk about the bundles- Yeah How those are working around the world as well as with Disney here in the U.S.? Yeah. Jessica, you know we've been big believers. David has been a big champion of bundles and the power that they can have for consumers, particularly at a time where obviously pricing continues to increase across the individual services. We continue to see both benefits on subscriber acquisition as well as obviously retention and meaningful improvements in churn with those bundles. It's a combination of distributor bundles like Verizon in the U.S., who bundles Netflix and us, or MercadoLibre and Claro in Latin America, or Canal+ or Sky here in Europe, as well as programmer bundles which Disney obviously in the U.S. has been our longest and most successful to date. RTL+ in Germany when we launched earlier this year, which has the best of local and the best of global coming together. We'll be announcing another bundle coming later in this fall in Europe. We have a Viu bundle in Southeast Asia. We continue to be big believers in it. We see the proof is in the data, in both, as I say, acquisition and meaningfully better churn. The good news is that along with all the other components that go into engagement and retention, content, the product, our marketing, and so on, we are looking at a 2026 year where the trends give us sort of high confidence that we're going to have our best year ever in terms of retention and lower churn in 2026. That trend is also helping. We see that trend continuing, particularly as we talked about earlier, as the strength of our content lineup, and the consistency of it throughout the year makes us feel even more bullish for 2027. Thank you. That concludes our question and answer session and today's conference call. Thank you all for joining. You may now disconnect.