Warner Bros. Discovery, Inc. Q1 FY2025 earnings call

• Focus on quality storytelling as the engine powering Warner Bros. Discovery, with shows like The White Lotus, The Last of Us making cultural impact. • Streaming has gained over 22 million subscribers in 12 months, with 5 million added in Q1 and on track for at least $1.3 billion EBITDA in 2025 and 150 million subscribers by end of 2026. • Studios are working towards $3 billion EBITDA goal, with strength from Warner Bros. Television and Motion Pictures, and DC Studios planning with projects like Superman launching in July. • Global reach and product improvements in streaming, along with local language content and sports bolstering relevance.

On streaming, in the first quarter, Warner Bros. Discovery gained over 5 million subscribers and delivered $339 million in EBITDA. Over the last 12 months, they gained more than 22 million subscribers. For studios, they are encouraged by progress towards the $3 billion in EBITDA goal, with strength from Warner Bros. Television and Warner Bros. Motion Pictures, including successes like The Minecraft Movie and Sinners. Streaming revenue contribution is significant, with studios working towards enhancing their EBITDA contribution.

• Streaming is on track to deliver at least $1.3 billion of EBITDA in 2025, up 85% versus 2024, and to surpass the 150 million subscriber goal by the end of 2026. • Studios are working towards getting back to the $3 billion EBITDA goal and growing, with a strong slate across studios including DC Studios' 10-year plan for the DC brand. • Expectations of growth from multiple levers in streaming like quality content, global footprint, and product enhancements, and from studios with their content portfolio and IP strategy.

• Potential impact of macroeconomic factors on advertising channels and upfronts. • Challenges in sports rights monetization in streaming, as it's hard to find a profitable business model solely from streaming for premium sports rights. • Uncertainties around capital structure and leverage ratios for global networks, and the impact of market dynamics on content and business models.

Q: Steven Cahall asked about capital structure for global networks and extra members opportunity for Max in the US.

A: Gunnar Wiedenfels mentioned no speculation on capital structures but emphasized transparency from internal reorganization. JB Perrette discussed that extra member opportunity in US is a 12-18 month initiative with password sharing messaging rolling out.

Q: Peter Supino asked about sports strategy on Max and licensing new IPs.

A: David Zaslav and JB Perrette discussed that sports strategy differs globally, with experiments in different models for US and international, and evaluating sports rights balance between cost and engagement.

Q: Bryan Kraft asked about HBO's standout hits, Max's resonance with younger demographics, and time spent across markets.

A: David Zaslav talked about HBO's strong creative team and quality content model. JB Perrette discussed Max's engagement with younger demographics through series like Euphoria and engagement across markets with Latin America leading, Europe aligned, and Asia Pacific smaller.

Q: David Karnovsky asked about macroeconomic impact on advertising and corporate EBITDA savings.

A: David Zaslav said macro impact so far is minimal, with advertising tracking in-line, and corporate EBITDA improved with some one-time items and expected year-over-year cost reductions.

Q: Rich Greenfield asked about NBA ad revenue impact and sports rights expenses.

A: Gunnar Wiedenfels explained that 2025 is impacted by overlap in sports rights, with Q2 having a headwind and Q4 and beyond turning to tailwind, and next year being better from NBA perspective.

Q: Jessica Reif Ehrlich asked about DTC ARPU growth, streaming consolidation optionality, and advertising strategy.

A: JB Perrette discussed ARPU growth levers like LTV, ad-supported SKU, password sharing, pricing, and sports upsell. David Zaslav talked about streaming inventory demand and upfront strategy emphasizing Max's quality content.

Q: Robert Fishman asked about content spend shift and licensing for third-party services.

A: David Zaslav and Gunnar Wiedenfels discussed content spend focus on quality, increase in internal use of output, and balancing exclusive content for Max with licensing to third-parties for win-win IP growth.

Q: Ric Prentiss asked about streaming drivers and studio $3 billion goal pacing.

A: JB Perrette listed streaming drivers as globalization, penetration growth, ARPU growth, content, and product enhancements. Gunnar Wiedenfels talked about studio $3 billion goal with opportunities in TV, film, games, and transformational changes providing long-term impact.