Warner Bros. Discovery, Inc. Q2 FY2025 earnings call

• Studios: Delivering on creative objectives with strong film and TV performance, investing in creative and operational capabilities, and aiming for adjusted EBITDA growth. • Streaming: Transformed HBO Max with subscriber growth, set to exceed EBITDA targets and reach 150M subscribers by 2026. • Balance Sheet: Dramatically delevered from over 5x net leverage to 3.3x. • Content Coordination: Aligning TV and film production for HBO Max, e.g., working with J.K. Rowling on Harry Potter. • Networks: Reimagining U.S. Networks portfolio as a content engine around unscripted brands.

The Studios business is on track to deliver at least $2.4 billion in adjusted EBITDA in 2025 with a goal of $3 billion. The Streaming business is on track to exceed $1.3 billion in adjusted EBITDA in 2025 and reach over 150 million subscribers by the end of 2026. The Studios segment has seen strong momentum with Warner Bros. opening 5 consecutive films with over $45M domestic box office, HBO leading in Emmy nominations, and HBO Max adding over 3.4 million subscribers in Q2. The Networks segment, including CNN and TNT Sports, is being reimagined with a focus on unscripted brands and monetization forms.

• Studios: Aim to deliver at least $2.4B adjusted EBITDA in 2025 with a goal of $3B. • Streaming: Exceed $1.3B adjusted EBITDA in 2025 and reach 150M subscribers by end of 2026. • Balance Sheet: Continue deleveraging. • Split: Plan to split into 2 independent publicly traded companies in 2026.

• Macroeconomic and geopolitical factors affecting upfront advertising negotiations. • Uncertainties in content licensing and sublicensing decisions. • Challenges in achieving sustainable churn reduction and converting unauthorized account shares.

Q: Can you talk about content licensing strategies?

A: David Zaslav discussed prioritizing asset value and growth over near-term licensing, with HBO Max differentiating through exclusive quality properties. Gunnar Wiedenfels talked about reimagining U.S. Networks portfolio for monetization and sports strategy.

Q: What are future franchises and halo effect?

A: David Zaslav mentioned big tent poles like Harry Potter, Superman, Lord of the Rings, with plans to monetize through various channels.

Q: Thoughts on HBO Max U.S. distribution deal restructuring?

A: Gunnar Wiedenfels explained legacy deal adjustment impacting revenue growth, with reacceleration expected from market launches.

Q: Engagement of wholesale ad-supported subs vs direct sign-ups?

A: Jean-Briac Perrette discussed LTV and activation strategies, with focus on upsell capabilities and partnership marketing.

Q: Churn and account sharing?

A: Jean-Briac Perrette talked about churn reduction efforts via bundles, content consistency, and product personalization, and account sharing in early stages with plans to drive action.