David Karnovsky

David Karnovsky asked about the outlook for F1 sponsorship growth in 2026, given the strong results in 2025 and the current pipeline, and sought clarification on the contribution and opportunity of 'digital advertising' mentioned in the press release.

Answer

Stefano Domenicali, President and CEO, Formula One Group, highlighted creativity in finding new opportunities, focusing on the quality of partners, and strong demand for sponsorship. He explained that digital advertising encompasses various platforms like podcasts, YouTube, and social media, offering significant monetization potential.

David Karnovsky inquired about F1's sponsorship growth outlook for 2026, given the strong performance in 2025, and the expected follow-through from existing deals and the current pipeline. He also asked for clarification on the new contribution from digital advertising, its inventory sources, and the overall opportunity.

Answer

F1 President and CEO Stefano Domenicali indicated continued growth in sponsorship, emphasizing a focus on the quality of partners and leveraging a competitive landscape where demand often exceeds supply. He mentioned new deals and opportunities being offered. Regarding digital advertising, Stefano explained that digitalization allows monetization across various channels, including podcasts, YouTube, and other social media platforms, with significant future potential.

David Karnovsky asked for an update on Zuffa Boxing's progress, including fan engagement, viewership, milestones for achieving 50-50 ownership, and expected financial disclosures. He also inquired about the operational and commercial lessons learned from the Royal Rumble in Riyadh, TKO's first international tentpole Premium Live Event, and how these insights will inform plans for WrestleMania 2027 in the same location, including details on the Financial Incentive Package (FIP) relative to a normal Saudi event.

Answer

Mark Shapiro (President and COO, TKO Group Holdings, Inc.) stated it's early for Zuffa Boxing but expressed optimism for its potential as a new revenue stream, with plans for up to 16 fights this year and international expansion. Andrew Schleimer (CFO, TKO Group Holdings, Inc.) added that TKO vested into 25% equity interest by signing a media rights deal and anticipates vesting into the next tranche based on 2026 financial performance. Mr. Schleimer clarified that Saudi events, including Royal Rumble, carry the same revenue recognition and cost profile, with three planned for 2026 versus one in 2025. Nick Khan (President of WWE and Board Member, TKO Group Holdings, Inc.) explained that Royal Rumble provided valuable learnings as the first event at that venue, which will benefit WrestleMania 2027, especially with the Asia Cup preceding it.

David Karnovsky asked why TKO retained non-PLE content like NXT and the content archive from the ESPN deal and inquired about the fan value proposition of ESPN's higher-priced DTC service compared to Peacock.

Answer

Mark Shapiro, COO, President & Director, explained that retaining content creates additional monetization opportunities and emphasized the strategic importance of securing ad inventory in future deals. He addressed the pricing concern by comparing it favorably to the previous, successful UFC pay-per-view model on ESPN+, which required a double paywall. Andrew Schleimer, CFO, added that the ESPN deal's 'halo effect' is expected to boost other revenue streams like partnerships.

David Karnovsky of JPMorgan Chase & Co. asked for insight into the recent TKO share purchases by Endeavor (EDR). He also sought clarification on whether incremental UFC events held abroad are overall EBITDA accretive compared to events held at the Apex facility.

Answer

President and COO Mark Shapiro declined to comment on Endeavor's activities, stating it was a TKO earnings call. CFO Andrew Schleimer clarified that while international UFC events have a lower margin profile due to higher costs, they are accretive on an absolute dollar contribution basis and represent a long-term investment in growing the fan base.

David Karnovsky inquired about the strategic positioning of UFC Fight Pass in upcoming media rights negotiations and asked whether title sponsorships, like the one for the Sphere event, represent a new, repeatable inventory category.

Answer

President and COO Mark Shapiro confirmed that TKO plans to keep UFC Fight Pass as a proprietary asset, focusing on driving its growth through more exclusive live events. He also stated that while the Sphere title sponsorship was a huge success, future title deals will be pursued selectively if they are authentic and don't over-commercialize the brand.

David Karnovsky asked about the NFL, specifically how Sinclair views the potential for higher collective broadcast payments to the league and how those costs might be passed through the ecosystem to networks, distributors, and ultimately consumers.

Answer

Chris Ripley, President and CEO of Sinclair, commented on early NFL negotiations, viewing them as positive for incumbents and potentially leading to new packages that increase overall payments without overburdening existing partners. He explained that costs from new sports deals, like the recent NBA agreement, were largely absorbed by streaming platforms rather than broadcast. Mr. Ripley emphasized Sinclair's strong political position (FCC proceeding on network affiliate relationships, FCC inquiry on sports marketplace) and commercial position, arguing for more equitable cost sharing between broadcast and streaming, suggesting broadcast might be overpaying.

David Karnovsky inquired about the NFL rights market, specifically how a potential higher collective broadcast payment to the league might impact the cost pass-through to various ecosystem points, including networks, distributors, and ultimately consumers.

Answer

Chris Ripley, President and CEO of Sinclair, commented that early NFL negotiations benefit incumbents and that new packages could increase payments without overburdening existing partners. He referenced the recent NBA deal where costs were largely absorbed by streaming platforms, not broadcast. Mr. Ripley also highlighted Sinclair's strong commercial position and ongoing FCC inquiries into network affiliate relationships and the sports marketplace, suggesting broadcast is currently overpaying relative to streaming.

David Karnovsky questioned the drivers behind Lamar Advertising's 3% cash operating expense growth, specifically if it's largely due to ERP implementation, and sought an update on the ERP process. He also asked for an update on the pharma vertical and other nascent national categories.

Answer

CEO Sean Reilly attributed the OpEx increase partly to ERP and partly to higher healthcare inflation. CFO Jay Johnson added that ERP-related expenses would moderate as the second phase of technology initiatives goes live later in 2026, with corporate expenses expected to grow below 2%. Sean Reilly highlighted the positive impact of FDA rule changes and Crossix attribution studies in making out-of-home an effective medium for pharma advertising.

David Karnovsky inquired about the drivers behind the 3% cash operating expense growth, specifically the impact of ERP implementation, and sought an update on the pharma vertical and other nascent national advertising categories.

Answer

CEO Sean Reilly attributed the OpEx increase to healthcare inflation (approximately 0.5%) and ERP costs. EVP, CFO, and Treasurer Jay Johnson added that ERP expenses would moderate as the second phase goes live later in 2026, with corporate expenses growing below 2%. Sean Reilly explained that pharma growth is driven by FDA rule changes simplifying ad disclosures and Crossix attribution studies proving media efficacy.

David Karnovsky asked for more details on the auto insurance vertical's performance and sustainability, and for clarification on political advertising expectations during a midterm cycle.

Answer

CEO Sean Reilly expressed satisfaction that auto insurance customers returned after internal actuarial issues, indicating confidence in the out-of-home medium, with programmatic channels being particularly attractive. He also provided historical context, noting that year-to-date political revenue in the 2022 midterm cycle was approximately $21 million, significantly higher than the $7.9 million in 2021.

David Karnovsky of JPMorgan Chase & Co. asked for insight into why airport and transit advertising are holding up well amid a cautious macro environment. He also requested an update on the M&A pipeline beyond the recently closed Verde transaction.

Answer

CEO Sean Reilly explained that the airport division's strength is driven by the significant rebound in air travel. He differentiated Lamar's transit business, which primarily involves bus wraps targeting a general audience, from competitors' models that rely more on ridership, explaining the different recovery profiles. He also confirmed that no M&A beyond the Verde deal is assumed in the current guidance.

David Karnovsky asked for an overview of the current M&A landscape, the potential inorganic revenue contribution from acquisitions, and an update on the full-year expense growth forecast.

Answer

Executive Sean Reilly stated that he anticipates acquisition spending to be 'well north of $200 million' for the year and that more specific details on the inorganic revenue contribution would be provided in August. Both Reilly and Executive Jay Johnson confirmed that the company's full-year expense growth forecast remains around 3%.

David Karnovsky of JPMorgan Chase & Co. inquired about the composition of the $150 million M&A pipeline, asking about deal sizes, and also asked for commentary on the implications of T-Mobile's acquisition of Vistar Media for the programmatic out-of-home space.

Answer

Sean Reilly (executive) stated that the M&A pipeline is active again and consists of typical tuck-in activity, with deals ranging from $2 million to $10 million and a few larger ones in the $40 to $50 million range. Regarding Vistar, he expressed excitement, viewing T-Mobile's involvement as a strong endorsement of out-of-home advertising that will benefit the industry by leveraging T-Mobile's data and marketing expertise.

An analyst on behalf of David Karnovsky from JPMorgan asked for more detail on how Lamar measures programmatic KPIs to gain share and what types of M&A opportunities the company is targeting for 2025.

Answer

Executive Sean Reilly explained that programmatic KPIs are measured by a growing number of third-party data providers that perform attribution analysis, justifying the higher CPMs. On M&A, Reilly stated that after slowing down in 2024 to strengthen the balance sheet, Lamar anticipates a pickup in 2025 focused on 'fill-in' tuck-in acquisitions across the country, which can be easily absorbed into existing operations.

David Karnovsky requested more detail on Live Nation's demand-side indicators, specifically parsing trends by regions, venues, and consumer segments. He also asked Michael Rapino about the playbook for recent arena acquisitions in Europe, the investments being made in those venues, and how these acquisitions align with Live Nation's broader continental goals.

Answer

Joe Berchtold, President and CFO, reported strong, consistent demand across all aspects of the business globally, including festivals, clubs, and theaters. He emphasized that 75% of U.S. tickets are under $100, reflecting artists' focus on affordability, and noted no pullback in demand from budget-conscious fans. Michael Rapino, President and CEO, expressed satisfaction with the progress in Venue Nation, highlighting a large global pipeline for arenas and amphitheaters in key markets. He confirmed the division is growing globally, meeting benchmarks and return expectations, with more expansion anticipated.

David Karnovsky asked for more details on Live Nation's demand-side indicators, specifically parsing trends by regions, venues, or consumer segments. He also asked CEO Michael Rapino about the playbook for recent arena acquisitions in Europe, including investment strategies and how these acquisitions align with broader continental goals.

Answer

CFO Joe Berchtold highlighted consistent strong demand across artists and festivals, from clubs to theaters. He emphasized that 75% of U.S. tickets are under $100, indicating artists' focus on affordability and no pullback in demand from budget-conscious fans. CEO Michael Rapino stated that the Venue Nation division is growing globally, hitting benchmarks for returns, with a large pipeline of arena and amphitheater opportunities in key international markets.

David Karnovsky asked for an update on the venue pipeline impacting 2026, including buildings opening in the second half of the current year and those planned for the coming year, and whether the previously guided 7 million fan count growth at Venue Nation is sustainable. He also sought an update on the stadium outlook for next year, specifically regarding a comparable U.S. year despite the FIFA factor and international growth.

Answer

CEO and President Michael Rapino deferred a detailed venue pipeline discussion to the upcoming investor day but confirmed a consistent growth pipeline and good progress on current building projects. President and CFO Joe Berchtold noted that fears regarding the FIFA World Cup haven't materialized, and Live Nation anticipates a very strong stadium year globally for next year, including robust international performance. Michael Rapino added that with additional amphitheater and arena shows, the company expects to maintain its historical double-digit fan growth.

David Karnovsky requested an update on the venue pipeline impacting 2026, including buildings opening in late 2025 and planned for 2026, and whether Live Nation expects to sustain its fan count growth pace at Venue Nation. He also sought an update on the 2026 stadium outlook, particularly regarding U.S. growth versus international and the FIFA factor.

Answer

Michael Rapino, CEO and President, deferred a detailed venue pipeline discussion to the upcoming investor day but confirmed the continuation of the previously outlined growth pipeline. Joe Berchtold, President and CFO, added that fears regarding the FIFA World Cup haven't materialized, and 2026 looks to be a very strong stadium year globally, with international markets showing particular strength. Michael Rapino further noted that adding more amphitheater and arena shows would help achieve annual double-digit fan growth.

David Karnovsky asked about the secondary ticket market, specifically if the trend of market-based pricing is accelerating and how it impacts Ticketmaster. He also requested an early view on 2026 supply trends given the FIFA World Cup's impact on North American stadiums.

Answer

President and CFO Joe Berchtold explained that the company is net positively impacted as sales move to the primary market. President and CEO Michael Rapino expressed optimism for 2026, stating they have already secured a strong global stadium business and that the company's geographic diversity in Europe and Latin America will ensure a strong year despite potential World Cup-related availability issues in the U.S.

David Karnovsky asked about the noted decline in secondary market GTV due to market-based pricing and requested an early view on the 2026 concert supply, considering stadium availability impacts from the FIFA World Cup.

Answer

President & CFO Joe Berchtold explained that as primary ticket pricing becomes more market-based, it positively impacts the company by capturing more value, though it reduces secondary arbitrage. President & CEO Michael Rapino expressed strong optimism for 2026, stating that despite the World Cup in North America, the global portfolio, particularly in Europe and Latin America, ensures a strong pipeline, with 40-50% of shows already booked.

David Karnovsky inquired about the outlook for full-year concert margins and the strategic rationale behind the acquisition of Japanese promoter Hayashi.

Answer

President and CFO Joe Berchtold explained that despite potential volatility, significant scale and volume should allow 2025 concert margins to be similar to the previous year. President and CEO Michael Rapino described the Hayashi acquisition as a crucial strategic move into one of the world's largest music markets, providing a vital local partner to scale the business and control venue access.

David Karnovsky inquired about the potential for live music ticket access to be included in 'super-premium' tiers from music DSPs and asked for an update on the DOJ antitrust case, including settlement discussions and trial timing.

Answer

President and CEO Michael Rapino confirmed discussions with DSPs, noting that presale ticket inventory is a valuable asset that would have a cost and would not be given away. President and CFO Joe Berchtold stated the antitrust trial is targeted for early next year. He expressed hope that the current DOJ administration will be more open to settlement talks than the previous one, but confirmed no substantive discussions have yet occurred.

David Karnovsky inquired about the details behind the revision to 2023 financials and asked for clarification on the Q4 foreign exchange impact from Latin America, including the region's business mix and the outlook for FX in 2025.

Answer

President and CFO Joe Berchtold explained the 2023 revision was a non-material, noncash tax adjustment related to the OCESA acquisition. He clarified the Q4 FX headwind is due to a recent downturn in LatAm currencies impacting a high-growth region for the quarter but does not see it as a material issue for the full 2025 year.

David Karnovsky asked about the client reception to Omnicom's combined company offering, both from existing clients and in recent RFPs. He also requested clarification on the 4% organic growth figure for Q4 2025, specifically whether it refers to the retained business, and inquired about the timing and organic growth performance of assets identified for sale, exit, or transition to minority ownership.

Answer

Chairman and CEO John Wren reported overwhelming enthusiasm from combined groups and employees, exceeding expectations. CFO Phil Angelastro clarified that the 4% organic growth figure for Q4 2025 excluded businesses targeted for disposition, which were generally underperforming or non-strategic. He noted that the sale of an experiential business (Jack Morton) from the IPG portfolio had recently closed, with further dispositions planned over the next 12 months.

David Karnovsky inquired about the initial client reception to the combined Omnicom offering, both from existing clients and in recent RFPs. He also asked for clarification on the 4% organic growth figure for Q4, specifically what it refers to, and sought details on the timing and organic growth trends of the assets identified for sale, exit, or transition to minority ownership.

Answer

Chairman and CEO John Wren reported widespread enthusiasm and optimism from combined groups across major markets, exceeding his expectations. CFO Phil Angelastro clarified that the 4% organic growth figure for Q4 2025 was calculated consistent with prior practice, excluding businesses slated for disposal, which generally had lower organic growth. He noted that the disposition process is underway, with some sales already completed, and more updates will be provided at the Investor Day.

David Karnovsky inquired about Omnicom's full-year organic growth guidance, seeking clarification on whether the 3% year-to-date growth aligns with a specific target within the previously stated range, and asked about client interest and response to the combined Omnicom-IPG offering in recent RFPs.

Answer

CEO John Wren affirmed comfort with the original guidance range (2.5%-4.5%) and noted that excluding the impact of the presidential election and Olympics, organic growth would have been approximately 4%. He reported very positive client responses to the proposed combination, even though the companies are currently pitching independently.

David Karnofsky from JPMorgan Chase & Co. asked for confirmation on Omnicom's organic growth guidance for the full year and inquired about client interest and response to the combined Omnicom/Interpublic Group of Companies offering, even before the official merger.

Answer

CEO John Wren confirmed comfort with the original guidance range (2.5%-4.5%) and highlighted the significant impact of Q4 project work. He noted that excluding the prior year's Olympic and presidential election impacts, Q3 organic growth would have been approximately 4%. He also stated that clients are very positive about the combined offering, with encouraging feedback and no significant loss of people or business, despite pitching independently.

David Karnovsky of JPMorgan Chase & Co. asked about the progression of macro uncertainty since April, the rationale for maintaining the low end of the full-year guidance, and the sustainability of growth from principal media trading.

Answer

Chairman & CEO John Wren stated that the macro environment has not changed significantly and that the company is comfortable with its guidance range, viewing the bottom end as a floor. He affirmed that principal media trading is a long-standing, growing product that clients opt into for better value and is expected to continue growing.

David Karnovsky of JPMorgan Chase & Co. asked for more detail on the decline in the Public Relations discipline, the continued weakness in Branding and Commerce, and the company's strategy for managing its cost base amid potential client spending adjustments.

Answer

CFO Phil Angelastro attributed the PR decline to a minor year-over-year project spend comparison and noted the Branding segment's challenges are tied to a slowdown in M&A activity. CEO John Wren and CFO Phil Angelastro both affirmed their confidence in managing the company's flexible cost base to align with revenue and protect margin targets, highlighting their strong track record in this area.

David Karnovsky of JPMorgan Chase & Co. inquired about client reactions to the proposed IPG merger and the factors influencing 2024 margins and the guided improvement for 2025.

Answer

Chairman and CEO John Wren reported that client feedback on the IPG merger has been constructive with no unaddressable concerns. EVP and CFO Phil Angelastro noted that 2024 margins were impacted by the Flywheel integration and strategic investments, while the 2025 margin improvement reflects a balance of efficiency efforts and continued investment.

David Karnovsky of JPMorgan Chase & Co. inquired about the current tone of client conversations amid election uncertainty and how that informs the outlook for Q4 and 2025. He also asked for details on the significant Amazon media account win, including key success factors and the expected timing for its impact on financial results.

Answer

John Wren, Chairman and CEO, responded that client focus has shifted from the Fed to the election, but the primary variable for Q4 remains project-based spending. Regarding the Amazon win, he credited the company's strong existing relationship, enhanced by the Flywheel acquisition, and the Media Group's proven success. Wren stated that revenue from the Amazon account will begin in the new year, as the current quarter is focused on staffing up for the new business.

David Karnovsky inquired about the factors contributing to the softer-than-anticipated film slate in 2025, including film quality, mix, and structural impacts like windows, and the potential for operating leverage and margin expansion in 2026.

Answer

Sean Gamble, President and CEO, attributed the 2025 softness to the normal ebb and flow of the industry, overinflated expectations for certain films, and the absence of a mega-blockbuster or major summer animated film, rather than structural issues. He acknowledged that shortened windows might affect smaller movies and casual moviegoers. Melissa Thomas, CFO, expects margin expansion in 2026 due to a stronger box office and higher attendance, noting that G&A will reflect merit increases and strategic investments, while variable costs will flex with attendance.

David Karnovsky asked for insights into the factors contributing to the softer-than-anticipated film slate in 2025, specifically whether it was due to film quality, mix, or structural impacts like theatrical windows. He also inquired about the potential for operating leverage and margin expansion in 2026, assuming an attendance recovery, and sought details on cost of goods, staffing, and G&A.

Answer

Sean Gamble, President and CEO, attributed the 2025 slate performance to the normal ebb and flow of the industry, overinflated expectations for certain films, and the absence of a mega blockbuster or major summer animated film. He acknowledged that shortened windows could affect smaller films but wasn't the primary driver of 2025's softness. Melissa Thomas, CFO, expects margin expansion and operating leverage in 2026 due to a stronger box office and higher attendance. She noted G&A would reflect merit increases and strategic investments but remain disciplined, with variable costs flexing with attendance.

David Karnovsky asked about Cinemark's Premium Large Format (PLF) strategy, including the rationale for D-BOX and ScreenX rollouts over XD, and views on co-branding PLF formats. He also inquired about the outlook for G&A expenses and concession costs.

Answer

CEO Sean Gamble emphasized that the entire theater visit is positioned as a premium experience and that PLF strategy is about growing the overall market, with format choices depending on specific theater demographics. CFO Melissa Thomas addressed expenses, noting that Q2 G&A was lower due to stock-based compensation but expects underlying wage pressures to continue. She also projected that the full-year concession cost rate would be higher due to inflation and a rising mix of merchandise sales.

David Karnovsky from JPMorgan Chase & Co. asked about opportunities to partner with studios to create viral social media moments and inquired about the drivers of 'other revenue' growth and its expected trend.

Answer

CEO Sean Gamble noted that while viral moments are often organic, Cinemark actively fosters fan engagement through events and merchandise. CFO Melissa Thomas explained that Q1 'other revenue' benefited from higher promotional income and gaming revenue. She noted the line has fixed and variable components, with the variable parts expected to fluctuate with attendance and film content going forward.

David Karnovsky asked for clarification on the capital allocation strategy, specifically the settlement of convertible notes, the future mix of buybacks versus dividends, and the company's view on Netflix's IMAX agreement for 'Narnia'.

Answer

CFO Melissa Thomas stated the company intends to repay the convertible notes' principal with cash and will decide on settling any excess value with cash or shares at maturity. The future mix of dividends and buybacks will be determined by market conditions, valuation, and liquidity, while maintaining the target leverage ratio. CEO Sean Gamble characterized the Netflix-IMAX deal as a promotional effort rather than a strategic shift, expressing a preference for full theatrical windows and questioning the film's performance in a crowded release period.

David Karnovsky asked for an update on the 2025 film supply, the outlook for content from streaming services, and the drivers behind the quarter's low concession cost percentage.

Answer

President and CEO Sean Gamble stated that while it's early, he expects 2025 film volume to rebound significantly and remains optimistic about content growth from streamers like Amazon. CFO Melissa Thomas explained that the low concession cost of sales (COGS) rate was driven by strategic pricing and favorable, but temporary, rebates, advising that the year-to-date rate is a better proxy for future performance due to underlying inflation.

David Karnovsky asked for more details on the selection process for National Harbor as the optimal location for a small-scale Sphere. He also sought clarification on how the remaining financing gap for the $1 billion project would be bridged, given $200 million in government funding, and whether Sphere Entertainment plans to operate and consolidate the venue in its financials without an explicit operating partner.

Answer

James Dolan, Executive Chairman and CEO of Sphere Entertainment, explained that a competitive process between Virginia and Maryland accelerated the decision, leading to a favorable offer for the National Harbor location. Regarding financing, Mr. Dolan indicated multiple options, including standalone project financing due to strong lender interest, and potential partnerships with in-market entities, emphasizing the community-wide benefits of a Sphere venue.

David Karnovsky inquired about the process and rationale behind selecting National Harbor as the optimal location for the small-scale Sphere. He also asked about bridging the financing gap for the National Harbor project, given the $200 million in incentives against a $1 billion estimated cost, and whether Sphere Entertainment plans to operate and consolidate the venue without an external operating partner.

Answer

Executive Chairman and CEO Jim Dolan explained that the National Harbor selection was influenced by a competitive process between Virginia and Maryland, resulting in an attractive offer and location. Regarding financing, Mr. Dolan indicated multiple funding avenues, including standalone project financing due to strong lender interest, and highlighted the potential advantages of collaborating with in-market partners who benefit from the Sphere's community impact.

David Karnovsky asked for context on the ticket pre-sales for 'The Wizard of Oz at Sphere' compared to 'Postcards from Earth' and questioned how the company plans to utilize its library of existing shows once the new content is live.

Answer

Executive Chairman & CEO James Dolan reported that 'Wizard of Oz' had sold over 120,000 tickets to date, with sales expected to accelerate significantly in the weeks before opening. He expressed confidence the new show would boost Sphere's Las Vegas visitor capture rate to over 10%. Dolan also confirmed that all original content is created to be 'evergreen' and will be utilized for years across the global network of Sphere venues.

Asked about the current state of the Las Vegas tourism market and the percentage of international visitors attending Sphere events.

Answer

James Dolan stated that they have not seen any significant negative changes in the Las Vegas market, which sees over 40 million visitors annually. He noted that international guests account for over 20% of Sphere experience attendees and 10% for concerts. He also mentioned that concert demand generally exceeds capacity, providing a buffer against potential economic downturns.

David Karnovsky of JPMorgan Chase & Co. asked for an update on the Las Vegas tourism market, inquiring about any changes in visitation or spending and the mix of international guests at Sphere.

Answer

Executive Chairman and CEO James Dolan responded that they have not observed any significant changes in the market, noting that international visitors account for over 20% of guests for the Sphere Experience and 10% for concerts. He added that overall concert demand exceeds capacity, providing a buffer against potential market softness.

David Karnovsky inquired about the upcoming third Sphere Experience show, its marketing strategy, and how the introduction of new content will affect the overall show count for existing attractions like 'Postcard from Earth' and the U2 experience.

Answer

Executive Chairman and CEO James Dolan explained that the new experience will be significantly more immersive and experiential than previous content, with an announcement expected soon. He noted that the U2 concert film is a low-cost, evergreen product that will continue, while the 'Postcard from Earth' show count will be significantly reduced but not eliminated. Dolan emphasized that scheduling decisions are driven by a competitive process to maximize Adjusted Operating Income (AOI) among concerts, attractions, and corporate events.

David Karnovsky asked how the Abu Dhabi agreement has impacted conversations with other potential partners and whether it should be seen as a catalyst for future announcements. He also inquired if the international model implies regional exclusivity for venues.

Answer

Executive Chairman and CEO James Dolan stated that the Abu Dhabi deal enhances confidence and helps in discussions for future locations. He confirmed the company has built an organization capable of handling multiple Sphere constructions simultaneously and is actively pursuing further expansion. The latter part of his response regarding regional exclusivity was affected by an audio issue.

David Karnovsky requested an update on the ongoing cross-selling opportunities within K-12 supplemental solutions, specifically the uptake for products like ALEKS.

Answer

Chair of the Board of Directors, Simon Allen, described ALEKS as a tremendous, self-directed tool for math and chemistry, serving as the backbone of the supplemental business. He also highlighted Achieve3000 for literacy, emphasizing the company's focus on providing supplemental material beyond core offerings and seeing significant growth opportunities in this sector. EVP and CFO, Bob Sallmann, added that the company has a full portfolio to address larger market opportunities in math.

David Karnovsky requested an update on the ongoing cross-selling opportunities within K-12 supplemental solutions and the recent uptake for products like ALEKS.

Answer

Simon Allen, Chair of the Board of Directors, highlighted ALEKS as a tremendous tool for math and chemistry, serving as the backbone of the supplemental business, and noted the success of Achieve3000 and Actively Learn in literacy. Bob Sallmann, EVP and CFO, added that the expanded portfolio addresses larger market opportunities in math, positioning the company well for future growth in supplemental and intervention solutions.

David Karnovsky asked about K-12 federal funding concerns, their potential impact on the procurement process for core or supplemental materials, and observations from the recent selling season or district feedback.

Answer

Bob Sallmann, EVP and CFO, stated that McGraw Hill is not seeing widespread delays or changes in purchasing patterns due to federal funding concerns, noting that observations are consistent with expectations. He acknowledged that there are always pockets of cautious spending but nothing widespread to indicate federal funding is a significant issue at the district level.

David Karnovsky asked about K-12 federal funding concerns and their potential impact on the procurement process for core or supplemental materials, inquiring about observations from the recent selling season or district feedback.

Answer

Bob Sallmann, EVP and CFO, stated that McGraw Hill is not observing any widespread delays or changes in purchasing patterns, with activity consistent with expectations. He acknowledged isolated instances of districts being cautious with spending but noted nothing widespread to indicate federal funding as a significant issue at the district level.

David Karnovsky, Executive Director and Senior Research Analyst at JPMorgan Chase & Co., inquired about the market's reaction to AI's impact on business services and data companies, seeking News Corp's perspective on reasonable concerns versus potential market overreactions or missed aspects.

Answer

Robert Thomson, CEO of News Corp, clarified that AI is retrospective, synthesizing generic content, while News Corp possesses contemporary, creative, proprietary content accessed only through payment. He highlighted News Corp's "woo or sue" strategy, its "moat" of premium IP, and the expected share of Anthropic's $1.5 billion payout for pirated books. Thomson also mentioned a partnership with OpenAI and expressed confidence in News Corp's ability to create compelling content, emphasizing that AI models require real-time, real-world data, which News Corp consistently produces.

David Karnovsky asked about the market's reaction to AI's impact on business services and data companies, seeking News Corp's perspective on what concerns are reasonable versus potentially overweighed or missed by the market.

Answer

CEO Robert Thomson clarified that AI is retrospective, synthesizing generic content, while News Corp possesses contemporary, proprietary content. He emphasized their 'woo or sue' strategy, highlighting a 'moat' protecting their premium IP. Thomson cited Anthropic's $1.5 billion payout for pirated books, from which News Corp and its authors expect a share, and mentioned a partnership with OpenAI. He asserted confidence in News Corp's ability to create compelling content, as AI models require real-time, real-world data that the company consistently produces.

David Karnovsky inquired about the structure of the Foxtel sale to DAZN, the rationale for accepting equity as part of the payment, and whether News Corp is still engaged in a broader strategic review of its overall structure.

Answer

CEO Robert Thomson explained that the deal is subject to regulatory approval and that News Corp will remain a close partner with DAZN. He positioned the sale as tangible evidence that the company is constantly reviewing its portfolio and acting decisively to maximize shareholder value, noting the recent share price appreciation.

David Karnovsky asked for more detail on the expected improvement in Dow Jones's consumer circulation growth, the strategy for converting promotional subscribers to higher-paying tiers, and the potential for a normalized medium-term growth rate.

Answer

CEO Robert Thomson highlighted that digital-only subscriptions grew 15% and expressed confidence in continued positive digital circulation revenue trends as promotional discounts phase out. CFO Susan Panuccio added that the revenue growth rate is expected to accelerate and be more weighted to the second half of the fiscal year.

David Karnovsky inquired about the third-party interest in Foxtel, asking about the nature of the potential transaction and whether it involves single or multiple parties, and how this affects the broader strategic review.

Answer

Robert Thomson, Chief Executive, confirmed a 'significant overture' is being assessed but emphasized News Corp's full faith in Foxtel's potential, highlighting its surging streaming business and 6% growth in broadcast ARPU. He stated the broader portfolio review continues and that updates would be forthcoming 'but not indefinitely.'

David Karnovsky inquired about the breakdown of 2025 digital advertising growth, specifically attributing it to new supply, new products, or increased engagement, and the future opportunities. He also asked Will Bardeen to elaborate on the drivers behind the Q1 adjusted cost guide being above recent trends, particularly the impact of video investments.

Answer

Meredith Kopit Levien, President and CEO, expressed satisfaction with 2025 ad performance, attributing it to increased ad supply, making existing supply more valuable, improved marketer demand due to scale across multiple appealing spaces, and effective ad products. Will Bardeen, EVP and CFO, explained that the Q1 expense guide reflects the year-over-year impact of ramping up video production across The Times and The Athletic, alongside strategic flexibility for sales and marketing investments, while maintaining focus on AOP growth and margin expansion.

David Karnovsky inquired about the breakdown of The New York Times Company's 20% digital advertising growth in the past year, specifically asking about contributions from new supply, new products, and engagement. He also sought clarification on the drivers behind the Q1 adjusted cost guide, which was above recent trends, and the dimensional impact of video investments.

Answer

President and CEO Meredith Kopit Levien expressed satisfaction with ad performance, attributing it to increased ad supply, improved demand from marketers due to scale in multiple spaces, and effective ad products. EVP and CFO Will Bardeen explained that the Q1 cost guide reflects a consistent approach to sustaining revenue and AOP growth, with strategic investments in video production ramping up since late 2025, and flexibility for sales and marketing.

David Karnovsky asked about the functionality of the new Watch tab, specifically if it aims for personalization or highlights top stories, and the process for inserting ads. He also requested a breakdown of single product net ads, particularly for games, and the impact of factors like Mini Crossword's paywall and the launch of Pips.

Answer

Meredith Kopit Levien, President and CEO, described the Watch tab as part of a broader video strategy to boost engagement with news and reporter videos, and full-length podcast shows, noting it's early days for advertising. For single product subscriptions, she highlighted strong net ads growth, with games playing a significant role, and confirmed the Mini Crossword paywall was an intentional decision for long-term value creation without sacrificing audience.

David Karnovsky of JPMorgan Chase & Co. asked for details on the drivers behind the standout digital advertising growth and inquired about the new licensing deal with Amazon, specifically the rationale for extending content to the platform and the guardrails that made the company comfortable with its content being used to train AI models.

Answer

CEO Meredith Kopit Levien attributed the strong advertising performance to a diverse portfolio of brands in high-demand spaces like sports and games, a large engaged audience addressable with first-party data, and a growing suite of high-performing ad products. Regarding the Amazon deal, she stated it aligns with the company's principles of receiving fair value, maintaining control over its IP, and advancing its strategy of becoming more essential to more people.

David Karnovsky requested an explanation for the sequential decline in bundle and multiproduct ARPU and asked about the key drivers of video engagement and innovation on the platform.

Answer

EVP and CFO Will Bardeen addressed ARPU by emphasizing the focus on total digital-only ARPU, which grew year-over-year, and pointed to strong revenue guidance as proof of the strategy's success. President and CEO Meredith Kopit Levien detailed video and audio innovation, highlighting reporter-led videos, podcasts, and AI-powered automated voice features as key drivers of user engagement.

David Karnovsky from JPMorgan Chase & Co. asked for an update on the digital ad rollout on lifestyle products like The Athletic and Games and whether programmatic would be the primary growth driver. He also questioned the company's capital allocation optionality, particularly regarding M&A, given its growing cash balance.

Answer

President and CEO Meredith Kopit Levien stated there is more ad supply to roll out across lifestyle products, with opportunities in both direct-sold and programmatic channels. Regarding capital, she emphasized the balance sheet provides valuable optionality. EVP and CFO Will Bardeen reiterated their disciplined approach: prioritizing organic investment, returning at least 50% of free cash flow to shareholders, and maintaining a high bar for any potential M&A that must accelerate the core strategy.

David Karnovsky inquired about the impact of AI-driven search results on traffic to The Times' various verticals and asked for clarification on what the Q4 guidance incorporates regarding the tech employee strike.

Answer

Meredith Kopit Levien, President and CEO, acknowledged that AI in search contributes to platform-driven audience headwinds but emphasized the company's strategy is to build resilience by creating products that drive direct traffic. William Bardeen, EVP and CFO, confirmed that while the strike had just begun, the company was prepared, and the Q4 guidance incorporates their best estimate of its potential effects on operations and results.

David Karnovsky sought updates on the Penn Station redevelopment process, specifically if the May 2026 timeline for master developer selection remains intact. He also asked about the current financial contribution of the Infosys Theater at MSG and the feasibility of rerouting shows like Cirque du Soleil to other venues if needed.

Answer

David Collins, EVP and Chief Financial Officer, confirmed that the US Department of Transportation and Amtrak continue to target May 2026 for selecting a master developer for Penn Station redevelopment, and the company remains committed to collaboration. He clarified that the significant majority of the company's economics are driven by The Garden and the Christmas Spectacular, with theaters following. Collins affirmed the ability to shift events from the Infosys Theater at MSG to other New York theaters within their portfolio if necessary.

David Karnovsky from JPMorgan Chase & Co. sought updates on the Penn Station redevelopment process, specifically if the May 2026 timeline for master developer selection remains intact. He also asked about the current financial contribution of the theater at MSG and the feasibility of rerouting shows like Cirque to other venues such as the Beacon or Radio City if needed.

Answer

David Collins, EVP and Chief Financial Officer, confirmed that the U.S. Department of Transportation and Amtrak are on track to select a master developer by May 2026, and the company remains committed to collaborating with stakeholders. He clarified that the significant majority of the company's economics are driven by The Garden and the Christmas Spectacular, with the theaters collectively following. Collins added that the theater at MSG is one of four in their portfolio, and they have the ability to shift events to other New York theaters if necessary.

David Karnovsky from JPMorgan Chase & Co. requested insight into the expected trajectory of various cost items and adjusted operating income (AOI) margins for fiscal 2026, acknowledging the impact of event mix.

Answer

David Collins, EVP & CFO, projected solid AOI growth for fiscal 2026, driven by core categories like bookings and the Christmas Spectacular. He noted this growth would occur despite higher corporate costs from staffing up the sponsorship business and other executive hires. Collins stated that due to the attractive contribution margins of key revenue lines, the company has an opportunity to modestly expand AOI margins in the upcoming year.

David Karnovsky requested an update on the company's capital allocation strategy, particularly regarding share repurchases, given the current stock price and leverage.

Answer

Ari Danes, an executive, outlined three core capital allocation priorities: maintaining a strong balance sheet with net debt leverage around 3x, ensuring flexibility for business investments, and opportunistically returning capital to shareholders. He confirmed the company repurchased $25 million of stock in the quarter and has $85 million remaining under its current authorization, signaling a continued commitment to buybacks.

David Karnovsky asked for more detail on the Christmas Spectacular's ticket sale trends and the potential for adding more shows, as well as the booking pipeline for non-concert content like family shows and sporting events.

Answer

EVP and CFO Michael Grau confirmed that Christmas Spectacular ticket sales are pacing 15% ahead year-over-year, with two shows already added and the potential for more. He also highlighted a strong pipeline for non-concert events, including 64 'Annie' performances, the return of the Tony Awards, high-profile college basketball matchups, and a UFC event.

David Karnovsky asked CEO Bob Iger to discuss plans for curating and deploying Sora-generated AI content across Disney platforms, its potential use beyond vertical video, and the expected impact of AI content on demand for new programming or archive franchises.

Answer

CEO Bob Iger explained the OpenAI licensing agreement allows Sora to create 30-second videos of 250 characters without human voice/face, which Disney will curate on Disney+ to jump-start short-form video. He also hopes to enable Disney+ subscribers to create content via Sora. He does not foresee AI content impacting demand for other programming, viewing AI as a tool for creativity, productivity, and consumer connectivity.

David Karnovsky asked about Disney's plans to curate and deploy user-generated AI content across its platforms following the OpenAI agreement, specifically if it would be entirely for vertical video, and the expected impact on demand for new or archive programming.

Answer

CEO Bob Iger explained that the OpenAI deal is a 3-year licensing agreement allowing Sora to create 30-second videos of 250 Disney characters without human voices or faces. Disney plans to use these curated Sora-created videos for short-form content on Disney+, similar to ESPN's offering, and hopes to enable subscribers to create their own videos via Sora on the platform. He does not foresee any impact on other programming, viewing AI as a tool for creativity, productivity, and enhanced consumer connectivity.

David Karnovsky inquired about Disney's perspective on generative AI, specifically the opportunity or risk to license out content or IP to emerging video creation platforms. He also asked about the role generative AI could play in driving production cost efficiencies across the business over time.

Answer

CEO Bob Iger described productive conversations with AI companies, focusing on protecting IP value while exploring opportunities for technology use to enhance consumer engagement. He emphasized the imperative to protect IP and expressed hope for industry-wide or company-specific agreements. He also highlighted phenomenal opportunities for AI to drive efficiency and effectiveness across the company, including in production, data mining, and enhancing direct-to-consumer platforms with dynamic tools and user-generated content creation.

David Karnovsky inquired about the strategy and challenges of launching new IP in the current theatrical market versus relying on sequels and reboots. He also asked about potential tax benefits from recent legislation.

Answer

CEO Bob Iger stated the priority is great movies, whether new IP or sequels, noting that even Marvel's 'Fantastic Four' is being treated like an original property for a new audience. CFO Hugh Johnston confirmed the tax bill will have a positive cash impact but no material book tax impact, with more details to come in Q4.

David Karnovsky asked about the programming strategy for the upcoming flagship ESPN direct-to-consumer service, how it will differ from linear ESPN, and the approach to retaining subscribers within a unified ecosystem.

Answer

CEO Robert Iger explained that the ESPN DTC service will offer an enhanced experience with additional features not available on the linear channel. He emphasized that the strategy is to provide consumers with choice while encouraging bundling. A key value proposition will be the seamless, fully integrated experience for subscribers of Disney+, Hulu, and the new ESPN service, creating a powerful and unrivaled content bundle.

David Karnovsky requested color on the performance of the new Disney Treasure cruise ship launch relative to expectations. He also asked about the rollout of the Lightning Lane Premier service at the parks, including observed take rates and its impact on overall guest spending and experience.

Answer

CFO Hugh Johnston described the Disney Treasure's launch as a 'spectacular start,' with strong room sales and excellent guest feedback, adding that the ship is expected to be profitable in its first quarter. He noted that the Lightning Lane Premier product is being marketed gently and rolled out slowly to ensure a great experience for all guests, with performance currently in line with expectations.

David Karnovsky asked for insight into how the multiyear forecast for the Linear Networks segment was constructed. He also inquired about the impact of the recent DIRECTV agreement and whether it should be considered a template for future distribution deals.

Answer

CFO Hugh Johnston explained that the forecast models a continued decline in linear, but Disney is well-positioned with a natural hedge as consumers migrate to its streaming services. He described the company's content portfolio as a 'must-have platform.' Regarding the DIRECTV deal, Johnston stated that it was uniquely crafted for that specific partner and should not be viewed as a template for other negotiations.

Asked about the company's ability to carry over the 'Outlander' audience to its prequel 'Blood of My Blood' and the broader confidence in their strategy of transitioning audiences to new iterations of existing franchises.

Answer

The company has a strong track record with franchising, typically retaining over 85% of the original audience for spin-offs, far above the industry average. 'Blood of My Blood' was designed to serve the core 'Outlander' fans while being accessible to new viewers. Its early performance, with a 40% viewership lift over the 'Outlander' finale, indicates they are successfully carrying over the existing audience while also attracting new ones.

David Karnovsky asked about the expected audience carryover from 'Outlander' to its prequel 'Blood of My Blood' and questioned the basis for management's confidence in successfully transitioning audiences to new iterations of established franchises.

Answer

Alison Hoffman, President of Stars Networks, highlighted STARZ's strong track record, noting its franchise spin-offs typically retain over 85% of the original series' audience, far exceeding the industry average. She pointed to 'Blood of My Blood's' early success, with viewership already 40% higher than the 'Outlander' Season 7 finale, as evidence that it is successfully attracting both the core fanbase and new viewers.

David Karnovsky from JPMorgan Chase & Co. asked for the key drivers behind the expected acceleration in transit revenue for Q3 and requested the specific revenue impact from the exited New York and Los Angeles billboard contracts.

Answer

EVP & CFO Matthew Siegel attributed the transit growth to a dedicated transit task force, increased management focus, and new incentives, particularly in New York. He specified that each of the two exited billboard contracts represented about 2% of 2024 billboard revenue, with Q3 facing the largest headwind from their absence.

David Karnovsky asked for quantification of the Q4 revenue guidance headwinds from the New York MTA contract exit and recent storms. He also inquired about the strategic rationale for exiting the contract and the performance of national advertising by market, particularly its impact on property lease expense.

Answer

CEO Jeremy Male stated the MTA contract exit represents a headwind of approximately 1.5% to Q4 growth, with a smaller impact from storms. He affirmed their bid was based on what was economically viable for OUTFRONT. CFO Matthew Siegel added that ongoing national advertising weakness in major markets like Los Angeles and New York contributes to lower lease expense growth due to revenue-share lease structures.

David Karnovsky of JPMorgan Chase & Co. asked about the drivers behind local sales outperforming national in the Americas segment, the reasons for the Q2 Americas revenue miss and full-year guidance reduction, and sought clarification on the lower full-year AFFO guidance.

Answer

CEO Scott Wells explained that the Q2 Americas performance and guidance revision were due to the delayed start of a single large national contract. He noted that the performance story is more about geographic strength in areas like the Northeast and NorCal than a broader national versus local trend. CFO David Sailer clarified that the AFFO guidance adjustment was primarily due to the interest expense amortization from the recent refinancing, not a change in underlying business performance.

David Karnovsky of JPMorgan Chase & Co. asked about the dynamic between local and national sales growth in the Americas segment and how different marketers are responding to macro volatility. He also sought clarification on why Q2 Americas revenue missed the guide's midpoint, the reason for lowering the full-year Americas guide, and the driver behind the lower full-year AFFO guidance.

Answer

CEO Scott Wells attributed the Q2 Americas revenue miss to a timing delay of a large national contract, which also impacted the national sales growth figure. He emphasized that geographic performance is a more significant driver than the national vs. local split. CFO David Saylor clarified that the lower full-year AFFO guidance was primarily a result of interest expense amortization from the recent refinancing, not a change in underlying business performance.

David Karnovsky of JPMorgan Chase & Co. asked about the drivers behind local sales outperforming national in the Americas segment, the reasons for the Q2 Americas revenue shortfall and reduced full-year guide, and clarification on the lower full-year AFFO guidance.

Answer

CEO Scott Wells explained the Americas revenue miss was due to the delayed start of a large national contract, which also skewed the local vs. national growth figures. He emphasized that performance variation is more correlated with geography than the national/local split. CFO David Sailer clarified the lower AFFO guide was driven by interest expense amortization from the recent refinancing, not a change in underlying business performance.

David Karnovsky of JPMorgan Chase & Co. asked about the alleged "undercurrent of tension" with exhibitors, citing reports of a rival PLF consortium and friction over IMAX-favored marketing and exclusive film deals, and requested an assessment of the relationship.

Answer

CEO Richard Gelfond described the relationship with exhibitors as "excellent," pointing to recent expansion deals with AMC and Regal. He reported that AMC's CEO confirmed "zero interest" in a rival consortium and suggested the narrative is driven by disgruntled non-IMAX partners losing market share.

David Karnovsky questioned IMAX's perspective on theatrical windows and sought clarification on the drivers behind the strong Q1 installation activity and the outsized Content Solutions gross margin.

Answer

CEO Richard Gelfond explained that theatrical windows are not a primary concern for IMAX, as its success is driven by a consistent supply of high-quality, diverse content. CFO Natasha Fernandes clarified that higher Q1 installs were due to exhibitor timing and the full-year guidance is unchanged. She attributed the high Content Solutions margin to operating leverage from record box office and the lower costs associated with Chinese local language films.

David Karnovsky of JPMorgan Chase & Co. inquired about the role of government subsidies during the Chinese New Year period and asked for the outlook on working capital for 2025.

Answer

IMAX China CEO Daniel Manwaring acknowledged minimal, early ticket subsidies but stated they had a negligible effect on the total box office, which was driven by market demand. He noted broader government support for film imports is expected to continue. CFO Natasha Fernandes stated that cash flows are strengthening and she expects cash conversion to continue improving with box office growth, highlighting past strategic share repurchases.

David Karnovsky of JPMorgan Chase & Co. questioned the reasons behind IMAX's recent weak performance in China and requested clarification on the drivers of the Q3 SG&A reduction and the future outlook for the R&D expense line.

Answer

CEO Richard Gelfond attributed China's softness to a mix of economic weakness and a less compelling film slate, but expressed optimism for 2025. CFO Natasha Fernandes explained the SG&A decline was mainly due to lapping prior-year transaction costs and some expense timing. She clarified the R&D line had a one-time credit from capitalizing camera development and will return to being an expense.

David Karnovsky of JPMorgan Chase & Co. asked about the accelerated realization of cost savings, the updated full-year margin outlook, and the drivers for the implied organic growth inflection in the second half of 2025.

Answer

CEO Philippe Krakowsky attributed the faster progress on cost savings to a comprehensive strategic transformation, industry-wide changes, and the focus provided by the upcoming Omnicom acquisition. He guided for a full-year margin improvement of "north of 100 basis points." He explained the second-half growth improvement is due to lapping significant 2024 account losses, which reveals solid underlying growth in key areas like media and healthcare, and sequential improvement in the U.S. market.

David Karnovsky of JPMorgan Chase & Co. asked for more detail on client conversations amid macro uncertainty, any shifts in media spending, and the drivers behind the weak performance in the SC&E segment, particularly in experiential offerings.

Answer

CEO Philippe Krakowsky stated that while clients are actively scenario planning, there has been no marked change in media spending behavior or shifts between channels. He characterized the experiential market as 'choppy' and noted it's a segment with more discretionary project spend that would be impacted first in a slowdown. CFO Ellen Johnson added that the segment's performance was consistent with their internal expectations.

David Karnovsky inquired about the underlying business conditions, noting management's comments on macro caution, and asked for an update on the tech sector's return to growth. He also sought clarity on the $250 million in cost savings, its impact on the flat 2025 margin guidance, and the potential for margin expansion in 2026.

Answer

CEO Philippe Krakowsky confirmed that large account losses are weighing on the 2025 guide but the underlying business is sound, noting a slight downshift in client planning due to macro uncertainty. CFO Ellen Johnson explained the cost savings are a continuation of efficiency efforts, with charges in 2025 equating to savings, and confirmed they will lead to expanded margins in future years.

David Karnovsky asked for clarification on the positive year-end outlook despite economic uncertainty and why Principal Media Buying is considered additive to growth rather than a simple shift in client spending.

Answer

CEO Philippe Krakowsky responded that macro uncertainty is now largely 'baked in' by clients, leading to more conviction in their spending. He detailed that Principal Media is a bundled solution of inventory, data, and technology, which allows IPG to create new product offerings for existing clients, thus driving incremental organic growth. He added that as a 'fast follower,' IPG has significant 'unencumbered billings,' representing a greenfield opportunity.

David Karnovsky asked for an update on the macroeconomic environment's impact on advertising channels, the company's outlook for the upcoming upfronts, and the reasons for the year-over-year improvement in corporate EBITDA.

Answer

CFO Gunnar Wiedenfels reported seeing no material macro impact on the business to date, with Q2 advertising tracking similarly to Q1 on a like-for-like basis. He noted strong scatter market demand is offsetting a potentially slower start to the upfronts. Regarding corporate costs, he confirmed the Q1 improvement was a mix of items but expects the full-year corporate cost to be down year-over-year.

David Karnovsky inquired about discussions for Charter-like distribution deals with other partners and asked how investors should view the strategic differences in the current film slate compared to the one inherited from prior management.

Answer

CEO David Zaslav stated that the company is in discussions with other distributors interested in innovative, Charter-like deals. Regarding the Studios, he highlighted progress, including a 5-to-10-year plan for DC starting with 'Superman', a stronger focus on four core gaming franchises to improve consistency, and a leading TV production business, all aimed at returning the segment to industry leadership.

David Karnovsky asked for details on the plan to improve the stand-alone economics of the Las Vegas Grand Prix and questioned the rationale behind admitting GM/Cadillac as an 11th team.

Answer

Formula One CEO Stefano Domenicali explained that for the Las Vegas GP, they are focusing on managing the cost structure, improving local relationships (including moving the race time earlier), and integrating operations with the London team to leverage data and experience for better ticket packaging. CEO Derek Chang added that while early financial metrics were disappointing, the issues are fixable. Regarding Cadillac, Domenicali stated their entry will provide an "incredible boost" to the F1 ecosystem and that the formal process with the FIA is nearly complete for them to join.

David Karnovsky of JPMorgan Chase & Co. asked for details on the Las Vegas Grand Prix's financial performance, specifically plans to improve revenue and manage costs after missing 2024 targets. He also questioned the decision to admit GM/Cadillac as an 11th team.

Answer

Formula One CEO Stefano Domenicali acknowledged the Las Vegas race is a work in progress, with a focus on cost structure, strengthening local relationships (including moving the race time earlier), and integrating operations with the London team to leverage data and experience. CEO Derek Chang added that while the initial financial metrics were disappointing, the issues are "durable and fixable." Regarding Cadillac, Domenicali stated their entry will provide an "incredible boost" to F1, noting the process with the FIA is nearly complete.

David Karnovsky asked about the risk to local media rights revenue from the ongoing issues with MSG Networks and the Optimum blackout, and whether this situation could be an opportunity to explore alternative distribution models like broadcast or streaming.

Answer

Jamaal Lesane, Chief Operating Officer, responded that the company's focus is on maximizing shareholder value and maintaining fan connections. While acknowledging that MSG Networks has approached them to renegotiate rights fees, he declined to speculate on hypothetical outcomes, stating they are actively assessing the best path forward for the business.

David Karnovsky inquired about the potential impact of the ongoing MSG Networks situation on local media rights revenue and whether this presents an opportunity to explore alternative distribution models like broadcast or streaming.

Answer

Chief Operating Officer Jamaal Lesane acknowledged the industry-wide pressure on local media rights and confirmed that MSG Networks has approached them to renegotiate fees. While emphasizing a focus on maximizing shareholder value and fan connection, he declined to speculate on hypothetical distribution strategies, stating the company is actively assessing the best path forward.

David Karnovsky of JPMorgan Chase & Co. asked about the potential for MSG Sports to accept reduced local media rights fees to support the stability of MSG Networks, given its financial pressures. He also inquired about the net financial impact of the new NBA national media deal, which includes higher fees but fewer exclusive local games.

Answer

COO Jamaal Lesane acknowledged the evolving media landscape and stated that the company is actively evaluating the developments and potential impact on its local media rights revenue. CFO and Treasurer Victoria Mink added that while national media rights revenue will increase, a reduction in local game telecasts below contractual thresholds would trigger a corresponding decrease in local media rights fees, partially offsetting the national gains.

David Karnovsky of JPMorgan Chase & Co. inquired about underlying trends in ad-supported streaming, excluding one-off items, and asked for specific drivers or phasing for the company's margin expansion outlook for fiscal 2025.

Answer

CFO Bryan Castellani stated that traditional ad-supported streaming is seeing low-to-mid-single-digit growth, consistent with broader macro trends. He noted they are lapping a TikTok deal and a change in Meta's premium music video licensing. For margins, he reiterated the commitment to 100 basis points of expansion annually over a multiyear period, driven by the shift to digital, global diversification, and operational efficiencies, while acknowledging quarter-to-quarter timing variability.

Kiscada Hastings, on behalf of David Karnovsky, asked about the differing management philosophies at the Warner and Atlantic labels and how this structural approach will drive market share growth.

Answer

CEO Robert Kyncl responded that having diverse approaches and executive strengths is a benefit to the company. He emphasized that the leadership teams across labels work collaboratively, sharing insights to improve the company's overall performance, rather than operating with a single, uniform strategy.

David Karnovsky asked for more detail on potential FCC rule changes for broadcast ownership and how local sports rights deals are structured to ensure profitability.

Answer

CEO Mike Steib opined that the FCC has the opportunity to change duopoly rules and ownership caps. Regarding sports rights, he emphasized that deals are viewed as investments that must deliver cash flow returns above the cost of capital, suggesting they are structured to be profitable on their own merits by serving teams' needs for both revenue and broad audience reach.