Warner Bros. Discovery - Q4 2025

Transcript

Operator (participant)

Ladies and gentlemen, welcome to the Warner Bros. Discovery Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participant lines are in a 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, Investor Relations. You may now begin.

Peter Lee (Senior VP of Investor Relations)

Good morning, thank you for joining us for our Q4 and full year 2025 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, and 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 may include statements about the benefits of the planned separation or the proposed transaction with Netflix, future financial and operating results, future company plans, objectives, expectations, and intentions before and after the separation, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations from Warner Bros. Discovery'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. I will turn the call over to David for some brief remarks, after which we will take your questions. Before doing so, I would kindly request that you limit your questions to topics related to our Q4 results and related business and financial topics. As noted in our shareholder letter, management will not be taking questions regarding the Netflix transaction and our discussions with Paramount, Skydance. With that, I'll turn it over to David.

David Zaslav (President and CEO)

Good morning, everyone, and thank you for joining us. From the beginning, we set our goal for Warner Bros. Discovery has been to make this great company the most innovative and exciting place to tell stories in the world. Looking at 2025, it's clear we fulfilled our ambition. Warner Bros. Motion Picture Group delivered a historic run of success, with nine films debuting number one at the box office in 2025, seven consecutive films opening with more than $40 million in box office sales, a first for any studio, our films spent 16 total weeks atop the global box office. We accomplished this through brilliant original films like One Battle After Another, Sinners, Weapons, and global tentpole titles like A Minecraft Movie and Superman. We revived IP like The Conjuring: Last Rites and Final Destination: Bloodlines. Fans responded, and critics did too.

Our film slate won nine Golden Globe Awards, including Best Picture, Musical or Comedy for One Battle After Another, and Cinematic and Box Office Achievement for Sinners. Next month, we're up for an industry-leading 30 Academy Awards, we're optimistic the incredible original films we produced and talent we've worked with will deservedly be recognized. We are seeing momentum continue in 2026. Wuthering Heights, our ninth consecutive theatrical release to open number one, has generated over $160 million at the global box office in two weeks, including an $83 million opening weekend, further reinforcing our commitment to exceptional original storytelling and our position as a premier destination for the world's leading creative talent.

Building on the momentum, our 2027 film slate is set to deliver a truly monumental year for Warner Bros., with tentpole and franchise powerhouses on the horizon, from Godzilla vs. Kong 3, Superman: Man of Tomorrow from James Gunn, Minecraft 2, Conjuring: First Communion, Batman Part 2 from Matt Reeves, Gremlins, and The Lord of the Rings: The Hunt for Gollum. We also brought innovative and exciting storytelling to television, both in streaming and through our linear networks. Many of the series that shaped global culture in 2025 were delivered to audiences around the world by HBO and HBO Max. Building on shows like The Pitt, The White Lotus, and The Last of Us, HBO continued to deliver hits in the fourth quarter with several breakout sensations.

It, Welcome to Derry, delivered the fourth strongest debut season in HBO history, averaging 27 million viewers per episode, and Heated Rivalry, which averaged 13 million viewers an episode and drove meaningful social media engagement. That momentum is ongoing. Both The Pitt and Industry have become cultural sensations with their new seasons, which debuted in the first quarter of 2026, seeing 30% and 50% respective audience growth versus their prior season. A Knight of the Seven Kingdoms, the third installment of the Game of Thrones franchise, has also debuted strongly, averaging over 24 million viewers per episode and growing.

With House of the Dragon, Euphoria, The Gilded Age, Dune: Prophecy, and Hacks returning this year, as well as the premiere of Lanterns and Stuart Fails to Save the Universe, this is just the beginning of what promises to be a banner 2026 for HBO. Our streaming segment also delivered terrific growth. Scaling HBO Max globally has been one of our core priorities for four years. We've executed our plan with focus and discipline, now exceeding the 130 million subscriber target we set out in August 2022.

Following the successful launches of HBO Max in Germany and Italy, and the upcoming launches in the U.K. and Ireland, we are on track to reach more than 140 million total streaming subscribers by the end of the first quarter, and we're well on our way to exceed 150 million subscribers by the end of the year. Our global linear networks also continue to create and tell stories that inspire and entertain fans. With 17 of last year's top 25 new cable TV series and improved general entertainment viewership trends in recent months, our global linear networks teams clearly remain highly attuned to today's audiences. While secular headwinds persist, our portfolio of networks attracted 30% of all prime-time cable viewing in the U.S., and we advanced critical initiatives like the launch of CNN All Access.

Encouragingly, we saw a sequential improvement in advertising trends during the fourth quarter, which has continued into Q1. Of course, the 2026 Milano Cortina Olympic Winter Games, which closed this past Sunday, was a massive success for Warner Bros. Discovery. Over the course of the Winter Games, we saw more than 50% growth in linear hours viewed compared to the 2022 Winter Games. We more than tripled our streaming audience on HBO Max and discovery+ throughout Europe. Four years ago, Warner Bros. was a business in need of transformation. Over that time, we've invested aggressively in transforming Warner Bros. Discovery for the future.

We invested big in making great original film and television, and reignited important legacy Warner Bros. IP, like our DC attack plan, which James Gunn and Peter Safran have been executing, Harry Potter, Lord of the Rings, Gremlins, together telling stories that have shaped global culture. We invested in streaming technology and turned HBO Max into a world-class D2C platform that we have now launched globally in over 100 countries and territories. We invested in our global networks, evolving our brands, accelerating our digital future, and empowering teams to adapt, innovate, and continue entertaining audiences worldwide. The result has been a creative renaissance at Warner Bros. Motion Pictures, Warner Bros. Television, DC, and HBO, and is exemplified by our success in 2025 with the best and most talented people on and behind the screen.

Since our Q3 2024 earnings call, when we made clear we were evaluating all paths to unlock value, we have taken decisive actions, first through our corporate reorganization, then announcing the planned separation of Warner Bros. and Discovery Global, and ultimately, a comprehensive strategic review. Our board continues to lead a rigorous, highly competitive, and thorough sales process. We engaged with four bidders, which led to eight price increases, and have thus far achieved a 63% increase in value versus the first offer received in September, delivering significant value for WBD shareholders throughout the process.

Our focus has and always will be maximizing value and certainty while mitigating downside risks, the board will evaluate any proposal against that standard with the objective of delivering the best deal for our shareholders. When we started Warner Bros. Discovery in April 2022, the WBD stock was around $24. Since then, we have been laser-focused on transforming the business for the future, investing big in our creative culture and original storytelling at HBO, Warner Bros. TV, Warner Bros. Motion Pictures, New Line, and DC, all of which created meaningful shareholder value. With that, we now welcome your questions.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star key followed by one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star key followed by two. One moment, please, while we assemble the queue. Your first question comes from Rich Greenfield of LightShed Partners. Please go ahead.

Rich Greenfield (Partner and TMT Analyst)

Hey, thanks for taking the question. Really, the first one for Gunnar. As you think ahead to the spin-off of Discovery Global this summer, there's a tremendous amount of investor focus on what leverage it can handle and what is really achievable. I guess, do you see any issues with Discovery Global being 3-4 times levered, given the free cash flow dynamics of DG right now? Why do you believe, 'cause there's been obviously a lot of focus on Versant, why don't you look at Versant as a good comp for DG? Thanks.

Gunnar Wiedenfels (CFO)

Okay, good morning, everyone, and thank you, Rich, for those questions. Look, I don't wanna talk about sort of specific comparison with our competitors here, but I do wanna talk about the opportunity for Discovery Global in general. I have spent a lot of my time over the past half a year, you know, working with the great networks leadership team, you know, fantastic people, and I really do believe we have an opportunity to double down on what already makes us a global leader in the field. We have unmatched scale internationally and locally. We have iconic brands reaching 1 billion people.

We have trusted journalism with CNN and TVN and other players everywhere in the world, fan-favorite talent, a world-class sports portfolio, I'll say a little bit more about sport and how that differentiates, a strong digital footprint that is already contributing meaningfully to the monetization of our brands and our network content, I think has tremendous growth opportunity as we get going here. I do wanna start with the international opportunity a little bit because that's typically harder to understand from a domestic perspective here. Number one, we have fundamentally different trends internationally. You know, for example, you know, we're expecting to be flat to slightly up in international ad sales this year.

Obviously, a fundamentally different setup than the domestic business, and largely impacted by the fact that we have meaningful free-to-air presence in many of the key markets. We also have scale internationally that allows us to partner, you know, potentially think about M&A, partnerships, representation with other players in the market, and a team that's been in these individual territories for decades, you know, boots on the ground with strong relationships in all of our revenue lines. That's number one, and I think hard or sometimes overlooked from a domestic perspective. Number two is sports, and I'll talk about the U.S. side here for a second.

You know, not all sports rights are created equal, and if you look at our sports portfolio, and if you just, you know, take one metric, over the past 12 months, we've had 140 events where we've reached 2 million people or more. This is a high-quality, high-impact sports portfolio, and we're committed to continuing to support that portfolio with opportunities as they arise. We feel very, very well positioned with that. I do wanna talk about discovery+ for a second. We haven't talked about it a lot because HBO Max has been the core priority, but if you remember back when we merged into Warner Bros. Discovery, we were trying to shut down discovery+.

The fact of the matter is, we still have millions of viewers who are very regularly engaged, who love the content, and there is a tremendous opportunity. We have already opened up the buy flow again in certain international territories, and as you saw in our proxy, it is a profitable business, and I think has a lot more ahead for us. CNN, I mentioned the journalism. CNN is the most trusted global news brand. The news gathering organization is unrivaled. From my perspective, whenever something happens anywhere in the world, we don't have to have people at a desk, we don't have to send people.

We have people on the ground who are there, you know, within hours or minutes, sometimes able to cover whatever is going on, and that's reflected in the spikes and the strong viewership we've seen coming into the first quarter of this year. You know, Mark Thompson has been leading that business with an eye towards leveraging that core asset of the global news gathering organization into a much more, a much broader monetization interaction model. We've launched CNN All Access to give people the interaction with our news offering, however, and whenever they want. Again, you saw in our proxy, the ambition, how we're planning to begin growing that business again, after a phase of investments.

You know, I'll speak as the CFO here again for a second, the capital structure. It's sometimes overlooked, and that goes to the first part of your question. Again, if you do the math based on what was disclosed in our proxy, you would see that Discovery Global would come out of the gate with roughly, you know, call it the 3.3 times net leverage number. That is absolutely sustainable and supportable. I actually think that rating agencies are probably.

Again, it's early days. We don't have final ratings yet, but I would expect that we're gonna see, you know, single B, maybe low double B ratings for Discovery Global. Absolutely sustainable, and there is a huge opportunity because as we've shown in the past, we are very well able and willing to leverage the opportunities in our long-dated, low-interest capital structure. Again, I could not be more excited about the opportunity and, you know, we're ready to get going.

Rich Greenfield (Partner and TMT Analyst)

Doesn't sound like you're losing a lot of sleep over leverage?

JB Perrette (CEO and President of Global Streaming and Games)

Absolutely not. I mean, you're right, there has been a lot of investor focus. There has been a lot of debate also about this, you know, famous debt allocation mechanism. Just to be absolutely clear, you know, this board and the management team, you know, we're targeting to optimize a shareholder value in everything we're doing. We're targeting to not have to move any debt around. We put in that estimate range of 0 to $2 billion in the proxy to give ourselves some wiggle room, that's the end of it.

Rich Greenfield (Partner and TMT Analyst)

Thanks.

Peter Lee (Senior VP of Investor Relations)

Thanks, Rich. Next question.

Operator (participant)

Your next question comes from Robert Fishman of MoffettNathanson. Please go ahead.

Robert Fishman (Senior Research Analyst)

Good morning, everyone. Looking at all your premium Warner Bros. and HBO original content and the franchise IP that you started to talk about, what do you think is now finally being appreciated that was overlooked before the sales process heated up? How difficult is building new franchises from scratch? Just separately, as we think about your internal forecast for streaming profits to roughly triple by 2030, can you help us break down the drivers to reach that goal? What do you think is misunderstood areas of growth? Is it advertising, pricing, subscriber increases, or even more efficient spending? Thank you.

David Zaslav (President and CEO)

Thanks, Robert. you know, I think that there was a we certainly had a team, me included, that was focused on delevering this company and paying back debt. and we needed to accomplish that, and we did. Most of our day was spent on this idea of investing in original content and bringing back the great franchises, that Warner Bros. uniquely owns, and investing more money in content. Yes, we canceled a lot of movies and a lot of series when we first got here. The question we asked in each case is: How is this content and how are these stories helping us, and are they doing well? We canceled a lot of stuff that was down 50% or 60% that we didn't think was gonna be successful.

What I think was missed was we hired a great leadership team, creative leadership team, and we invested enormously in this mission of this question that we ask ourselves all the time, that, you know, what stories will we tell at this great company, at Warner Bros., at HBO, at Warner Bros. Television? We really tripled down on investing in getting the best writers and directors back at Warner Bros. We didn't lose any creative talent in the last 4 years, and we added substantially to that, and investing aggressively in original content at HBO, Warner Bros. Television, Warner Bros. Motion Pictures. Not just investing in just doing in existing franchises. You know, Batman II is very important to us, and Minecraft II is important to us.

Original content, that's, you know, that is really what Warner Bros. is about. It's why we invested in Sinners, it's why we invested in Weapons, it's why we invested in One Battle After Another. I don't think anybody is investing in original content and television and motion pictures the way we have. It did take time. You know, we're a long cycle company. Our commitment to DC was mostly heard in terms of language, and then you saw it with The Penguin and Superman. Our commitment to original content, you saw it coming slowly. It came out with Minecraft and talking about building new franchises. Mike and Pam were able to do that with Minecraft, and Minecraft 2 is coming back. It had made almost $1 billion, and it's coming back in 2027.

I think when you look at Warner Bros. today and HBO, it's a company that's storytelling first, focused primarily on the creative culture, and with a superb creative team that has been given great latitude to take risks, to tell original stories, because we are a business of challenge and failure. But with the Warner Bros. library, together with the creative talent we have, it's been a great creative renaissance at Warner Bros., and you see it across our entire company, and you'll continue to see it.

When you look at 27, you know, on the motion picture side, it's stunning. And, it's all coming together for Warner and for HBO as well. HBO has never been stronger. Casey, and the team at HBO, have shepherded, you know, an extraordinary creative slate, and JB and his team fought to take that all around the world. Now that we'll be launching in the U.K., Germany, Ireland, and Italy, we're not done yet, but it's a huge accomplishment to take these, this business global and to see it soar.

JB Perrette (CEO and President of Global Streaming and Games)

Robert, on your question about the levers for growth and what makes us highly confident about the future growth of HBO Max and the streaming business, I'd say there's five different levers that we look at. One is we say oftentimes the product is the content, and it starts with, we've never been clearer about what we need, the kind of content we need, the customer segments we have to go after and strengthen, and we've been at work at that for the last four years, continuing to improve it.

And some of the hypotheses that we had, like the need for a longer-running series that ended up with The Pitt and with the strength of the team that Casey and his organization have we have a track record of delivering an incredible batting average with the swings that we take. And so the content is strengthening. We go into ten years of Potter starting in the beginning of 27 and so we have great visibility to a strengthening content slate, which is at the core of everything we do. The second is we are seeing and we do expect further volume and penetration growth, driven by, A, obviously relatively recent launches in big, sizable new markets including the European markets that we are in the process of completing this quarter

There's more growth to be had in those markets. Penetration growth in our existing markets, driven by partly the content slate, a sharper marketing focus, social outreach that is strengthening. We're in the second inning of our password sharing enforcement. That is just beginning to get scale. It hasn't expanded globally at all. That'll start in 2026. That's volume and penetration levers. The third is product enhancements. We talk about this all the time, that we went from not good to good, but we've still got a ways to go to get to great. And that is every day, you know, hundreds of improvements last year that we made that move the dial, you know, inches every time, but to improve engagement and retention.

The fourth is obviously retention. You know, we have focused a lot, but the we still think there's significant opportunity to continue to improve churn and retention, and we have a number of initiatives going forward this year and next that will continue to drive that lower. The last is just monetization, which is obviously a combination of both price on the subscription side and ad sales, where we are very early in the ad sales, you know, growth trajectory, based on the fact that our fill rates are still relatively low internationally, and we're still launching in new markets with our ad tiers, and we think there's further upside in the years to come. We feel great about the next couple of years and the really kinda sweet spot of the flywheel we're finally getting into, to seeing content, marketing, product enhancements all flow together to drive that growth.

David Zaslav (President and CEO)

You know, seeing HBO, driving it globally was such a key initiative for us, and doubling down on the quality content, and also backing Channing and her great team on rebuilding Warner Bros. Television as the largest and premier producer of TV in the world. One of our big bets was the motion picture business. We believe in the motion picture business. We love the motion picture business, four years ago, most of the movies were being made to go direct to streaming. We did rid of a lot of those movies, we took those economics, plus some, with an ambitious idea that people will come back to the theaters. Mike and Pam believed that, Bremer believed that, James Gunn and Peter believed that.

We, as a company, believe so deeply in the motion picture business, in putting movies on the screen for a shared experience. It's the top of the pyramid. It's what we all grew up with and we're awed by. When we look at this year, and we look at next year and the year after, our commitment to the motion picture business, it's at the core of our company, and we're just excited about the fact that people are going back to the theaters, and they're going back to see our content.

Peter Lee (Senior VP of Investor Relations)

Great, Robert.

Robert Fishman (Senior Research Analyst)

Thank you very much.

JB Perrette (CEO and President of Global Streaming and Games)

Next question, please.

Operator (participant)

Your next question comes from Peter Supino of Wolfe Research. Please, go ahead.

Peter Supino (Managing Director and Senior Analyst)

Hi, good morning, everybody. I wanted to ask you to expand on the international expansion of D2C. You mentioned earlier in today's call that the programming is the product, and so I'm wondering if the amount of programming that you're offering international audiences is today driving enough engagement to get you a level of ARPU that enables you to make money, or does that flywheel that you're working on require more programming dollars and does it require any local programming? Thank you.

JB Perrette (CEO and President of Global Streaming and Games)

Peter, I guess two observations. When we kicked off this journey four years ago, we said that we would focus on launching in markets where we thought we could actually be profitable within a three to five year time horizon of launch. I will tell you that we've turned out to outperform that metric significantly and turn profitable in most markets within one to two years of launch. We are well ahead of where we thought, and the international businesses are, particularly the ones that have been around for two years, like Latin America, for example, meaningfully profitable. We continue to see opportunities to drive that profitability further.

The big benefit that we have, compared to some, is that a lot of the IPs that we're working with have global audiences already. Whether it be DC, and/or both DC theatrical slate as well as the DC series we do, whether it be obviously the HBO brands, the Game of Thrones universe, as an example, and even on the theatrical side, other series and other things that we have in development that piggyback off of a already established global franchises. Our content appeals to those global audiences in a unique way that is different than most, and so our need to do a lot of local international content is a little bit different than other players, number one.

Number two is, we are doing and we have been doing select international content in markets that either there is a particular need or where the content seems to travel better than in most places. We were early on, a couple of years ago, to acquire the biggest leading local streamer in Turkey, which is a content type that travels well. Turkish novellas across many parts of the world do really well. We target investment in markets where both there are strong, big scaled opportunities, as well as opportunities where the content tends to travel.

We announced this partnership with CJ last year on Korean content, which also obviously has a great track record of traveling well. We are already investing in local content. We don't see a need to have a meaningful spike up. We will continue to invest in those markets, as is currently in our plan and in the financials you see represented in the proxy. Certainly, local international content continues to be important, but we don't see a certainly major step change needed to continue to drive our growth.

Gunnar Wiedenfels (CFO)

Thanks, Peter. Next question, please.

Peter Supino (Managing Director and Senior Analyst)

Thank you.

Operator (participant)

Your next question comes from Bryan Kraft of Deutsche Bank. Please go ahead.

Bryan Kraft (Lead Equity Research Analyst)

Thanks. Good morning. I had two, if I could. Just first on the studio, I was wondering if you could provide some more color on the video games pipeline and how your broader strategy is evolving there, including what's coming in 2026, and just any kind of, you know, directional color on what your guidance assumes for 2026 EBITDA contribution from video games relative to 2025. I just wanted to ask on the network side, could you give a little more color on the advertising improvement? I know there was an NBA headwind, but how much improvement did you see in domestic advertising, excluding sports, versus the international side, which also sounds like it's performing well and had some improvement? Thanks.

JB Perrette (CEO and President of Global Streaming and Games)

Yeah. Thanks, Bryan. On the first one, on the game side, obviously, 2025 was a year of sort of reset for the games business. We really went back to kind of the basics. The largest part of it was we had allowed ourselves to sort of get distracted to going after too many IPs with a too broad a set of studios. The core of last year's reset was around getting back to proven studios with proven games and proven players. That's where we are now. Obviously, 2026 is a year, given that 2024 we had, unfortunately, unsuccessful launches. 2025 was this reset year, we didn't really replenish the pipeline. 2026 we'll see a sort of year that looks similar to 2025.

The real fruits will start coming in 27, 28, when we return to some of our biggest franchises, you know, launching in that timeframe and returning to those franchises. We haven't announced those yet. In 2026, we have two big IPs launching, one in May, which will be a LEGO Batman series from one of our most prolific studios in the UK, TT Games. We are thrilled about. We announced that game last August. We just released another trailer yesterday, the feedback and the trending and tracking is looking terrific for that game, and the quality of the game is fantastic. That's on the console PC side.

The second game for 26 is out of our Boston studio with our successful mobile franchise, Game of Thrones: Conquest, which will be coming out with a second game called Dragonfire that will be launching this summer. Again, there, that's a different profile. As you know, mobile games tend to have a more upfront cost based on the UA and the marketing cost, but we feel confident, just like its predecessor, Game of Thrones: Conquest, which eight years on is still delivering significant financial returns, that one will also see a similar trajectory and will help us build a even more robust library.

Gunnar Wiedenfels (CFO)

Thank you, JB. On the ad sales side, Bryan, generally speaking, starting with the U.S. market, you know, from our perspective, the market itself has been relatively consistent with prior quarters. As you pointed out, we have done significantly better, and the sequential improvement that you mentioned is after digesting 100 basis points of NBA headwinds in terms of ad sales. Look, the drivers here are, number one, the new upfront has kicked in. Number two, we're seeing, you know, good scatter premiums, but number 3, really some real health in terms of the underlying audience delivery, and that is across the board. On the sports side, once you correct for NBA, we've done really well with the MLB playoffs.

NHL has done well, you know, CNN has seen improvement. On the general entertainment side, you know, we mentioned this in our shareholder letter, we've had 17 out of the top 25 premiere premieres for freshman series. Importantly, we don't talk about this enough, but, you know, this is across all of our key networks. We had, you know, top shows for TLC with Baylen Out Loud, you know, Fall of Diddy on ID, Flip Off on HG, Tournament of Champions on Food Network, and Discovery with Naked and Afraid: The Pack of Wolves. All of our top networks are continuing to create, you know, high quality output, and that I think puts us in a very good position for 2026 as well.

We're seeing those trends continue with an even more pronounced uptick on CNN audience. Underlying delivery has been a real helper. Turning to the international side. International, again, as an entire business line, has outperformed relative to the U.S., obviously, with different trends in the different regions. Importantly, EMEA, our largest region, continues to do very well. You know, as I mentioned earlier, I think, you know, we can see some real stability, potentially even a little bit of growth in ad sales going into 2026.

Peter Lee (Senior VP of Investor Relations)

Thanks, Bryan.

Gunnar Wiedenfels (CFO)

Thank you.

Peter Lee (Senior VP of Investor Relations)

We'll take the next question, operator.

Operator (participant)

Hey, your next question comes from John Hodulik of UBS. Please go ahead.

John Hodulik (Managing Director)

Great. Thank you, guys. Maybe a couple of follow-ups on the Discovery Global side. Gunnar, you guys give some guidance on for ad and OpEx savings for 2026 on that side. One, anything you can tell us about the cost savings? Is it just the NBA, or are there additional opportunities for cost savings there? Is there a way to sort of bottom line it in terms of how you see EBITDA trends in that business as we look out to 2026 and maybe beyond? I'd love to get your view on how you see the sports business. You talk about the TNT sports app. Just what's your appetite for building a sports business and potentially securing additional rights, and how you see that business going forward?

Gunnar Wiedenfels (CFO)

Yeah. Thanks, John. You know, look, in terms of cost guidance, you know, it's a little bit of a weird situation because you have our projections, our long range plan in the proxy, and I think that answers your question to some extent. Again, there is a big benefit from NBA cost savings, obviously, and, you know, it's been a great outcome for us, maintaining that profitability through such a transformation of our sports portfolio. We're gonna continue to be very focused on efficiencies in general. We are, you know, looking wherever we can at utilizing AI to further improve our efficiency and our effectiveness.

Got some great projects ongoing that are, you know, creating much better visibility into our content, et cetera. Those are all gonna be things that will help us drive efficiency and generate more output with the same cost structure. On the sports business specifically, we continue to have appetite for sports rights. It is one of the important strategic pillars as you heard earlier. You know, what hasn't changed is we're gonna be disciplined. We're not gonna be doing deals that don't make financial sense for us, but we're open for business. You will always see us involved in every process that's ongoing, and we will know what the value is, and we'll continue to be great partners. We're very happy with the partnerships that we have. There will certainly be continued appetite as we go forward, even after separation into Discovery Global.

John Hodulik (Managing Director)

Great. Thanks, Gunnar.

Peter Lee (Senior VP of Investor Relations)

Thank you, John, and thank you, everyone.

Operator (participant)

Thank you, ladies and gentlemen. There are no further questions at this time. That concludes today's conference call. Thank you for your participation. You may now disconnect.