Ladies and gentlemen, welcome to the Warner Bros. Discovery Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Additionally, please be advised that today's conference call is being recorded. I would now like to hand the conference over to Mr. Andrew Slabin, Executive Vice President, Global Investor Strategy. Sir, you may begin.

Good morning, and thank you for joining us for Warner Bros. Discovery's Q4 earnings call. Joining me today is David Zaslav, President and Chief Executive Officer; Gunnar Wiedenfels, Chief Financial Officer; and JB Perrette, CEO and President, Global Streaming and Games. 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 comments regarding the company's future business plans, prospects and financial performance, and involve risks and uncertainties that could cause actual results to differ materially from our 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, in its reports on Form 10-Q, and Form 8-K. And with that, I'd like to turn the call over to David.

Hello, everyone, and thank you for joining us for our fourth quarter and full year earnings call. Our top priority this year was to get this company on solid footing and on a pathway to growth, and we've done that. We said we would be less than 4x levered, and we are. We paid down $5.4 billion in debt for the year for a total of more than $12.4 billion since the deal closed. We're now at 3.9x and expect to continue to delever in 2024. We've significantly enhanced the efficiency of the organization with a long runway still to go. We said we were going to generate meaningful free cash flow, a key KPI for our leadership and company, and we've exceeded our goal with $6.2 billion for the year. Gunnar will take you through the financials. But I would just highlight that as we look at the start of the first quarter, 2 months in, we are already seeing markedly improved free cash flow for Q1 versus first quarter last year, and inflection sequentially in linear and acceleration in streaming advertising. We are optimistic that the efforts we've undertaken on digital and advanced advertising solutions, much of which you'll hear about leading up to and during the upfront, will enable us to achieve a more competitive profile. Bottom line, we're a far healthier company now and we're building real momentum. And we expect 2024 will be a year to drive that momentum forward even further. That said, this business is not without its challenges. Among them, we continue to face the impacts of ongoing disruption in the pay-TV ecosystem and a dislocated linear advertising ecosystem. We are challenging our leaders to find innovative solutions. For example, our U.S. networks and sports teams have been collaborating on a number…

Thank you, David, and thank you, everyone, for joining us this morning. 2023 was indeed a year marked by the accomplishment of several key objectives, and I'm very pleased with the effort across the organization to evolve our company as our industry continues to change. We come into 2024 well positioned and, once again, with an ambitious agenda to further enhance our financial and strategic profile and to drive meaningful long-term shareholder value. Though we grew EBITDA 12% for the year on a pro forma basis, more than $1 billion year-over-year, the enormous financial benefits of our many important and successful transformative efforts have been somewhat mitigated by sustained headwinds across the industry, yet we made strong progress against this backdrop this year, and I'd like to highlight a few notable accomplishments. First, our post-merger integration is substantively complete as of the end of 2023. We have now achieved total combined merger and transformation savings of $4 billion, not including the significant savings realized on content as well. As David has laid out before, while we talked about synergies, we're really applying a fundamentally different management approach to the combined company, data-driven and rational with shareholder value at the center. There are substantial improvement opportunities left for us to capture, particularly in areas such as enterprise systems, production flow, global centers of excellence to name a few, and we expect to see this reflected in our near- and long-term free cash flow generation. This is an entire organization buying into and operating with a one team, one company mindset. Second, our streaming team has made the turn. The D2C segment generated approximately $100 million of positive EBITDA, a $2.2 billion improvement year-over-year on a pro forma basis, well ahead of our targets. This was accomplished with a tremendous level of…

[Operator Instructions] Your first question comes from the line of Vijay Jayant from Evercore ISI.

This is Kutgun Maral on for Vijay. One on the Studios and one on DTC. On the Studios, can you talk a little bit more about your strategic initiatives over the next few years? And when do you think we'll get to see the execution on your vision manifest more meaningfully from a financial perspective? Can we see more signs of this in 2024, 2025? Or do you think it will still be at least a few years until we get it to full value since it takes a while to reinvigorate franchises? And at DTC, when I look at Max from a content perspective, it feels a lot more like legacy HBO Max and maybe with a less of a focus on legacy Discovery+. So I was hoping to get a little bit more color on how you think about the content portfolio overall at Max, and if there are areas you expect to invest more or less in going forward. And I guess as we all think about the evolution of the broader media ecosystem and to date M&A scenarios, what I'm really trying to get at is whether more programming tonnage is necessary to be successful in DTC as we think about the evolution of the broader ecosystem.

Thanks so much. Look, we're coming through 2 years of product that we inherited that was a struggle, and you saw it as it came through our balance sheet. This year, we expect it's going to be much better. Wonka was very strong. The team got in and really reworked that product. We've shown that we have a great ability to market a product globally. We're very committed to the motion picture business. We have loads of talent back, which I enumerated. But when you look at this year, we have M. Night, his daughter has a movie coming out this summer, The Watchers. We have Beetlejuice coming, we're very excited about. Todd Phillips has his Joker 2 coming, all of which, our overall lineup this year is much more compelling. We have a team that's ready to take -- to build those brands around the world. And as I've said, we've really targeted DC. We have Superman, Supergirl, a great script that's been written, and that's being cast. We'll have James and Peter take you through in the next few months, a full spectrum of what they see over the next 10 years. And we're attacking Lord of the Rings. We're attacking Harry Potter. Because we think this is a balance. We have these great brands, Game of Thrones. We have these great brands that people everywhere in the world know, love and will leave dinner to come run and see. And the balance is, we also need things like the new things like Barbie. And Mike and Pam are doing a terrific job, and our commitment to the motion picture business is something that's -- there's a real sense of in the town, and it's one of the reasons why we're getting some of the very best people coming onboard with us. So I'm pretty excited about what we have this year and what you'll see rolling out in the year ahead. Bottom line, the Studio has really been underperforming and -- including the end of the year, where we had some real struggle. But we're very optimistic about this year, and it has -- it gives us a chance to have a lot of upside in the next 2 years. I mean it was really a struggle. JB?

Yes. And Kutgun, on the DTC segment, I guess a couple of points. Number one is I think as we mentioned in our previous calls, first of all, as we're 8 months in, the encouraging thing for us that we've seen is our engagement in terms of time spent per active account is -- has continued to increase. And most of that increase has been driven by the inclusion of the legacy Discovery content. So -- and it's not been cannibalistic to the legacy HBO Max content. So we have seen increased engagement, increased our views, all driven by the inclusion of the legacy Discovery content. The second point I'd make is if you look at the top 10 rails, it's pretty indicative. And you'll see oftentimes in there weeks where 90 Day Fiance, or some of our other legacy Discovery content, are making up 3, 4, 5, sometimes even of the top 10 series on Max. So again, talking of the content diversity and the success of the 2 content portfolios coming together. And then the third thing I'd say is I think what is exciting about the next sort of 12, 24, 36 months is about 1.5 years ago, Casey and the team, with the non-HBO content, the Max originals really took a turn to sort of focus on bigger, broader WB-based franchises. And when you think of the lineup coming, they're very broad, very 4-quadrant titles, like Penguin, Dune, It, Conjuring, Harry Potter. And so we feel like we're on a great trajectory. And frankly, the content lineup over the next 2-plus years on Max is the most rich and the deepest and broadest that I think it will ever have been, not just on Max, but frankly, even within the HBO lineup as well.

And contrasted, candidly, of the next -- of the last 6 to 8 months, where we just didn't have a lot of content. So what's encouraging is that we've been able to grow, and we really haven't had much fresh content. And so this True Detective was step one, but we're going to be rolling out all of these franchises and shows over the next 12 to 24 months, and it gives us a real sense of optimism.

Your next question comes from the line of John Hodulik from UBS.

Two, if I could. First, maybe for Gunnar. Thanks for some of the puts and takes for '24, but just any other color you could give regarding EBITDA and potential growth. Maybe break down it by segments, if you could. And then on the new skinny sports bundle, just any other info you guys could provide in terms of what the product is going to look like, pricing, economics? And just maybe, David, your confidence that it's not going to accelerate cord-cutting?

Sure. Well, why don't I start with that. Look, there's about 125 million households that -- in America. And there's more than 60 million of those that are not in the traditional bundled cable ecosystem. The -- and we see that with things like Bleacher Report, where we have 30 million people, mostly under 30, that the overwhelming majority are not in the traditional cable universe. But they love sports, they're on Bleacher and House of Highlights all day. And so we have a very rich target of over 60 million people that love sports. And it's a product that's quite modern. So today, when people are thinking, what channels should I watch, what channel is my sport on, you'll be able to go to this new product, this new app-based product. And if you love the baseball playoffs, you'll watch all of them, and you're not thinking what channel is it on. Hockey, you'll watch all of the hockey playoffs, right through to the Stanley Cup. For basketball, you'll watch all the playoffs, right through to the championships. And you will never think or ever have to Google where is it. And so it's a platform that this -- that the younger generation that is not subscribing, we're able to go after those that we're missing. We're missing those subscribers. The traditional cable industry is missing those subscribers. We think it's very pro-consumer. Look, we have a great relationship with our existing distributors. This is a unique product that's looking to meet a very strong demand. And together, I think this partnership of us, together with Disney and Fox, with Bob and with Lachlan, we're like-minded, we're aligned, we believe that this could be a very compelling product. We're going to be very aggressive with it. We're going to be aggressive marketing it. And we think it coexists very effectively. We don't see a lot of people unsubscribing to cable in order to get this. We're going after the 60 million plus, those that are not thinking about getting cable when they get their own apartments. And so we're quite excited about it. I've seen a number of the prototypes. We're pretty far along. This is not an announcement. You're going to see, we are going to follow pretty quickly with our plans. And I think it's going to meet a really -- it's going to meet a demand that's very strong in the marketplace.

Well, and then on your EBITDA question, John. So I did go through some of the puts and takes, as you said, in the prepared remarks. We are also going to continue calling out factors that will affect comparability over the course of the year. On a segment-by-segment level, if we start with the Studio, we've talked about the games cadence last year, this year. And on the film side, obviously, this is going to continue to be a hit-driven business. And just last year was a great example with the greatest success in the film studio's history and some real challenges across the industry on the superhero side. So there's not a lot more to add at this point. For D2C, which clearly is the top priority here from a growth perspective for us, we're committed to maintain profitability. But as we said last time we spoke to all you guys, is we've restructured the business. $2.2 billion of profit improvement in 12 months. From here, the priority is going to be different. We're not going back to subs at all cost, but we want to fuel profitable top line growth. And that's going to be guiding us as we go through this year and beyond. We have the $1 billion bogey for 2025, and JB and the team are going to lay very important foundations this year. We have deliberately not given a more specific target here because we will not be in a situation where we manage the business for results in individual quarters or fiscal years. We'll do the right thing for the company and especially on the D2C side that might mean decisions over the course of the year to pull back on individual markets, accelerate into others, respond to how our consumers are receiving our content. So rest assured, we'll do the right thing from the perspective of long-term asset value and value generation, but we will not be focused so much on individual quarters or years profitability. On the linear side...

Just one point on that. This -- the ability to now have a profitable streaming business and to keep that business profitable and growing in a year where we're launching in multiple markets around the world, where we're deploying real capital to build the brand, to market the programming and to have the infrastructure around the world. And so for us, we see this year as a continued build as we go toward next year and -- of a $1 billion in streaming.

Right. And then just to finish up the segments here on the linear side. I mean you heard us talk about what we're seeing right now, and that is a more optimistic view than we have had throughout most of the past 21 months since we closed this deal. But at the same time, I don't have a crystal ball, and we're not in the business of making longer-term projections here. We're going to be as transparent as we can in as much detail as we can about what we're seeing, and we'll continue doing that as we go through the year. What really matters to me is we're going to continue to be very focused on delevering the company. I told you that against the $6.2 billion of cash generated last year, we're off to a strong start in Q1. January was very good. We're going to continue focusing. And I do think that we're still in the early innings here. We have an entire organization with 35,000 people changing their view on how we run the company, how we deploy capital and what we're optimizing for. That's going to have dividends for us for many, many years. So we'll continue to delever. We're committed to our 2.5 to 3x target range. And you'll continue to hear us talk about free cash flow generation.

Look, free cash flow is a key metric for us. And we said we're going after it to have generated the $6.2 billion, but also just the 60% conversion. This company -- and in a year where we held back dramatically on selling our content to third parties, where you saw -- I think it was almost $1 billion in difference year-over-year in terms of the content that we sold. We're doing what's right for the business long term. We're laser-focused on driving free cash flow, delevering, you'll see us driving free cash flow this year. You'll see us delevering the balance sheet. That makes us a healthy company. Because when you partner that with the fact that we have great content, great creatives at Warner, at Max, at HBO, great content coming up in the next few years, that, we think, is the recipe to really differentiate us.

Your next question comes from the line of Rick Prentiss from Raymond James.

Yes, hitting the free cash flow number, obviously a strong year this year, but you had the strike benefit. And you say you're going to grow the free cash flow, can you give us a sense of is that -- can you go beyond the $6.2 billion? You got to normalize for the $1 billion, can you do mid-5s? Can you give us kind of a goalpost on the free cash flow? And then second question, as you think about that free cash flow production that you're driving and the delevering that you're driving, it naturally brings up capital allocation questions. Someday stock buybacks maybe, but also organic and external growth. What assets do you think you've got covered, we don't need any other assets in this category. But there's some other assets out there in the marketplace that might be interesting on a nice to have or need to have.

Let me start with the free cash flow question and a view on investment priorities. So I did go through in my prepared remarks some of the puts and takes, and I deliberately do not want to give a specific quantitative free cash flow guidance. We did call out the fact that there was $1 billion of a benefit last year, and that is going to reverse in 2024. There's no question about it. I also took you through some of the below-the-line helpers here, interest expense and cash out is going to come down. CapEx is going to come down. Restructuring expenses are going to come down. And as I said, we will continue to be very, very focused on capital efficiency. And some of that impact is not going to be individual quarters, but it's a longer-term process. And we have already very significantly changed the approach to our investment decision-making and a harmonized process across the entire company. So I have a lot of confidence that these will be very positive contributions over years to come. And as I said before, I'm not in a position this year to give very specific EBITDA or cash conversion guidance. We'll be very, very focused on it. We still believe that our long-term target of 60% cash conversion is very doable, very achievable. We're going to continue to focus on delevering the company. And what I will say is we haven't really -- we haven't made any trade-off decisions here between investing in the company and delevering. We have funded our investments. David talked a little bit about the film studio, but we've also made investments on the games side to get to a more consistent cadence of releases over time. We have deployed hundreds of millions of capital into our studio lots and tours and operations. And we have funded every promising content project. And all of that is happening at the same time as we're investing in an overhaul of our systems landscape, et cetera. So we have made a ton of investments. We have great assets. We know where to invest more over time. And as I said, we -- from a capital allocation, capital structure perspective, we remain focused on the 2.5 to 3x for now. But you're right, over time, there's going to be more and more optionality.

And just as an operating thesis for the company, we're really focused on running these companies -- each of the companies efficiently, having them work together. And we're fighting for free cash flow and to grow free cash flow in each of the businesses. As Gunnar said, this past year, we did get the help of the strikes. On other transactions or whether there's assets out there outside of investing in ourselves that make sense, obviously, we look at everything. We worked really hard to get ourselves a healthy balance sheet, to pay down debt to get below 4x levered, to really focus on where we're spending money, on driving free cash flow. And so we've positioned this company really now as being a healthy company and with a great leadership team, with a lot of direction. We have a great set of assets. We're probably the only pure storytelling company, particularly a pure storytelling company that operates on all platforms. And I think we have the greatest set of franchise content assets. And so I like our hand. I think as we look to the future now with Max profitable, we think we can build that. And so we like where we are. We do have the optionality of looking at other assets. But it's going to be a very high bar for us. We like our hand where it is, and we like the -- our particular strategy right now of building Max and really deploying all of our great creative assets.

Your next question comes from the line of Jessica Reif Ehrlich from Bank of America.

So maybe switching gears to advertising. You mentioned a few times that Q1, you're starting to see strength. Can you just give us some color on where it's coming from, how confident you are that this will continue throughout the year, particularly in light of all the increase in inventory, whether it's Amazon coming to the business, Walmart with Vizio? And then as a follow-up, you mentioned some market launches in some pretty big countries, U.K., Germany, Italy, Australia, Japan. Can you talk about the timing? Some of these markets have limitations like the U.K. And then lastly, any color that you can give on third-party content sales or your views on that? There's just no way, given your library, that you can use all this content on Max.

All right. Let me maybe take the first one here and provide a little more color on Advertising. So as we said in our prepared remarks, we have actually seen improvements now into the first quarter across the board. The U.S. side is, I think, benefiting from the fact that we've seen improving ratings trends over the entire second half of last year, and I think that we're beginning to monetize that. The upfront deals are kicking in. Remember, we've had a very different strategy this year versus last year. So it's a visible improvement across the board. And we -- again, I don't want to make any predictions for the rest of the year. But we have a lot of growth priorities lined up. We're catching up on advanced advertising revenues. The team has made some structural changes, and we're beginning to harness the entire data footprint of Warner Bros. Discovery as we roll this out. Upfront, the cancellations are looking weak. So that's the U.S. market. And again, forget about the streaming side of it, which, as I said, is growing at north of 50%. Internationally as well. And while there is no such thing as one international market, it is a mixed picture. But the key markets, the most relevant markets for us in Europe specifically are doing very well. Again, Poland is doing incredibly well. We've got very, very strong network positions there. Italy has seen real upswing in programming. We're the fastest-growing group in that market. And that's all flowing through to advertising. And even in those markets that historically have underperformed a little bit for us, such as the U.K., the Nordics, those numbers are looking much more stable now than they did in the fourth quarter. Again, this is 7 weeks into the year. I don't want to make any predictions, but we're in a much, much better place today than we were.

On the Max side, Jessica, in terms of international rollouts, I mean, David -- as David said in his remarks, one of the things that sort of misunderstood when people look at our subscriber numbers versus certainly our larger peers, is the point he made in his remarks, which is that we are currently available. Our TAM is less than half the size of those larger peers. So that means we have still 2x of the addressable market to go after, the other half of the addressable market to go after. We are excited that in 2024, we're getting back to growth in new market rollouts, which is the first time in 2 years as we've been obviously hard at work retooling the platform and the technology and getting it right in the U.S. with LatAm launch next week. Europe starting in the second quarter, with 2 brand new markets in France and Belgium starting in the second quarter. Asia and Australasia will likely be more by '25. And then the rest of the European markets for now slated more for '26. So that's sort of how we see the rollout coming, and we think that's a huge tailwind for us for growth in subscriber growth and revenue growth over the next 24 months.

And then, Jessica, on the third-party sales, I'll let David weigh in as well, of course. But we are doing exactly what we said we were going to do. There is no religion with regards to warehousing all of our content on Max or not doing business with competitors. We are one of the greatest makers of content in the world, and we serve our own platforms and we serve third-party platforms. And the honest answer is, I can't give you a sort of high-level direction. We're looking at this case by case. And we've got a process in place. We have the best possible view now on what the strategic, the financial merits of exploitation of our own platforms,versus partial exploitation with third parties are. And we have healthy discussions. And what you will notice is we haven't sold anything since we closed the Warner Bros. Discovery merger. We have done some co-exclusive deals, and that makes a lot of sense. We've got all the data. We know exactly what we're giving up and we know exactly what we're winning. Now at the same time, we are having tough discussions internally. We look at the data together and there are definitely certain red lines, and David makes sure that we never cross them. But in other cases, we've gone with some deals that have garnered some press attention and that I'm very, very happy with because we're doing the right thing, we're providing oxygen to our content and we're optimizing returns here, not only for the company or our shareholders, but also for the talent that we're working with. We are doing the best we can to make those great stories and monetize them in the best possible way.

The point that Gunnar made, when we do sell content, we do it only co-exclusively so that we hold on to everything. There's nothing that we want that's on Max that we would sell and wouldn't be on Max anymore. I would put it in 2 categories. Channing is back in business quite aggressively, the Warner Bros. Television business. We have over 100 series, some of the best series on television, Shrinking, Abbott Elementary, Ted Lasso. We have some of the greatest talent on the TV side working with us. And so that's back up and we think we'll see a lot of opportunity there. On our library, we're incredibly aggressive on the bottom end of it. There is a group of big branded programs that represent the core of who we are as a company. And we're -- those are going to stay with us. And you've seen some big-name shows, but most of those have been around for a very long time. They've already been syndicated on other platforms, and we're able to reap a significant amount of dollars from them. And so that will be the balance. We probably have the biggest motion picture and TV library in the world, and our job is to really focus on how to monetize that with different windows.

Your next question comes from the line of Ben Swinburne from Morgan Stanley.

Maybe for JB, just to follow up on the direct-to-consumer Max strategy. You listed U.K., Italy, Germany. I know those are Sky licensing deals. I'm assuming Australia, Japan have a similar structure. So you guys -- have you guys made the decision to sort of move out of those relationships and go direct to consumer? Or maybe just talk about your thoughts, because you have had some nice deals in those markets in the past. And then for JB and maybe Gunnar, however you want to address it, great news to hear on the NBA conversations. Clearly, that would be a big positive to retain those rights. How do you think about making that work financially for the company? It's not a big debate that linear TV is under pressure on the revenue side. And I think it's probably safe to say the NBA costs are going to go up. So how do you guys approach this from a kind of a P&L point of view when you think about exploiting the NBA for what I imagine will be another long-term deal?

Thanks, Ben. Look, the U.K., Germany and Italy, and I think we've said it before over the last year, are key markets for us. We have deals in those markets with Sky, which is a -- has been a -- over the years, a great partner to us in many ways, and will continue to be a great partner to us. But having our own direct-to-consumer product in those markets is a core strategic initiative of ours. And we're already in business aggressively in those markets. In the U.K., we have our direct-to-consumer Discovery+ product. And we're one of the leaders in sport in the U.K. where we have our partnership with TNT, which we just rebranded as TNT Sports, and that has millions and millions of subscribers. And that partnership is going very, very well. And so the idea of coming into that market with the wealth of content that we have and our content is -- we see how well our content works in the U.K., Germany and Italy. We could see the ratings of that content when it airs on Sky and the share that it gets in the aggregate. And so we think it's -- those will be real businesses for us and meaningful, and real opportunity to grow economics and grow subscribers. But that will be in -- beginning in '26.

And I'd just add, Ben, I think the thing that's in most -- in some ways, most exciting for the international rollouts is that, as David mentioned in some of his prepared remarks, there are a number of distribution partners in all these markets that are very eager to find ways to help us get to market faster and scale faster. And doing it with a partner, in many cases, can drive a lot of efficiencies from a marketing standpoint and get us to scale very quickly. So those are also great and very good conversations, and ultimately, economically, I think will be very interesting for us as we transition from more licensed model to a DTC model. Now there are markets like, for instance, India, where we did a very attractive deal with Reliance. There are markets where we look and we say that, for the near term, even in that case, we did not do a long-term deal, we get a chance to see how all of our content does. And if we think that we can be more profitable and build asset value in a market, we will go in markets where we don't and the economics are very compelling to sit out for a period of time. We'll do that, like we did in India. But Europe is core to us, and Latin America. So you're seeing us really speak to that with these launches, and you'll see it over the next 18 months.

And then, Ben, on the NBA, as you know, we're in the middle of exclusive discussions here. So I want to lift it up maybe one level to a general statement on how we look at sports rights. We're spending close to $20 billion sort of on content and programming in the broadest sense. And every dollar we spend plays a different role across the portfolio. We generally like to own our content. That's not the case with sports. But we obviously acknowledge the enormous value -- reach value, emotional value of these deals. And we have been able to strike profitable deals and we're always going to be disciplined. It's very easy to lose control over sports rights investments. That's not what we do. We're going -- we know exactly what value we assign and we stay disciplined during our discussions. And if you take that into account, I think we have enormous opportunity to be much more efficient with our content spend overall across the entire company, and that will include certain areas in which, you're right, you probably have to assume that there is inflation going forward. On the NBA specifically, we've had a very, very strong partnership for 40 years, and I certainly hope that we're going to be able to continue that in the most positive way.

Your final question comes from the line of Robert Fishman from MoffettNathanson.

Two for you guys quickly, if I can. David, you've been vocal about the idea of rebundling. Do you think it's inevitable that the digital streaming ecosystem will end up looking a lot like the old MVPD world? And maybe if you can talk about the benefit of bundling Max with other streaming services, like Netflix through Verizon? And then for JB or Gunnar, can you talk about the future of Bleacher Report, Sports Add-on product, given the sports JV announcement? Anything you can share in terms of the engagement with Sports on Max to date with the free option.

Thanks, Robert. Look, I think everything is driven by the consumer experience. And the consumer experience right now is -- it's cluttered, it's awkward, it's somewhat confusing. People have learned how to deal with it. You Google what show, where a show is and where a sport is. But rebundling just makes an awful lot of sense. And this idea, I think we've transitioned out of the idea of subs at any cost. We've done that by getting Max profitable and really focusing on getting real subs, with real economics and growing that like a real business. But the ability for a consumer to go to one place. The Verizon example is a good example, and Netflix is a great product. You put it together with Max and you can get those together, provide a very meaningful experience for people and it makes it a lot easier to traverse across our universe and theirs. In the longer term, I expect there will be meaningful bundling. It's going to happen in 1 or 2 ways. It will either be a bundling by an intermediary, a platform company like an Apple or an Amazon or a Roku, or what's going on with Charter and Comcast, which is very compelling and I think very helpful to all of us in the content business. That these channel stores morph into places that have just provide a simpler and easier and less anxious experience for people to find the content that they want and have it be simple and fluid. Or we could do it ourselves. And I've always advocated that we should do it ourselves. And so we're looking to do that domestically. We're looking to do it outside the U.S. In some ways, the sports venture is that very -- is trying to meet that very need. That when you put our product together with Lachlan and Fox's product, together with the ESPN product, it just has a much better, more fluid, more simple consumer experience. It's not which channel is it on, it's not where do I go, how do I go, do I have it, don't I have it. It's in one place. And I think more and more will be gravitating toward that.

And I think, Robert, on the VR sports part of the question, it really -- it dovetails exactly with what David just said, which is we look at the overall the sports venture, this new sports venture and the ability for the partners to bundle with their existing streaming services, and with our case with Max, is great for the consumer, makes it much more simplified. And as it relates to what does that mean for the existing VR sports that are on Max, look, we'll have more to share with that over the coming months as the -- we get closer to launch the venture. But obviously, it's incredibly compelling to be able to say that we'll be able to take the incredible entertainment offering that will be on the -- that is on Max, along with the great aggregated, simpler, more compelling consumer offering of the joint venture to put those 2 together and offer them in a compelling fashion to the subscribers. And just as a note, obviously, in the meantime, we're continuing to lean in on the Bleacher Report sports offering, and we're incredibly excited over the next few months to bring all of our March Madness, including building up to the Final 4 on Max for the first time here over the next 45 days, and then leading into the NBA playoffs and a little bit later in the spring.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.