Ladies and gentlemen, welcome to the Warner Bros. Discovery First Quarter 2024 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 Q1 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 made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The 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 and its reports on Form 10-Q and Form 8-K. With that, I'd like to turn the call over to David.

Hello, everyone, and thank you for joining us. As we kicked off the new year, our focus was simple: to continue building this company for the future, recognizing that it's not business as usual and that we are transforming ourselves for what's next in an industry undergoing tremendous disruption largely driven by technological innovation impacting consumer behavior. And we're embracing that innovation here at Warner Bros. Discovery with bold and courageous decision-making. To that end, we've had a productive start of the year. We are pleased to see positive momentum building in several critical areas. Most notably, Max is gaining subscriber traction in all regions, adding 2 million subs this quarter with our total Direct-to-Consumer subscriber count nearing the 100 million mark. And while our U.S. subs will be impacted by some seasonality, particularly related to sports in Q2, we're on track for continued robust international growth this quarter and new subscriber highs through the remainder of the year. We're also gaining ground in ad sales with an acceleration in Direct-to-Consumer and sequential improvement in linear this quarter, helped in part by a record March Madness men's basketball tournament and steadier overall ratings. At the same time, we're taking meaningful steps to rebuild our Studios as the cornerstone of our storytelling engine and we're proud of the recent creative successes that have supported our #1 box office share this year, including Wonka, Dune: Part Two and Godzilla X Kong, and we're excited about the quality and breadth of our future pipeline. We're also leaning into the ways that new technologies like data-driven systems and AI can improve our consumer offerings and enable us to run our businesses more productively and effectively. This is one of our top priorities. Regarding the balance sheet, we continued to see tangible results from our…

Thank you, David, and good morning, everyone. I'd like to begin by spending a minute or two on the balance sheet and highlighting the key factors that underpinned the $1.3 billion positive year-over-year swing in Q1 free cash flow in what is our seasonally weakest cash production quarter and where we typically see more cash outflows than inflows. Namely, number one, the continued benefit from the many initiatives to improve working capital, which we are still in the early innings of realizing. Number two, the more disciplined and analytical approach to content investment and allocation. Number three, meaningfully lower cash restructuring costs. And number four, lower cash interest expense as a result of the more than $6 billion of debt we repaid over the past 12 months. The primary use of our free cash flow remains delevering the balance sheet. We remain committed to our gross leverage target range of 2.5x to 3x, and I'm confident that we will continue to make progress towards further delevering this year. We paid down over $1 billion of debt during the first quarter, including nearly $400 million from open market purchases at a discount. I continue to view our debt stack as an important and valuable resource. Our weighted average maturity is roughly 15 years with very manageable average annual maturities for the foreseeable future with maturities in any given year, significantly less than what our annual free cash flows have been even normalized for the strikes. Our debt is virtually all fixed with an average cost of 4.6%, in line with the yield on comparable U.S. long-dated treasury. Based on the difference of current market value to book value reflecting the current rate environment versus when issued, we have a $6 billion asset in our debt stack. And you should expect that…

[Operator Instructions] We will take our first question from Bryan Kraft with Deutsche Bank.

I was wondering if you could share any additional details about the bundling relationship with Disney+ and Hulu, for example, pricing, how much marketing will be behind it and how the 2 companies are coordinating and funding the marketing activities. And related, how has the Max-Netflix bundle with Verizon performed? And will we continue to see additional domestic bundles created? And how about on the international side, are you doing anything yet outside the U.S.? Or do you plan to?

Thanks so much, Bryan. The bundle with Netflix is doing much better than expected with Verizon. And so I think it's another example where there's more strength together, and it's really driven by the need for a change in the consumer experience. We see it in all of our studies and then even on a practical basis talking to consumers. And so it's just much more efficient. What's interesting, and I think different about the bundle with Disney is, I've been saying for a long time, we need to come together ourselves and provide a better consumer experience, a more compelling and exciting offering or there'll be other companies who'll do it for us. And there are a lot of great companies like Roku and Apple and Amazon and are doing a terrific job of aggregating services in the quest to provide a better consumer experience. It's much more efficient, better ARPU and a much better business if we can do it ourselves. And Disney itself is a fabulous company. They, together with us, turned 100 years old this past year. They have some of the greatest content and stories in the world. They're a global company like we are. And coming together -- an incredibly well-run company with Bob Iger, and so coming together for this bundled Disney+, Hulu and Max is really an extraordinarily positive offering. It will be very -- it will be priced well and it will be both ad-lite and ad-free. And for consumers in the U.S., I think it will be a really positive consumer experience and gives us, I think, a real advantage and opportunity. When you look at the marketplace, there's this question of distribution versus content. I've always felt that, in the long run, the best content wins. And that's why we've really focused on the creative side of our company, building the TV production business, the motion picture business, bringing the best talent back to Warner Bros. that ultimately -- and having the best TV and motion picture library, that ultimately the best content wins. The marketplace right now has looked at the great distribution companies and have assessed that it looks like the distribution companies are going to be the companies that will be the big winners. And those are great companies, but I believe that distribution and content -- distribution companies and content -- great content companies will be winners. And that's why our quest to be the best storytelling company in the world; Disney, as we look over to Bob and his leadership, is an extraordinary storytelling company, and so I think this will be a great opportunity to provide great content for a reasonable price to consumers in America. And I don't know, JB, you want to add to that?

Yes. I mean, Bryan, just the only other thing I'd add, on pricing, as Dave said, we'll come out with more specific, but you should imagine it will be priced very attractively for the consumer. As a reference point, it's really working off of the Max stand-alone and the existing Disney+ and Hulu package bundle. So as a comparative basis, it will be priced very attractively for consumers. The second -- on the flip side, for us, on the ARPU side, it also has a very strong deal for both parties that we feel very, very good about. And obviously, not to mention the LTV of those subscribers we expect to be significantly better than what we see today. On the marketing, it's two-pronged. We will have a significant amount of marketing support from both parties, both third-party marketing as well as on air and our own platforms, driving to the bundle. And then at least, as importantly, the buy flows and everywhere you see people once they get into the buy flow, whether they're coming in for the bundle or they're coming in just for our stand-alone products, there's high prominence of the offering across all the buy flows on both sides, both Disney and ourselves. And then on the international side, look, you should expect, obviously, this has been a very big priority for us, as David said, and we are -- we haven't really executed similar. We've done a lot of international partnerships and bundles with telco, mobile and broadband players. And as you'll see us roll out in Europe and as we announced on Tuesday when we come to markets on Wednesday -- sorry, when we come to markets like -- new markets like France, we have big partnerships with people like Canal, Free, Orange, SFR, all the big mobile telco players, that will continue to be our strategy. And then partnerships with other programmers and other streamers we will continue to explore, and I think you should see that in our road map in the quarters to come.

Yes. And one of the advantages that we're seeing is by having 10 to 12 channels in every country and free-to-air and local content all over the world, we have relationships with all these distributors. And when you saw deals here in the U.S., this innovative deal that Bob and Chris did with Charter and Disney, those are deals outside the U.S. that you'll see replicated or already happening, and you'll see it as we launch, that allow for a real advantage for the fact that we're already in business. A real advantage that not only are we in business, but that consumers are watching our content. And we'll be transitioning a lot of those consumers to watching us through our Max product.

We'll take our next question from Vijay Jayant with Evercore ISI.

This is Kutgun Maral on for Vijay. If I could just follow up on the Disney bundle, maybe a high-level question. If we take a step back, the content companies entered distribution years ago with streaming. And now we're kind of going through this rebundling base of these services. Between the Disney bundle as well as the separate sports JV you announced a while back with Disney and Fox, you're clearly placing yourself in a key position in this industry transition. So I guess the question is, how does this evolve over the next few years? And what does this mean for industry consolidation and how you look to invest behind your DTC and linear assets?

Well, we've been saying for the last 2 years that the consumer experience is a real challenge. And ultimately, you've got to follow the consumer. Our philosophy is create the best consumer experience, and that ultimately, the consumer will go to the best content, the best storytelling in the world. And so in order to effectuate that, we've pushed for this real direct-to-consumer with no middleman. There are great companies that are doing a terrific job of helping this -- as we make this transition to provide a better consumer experience. But the ability for us and Disney together to reach out to consumers, it's a stronger business. We get all the data. We have an ability to work directly with consumers and to work to enhance that experience. We're doing that ourselves with Max. The key for us is we need to be prominent in all of the major bundles and all -- because we want to be in front of all consumers. And we think that we have the entitlement as long as we can continue to provide great content, whether it's entertainment, nonfiction, sports, news and we have content in every language. JB?

Yes. Just the only thing I'd add is, look, I think what happened in the 2010s is the industry went down a very dangerous financial path of trying to invest in every type of content in every genre to try and be something for everyone. And at the end of the day, we know where that led us to. We're now getting back to all being great at what we do and swim in the lanes that we were great at. Disney, obviously, is incomparable and world leader in kids and family. We are world leaders in premium dramas, scripted drama, comedy, nonfiction verticals. And we can get back to investing and prioritizing our lanes and our key content, they can do theirs. And synthetically, these bundles allow us to do that while still providing the consumer with a very attractive price for the combination of products such that they feel like they don't need to any more do all the switching in and out of services month-to-month, but rather pay and get an advantage of one price. And even if they don't use the service in one month, they still feel like they're getting great value and they might use it the next month. And so it's got a lot of rationale by pulling these together and makes us all be able to go back to investing in the areas that we really are great at.

It does feel like this is a moment in terms of what the next year or 2 years will bring. I said a while back that this is a generational disruption. I went through a generation -- a disruption not quite as big as this, but when my career started, when the cable business was getting started, that was a real disruption. And as we look at what happens ahead, there likely will be a restructuring of how people view content and there's a lot of irrationality in the market that's getting shaken out in terms of the amount of money spent. We said early on, it's not how much, it's how good and that's what we're focusing on. And ultimately, I think the business will look very different in 2 to 3 years. And it will be much better for consumers, from our perspective.

We'll take our next question from Jessica Reif Ehrlich with BoA Securities.

Maybe sort of following up on, David, on what you just said. The last 2 years, as you well know, you've gone through a restructuring while navigating through the massive industry changes. And as you look out over the next 2 years and you said there would be some -- the industry would restructure, but from a WBD point of view, what do you think the biggest surprises will be? How different will the company look? And then secondly, next week is the Upfront, as we all know. Can you give us your outlook for both sides, both Direct-to-Consumer and linear?

Thanks, Jessica. Look, we've spent the last 2 years at the very essence has been -- the investment community uses the word synergy. The way we looked at it is we had an opportunity to restructure each business to start over. What does this business look like if we started today, to build a business that will be successful for the future. We did that at Warner Bros. Motion Picture. We did that at Disney. We did at DC. We did that with Max and HBO. We did it with our channels business, our production business on Warner Bros. Television. And for us, it's really 2 tiers. One is, we got rid of a lot of content we didn't think it was going to help us. But at the same time, we brought in a lot of great creatives and invested in a lot of content. So it's how do we run these businesses efficiently for real free cash flow and drive for growth. But two, creative excellence. How do we have the best content? In this past year, HBO had maybe its best year ever, and in addition to that, Warner Bros. Television has some of the best, highest quality TV production. And we're looking at our Motion Picture business now, which we're feeling really good about. It's #1 at the start the year, but we have a lot of great content. And so I think it's that combination. Great content, great creatives, how it's fighting to tell the best stories on every platform. And then running it like a real business, real free cash flow and real EBIT. And I think those 2 are going to -- will drive us for the future. And -- but it all starts with the content. If our content is great, that's our mantra: the best content will win. And we have to continue to tell the best stories.

Yes. I mean, look, for the Upfront, I think it's a little early. We definitely hope to continue some of the momentum that we've seen last year. I would also say that we're operating in a much more constructive environment this year than we did last year. So hopefully, that will be supportive. To your point, Jessica, about the differentiation between D2C and linear, really, one of the things that's working very well right now is that convergence, the way John and the team take our inventory to the market is fully harmonized. Now it's across platforms incremental reach. We're leaning in further. You've seen some nice growth rates for our D2C inventory. We've got more to take to the market. We're taking it to the market with more data-driven product like the Olli announcement that we made earlier. And so there should be further opportunity. We're just getting started. And look, longer term, there is definitely more opportunity here. We have been very transparent about the significant monetization difference between linear and digital advertising. David talked about AI a couple of minutes ago, certainly, that should be a helper longer term as we think about our go-to-market here. So definitely some upside. And maybe one thing to add to your question about the surprises here, I think if you take a step back and look at our numbers right now, what we just discussed for the first quarter, we have full conviction that our Studio can earn a lot more than it is doing right now. We have full conviction that JB and Casey and the team are on an incredibly successful track. But as we've laid out many, many times before, this doesn't happen overnight, but we're seeing the sausage we're making. We're seeing how we're running the company fundamentally differently that's not reflected in our current and near-term financials. And I think that's going to be the surprise as we come through and show you what the D2C business and our content business can do longer term as we come out of the transformation.

Yes. When you think about the D2C business in the U.S., we need to fix the consumer experience and I think these bundling structures that we've come up with in sports and with Disney will help to do that. But we're a global business. We're in business almost in virtually every country in the world with multiple channels or free-to-air channels and 2/3 of a mature, if the subscription business is gestationally beginning to mature, come from outside the U.S. So when we launch with the Olympics, we're just getting started outside the U.S. So when you look at our subs, this is a big moment for us. And we think we have a real advantage because we have local content in every market. We've got relationships in every market. And this new idea of distributors, particularly in Europe and as well as Latin America, recognizing they don't want to get left behind and they're starting to talk to us proactively about moving our content onto broadband, how can they offer our products in a way because they don't want to be the antiquated cable operator. They want to be the cable operator and the channel store as well. So all of that, I think, bodes very well for our future. You have to be global. This is not a game for U.S.-only companies. Have to be global, above the globe.

We'll take our next question from David Joyce with Seaport Research Partners.

Following on to the Upfront and advertising question. You obviously have a long -- a strong relationship with the advertisers and have been on the forefront of ad tech. I'm just wondering how you're able to match up your analytics and data and targeted advertising on the linear networks with the offerings that the various digital platforms are doing. Just wondering when that might be showing through or is it starting to show through as some of this modest sequential improvement.

Well, it's certainly beginning to shine through, but I think there's a lot more opportunity. The thing to keep in mind here is we've got to differentiate between the traditional linear and D2C advertising. Obviously, on the D2C platform, we are enjoying all the benefits that everybody else enjoys in terms of being plugged into all the key marketplace platforms and taking advantage of data partnerships in the marketplace. But also on the traditional linear side, it's important to remember that with the shift in the distribution landscape, we've got a much greater share of virtual MVPDs in the mix. That opens up opportunities for us to do targeted advertising with dynamic ad insertion within the linear streams. And those are some areas where we see additional opportunity. And if you take that together with the fact that JB is bringing in more and more ad-lite subscribers, that drives additional scale that not only drives inventory, but also a real scale advantage as we increase our reach across the combined platform. So to answer your question more precisely, I think it's starting to come through, but this is going to be a growth cycle, I think, for many, many years to come.

We'll take our next question from Kannan Venkateshwar with Barclays.

Maybe one on the JV. When you think about the Disney JV with Hulu and Disney+, is there an opportunity maybe to add other services? Does this become kind of an anchor? And are you viewing this long term as an opportunity to maybe bring other services into the fold as well? And is there also a role for some degree of exclusivity in the sense that when you go to market with Disney on a standalone -- or Max on a stand-alone basis and a bundle, obviously, the price difference has to be attractive enough for consumers to go towards the bundle. So is there any kind of a different approach as you think about what kind of content becomes available across the bundle and individual services? And maybe one on advertising. I mean, your advertising increases or year-over-year change in DTC is now starting to become meaningful enough to offset bigger and bigger portion of the big clients in linear. I think it was about 30% offset this quarter. Is there a point over the course of maybe next year or 1.5 years where you see this becoming a big-enough driver to offset a big part of your linear ad declines?

Thanks, Kannan. On your first question, look, we think this proposition of Disney+, Hulu and Max is incredibly robust and compelling. You've got truly -- when we think about a lot of what's happened, as I said earlier, around people trying to figure out whether every individual company could invest sufficiently to deliver something great for everyone in the household, the reality is we've, I think, all learned somewhat painfully that the expense and frankly the excess of content from a consumer standpoint was way too much. And this allows us to come back. And when you see that package together, you have the greatest offering of kids and family content, the greatest offering of adult fare, the greatest offering of scripted and nonscripted content. So we don't think we need anybody else in that package to make it incredibly compelling. And when you see the dynamics of the existing landscape, obviously, Amazon and Netflix are both incredibly compelling, have great offerings and have become sort of utility. You sort of look at people saying, I need that plus one other package at a very attractive price, those two -- our bundle plus one or two of those other services pretty much, I think, can make up the entertainment experience for most consumers very happily. I think it will put more pressure probably on independent services from a churn perspective because they'll see likely more and more serial churners, people who come in and out on a much more ad hoc basis. And so we do think this package can be an anchor tenant of every households entertainment experience. And we don't think there's a need at this point for anything more to it. Gunnar?

Yes. Look, I mean, in terms of replacing linear ad sales, again, one important point that I want to reiterate, and we've made this a couple of times before, I think it's too simplistic to just look at, okay, we're doing, whatever, $7 billion of linear advertising today and that's going to transition elsewhere because the viewership is transitioning elsewhere. I do believe that we're going to see a very, very long period of coexistence. And feedback we're getting from the marketplace and the success we're seeing in our ad sales go-to-market, I think, supports that. So those environments are going to coexist. But as I said before, we are seeing significant acceleration on the streaming side. We've gone through the CPM benefits that we're getting with a more targeted and more direct advertising approach. And we are seeing that there is a long runway for inventory growth on the streaming side as well. Again, 2 years ago, everybody thought that this was going to be an ad-free environment. I think we can clearly conclude that, that's not the case and we're still in the early innings. If you just compare the penetration of ad-lite subscribers as a percentage of the total subscriber base, it's growing, but still from a lower starting point. if you look at ad loads and a lot of the offerings -- by the way, specifically for HBO, which for years has had zero advertising embedded and we're taking very careful steps still to increase that, yet we're already seeing pretty significant.

We're only doing a 30-second spot or a 60-second spot. And for those that are purchasing ad-lite, I don't -- I think there's an expectation that there would be more advertising than that. It wouldn't be approaching any kind of significant density, but you could easily go up to 2 or 3 minutes, double or triple what we're doing now.

And if you look at the combined company, as we said in our prepared remarks, I mean, the combined company advertising trend is still down, obviously, with what we're seeing in linear. But it's gone from down 10% to down 7% and that's really driven by some of that support we're seeing in the streaming world.

We'll take our next question from Rich Greenfield with LightShed Partners.

I wanted to follow up on JV. You mentioned the buy flows and sort of how this will work from a both of you adding it into those buy flows. But how about the marketing? Like when you walk through -- I'm sure everyone who's on the call has walked through JFK, you've seen the massive Disney-Hulu advertising. Like are they going to be marketing House of Dragon this summer when this launches? And conversely, when things like Moana 2 hit Disney+, is Max going to be promoting like sort of the overall content offering among, not just your services, but theirs as well? I'm just trying to understand how this will functionally work. And then just because it's obviously topical, it doesn't look like Paramount+ is going to exist much longer, I think probably most people now sort of realize that. If that content is up for grabs, how interested are you in licensing a wide swath of kind of Paramount's sports content, entertainment content? Anything you could talk about would be great.

Thanks, Rich. On the marketing question for the bundle, look, both parties will continue to market clearly their offerings. And obviously, if you think about the majority of the market spend, it's really related to content marketing. So each of us will still have responsibility and we'll continue to market our content on our -- from our individual companies. And those will be attributed to the Max service or the Disney+ service or the Hulu service. In the performance side of the house, I think you will see a heavy lean-in on the bundle and it will be launched and then we'll do obviously more heavier lean-ins periodically throughout the year. But my point about the buy flows, Rich, is that even if we're individually marketing our services -- or our content, I should say, the reality is once you get to that landing page, once you get to the top of the fold on our buy flows, the bundle -- this bundle will be prominently positioned such that people will see it every time they go in through the buy flows. And so whether it's marketing of individual content pieces, marketing of individual services or marketing of the bundle, you won't be able to not see this offer as part of the buy flow, whether you're coming in through Max, Hulu or Disney+, which is the prominence that we think is really important and visibility to help drive more -- obviously, not just awareness, but ultimately subscriber growth from them.

And look, we're always looking for good content. We structured a deal a while back for South Park, which has been a great product for us. When NASCAR came available for the summer, we bought some NASCAR. We have hockey, which we've done and -- which we added in the last few years, we're having a lot of success with. So any content company that we're -- we bought a movie output deal with A24. Anytime there's an opportunity to buy content that we think will enhance our offering, whether it's a specific piece of content or whether it's a broad swath of content, if we think it can provide a better consumer experience and strengthen our offering, we're always looking at opportunities.

And we will take our final question from Steven Cahall with Wells Fargo.

So David and Gunnar, with a continuous improvement mindset, it seems like you have some tools that could help reaccelerate EBITDA. And then I think there's some concern about what you might be willing to do to match on the NBA rights. So I'm just wondering if we can think about these things being tied together, do you think you can find enough cost improvement that strengthens your hand as you think about a more aggressive matching offer to retain some of those rights? And then, David, you said the churn is still above your target and I think this new Disney-Hulu bundle should certainly help that. I think you've also maybe got a bundle that's rolling off towards the end of this year with AT&T. Can you just help us think about some of the churn benefits you get from bundles and then some of the ARPU dilution which usually hits? And on a net-net basis, do you think that these improve the value of DTC earnings over time?

Thanks. Look, churn is the -- you need to have a great product. You need to have great content. But the churn is just a killer in this business. And so we have been hyper-focused on it. And it's not one simple answer. But the churn is down dramatically and we measure it daily, weekly from when we launched this business. It's not in our target because our target is that it should be extremely low in the -- with a 2 handle. That would be -- that's when your business starts to be really healthy when you're below 3. And so JB, why don't you talk -- we have very specific initiatives on churn. Certainly, bundling is a big helper. A lot of these deals that we're talking about with players in Latin America and in Europe where you're working with an existing distributor that you have a relationship with, that's hard bundling in many cases with users, have different characteristics that are quite attractive. But we need to go at this as like an attack mode. JB?

Yes. Well, I think, Steven, to David's point, the fact that up until we launched in LatAm, our ad-lite offering and SKU was only in the United States for HBO Max. It's a good example of where, as we look to partner with all sorts of distributors across the world, oftentimes you're right, there is pressure to do it at a price point that is more attractive and less costly to the partner. And so launching that SKU across Latin America in a number of markets in Europe not only ultimately helps us go after a new customer segment that's more price sensitive at the lower end of the price points, but also allows us to work with partners who are more price sensitive in those partnerships and find a way to make it more affordable for them to get into business with us while at the same time not seeing ARPU dilution because that SKU and success is our highest ARPU SKU. And so we get the benefits of new distribution from new customers and better partnership opportunities by getting that SKU out into markets and into partnerships with new players. And the LTV, I would say, which is obviously the other metric that we track very closely, our bundled partnerships generally do have some of the highest LTVs we see. And so obviously, we evaluate every deal on its own merits. We make sure that we're making the right trade-offs. But we look at both ARPU and LTV as the core metrics when we think about the values of those partnerships.

This change of working with existing distributors is really meaningful. Because these distributors, cable operators, broadband players across Europe with the innovative deal that Chris did, what they're basically saying is that they want to take part. They want to be part of the content opportunity and the content economics in the new world. And so when you're working with an existing distributor where we have all these economics against our cable business with distributors in 180, 200 countries around the world, they don't want to see that relationship go away when people start consuming on -- through broadband, on app, more contemporary products. And so they're starting to really recognize that there's a real opportunity for them as well in recapturing those economics through broadband product. Why should they stand by and let somebody else get the revenue share on viewership of the quality content that we have that we're transitioning over a period of time from free-to-air and cable to more contemporary app products? So the fact that we're working with broad distributors and they're starting to recognize the value for them to be hard bundling, marketing, driving this to recapture that younger consumer is a very, very good trend for us and for the industry.

And then, Steve, on the continuous improvement mindset, again, it's -- I think it's important to take a step back. The large part of this company and maybe the entire industry just was never very focused on financial discipline. We have dramatically changed that. We have a completely different mindset across the entire management team now. And that starts from the creatives who know that the creative stories need to be great, but we're also running a business. And we have so many different processes in place now and some of those pay dividends over time. Again, I mentioned the content workflow systems in my opening remarks here. If you designed Warner Bros. Discovery today, you would not create 12 different content systems, 14 different teams, the issues that HBO Max faced in '21 where they tried to roll out the product and were simply not able to get our content assets through the pipes because it was all duct taped together. We're in the process of working through all that. My own financial systems, the corporate systems, we're still ripping out 5 different ERP systems. I have 225 financial boundary systems that we're replacing. These things are paying dividends over many, many years. And what's also important is the one company mentality that just didn't exist on the Time Warner/ WarnerMedia side, everybody is fully focused and fully aligned. Our linear teams are proud to deliver the cash flow that we need as a company to fund our investments. They're proud to deliver the content regardless of whether it works on linear networks or whether you have applied it on [ sets ] working in the D2C space. And...

And one company really -- you really see it in the ability to market globally. You saw it with Barbie, Wonka, with dune: Two, with Godzilla. You saw it with House of the Dragon, The Last of Us. When we launch House of the Dragon again, every platform, every platform everywhere in the world will be promoting it. But it won't be just in spots, it will be all of our talent talking about what's coming up on Max. And it's something that's become very attractive and it's recognized in the community, that this is a place where if you create great content, that the Warner Bros. Discovery team will globally get behind it. People will know it's coming and we'll generate a lot of energy behind any great content. And so I think that's becoming one of the signatures of this company: one company and the ability to market globally like no one else.

And even in our growth business under JB and Casey, we're still focused on this. There's a difference between an investment and an expense. And there is -- it's not a coincidence that we're leading in terms of profitability while we're getting ready to significantly accelerate our growth over the next couple of years.

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time. Goodbye.