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spk01: at this time, please press the star followed by the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Once again, to ask a question, please press star and then one now. And our first question comes from Doug Mitchelson from Credit Suisse. Your line is open.
spk02: Thanks so much. Good morning, everyone. One for David, one for Gunnar. The T-Mobile relaunch of a streaming live TV service was certainly interesting, and you talked on this call about distribution being relatively broad on all platforms. With the Discovery Networks and the standalone $10 a month Vibe service, separate from a new sports-focused $40 bundle of channels, can you talk about the strategy there, and then whether this would allow other distributors to pursue a similar strategy? And then for Gunnar, I was just hoping for an update. I know you gave the cost investment in digital initiatives, but not the revenue. I was just hoping for an update where 2020 is shaping out in terms of losses on the digital investments and what's the path forward from here into 2021 and beyond for that. Thank you both.
spk03: Great. Thanks, Doug. Good morning, everyone. We were very surprised. with how T-Mobile decided that they were going to bundle our networks, particularly because we have a clear agreement where our networks are required to be carried on all their basic tiers OTT offerings. So let's just characterize it this way. We're in active discussions with them to quickly resolve that issue. We don't believe they have a right to do what they're doing right now. And they know, it's very clear to them and they're focused on it. Okay, that's interesting. Thank you.
spk09: Okay, Doug, and on revenues and losses from our next generation initiatives, remember we started the year with the guidance of a billion plus in revenue and losses of roughly 600 million. We've obviously pulled that, but what I can say is that we have continued to enjoy some revenue growth. All of our numbers include contributions from our direct consumer portfolio, obviously not at the level that we originally envisaged, but we're very pleased with the progress. We've also reduced some of the investments, but continued prioritizing the strategic build-out of the portfolio. So we still expect a slightly increased investment number here for the year, and we'll say more later. And also for 2021, it's a little bit too early, but again, we're fully committed to the discovery future and the direct-to-consumer space, and we'll make all efforts to support that.
spk02: David, thank you. David, if you'll mind me following up, because you did mention that you had a lot of the cable deals done this year. Have you already sort of, do you have line of sight on partnerships for the launch of your OTT service in the United States? In other words, is the distribution partnership end already wrapped up or well enough underway that you have line of sight and visibility, or is there more to do there before you're really ready to launch that service?
spk03: Yeah. We're going to go into real detail. We're going to do an extensive discussion with full disclosure in early December, which we're super excited about. We will take you through in every category where we're going, how we're going, why we think we're advantaged. how globally we think we can attack it, who's helping us. We have been, the whole company has been focused on this. So I'd like to, it's in early December, we'll come out with the whole package. I think you'll like it very much. We've had the benefit of being at this for a very long time, direct to consumer around the world in different ways. We've learned a ton. We see areas where it's really working and why it's working. And so what you'll see will be the benefit of all of that. And as we announced at our last call, and as you saw, as we talked about this morning already, we certainly recognize the value of having distributors, multiple distributors supporting. And distributors have recognized the value of having unique, content that helps their platforms. And a good example of that is Sky, as well as multiple distributors across Europe that we've already announced that will be helping us. Just one other point. We've had a really strong year on this issue of how do we get great content to people, engage them in our brands, grow our viewership. And it's really reflected in the fact that we've been able to get all of our affiliate deals done this year here in the U.S. with some great distributors, large distributors, with very strong pricing, with all of our channels being carried. And it's a great deal, really, for both of us, because we're way over delivering. They're selling into our channels. And when you look at the overall package today, the real value here, with so many reruns, it's basically sports news and us. And who knows what's going to happen now with political? But news looks like it could potentially go back to normal, in which case there'll be really a big added benefit. But we've been able to get full carriage of all of our channels with big increases. And I think that really reflects the great work and the great IP that we have domestically here in the U.S. And the fact that we're number one for women, we're number two for women, and we have a real broadcast equivalent or higher on many nights than broadcasters. And we'll talk about that later, how we're advantaging ourselves on that. Thank you both.
spk01: Thank you. And our next question comes from Rich Greenfield from LightShed Partners. Your line is open.
spk05: Hi. Thanks. A couple of questions. When you think about discovery strategy that's coming, I know you're going to announce it soon, but just conceptually, wondering especially overseas, how does Eurosport fit in? I mean, are you thinking about having – We've seen companies like Disney create sort of a siloed approach where sports, ESPN+, is separated from Disney+, and Hulu. They kind of have sports separate from everything else. As you go to market, is the thought when you talk about sort of an everything discovery, does that include what you're doing in sports overseas, or are you thinking about that as a separate product? And then two, you made comments in the Q2 release. You talked about how abandonment of some MVPD deals put pressure on subscription revenue as you sort of prepare yourselves for D2C. It sounds like from your commentary that that's expanding and there's more markets that we're playing in beyond the Nordics that we're playing into that pressure this quarter. Could you just help us understand sort of where you're making those decisions to sort of sacrifice short-term affiliate revenue to position yourself better overseas for D2C?
spk03: Sure. Thanks, Rich. Well, first, we're the leader in sports in Europe, and we're the leader with local IP. And the real advantage that we think we have, and we'll get into more detail in December, is you have mostly big U.S. services with a little bit of local. And we have dramatic local entertainment. We have all of our brands and cable content in language in 200 countries. And all throughout Europe, we have local sports. And we do have, as you know, some other local sport like the PGA. But one of the great things about this company, because we're in 200 countries, we have the ability, like we did in Denmark, to say, hey, we might be able to take one step back and two forward. How would it work if we opportunistically take all of our local content, all of our local sport, and go to market? And what does it look like? And what is our SAC? And who will work with us? And how quickly can we scale? And so when we talk to you in December, we have a lot of learnings on what's worked and what hasn't. When we can take one step back and we think that we have the goods to go two steps forward, we're now basing it on metrics and on knowledge. We think we can do two. We think we really have a free cash flow machine that will continue for a very long period of time to generate real return with great margins, but then we'll be investing thoughtfully and knowledgeably above the globe. We've been holding our global content to go at it, and now we're going to go at it in a way that we think is quite unique, and I've said it for a long time. Local content, all of our existing genres local, and looking at this opportunity to add local sport, and in some cases it could also be local news. It's a big differentiator for us. Everybody else is looking at going above the globe or even expanding into other countries. And they're facing two issues. One, holy cow, I don't own any of my content outside the U.S. What do I do now? So do I go buy it back? Do I wait to create it? Now it's going to take so much longer to create. So that's a real issue. We don't have that issue anymore. And we have an extensive library as well as, you know, the real local elements. So I think as you look at all the other players, great players in the marketplace, they're at a huge disadvantage here. And we think we're at a very significant advantage. And so we're going to play into that. And we're going to play into it hard.
spk05: Thank you. Really helpful.
spk01: Thank you. Our next question comes from Michael Nathanson from Moffitt Nathanson. Your line is open.
spk11: Thanks. I have one for David and one for Gunnar. David, you know, on the upfront, I know the story was that you guys definitely held out for more pricing. I wonder, can you talk a bit about what you actually achieved on the pricing side? You know, how much inventory would you sell versus the past? And just when you look at your premium product toward the best pricing versus broadcast, how far is that gap? And do you think it meaningfully closed this up front? And then for Gunnar, I know we're waiting for Investor Day sometime in December, but just thematically, how do you think about working capital in a more DTC world? Do you think anything changes within the business model where maybe it will invest more in content and amortize it? But just give me a sense of maybe the impact on cash flow as you build out more DTC products globally. Thanks.
spk03: Thanks, Michael. Well, look, I think a number of things worked our way. Our content certainly has a real familiarity and comfort. Our characters, our brands, and we're back to 90% of production, and we were producing content throughout the whole pandemic, and we were shooting a lot of it at much lower prices. We found that doing authentic content with Joanna Gaines or with Guy Fieri or with Mike Rowe in their house. That all really worked for us. And the net of it was when we went into the upfront, our share was significantly up. We're the only player now. The Scripps deal and the fact that we've really invested in our content significantly when others haven't over the last couple of years, our share is just growing and growing. And right now, What we put together is not just broadcast equivalent, but we're higher very often than most of the broadcasters, if not number one, on many nights with an unduplicated reach that when an advertiser looks at us, they say, wow, for reaching women, they're better. And now the broadcasters are the traditional broadcasters. either haven't been investing or they can't invest now. And so we have fresh content. And so when we looked at it, we said, there really is a win here. We did, I believe we, I know that we did better than everyone, but it's more than that. Our CPMs have been kicking up, but maybe we get an extra couple of points. We established this discovery premier package. And in those cases, we're charging dramatically more. So the broadcasters are, 60 62 64 and we're in the 40s the high 40s the mid 40s the low 40s you know and we go up 50 but we have better reach with more original content with more engagement and um we found that really the ability to reach women with us and the engagement and the brands and the brand affinity so i think we did great on the up front much better than we've ever done. I think we established all the work we've done over the last three years of saying, here's what we are, here's why we're more valuable. In the long run, there's an argument that we should flip. If the broadcasters are running mostly rerun content and we have original content, then why should they be in the 60s and we be in the 20s? If the core of the package is sports news and us, and we can provide consistent and reliable original content with high engagement, why shouldn't we be in the 60s and they drop? So I think we're really pushing this issue and getting a lot of traction that it's a real win-win. And I think John Steinloff gets a lot of credit. We've been working on this for a couple of years, and we're really breaking through. And we see it in Scatter. We see it in Scatter, a lot of strength because we have a lot of original content and we have a lot of momentum.
spk09: Michael, on your free cash flow and working capital question, two things. Working capital, I think the direct-to-consumer business in and of itself is a little more beneficial because you get paid upfront by your consumers directly as opposed to the TV cash cycle, which as you well know, includes some very long payment terms with the traditional uh business partners so so that's a positive um from a higher level for the for the free cash flow overall obviously uh any startup business any growth business uh you know has has upfront investments uh as we're you know building scale to monetize uh the the structure that we're putting in place uh up front so but as you know we've been working on this uh for two years very pleased with the progress of the um technology uh platform so that that's an area where we have a bit of a head start We've also been hiring personnel. We've been producing content. As you know, the big swing factor and the big variable factor for any future expansion is really subscriber acquisition costs and here. we will be willing to get behind anything that's really successful from a customer lifetime value perspective. And clearly, you know, there is a lot of variability in there. And there's also a little bit of the more successful you are, the more growth potential and growth you're seeing, the more you're spending against it. But again, if you take a step back, I'm very, very confident in this company's ability to generate free cash flow. and investing in our own organic growth is our number one priority. So we'd be willing to get behind that.
spk11: Right. It doesn't sound like, when we look at other companies' pivots, the cash flow has been really, really consumed by the pivot, but it sounds like this is more manageable for you given the investments you've made so far.
spk09: That plus, again, I mean, we've been saying this all along, we're also just operating in a very efficient model with our global, truly global footprint. the platform in place, and very efficient content joiners. So, yes, we should be better off than others.
spk03: And we think, interestingly, that this grand experiment that we're all unfortunately going through here with the pandemic and operating remotely, we've learned a lot. And we've also learned, you know, on the content side, how we can produce content for less. how that content can be more engaging and more compelling, how do we produce content, the fact that we're 90% back in production. And in the overall cost of our company, we think that there's real opportunity, and you see it in the numbers, you're going to see it further. It's revealed real opportunities for us to continue to reduce costs in ways that shouldn't affect performance or investment in content. Investment in content in the context of having the amount of original content that we need. We may be able to reduce investment because we could produce for cheaper and use that investment as we pivot to substantial exclusive content for our global platform, direct to consumer. Thanks, guys.
spk01: Thank you. Our next question comes from Jessica Reeve-Ehrlich from Bank of America. Your line is open. Thank you. A couple of questions.
spk00: First, you know, you've been really aggressive on the cost side. It's obvious in these numbers as well. But you've seen maybe under the cover of COVID or just because the industry is transforming, you've seen a number of media companies announcing really significant reorganizations over the last couple of months. You know, how do you think about the structure for discovery? Is there room to continue to do? How are you thinking about that? And then separately, David, you mentioned the Sky Direct-to-Consumer offer, which we believe is a rebrand of Deep Play as Discovery Plus in the UK and Ireland, and you've added a subscription tier. What's the rationale for rebranding the service, and how did you decide on that £4.99 price point?
spk03: Okay, thanks so much, Jessica. There has been a lot of restructuring, and I think – That's a certain strategy of viewing all IP as one set of IP. IP is IP is IP. We don't believe that. We have a team that produces food content. We have a team that produces crime content. We have a team that produces natural history content at Discovery. And we think we got the best teams. They understand the brands. They also know the best producers. We have the best producers engaged. We own a lot of the production companies with Mike Freeze, with all three. And we think this idea of continuing to invest in great creative people, great content, and having them understand a lane better than anybody else. The idea of producing HG right now has never been stronger. Kathleen Finch is one of the best creatives I've ever worked with. And she's got a great team. The idea of dismantling that team and saying, OK, let's just produce shows. I think that may be good for cost. And it may work out if you're just doing broad entertainment and you're taking pitches. But for us, it's working for us. And I think it's going to really drive continue to drive this. The the the two engines that we have. One is our existing platforms, you know, outside the U.S. We're seeing some real strength in the traditional ecosystem. And our share is growing, and we're doing very well, and we're generating massive free cash flow domestically and internationally. So we're not running from that. We think we're going to be able to get better pricing, as I've said. We're getting more share. If news calms down, we may get a lot more. And as these other companies decide, you know what, let's move away from this platform, I think more and more people are going to what's really sticky. and consumers can see where people are investing. And so I think that we're going to get a real benefit from that. Having said that, I think we can save a lot of money, but we're not going to do it in the area of content, because it's going to pay off on both. The great content that we can create, we're learning a lot about what people want so badly that they'll pay for it. And how do we create, you know, and where do we put content? We'll make those same decisions, and we'll talk about that in December. And we've been at that now for a very long time, quietly. But we think great content is what our company is about and owning it globally. That is what Discovery is. And that's what we're a global IP company. And we're not a distribution company. And so it's not a sidecar for us. It's what we do for a living. We'll talk in December about what we're doing. You can get a little bit of a hint of it with Sky. We think that a global platform that we can promote on our 10 to 12 channels, free to air and cable around the world, that we could have a mix of content that's truly unique with huge scale is going to pay a big benefit for us and will differentiate us locally and globally, and Sky is just a piece of that strategy, and we'll explain more of it in December.
spk09: David, I think the only thing I would add, David, is Jessica, maybe less publicly, but clearly since the closing of the Scripps merger, we have done some pretty significant reorganizations that have helped us achieve the performance that we have, and we feel very good about it. There's been a lot going on.
spk00: No, you've clearly cut costs, not even a question. And then just to follow up on what David just said, and everyone's trying to come at it in different ways, but we know that you're going to talk to us in December about your strategy, but on a higher level, can you give any color on how you're thinking about SVOD versus AVOD or a hybrid strategy?
spk03: Well, we're in the AVOD business here in the U.S. with our Go product. We'll talk to you a little bit more in December about that. It's going, that has gone very, very well for us. We've been in the market with advertisers, with the upfront, with that product. We think we're going to improve that product in many ways significantly that'll have some, that'll have some real opportunity for us. Ultimately, you know, I think that getting, we need to get our content in front of everyone everywhere in the world, but we'll, you know, we'll take you through what that balance is and, and which piece of that we're going to go at hard. We've thought about it a lot. We've already been at it a lot. And we'll give you the detail in the back up in early December.
spk01: Thank you. Thank you. And our next question comes from from RBC Capital Market. Your line is open.
spk07: Great. Thanks for taking the question. I wanted to ask about U.S. affiliate revenue trends. Between the pricing visibility you have following your recent renewals, potential upside from the new bundles like the entertainment-only tier on T-Mobile's T-Vision, and with what appears to finally be some relief on the pay-to-be sub-decline trends, how are you thinking about the sustainability of the recent affiliate revenue strength looking out to the medium term, perhaps into 2021? And just on T-Mobile, I thought your commentary over there was pretty interesting. Sounds like there's some friction with how programming lineups ended shaping up, but one could argue that the entertainment-only tier was a major win for you. So I'm just trying to first better understand that relationship, and second, see if you think we'll see further changes to how linear bundles are structured as you lean into your DTC strategy. Thanks.
spk03: Sure. Thanks so much. Well, if we were encouraged by Tom Rutledge's performance, I mean, it's pretty compelling. He's running a hell of a company and the beneficiary is the country getting more access to broadband and turning the corner on cable subs. Comcast had a very good quarter. So it feels like sports was off the platform. We were in the middle of a Tough pandemic. People were maybe saying, you know what, let me go buy Netflix. Maybe that's good enough. It's hard to predict these things. The good news for us is we're on all platforms. And we probably have the best carriage in terms of skinny bundles. Our content has never been stronger. Our scale has never been higher. And we've done very well in all of our renewals and getting everything carried. And so what looks like it may be a stabilization is very good for us. On T-Mobile, I think I've said enough. In the end, you know, our stuff is carried on the broad platforms. And then it is good for us if, in addition to that, someone wants to take the great content that we have and offer it in a smaller bundle for less money, that's good. But not that way.
spk07: Understood. Thanks so much.
spk01: Thank you. And our next question comes from Michael Morris from Guggenheim. Your line is open.
spk12: Thank you, guys. Good morning. Two questions for me. First, I'm curious how you're thinking about the implications of an increasing amount of peer content on these free ad-supported, over-the-top services. Do you think that populating those is creating sort of a growing threat to maybe the existing economic model? And as you think about your products going forward, Just how you think of the balance of having, you know, your own controlled app environment versus selling your branded content to third parties like Pluto or Tubi, Roku General, guys like that. And then second, maybe just a little bit more specific on the investment and content going forward, particularly into the DTC launch. Are you expecting a meaningful step up in your cash spend in the 2021 to support the product portfolio? And you talk about the value of the library and how that can support you. Is there a way to quantify how much that library, that deep library you have can benefit you in terms of how much content you're able to serve the consumers? Thanks.
spk03: Thanks a lot, Michael. Look, there is a lot of content out there, AVOD, SVOD. The good news is that there seems to be a big appetite. One of the challenges is curation. You know, the idea of, hey, here's more and here's more free. I think in the end, people don't just want more stuff. They want stuff they know. They want stuff they love. And they need to be able to curate it. I think that Iger has been quite clever. In some ways, it's a little bit retro, but it's quite clever with the very successful Disney+. If you look at it, you know, I'm an old cable guy. And when people watch cable, it works because of curation. Everyone has their favorite six channels. There may be 200, but everyone has their favorite six. When you look at Disney, you see those handles. You see Marvel. You see Star Wars. You see Disney Family. It's very clever. They're always together. And it says in a blaring light, we're not just a whole lot of stuff. Those are handles where you can come in and see the stuff you love. And it's almost like those are the five channels. And so it's quite compelling. I think the challenge the marketplace is having is they're just a huge amount of content that's the same. Movies and scripted. And they're kind of yelling above each other. Hey, I got this new series. Well, it's hard. Here it is. Here's what it's about. Here's who it's starring. And so in some ways, I think it's very good for us. that the marketplace is getting driven with a huge amount of dollars, and people are getting more and more used to paying and going to content and consuming it on all platforms. That's really good for us. I think what's even better for us is that all that stuff looks the same, and it's very expensive to market. You have to explain what the series is about, who's in it, why they should want to see it. They already have all this other stuff that looks a lot like it. So we'll take you through it, but we think that our library, we sell very little content. We've been holding our content for this moment for a long time. And we're going to go very well with everyone. We're going to look very different than everyone. And when people see our brands and our characters, they're going to know very well, you know, who we are and whether they like us and whether we have real value. And I think there'll be a lot of comfort in looking at us and not saying, oh no, another 50,000 hours of content. They'll look at us and go, I think that's the stuff I love. And we'll talk to you more about it in December.
spk09: And Michael, from the perspective of the content cost or investment development, again, it's too early for guidance for 2021. What I will say is we are willing to get behind an investment if we see a strong ROI for us, as we have in the past. But that said... to your point, there is a lot of value in our library, and not only the library, but also the current content output in our traditional ecosystem that's already existing 8,000 hours a year that obviously any new product could tap into as well. So again, as I said earlier, I think our profile will always look better with less cash burn than what others may be able to do.
spk03: We're just we just take a look at what we have and we've been holding onto it. And this idea that you can sell your content outside the U S you can sell some of your best stuff to other players and still do well. You could sell some of your best stuff to three other players and then come out with what's remaining of that and do well, or have your stuff be non-exclusive because a lot of other people have it. You know, those strategies may turn out to be good, but, You certainly make more near-term money, but we think it's dilutive and it's confusing.
spk12: Thank you very much.
spk01: Thank you. Our next question comes from Canon Venkeshwar from Barclays. Your line is open.
spk10: Thank you. This is David Joyce for Canon. Your advertising front, you were ahead of expectations in the quarter. Could you provide any context on what the digital strategies have done for you there from the Discovery Go apps or from your targeted advertising efforts? And also, wondering what that opportunity set is going forward. Is that opening up the advertiser base for you? And then just one final thing on the upfronts, given the timing shift and the advertisers – tending to seek for a calendar upfront. Is there any structural implications for moving to the calendar upfront from the broadcast? Thank you.
spk03: Thanks, David. We are doing very well on the digital side, and our pricing is very good. We've been taking those dollars on go, and it's been strong. We'll talk to you more in December about how we think we could take more advantage of that. October, as we said, October was flat. November feels good. And I think unlike maybe many of the others, we did have some political, but it wasn't in the top five of our advertising. I think we've been doing well because we're a lot more confident on what we have in the marketplace and the value that we present. And we've been doing very well in scatter on pricing. We expect that to continue. And we've been, you know, we are forming this alliance with, with many of the advertising agencies that are looking at the restructuring and saying, who's still doing a lot of original content that's dependable on this platform? Where's the engagement? And what's the pricing? And so I feel like we're breaking through on that. And on the upfront, the upfront was very healthy for us. There was some talk about the upfront you know, really changing dramatically. I think there will be a calendar up front, but the up front was quite healthy.
spk10: All right. Thank you.
spk01: Thank you. Our next question comes from Steven Cahal from Wells Fargo. Your line is open.
spk08: Thanks. First, I just wanted to follow up on Cutgun's question. It sounded like your sub-decline improvements were more idiosyncratic than industry, and we've certainly seen some MVPD recent reports looking a little better. So just wondering, you know, if everything is equal going ahead, we would have even further improvements in your universe sub-declines just driven by some of that MVPD improvement. And then relatedly, we've definitely had questions about whether or not you've got an unusual amount of pricing lifts this year with these new renewals. So just wondering if you could comment on whether that's correct or whether the kind of 2% we're seeing now is more like a decent run rate for domestic affiliates going forward. And then just on the DTC side, I know there's a lot that's going to come in December. Golf TV is a product that's already in the market. So I was wondering if you could give us an update on how Golf TV has performed so far this year. I think you launched it in a couple of new markets. Thank you.
spk09: Okay. Steve, let me start with the two affiliate questions. Again, I don't want to speculate about subtrends. Again, we're happy to see a slightly better number this quarter. Certainly hope that, you know, that might be the case for a while, but it's really not in our control. What is in our control is the degree of carriage that we're getting. And as David said, in all the recent renewals, we've been getting very good results here. So there was some talk in the market about potentially getting tiered or losing carriage for networks. None of that has happened. And again, we closed two more deals today and in this quarter that we talked about today. And if you look at the, if you look at our reported numbers, you know, you see that the 2% growth, you know, you know, 4% sub declines on the, on the, on the, on the core nets. So you can kind of do the math of what our underlying economics are. And as we've said previously, we're very pleased with the deals that we've closed this year that are supportive for this environment.
spk03: One point on the, you know, there's always a balance when you do these deals. you know, we're pretty well protected and which isn't, which is our benefit and the distributors benefit that we're carrying on all tiers that were carried broadly. And, you know, we may have, you know, even though we got significant increases on all of our deals, maybe we could have gotten a little bit more, but in the end, from our perspective, getting that full protection. And I think that that was also something that was easy for the distributor to give, um, on golf TV, um, between golf and cycling and the Eurosport player. We've been gathering data and information. We also have a lot of these other niche products that we've been offering. We'll talk to you in December about what we've learned, how we think what we've learned and where we're really accelerating and where we're finding it's a little harder and the balance with some of these platforms with Avod where people come in and can spend a lot of time and then have another tier where they pay. on some products, like some of the niche products that we have, and whether niche really in the long term is, with some it might make sense, with others we might be better off putting it all together and having a very unique offering. And we'll talk to you about what we've learned about that and why we have this aggressive strategy that we're taking global in December, that we'll talk to you about in December.
spk08: Got it. Thank you.
spk01: Thank you. And we'll take our final question from Ben Swinburne from Morgan Stanley. Your line is open.
spk06: Thank you. Good morning. David, I guess just to wrap up on D2C, and again, I know you want to save most of this for December, but one of the things that has clearly been a point of tension in the market with your distributors is launching a product that might compete with what they sell. And I'm just wondering if we're sort of past that now. I mean, if you look at, obviously, CBS All Access has been in the market for a while. It's a pretty direct competitor with CBS Network. AMC Plus launched recently. Do you think we're beyond that issue with your distributors and now there's much more alignment? And secondly, the Scripps deal has been so transformative for the company. I'm sure you'd agree in a variety of ways. And I know there aren't other Scripps out there. But you generate so much cash flow, have balance sheet capacity. I'm just wondering if you think you'll be more active in M&A over the next couple of years as you build scale, because it seems like you've got a lot of infrastructure, you have a lot of library content, and there aren't going to be 20 global D2C companies, I'm sure you'd agree. So if you're thinking about being more aggressive in that front. Thanks a lot.
spk03: Thanks, Ben. Well, I certainly would agree on the Scripps deal. Ken Law was brilliant. He's a real entrepreneur. He built HGTV from nothing. He took food, which was a free service, and enhanced it and invested in it. And he built a hell of a company with great leadership. We're very lucky he's still on our board. He's been a close friend of mine for 30 years. I've learned a ton from him. And he continues to lean in with us. And it's one of the big benefits that we have. We've become one company. When we bought it, when we bought Scripps, we were generating $1.4 billion in free cash flow. They were generating $650. And maybe we were one three. And we said we thought we can get to a billion. 18 months later, we had over an incremental billion in free cash flow. And it's been sustained in an aggressive way. Our share has grown dramatically. We've taken... all the great creative leaders that Ken brought, and we took that content and took it around the world, some channels, some on platforms. What it showed was in 18 months, we went from 4.7 times lever to below three and a half. If the right asset came up, there's nobody that has more synergy than us. We're in every country. The fact that we have channels in every country, free-to-air and cable, they're not just channels now. They're marketing machines for direct-to-consumer. They're marketing machines for product. And we have infrastructure everywhere. And so what we learned is we can do it, we can do it quick, and we can do it while we're growing our business. Having said that, we have a hell of a global IP company right now that's hugely differentiated from everyone in the marketplace. The marketplace is... behind schedule in feeding their IP. So we never shut down our IP production. We learned that we could produce for less more authentically during the pandemic. We're back up in business. And we have a hell of a hand right now. And we're competing against a load of players that don't have local, can't expand outside the US until they get local. or can't afford to get local. And a lot of what the content that they have looks very much like what everyone else has. And when something comes up, they all bid on the next big item. And so we come out with an educated marketplace, very, very differentiated. And with the amount of free cash flow our existing business is generating and growing in market share, with pricing that looks really pretty compelling on the advertiser side, because globally, Our share and our performance is being recognized. It looks like we got this free cash flow machine that's way outperforming globally. And we got all this IP we've been holding on to and all this IP we've been producing and quietly holding on to. And so I don't think we need anything. If something, you know, there's a lot of people that might say, if we come into you, we'd be more diversified. There'd be a huge amount of synergy there. But from our perspective, it has to help us grow a lot faster or it has to add real IP that we think is going to further differentiate and further scale us. So I think right now we've got a hell of a hand, and, you know, we think. And we'll take you through it in December, and when we take it around the globe, we'll see if we're right.
spk09: Thanks, David.
spk01: Thank you. And that does conclude our question and answer session for today's call. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect. Everyone, have a wonderful day. Thank you. Music Thank you. Bye. Thank you. you
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