Warner Bros. Discovery, Inc.

Ladies and gentlemen, welcome to the Warner Brothers Discovery First Quarter 2025 earnings conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Additionally, please be advised that today's conference call is being recorded. I would now like to hand the conference over to Mr. Andrew Slavin, Executive Vice President, Global Investor and Strategy. You may begin.

Good morning and thank you for joining us for Warner Brothers Discovery's Q1 earnings call. Joining me today is David Zaslov, President and Chief Executive Officer, Gunnar Vedenfels, Chief Financial Officer and J.V. Perrett, CEO and President, Global Streaming and Games. Today's presentation will include forward-looking statements that we may pursue into the safe harbor provisions of the Private Security 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. I will turn the call over to David for some brief remarks, after which we will take your questions.

Good morning, everyone. Two years ago, we said, it's not how much, it's how good. And today, that focus on quality is really paying off. Our commitment to high-quality storytelling, powered by the most exceptional creative talent in front of and behind the camera, continues to be the engine that powers Warner Brothers Discovery. That engine has never been stronger, more differentiated and more important, both here in the U.S. and around the world. Whether it's the White Lotus, The Pit, The Last of Us, a Minecraft movie, Sinners, or the Eastern Gate series internationally, when you look at what's shaping culture today, so much is coming from our studios and reaching audiences on our platforms. These stories aren't just watched, but savored. People immerse themselves in them, share them and return to them. They spark conversation, drive connection and fuel fandom. And that cultural influence and strength is showing up in our bottom line. On streaming, as you saw in our letter, we delivered another exceptionally strong quarter. Over the last 12 months, we have gained more than 22 million subscribers. And in the first quarter, we gained over 5 million subscribers and delivered 339 million in EBITDA. We are firmly on track to deliver at least 1.3 billion of EBITDA in 2025, up 85% versus 2024, and to surpass our 150 million subscriber goal by the end of next year. What's fueling that success? It's multiple growth levers that provide years of opportunity still ahead. Starting with the best stories from HBO, which is delivering the deepest, most consistent storytelling pipeline in its history. It's local language content and local sports that bolster our relevance in every region in the world. That combination makes us really unique. The impact of our stories is then amplified by our increasingly global footprint that still has almost half the world to go. And it's brought to life by a product that has gotten better at enhancing personalization and engagement, but still has a strong roadmap of improvements ahead. On studios, we are also encouraged by the progress in getting back to our 3 billion in EBITDA goal and growing. That's coming from the strength of Warner Brothers Television, the world's leading independent TV studio, which broadens our cultural and commercial impact on the platforms outside of WBD ecosystem with standout shows. It's also coming from Warner Brothers Motion Pictures, where our strategy of a mix of IP-based blockbusters and compelling new originals is gaining traction and delivering results. As demonstrated by the recent big success of a Minecraft movie and Sinners. And Final Destination, which is launching next week, is trending very strong. Looking ahead, we are excited about the strong slate across all of our studios, starting with DC Studios launching Superman in July. We're wrapping on Supergirl and are deep into production on Lanterns, all part of our 10 year plan to reignite the DC brand globally and drive long-term franchise value. What we have now is a powerful combination of a differentiated, profitable and growing global streaming service with a world-class studio business, both being supplemented by the meaningful continued cash generation from our global linear networks. Warner Brothers Discovery's global reach, growth and the demand for our quality content offerings gives us real confidence in our ability to create long-term, sustainable growth and shareholder value. With that, we welcome your questions.

Thank you. And ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star followed by the number one on your telephone keypad. To withdraw your question, please press star followed by the number two. With that, our first question comes from the line of Stephen Cahal with Wells Fargo. Please go ahead.

Thank you. Good morning. So, you know, first, I think there's a lot of industry discussion around your reorganization and some of the optionality that that creates for those assets. I think the biggest debate is just the leverage ratio that global linear networks can handle as we go forward. So I was wondering if you could give us any insights as to what you think a capital structure could eventually look like on an asset like that at some point, what you think a leverage ratio could be that still preserves or increases the equity value that you've got today and how you can get there in terms of the EBITDA and cash flow trajectory. And then on extra members, do you have a sense of how big that extra opportunity could be for Max in the US? Is it a few million? Is it significantly bigger? And how do you lean into all the tent poles you have upcoming in order to help capture those, as I imagine that drives you towards or even create some upside to the 1.3 billion in EBITDA? Thank you.

Steve, this is Gunnar. Good morning. Obviously, I don't want to speculate on capital structures for hypothetical, you know, parts of the company. We are very happy that we were able to get through this reorganization as quickly as we did the internal reorganization that we announced in December. As we laid out, we believe that we are now properly structured to take advantage of whatever opportunities may arise. David has pointed out, you know, how this industry is facing generational change. And we believe there is now a lot more transparency for you guys. You'll see that we also issued trending schedules, you know, several quarters back, you know, clearly explaining what's going on in the two division structure that we have implemented, showing the content flows between streaming and studios in that division, etc. So I think we've done a lot of good work here to create transparency and secure optionality. And that's it. I don't think there's any value in speculating about, you know, potential capital structures at this

point. Restructuring with these two subsidiaries, it's how we run the company. And it also gives real visibility to you and to all of our shareholders to see what we're seeing, to be able to see that we're the biggest maker of content. And we have the largest production operation globally. And we have a streaming service that is really growing with and by putting this structure in place, you're able to see that. And you also see that on on our traditional business side, we were global. It's free to air. It's sports. It's global news. It's differentiated cable brands, all of which can nourish and enhance our existing streaming business. But it shows you kind of how we look at the business. It also gives us full optionality. Having done that work now, not only can we see this and can you see it, but we can move quickly if we decide to change and make a determination on restructuring.

And then, Stephen, on the extra member, a couple of things to sort of size the opportunity and thinking about the timing. Remember, right now we've launched only in the US. It's only available on our retail subscriber base, which obviously is a subset of our total sub base. And the messaging is part of the parallel path of the password sharing initiatives that we have is very soft messaging that will start getting firmer and more visible to subscribers over the months to come. So in twenty five, I think you're going to see some benefits from it. I think it's going to increase and really be a more twelve to eighteen month initiative as it rolls out to more more subscriber cohorts here in the US, globalizes later in the year and into twenty six. And as the messaging on the password sharing gets more assertive over the course of the more of the back half the year and really into twenty six.

Thank

you. And your next question comes from the line of Peter Cipino with Wolf Research. Please go ahead.

Hi, good morning and thanks. Wanted to ask you about your sports strategy on Max understanding that that strategy leverages relationships and licenses that you have to the linear segment. Do you see opportunities to license new IP going forward?

Thanks. Well, you know, the strategy really differs as we look at the global reach of mass. There's a number of markets where it's it's part of Max. There's a number of markets where it's an add on having the sports outside the US has been really helpful to us together with the compelling local content and HBO. It's been an offering that's that's really differentiates us and is it was seeing some meaningful demand. JB, you want to talk more specifically about the US?

Yeah, Peter, we have, you know, I'd say we have we've taken a very disciplined but experimenting with different models to see how in this migration from certainly sports in the US from wholesale to maybe a more hybrid or wholesale plus streaming works versus internationally where generally our European sports business is historically been more like our TNT sports asset in the UK. And all the card sports business, unlike here in the US, and so we have various levels of experiments where their subscribers are paying definitively extra for that sports content here. We obviously have it ingested into our entertainment to top entertainment tiers as we do in in Latin America across all the tiers. We see the power of it from an acquisition standpoint. We see the power of it from a an engagement standpoint. That said, obviously, we balance that with the cost of these rights and we are evaluating them to see, you know, what makes sense because it is hard still to find a business model in streaming alone that makes these premium sports rights, you know, profitable and successful in driving those two metrics. And so we're going to continue to experiment in a smart way. We do think there's clearly opportunities to leverage powerful sports rights as we do with Champions League in in Brazil and Mexico, as we do with our sports rights here. But it's not a one one single model. We're going to continue to experiment and see how we evolve the model to make it successful and profitable at the same time.

In the end, sports is the rental business. You know, for us, Superman, Batman, DC, Harry Potter, Lord of the Rings, those are the core and equivalents of the NFL to us. We own those assets. Game of Thrones, as we build storytelling content that people love everywhere in the world with characters that they love everywhere in the world. And then we could build out that world like we're doing with Harry Potter with 10 consecutive years. In the aggregate, that is where the future of Warner Brothers Discovery is as the best storytelling company in the world with with the most extraordinary library and from the Wizard of Oz to to to DC and Harry Potter and for us to harvest that. Because one of the advantages that we have is that it's there's an opportunity to really begin to harvest it. In many cases, we haven't been doing that. And so that's where I think we'll be spending more of our money and being less dependent on sport, which is a rental business.

Thank

you. And your next question comes from the line of Ryan Kraft with Deutsche Bank. Please go ahead.

Hi, good morning, David. You talked about the strength of Max's distinctive programming as a source of competitive advantage. I wanted to ask, first, how is HBO able to turn out so many standout hits like this to do it so consistently? What's the secret sauce there from your perspective? Second, for David or JB, can you talk about how Max is resonating with different demographic groups, domestically, particularly the younger consumers? And then lastly, I was wondering if you can give us a sense of how time spent on Max in the US compares to time spent in other markets on Max, particularly in Europe and Latin America. Thank you.

Thanks very much. Well, first, we have one of the the best creative executives, you know, the generational talent with Casey Blois, who's been at HBO for two decades. And he's also built an amazing team with Franny and Amy and Sarah and Nina and Nancy. This is a group that have been together for 15 plus years and their ability to tell stories, to partner with great creatives. But they also have a model of quality. When people see that HBO brand, they know that that represents all of that talent. And people have for 50 years been coming to HBO for quality content. And this is the strongest HBO has ever been. The idea of it's not it's not how much it's how good is something we identified that we're not going to flood the zone. We want to we want to be telling the best stories and we want to also be taking advantage of all the great quality content over the years, like Game of Thrones and come out with House of the Dragon. We got Euphoria coming up and a real innovation from that team with the pit, which was a medical procedural. But John Wells and Noah Wiley together with Casey and and and Sarah and and Channing, who runs our Warner Brothers television group. We've really brought the best creatives back to Warner and that together with with that with the great talent we have plus. HBO is a different model for storytelling that we do it very similar to what when when I was at NBC with must see TV. Whether it's Sunday night or Thursday night or Monday night, it becomes a cultural happening people on Thursday night wanting waiting for a week to see the pit and that's part of a philosophy of this company of great storytelling. With a shared experience, whether it's in the theater and then people can talk about it and will or people together on Sunday nights and watching the last of us. That's the core of what we are and it also as you saw with white lotus by having that experience over two months or over four months with the pit. It also it makes stars people feel that they really get to know people in a way that's different than just watching eight episodes in you know in eight hours on a Sunday afternoon so becomes part of the culture. And more and more that's the future of of Max is quality quality quality and that's why I think we're seeing a lot of the growth and that's why we're we think we have a great future.

And

then on the

two questions around engagement in the in the US in terms of the younger demographic. We see a very strong and popular for a lot of the reasons that David just described in terms of the topicality the conversations that people don't want to be missed and the FOMO that people don't want to be don't want to miss. We do well in that younger demographic and obviously, as you think about our lineup of series. Particularly things like you for your coming back, which is one of our youngest skewing and biggest and youngest skewing series and obviously building into. The truly for quadrant

Harry

Potter down the line, we have a number of series that is attractive to that demographic. On the engagement across markets. Latam is is our leader, I'd say, with the most complete offering, partly also because that that market has. Multiple pay output deals, so our film offering is the most complete. As well as obviously all the great output coming from HBO and the US side and we've been at originals for local originals probably one of the longest in that region of the world. And so in Latin America leads the way in terms of engagement, the US Europe are are sort of aligned and a little bit behind Latin America. And Asia Pacific is a smaller piece, largely because obviously our content mix there is largely a US based Hollywood offering and so it's got real appeal, but slightly less engagement, what you see in Europe and the US.

And Casey has a home field advantage, he can just walk down the the down the road and a lot and go into Channing's office with her whole team. And whether it's Harry Potter or the pit more and more a lot of the content, we have really two of the best studios, we have the studio for HBO. And then we have the Warner Brothers TV studio and yes we produce for for Apple and Netflix some of their best content, but that's our home field. Thanks

so

much

appreciate

it.

Your next question comes from the line of David Karnofsky with JP Morgan please go ahead.

I thank you, maybe I'll ask on the macro the release noted no material impact over the last month want to see if you could dig in a bit on. What you're seeing across advertising channels and hearing from your marketing partners and. How that informs your view of the coming up front and then for Gunnar corporate EBITDA was nicely improved or slash quarter and last year, if you just walk through some of the items helping there and what should we think of is kind of run rate permanent savings thanks.

So yeah look the. Starting with the macro question the the good news is so far so good, as you would imagine, you know, for the past. Five weeks or so we've been tracking very, very closely all the indicators internally and externally and the reality is we're not seeing any impact whatsoever to this point. In fact, you know, starting with advertising, which would naturally be the part of our business that would be most impacted by declining consumer sentiment and and maybe slowing GDP growth and you know i've called out some of the factors impacting Q1 and. Q2 and if you do a like for like comparison everything we're seeing right now. Q2 so far is tracking pretty much exactly in line with Q1 corrected for those items that I called out earlier, so I think that is that is good news at the same time. We do obviously look at sort of external projections and and we have a much more diversified portfolio now than we used to have, but advertising obviously would be at risk to some extent. We have the upfront discussions that are that are probably going to go a little slower start a little slower. This year, at the same time, we see that being offset by by pretty strong scatter at this point. And nonetheless, you know we we've managed through turbulent times, you know as a leadership team and you know we would do the same. You know, should the outlook deteriorate in the second half and you know you also saw we did. You know, right after the announcement of the tariffs take some precautionary measures nothing extreme, but you know we will we will manage. Our cost base appropriately for a potentially more turbulent environment here to make sure that we're in ring fencing our financial performance, the corporate. cost step down that you saw on the in the first quarter was a mix that there were there were some smaller one time items, but you know, generally speaking, you know I would expect the the corporate. cost number to be down year over year for the for the full year. So so nothing you know no no trend change there to to call out at this point, David.

Thank you.

Your next question come from the line of which greenfield with light shirt these go ahead.

I thanks for taking the question last quarter going or I think you said that there'd be a net savings from the NBA in. of several hundred million dollars. I guess if we just look at sort of Q one and Q two would be great to sort of understand what Q one would have looked like if you know if you peel back. NBA ad revenue and the costs all costs sort of associated with it, I assume there's a net benefit in Q one, but just any way to sort of quantify and then. You know, as you sort of gave that Q two cost guide and you said that cost would be up year over year, what would it look like I assume it would obviously be down without the NBA but just any way to sort of think about those two Q one Q two issues would be great.

yeah so the short answer is yes, it would be would have been down significantly without the NBA but let's take a step back and. and peel back that onion, a little bit, so it is true, you know, as we said we're very happy with how we. transformed our sports rights portfolio in the context of the the the NBA discussions. We have a very strong portfolio now we've been successful in renewing our affiliate deals which, as you know, you know that part is a major driver of monetization for these sports rights. We did also say that 2025 is going to be impacted by some overlap between sort of you know outgoing and incoming rights. And that that is still a thing you know I would, if you want to quantification for that I would say you know it's it's it's okay to model roughly $300 million cost increase in 2025. Q two is going to take a big part of that there's going to be a little bit of a headwind in Q three as well, and then from Q four on. This should turn you know, initially into a moderate tailwind and then to your point we're going to see very significant improvement in sports rights expenses with the NBA coming out in in. A very material step down from from the increases that we saw this year and again, I think. you're you're more specific question on what Q two would have looked like without the NBA I want to stay away from from you know quantifying that because there are so many different factors playing into it. But again, if you keep in mind that NBA was a very profitable property for us. Partly because of its value for affiliate discussions, we were able to renew these deals without the NBA so so you know next year is going to be significantly better from financial perspective from that perspective. Thank you.

And your next question comes from the line of Jessica we've early with Bank of America securities please go ahead.

Thank you, I guess two questions first on direct to consumer you've entered into a number of distribution agreements are mostly wholesale agreements. Of course, that lower our poo maybe you could discuss some of the drivers, you have to increase our poo over time and you know coming into the year. streaming consolidation was widely expected you talked about optionality do you believe there's still opportunity to scale further here and then maybe just a follow up on the advertising comments. Yes, this macro uncertainty but you've got more tools like particularly in a tech so you coming into the upfront like with a different strategy or approach.

Jessica start on the on the our food question. Look, we always evaluate these deals based on our approval really based on lifetime value, including obviously our poo and the turn dynamics so you're right that we have a number of distribution partnerships with wholesale partners, where we. You know, may take a reduced wholesale rate, but obviously have a turn profile that significantly higher and we evaluate that on an LTV basis that is a creative to the business. In terms of other levers for our food growth there's several. One obviously, as we talked about it, we talked about in the previous call, which in the near term, as we said, then I think in our fourth quarter call. will create some downward pressure on our poo in the initial phase remembering that we were only in our ad. Supported skew was only available as of a little over a year ago in one market, which is the US we've now rolled out in over 45 markets and we're seeing great traction in terms of the demand for that in our mix of gross ads. But they so therefore, but that's obviously at a lower distribution revenue. impact and the and the advertising piece of the our food calculation there is growing and the good news is internationally we're seeing great demand. On numbers in a variety of the biggest markets are up multiples of what they were even 12 months ago, but that's going to continue to grow and the art who was going to continue to expand over time. And so there'll be growth, we think, on the on a net our poo basis from the advertising skew over time, obviously, this additional member extra member skew. will help and as the password sharing crackdown comes we'll also add more subscribers on top of that. There is pricing. components that we think are still you know, in some markets slightly below where we think there's opportunities so price will continue to be a lever that we can push and and then you know, as we talked about on our earlier question around sports and the upsell of sports. We will. will be leveraging the upsells to sports in the markets where we have that, particularly in Europe, which will also add more approved benefits so. Not to mention, obviously, that is, we see engagement as we continue to focus on engagement and the product improvements that we're making again, particularly on the ad light skew. That we have that engagement will translate to more time spent, which will translate to obviously more monetization so. Those are a couple of the levers that we feel comfortable with. David.

yeah. Well, look across the board, the streaming inventory on Max we're seeing just real demand and tremendous amount of value and coupled with the growth that we're seeing you know, for instance, one of the one of the really positive. developments that we see now and for more than I think it's for three quarters is that in Europe. we're net growing when you take a the the decline of the traditional business and then you see the growth of our streaming business and our and our ad light product together. we're seeing meaningful growth across Europe and, in fact, when you look at all of international. What the decline in the traditional business is being outrun by the by the increase in in our subscriber and add revenue so that we're net positive there, which is. You know, a really meaningful turn for us and the fact that that it's substantial in Europe is is is a is a powerful sign in the US. You know we need it we're not there yet we it's not clear that that will be able to to get there on the upfront. will be emphasizing the streaming inventory on Max, which is you know really coveted and with what we have coming up on on Max. there's a lot of demand specifically for specific titles and to be associated with the quality of content and the fact that it's watched. In large groups, which is you know, with the their sports and then there's there's HBO and then we have our films coming in the ability to to affiliate with those films on on ad light.

Robert fishman with maverick napanson. Please go ahead.

I good morning to for you guys, if I can, as you shifted away from the more is better streaming strategy. How does the focus on higher quality content change the way you think about the right level of content spending. At streaming and the overall company and should we expect content spend to come down or is it just a reallocation of those dollars to the bigger bet. Now also be great to hear your updated thoughts on licensing your library and producing original for third party streaming services. You mentioned in the investor letter that the movie do show for Netflix as one example, how do you balance what should be exclusive to MAC and how that evolved over the past couple years, thank you.

Thanks Robert. What can i get you having a terrific run with running point now and and and. On apple. Ted lasso and presumed innocent presumed innocent was a title of ours were to your point we use that title to create a compelling series. Which you'll in hall and and sell that to apple it's a it's a very good business for a shrinking bad monkey avid elementary which we sell to to disney. Where were high quality provider it's one of the reasons why some of the best and the brightest people want to come to us because they're not a captive and they can produce content for anyone. A lot of the content more and more of the content is coming to us but it's a very substantial business that Channing is running and it's important for us. To be able to sell our content to third parties as we look at our titles, there are some where there are many that are really just for Warner Brothers. When you look at the major characters with that that James gunn and Peter saffron at developing with their 10 year plan around DC that is to build asset value for us globally everywhere in the world Wonder Woman Batman Superman. Super girl so those are we look at those as big asset builders of big differentiators same thing with Harry Potter. You know, and why we've leaned in so hard with JK and will be doing 10 years of that you know today we're good what we're announcing the date of our Lord of the Rings movie so there's there's some premium global IP that's recognizable. Game of Thrones those belong to us and they will only belong to us forever because we'll build we're building big assets and a global differentiated strategy around that. So it's those global tent poles together with quality originals that's what makes our motion picture slate it's what makes our streaming business so strong. And but then we have so much IP at this company had a bar Barrow Rooney Tunes and there's there's just a lot of titles. In you know, and with the biggest TV and motion picture library in the world where we can take things like presumed innocent. Or scooby doo and in some cases will find what scooby doo we can sell something you know to Ted and Netflix. And that can get very broad acceptance in the marketplace and then we can follow it with a scooby doo movie and that would be a real win win for us. That will take that piece of IP and grow to a to a point where it's even more valuable for us so it's all about harvesting our IP. But recognizing that the most important IP that differentiates us from everybody in the industry will be used to build asset value. Right

and then and then you from a financial perspective, Robert, there is no significant step up and in content spend that's associated with this. Strategy evolution for streaming we have always been clear we have significant growth ambitions for the streaming service and for the studio. And we will support that growth ambition with you know growing content spend over over the coming years, but that's going to be a moderate increase nothing. No dramatic step changes and then maybe the only thing to add on the you know licensing versus versus internal use point. You know, if you compare our studio numbers today with you know a couple of years ago you'll you'll see that we have continually. Increased the share of one of others output that we're using internally and you see that in our in our company eliminations. And it's just an important point to make that every dollar off in our company profit that we take out in our company eliminations is really to David's point building asset value that is future streaming profit. In waiting, and we have built that internal assets in a pretty significant

way. You know the this idea of it's not how much it's how good you know we laid down that pipe two years ago. And so what you're seeing now is you're seeing the fruits of that strategy and us doubling down on it because consumers are looking at the quality content. And saying that's really what they want and we did get rid of a lot that was a shift from when we took over and bought this company. And we we got rid of a lot of content we and with a lot of noise around it, but it was part of that overall strategy of you know we do we do not want to flood the zone. We want to stay true to the HBO brand and quality is the lane that we thought was open to us and the marketplace has said it's wide open. And that makes shift

Robert as David said is really away from kids volume particularly on the library side purely and some obviously less unscripted and towards. A more pay one movies you know global scripted originals and select local originals and key mortgages.

Great

thanks guys.

And your next question comes from the line of Rick Prentiss with Raymond James please go ahead.

Thanks for taking the questions going to follow up on the on the streaming side obviously you're firmly on track, as you mentioned. As you think about long term, where the bigger drivers as you rank them subscriber growth art who grows cost cutting well what should drive that business. Up into the rise, we go forward and then on the studio side mentioned several times your goal to get back to 3 billion talk about your slate the IP you've got help us understand the pacing to kind of get to that number and stay at that number.

I mean on the streaming i'd say the good news for us not a single or even a small set of levers there's you know several big levers so number one is obviously globalization. As David has said repeatedly we're you know we still got almost half the world to go in terms of rollouts and new markets. Number two is in those markets penetration growth in the markets where we already are and sort of same store sales basis is penetration growth part of that is driven by things like the introduction of a lower priced. add light skew in more markets to sort of go after or price sensitive consumers and that's you know we're only 12 months into that. And I should say on the globalization first globalization point remembering that obviously in the beginning of part of next year, we have the you know, three of the biggest markets in Europe and three of the biggest markets in the world coming online with Germany the UK and and Italy. And so that'll be a big bolster so globalization penetration growth. Our food growth in the same point to respond to Jessica's question earlier and better ad sales monetization in particular. The password sharing crackdown initiative that again will take you know 12 to 18 months to get full of full steam. But we'll create another boost of both subscriber and our food growth through the extra member add on and then. You know, look content is obviously the fuel of this entire thing content is the stories are the product. And the content slate, we have in the case, he and the team have curated over the next 1824 months is stronger than anything we've ever had and more consistent. And so that will be another avenue growth and lastly you know product enhancements David mentioned to it in his opening remarks, but you know we went from not good to good. But we still have a chocker block roadmap that we're effectuating every day where the products getting better and better to go from good to great. And so that will help engagement that will help time spent that help monetization so we got five or six different levers that will help create some real tailwind for us here over

the next couple years. The final one is kind of a strategic attack that we've been on for a long time, which is bundling better together and putting together a bundle that's not just a bundle for price. But that has a better consumer experience, the real opportunity here is people turn on the TV set and they see 1820 apps and they're sitting down with their Google and trying to figure out where where to go. What we did with Disney that bundle here in the US of Hulu Disney plus and Max is very compelling and when you see these bundles and we're starting to roll them out around the world. As people look at who is a global player that we can attach to to get more scale and to try and and to try and find real growth and in those bundles is by definition less lower marketing. What's lower churn you know, so when you see churn numbers. Like we see with Disney and we're starting to see in some of the bundles we're doing around the world it's very encouraging you don't need to remark it to get to some of the same subscribers that are coming in and out one. And to you got two or three players marketing to a product and that product is more satisfying because you can go. Across without having to come in and come out and come in and come out, and so this is an evolution ultimately there's going to be. there's going to be five or six players that may be a few regional players that can do marginally well and they may be overly dependent on rental sports but there'll be a few global players probably five or six. That will it'll be a better consumer experience and some of those five or six may even come together in a bundle to make that experience even more compelling. And you know if you bet on on solving for a consumer problem and providing quality content great storytelling and and a better consumer experience. Better consumer experience always provides huge value creation and so that's our focus, but the bundle, I think, is a big part of it bundles.

And then Rick maybe maybe on the on the 3 billion. target that we put out for the studio. And again, a reminder that's not a that's not guidance for this year, even though we did say that we're expecting to make a very significant step towards that number. This year, but to two levels to answer that question one sort of you know, on the on the on the level of the individual business units, you know there is opportunity everywhere in. In the studio landscape, you know Channing and her team have been incredibly successful with TV productions. And there may be more opportunity, you know, as she manages the transition of you know the business model from a very broadcast heavy. You know output years ago to a more streaming focused model now there's there's margin and ROI upside there. You know, in the film space, you know we're starting to see you know the portfolio strategy come through David has mentioned this a number of times the combination of you know harvesting our own library. And if I P combined with with you know the right level of. You know original films, the right mix of bigger swings and and smaller budget, you know commercially safer films, etc. We you know we're looking at a blowout second quarter here. Showing some of the fruits of that. But again, I don't want to get too focused on that. But I do believe we're going to see more, you know, on a longer term basis, the games business. Remember last year was really impacted. By you know some some misses we had in that space and JB has implemented a pretty significant restructuring of that business and that should be a A growth driver, you know, over the longer term horizon here and then and then frankly the The biggest point underlying all of this is all the transformational change that we have implemented over the past three years. It starts with a much greater Collaboration coordination approach that we take to franchise management, the planning that goes into, you know, the rollout of every, you know, new IP. Moment, the way the entire company rallies behind you know each each new film. And each each series that we're that we're creating that is going to pay dividends for for a very long time to come. And we have also frankly revamped every step along the value chain from green light to the monetization the windowing of our content. I have no doubt that all of this is going to, you know, provide lasting Impact. And again, as I said before, what we're not going to see is perfect consistency. It's a hit driven business, but I have no doubt that we're going to see much greater Upside and success and much, much less downside in the inevitable areas where where we're going to miss at times. Last thing I'll say is we're also supporting this growth with investments, you know, I talked about content investments already we're planning to moderately increase that That number every year, but you also saw the capex in in Q1 slightly up a lot of that is going into the necessary investments in our studio footprint. And so again, I think this is a great longer term Outlook longer term story for the studio and and very short term, we're going to have an absolutely amazing second quarter.

Great. Thank you.

And at the time we have four questions, ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.