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

Good morning, and thank you for joining us for Warner Brothers Discovery's Q2 earnings call. Joining me today is David Zasloff, President and Chief Executive Officer, Gunnar Wiedenfels, Chief Financial Officer, and J.B. 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 of 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. In addition, we will discuss non-GAAP financial measures on this call. Reconciliations of these non-GAAP financial measures to the closest can be found in our earnings release and in our trending schedules, which can be found in the Investor Relations section of our website. And with that, I'm pleased to turn the call over to David.

Good morning, and thank you all for joining us. Our top strategic objectives have always been clear. to be the premier home for the world's most creative talent, both in front of and behind the camera, to operate as the world's largest, highest quality maker and producer of film and television, and to distribute those stories to audiences worldwide through a globally scaled, profitable streaming service. In the second quarter and in the early weeks of the third quarter, Warner Brothers led with strong momentum in delivering on all three of those objectives. We're seeing that momentum at Motion Pictures, where Warner Brothers became the first studio ever to open five consecutive films with more than $45 million in domestic box office. We're seeing that at the Emmys, where Warner Brothers TV led all studios in nominations and HBO set a new record with 142 nominations. We're seeing it in the strong critical and fan response to Superman, which begins an exciting new era for DC Studios. And we're thrilled to share that James Gunn is already writing and preparing to direct the next installment within the super family. And we're seeing it at HBO Max, which again added more than 3.4 million subscribers in Q2, as it continues to launch in markets around the world. This pattern of creative success is the result of a three-plus-year attack plan aimed at enhancing every dimension of our creative culture and storytelling business. From HBO to Warner Brothers Television, to Warner Brothers Pictures, and from Animation to DC Studios, we've invested in our studio's creative and operational capabilities. As a result, our studio's business is now on track to deliver at least $2.4 billion in adjusted EBITDA in 2025, with our sights set on our $3 billion goal. We have transformed HBO Max and have our streaming business on track to exceed $1.3 billion in adjusted EBITDA in 2025 and reach over 150 million subscribers by the end of 2026. And from CNN to TNT Sports, we are bringing innovation to news, sports, and unscripted programming as we work to optimize our global networks. All the while, we've dramatically delevered our balance sheet from over five times net leverage to 3.3 times now, the lowest since our merger closed. As we continue to navigate generational disruption and move forward with splitting into two independent publicly traded companies in 2026, our current momentum will help position both future organizations for long-term success. With that, we look forward to your questions.

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Just a moment for your first question. And the first question comes from Robert Fishman with Moffat Nathanson. Please go ahead.

Good morning. I have one question for each company, Warner Brothers and Discovery. Can you each talk about your content licensing strategies? David, you shared in the letter that the $5 billion annual library revenues from Warner Brothers TV and film and balancing that tradeoff. So would you be more open to licensing the Warner Brothers and HBO content to third-party streamers now going forward? And then for Gunnar, can you talk about your approach to overall content licensing, but especially with regards to your sports rights, especially in light of the potential of sub-licensing these rights to ESPN or other streamers? Thanks so much.

Thanks, Robert. Well, look, one of the great building blocks of our studio business is we have the largest TV and motion picture library in the world. And that is like a long cycle business that we can look at as a steady stream. Having said that, we've made a number of judgments, including this year, where we've opted to sell significantly less than we could into the streaming market as well as the traditional market. Because we're seeing such growth and we're driving towards such growth for our studio business, which includes our streaming, HBO Max. And so we think in order to differentiate HBO Max, it's important that there are a wealth of properties, quality properties, that reinforce you only get this at HBO Max. And that's working for us in terms of driving growth. It's working for us as people more and more seeing HBO Max as the premier quality service around the world and storytelling. And so it's really a decision to fight for asset value and growth rather than near-term value. And we did walk away. And I expect that we will continue to because we're seeing very good trends as we grow around And Robert, maybe just to add one point to what David said.

And we try to shed a little bit of light on this in our letter this quarter as well. It is important to understand that we have very significantly shifted the mix between external and internal content sales over the past three years. And that has sort of put pressure on our near-term financial results. But we have put a 10-digit figure of value in terms of intercompany profits parked on the balance sheet. That's going to come back into the P&L over the next few years as JB utilizes this content and Casey utilizes this content on the HBO Max platform. So we have taken a short-term financial hit for some real value that's going to flow through, and that's a significant amount.

One of the real, I think, advantages of running Warner as one company is HBO was the premier producer of quality storytelling and Warner Brothers Television was the premier producer of TV series. But they didn't work together very much. We now have Channing and Casey working together. So we innovated with the pit as a procedural that was, you know, very, very successful for us. And that'll be coming back in January, nine months after 15 episodes came off. They're working together with J.K. Rowling on Harry Potter, which is extremely promising and is already in production and will be doing 10 consecutive years. So this idea of aligning the best TV quality production company in the world and having some of that best work, not all of it, Ted Lasso, shrinking, presumed innocent. We do a lot of content for others, but more coordination going to HBO Max for a net value and a net positive that will drive sustainable growth at HBO Max.

Right, right. And then, Robert, for Discovery Global, there were really two questions, one on general content licensing and then the sports question. Let me start with the entertainment content first. One thing that has already happened and that I expect to become more of a factor going forward as a separate company is we are reimagining the U.S. networks portfolio really as a content engine around very strong unscripted brands and not so much as sort of just traditional linear networks. And as part of that, certainly all monetization forms will play a greater role, and content licensing is definitely one factor or one tool in the box here. So it's going to be a meaningful contribution going forward as we think about recovering our content investments. I will say that for the current trends, 2024 was a year where we really started firing that up a little bit, in 2024 also had some unusually high content licensing numbers. And that's a factor that I also wanted to call out for the second half here. You know, we had $580 million of networks content sales in the second half of 2024. That's above what, you know, a more normalized run rate of, you know, roughly 200 million a quarter or so. So that's definitely a factor as we think about the rest of the year and going forward. On the sports side, again, never say never, But I will say the following, you know, we love the sports portfolio that we have. Luis and the team have done great work restructuring this over the past two years, and we've got a very, very strong portfolio, you know, all the key franchises. And it's going to be even more important as we look at Discovery Global as a separate standalone entity. So we will continue with an important sports strategy. We will continue to be looking at investments with the same discipline that we have in the past. And with that, you know, I think it's unlikely that we will sub-license rights out. In fact, if you look at what we've done recently with the college football playoffs, you know, the two games this year growing to five games next year, we have, if anything, taken on a little more. And then the final thing I'll say is I don't think there is a need to sub-license, you know, if that's sort of the direction of your question. In fact, Luis and the team are working hard on developing the go-to-market approach to utilize our streaming rights going forward. And, you know, the broad strokes are, it's going to be a standalone product that we will be able to take direct to the consumer, but also bundle, you know, with HBO Max, with Discovery Plus, potentially third parties, again, all in the spirit of making our content available to as many people as possible. So, you know, lots to work through and stay tuned.

Great. Let's go to the next question, please.

Your next question comes from Jessica Rafe Arlick with Bank of America Securities. Please go ahead.

Good morning. Thank you. Two questions also. David, you've been developing a lot and have a lot of franchises. You mentioned Harry Potter, now Superman. Can you talk about what else you see as future franchises and kind of the halo effect that the success can have on the entire organization from theatrical licensing, streaming, games, merchandise, et cetera? And then, Gruner, now that you're becoming the CEO of Global Networks, it's a segment that's obviously been challenged from just the secular challenges. Can you talk about what you see as the underappreciated opportunity for growth in this business?

Thanks, Jessica. um you know i i've said all along that uh one of the assets that we have at this company is that we have such uh so much compelling uh storytelling ip that people know everywhere in the world whether it's batman superman wonder woman lord of the rings um you know and and then we'll call those the big the big tent poles harry potter and then you know smaller tent poles like the fugitive, goonies, gremlins that everybody knows. And a piece of our strategy is light up strategically those big tent poles so that we have two or three of those a year, which provide real stability. We got a great script on Lord of the Rings with Peter Jackson that we're already, that we're moving forward on, and we'll be giving you more detail on that. We're working very hard on on wonder woman we all you know we already have a big piece of the dc uh strategy laid out but we effectively have four studios so we have so one is is developing dc we've talked about that the second is warner and half of what mike and pam are doing is things like lord of the rings or gremlins or goonies or our practical magic going back to things people know and the other half is news stories, you know, like sinners. And then we have New Line, which New Line is back to what they do better than anybody in the world, which is horror. And, you know, for those of you that have a free moment this weekend, you know, go see Weapons and just hold on to your seat because it's an incredible ride. But they're having, New Line is back in its lane and we expect to do a number of those a year together with some comedies, which is part of the great heritage of New Line. And then animation. We have Cat in the Hat coming in January with Bill Domanski. And so we have a very balanced portfolio that's much more focused on the economics of each of these and having that. And since our IT has been underused, no Superman in 14 years, no Lord of the Rings in 13 years, you know, that to go back and to be able to bring a lot of those franchises back to life and also tell new and original stories. So we feel really good about where we are. And when we project this year for the Motion Picture Group, we're conservative. We understand that the motion picture business, you know, in the end, the audience will decide. We've had an extraordinary run. You know, we were, you know, in last place and we came, Mike and Pam and DC and New Line together went from last to first. You know, Disney is a little bit ahead right now and we're looking forward to what we think will be a good weekend. But we're having, we're really making the turn. It's been three years of investment, and you're going to start to see these products roll out, and you'll see them roll out strategically and with real focus on cost. And finally, we have a big advantage, I think, in the way that we're marketing these films. You know, we've spent years getting them ready, and we have a real global attack that you saw with Barbie, you saw with Wonka, you saw with Superman. You saw it with F1 when Apple came to us uniquely and wanted us to take it on. And so I think that we have real momentum there.

OK, and Jessica, on the global network side, look, it's a legitimate question, of course, and the number one question, maybe. I have to tell you the thing that excites me the most about the future here is I will have the privilege to work with, you know, maybe the greatest team I've ever I've ever seen in my career. I've known many of these people for for years. And it's a team that has a track record of fighting to win. And it's a team that's that's everywhere in the world. And I spent a good part of my time over the past eight weeks, you know, traveling around and meeting a lot of the people across the Discovery Global footprint. And I can tell you the the level of excitement, creativity and energy that's that's coming through in these meetings is off the charts. And one big factor here is that people understand that we're building a group of assets here that is set up to thrive and continue to prosper on a standalone basis. You know, we've already talked about the changes we're making to the perimeter, all of U.S. sports coming with Discovery Global, Discovery Plus moving over. We have Bleacher Report, and we have an international free-to-air footprint with very different secular trends than what you're seeing here in the U.S. And the ability to focus on these assets and nothing else is exciting me and is exciting the team everywhere and with everybody I've spoken so far. And it won't mean that we're going to change the secular trends, but I do believe that there are very significant pockets of growth and opportunity and we'll work really hard over the next half year here to identify those and get in position to deliver what I think is going to be a business with much more longevity than what the market sees right now. Great. Thanks, Jessica. Next question, please.

Your next question comes from Michael Ng with Goldman Sachs. Please go ahead.

Hi, good morning. Thank you for the question. I just have two. First, on studio and live events, I was just wondering, given all the investments that you're making in D.C. and the early success of the D.C. reboot, are you revisiting what D.C. is doing in terms of theme parks and live events? I know there's the licensing deal with Six Flags, but against the backdrop of something like the success of, you know, Harry Potter or Universal, I'm just wondering if there was an opportunity to, you know, revisit what you're doing with the DCC franchises in parks and then add a quick follow-up.

Thanks, Michael. We think there's a tremendous amount of untapped value. First, you know, generically, we have a lot of upside. We make about, when we took over three years ago, about 22 cents for every dollar that Disney makes in circulating their IP through the system. We're up to about 30 cents now. Harry Potter is different. We're extremely effective in monetizing that through gaming and through a very mutually beneficial deal with Universal and the Harry Potter parks that we have. and that was kind of a framework for us to go on the attack. Bruce Campbell's running that business. We announced he will be the COO of our new business and we think that's a real growth opportunity for us. We've gotten back some of our rights that were given to Six Flags and freed up D.C. in a way that we think can be very compelling. A lot of those rights weren't tied up at all outside the U.S., and we're in different stages of deploying those assets. We're not going to build theme parks ourselves, but there are some, like Harry Potter. Those are, it's not a theme park, but that's, if you look at Leavesden, we went into Japan. Japan is both of those are sold out for over a year. We're looking at expanding that. And some of it will be either a little bit of ownership or licensing. We're already doing something like that in Saudi Arabia, which is quite lucrative. So the answer is yes. And there's more than just DC and Harry Potter. And you saw it with Superman, the way Bruce and the team deployed Superman across all the merchandising elements. And it was quite effective.

And we ended up with a lot more economic value right thank you david that's that's very helpful um and then for for gunner i was just wondering if you could talk about the um comments in the letter related to the um hbo max uh u.s distribution deal restructuring um you know what was the the nature of that and um you know what what drives the the reacceleration um you know after uh after the after the first half of 26 thank you.

Michael, it's essentially as we laid out in the letter, we had a legacy deal with a former affiliated party, and it's not unusual once those come up for renewal that priorities shift, and we've taken a bit of an adjustment of the rates, and that's what we wanted to call it out, because it's going to have a meaningful impact on our revenue growth for a 12-month period until we lap this deal, but it's also important to note that, you know, we expect a reacceleration not only once we lap this deal, but also from the various market launches that we have in the pipeline beginning Q1 of 2026. I don't know.

JB, you may want to add to that. One quick thing. It's not Saudi Arabia. It's Abu Dhabi. So sorry about that. But go ahead, JB.

Yeah, I think in terms of the HBO Max and the streaming profile, as Guter said, it will certainly dampen the growth rates for the second half of 25. The reacceleration drivers are going to be starting in the first half of 25. Obviously, big new international launches coming from Europe. So on a global basis, we'll start to see revenue reaccelerate in the first half, really in the first quarter of 26. And then the U.S. growth will reaccelerate starting in the second half of 26 as we lap that reset.

Great. Thank you very much.

Great.

Next question, please. Thanks, Michael.

Your next question comes from John Hodulick with UBS. Please go ahead.

Great. Thanks, too, if I could. First, can you talk a little bit about some of the underlying drivers of ARPU? You've seen some more dilution as we move through the year here. And David, just your thoughts around price and power of the Max product. And then maybe secondly for Gunnar, just with the NBA law coming up in the fourth quarter, you call out the impact there. Just any other sort of color you can give us from either a revenue or overall profitability standpoint as you lap that contract?

So let me just start. the number one objective was to establish HBO Max as the premier highest quality storytelling platform and have it be the place that people go. And Casey and the team, HBO Max or HBO itself has never been stronger, has never had more hits. And so we're really, they're having a great run. And when we talked about it's not how much, it's how good, we've really delivered on that and consumers are seeing it and it's it's it's translating into real demand and and growth but our strategy hasn't been to try and raise a lot of price we want to we want the market to accept the product to recognize it as as high quality and then first to start to narrow down the ability for for multiple users to be using the product but yes that when you have the highest quality product in the market with big branded stories that people want to come back to, that they feel very passionate about, that gives us what we think is a very big upside over time to raise price on the highest quality service. But JB, why don't you talk a little bit about what you're seeing in the market and how that will lay out?

Yeah, I think to add on to it, I think the exciting thing for us is that obviously post both COVID and then the strikes. I mean, look, we've all taken a little while to get our sea legs back and more consistent. And the combination of those being through and a refined and much more rigorous content strategy that's based on 52 weeks a year of programming with a constantly iterating and better data sets to look at what's working and what's not working um we feel as we look ahead at the next 24 months of our slate you know 25 as we said i think on previous calls the slate was stronger than 24 26 looks stronger than 25 and as we look at 27 the early parts of 27 uh the engine just keeps getting better and so uh a lot of that to david's point we want to be smart around still making the product we think there's still a lot of upside in terms of the scale and penetration of the product. So we want to keep it affordable and grow penetration in these markets. But at the same time, with the quality of the slate, the return obviously to HBO Max as a brand and what that stands for from a premium standpoint, we do think there's obviously meaningful growth also coming from price acceleration over the next couple of years.

Right. And then on the NBA deal, look, as a reminder, obviously, for many of these sports rides, the main monetization engine is the affiliate revenue. So if you look at just advertising and content cost as a differential, those deals are loss making from that perspective, right? So there is going to be a benefit from the NBA coming out of our financials. You know, if you think about how the season plays typically over the quarters, it's important to note that Q2 with the playoffs is by far the biggest chunk, both of, you know, content costs and revenue generation on the ad sales side, followed by Q1 and then the smallest quarter is Q4. So with that in mind, and the fact that we have reinvested some of the savings into other sports rides, we mentioned college football playoffs already, Big 12 in the fourth quarter now, what you can expect is roughly $100 million sports cost benefit in the fourth quarter. And then as we turn to 2026, there will be a net benefit of hundreds of millions of dollars from the rights costs coming out and some offsetting revenue losses from an EBITDA perspective. So, you know, a very significant improvement. Thanks, John. Let's move on.

Your next question comes from Richard Greenfield with LightShed Partners. Please go ahead.

Thanks for taking the question. I wanted to ask JB, as we look at the streaming landscape, there's been a clear push towards wholesaling to MVPDs. I'm curious, how does the engagement look for those ad-supported subs that you're bringing on versus those that sign up for HBO Max directly? Are you thinking about how you market to those subscribers who may not even realize they have Max? Because it seems like there's a substantial advertising opportunity if you can engage those wholesale subs in the service and certainly in the app. And then just for David, one of your oldest pieces of IP that probably doesn't generate a lot of revenue is going to be getting a pretty big makeover in a few weeks. I'm curious whether you've seen Wizard of Oz in the sphere and any thoughts would be great.

Let me just start with Wizard of Oz. Jimmy Dolan, in the spirit of the great Chuck Dolan as an entrepreneur. I've been to the sphere many times. I've seen in the smaller sphere the Wizard of Oz. We work together with them. They really get the credit. It's a credit to Warner Brothers and the library that we have. We're also looking at our own project around uh wizard of oz um that we'll talk about uh at some point but uh it feels really great it's very exciting it's very innovative um and it premieres at the sphere on the 28th so very exciting uh jb yeah rich it relates to the wholesale partnerships i guess a couple thoughts number one is when we look at any of those deals we always look at it um as on an lcb basis uh uh and sort of a net arbu basis when you expect the natural sack we would do use to try and actually acquire those retail subscribers.

And so every deal starts with a very healthy LTV profile of a wholesale sub versus what we think we get and what we have to spend to get on a retail basis. So that's kind of the underlying. Then we do work, to your point, increasingly on partnering with the different MDPBs and non-MDPB partners on activation, and we spend more and more time with them, with their customer service teams, with their UX and experience teams on activation of the product. And we have seen great strides and improvements on activation across the board. And frankly, in all of some of our biggest, most recent partnerships, both in the U.S. and outside of the U.S., we are trending above what we expected in terms of activation. Obviously, then once we're activated the engagement uh is subject to both in-app uh marketing and merchandising uh as well as continued partnership marketing through uh through the different partners and then the other thing that we've seen that has been very healthy and also leads to better our crew uh is in most all those deals we have upsell uh capabilities and so we go from an ad ad light uh product to an ability to actually upsell the customer, where we take the majority of the economics on the upsell to an ad-free, which also has an ability to drive more R-proof for us, particularly outside the U.S., where ad sales obviously is still a growth business, but it's starting off a lower base. So we have a full attack plan. We have a team, actually, that we put around the world globally to go after trade marketing and partnerships to try and drive of activation and engagement. And we're seeing nice pickup and growth and acceleration of those as we do those deals around the world.

The only thing I would add is that it's different in different markets. For instance, in the UK, a huge majority of programming outside of sports on Sky that was loved was HBO programming. So there's some markets where people have been watching the last of us euphoria white lotus house of the dragon and it was on a different platform and now it's going to move to hbo max and so you'd expect in that case when you have a huge engaged population that has been watching through um that that that group um will be spending a lot more time watching we're seeing that in australia and then when when when it's available on a platform as HBO Max, the retail picks up significantly because it's like a marketing vehicle to say, oh, HBO Max is here. And so, you know, JB has been seeing that in Australia and we're getting very powerful pull through in terms of consumer demand in the UK, Germany, and Italy. And we're in a lot of discussions in Italy and Germany, as well as we're non-exclusive in the UK. So you'll be seeing those markets as quite powerful coming into next year, because it has that unusual dynamic of an embedded audience. JB, I don't know if you want to add a little more to that on Australia, what we're seeing practically.

No, that's right. I mean, in Australia, the launch was essentially a dual track launch, So we went obviously retail as well as through our partnership with Foxtel, which was, as David mentioned, our longstanding licensing partner. And so we love that double track of fishing in a pond that's already stocked with our wholesale partners with good economics and at the same time going direct in a smart way to expand the reach of the product. And Australia has been a great success story for us in these early months and way exceeded our expectations. So, it makes us even more bullish of what we expect to see in the beginning of next year as we launch these big European markets.

Let's go to the next question, please.

Your next question comes from David Joyce with Seaport Research Partners. Please go ahead.

Thank you. As you went through your upfront advertising negotiations, granted, you still have a combined company for the next year but how are you contemplating uh addressing you know marketers uh desire to you know advertise across platforms uh do you have something some structure in place to sell the advertising on streaming and your global networks yes uh david that is a great point and that that's one of the areas that we looked at uh really hard as we contemplated the separation and we concluded we've said publicly we're going to continue to go to the market as business as usual.

We will have a structure in place. This is one of the areas where there's significant synergy. When we announced the separation, we made clear that after all that hard work went into generating the synergy, we're going to continue to work as hard to maintain a synergy opportunity where it is present. Ad sales is definitely one of those areas. So nothing is going to change from an advertiser perspective. And we're working through the process to set that up internally. And with the upfront in general, since you mentioned it, you know, we obviously had some concerns going into the year with the macroeconomic and geopolitical environment. And the fact of the matter is, you know, the market has held up very well. We've seen prices up across all categories, you know, more so in sports than in general entertainment. On the digital side, there is some price pressure, but, you know, We've maintained a very strong price premium for the quality of inventory that we're delivering. So, NetNet, I'm very happy with the outcome. Thanks, David. Next question, please.

Your next question comes from Brian Kraft with Deutsche Bank. Please go ahead.

Hi. Good morning. JP, I was wondering if you would comment on where the business is in bringing churn down to what you view as a healthy, sustainable level.

And also, you know, how you're going about driving that churn down.

And then, I guess somewhat related is hoping you could provide an update on where you are on the effort to convert unauthorized account shares into paying customers. You know, what inning would you say you're in there and how meaningful do you see that opportunity as you go forward?

Yeah, I'll start with the second, which is on the sort of account sharing. I'd say we're just in the first inning. The reality is we've done a lot of the last several months making sure that our data sets on figuring out who is a legitimate user and who may not be a legitimate user and making sure that we test it sufficiently so that when we turn on the more aggressive languaging around what needs to happen, that we were actually, you know, putting the net in the right place, so to speak. um and uh and we feel great about where we are starting in september uh you'll actually start to see the messaging which right now has been a fairly soft um cancelable messaging um uh start to get more uh fixed and such that people have to take action as opposed to right now sort of having it be a voluntary process um and so uh the real benefits will start probably in the fourth quarter and then kick in in 2026 as we tighten the messaging and drive that in a much more aggressive fashion starting in the 4-4 this year. As it relates to churn, look, we continue to drive churn. I think one of the things in terms of the levers of how we go after it, there's a number of different ways. First thing, obviously, you've heard David and all of us talking about the importance of bundles um we've been very successful obviously um and you'll see this more over the next few months and as we prepare to roll out in europe uh obviously we've had a very successful relationship with disney here in the u.s we're in active conversations with a number of other uh leading streamers uh in international markets around bundles and the profiles of those users see in some cases you know uh churn cut in half if not greater and ltv is double or more. And so bundles is one way we've seen great expansion of LTV and reduction insurance. On engagement, obviously, being the number one thing, and the engagement driver that obviously matters most is around content. And as I mentioned earlier, as we look at the content slate and more the consistency of our content slate, we have had a couple years where we've great content but big bigger pockets of time throughout the year with uh with more gaps um we're now getting to a rhythm uh where between casey's slate uh the theatrical slate um uh some third-party acquisitions uh we have a much more consistent 52 week a year schedule where we're doing a much better job of handing off uh consumers and subscribers to from one set of content to other set of content. And so we're doing a much more aggressive job on managing the programming and the scheduling throughout the year to reduce that. And then there's enormous amount of work still to go on the product itself and the personalization of the product, which, as I said on previous calls, we went from not good to good, but we still have a ways to go in terms of the feature set. And we're developing and launching, you know, small and new features and AD testing, a bunch of features every month to try and get the product from good to great and we know we still have progress there which is both obviously a challenge but also an opportunity uh that will help us drive that engagement um and so uh it's a on the overall churn we feel like we are and we actually saw in the early uh the sort of may the march april may june time frame some really positive improvements uh on the churn side um but we're not satisfied with where we are and we're continuing to attack it aggressively across product, content, marketing, all the marketing levers that we have.

Thank you. Next question, please.

Your final question comes from Peter Subbino with Wolf Research. Please go ahead.

Good morning, everybody. I wanted to ask you, David, please, about your better together view for DTC. At this point, it seems like it was prescient as the industry has continued to expand bundling so could you discuss the contribution to growth ads and maybe to churn of your wholesale or third party strategy and contrast that to your retail strategy and and maybe comment on how the partnership with disney has tracked versus your expectations thank you thanks peter um look i i think one of the things that really drives better together uh is common sense a more robust bust slate that appeals to um to more consumers but most importantly the consumer experience you put the tv set on and or you put on your device

and there's 18 apps and you're you're googling to find out where your show is where your sport is or where the movie you want to watch is um and in all the research we do it's people have adapted to it, but it's a very clumsy consumer experience. And one of the reasons we have fought so hard over the last three years to be a truly global player, and there's really only four or five global players right now, truly global players, Amazon, Netflix, Disney, YouTube, and us. And YouTube is in a different business now, but they do have a very powerful global attack. And being global really allows us to take things like Harry Potter to billions of people around the world. And as more and more of these regional players are looking at the cost of building a platform, the engineers, the marketing, and also how differentiated in many cases we are from them and how much stronger we are together, that it's a much better consumer experience if we're together in Latin America with Globo. We have local content in Brazil. We have local sports, but they have a huge amount of local content, and we have tremendous quality with content that's loved down there. And that's true as you go across Europe. And so I think a big piece of this will be cleaning up the consumer experience. We really expect, or I at least expect, that we'll look at this business four or five years from now, and it won't be 18. And I think the companies that are most successful will be global. Maybe there are some regionals that could eke out some profits. And there'll be a lot of those smaller players that want to become part of the global players. and that's what we're seeing you know uh and we're seeing it on an accelerated basis it may start with bundling and that's a very effective we're doing much better with disney uh than we thought um and i think then you know that that it's not just the churn it's consumer satisfaction consumer experience um they're going after they have demos that we don't have we have demos that they don't have so it's it's it's just better together some of it will be a result of uh consolidation in some markets and some will be white flag i'm getting you know i don't want to lose money anymore and i want to get back to what you know a lot of companies want to get back to what they do which is just produce content and leave the direct to consumer fight you know to that that global fight to others so um great thanks david thanks peter operator ladies and gentlemen this concludes today's conference call we thank you so much for your participation you may now disconnect