Warner Bros Discovery at Bank of America Conference: Strategic Split in Focus

On Wednesday, 03 September 2025, Warner Bros Discovery (NASDAQ:WBD) addressed key strategic moves at the Bank of America 2025 Media, Communications & Entertainment Conference. The primary focus was the company’s upcoming split into Warner Brothers and Discovery Global. The discussion highlighted both opportunities and challenges, including financial targets and strategic priorities.

Key Takeaways

• Warner Bros Discovery plans to split into two entities by Q2 2026, with Gunnar Wiedenfels transitioning from CFO to CEO of Discovery Global.
• The company aims to reduce its net debt from approximately $30 billion by year-end.
• Financial guidance for 2025 includes at least $2.4 billion from the studio and $1.3 billion from streaming.
• A focus on creative excellence and operational discipline is expected to drive growth.
• International expansion plans include launching in the UK, Italy, and Germany in 2026.

Financial Results

• Net Debt: Currently around $30 billion, with expectations to decrease significantly by year-end.
• Studio Financials: Projected revenue of at least $2.4 billion.
• Streaming Financials: Expected revenue of at least $1.3 billion for the year.
• Sports Expenses: An increase of $300 million in sports costs for 2025, excluding the Olympics.
• Margin: A target of 20% margin remains achievable.
• Subscriber Targets: Aiming for 10 million subscribers in the UK and Ireland through a partnership with Sky.
• Bridge Loan: Majority of the $17 billion bridge loan allocated to Discovery Global.

Operational Updates

• Separation Process: On track for completion by Q2 2026, with intercompany agreements mostly finalized.
• Studio Performance: Recent film openings have been successful, each grossing around $40 million.
• Streaming Strategy: New solutions for sports and CNN are in development.
• Warner Brothers TV Production: Success in the SVOD space with popular productions.
• DC Franchise: A long-term plan has been outlined, with recent successes in film and series.

Future Outlook

• Discovery Global Strategy: Focusing on valuable content brands, digital expansion, and international markets.
• Content Spending: Increased investments planned for HBO Max and the studio.
• International Expansion: Launches in the UK, Italy, and Germany are planned for 2026.
• Consolidation Opportunities: Open to potential mergers in the streaming sector.
• Warner Brothers: Expected to be cash flow breakeven around the time of separation.

Q&A Highlights

• Warner Brothers Stake: Considering monetizing up to a 20% stake before the split.
• Opening Leverage: Most debt will be with Discovery Global, supported by free cash flow.
• Studio Profitability: Aiming for $3 billion in EBITDA, with higher profitability potential.
• Discovery Global Opportunities: Exploring previously underinvested areas.
• Content Spending Allocation: Reinvestment of cash within Discovery Global, especially in content.

For a detailed understanding, readers are encouraged to refer to the full transcript.

Full transcript - Bank of America 2025 Media, Communications & Entertainment Conference:

Jessica, Interviewer: Okay. Great. We’ll get started. We’re thrilled to welcome Gunnar Wiedenfels back. Currently the CFO of Warner Brothers Discovery, but onto other things as well, so we’ll get to all of that.

So it’s been let’s let’s focus a little bit on WarnerMedia and Discovery first. But it’s been three years since the merger, and you spent a great deal of that time restructuring, transforming, realigning the company across every single division. You’ve accomplished a great deal. However, as you’ve done that, the the industry continued to evolve and change. So you’ve announced plans to split the company into Warner Brothers and Discovery Global, where you will be the CEO.

What is the timeline of the split?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. Look. First of all, welcome everyone, and thank you, Jessica, for for having me again. We have publicly said q two of next year is when we wanna get this get this split done. And I will start by saying that we’re seeing great momentum on all fronts right now, and that is for for the separation process, that it’s for the business fundamentals and financially.

So maybe allow me a minute or so to talk about those three separately. So from a from a separation perspective, again, I I continue to see a very significant value creation opportunity here. We are well on track. We have that q two twenty six timeline. The timing is perfect in a way.

We have done so much hard work since since that merger to delever the company. We’re at net debt of roughly $30,000,000,000 at this point. We’ll be significantly lower than that at the end of the year, so that’s been one one key priority in the past. The tender offer was a great success that has has helped us. And, you know, we’ve got one more creative tool in the in the box here with the retained stake for for Discovery Global in in the in the Warner Brothers company, and I’m sure we’re gonna talk about that.

But that’s something I’m starting to focus on a little more now. We have about a year after separation to monetize that, but it’s already we already have, you know, serious people asking about, you know, ways to get their hands on that maybe before that. So there’s there’s a lot of interesting activity there. And, you know, we we had a very busy weekend. We subsequently completed our intercompany agreements that we need to put in place, TSAs, commercial agreements, and we got we got that, you know, broadly done over the weekend, which was a huge milestone, and and, you know, the team worked really hard through that entire weekend.

And you saw the announcement that, you know, we hired Brad Singer, who’s gonna be David’s CFO for the for the new company. You know, we we worked with him for a month or so as he sort of did diligence on on all the numbers and and plans, etcetera. He’s he’s tremendously experienced and and is gonna add a lot of value and is excited to come on. In fact, he’s already soft starting so that, you know, in October on October 1, he’s he’s gonna hit the ground running. So so that’s all going very well.

Fundamentally, a great momentum also across the board, creative a creative success right now. Maybe more visible than anywhere else in the in the film business. We’re we’re now six for six film openings, about $40,000,000, and I’m not gonna jinx it, but I’m also positive about upcoming Conjuring installment. So that’s all going very well on on the on the on the network side. We have the unique situation right now of no major affiliate deals upcoming for a while, so the team is really also focused on the creative side, but also, you know, Luis Silva Wasser making a lot of progress putting together a streaming solution for for the new Discovery Global company in the sports space.

Mark Thompson is gonna come out with more specifics within a matter of weeks on a a CNN streaming solution, etcetera. So great great momentum there as well. And financially, we’re continuing to generate the the the cash that we need in a major way. And I have full confidence in our guidance elements, the at least 2,400,000,000 for the studio, streaming at least $1,300,000,000 for the for the for the year, and then a a positive outlook from there. So, you know, we’ve we’ve chopped a lot of wood.

We still have a lot on the on the agenda, but we’re checking it off one by one.

Jessica, Interviewer: So maybe just a follow-up on on what you just mentioned, the up to 20% stake in Warner Brothers, going to Discovery Global. So it it sounds like you you you can entertain bids before the split or are entertaining bids before the the split’s complete. Could you talk like, is there can you sell it now before before you split? And, you know, also, can you you’ve mentioned that you’ve already had discussions. What what kind of interest has that been?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, you know, we we could. And then if you take a step back, it’s gonna be a trade off. Right? Because we wanna get full value for it. It’s it’s it’s a huge building block in this this whole transaction to, you know, to get an equity injection at the right valuation at an accretive multiple to help with with the with the delevering path.

So that’s definitely gonna be a priority, but and and again, we’ve we’ve been very clear from a tax perspective, we we have a year, potentially a little longer, but, you know, let’s say a year. But, you know, we have had some interest in discussions earlier than that, and and technically, we will be able to monetize part of it, all of it, you know, whatever before we even close the transaction. Again, there’s there’s, you know, nothing specific here yet, but definitely something that I’m gonna be a lot more focused on over the next few months.

Jessica, Interviewer: What’s the process to establish opening leverage for each company?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. So one of the big building blocks from here to the closing of the transaction in the second quarter is getting pro form a financials in place and carve out financials. So the team is working really hard on that. There’s a there’s a a sequence of steps that we need to get through on that basis. And, you know, as part of that, you know, with an eye towards the budget for next year and updated long range plans for both companies, we’re gonna work with the board to make the the final determination of what goes where.

We’ve already said and that hasn’t changed. If you look at the the the takeout financing for the for the bridge loan, the $17,000,000,000 bridge loan that we have in place, the majority of that is gonna go to Discovery Global and, you know, if you add the existing debt, so, you know, the the vast majority of the debt is gonna be with Discovery Global where the free cash flow is to service that debt as well. Right.

Jessica, Interviewer: Okay. So let’s go through the pieces. I’d started with the studio, which is obviously one of the crown jewels in all of Hollywood. And it still appears, like, to us at least, like, significantly, that there’s a significant opportunity in terms of in terms of profitability. You guys have targeted $3,000,000,000 in EBITDA potential as as and not as an endpoint.

Right. Can you break down the drivers that get us from here to at least at least there?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. And I’m I’m glad you said it in your question already. It’s not an endpoint. It’s an it’s an interim step. I think there’s significantly higher potential there.

And, you know, the changes in that business take a while, and we’ve been working really hard over the past three years of on on implementing that change. And it really, you know, starts with the with with the creative, you know, both on the executive side and and talent community. David has made a real point of of of bringing talent back to to working with us, and I I think we’re seeing, you know, some of the benefits now in in in our performance. But it also expands into just the the the professional management, the the process of decision making from a budget through marketing, through, you know, you know, production execution to windowing. And then third, embracing, you know, franchises, the 360 degree nature of the monetization opportunity.

So those are some overarching points. And, you know, we have already seen some steps forward here. Again, 2,400,000,000.0 at least for this year is a significant step towards that goal. And and from here, there will be further growth opportunities. On on the film side, again, it’s always hit and miss, but there’s a little a little bit of a pattern now.

Mhmm. And, you know, the slate structure across the four, you know, distinct categories of films and everybody staying in their in their lanes and doing what they’re what they’re best at is is is gonna be a driver for us. In in Channing’s business, the the the Warner Brothers TV production, you know, where I’m sure we’re gonna talk more about it, but we’re seeing great success, you know, especially in the in the in the growing SVOD space where, you know, she’s in business with with all of the the key platforms. Games has had more difficult years last year and to some extent this year, but there is tremendous opportunity. We know where that business can perform, and and and JB has has restructured the business into, you know, four franchises that have, you know, billion dollar plus, potentials, and we’re gonna see some of that, come through.

So there there’s there’s opportunity in in every one of these, units. Okay.

Jessica, Interviewer: Gurry, you’ve said that in success there’s now greater upside, but in failure there is less risk. Why is that the case?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, it comes back to a strategic and professional approach to managing the studio. Right? It starts with slate composition. As I said, we’re gonna have what we think is gonna be the right balance of, you know, tentpole films with some, you know, lighter budget films, you know, the right mix of using our own IP, but also embracing, you know, the the the creative genius of of, you know, original filmmakers. But it has to be it has to be it has to fit and dovetail together in in in the right mix of his slate.

You know, the the the operating discipline and and rigor is a major point. You know, when we first started working together, there wasn’t a lot of, you know, detailed, you know, budget focus, discipline, daily hot cost reports. And and, I mean, we’re we’re we’re actually coming in below budget for for all of our productions now That’s something that was unheard of before. And and then, frankly, just, you know, professionally looking at the data, analyzing how, you know, how to best make those windowing decisions, you know, what goes onto what what platform, and embracing, you know, again, all cash registers that help us monetize our our content.

Those those are all important important factors. And, it is a hit driven business. We will make great movies. The the the past six films that we released all had 90 audience scores. You know, it’s probably not gonna, you know, continue on like that forever, but, you know, that’s that’s that’s an that’s a factor as well.

So, you know, we have a great run right now, but I I believe that what we have put in place in terms of how we manage the studio is also gonna limit the downside in in in the inevitable cases where we where we have some some creative failures.

Jessica, Interviewer: So I I mean, have a ton of franchises, but, you know, just a few months ago you released Superman, which successfully kick you know, kick started the DC studios launch, and it’s it’s obviously very important to the company. It is. How meaningful can the halo effect be on the rest of your business, and how does

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: that flow through? It’s it’s tremendously important. I think DC is maybe one of the most undervalued and underappreciated parts of our portfolio. And, you know, I think, know, that the DC franchise has, you know, billions of dollars of of greater potential than what we’re seeing right now. And, again, back to the point that I made in the very beginning, it all takes time.

It was three years ago that James Gunn and and Peter Safran, you know, defined their their vision, laid out that, you know, five, ten year canon. And Superman on the film side was really the the the kickoff of that. But, you know, it’s it’s more than just the films. We’re gonna we’re gonna have a a film cadence from here from here on out. But you’ve also had the Penguin.

You have Peacemakers second season right now, tremendously successful on on on HBO Max. And it all, you know, it’s all integrated. It all fits together. And I think that is is going to create, you know, opportunities beyond the individual beyond the individual titles. I’m super excited about DC.

Jessica, Interviewer: Right. Do you expect content spending to be structurally lower now as the entire industry is focusing more on profitability?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Look. That it’s true. The entire industry is focused more on profitability, and I think that’s good because it it it will drive sustainability in in this industry. You know, where where does that matter for us? It’s it’s Channing’s WB TV production business, and what we’re seeing here is that it’s actually helpful because with greater budget pressures everywhere in the industry, people are focusing on quality, and that’s what always takes them to Warner Brothers TV.

Channing is in business with all of the leading streaming platforms. In fact, is is producing some of the biggest hits on those platforms. We just recently, you know, announced a couple of green lights with with Amazon. So, you know, she’s very, very well positioned, and, you know, we haven’t even started expanding into some other areas where where she still also has a right to win.

Jessica, Interviewer: I mean, we could say on Warner Bros. Like, I mean, this studio forever, but let’s move on to streaming because we have a lot to cover. You know, the profitability in at HBO Max has been a source of outperformance from an EBITDA perspective. Can you talk about the building blocks from here and what the long term margin potential of the business is? Can it be a 20% plus margin business?

And if if yes, what under what time frame?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. We we we made that we set out this 20% bogey a while back. I still believe that it’s very, very achievable. At the same time, you know, margin isn’t an objective in and of itself for that that kind of business or growing that kind of business. Right?

The way we manage it is much more focused on looking at customer lifetime value relative to the subscriber acquisition cost. And, you know, one of the reasons why I wouldn’t wanna put a timestamp against this is, you know, there may be investment opportunities to drive towards greater value that may have a short term margin impact. But we have look. We have invested billions and billions of dollars in the the technology platform, in the global launches, and and rolling that platform out everywhere around the globe and the content that that we need to drive, you know, through that global platform. And I expect very significant operational gearing from here with a lot of the incremental revenues, you know, dropping down to the bottom line or allowing us to, you know, further invest in in in more of of that successful content.

Again, we’ve been very very open to driving content investments because I do think we have a process that that works and that allows us to, you know, drive great ROI with with limited downside potential.

Jessica, Interviewer: There’s been significant increase in pricing just across all of the streaming business. Are we approaching a tipping point from a consumer perspective? And, has the increase in prices driven downgrades to the advertising tier?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: So look, I think, first of all, of course, you’re right. There is a trend towards higher price. We just had, you know, Apple increase the price of TV plus pretty significantly. And look. I think I think it’s healthy.

We we’re coming off of a period where, you know, enormous amounts of quality content were given away below value. And so I think that trend, you know, has been pretty consistent and I expect will continue to persist. In terms of, you know, how that drives viewers to one tier or the other, I’m not sure that pricing is the most important driver then, frankly. We want to be indifferent. Right?

If you have a greater tolerance or even an interest in advertising, wonderful. Take our AdLight tier. If you want sort of the the uninterrupted experience with with no ads, you know, pick that product and and ideally, we adjust pricing between the the the options in a way that that gets us profitability on on both fronts. For us specifically, there is significant opportunity on the advertising side. We in in many of the international markets, we have only recently introduced AdLight peers and also in The US, I think there is there is greater engagement, greater scale, maturing technology that’s that’s going to make this one of the the the growth drivers for the mid to long term plans.

Mhmm.

Jessica, Interviewer: But on the other side of that, HBO Max has been leaning also into wholesale agreements that drive subscribers, but obviously lower ARPUs. Why is that the right approach?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: It’s it’s the right approach as one approach in in a mix of approaches. Right? It all comes back to we wanna drive shareholder value. We wanna drive customer lifetime value and make sure that we’re acquiring profitable subscribers. So, you know, wholesale partnerships are one way to very quickly build scale, especially in new markets.

And it’s typically a financial profile whereby we have lower subscriber acquisition costs, sometimes lower churn initially, but you pay a price for that with lower ARPUs. But it’s definitely one legitimate way to grow and then, know, over time as you’re more established in in in certain markets, you know, you might shift that, you know, the the weight between the various go to market approaches. But we’ve always been very open. We wanna be as as as widely distributed as possible. Wholesale partnerships are a part of it.

We also like our our Disney partnership. That’s been a great success here in The US and, you know, has has, you know, tremendously attractive economics. So, you know, all of these approaches play a role in the mix and it’s always falling short to just look at, you know, oh, this is the number of subscribers or this is ARPU. None of these metrics matter in isolation.

Jessica, Interviewer: Right. So in the ’26, you’re gonna have some pretty big launches. UK, Italy, Germany. Yes. What are the milestones investors should focus on?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, you know, for the for The UK and and Ireland markets, we’re we’re essentially locked and loaded. I think we’ve always said publicly that we’re expecting 10,000,000 subscribers through the Sky relationship, the Sky partnership, but it’s also important that we have flexibility beyond that other other partnerships and then a a retail go to market approach. You know, Germany and Italy are other key markets that were, you know, as we speak, working through the the approach, to cover those markets, but there’s big opportunity. Those are, those are some of some of the, you know, most relevant markets in Europe and we have the benefit of our content, you know, been known and sort of, you know, iconic in those markets for years already, so we’re gonna hit a fertile ground there. Right.

Jessica, Interviewer: There’s a view that DTC consolidation needs to happen. What role does WBD play in these discussions?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: I’ll give you the same answer for this as always. We’ll be we’ll be looking at everything, Jessica. And in fact, one of the reasons why we are splitting the company is that we are going to create two entities that are gonna be much more nimble and able to respond to opportunities in the market. That said, we’re also very focused on creating two very viable companies, and I think that HBO Max has what it what it takes. We’ve got a great process in place, a great platform, you know, what Casey is producing is working really well.

But, know, that said, we’re always going to look at whatever opportunity arises. Right.

Jessica, Interviewer: Do you believe you may do think you’ll need to accelerate content investments to further drive engagement on the platform? Were you, like, a steady cadence at this point? Or do you do you have to accelerate?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: It’s a growth business and, you know, as such, we have increased content spend in our plans. And by the way, that applies to both HBO Max and the studio. And again, as I said, I have great confidence given the process that we have put in place that we’re able to deploy capital in a in a very accretive way in in both of these businesses. That said, David has made this clear from the very beginning, you know, for for us, for HBO, it’s much more about quality than than than quantity, and that’s gonna continue to be the focus of our our content strategy. But, yeah, we are going to continue spending more.

So

Jessica, Interviewer: last thing on DTC, but when you put all this together as we think about the growth algorithm for streaming, you know, how do we how should we think about subscriber growth versus ARPU growth over the next, you know, over the coming the next few years?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. With different nuances, it’s all of the above. Right? We will we will see subscriber growth predominantly internationally in in those markets where we have launched and are still in the early stages of penetration. In those markets that you just mentioned earlier where we are about to launch next year.

So that’s definitely the the the non US markets are are are those where we expect and plan for significant subscriber growth. ARPU growth, you know, over time is gonna be a factor in in all of these markets. We already mentioned pricing as an industry wide trend. You know, we also see pricing opportunities in in international markets, and advertising as an overarching opportunity is is only gonna grow in in in importance over time. And then, again, I do think we now have a platform in place that allows us to convert a lot of that revenue into profit growth.

Jessica, Interviewer: So last question on the studios Warner Brothers side. Can Warner Brothers be cash flow positive in its first year as a standalone entity?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, we’ve already when we announced the separation, we we told the market that we expect that asset perimeter, the the Warner Brothers company, to be cash flow breakeven, you know, around the time of separation. That’s one of the one of the reasons why we’re able to do the split now. And given the billions and billions of investments and by the way, both on the Warner Brothers side and on the HBO Max side, you know, do think that there’s tremendous growth opportunity and that we’re going to see, you know, nice cash flow conversion, you know, for the years to come after the separation.

Jessica, Interviewer: So moving on to Discovery Global where you’ll be CEO. You you know, in many ways, the focus of a consolidated WBD was to reinvigorate the studio, scale streaming, drive synergies, perhaps some of the linear assets suffered as a result, you know, tell us. But it does seem like maybe it was underinvested to drive some of the other businesses. Also, there’s a widely held view that the linear businesses business, for all intents and purposes, is in this perpetual state of decline with kind of no end in sight. But here you are, signing up to be the CEO of of the the Networks business, that will, as you said earlier, will have a lot you know, will have the bulk of the leverage.

So what are investors under appreciating about these businesses? Or maybe, you know, what do you see that you think represents an opportunity going forward as a standalone entity?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. Let me let me start by saying I’ve never been as energized as I am right now. You know, we, had our second workshop with my future leadership team, last week, and and was, you know, I was, saying earlier, we started at 8AM, took four ten minute breaks, went through 06:30PM, and then off to dinner and could have gone on for another ten hours. And and there’s a lot of excitement in the team because, you know, as you said, we had, for the very right reasons, very clear priorities that we’re focused on Warner Brothers and HBO. There is there is a lot of opportunity that we that we can tackle on on the Discovery Global side.

And, you know, if I should summarize it, to me it comes down to four things. One is the focus. Right? We you know, this is all we do now. And there are there are areas, know, pockets of growth, pockets of investment opportunity that we just wouldn’t have tackled, you know, as part of a WBD conglomerate, but that, you know, make make a lot of sense to tackle now.

And that’s really what’s energizing the team right now. We have the opportunity to do that now. That’s tied to the second point, which is we have cash. The the business continues to throw off an enormous amount of cash. Now granted, part of that will be used to pay down pay down the debt.

As I said, we’re gonna carry the majority of the the debt of the combined company, you know, creating equity value that way. But there will be excess cash that we can now put to work within Discovery Global as opposed to, you know, handing it off to to HBO Max and and and and the studio. Number three is the the, you know, the fact that we have enormously valuable content brands and we have to reimagine those as actual content brands and not linear networks and and that’s something that applies across all of our genres. You know, it applies to our, you know, unscripted entertainment, it applies to news, it applies to sports, and the the teams are hard at work to to leverage those, you know, beginnings of of of digital expansion that we have in all of these genres. Right?

We’re gonna get Discovery Plus back over, you know, to to support the the entertainment networks. I mentioned earlier that Mark Thompson and Alex McCollum are are very close to launching a CNN streaming product, an all encompassing news product that I think is is is gonna be really exciting. And, you know, in the sports space, you know, we’re we’re we’ve got a massively successful, you know, social media setup with with Picture Report House of Highlights, and we’re working on creating our our own TNT Sports app, which is gonna be available as a, you know, as a streaming product, but importantly also as a bundle option, you know, internally with Discovery plus or, you know, not so internally anymore, HBO Max, but also, you know, open open to other partners in the industry. That’s that’s gonna be a great additional monetization opportunity. So and then there’s other there’s other, you know, avenues we can take, you know, content sales might might take a more prominent position going forward.

You know, long story short, just, you know, thinking way beyond just the the core linear monetization. And then the last thing I wanna point out is international. You know, we actually, think you took a group of investors to to Poland once, and I remember that trip because it was so eye opening for a lot of, you know, our investors. How you know, what massive, you know, positions we have in some of these markets. And, you know, that that’s true across a number of the key territories in in in Europe, very different top line trajectories in in in the in the more free to air dominated markets, and we’ve got very strong positions.

I think we have a lot of assets there that we can that we can build out, that we can build on, and that we can build around.

Jessica, Interviewer: There’s a lot in there, but so I mean, you mentioned the the, you know, the focus and how valuable valuable content brands you have. I mean, the plan to invest more in the brands and where would your content spending be going?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, you know, again, we’re in the process of of detailing out that strategy with with the team, and it’s it’s too early to give financial projections here. Bottom line is I don’t think that we’re gonna see dramatically, you know, a higher or different spend, but, you know, the way we allocate and and and reinvest might might look different going forward than it than it does today. But bottom line is we have investment opportunities that I think will have tremendous, you know, return on investment and actually, you know, surprisingly short payback periods.

Jessica, Interviewer: And is there any more you can do on the I mean, you’ve restructured a lot, but is there any more you can do on the cost side if revenue continues to be pressured?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, look, as you said, we have already done a lot. And I always stress that, you know, it’s it’s it’s not a reasonable assumption that for every dollar of revenue that comes out of the linear ecosystem, we’re gonna find a dollar of cost. But that said, you know, this this team is scrappy, is very focused and disciplined, and we will continue to to look at efficiency opportunities wherever we can as part of, you know, managing you know, as part of any anyone’s management, you know, in this in this market environment.

Jessica, Interviewer: And then before I switch gears a little bit, but, you know, is there any more that you’d like to you just kind of alluded to these apps. Is it that anything you’d say on time frame or how robust they will be or you know?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, these are these are big priorities, and and, you know, Mark and the team have been working on the digital strategy for CNN for for quite some time. And and, again, it’s a matter of weeks before, you know, they will come out and give a a launch date for that for that app. And, you know, as part of the separation, we decided that sports here in The US are gonna come off of HBO Max, and that means we need to have our own streaming home. And Louise and the team are driving that hard right now, and it’s gonna take a little longer than, you know, a matter of weeks, but we’ll we’ll hopefully have that ready right around the time of of our separation.

Jessica, Interviewer: And then on sports, you know, when you were in that path of, like, negotiating and sort of, you know, with the NBA or figuring it out, you were able to add a lot of, like, actually, quietly, but a lot of sports. Yeah. Are you are you is your portfolio where you want it to be at this point? Are there more things that are on your radar?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, remember, the the the most important purpose of that sports portfolio here in The US in in the context of that discussion was to secure enough, you know, premium high value content to assure sort of continued great partnerships with our affiliates. And we have achieved that. We have worked through all of these all of these deal renewals. That said, you know, sports is a core part of our strategy. We’re we’re always gonna continue looking at everything that that comes to the market.

And in many cases, you’re gonna see us say no because, you know, you have to be incredibly disciplined in that space. But I think as Luis and the team have shown, you can be very successful with that strategy. I love the portfolio as it stands right now, and if there are rights that become available as everybody is kind of reshuffling their strategies, you know, we’ll be there and we’ll take a look, and if we can generate some shareholder value off of it, we’ll we’ll be in business.

Jessica, Interviewer: There are several linear assets coming to the market that we we know about, and naturally there’s been a discussion of a linear roll up vehicle. Do you view your linear networks as a consolidator or maybe a target?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Look, the same thing as as public companies. You will always see us in every one of those processes. Right? Yeah. Yeah.

We we always wanna learn. We always wanna see if there are opportunities. You know, I I do think specifically in The US, it’s it’s not as simple as it looks, you know, on the face of it. The question I would ask is, does a transaction make us better or just bigger? And, you know, I think that’s a tough question this market.

I think internationally, are a lot of opportunities. I mentioned this earlier. We have, you know, very strong positions in some really attractive markets with very different, you know, core business trends, and I think there’s a lot that we bring to the table that goes beyond just just cost synergy, and again, so you’ll see us look at everything, but we’ll continue to be disciplined and make decisions with an eye towards real, you know, value creation opportunity.

Jessica, Interviewer: Right. So it sounds like the international opportunities far away to what you see domestically. And you have pretty big scale here already. Can you can you are there opportunities to scale up in Western Europe and Latin America? Like, where would you

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. I mean, you know, let’s you know, wouldn’t wouldn’t get very specific right now, but I would certainly hope so. Yeah.

Jessica, Interviewer: Right. Okay. On the last earnings call, of the things that came up was double sports rights costs in the second half. Can you help us think through the magnitude of this impact?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. That’s, you know, that’s unfortunately, you always need to you you can’t perfectly time all this, and that has led to some confusion with, you know, us bulking up a little more on rights as we prepare to, you know, walk away from the NBA. But it’s, you know, in a nutshell, if you exclude the Olympics in Europe for a second, you know, dollars 300,000,000 higher sports expenses in 2025 from those from that sort of, you know, redundant, you know, set of rights with with a lot of that hitting the second and third quarters. In the fourth quarter, we’re actually gonna start to see some relief. We’re we’re gonna be, you know, losing roughly a $100,000,000, from, you know, changes in the portfolio among others, the MBA, going away, and the bulk of that MBA driven cost saving is gonna hit, in in q one and q two, predominantly q two of next year.

So there’s there’s gonna be a a tailwind. And, again, as as as you mentioned, you know, I think the team has done a great job, you know, accumulating a portfolio. We’re gonna see some increases next year as well. We’re gonna have five college football playoff games, including a semifinal. And so, you know, it’s a it’s a it’s a great portfolio.

You can’t always perfectly tie in the financial impacts tied to it.

Jessica, Interviewer: And then just just on sports, I’ll go to my kinda last set of questions. But, you know, with ESPN launching their DTC service, it it seems, you know, and I guess they announced this bundle with Fox. It just seems like there’s a lot of opportunity to kind of bundle or reassess, like, how how you market sports. Like, from your perspective, for your assets, how how are you

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: thinking about it? Yeah. Look. I think I I think that’s right. And and I think you do need to have a an all encompassing, you monetization strategy in order to refinance these these rights.

That why that’s why it was so important for us when we made the decision to separate to quickly get something started that, you know, Luis can use in order to utilize our streaming rights. But as I said earlier, very much also with an eye towards, you know, the the flexibility to bundle this with with other products as as as we see fit or as as the the opportunities arise. So

Jessica, Interviewer: I realize there’s still some time before the separation is complete. Could you talk about what the key priorities are for you and David ahead of the separation?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Well, you know, the top priority is, you know, any separation is a time of uncertainty, you know, disruption for people not keeping our eye or keeping our eye on the ball and continuing to deliver. I talked about the the tremendous underlying momentum that we’re seeing right now. We gotta we gotta keep that going. Number two is to work through the the practical reality of separating this company. Again, this is hundreds of work streams, you know, thousands of people working on this, and, you know, I do wanna give a shout out, you know, to to the, you know, the thousands of people that have worked tirelessly on this in times of uncertainty, including, you know, lot of people taking the labor in Labor Day quite literally, getting through these work streams, that’s a a second priority and again we’re seeing great energy everywhere in the company, specifically on both sides of this upcoming split and David and I and the teams are are ready and can’t wait to get started.

Jessica, Interviewer: Okay. So last question. When can we expect to hear more about the go forward strategy and the key priorities for each company post separation?

Gunnar Wiedenfels, CFO, Warner Brothers Discovery: Yeah. You know, as I said, this is this is an ongoing process. We’re we’re we’re, you know, actively working on on strategy. We’re actively working on, you know, a very early budget process for next year and a refreshed long range plan for for both companies. You know, we’re we’re gonna begin terming out the bridge loan at some point.

We need carve out and and pro form a financial statements, so, you know, closer to that second quarter date of next year, we’re definitely gonna be in front of investors both on the debt and the equity side with a lot more detail. Right.

Jessica, Interviewer: With that, thank you so much. Thank you.

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