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Ladies and gentlemen, welcome to the Warner Bros. Discovery fourth quarter 2024 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speakers’ 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. Sir, you may now begin.

Good morning and thank you for joining us for Warner Bros. Discovery’s Q4 earnings call. Joining me today is David

Good morning everyone and thank you for joining us. Two and a half years ago when we brought Warner Bros. Discovery together, our vision was to combine Discovery’s leading position as a global force in media and entertainment with local content and local sports alongside the iconic storytelling brand’s IP and libraries of Warner Bros. and HBO. This powerful combination is a unique compelling offering that we believe would resonate with consumers worldwide. It was the strategic guts of our transaction. Our direct-to-consumer business ended 2024 with about 117 million subscribers across more than 70 countries, and we still have nearly half the world to go with many key markets like the U.K., Italy, Germany, and Australia launching over the next few years. We added about 6.5 million subscribers in the fourth quarter and nearly 20 million subscribers in less than a year. Max continues to grow at a powerful pace, and we expect it to continue throughout 2025 and beyond. In this generational media disruption, only the global streamers will survive and prosper, and Max is just that. With the launch of Max internationally in 2024, we now have a global subscription business that is growing subs, revenue and EBITDA. We have a clear demonstrable path to at least 150 million subscribers by the end of 2026, fueling further revenue and EBITDA growth. Max is one of the world’s very few global and profitable streaming services. Our direct-to-consumer business contributed almost $700 million in EBITDA, a $3 billion improvement in just two years, and we expect direct-to-consumer EBITDA to nearly double in 2025. As I mentioned in our last earnings call, we are laser focused on getting our studios back to a place of industry leadership and generating $3 billion or more in EBITDA. We are showing growth and real strength in Warner Bros’ television business, which I believe is the highest quality and largest maker of TV content in the world. We are excited about our studio’s creative and financial outlook this year and beyond, particularly all of this coming from Warner Bros Pictures and DC Studios, kicking off with the release of Superman this July. Despite the headwinds facing linear television, we recently struck a flurry of multi-year renewal agreements with five of the six largest pay TV providers in America, many of which were a year early and all of which commanded overall rate increases. These long term deals provide real security and stability to our linear business. Finally, we have been hard at work and have made real progress implementing the reorganization we announced in December, which went into effect on January 1. This new structure will provide investors with better visibility to the strength of our streaming and studios business and will give us real strategic value and optionality into the future. 2024 marked a year of significant progress in transforming Warner Bros. Discovery, laying the foundation for what’s next and positioning us as a global media leader committed to providing shareholders with sustainable future growth. We remain fully focused on enhancing shareholder value and welcome your questions.

Ladies and gentlemen, we will now begin the question and answer session. [Operator instructions] Your first question comes from Jessica Reif Ehrlich with Bank of America Securities. Your line is open.

Thank you, good morning everybody. Two questions, please. Can you give us an update--David, you just alluded to the restructuring taking place as of January 1. Can you talk about potential longer term more transformative actions, and then secondly, in the shareholder letter there was a comment on near term linear pressure as you add direct-to-consumer and greater packaging flexibility. Can you flesh that out and maybe discuss the long--you know, in ’25 will there be consolidated growth?

Morning Jessica, this is Gunnar. Let me take those two. Starting with the corporate restructuring, this, as you know, has been a real priority for us and we’ve made great progress. As we said in the letter, we have implemented that new structure effective January 1. As you would imagine, there is still a lot of project work underway to manage and implement the financial aspects of the reorganization - you know, we would still have some processes run out of the wrong entities, tax implications, etc., so we’re still working through that with a lot of focus, and we’re making great progress, and as we said in the letter, we’re hoping to wrap that up really within the next few weeks. The point that I want to--

I would just add that I think this restructure creates real visibility to the strength of our studio and library and global streaming business. It allows us to--we’ll be better able to respond to this generational disruption. The new structure will enhance our strategic flexibility and also create potential opportunities to unlock additional shareholder value, which we’re focused on. We’re also focused on executing our strategy while ensuring we’re able to take advantage of broader market opportunities as they arise. In this disruption, we expect that there will be.

Yes, the last thing I was going to add, Jessica, is we don’t think from today’s perspective that we’re going to see a dramatic change to our segment reporting, but we are planning to provide incremental guidance beyond that to create more clarity on the global linear network on the one side and then streaming and studios - think of it as sort of a sub-consolidation and, based on the progress we’re making, I’m hopeful that we’ll be able to provide that as we report first quarter earnings. Then on your point about linear pressure and packaging flexibility, I think--you know, I want to take a step back. The work that our affiliate team has done in 2024 is just absolutely unbelievable - you know, working through all these agreements ahead of schedule and securing rate growth in the current environment, I think is a remarkable accomplishment.

And it takes us--it give us a different cadence, you know, having started as a--in the distribution side of the business. Normally you would have your deals coming up 20% a year, so you’re always facing that, either opportunity or uncertainty. In my--in all of my experience, we’ve never had this secure of a base, where almost all of our deals are done with increases with all of our channels carried for a period of years, that gives us, I think, a real advantage as we go into--it takes one issue off the table for us.

And as we look forward, the one thing I would want to call out, we’ve seen pretty strong rate increases in the prior year, in Q4, close to 6% rate increases in our domestic affiliate business. With the new set of deals, those rate increases are going to be slightly slower, more in the low single digits versus mid single digit rate, but as we laid out, we have also as an industry come together and created some flexibility that will drive the sustainability and longevity of that ecosystem. Then specifically when we look at the international part of our business, it’s really remarkable how across our international footprint in the aggregate, we are already seeing positive net revenue impact from our affiliate renewals. What does that mean? In many of these renewals, we’re working together with our affiliate partners to make some concessions on the linear side, where they’re facing not as pronounced but similar pressures as domestically here, but we’re cooperating through soft or hard bundles on the DTC side and net-net in the aggregate we’re growing. Across our international affiliate portfolio, we’re up in revenue - that’s the kind of crossing of the line that we’re looking for. We’re not there in the U.S. yet, but it’s a great proof point that we’re seeing that strong value and demand for our content internationally already leading to consolidated growth.

Thank you.

Okay, let’s move to the next question.

Your next question comes from Robert Fishman with MoffettNathanson. Your line is now open.

Hi, good morning. Two for you guys. As you think about the importance of scale in DTC, curious does Max have enough diversity in programming as a standalone service to compete with those larger SVOD platforms; or maybe asking it differently, any updated thoughts on whether the smaller streaming platforms ultimately need to consolidate? Then on a related note, when you think about the strategy to use sports and news on Max, pulling that content from the ad tier, I think yesterday, can you talk more about how you plan to explore ways to evolve the sports and new distribution ecosystem? Thank you.

Thanks Robert. We really see our offering as unique and there are very few global streaming services, and the kind of demand and consumption that we’re seeing around the world is quite compelling, and it’s really driven by the quality of the original storytelling, whether it’s White Lotus, House of the Dragon, The Pit, together with the great library of content that we have and the great IP and motion pictures. But you add that to the fact that we have 20, 25 years of entertainment content from our free-to-air channels, cable channels around the world, and sports, it’s really the quality package of content you really want to see, which includes even things like Friends and Big Bang Theory. It’s got a great menu. It’s distinguished from others because, in addition to that very high quality, you also have meaningful local, and so--and that is also driving not only consumer interest but distributors’ interest in the product, so we feel really good about where we are. JB, talk a little bit about our news and sports strategy, because it differs in the U.S. versus other markets.

Yes Robert, I think both on the diversity point also, we’ve never gone into a period, as we look out over the next two years and, frankly, well into 2027 at this point, where we feel better about the line-up, the consistency, the strength. You saw in our note we have 15 franchises returning that have been in our top 20 of all time, so we feel really good about the content line-up coming and the diversity of that content line-up over the next two-plus years. On the sports and news front, we recognize and we’ve said, I think fairly openly, that we’re continuing to experiment on what the right model is, and the reality is we have a variety of different models in operation around the world. In the U.S., as you rightly point out, we announced yesterday we’re moving sports and news out of the ad-lite and into the premium and standard add-free. In Latin America, we have it across all of our packages; in Europe, we up-sell it as an add-on and a buy-through, and so we’re openly continuing to experiment as to what the right model is and what the best way is to both drive engagement and first views or acquisition through that powerful content, but at the same time make sure we’re figuring out a business model that works. We’re going to continue to experiment and see what works, and we have the beauty of a global footprint with rights across the world that we can experiment with.

One of the things that we’ve pivoted on is Mark Thompson and Alex MacCallum, who--the two of them built the digital business at the New York Times, we see that as an opportunity to build a completely separate digital and subscription line of businesses, and over the next few months, they’ll be out talking to you about how they’re taking advantage of CNN as the largest digital news brand in the world, the most trusted news brand in the world with over 150 million people coming every month, and how they’re going--and what we’re doing to build a sustainable digital business out of that. But when you look at the overall question of what are we, we said three years ago it’s not how much, it’s how good, and that has been our focus. In Europe when we have sport, we have the best sport, and we’re going out with the highest quality content, and so that is KC and Channing and Mike and Pam, the focus is--and Gunn, it’s not how much, it’s how good for this streaming service.

Okay, let’s move to the next question, please.

Your next question comes from Kannan Venkateshwar with Barclays. Your line is now open.

Thank you. Maybe a couple. First one on strategy, David, if you could just outline how you see the asset landscape right now. Obviously there’s a lot going on in the industry with different objectives, but in this environment, do you see yourself as a buyer or a seller? Is there an opportunity to maybe become the consolidator and do some kind of bigger spinoff of networks? Your thoughts on that would be useful. Gunnar, just to follow up on Jessica’s question on the full year, when you have easier comps on studios this year and if we just look at networks, despite the headwinds, if you just stay with the same trend line as this year into next year and then DTC profitability that you guided to, it would imply that you should grow EBITDA in ’25, so is there something that takes away from that algorithm? Would be great to get your thoughts on that. Thanks.

I guess fundamentally when you look at the marketplace, we really believe that the global players will be those that will really prosper in the years ahead, and ultimately the largest sustainable growth media companies, there will probably be four or five, or six, and our job every day is to fight to get a seat at that table. We feel that we’ve made real progress now with our global streaming service and the global appeal of all of our content and the consumer reaction to assure that seat. The consequence of that, I think, is there’s more and more pressure on regional players - can they build their own platform, do they have enough local content? One of the things that we’re seeing now is we’ve been talking about bundling for two and a half years, but many of the really high quality local players have come to us now after two or two and a half years and aligned on our strategy of better together, so whether it’s Globo in Brazil or Televisa in Mexico, or all across Europe players coming to us, and I expect that’s going to happen. There will be a few global players, there may be some consolidation in getting there. The consolidation may simply come with bundles, and the bundles, you know, as opposed to just being an economic bundle, will be a consumer-friendly bundle where you can move between content from one to another. I think we’re going to be a very, very attractive player. We’re already having a number of discussions, and we’ll just have to assess how strong we are alone and who and when we need. In the end, we’ll always do what’s right. We’re a public company, we’re always going to do what’s right for shareholders. But JB, this idea of bundling, because this is something we’re attacking regularly.

Yes, I think at the end, as David says, there are two forms of re-aggregation: there’s a structural one, which is what David talked about, and then there’s a commercial one, which is the bundling strategy, and we’ve seen great success with it obviously here in the U.S. with Disney, seeing it both drive acquisition as well as significantly reduced churn. And to the earlier question that Robert had about diversity, the reality is the industry has gone from a model in the 2010 to 2020 period of everybody trying to do everything and, frankly, a glut of content and an overspend, to a much more rational spend where we’ve gotten all back to doing what we’re really good at and providing consumers access to all that goodness through these bundles. I think that is a commercial path to getting a lot of the value, and we’re seeing it happen already. As David said, the good news is people are seeing that and it’s gaining a bit of momentum across the world, not just with global players but, frankly, with regional and local players as well, so we think that’s an exciting new growth vector for us as well.

Yes, and sports will be a pressure point. Some regional players are becoming more and more dependent on sports and rental sports, and the ability to really build a long term platform on short term sports rights has not been a good story in the past, and it’s unlikely to be a good story in the future.

Then Kannan, on your financial follow-up, as you saw in the letter, we’re not intending to give consolidated financial guidance this year, as we did in the prior year as well, but we have a lot--and I’ll just recap some of the points we put in there and give some additional context. Starting with DTC, you saw the $1.3 billion EBITDA target - very achievable from our perspective, and importantly having gone through a $3 billion swing over two and a half years here in profitability, I do think we have now earned the flexibility here to make trade-off decisions, get behind what’s really working, fuel further growth or optimize for profitability where we don’t see those opportunities, so I think that’s a pretty specific guidance that you can model. On the studio side, you’re right - we do have a lower comp in 2024. We talked about the limited avails for content licensing in the prior year - that’s obviously getting better. We have a humming TV production business, which we expect to continue growing and improving in profitability - Channing’s team is already doing a phenomenal job, and then JB--you may have seen the restructuring of the games unit that JB has implemented towards the end of last year, so with that, we should be in a much better position in 2025 as well. I also believe that our film slate has a greater balance, and as we’ve discussed multiple times, we should be--you know, with the process rigor we have implemented, we should be doing better financially, both in success and the inevitable misses that you have to success with a hit-driven business as well. In a nutshell, studios, certainly very significantly better in EBITDA this year than in the prior year. Then the third point, obviously, is the network business, and I don’t want to create the wrong impression here - that business continues to face challenges. We have seen a weaker ad sales result in Q4 than what we had hoped for, what we had expected frankly. We didn’t expect a ton of political advertising, but CNN we had hoped for a greater benefit from the elections, which didn’t come in. Now, going into the first quarter, we see some mild positive signals from the ad market. It’s not a sea change, but we’re seeing less upfront cancellations than in the prior year. We’re seeing scatter CPMs up moderately, but we also acknowledge that we have some work to do in terms of our linear portfolio. Ratings and delivery, Channing has taken over that business as an additional responsibility, has put the team in place. There are a lot of content initiatives that are underway, some new shows - you know, Baylen Out Loud on TLC, the team that’s delivered so many hits in the past is doing very well, and the thing that I’m most excited about is that Channing, with her vast knowledge of the deep library at Warner Bros. and HBO is going to implement a strategy of much more efficiently utilizing those libraries. That’s always been one of the core ideas from a synergy perspective here, so hopefully we’ll be seeing some progress there as well. Then I called out on the affiliate side the fact that we’re going to--we’re expecting to continue to see sub declines. It’s probably too early to expect a leveling off or a significant moderation, slightly lower rate increases than in the past. We do have a great sports portfolio, and again I’m very, very happy with how that sports strategy has been implemented over the past few years, but that does mean that we’re seeing some incremental expense in 2025, importantly expense that will come back out in 2026 because, remember, we have a half season of the NBA this year and that was a significant chunk of expense, and 2025 is only suffering a little bit on the expense side from having that expense plus the cost of the new rights, that we’ll see a very significant improvement as we come out of the year into 2026. Other than that, we will continue to be very, very focused on cost. It continues to be a huge priority for the team, albeit obviously now from a basis of a cost structure that’s already been improved very significantly over the past few years. Then last comment I’ll make is on the international side, we continue to see trends in the linear market that are much better than domestically, not in the aggregate growing but a much more moderate pressure there, even though in the current geopolitical environment, we had to acknowledge that there is some uncertainty there as well. That’s the reason why we’re not out here with a firm, hard number for that business or the company in the aggregate. But look, we’re making phenomenal progress in the transformation of our business and the intention here is, obviously, to have those lines cross, and we see so much opportunity in DTC and the studio businesses, and we have no doubt that we’re going to cross the lines at some point but I’m not putting a timestamp on it.

Thank you.

Your next question comes from Kutgun Maral with Evercore ISI. Your line is now open.

Good morning and thanks for taking the question. I wanted to ask about free cash flow and the balance sheet. Gunnar, I know you just mentioned that you are not providing explicit consolidated guidance and walked through the moving pieces and the uncertainty ahead, so forgive me for the follow-up, but any chance you could expand on the free cash flow outlook for the year, particularly with the moving pieces across working capital? I ask in part to get a better sense of where net leverage can move to from 3.8 times today, because it seems like we could see a healthy year of deleveraging ahead, but I can’t really tell with the EBITDA commentary, so would appreciate your perspectives. Thank you.

Sure, look Kutgun, as you know, free cash flow has been one of our top priorities from a financial perspective, the most important metric, and we have really changed the entire company’s mentality here. This was not a fact anyone looked at three years ago, and we have a pretty well oiled machine now, and that’s one of the reasons why we continue to put up these strong cash conversion rates, even with some top line pressures especially on the linear side. The balance sheet, I think is in very good shape now. By the end of this quarter, we will have paid down $19 billion of debt since closing the transaction, and we will continue to be super, super focused on this. At the same time, I also want to reiterate that I’m not worried about any maturities. I view our capital structure as a real asset. The terms that we locked in between the rates and the maturity profile are an absolute strategic asset for this company, so we’ll continue to focus on bringing net debt down further. I continue to believe that 2.5 to 3 times is the right leverage target for this company, but it’s not the end-all, be-all target of this company. Specifically for free cash flow in 2025, again we’re going to continue to focus on it. Talking through some individual building blocks, we want to continue growing content investments, albeit with continued improvement of our ROI against those investments, and I see evidence of that every day. Moving further through the free cash flow walk, working capital will be strong again in 2025. We did have a good result in ’24, even though there was a drag of almost $500 million from paying down some of our securitization facility opportunistically, which I don’t expect to happen in 2025. We’ll obviously benefit from lower debt load and corresponding interest payments. We are going to see a little more capex as we expand our production footprint, predominantly in Leavesden, expanding our capacity there, and restructuring expenses are going to continue to come down. But to your point, the absolute dollar amount in the end is going to be mostly driven by the resulting final EBITDA number, of course.

Very helpful, thanks Gunnar.

Your next question comes from Rich Greenfield with Lightshed. Your line is now open.

Thanks for taking the questions. I’ve got a few, but hopefully they’re quick. Given your comments about sports costs that penalize ’25 until the NBA ends after the first half, how should we think about the net sports cost savings for ’26 versus ’25? Disney is also--this sort of goes to JB’s commentary, Disney’s dropping a whole bunch of sports, you’re probably going to have half the UFC available, all of F1, and Sunday Night Baseball is obviously now available, but it doesn’t--given your renting sports comment, should investors assume that you don’t have interest in any of those sports rights at the moment? Then just finally, a follow-up on the earlier question on your new affiliate deals, do you get any type of minimum penetration guarantees for Max when you include it as a wholesale as part of these packages? I know you used to get minimum penetration for your cable networks, and I’m curious how that works for DTC.

Thanks Rich. Look, we like sports, but we’re very disciplined and we’re opportunistic, so we’re money good on almost all of our sports in this company. We’ve worked very hard to build our free cash flow, our EBIT, to pay down debt, and I think the critical element for us as we look at our streaming service is the quality content - the movies, the series that Channing and Casey does. That’s the leading edge of what consumers--and our library, but that’s the leading edge of the value equation, and we own that. When we launch Harry Potter in a year or a little over a year, we’ll have 10 consecutive years of Harry Potter and be able to amortize that globally around the world. That kind of investment also pays off in merchandising, in our smaller theme-oriented parks, and so our focus is let’s really spend economics on where we can get the best return. There are sports rights that we can look at opportunistically and say, we can make a real return on, but we are--we don’t need any more sports anywhere in the world in order to support our business. We would buy sports if we think it would enhance our business, and it’s going to get more difficult - you know, some of the prices being paid and some of the competitors are opting to go to sports instead of doing what we do, because what we do is long cycle, it’s hard, and it’s not easy to do what Channing and Casey and Mike and Pam and James do. When I see a real push to pay a lot more for sports to get effective--you know, guaranteed audiences, or an audience that you could really model versus building it on great IP, like Batman and the Penguin, I think that’s a good thing for us because that’s where we’re really build the value, and that’s what we build our brand around.

Then Rich, on the penetration and carriage commitment question, a couple things. One is it’s not a one-size-fits-all, and globally we have a variety of different models in play. The second is obviously we’re doing soft and hard bundles. In the soft bundles, obviously there’s no penetration or carriage commitments. In the hard bundles, there’s plenty that do have carriage or penetration commitments and then there’s others that don’t, so it’s really kind of a mixed bag. It’s hard to say it’s one particular model, but we certainly do in a variety of cases have obligations and commitments, and that’s part of what we obviously--the reasons we pursue them is that we do have carriage commitments like we’ve done in the U.K. with Sky, like we’ve done in other markets across the world, where the partner is agreeing to distribute it to fixed number of their subscriber base.

I’ll just add one last thing on the sports side, to be specific. We will see several hundred millions of dollars of sports expense come out in 2026. To be fair, there will be some associated ad revenues as well, but this should be certainly a few hundred million dollar improvement in 2026 over 2025.

Thank you.

Your next question comes from Mike Ng with Goldman Sachs. Your line is now open.

Hey, good morning. Thanks for the question. I just have two related to DTC. It was encouraging to hear about the 150 million-plus subscriber target by the end of 2026, of that, roughly 35 million subscriber growth over the next two years. Any thoughts on how much is domestic versus international? It sounds like the comments around the international launches and the hard bundles, it seems like it’s more international, but just wanted to get your thoughts around that. The related ARPU pressures because of these growth drivers, is that more of a comment around ARPU potentially being flattish from here, or could we actually see ARPU down a little bit before normalizing and returning to growth? Thank you.

The U.S. is a pretty mature market. We think that there’s still some growth, given the quality of our service, and we’re fighting for that. A lot of the growth may come from price as we play around with the quality of what we’re providing versus the cost of what we’re providing, as well as how many people in a home can use the service, and that will be rolling out. But this idea of global media company and a global streamer and being able to scale, that’s the point that we’re pushing on right now, on an open door, and that’s what we think when we look around. There’s not a lot of players playing that game, so. JB?

Yes, I think Mike, a large proportion of the growth will come from international, just because, again as David mentioned, we’ve got a material footprint outside the U.S. that we’re not even reaching yet, and so that international growth will come from launching in new markets as well as penetration growth. That’s the answer on the first question. On the ARPU question, you will see some deterioration in the ARPU in the near term, but again at this point of our expansion to be given that--you know, you think about things like our ad-lite offering, prior to about 15 months ago, it was only available in one market, it’s now available in over 45 markets. That’s taking time as we go with a lower priced ARPU or price in some of these markets and build up the advertising revenue stream, that will take some time. As we launch in international markets in Asia, which is a region that has generally lower ARPUs, you’ll see some obviously continued pressure that comes from that, and then as we do recognize that trying to get the product in the hands of more people more quickly is a priority, as we do these attractive hard bundle deals where we do give up a little bit more on pricing to get immediate scale and distribution, that will as well. You will see that pressure go on, but we’ll continue to manage the business smartly in terms of looking at our subscriber acquisition costs and balancing that with the right LTV profile, and we think there’s a lot of room still to lean into that equation based on the numbers we’re seeing. Medium to long term, we’re very confident we can get back to ARPU growth, even after this expansion period here over the next 12 to 18 months.

Great. Thanks David, thanks JB.

Your next question comes from Ben Swinburne with Morgan Stanley. Your line is now open.

Thanks, good morning, and thanks for the shareholder letter - I think it’s helpful. There’s three long term--I guess you wouldn’t call them guidance, but long term goals that you guys have talked about, either in the letter or this morning, one for each segment. I was hoping you could talk a little bit more about in networks, there’s a comment that you think you can stabilize segment revenues over the next few years following the MVP agreements. That would be certainly exceeding the market’s expectations, so would love to hear a little more about that outlook. The 20% margins at DTC, any timeline that you’d want to share with us at this point? I think you’ll be probably around 10-plus for ’25. Then David, the $3 billion-plus of studio EBITDA, obviously last year was tough, but even the prior year you were kind of in the low 2s, so how can you help us gain confidence across those three metrics, all of which I think would be--would drive healthy value for your stock and upside to expectations? Thanks a lot.

Okay Ben, thank you. Let me take them one by one. On the network side, I want to make sure the comments are understood properly. We’re not expecting revenue stability as in zero growth or a decline. What we’re talking about is stabilizing our position within the industry trends, and certainly we do hope that some of the movement that we’ve now seen in recent affiliate renewals over time will have a positive impact on the industry overall. But don’t take this as sort of guiding to flat revenue from linear, but I do think our hand today is much better than it was, maybe six to nine months ago. On the DTC side, the 20% margin target, it’s one of those that we’re going to manage. I have no doubt that we’re going to be able to hit and exceed those margins, but we’re not going to be managing towards a margin goal - it would be wrong. As JB laid out, we’re looking at lifetime value relative to [indiscernible]. We now have a profitable business and we will use the flexibility to make the trade-off decisions. I’d much rather have stronger growth in ’25, ’26, ’27 maybe at the expense of a little bit of EBITDA margin because it builds longer term asset value. Hitting a margin goal a year early or late really doesn’t help any of us, and first and foremost, shareholders are going to benefit from the asset value we’re building. But again, the margin target itself, I think is very well in hand based on our plans. Then on the studio side, again let’s go back to what we discussed during the third quarter earnings call. I laid out some of the points that impacted 2024, among others a year that had a very, very low number of avails in our content library. We know that 2025 and all of the years in the near future are going to have much, much better profiles, so that is a major part of the profitability of our studio. While the film and TV production drives the replenishment of the library, availability dates are a major factor. The other point is I don’t think we’re going to see a year like 2024 again when it comes to what happened in the games business. This was a real outlier to the negative after maybe a bit of an outlier on the positive in 2023, but based on the restructuring that JB has implemented, I think we’re in a much better place. Remember, we have made real changes when it comes to managing our franchises, when it comes to driving the ancillary revenues in the consumer product segment - experiences, tours and retail, all of those things are now coordinated from the moment of green light, as opposed to being an afterthought previously, and those are real margin opportunities for every dollar we spend. Again, I think we’re going to see a real step-up in EBITDA in 2025, but when David talks about getting the studio to $3 billion, that’s not an end state, that’s fixing where we are right now and then growing from there, and we believe the studio has enormous potential beyond that.

Thanks Gunnar.

Our last question comes from John Hodulik with UBS. Your line is now open.

Great, thanks for taking the question. Maybe just a quick one on skinny sports bundles. Despite the wind down of Venu, it looks like this distribution model is going to proliferate - you have DirectTV, Comcast, it sounds like one’s coming from Fubo. Maybe David, what’s your initial thoughts on these bundles in terms of do you think they’re going to see meaningful adoption and drive any sort of meaningful change in either cord cutting or affiliate trends at Warner Bros? Thanks.

I think part of it is going to depend on the consumer value proposition. The idea of aggregating sports together and offering it on a contemporary platform, where instead of thinking about channels you can think about sports and go there and see it, is very compelling. It was one of the reasons that we were driving behind Venu. Some of these bundles, if you look at them as contemporary platforms that just provide a better consumer experience, is positive but it really depends on the value equation. If it’s very close to the price of the overall bundle, what we’ve seen over the years is that even though consumers might think that that is what they choose, when they do get the choice, unless it’s significantly less expensive, they opt for the bigger bundle where they can see a wealth of other quality content. I think ultimately, everything we’re doing is going to be driven by providing a better consumer experience, and everything we do here is driven by that. It’s one of the reasons why we’re so optimistic. When you put the TV set on and you see 18 apps and three people watching TV at the same time have their phones out, Googling where a show is or where a sport is, it’s not a good consumer experience. The value creation over the last 50 years almost always follows a better consumer experience, and that’s what we’re doing with Disney, that’s what we’re doing with Verizon when we’re together with Netflix, that’s what we’re doing on our own by having local sports, local content together with the best quality TV and motion picture content, and that’s why I think there will be an aggregation in a meaningful way behind a couple of the bigger global players because consumers, at some point, they’re going to say this is too cumbersome and too challenging. I just want to put the TV on, or I want to go to my phone or whatever device I go to and be able to see the content that I love without having to come in and out of products and without Googling where things are. I think that’s going to be the wind at the back of this industry, and I think everyone’s going to have to get on-board with that because consumers are going to demand it. That’s where we’re going.

Thanks David.