華納兄弟探索 (WBD) 2025 Q4 法說會逐字稿

Ladies and gentlemen, welcome to the Warner Bros. Discovery fourth-quarter and full-year 2025 earnings conference call. (Operator Instructions) Additionally, please be advised that today's conference call is being recorded. I would now like to hand the conference over to Mr. Peter Lee, Senior Vice President, Investor Relations. You may now begin.

Good morning and thank you for joining us for our Q4 and full-year 2025 earnings call. Joining me today from Warner Bros. Discovery's management is David Zaslav, President and Chief Executive Officer; Gunnar Wiedenfels, our Chief Financial Officer; And JB Perrette, CEO and President, Global Streaming and Games. This morning, we issued our earnings release, shareholder letter, and trending schedule, and these materials can be found on our website at ir.wbd.com.

Today's presentation will include forward-looking statements that we make pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include statements about the benefits of the planned separation or the proposed transaction with Netflix, future financial and operating results, future company plans, objectives, expectations, and intentions before and after the separation, and other statements that are not historical facts.

Such statements are based upon the current beliefs and expectations from Warner Bros. Discovery's management and are subject to significant risks and uncertainties outside of our control that could cause actual results to differ materially from our current expectations. For additional information on factors that could affect these expectations, please see the company's filings with the US Securities and Exchange Commission, including but not limited to the company's most recent annual report on Form 10-K and its reports on Form 10-Q and Form 8-K.

I will turn the call over to David for some brief remarks, after which, we will take your questions. Before doing so, I would kindly request that you limit your questions to topics related to our Q4 results and related business and financial topics. As noted in our shareholder letter, management will not be taking questions regarding the Netflix transaction and our discussions with Paramount Skydance.

And with that, I'll turn it over to David.

Good morning, everyone, and thank you for joining us. From the beginning, we said our goal for Warner Bros. Discovery has been to make this great company the most innovative and exciting place to tell stories in the world. Looking at 2025, it's clear we fulfilled our ambition. Warner Bros. Motion Picture Group delivered a historic run of success with nine films debuting number one at the box office in 2025, seven consecutive films opening with more than $40 million in box office sales, a first for any studio, and our film spent 16 total weeks atop the global box office.

We accomplished this through brilliant original films, like One Battle After Another, Sinners, Weapons, and global tent pole titles like A Minecraft Movie and Superman. And we revived IP like The Conjuring: Last Rites and Final Destination Bloodlines. Fans responded and critics did too.

Our film slate won nine Golden Globe Awards, including Best Picture - Musical or Comedy for One Battle after Another, and cinematic and box office achievement for Sinners. Next month, we're up for an industry-leading 30 Academy Awards, and we're optimistic the incredible original films we produced and talent we've worked with will deservedly be recognized.

And we are seeing momentum continue in 2026. Wuthering Heights, our ninth consecutive theatrical release to open number one, has generated over $160 million at the global box office in two weeks, including an $83 million opening weekend, further reinforcing our commitment to exceptional original storytelling and our position as a premier destination for the world's leading creative talent.

Building on the momentum, our 2027 film slate is set to deliver a truly monumental year for Warner Bros., with tentpole and franchise powerhouses on the horizon from Godzilla versus Kong 3. Superman: Man of Tomorrow from James Gunn, Minecraft 2, Conjuring: First Communion, Batman Part II from Matt Reeves, Gremlins, and Lord of the Rings: Hunt for Gollum.

We also brought innovative and exciting storytelling to television both in streaming and through our linear networks. So many of the series that shaped global culture in 2025 were delivered to audiences around the world by HBO and HBO Max. Building on shows like The Pit, The White Lotus, and The Last of Us, HBO continued to deliver hits in the fourth quarter, with several breakout sensations.

IT: Welcome to Derry, delivered the fourth strongest debut season in HBO history, averaging 27 million viewers per episode. And Heated Rivalry which averaged 13 million viewers an episode and drove meaningful social media engagement. That momentum is ongoing. Both The Pit and Industry have become cultural sensations with their new seasons, which debuted in the first quarter of 2026, seeing 30% and 50% respective audience growth versus their prior seasons.

A Night of the Seven Kingdoms, the third installment of the Game of Thrones franchise, has also debuted strongly, averaging over 24 million viewers per episode and growing. With House of the Dragon, Euphoria, The Gilded Age, Dune: Prophecy, and HACKS returning this year, as well as the premiere of Lanterns and Stuart Fails to Save the Universe, this is just the beginning of what promises to be a banner 2026 for HBO.

Our Streaming segment also delivered terrific growth. Scaling HBO Max globally has been one of our core priorities for four years. We've executed our plan with focus and discipline, now exceeding the 130 million subscriber target we set out in August 2022.

Following the successful launches of HBO Max in Germany and Italy, and the upcoming launches in the UK and Ireland, we are on track to reach more than 140 million total streaming subscribers by the end of the first quarter. And we're well on our way to exceed 150 million subscribers by the end of the year.

Our Global Linear Networks also continue to create and tell stories that inspire and entertain fans. With 17 of last year's top 25 new cable TV series, and improved general entertainment viewership trends in recent months, our Global Linear Networks teams clearly remain highly attuned to today's audiences.

While secular headwinds persist, our portfolio of networks attracted 30% of all primetime cable viewing in the US. And we advanced critical initiatives like the launch of CNN All Access. Encouragingly, we saw a sequential improvement in advertising trends during the fourth quarter, which has continued into Q1.

And of course, the 2026 Milano Cortina Olympic Winter Games, which closed this past Sunday, was a massive success for Warner Bros. Discovery. Over the course of the Winter Games, we saw more than 50% growth in linear hours viewed compared to the 2022 Winter Games, and we more than tripled our streaming audience on HBO Max and discovery+ throughout Europe.

Four years ago, Warner Bros. was a business in need of transformation. Over that time, we've invested aggressively in transforming Warner Bros. Discovery for the future. We invested big in making great original film and television, and reignited important legacy Warner Bros. IP like our DC attack plan, which James Gunn and Peter Saffron have been executing, Harry Potter, Lord of the Rings, Gremlins, together telling stories that have shaped global culture.

We invested in streaming technology and turned HBO Max into a world-class D2C platform that we have now launched globally in over 100 countries and territories. And we invested in our global networks, evolving our brands, accelerating our digital future, and empowering teams to adapt, innovate, and continue entertaining audiences worldwide.

The result has been a creative renaissance at Warner Bros. Motion Pictures, Warner Bros. Television, DC, and HBO, and is exemplified by our success in 2025 with the best and most talented people on and behind the screen. Since our Q3 2024 earnings call, when we made clear we were evaluating all paths to unlock value, we have taken decisive actions, first through our corporate reorganization, then announcing the planned separation of Warner Bros. and Discovery Global, and ultimately, a comprehensive strategic review.

Our Board continues to lead a rigorous, highly competitive, and thorough sales process. We engaged with four bidders, which led to eight price increases and have thus far achieved a 63% increase in value versus the first offer received in September, delivering significant value for WBD shareholders throughout the process.

Our focus has and always will be maximizing value and certainty, while mitigating downside risks. And the Board will evaluate any proposal against that standard with the objective of delivering the best deal for our shareholders.

When we started Warner Bros. Discovery in April 2022, the WBD stock was around $24. Since then, we have been laser focused on transforming the business for the future, investing big in our creative culture and original storytelling at HBO, Warner Bros. TV, Warner Bros. Motion Pictures, New Line, and DC, all of which, created meaningful shareholder value.

With that, we now welcome your questions.

(Operator Instructions) Rich Greenfield, LightShed Partner.

Really, the first one for Gunnar. As you think ahead to the spin-off of Discovery Global this summer, there's a tremendous amount of investor focus on what leverage it can handle and what is really achievable. I guess, do you see any issues with Discovery Global being 3 to 4 times leverage, given the free cash flow dynamics of DG right now? And why do you believe -- because there's been obviously a lot of focus on Versant, why don't you look at Versant as a good comp for DG? Thanks.

Okay. Good morning, everyone. And thank you, Rich, for those questions. Look, I don't want to talk about specific comparison with our competitors here, but I do want to talk about the opportunity for Discovery Global, in general. And I have spent a lot of my time over the past half a year working with the great Networks leadership team; fantastic people. And I really do believe we have an opportunity to double down on what already makes us a global leader in the field.

We have unmatched scale internationally and locally. We have iconic brands reaching 1 billion people. We have trusted journalism with CNN and TBN and other players everywhere in the world, fan favorite talent, a world-class sports portfolio, and I'll say a little bit more about sport and how that differentiates. And a strong digital footprint that is already contributing meaningfully to the modernization of our brands and our network content and I think has tremendous growth opportunity as we get going here.

I do want to start with the international opportunity a little bit because that's typically harder to understand from a domestic perspective here. But number one, we have fundamentally different trends internationally. For example, we're expecting to be flat to slightly up in international ad sales this year. Obviously a fundamentally different set up than the domestic business. And largely impacted by the fact that we have meaningful free-to-air presence in many of the key markets.

We also have scale internationally that allows us to partner, potentially think about M&A partnerships, representation with other players in the market. And a team that's been in these individual territories for decades, boots on the ground, with strong relationships in all of our revenue lines. So that's number one, and I think hard or sometimes overlooked from a domestic perspective.

Number two is sports, and I'll talk about the US side here for a second. Not all sports rights are created equal, and if you look at our sports portfolio, and if you just take one metric over the past 12 months, we've had 104 -- 140 events where we reached 2 million people or more. So this is a high-quality, high-impact, sports portfolio, and we're committed to continuing to support that portfolio with opportunities as they arise, but we feel very, very well positioned with that.

I do want to talk about the plus for a second. We haven't talked about it a lot because HBO Max has been the core priority. But if you remember back when we merged into Warner Bros. Discovery, we were trying to shut down discovery+, and the fact of the matter is we still have millions of viewers who are very regularly engaged, who love the content, and there is a tremendous opportunity. We have already opened up the buy flow again in certain international territories. And as you saw in our proxy, it is a profitable business and I think has a lot more ahead for us.

CNN, I mentioned the journalism. CNN is the most trusted global news brand. The news gathering organization is unrivaled from my perspective. Whenever something happens anywhere in the world, we don't have to have people at a desk. We don't have to send people. We have people on the ground who are there, within hours or minutes sometimes, able to cover whatever is going on.

And that's reflected in the spikes and the strong viewership we've seen coming into the first quarter of this year. And Mark Thompson has been leading that business with an eye towards leveraging that core asset of the global news gathering organization into a much more -- a much broader monetization interaction model.

We've launched CNN and All Access to give people the interaction with our news offering however and whenever they want. And again, we saw in our proxy the ambition, how we're planning to begin growing that business again after a phase of investments.

And then, I'll speak as the CFO here again for a second. The capital structure, it's sometimes overlooked, and that goes to the first part of your question. Again, if you do the math based on what was disclosed in our proxy, you would see that Discovery Global would come out of the gate with roughly, call it, the 3.3 times net leverage number. That is absolutely sustainable and supportable.

I actually think that rating agencies are probably going to -- and again it's early days. We don't have final ratings yet, but I would expect that we're going to see single B, maybe low BB ratings for Discovery Global, so absolutely sustainable.

And there's a huge opportunity because as we've shown in the past, we are very well able and willing to leverage the opportunities in our long-dated, low-interest capital structure. So again, I could not be more excited about the opportunity and we're ready to get going.

Doesn't sound like you're losing a lot of sleep over leverage.

Absolutely not. I mean -- and that -- look, I mean, you're right. There has been a lot of investor focus. There has been a lot of debate also about this famous debt allocation mechanism. Just to be absolutely clear, this Board and the management team, we're targeting to optimize a shareholder value in everything we're doing.

We're targeting to not have to move any debt around. We put in that estimate range of 0 to $2 billion in the proxy to give ourselves some wiggle room, and that's the end of it. Thanks.

Thanks, Rich. Next question.

Robert Fishman, Moffettnathanson.

Looking at all your premium Warner Bros. and HBO original content and the franchise IP that you started to talk about, what do you think is now finally being appreciated that was overlooked before the sales process heated up? And how difficult is building new franchises from scratch?

And then just separately, as we think about your internal forecast for streaming profits to roughly triple by 2030, can you help us break down the drivers to reach that goal? What do you think is misunderstood areas of growth? Is it advertising, pricing, subscriber increases, or even more efficient spending? Thank you.

Thanks, Robert. I think that there was a, -- we certainly had a team, me included, that was focused on delevering this company and paying back debt. And we needed to accomplish that, and we did. But most of our day was spent on this idea of investing in original content and bringing back the great franchises that Warner Bros. uniquely owns and investing more money in content.

And so yes, we made -- we canceled a lot of movies and a lot of series when we first got here. The question we asked in each case is, how is this content and how are these stories helping us, and are they doing well? And so we canceled a lot of stuff that was down 50% or 60% that we didn't think was going to be successful.

What I think was missed was we hired a great leadership team, creative leadership team, and we invested enormously in this mission of -- this question that we ask ourselves all the time that -- what stories will we tell at this great company, at Warner Bros., at HBO, Warner Bros. Television? And so we really tripled down on investing, in getting the best writers and directors back at Warner Bros.

We didn't lose any creative talent in the last four years, and we added substantially to that. And investing aggressively in original content at HBO, Warner Bros. Television, Warner Bros. Motion Pictures. And not just investing in just doing -- in existing franchises. Batman II is very important to us, and Minecraft 2 is important to us.

But original content, that is really what Warner Bros. is about. It's why we invested in Sinners. It's why we invested in Weapons. It's why we invested in One Battle After Another, and I don't think anybody is investing in original content and television and motion pictures the way we have.

It did take time. We're a long cycle company. And so our commitment to DC was mostly heard in terms of language, and then you saw it with Penguin and Superman. Our commitment to original content, you saw it coming slowly. It came out with Minecraft and talking about building new franchises. Mike and Pam were able to do that with Minecraft. And Minecraft 2 is coming back. It made almost $1 billion and it's coming back in '27.

So I think when you look at Warner Bros. today and HBO, it's a company that's storytelling first, focused primarily on the creative culture, and with a superb creative team that has been given a great latitude to take risks to tell original stories. Because we are a business of challenge and failure, but with the Warner Bros. library, together with the creative talent we have, it's been a great creative renaissance at Warner Bros., and you see it across our entire company, and you'll continue to see it.

When you look at '27, on the motion picture side, it's stunning. And it's all coming together for Warner and for HBO as well. HBO has never been stronger. Casey and the team at HBO, have shepherded an extraordinary creative slate. And JB and his team fought to take that all around the world. And now that we'll be launching in the UK, Germany, Ireland, and Italy, we're not done yet, but it's a huge accomplishment to take this business global and to see it soar.

Robert, on your question about the levers for growth and what makes us, highly confident about the future growth of HBO Max and the streaming business, I'd say there's five different levers that we look at. One is, we say oftentimes the product is the content, and it starts with we've never been clearer about what we need, the kind of content we need, the customer segments we have to go after and strengthen.

And we've been at work at that for the last four years, continuing to improve it. And some of the hypotheses that we had, like the need for a longer running series that ended up with The Pit and with the strength of the team that Casey and his organization have.

We have a track record of delivering an incredible batting average with the swings that we take. And so the content is strengthening. We go into 10 years of Potter, starting in the beginning of '27. And so we have great visibility to a strengthening content slate which is at the core of everything we do.

The second is we are seeing and we do expect further volume and penetration growth, driven by, A, obviously, relatively recent launches in big sizable new markets, including the European markets that we are in the process of completing this quarter. And so there's more growth to be had in those markets, penetration growth in our existing markets driven by partly the content slate, a sharper marketing focus, social outreach that is strengthening.

And then we're in the second inning of our password sharing enforcement. And so that is just beginning to get scale. It hasn't expanded globally at all. That'll start in 2026. And so that's volume and penetration levers.

The third is product enhancements. We talk about this all the time that we went from not good to good, but we're still got a ways to go to get to great. And that is, every day, hundreds of improvements last year that we made that improve -- move the dial inches every time, but to improve engagement and retention.

The fourth is obviously retention. We have focused a lot. But the -- we still think there's significant opportunity to continue to improve churn and retention. And we have a number of initiatives going forward this year and next that will continue to drive that lower.

And then the last is just monetization, which is obviously a combination of both price on the subscription side, and ad sales, where we are very early in the ad sales growth trajectory based on the fact that our fill rates are still relatively low internationally. And we're still launching in new markets with our ad tiers and we think there's further upside in the years to come. So we feel great about the next couple of years and the really sweet spot of the flywheel we're finally getting into to seeing content, marketing, product enhancements all flow together to drive that growth.

Seeing HBO, driving it globally was such a key initiative for us and doubling down on the quality content. And also having -- backing Channing and her great team on rebuilding Warner Bros. Television as the largest and premier producer of TV in the world.

But one of our big bets was the motion picture business. We believe in the motion picture business. We love the motion picture business. And four years ago, most of the movies were being made to go direct to streaming. We did get rid of a lot of those movies, but then we took those economics plus some with an ambitious idea that people will come back to the theaters.

And Mike and Pam believed that and [Bradmer] believed that, and James Gunn and Peter believed that. And we as a company believe so deeply in the motion picture business, in putting movies on the screen for a shared experience. It's the top of the pyramid. It's what we all grew up with and we're awed by.

And it's what -- when we look at this year and we look at next year and the year after, our commitment to the motion picture business, it has -- it's at the core of our company, and we're just excited about the fact that people are going back to the theaters and they're going back to see our content.

Peter Supino, Wolfe Research.

I wanted to ask you to expand on the international expansion of DTC. You mentioned earlier in today's call that the programming is the product. And so I'm wondering if the amount of programming that you're offering international audiences is, today, driving enough engagement to get you a level of ARPU that enables you to make money? Or does that flywheel that you're working on require more programming dollars and doesn't require any local programming? Thank you.

Yeah, Peter, I guess a couple of observations. When we kicked off this journey four years ago, we said that we would focus on launching in markets where we thought we could actually turn -- return -- be profitable within a three- to five-year time horizon of launch. I will tell you that has turned out to be -- we've turned out to outperform that metric significantly and turn profitable in most markets within one to two years of launch.

And so we are well ahead of where we thought. And the international businesses are, particularly the ones that have been around for a couple of years like Latin America for example, meaningfully profitable. And so, we continue to see opportunities to drive that profitability further.

The big benefit that we have compared to some is that a lot of the IPs that we're working with have global audiences already. And so whether it be DC and are both DC theatrical slate as well as the DC series we do; whether it be obviously the HBO brands in a -- the Game of Thrones universe as an example. And even on the theatrical side, other series and other things that we have in development that piggyback off of an already established global franchises.

We don't need to actually -- our content appeals to those global audiences in a unique way that is different than most. And so our need to do a lot of local international content is a little bit different than other players, number one.

Number two is we are doing and we have been doing select international content in markets that either there's a particular need or where the content seems to travel better than in most places. And so we had a -- we were early on a couple of years ago to acquire the biggest leading local streamer in Turkey, which is a content type that travels well, Turkish novelas, across many parts of the world do really well. And so we target investment in markets where both there are strong, big scale opportunities as well as opportunities where the content tends to travel.

We had -- we announced this partnership with CJ last year on Korean content, which also obviously has a great track record of traveling well. And so we are already investing in local content. We don't see a need to have a meaningful spike up. We will continue to invest in those markets as is currently in our plan and in the financials you see represented in the proxy. But that -- certainly local international content continues to be important, but we don't see a certainly major step change needed to continue to drive our growth.

Bryan Kraft, Deutsche Bank.

I had two if I could. Just first on the Studio, I was wondering if you could provide some more color on the video games pipeline and how your broader strategy is evolving there, including what's coming in 2026? And just any directional color on what your guidance assumes for 2026 EBITDA contribution from video games relative to 2025?

And then, I just want to ask, on the Network side, could you give a little more color on the advertising improvement? I know there was an NBA headwind, but how much improvement did you see in domestic advertising, excluding sports, versus the international side, which also sounds like it's performing well and has some improvement?

Yeah. Thanks, Bryan. On the first one on the game side, so obviously 2025 was a year of reset for the games business. And we really went back to the basics. And the largest part of it was we had allowed ourselves to get distracted to going after too many IPs with a too broad a set of studios.

And the core of last year's reset was around getting back to proven studios with proven games and proven players. And so that's where we are now. Obviously, '26 is a year given that '24, we had unfortunately unsuccessful launches. '25 was this reset year, so we didn't really replenish the pipeline. '26, we'll see a year that looks similar to '25, but the real fruits will start coming in in '27, '28 when we return to some of our biggest franchises launching in that timeframe and returning to those franchises. We haven't announced those yet.

In 2026, we have two big IPs launching. One in May, which will be our Lego Batman series from our -- one of our most prolific studios in the UK, TT Studios. We are thrilled about -- we announced that game last August. We just released another trailer yesterday and the feedback and the trending and tracking is looking terrific for that game, and the quality of the game is fantastic. That's on the console PC side.

And the second game for '26 is -- out of our Boston studio with our successful mobile franchise Game of Thrones: Conquest, which will be coming out with a second game called Dragon Fire, that will be launching this summer. And again there -- that's a different profile. As you know, mobile games tend to have a more upfront cost based on the UA and the marketing cost, but we feel confident just like its predecessor, Game of Thrones: Conquest, which eight years on, is still delivering significant financial returns, that that one will also see a similar trajectory and will help us build an even more robust library.

Thank you, JB. And then on the ad sales, side, Bryan, so generally speaking, starting with the US market, from our perspective, the market itself has been relatively consistent with prior quarters. As you pointed out, we have done significantly better and the sequential improvement that you mentioned is after digesting [100 basis points] of NBA, headwinds in terms of ad sales.

And look, the drivers here are number one, the new upfront has kicked in. We're -- number two, we're seeing good scatter premiums. But number three, really some real health in terms of the underlying audience delivery, and that is across the board.

On the sports side, once you correct for NBA, we've done really well with the MLB playoffs. NHL has done well. CNN has seen improvement. And on the general entertainment side, we mentioned this in our shareholder letter, we've had 17 out of the top 25 premieres for freshman series. And importantly, we don't talk about this enough, but, this is across all of our key networks.

We had top shows for TLC with Bailing Out Loud, Fall of Diddy on ID, Flip Off on HG, Tournament of Champion on Food Network, and Discovery with Naked and Afraid. So all of our top networks are continuing to create high-quality output, and that, I think, puts us in a very good position for 2026 as well. We're seeing those trends continue with an even more pronounced uptick on CNN audience. So underlying delivery has been a real helper.

Turning to the international side. International again as an entire business line has outperformed relative to the to the US, obviously, with different trends in the different regions. But importantly, EMEA, our largest region, continues to do very well. And as I mentioned earlier, I think, we can see some real stability, potentially even a little bit of growth in ad sales going into 2026.

Thanks, Bryan. We'll take the next question, operator.

John Hodulik, UBS.

Maybe a couple of follow-ups on the Discovery Global side. Gunnar, you guys did some guidance for ad and OpEx savings for '26 on that side. One, anything you can tell us about the cost savings? Is it just the NBA, or are there additional opportunities for cost savings there?

And then is there a way to bottom line it in terms of how you see EBITDA trends in that business as we look at the '26 and maybe beyond? And then I'd love to get your view on how you see the sports business. You talk about the, TNT sports app. Just what's your appetite for building a sports business and potentially securing additional rights and how you see that business going forward?

Yeah. Thanks, John. So look, in terms of cost guidance, it's a little bit of a weird situation because we have -- you have our projections, our long-range plan in the proxy. And I think that answers your question to some extent. Again, there is a big benefit from NBA cost savings, obviously. And it's been a great outcome for us, maintaining that profitability through such a transformation of our sports portfolio.

We're going to continue to be very focused on efficiencies. In general, we are looking wherever we can at utilizing AI to further improve our efficiency and our effectiveness. Got some great projects ongoing that are creating much better visibility into our content, et cetera. Those are all going to be things that will help us drive efficiency and generate more output with the same cost structure.

On the sports business, specifically, we continue to have appetite for sports rights. It is one of the important strategic pillars as you heard earlier. And what hasn't changed is we're going to be disciplined. We're not going to be doing deals that don't make financial sense for us, but we're open for business. You will always see us involved in every process that's ongoing.

And we will know what the value is and we'll continue to be great partners. We're very happy with the partnerships that we have. And there will certainly be continued appetite as we go forward, even after separation into Discovery Global.

Thank you, John. And thank you, everyone.

Thank you, ladies and gentlemen. There are no further questions at this time. That concludes today's conference call. Thank you for your participation. You may now disconnect.