David Zaslav
Chief Executive Officer at Warner Bros. Discovery
Good morning, and thank you all for joining us. Two weeks ago, we closed our transformational merger and began our next chapter as Warner Bros. Discovery. As we begin the exciting work of bringing together the rich legacies of these two great companies, our mission is simple: to be the world's best storytellers with world-class products for consumers. It's been fantastic to finally have the teams working together. And I'd love having the opportunity to get time with the new leaders across WarnerMedia as well as thousands of employees across key locations in the U.S. And I couldn't be more impressed by the strong sense of motivation and excitement, an opportunity to unleash the potential of the combined talent pool of this new great company. These last few months in our industry have been an important reminder that while technology will continue to empower consumers of video entertainment, the recipe for long-term success is still made up of a few key ingredients: number one, world-class IP content that is loved all over the globe; two, distribution of that content on every platform and device where consumers want to engage, whether it's theatrical or linear or streaming; three, a balanced monetization model that optimizes the value of what we create and drives diversified revenue streams; and four, finally, durable and sustainable free cash flow generation. Warner Bros. Discovery emerges as a far more balanced and competitive company and uniquely positioned to deliver on these four critical ingredients.
We have no religion about any one platform or window versus another, and we intend to approach each and every decision through a lens of enhancing asset value against a set of financial returns. Our goal is to maximize long-term shareholder value and asset value, not just subs. We will not overspend to drive subscriber growth. Our focus is to invest in content and platforms that extend the life and return of our global IP and position us to drive greater returns out of each dollar of content spent than our peers and to ultimately drive free cash flow. And we will refine our capital allocation and content windowing decisions accordingly. We can maximize the distribution of our global IP in a number of ways, guided by simplicity and choice for consumers. In streaming, we have a massive opportunity to reach the widest possible addressable market by offering a range of tiers, all with the most compelling and complete portfolio of content, a premium and attractively priced ad-free direct-to-consumer product, a lower-priced ad-light tier, something we have had tremendous success with and is our highest ARPU product, and in some very price-sensitive markets outside the United States, we can even offer an advertiser-only product. We have the ability to ring any number of cash registers: theatrical, gaming, premium home video, pay TV and free-to-air broadcast. Plus streaming now with 100 million collective subscribers, it is a growing and important complement to these existing and traditional avenues of monetization and represents true optionality that, over time, will drive our strategic decision-making.
Given the depth of our content, decades of film and scripted and unscripted television series, many of the most iconic brands and franchises, including half of the MGM library, supported by a continuous pipeline of new production, together with the world's news leader, CNN, and a large international offering of live sports, we have enormous flexibility in terms of how we monetize these assets. We benefit from a deep history of world-class content production. Warner Bros. Films, Warner Bros. Television and HBO, true global leaders that are producing at scale, true content makers like Warner Bros. Discovery, with an ability to produce and control the content IP versus those that just write checks, are positioned best to win. As you've heard me say, we are not trying to win the direct-to-consumer spending war. To begin with, we firmly believe the two content companies coming together have unique advantages, including the largest film and television library from Warner, the largest domestic and international lifestyle library from Discovery and significant global live sports and news. This strong foundational offering will allow us to invest in scale smartly and will uniquely position us in our drive to become a fully scaled global streaming leader. We come into this transformational moment with great creative momentum. Just to give you a glimpse, starting with the global success of the Batman at Warner Bros. Studios; at Warner Bros. Television, Ted Lasso; and breakout hit series Abbott Elementary on ABC, which was just renewed for a second season; and of course, Chuck Lorre's unique and compelling content.
The HBO Max, which is on such a roll, fresh off record viewing for HBO series Euphoria, Winning Time, Gilded Age and Barry, the hit Max Originals And Just Like That, Peacemaker and the Flight Attendant. And in Europe, the Beijing Olympic Games at Discovery, Chip and Jo and the launch of Magnolia and 90 Day is a real strong performer on Sunday nights, just to name a few. One of the company's unique assets is the linear network group. And in 2021, taken together, we enjoyed the number one share in total television total day in all key demos and people 2+. And we have the greatest brands: HG, Food, HBO, Discovery, CNN, NBA, March Madness, NHL, Magnolia, the Oprah Winfrey Network. Our balanced verticals and content genres across scripted, lifestyle, sports and news provide us with significant opportunities to not only cross-promote for the benefit of the portfolio but also to offer compelling reach and targeting campaigns for our advertising partners. I'll speak to this a little more in a moment, but this isn't just a domestic phenomenon. In LatAm, for example, we are now the number one or two pay TV programmer in every market, and we bolstered our position as the second largest broadcaster in Europe. Again, we are excited about the strength of our sports portfolio and the optionality that gives the new company. We enjoyed our exciting March Madness and Final 4, NBA regular season and what looks to be a strong playoffs at Turner and capping off our first season of the NHL and playoffs.
Major League Baseball has just started to come together while having just completed a robust Olympic Games in Europe, as I noted. Lastly, CNN is once again setting the standard for groundbreaking and journalism first news coverage. During critical moments, the world turns to CNN. At its core, CNN is the nation's premier news outlet and has the number one digital news service in the United States with 35 million unique monthly users. The heroic reporting out of the Ukraine reminds us all that CNN is the world's most impactful news platform, and for us, a true reputational asset. From a management perspective, we have brought together a strong leadership team and a streamlined structure to foster better command and control and strategic clarity and coordination across the entire company. We've just begun to hit the ground running with the teams and the broader organization. My focus is to foster a culture of collaboration and to embrace a singular focus around being the top home for the best and most diverse talent and creators to bring their stories to Warner Bros. Discovery. We will have our heads down across the company, and we'll have a more formalized and detailed outlook across our businesses to share in the coming months. Though in the course of initial planning, integration and synergy capture, early action priority items for me will be the upfront. Like with Scripps, we are fortunate to have closed the transaction in time for this year's upfront marketplace.
We expect our presentation on May 18 to be an important opportunity for the company to share the full suite of our combined network portfolio, the top talent and personalities within the family and the breadth of genres across series, specials, news, sports, streaming and the best lifestyle content in the world. The combined strengths of both organizations' client relationships, advanced advertising, programmatic, sponsorships and direct-to-consumer, ad-light streaming services, all position the company with a unique hand. I have personally spent quite a bit of time with key advertisers and agencies. And I'm so impressed with the combined capability of our platforms and our ability to uniquely serve the needs of our clients, including integrating sports alongside our broad entertainment offerings. One offering where before it was Discovery, Warner and Sports, now as one, it's simpler and provides more value to advertisers. In many respects, we are building upon the momentum that Jon Steinlauf has built with Premier, bringing unduplicated broadcast equivalent reach and greater share to advertisers, helping us to secure a greater share of revenue. I remain very enthusiastic about the upside here and this multiyear opportunity. Direct-to-consumer. JB and his team are deeply involved in the early integration phase and go-to-market plans, having had very little interaction across the organizations during the pre-closing period.
This will take some time, though key steps to identify and analyze technology proficiencies, subscriber concentration and overlap, content opportunities, marketing and pricing strategies are all underway. Content. Kathleen Finch on the network side, along with Casey, Channing and Toby, are assessing the opportunity across the entire organization, and they are significant as drivers of both more efficient spend as well as revenue upside. Like direct-to-consumer, we will have more to say in time, particularly on windowing as well as content sharing. And finally, synergies. We have been working hard for months and are now validating and executing against those 200-plus work streams. The attack is strategic, operational, structural and financial. We will clearly take swift and decisive action on certain items, as you saw last week with CNN+, while others will take time to formulate appropriate action plans. We've detailed a $3 billion-plus cost synergy plan, and we're already on our way with coordinated efforts from our transformation office as to the waves over which this will unfold. Just 18 days in, we are as enthusiastic and excited as ever with the opportunity ahead to integrate and drive the new Warner Bros. Discovery. The leadership team is locking arms on our integration plans and long-term growth strategy, and we look forward to providing more detail on each of these in the coming months.
I'll hand it over to Gunnar, after which he and I will answer some questions.
