President & Chief Executive Officer at Warner Bros. Discovery
Hello, everyone and thank you for joining us. Let me start by saying I am pleased with all that we have accomplished in just our first 6 months as a combined company. We have had to work through a number of really tough issues, some anticipated, some unexpected. And we continue to make the difficult decisions that we know are necessary to position our company for long-term growth and success.
As you would expect with a deal of this magnitude, in a dynamic and changing industry and amidst a more challenging economic environment, a significant amount of change is required. In fact, we see this as presenting a meaningful opportunity, one that we have seized wholeheartedly. This is an opportunity to look inside each one of our businesses and really determine what's working, what's not working. Is it structured properly? Does it have the right assets, people and resources to be effective and the best of class in the environment we face today? None of this is easy and nothing happens overnight. That said, we are fully committed and laser-focused. I believe we have the strongest hand in the industry in terms of the completeness and quality of our portfolio of assets and IP across sports, news, nonfiction and entertainment in virtually every region of the globe and in every language.
Six months in, we now have a full, strong and energized leadership team in place. And we are confident we have the right strategy and are making the structural and strategic changes to successfully achieve our goal of becoming the greatest media and entertainment company in the world, capable of generating significantly higher earnings and free cash flow than we are today and creating real long-term sustainable shareholder value. Last quarter, we laid out 3 strategic priorities that serve as our guiding principles and influence our decision-making strategically, operationally and financially.
Starting with content; content is the heart of everything we do and we are investing at historic levels in the highest quality storytelling, sports and news. All of the hard work we are doing now will allow us to continue making meaningful investments in content to support our plans going forward. Our best-in-class portfolio is led by the strongest content and creative executives in the business. And one of the things that differentiates these leaders is that they do more than just pick shows and write checks. They support and nurture our creatives and talent and help them to bring their bold visions to life on screens large and small. They are doers who have spent time in the control room developing films and TV shows, writing scripts, working closely with talent and creatives. They know their crafts inside and out, what it takes to create compelling, unforgettable experiences for fans worldwide. And they know how to replicate that success and storytelling over and over.
No one embodies this creative commitment more than our new heads of DC Studios, James Gunn and Peter Safran, who have said that running DC Studios is a passion project, not just a job. James is a brilliant storyteller who has the distinction of being the first and only filmmaker to direct a movie for both Marvel and DC. Peter is a prolific producer whose credits include DC's highest grossing movie, Aquaman, as well as the entire Conjuring universe, the most successful horror franchise of all time. We could not be more thrilled to have them join our leadership team and I'm excited for what is to come.
I've spent a lot of time over the last few months with James and Peter, talking about our strategy and long-term plans for the future of DC across TV, animation and film. They have a powerful vision in blueprint that will drive a more unified creative approach. It will enable us to realize the full value of one of the world's most iconic franchises. They're hard at work right now.
Our teams company-wide are working hard every day to ensure that Warner Bros. Discovery is the place creatives choose to come and tell their stories. We have a huge advantage: Warner Bros. with its 100-year legacy and ability to launch films in every corner of the globe, tied together with Warner Bros. TV, the biggest maker of television in the world and HBO, 2 of the most prolific storytelling studios in the world. Together, it creates an unparalleled full-service entertainment ecosystem.
To that end, we recently signed a long-term deal with Matt Reeves, who cowrote and directed The Batman and created the upcoming new series, The Penguin, for HBO Max. Todd Phillips will begin filming the highly anticipated Joker sequel next month. We signed an overall deal with Quinta Brunson, a trailblazer who brought us the hugely popular Emmy-winning TV series Abbott Elementary. And our longtime partner, the prolific Chuck Lorre, is producing his first series for HBO Max, the upcoming comedy How to Be a Bookie with Sebastian Maniscalco, just to name a few.
We're very excited about our robust film slate for next year. We are back in business with a lineup of features that is truly supportive of a distinct theatrical window. The slate includes The Flash; Shazam; Dune 2; Aquaman; Wonka, a prequel to the classic film; The Color Purple produced by Steven Spielberg, Oprah Winfrey and Quincy Jones; and Blue Beetle, DC's first superhero, will be starting a Latino character directed by Angel Manuel Soto; as well as exciting new series for HBO and HBO Max, including The Idol from the brilliant Sam Levinson, who created Euphoria and starring The Weeknd; The Last of Us, based on the postapocalyptic video game; along with new scripted original series for TV such as Lazarus Project set to air on TNT next year.
We also have projects underway with incredible on-screen talent, including Joaquin Phoenix and Lady Gaga for Joker 2. Ryan Gosling has joined Margot Robbie for Ocean's Eleven prequel. Robert Pattinson will return as Batman. Robin Thede's Emmy-winning HBO comedy series, A Black Lady Sketch Show, has begun production on its fourth season. The award-winning cast of Succession will return next spring for its fourth season also. And the list goes on and on.
Our unparalleled IP also allows us to grow our consumer products business and extend our characters into games, one of the fastest-growing media segments with titles such as the much-anticipated Hogwarts Legacy game built around the amazing world of Harry Potter and launching in the first quarter next year and leveraging incredible IP such as Mortal Kombat which is celebrating its 30th anniversary this year and still going strong.
On the sports side, we just re-signed Ernie Johnson, Charles Barkley and Kenny Smith for multiyear deals. We've also got a long-term deal in place with Shaq. We're thrilled to have the 4 of them continue to host TNT's flagship studio show, Inside the NBA, I believe the best show in all of sports. And this further reflects our deep commitment to sports and providing fans with the programming they can't live without. CNN's new show, CNN This Morning with hosts Don Lemon, Poppy Harlow and Kaitlan Collins, kicked off this week with great buzz. No one knows morning television like Chris Licht and the show is one of the many building blocks he and his team are putting in place as Chris leads CNN into the future with great courage and strategic vision.
Our second strategic priority is maximizing the overall value of our content through an omnichannel distribution and monetization strategy. The fact is we cover more surface area than any other media company and that optionality allows us to distribute our content in multiple ways. No matter where consumers go or what their preferences are, premium, pay-TV, free-to-air, theatrical, streaming, gaming, we are there around the globe and able to monetize our content and IP in ways that maximize audience and profitability. Optionality has never been more important and we continue to refine what the right windowing and distribution model is so that we can reach even more consumers and maximize profitability.
As we said last quarter, we will be aggressively attacking the AVOD market with our own FAST offering in 2023. As the company with the largest film and TV library in the industry, we have a unique opportunity to increase our addressable market and drive real value and we plan to move quickly. Stay tuned.
Finally, our third strategic priority is operating as one company. One plus one does equal more than 2 when it comes to working collaboratively and supporting individual efforts across our many businesses. In many respects, this is a significant departure from the previous norm. We've already had some real success with our cross-promotional initiatives such as with Shark Week, Elvis, House of the Dragon and Black Adam. The fact is with our huge viewership share in the U.S., our broad portfolio of networks and global platforms around the world, we have an amazing ability to efficiently cross-promote across our lineup.
Our one team philosophy is a core tenet to the critical work we continue to do to transform the organization for the future. And nowhere is this more evident than with our ongoing commitment to driving synergy enterprise-wide. Success requires all hands on deck and we're seeing it. In fact, I'm pleased to share that we have increased our synergy target to at least $3.5 billion from $3 billion.
Gunnar will take you through the details but the key point is this is more than just a dollar tally of what we've saved on an expense line. It is more than just a number. We are fundamentally rethinking and reimagining how this organization is structured and we are empowering our business unit leadership to transform their organizations with an owner's mindset and a view on quality and accountability. And you see this reflected in our numbers and some of the strategic decisions we are making.
We're making real progress and we're driving toward the endgame. Like everyone in our industry, we are managing through some cyclical headwinds and secular challenges, including lower-than-expected ad sales and faster pay-TV subscriber declines. Gunnar will say more but I do want to make a couple of quick points.
First, regarding our advertising sales which have been impacted by a number of factors that include the macroeconomic downturn and the strength of the NFL and college football on other networks. The good news is on Turner, we just had Major League Baseball's American League Division and Championship Series on TBS. Both saw substantial double-digit growth in viewership compared to last year, though a shortened Championship Series wasn't ideal.
The NBA is off to a great start on TNT, delivering its most watched regular season coverage since 2017 with viewership up 29% season to date. And with March Madness in the spring, along with our first ever coverage of the Stanley Cup Finals, from now through the summer, we have a large share of professional sports, both here in the U.S. and internationally.
On the advertising side, we had a great upfront where we outperformed the market and we spent the last 4 months reorganizing the ad sales team. We had a broad restructuring, including having sports and news be organized and sold with entertainment and nonfiction as one full-service offering. It was an awful lot of work and we're glad to have it behind us. The team is led by the superb Jon Steinlauf, who has a great track record of outperforming the market and did so for us in the 5 years following the Scripps acquisition as he led our team at Discovery. So the team is now in place, attacking the market with the full suite of tools every way a brand wants to engage with consumers, whether through traditional commercials, product placement or dynamic targeting. We will offer those touch points.
With respect to direct-to-consumer, we added nearly 3 million net global direct-to-consumer subs this quarter and we expect a healthy inflection with the launch of our combined service and expanded global footprint. With that, we are excited to announce that we have moved up our U.S. launch date from summer of 2023 to spring. We've been very hard at work. We can't wait to make the service available to consumers around the globe and get the business running on all cylinders.
While our team is hard at work preparing for the launch of our combined offering, we're also actively experimenting and testing our hypotheses about the future product, in large part to address some of the deficiencies of the existing platform. And we're seeing some positive signals. A few quick examples; one is related to the product user experience. Previously, when a series concluded on HBO Max, there was no end card that would then recommend additional programs for the user to enjoy, an obvious way to drive greater consumer engagement. We've started rolling this out and are already seeing very promising engagement uplift.
A second example, around content. We've begun experimenting with bringing d+ content on to HBO Max, starting with select Magnolia Network shows such as Fixer Upper: The Castle which was a top 5 show after only its first few days on the service. These early green shoots bolster our strategic thesis that the 2 content offerings work well together and when combined, should drive greater engagement, lower churn and higher customer lifetime value.
And lastly, on churn. We've implemented a number of initiatives to improve customer retention and these have helped drive our voluntary churn rates to record lows in the last few weeks. We've still got a long way to go but these early signs are certainly encouraging.
As we said, we plan to roll out the new service here in the U.S., followed by Latin America in 2023, then in Europe and APAC thereafter. We see significant opportunity across the globe and we're excited to resume expanding our distribution in countries where we are currently not represented. As you would expect, we made the strategic decision to hold off on active expansion until our new offering is set to launch.
Before I turn it over to Gunnar, I was recently asked if I thought the golden age of content was over. And I said absolutely not. There's nothing more important than content. People are consuming more content than they ever have but it has to be great content. It's no longer about how much. It's about how good. And ultimately, it is the consumer who tells us what is good. And the consumer is telling us right now, with House of the Dragon, Euphoria, Batman, Harry Potter, Friends, Big Bang Theory, you take a look at the portfolio of tentpole assets across Warner Bros. Discovery and the breadth is large and the opportunity is real. No one has a better or more recognizable hand of content, IP, brands, franchises and personalities than we do.
That said, I believe the grand experiment, chasing subs at any cost, is over. Let's face it. The strategy to collapse all windows, starve linear and theatrical and spend money with abandon while making a fraction in return, all in the service of growing sub numbers, has ultimately proven, in our view, to be deeply flawed. We believe there is a real opportunity to do things differently, to deliver the content consumers want and will pay for while getting the full value of our offering. As we said last quarter, our focus is on delivering $1 billion of EBITDA in streaming by 2025 and we expect to make significant progress toward this goal next year. Profitability, not purely sub count, is our benchmark for success.
While we've got lots more work to do and some difficult decisions still ahead, we have total conviction in the opportunity before us. At Warner Bros. Discovery, we've got the best assets in the industry, reach that extends from premium, basic pay-TV and free-to-air to theatrical, streaming, consumer products and gaming, exceptionally talented people across this great company and the right strategy and financial framework to set us up for long-term success.
With that, I'll turn it over to Gunnar and he'll walk you through the financials for the quarter.