Warner Bros. Discovery, Inc. (WBD) Earnings Call Transcript & Summary

Good morning. This is Doug Mitchelson from Crédit Suisse, media and telecommunications analyst. Very pleased to have with us this morning, David Zaslav, Chief Executive Officer of Discovery Communications. David, thank you so much for joining us this morning.

It's nice to be with you, for my first time remotely with you. Everything's remote.

That's right. It's the first virtual conference. So it's an experiment this year. Hopefully, it'll go well. Thanks, everyone, for joining us. I do have a long series of Q&A for Mr. Zaslav, so we won't be taking any questions from the audience. But feel free to e-mail me feedback at [email protected].

David, let's jump right into it. So just -- I want to start asking you -- start with -- ask about the state of the union at Discovery, obviously, a very dynamic backdrop right now.

Sure. Look, it's -- I think it's been a very rough 4 months for -- globally for everyone. Discovery has done remarkably well. We're operating almost fully remotely. We've learned a ton. We started out with a number of cases of COVID, and we formed a COVID task force. We've also -- we've gotten into a great rhythm. I have a call every morning at 8:00 with the full leadership team, followed by 2 days a week of COVID call. We haven't had any cases in a few months. We're getting back to work in a number of markets that are going very well across Asia, and we're now starting to open up in Europe. The workforce has been extraordinarily productive. And I think we're a unique company in that our market share is up around the world, and one of the reasons is we're producing a lot of content right now in this period, and we'll talk about that later. But we've produced over 700 hours of original content during this period. Our leadership team has been very engaged and strong. We've learned a lot about working remotely and working from home. It's extremely productive. And there are the lessons learned on efficiency and effectiveness. In Poland, we're the major provider of news. And in the areas where we have production studios, we're now -- we're operating with 1 or 2 people in the control room where we used to have 14. We're learning a lot about the amount of real estate that we're going to need. So I think on the good side, the team has really stepped up. Our productivity is very strong on both the commercial and programming side. And we've learned a ton. We'd certainly all love to get back to work, but we're in no rush because #1 issue for us is safety. At the same time, we've been dealing with the tremendous racial unrest around the world. And we're very lucky that we've been investing for years in diversity at our company. And we have a great team of leaders that have been focused on this. And we also were lucky to have Oprah Winfrey as part of our family and on OWN. We did do a -- an OWN spotlight, which we carried globally. 12 million people tuned in for Oprah Spotlight, talking to focus on the issues of the racial issues here in America and what we're going to do about it. We may have a follow-up to that. It was a historic event. And it showcases what we're able to do, the breadth of the reach that we have. And we're the only company that can do something like that and take Oprah into every country in every language everywhere in the world. And this issue is something that the protests around the world and the challenges around the world are really quite similar to ours, so it's resonating all over the world. So I'm anxious to talk about how the company is doing because I think we're doing really well. And we've learned a lot, but it's been a tough 4 months on all of us, and we've weathered it quite well.

And we will certainly get to the company in detail. But I wanted to start from a high level because so much change is taking place. I'm just curious as you sort of bring the lens back out. How are you thinking about the company in the next 5 years?

Well, the one thing that's striking to me is that the company, the performance of the company and the fact that we've generated a high-margin free cash flow company, that it has great personalities and great programming that engage people is -- viewers is really working. We generated $250 million of free cash flow in the first quarter. And in April and May, we generated about the same amount of free cash flow. And so in an environment where there were huge cancellations across Europe, pullback here in the U.S., you see a company that's working extremely well in terms of the efficiency of the way that we're able to generate viewership to free cash flow. In addition, we've been very pleasantly surprised at how appealing our programming is. And it reinforces to us that we have something really special. Right now, it's news. There is no sports. And people are watching HG and Food and Cooking and TLC in ways that they never have before. We had a big event on Discovery. So the relevance of our content, the cost of our content, the ability to produce a cooking show with Joanna Gaines and have it be a record on Food Network, and her kids filmed it, the -- I think we're really well positioned. We have a larger library or as large of a library as Netflix. We're producing content even in a pandemic, and that content is resonating because it's of the moment. And we're in niches that when people are trying to figure out and curate where do I go, they're turning to Discovery, to Food, to HG, and they're turning to our personalities, Chip and Jo and Oprah. And so I think our brands, our personalities, our cost of content and our library is generating this machine that is really quite unstoppable. Around the world, our share is up, double-digit outside the U.S. We're one of the few media companies that are up significantly in the U.S. And we think that's going to have lasting value. Behaviorally now for 3.5 months, people wake up and they're watching our channels, and they're watching our characters, and their length of view has gone up. And so yes, this is going to pass, and we hope that it passes soon. But when people do something for 3.5 or 4 months, we think the legacy value of the engagement with our characters -- and our characters have actually gotten closer to the viewers because we've been shooting shows with them in their homes. And they're meeting their families, and they're seeing their living rooms and their kitchens. And we've learned a lot about that. But the #1 thing we've learned is our social footprint has gone up, and people feel very directly personal to us. So in a world now as we go forward where one of our key objectives is we're outperforming everyone on the traditional platform, but we need to reach everybody whether they have cable TV or free-to-air or not. And we look at our aggregate content and how people have flocked to it and have gotten comfort from it. And it reinforces to us that our content and our personality and our library is quite unusual in an environment where everyone else is airing reruns. And all of these SVOD services are now in a position where they really don't have -- they didn't have enough content before, and they even more so don't have enough content. To give you an example, on Sunday night, we had a 38 share of viewership in America, 38 share. We did a [ 4 5 ] on TLC. We have 90 Day Fiancé is probably the biggest hit on television. But when you aggregate it on networks together on the back of an envelope, which I just did it, about 62% of all the original content on television on Sunday night came from us. And the ability for us to create that kind of content at a cost of 1/3, 1/10, 1/5 of what it costs to produce that other stuff, and hey, a [ 4 5 ]. When is the last time somebody got a [ 4 5 ]? And the cost of that show is 1/10 of the cost of -- and we've been able to take that show and make 8 hours out of it on Sunday and Monday. And so I feel good about our future. We have some good plans for getting our IP direct to consumer. And the way that we're generating audience and free cash flow and our content is becoming more popular, I think we've got a really good hand.

And I think this question overlaps a lot of what you just said. But I still want to ask you because it might entice sort of an interesting conversation, which is, you know one of my questions is, does Discovery have much content? It's a question investors sort of ask a lot. As everything evolves -- as more and more is shifting to streaming, does your company have the content that's really going to resonate in a sort of an all-streaming world, leveraging the contents you just made? How do you think about that issue?

Well, we've been out in the market. Last Monday, I spent the whole day with focus groups of people that never had cable, cord cutters, under 40, over 40. People that have cable, what do they like, what do they want. And to me, I think the real challenge for everyone right now, because there's so much available, is curation. You go in and you don't just see a list of stuff and say, "What do I watch?" And I got to call you on a Sunday night, "Doug, what's good? What's the series? What should I watch?" And the resounding thing about us is, "Wow, Chip and Jo, I love them. Oprah Winfrey. Oh, Discovery. Oh, Planet Earth. Food Network, that's my favorite. HGTV." We have brands and characters and Guy Fieri, we have huge fans of our characters. Our characters are real-life people that are relatable, and they have relationships. And we have all this great content. And I think, if anything, what this has shown is when people could watch anything, and they could watch something on Netflix, on Amazon, you've seen The Haves and the Have Nots. They've walked away from all of those repeats. And I think more and more, it's like, "Okay, I can get repeats anywhere. When I want to watch something in a repeat, I'll watch it without a commercial, and I'll watch it on one of those other platforms. But what's original? Where are my characters? What makes me comfortable?" So I think that we have something quite unusual. We're also, for most of last year, we were the #1 media company in America for women. And since then, we've gotten a lot stronger. We got a lot of great content for men with the BBC and Discovery and for families. And I think when you look at what we have and you look at what everyone else is offering, we're actually quite different. We have a Netflix size library with characters and brands that people love. And all the others are -- they're out there saying, "Come to us, friends. Come to us for Mad About You. Come to us, we have Game of Thrones." And that's a tough game. It's also an expensive game. And when you look at each of them, one of the things that has come back to us is that, "Where is the nourishment?" Aside from sitting down and watching a long-form series, "Where is the content that I love?" That's what a load of women have said to us. And so we think there's a lot of our products out there, but we think family content and great content for women and some really great content for men that's differentiated and easy to navigate could be a real winner in direct to consumer around the world. And remember, we own all of our content everywhere in the world. So those that are playing the U.S.-only game, it is a great country, 350 million people, 1 language, a shared culture, 1 satellite. There's 750 million people in Europe. The skit -- the reason that the FAANG companies have accelerated in market cap is because they're above the globe. And so we positioned ourselves, except for sports, where we're primarily Europe, except for golf, where we're everywhere but the U.S., where we can take our content everywhere in the world. And so we're feeling good about it. We're doing a lot of work, and you're going to hear from us on it. We think there's an open space for us.

So it's a great step to over the top, but I'm leading up to an M&A question first before we get there. And let's just start. As you think about the environment you're operating in today, you've had launches from Quibi and Peacock and HBO Max as companies try to figure out their future business models. Do you see another round of consolidation or will there be deconsolidation coming in media? And how do you think about sort of structuring and planning the strategy for Discovery relative to those thoughts?

It's hard to tell. I think our industry has continued to consolidate. So I think the answer is when there's momentum and a direction, it will probably continue. Most of the companies, and I've said this before, that are doing scripted series and scripted movies, they look the same. And so for them, they have a piece of the scripted series, scripted movie pie. "Oh shoot, they got Seinfeld. Oh -- but we can get Office." But in the end, if someone's saying, "I want a scripted series and scripted movies," it's like one pie and they're splitting it. We feel like we have something that's quite complementary to all of them. You can have Disney+, but if you had our stuff, where would those go? Well, you could have HBO and HBO Max and Disney+, but you're still missing a big piece that we could bring. And so there's a lot of great services out there, but it's not clear that any one of them -- Netflix, it's pretty clear they have enough. Disney has had a hell of a run. You got to give a lot of credit to Bob and to that overall strategy and the scale of what he's been able to deliver. But it remains to be seen whether the rest of the players in the market have enough. We're quite big in our space, and our research is showing more and more for the people that like the stuff that we have. We have almost all of it. And so I think you could see some consolidation. We're -- right now in terms of M&A, we're kind of pencils down. If something is really cheap and available, we're a synergy machine, and we're always on the lookout for more assets that could strategically really help us. But we're looking at how this company is performing right now. The fact that we can hold our costs flat, which is where they're running right now about, our costs are actually down but we're investing in that direct to consumer. So we're holding a relatively flat cost structure. We've learned a lot about producing programming for less money. So you'll see more original for less. So we look at where we are right now. We say, let's keep this engine running and let's really focus on getting this great IP in the hands of everyone, because it's certainly outperforming everyone in the world where you put your TV set on, and you got to figure out whether it's an MVPD or the traditional provider. When that clicker is in your hand, then you could watch anything. Even when that clicker gets you right to Amazon and Netflix, they choose us almost -- with the exception sometimes of news, they choose us as an aggregate, quality brand and character basket more than they choose anyone else. So there's no reason why that same group of people that grew up with our content aren't going to make that choice for us domestically and around the world. And around the world, we're the leading sports and international media company. And I think if there's a fight here in the U.S., we think this local language, local sports play that we have in Dplay and the fact that we're -- we have a huge amount of local content in every country is going to be a boon in terms of asset value. Because if you listen carefully to some really smart people, whether it's Randall and Stankey talking about their vision for HBO and HBO Max or Bob with Hulu and Disney+ or those that want to go outside the U.S., you hear them within the first sentence say, "I need some local content. I need some in-language content. And it's expensive, and I'm going to have to ramp that up and I can't." So that's a real value to us that we have. We've been out there for 20 years with free-to-air sports and local factual.

I did want to talk about international a little bit to set up the streaming conversation. I feel like you have already learned a lot about streaming with the efforts that you've had, particularly in Europe. What's the latest? What are your thoughts about -- it's obviously going to lead to your U.S. over-the-top strategy. But what are you learning right now in Europe? And particularly, you'd obviously started thinking about Denmark, some of the distribution situations you had there and the Nordics early to streaming. What's the latest thoughts?

Well, on the downside, we've learned that direct-to-consumer sports platforms stall when there is no live sports. So certainly, an unusual situation. But with Golf and with the Eurosport -- and with our Eurosport player and with our -- with GCN, our direct-to-consumer cycling product, we have a very big social funnel and a very good relationship with people that love those sports and love sports in general. But it's a challenge when the faucet of live content turns. We've learned that differentiation really matters, local language and local sport, when there's a blaring direct-to-consumer product that's spending $8 billion a year or $10 billion a year on content, but most of it is American, that content from Netflix is quite appealing. Disney+ will be probably quite appealing. But to have a huge library of local content and local sports is quite strong. And we're also learning that local news is strong. We have about a 30 share in Poland. We're the primary provider of news. And people are turning to us every day, all day long to find out what's going on. And so local language, entertainment and factual, local sports and some local news, I think, is a killer. And we're probably the only company that can do any 1 of the 3 of those in an aggressive way because we're the only company that really does business in every country, everywhere in the world. So we might compete with a local player in each country, but nobody else is positioned with commercial resources and creative resources and relationships with distributors and advertisers in every country. And in the U.S., I think we've learned that there's a real appetite for direct to consumer, but there's starting to be real confusion. And so in some ways, the good news for us is that there's been -- Netflix paved -- started to pave the road. Iger, Bob went out and kind of widened the road a little bit. And right now with Peacock and HBO and HBO Max, it's basically acclimating behaviorally people to be able to get more comfortable downloading and paying for content. And we think that, that could be quite good for us because they've been doing 2 things. Not just do you want my content, but here is how you get it. And you should get used to paying for stuff. And the fact that, that seems to be synthesizing behaviorally with people in the U.S., I think is a really good thing for us because as we -- when we put our car on the road, they've done a lot of the work in terms of people figuring out how to do it, how to get it on their set, how to get it on their device, do I want to watch content. And if they decided they do, and then they see all of what we offer, we think that it could be a real opportunity for us.

So the -- one of those areas I was headed on the international front before we sort of come back to the United States, is the situation with sort of TDC in Denmark and you see -- now where you made a decision to go dark. Is that something that worked out, something you regret? Any thoughts on that?

Well, look, I think the future is a balance of both. And we have some really compelling sports rights there together with a market share of about 25% to 30%. So that was really -- it's a -- there's a lot of broadband in that country. So I think I would call that an experiment. What happens when you take really compelling local sport and entertainment? Should we do an okay deal? Or should we actually take that out for a ride in a quantified way? We're in 200 countries. Here's Denmark that's probably ahead of most of the world. It's not quite the U.S., but it's close in terms of broadband, the willingness to view content on other platforms, the love of sport, the love of local. And it's sort of like a small experiment. Let's see in this country, what happens when we take that out and we promote it aggressively? What percentage of the country is going to sign up to be with us? And what will we learn from that? And how could that help us as we look across Latin America, Asia or the U.S.? And so we are in learning mode, and that was a -- it wasn't a close call because we have such great content, it was a way to kind of see, let's see how we do. We're doing pretty well right now. And I think we can do great when sports comes back. And then we'll huddle up with JB and say, "Hey, what have we learned from this?" And we may -- what we learned is maybe we should give up a little near-term money and scale up more aggressively. Or maybe we've learned that we should continue to take money and not give up the platform and not be as aggressive. But I like the play. And so far, we feel like it's working for us. We'll see.

So let's circle back to the U.S. strategy for OTT. Your comments around reexamining the U.S. marketplace certainly get a lot of attention when you make them. And you've made them a few times over the last sort of a year, 1.5 years. How do you thread the needle of taking Discovery's content and start to monetizing the cord-nevers and cord-cutters that are out there, while still making your distributors happy and maximizing the pay-TV bundle that you don't want to hurt too quickly? How do you think about that?

Well, we're working with our distributors. We're in discussions with almost all of the large distributors. We just recently did a couple of new distribution deals on very favorable terms for us, and I think, very favorable terms for the distributors because our share is up. They're making a lot of -- they were making a lot of money selling our channels. Right now, the advertising market is a little soft, but they still make a lot of money. There are a lot of advertisers that only want to be in Motor Trend, they only want to be in Food, only want to be in HG, only want to be in Discovery. And we're a very good buy. And even at increased rates, we're a very good buy. And so we were able to get some good deals done with our distributors, which is encouraging. And we view them as an important partner to us. They are -- there are 30 million people that get broadband from those distributors. And so we think there's a way for us to work with them to reach those broadband-only subscribers. And those are the discussions that we're having, and they're going pretty well. And in the meantime, getting a 38 share on television on a Sunday, having shows. We've got a [ 4 5 ] on TLC on Sunday night. We got a [ 3 5 ]. Broadcast is averaging 0.4. So think about how many 0.4s you need to deliver a [ 4 5 ]? And so -- and people -- right now at least, Food and HG and the new sports. And it may skew female, but it's still 40% male with a lot of time being spent with Bobby Flay and Giada and Ina and Guy Fieri. And so we think the fact that our content is getting stronger enhances our hand. And working with the distributors, we think, could be kind of unique rather than being -- taking everything off that platform and going hard. We don't think we need to do that.

So let me -- I'll press a little bit. Just any sense of timing you can give investors as to when you think this will happen? When you think it's important for it to happen? I'll go back to the comments when you first introduced us this concept by -- I think it was quite a year ago. I think people felt a sense of urgency from you. And whereas perhaps you have quite a bit of time to sort all these out.

We recognize -- I recognize that we have great content. To be successful, it's not enough for us to outperform everyone on the traditional MVPD and cable and free-to-air game around the world. We need to reach everyone on every device. We get it, we're at it. And I think that having some of these other platforms launch, watch what they did well, watch what they didn't, they're very different from us because they're more of the same. We think that, that is feathering the bed quite nicely for us, and you'll hear from us.

So let's shift over to a couple of digital investments that are still underway. Food Network Kitchen, what's the latest there?

We've been building Food Network Kitchen. We've been building a very big funnel for recipes. It's been a very good time in that genre as you could expect. Even I'm -- I've learned to cook. Motor Trend, we've been building. So look, I think that our overall strategy is local language, local sports and, in some markets, in at least Poland, news as well in Europe. In the U.S., we're looking at the opportunity to how do we aggregate what we have. And then we have these great niches, and we're going to continue to burrow down on those niches, whether it's cycling or golf or food, Food Network Kitchen, or cars with Motor Trend. We should talk about advertising, Doug. We should talk about advertising only because it's the #1 thing that when I talk to investors, the #1 thing they want to get a pulse on right now because it reflects kind of where the economy is, is advertising. So maybe I'll...

Well, I was saving that for last to keep our average viewing as high as possible for the session, but let's jump in there. Let's jump in there. Fire away.

The advertising market has been pretty tough outside of the U.S., but it's getting better. And one of the things that we see that's very encouraging is that the markets are working. So when Poland does open up, then we go from the 40s to the 20s in terms of down. When Germany opens up, it goes from the 40s to the 20s. And so we never got in. It's a different market outside the U.S. The U.S. was restrained by the upfront and the ability to cancel. Outside the U.S. is pretty much a perfect market, anybody can come off. And so sequentially, things are definitely getting better in a meaningful way with the exception of Latin America, which remains, I would say, challenged or continuing to get to decline. So Europe is improving. I think the most important thing is that when a country opens, the money is coming in, in a very meaningful way. And we're not back up to even, but we're much better, dramatically better than what we thought we would be when we looked at this. And you can see that in the amount of free cash flow that it's generating through our company than we thought we would be when this started. In the U.S., things are getting better. The scatter market is picking up. Cancellations in the third quarter are significantly better than we thought they were going to be. They are more than -- they're meaningfully more than what we've seen in the past, but they're much better than we thought they were going to be. And every week, the scatter market in terms of volume seems to go up. And one of the interesting things is that there was a lot of money pulled. If you look at the money pulled during that, "Oh, my gosh." And I get it, a lot of people pulled the money because they weren't opening movies. So they -- why am I going to advertise a theme park or a hotel? But if you look at the money that was pulled, and then you look at the money that was redeployed, the money that was pulled and redeployed came back at a higher price. And so those advertisers that did take money and then said, "I need to get back in." And there is a feeling, "I got to get back in," when sentiment has changed, people are out. They want to shop again. In some of the markets, we're really seeing it in Asia in a meaningful way. We're starting to see it in -- across Europe. We're seeing it here. And you could feel that sentiment change with advertisers, and the upfront is getting started, it's the normal push and pull, it's definitely going to go much later because people are trying to figure it out. But I think the fact that the dollars that fled and came back in, came back in for a higher price. And the fact that from a sentiment perspective, it feels like there's some real momentum if there's not a second wave here in the U.S. or in Europe or that things could be significantly better than any of us thought because the advertising money is coming back faster than we thought. And they were very aggressive with the creative, which is encouraging. When you watch TV, there was a portion of coming off because I don't have a product to sell. But the advertisers are really -- they understand their audience, just like we want to understand our audience in the free-to-air and cable business and in the media business. And they could take a look at an insurance ad and say, "That doesn't feel right today." Or an ad for a particular product, a cleaning product, "That doesn't feel right today." The world is in a different place. We need to recut our creative to acknowledge what's going on. And I think the fact that we did the same thing, the 700 hours of content we're shooting with Ree Drummond, The Pioneer Woman, and her family is shooting it, that content. And the shows are doing better. But also when we look at her as a talent, she's actually more comfortable when her kids are shooting it because she's not in a studio. So we learned something from that. But I think the advertisers now, you look at almost every ad is recut for the moment.

I think you said on your last earnings call, April was going to be down 20%. I'm not sure if that's ended up being sort of the right number. Any sense of what you're seeing for a May or a June in the assets?

April was down 18%, and May and June look to be better, meaning, significantly better. But we have May in the bag, significantly better, and June is tracking meaningfully better. So I think, for us at least, very different from kind of the scenarios that we were modeling out in those first few days. And the sentiment feels good. And what we were able to do with P&G on the Oprah Winfrey Show, the Spotlight, they produced content specifically. And a number of the advertisers produced this content specifically for that show. In fact, one of the ads, the head of OWN and Oprah herself took a look at from P&G. And so I think that's part of the future. It's not only -- and I think we're doing less ads, which is helping our ratings overall also around the world. And the advertising that we're taking, we're also going back to advertisers and say, "Do you really want to run this now?" But if you go back and look at those ads that P&G ran, I thought they were really -- they added to the quality of the programming. And we did only 6 minutes of commercials per hour. And most of our distributors, almost all of them did no local and kind of respected that as a special event.

So you're first in doing everything. Any upfront prediction you're able to make at this point or thoughts about upfront strategies this year? Price versus volume is something we're always thinking about. It seems like a year where everyone is going to focus on price and maybe a little bit less on volume, just given the virtual nature of the upfront.

Look, everyone has different strategies. For us, we still get -- the CPMs that we get, so we have 38% of the audience. And the advertisers are paying more for a 0.4 on one of the broadcast networks, and they offer a [ 4 5 ] on us. So we have some work to do. And we've been able to -- we've had some real success with Discovery Premier with this idea of, you can come in with us for $40 or $45. Our normal CPM might be in the $20 or $22 or $23. You can come -- we have a lot of shows that are working and are real hits, and we're aggregating huge audiences across our portfolio. So do you want to pay more for a broadcast CPM? Or is this really a pivot moment where people start looking at where is the young audiences? Where are people engaging in live television? Where is the length of view really strong? And so I think we've been doing quite well for those reasons and also because we have brands that really align with products that people need to be on our networks. And so I think the upfront right now, if nothing else happens, is going to take longer than we expected. But I think right now there's a fight over price. I think everyone is looking at this environment and saying, "Shouldn't I get something for cheaper? Or shouldn't I get a deal?" And I think the media side is saying, "No. Right now, we think we should get higher pricing." And the inventory to promote on television is going, in the aggregate, down and our share of that is going up. And so we think that we should get more volume and more price.

How's Discovery GO playing into that? The feedback I get from a lot of ad buyers is they're looking for targeted advertising. And FOX goes and buys Tubi, and obviously, Viacom CBS, CBS All Access and Pluto and others. And your platform is Discovery GO, and you've talked a lot about that it's contributing a lot to your growth. What's the latest there?

It's up 30%, 40%, 50%. The average age is 27 or 28, and it's generating hundreds of millions of dollars for us. And the amount of money that we're bringing in on GO is actually up from where it was last year versus negative even in this kind of an environment. It's very attractive. The CPMs are very attractive. And it's another one of those indicators to us that we have something really special that someone goes ahead and they authenticate the Food GO or Discovery GO or OWN GO or HG GO. And when they do, they spend an awful lot of time. So they can go to an aggregated product, or they can come to this one channel and get to watch the characters and the shows they love. And we have enough people doing that, that we're generating hundreds of millions of dollars on that. And the advertisers love the product. So we think that's something that we could really build on. And we are spending a lot of time talking to the users of GO as to, "What else would you like to see? If you love food, what are the other shows on our networks that you like to watch? How much time would you spend watching? What would you do if we did this? What would you do if we did that?" So it's a -- we have a direct relationship through GO with millions of people. And we have enough data that we're able to talk to them. And I think that is really informing us in a way that's quite meaningful. Karen Leever has done a great, great job building that platform.

So before we hit distribution, you started talking about some content ideas and some content topics. And I'd be remiss if I didn't ask about Magnolia, and again, Shark Week in April. Is there sort of a full Shark Week coming this summer? Any thoughts about that?

We have Shark Week coming, and we have a great -- I don't -- we haven't announced it yet, but we have a great Sunday night of Shark Week kickoff, that's going to be a lot of fun. We had Mike Phelps, where he was racing the great white. We had Shaq Week, where Shaq ended up getting into the cage with the shark. We have something that's a lot of fun that we're all excited about, and we'll announce that. We think Shark Week is kind of our Super Bowl. And particularly this summer with a lot of people at home, it's a big party. So we're looking forward to Shark Week. What else did you ask about?

Magnolia.

Yes, Magnolia. So...

Any issues with the launch-driven COVID impacts, things like that?

So we're not going to be launching in October. I've been working very closely with Chip and Joanna. This is -- Magnolia is their business. They're the Chief Creative Officers, sort of like Oprah is really running OWN and the Chief Creative Officer of everything that goes on there. We debuted a number of their programs on DIY along with a show that they did. And the show they did on a Sunday night on DIY, the only show on all of television that repeated in 60 minutes. So people had to figure out, "Where is DIY? How do I get there? What number is it on my cable system or MVPD or satellite provider?" But they tuned in to watch the programming, and then they tuned in to watch Chip and Jo. Jo did a show for Food Network, which was the highest-rated food show that we've had in daytime ever. And so we see the demand for them, their extraordinary personalities. But it goes back to what I said when we started, and that's that there's so much stuff out there. The question that most consumers say is like, "What should I watch?" And Chip and Jo are great curators. Oprah is a great curator. Food Network, that brand is a curator. HGTV and Discovery are curators. And so I think we have that real advantage of -- we're not about shows, but Jo had the #1 cookbook on -- in The New York Times Best Seller list and her cookbook from last year was the #2 book in The New York Times Best Seller list. And so the reason I think is that they're authentic, they have great taste and they know who their audience is. And their audience has the feeling that they want to see the world, a little of the world or get a sense of the world, through their eyes. And so we're very excited about that. We're going to -- the fact that DIY is now the fastest, or if not the #1 or 2 fastest cable network growing in America, we launched OWN from nothing. We launched ID from nothing. No other cable company has really launched a successful cable network in the last 10 years. The last one was FOX News. ID, we launched as the #1 or 2 or 3 network in America for women, OWN #1 for African American women. And we weren't sure could we launch another one. But DIY is hugely up. And Chip and Jo have a whole production entity in Waco. And when we put those together in '21, we think we're not only going to have another network domestically that we can take around the world, but we're going to have IP that we could put on every platform through Magnolia. So I think it's going to be a big asset for us.

So maybe that's a good transition over to the distribution side. You talked about a couple of recent renewals that, I think, you said it went well. How is the sort of distribution deals changing for Discovery? Are they asking you for different things? And how difficult is it to garner the price increases that Discovery thinks it deserves?

Well, you always want to go into a negotiation with a good equitable position. We spend more money on content every year. There are others that are saying, "We're going to spend less and take our best stuff off the platform." Our content is -- starts out as extremely inexpensive, and they make a lot of money selling it. And so the simple position that our networks are up. We're investing in them. We have great characters. I think that puts us in a position where we start off with, "We love your networks. We like selling your networks. They're doing very well for us. Thank you very much." And we work together with each distributor to -- they help us with our networks. And so I think it's a very symbiotic relationship. So that's a big help to us. I think one of the surprises is that there was a lot of talk in the industry that you got to get -- it's only going to be -- you have 18 networks, it's only going to be 8. On renewals, you're only going to get 8. And in fact, we believe that we have a lot of quality brands, but we got ourselves in a position on our last renewals where about 85% or 88% of the economic revenue was against 8 networks. So that if something did happen where we lost some of the smaller networks, we'd lose the ad revenue, we'd lose the opportunity cost. But most of sub fees were against the bigger networks. In these renewals, we got carriage for all of our networks. And in almost everyone, we got additional carriage for some of the networks that didn't have as much. And so against logic, maybe because we invested, maybe because of Chip and Jo, maybe because cooking has become so popular, maybe because we have a great library, and when we put them on these platforms, people like them. Motor Trend is way up. But in the end, all of our -- we didn't lose any carriage for any of our channels on renewal. And in fact, we came out of them with more carriage, which I think is quite encouraging.

And obviously, cord-cutting is a pretty hot topic. Investors are wondering what's going to happen as unemployment rises and sports off the air. I think the hope for Discovery investors is that you can have enough price increases in your deals that will offset any sort of subscriber or volume declines. I think we're looking for 1%-or-so type of full year revenue growth in next couple of quarters. Does that philosophy make sense to you?

Well, I don't want to speak to exactly what the results are going to be, but we did very well with our deals. And we can't control the ecosystem, but we did very well with our deals. We're doing well with our deals outside the U.S., the fact that our share is growing significantly more than double-digit outside. And we think sports is going to help. One of the things about the Olympics that's going to end up being, we think, quite valuable to us is that in the normal -- if there hadn't been any issues, we would have loved to have the Olympics this year in Tokyo. But once the pandemic hit and the advertisers were pulling money off the table, we were concerned about our ability to fully monetize the Olympics. But when Bach -- when Chairman Bach made the decision to move it to next year, it gives us a very unique opportunity. 2 years ago, we had a direct-to-consumer Olympic product that had over 0.5 million subs in like 4 days. And the platform wasn't the greatest, and we were learning what we were doing and we were trying to figure it out, and it was the Winter Games. Now we have the Summer Games, and 5 to 6 months later, the Winter Games. And we have all the lead up to the Summer Games through Eurosport, and we have the lead up to the Winter Games. And so what's usually a 3-week -- a big lead up to the gold and then it goes away, next year as we look -- if you're a distributor and you're looking at Eurosport, not only do we have the cycling and the tennis and a lot of the football but we have back-to-back Olympics. And we have back-to-back Olympics with leads up to the [ VOD ]. And so I think the strength of our IP next year and the ability to potentially digitally aggregate those together as well as from an advertising perspective, get advertisers in that whole ecosystem where there isn't a rest period of 1.5 years or 2 years, we're -- we think that could be really compelling, and we're having some good discussions.

So let me put sort of the last 2 questions together, visibility and buybacks. At this point in time, do you feel like you have a pretty good line of sight as to where Discovery is going to end up for the year? Is there any variability on the revenue new side? You've also got flexibility on the cost side. And how does that inform how you deploy your excess capital? You got a great balance sheet, excess liquidity. As you said, you're still generating lots of free cash flow. I think there's a few investors out there who thinks your stock might be a little bit cheap, but it's not an easy time to deploy capital. How do you assess risk and visibility here, David?

The visibility is better than it was. Basically, you couldn't see your hand in front of you, and we were really trying to guess, and we were very candid. We just had no idea how would the different commercial players react, how would viewers react around the world. We have much more data now, but we don't have a lot of visibility. We have visibility of what's happening right now. And if there isn't a second wave here in the U.S. or in countries around the world, then we have a pretty good sense of where things are going to be. But we don't have a lot of visibility. We -- this is a year where there's a lot more modeling and trying to determine best case/worst case, what do we do here or there. The good news for us is the exception of sports, and in some cases, it's been advantageous to us. There was a -- there's at least one situation where we use the fact that there was no work for a period of time to get out of a deal that was -- that we were losing a lot of money on, that had a provision that -- 80% to 90% of our deals have provisions that are favorable for us. And this particular one had a provision that said if for a period of time there is no sport, then you have a right to cancel with no additional fee. So we were able to take advantage of that.

So what do you think about the concept of buybacks at this point in time?

We think our stock is really cheap, but the visibility isn't great. And we're generating a huge amount of cash where it kind of pencils down on M&A because we think investing over the long term, depending on where this goes, the company is performing extremely well, better than expected. Our share is better than expected. I think you'll find that we'll probably do better than most on the commercial side. We're very stable or stable on the distribution side. So I think we like -- and we have a great global IP library that we're figuring out how do we fully monetize that at a time when everyone else is figuring out, "What do I do? I don't have enough. How do I get into production?" So we like our hand. And I don't think you're going to see us doing -- buying back at this moment. We just don't have the visibility. But we're generating a lot of cash. We're going to lay low, do what we're doing right now, which is outperforming our peers. We're growing share, we're delighting audiences, we're learning. And we have a real throttle on costs. If things got worse, we could take costs down significantly. We're not tied in to a lot of these long term. We didn't go out and buy syndicated shows for the next 4 years, and we have to write huge checks for each of these things, no matter what. So we think we have a real advantage on the cost side. And until we can have better visibility, we'll lay low. And -- but we do think we're quite cheap. And as soon as we think there is visibility, then we'll look at getting back into the market and supporting what we think is a very cheap currency.

I think you've covered a lot of ground today, David. Any final closing thoughts?

Just say we've learned a lot. We're going to -- we'll come back stronger, and we'll come back as a very different company. And our footprint is -- everything from our real estate footprint, to how we do business, to many people working from home for maybe 2 days a week, maybe forever. We think we'll start to get every advantage out of this experiment. And I think we're going to come back as a leaner, stronger, a more knowledgeable company. And we were forced to create content with iPhones and with GoPros. And for a lot of our channels, that stuff did better, and it's a hell of a lot cheaper. So I think we'd come out of it with more knowledge, and we just hope that this is over. And we hope that we can deal with some of these racial issues as a nation and around the world in a way that advances us as a society. So that's it. Thank you very much.

David, look, well, it's a very busy time, a very dynamic environment. We really appreciate you being with us here this morning. Thanks for everybody listening in. And hope to -- I think, the virtual session worked out just fine. Maybe next time, we'll do it over cooking or something. But really enjoyed it, David. Thank you very much.

Good. Thanks so much, Doug.

Thank you.