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

Welcome to Day 2. We are thrilled to have Gunnar Wiedenfels here virtually. As you may or may not have heard, he has COVID so -- he hasn't canceled, but he is kind of here with us and Gunnar, welcome. It's great to have you back. I think you're giant sized but anyway, wait, you're muted.

[indiscernible] there in person but that's the thing we learned, I think during the pandemic, right, stay out of people's way if you're not feeling well. So thank you for the flexibility of being able to do this virtually. Good morning, everyone.

Yes. You can't see, but we do have a full room so we'll get started right away. It's now been roughly 18 months since the combination of discovery with the old Time Warner. And as an outsider looking in, it looks like you've basically done the impossible. You've broken down the silos of the old Time Warner, which were in place, I don't know, for decades, like really since they've started. What do you have left to do? And can you talk about the priorities for the year ahead?

Well, thank you, Jessica. Before we go in there, it really does feel -- and David said this last week, like we've worked so hard over these past 17 months, and we prepared the company to be ready to take advantage of the opportunities that are ahead and to respond to the challenges in the ecosystem. These were certainly, the 17 months, the most intense 17 months that I've seen in my career, and we have chopped a lot of wood. And we've got a great team together really operating as one company. To your point, we've got a balance sheet that is getting stronger and stronger with a clear trajectory on the leverage side. We've got the most diversified portfolio in media and with the launch of Max, a really state-of-the-art profitable, live capable platform. So I really do think we're ready to take advantage of the opportunities in the ecosystem. And to your point, one company mindset versus a siloed management approach is really probably the single biggest change in Warner Bros. Discovery after we came together in April of last year, and it's remarkable. And I was just down in Atlanta earlier this week and realized that we even had colleagues that have been with one part of the company for 13 years, but had never been to Atlanta because it just didn't occur to be an opportunity. I'm talking sort of within the Time Warner, within Warner Media. And we've got to see some great progress they're making on the sports side, but we see [indiscernible] and Craig Barry, really bringing together our podcast operations team, Turner Sports, Eurosport, CNN, to drive some synergies. So this is by far the biggest driver of all these opportunities. And as you know, we've taken the synergy target up. We've got $3 billion in the bag, already raised our expectation to $5 billion-plus now. And this is really one of the biggest drivers behind all of that. To your point, what's left to do. We still have a lot of opportunity in many areas. We're still scratching the surface. And we have changed the mindset to a more cash-focused mentality, which as you know, has been a huge priority for David and myself from the very beginning, especially in an environment where capital isn't free anymore. We can do more there, capital allocation across our -- the $20 billion content portfolio is a major opportunity. The company has continued to create great successes. And I think we can do even more with funding the right projects with the best thoughts of success. And we still have a lot of growth opportunities that we haven't fully captured. Again, consumer products, merchandising, franchise management as a general theme. Other areas in the studios, games has had some real success we can do more. David has already talked about the number of films that we want to make going forward, et cetera. So there still is a lot left to do. But the most important point is we've really put ourselves in a great position here to tackle these challenges in the industry.

And so on that synergy point that you just made, what were the key drivers of the increase to the $5 billion? At least $5 billion from $3 billion? And is there more to go?

Yes. Look, I hope there's more to go because again, the way we look at it is we talk about synergies but it's really a continuous improvement program. And we still have the team fully up and running. We're still generating new ideas into the funnel. And we will continue to do so and increasingly also add growth ideas to the funnel, and we will execute those with the same rigor that we have applied to the efficiency measures that were implemented over the past 17 months. As I said before, the biggest drivers of these step-ups are really not individual new initiatives that we've added to the funnel. We've got over 1,000 individual initiatives in our attracting system. But more my increasing confidence in our ability to deliver against these, right, because everything starts with an idea. The next step is a business case. The next step is an operating milestone plan and then the implementation. And obviously, as you move these initiatives through that funnel, you get more and more confident. And we do know from prior experience, typically, you lose about 1/3, 40% of the potential on the way through that funnel. We've done better than that this time, and we have added more initiatives to that process. So I feel very, very good about where we are. And we're at the point where, again, just like we did after integrating Scripps and Discovery, we're making this part of our management culture. It's part of -- it's part of how we run the company. This is not about an integration. We just want to do the best for the company. And as I said, there's still so much opportunity from applying that one Warner Bros. Discovery perspective to virtually every decision we're making.

And as you drive to a 60% free cash flow conversion, what do you think -- what are the key areas of focus?

Well, one big driver, obviously, is profit improvement. And as you know, even with the slightly lower outlook for EBITDA, we're continuing to grow profits very significantly, and we intend to keep doing so. And that's, obviously, the biggest driver of free cash flow conversion from EBITDA because the below-the-line items become less relevant on a relative basis. There are a couple of other big items on the content side. Again, we've only just scratched the surface. We've closed the gap. The company previously was amortizing significantly less than spending. We've closed that gap pretty significantly. And I do think as we're bringing together our back office processes, our post production processes, content management systems, et cetera, there is going to be very significant efficiency potential in the content side -- on the content side, in and of itself, without any impact on the quality of the creative and the opportunity on the creative side. Another big, big factor is just what I mentioned earlier, the cash mindset. The cash mentality. That's something that has radically changed over the past 17 months. We do have areas in the company where people didn't know whether an invoice had already been sent or not. And if it was out there, people didn't know whether the cash have been collected or not. It was just not managed that way. We have made enormous progress. We've got a full team with hundreds of individual improvement opportunities down to the granular level of managing payables in Chile. Down to that level, we now have the transparency. We've just gone live with one, with our central consolidation system, which creates a lot more transparency that was one of the big finance systems project. And with that transparency, comes accountability and comes management attention. And again, as I said in one of these discussions with you, I think what doesn't get measured, doesn't get managed. And we've started to measure it, and we definitely see the impact on managing it. And that is working capital, but it's also a closer look at when do we have to make what investment, and how does a certain investment stack up against other opportunities in the company. I think the one thing to keep in mind is with the production that might have a 10% margin, but it takes 24 months to get it done, and then we might not collect all the revenue right away. That gets more difficult in a higher cost to capital environment. And we're creating that awareness across the entire company, and we've made pretty significant progress. One thing that is going to come in, in a helpful way in 2024 and beyond, is the fact that we're delevering the company. So interest expense is going to be less of a cash drain. And as we come off of some of the most important and some of the most capital-intensive integration exercises such as our personnel restructuring, the consolidation of the real estate footprint and so on and so forth. That has driven a lot of cost to achieve, which is going to come out of the cash flow number going forward. So that would be an additional tailwind. So again, I think we've got a lot more runway here, but I'm also super happy with where we are. I mean we're going to be generating more than $5 billion of free cash flow 17 months in.

Right. Can you just drill down on one of the points that you just made about your decision-making process on content, now that cost of capital is climbing or as you said, money is no longer free. What are you doing differently?

Well, we have this tremendous opportunity and the fact that we're such a greatly diversified media portfolio. We're covering virtually every genre on every platform, in every market around the world. And historically, those businesses have been managed very, very granularly within their own silos or divisions, if you want to call it that. That, obviously, leaves a lot of opportunity on the table because to really get the best value out of every bit of content that we're creating, we need to utilize all of those cash registers, all of those windows. And we need to do that in a well orchestrated and optimized way. And it begins with the content investment process. I know that there are certain projects that we have in the past, walked away from, because it was driven out of one individual unit. It didn't look like it made a lot of sense for that specific unit. We can elevate that now and look at these projects across WBD level, and there is much more monetization opportunity, if you apply that broader lens. That's what we're trying to do. And again, early days there. It's still -- there's a systems component to it, but we're making great progress. We've been at this now for more than a year. And we're really opening the aperture and looking at these investments from a much broader lens. That's also been a factor not only on investment side, but also on the monetization side as we talk about windowing how do we sequence our content through those various monetization windows. What kinds of content do we keep exclusively versus do we sell potentially to third parties, et cetera, and we can talk more about that.

Yes. So on that point, how do you decide what to keep exclusively and what to sell to third parties? And can you give us an overall picture of what you think the opportunity is for third-party content sales?

Sure. The way I look at these questions is when we set out as Warner Bros. Discovery, David set 3 strategic pillars that are just foundational and fundamental to everything we do. We want to be the greatest storytellers in the world. We want to be the best at monetization, distributing our content across all platforms everywhere in the world. And number three, we want to manage this company professionally, rationally and as one company. If you apply that 3-pillar framework to these decisions, the first thing we do is we try to collect as much data as we can. And we have an enormous amount of data fully aggregated yet, still partly disjointed in parts of the organization. We're working on that. But we have a pretty comprehensive and pretty good view on what works, what doesn't work, what do our consumers want to see when -- one platform. And we can look at the data. It's never going to be a complete picture. There's always going to be management judgment coming into play. But we know, for example, that certain titles, this whole idea of warehousing content on the Max platform, on a streaming platform. To me, in retrospect, is incomprehensible because we know, looking at the data that you have that Pareto distribution. A small percentage of titles or a small percentage of titles really drives the vast majority of viewership and engagement. So you've got to look at what to do with the rest. And it's not only an opportunity to generate additional revenue. And one thing that's important is we almost -- all the licensing syndication content sales, whatever you want to call them, revenues that we're driving off our own content are nonexclusive or co-exclusive. So we always keep the same content on our platforms as well, but we generate additional revenue by making it available to third parties. And Jessica, it's the same thing that we've seen over and over and over again, over the past 20, 30 years. As long as I can think, content needs to get oxygen to be -- to stay alive and to stay vibrant. And we've seen this again and again. You have a title where engagement of viewership drops off after whatever, a number of months, 6, 7 months or so on the platform. It drops off because people on the platform have seen it often enough. We then had a third-party co-exclusive deal, not only generate some revenue, but all of a sudden, you expose it to a new audience, to a potentially, a broader audience. And lo and behold, your own viewership on your own platform starts to benefit because people go like, "Oh, I haven't seen that in a while or I missed that." So there -- it's a win-win-win. It's great for our consumers to get access to the content. It's great for talent because we won the greatest monetization for every piece of IP. It's great for our platform, and it's great for my free cash flow as well.

So speaking of talent, can you talk a little bit about the impact of the strikes, strikes plural, from a content production standpoint as well as financials?

Sure. Look, it's an unfortunate situation. And I know that David is spending a lot of his time with his peers on trying to resolve this as quickly as possible. Content is the backbone of what we do. We got to get back to work, and we have to find a way to get to a solution that's fair and makes everybody feel respected and rewarded fairly. So that's the #1 priority here. From an operational financial perspective, as you know in many areas, especially since we've got both the writers and the actors on strike. We're really shut down. There is very, very little content production going on right now. I do think that we're confident that there will be a solution. Once that happens, we're going to be ready to really get back to a normal production cadence as quickly as possible. And as we laid out on our earnings call, there is uncertainty. And as you know, we filed an 8-K a week ago because by the time we reported earnings, I was still hopeful that we could see a resolution early September which, obviously, hasn't been the case. But in that framework that we made out on the earnings call, we're now seeing a slightly lower EBITDA number for the year because content delivery and monetization is subdued, especially in the third and potentially the fourth quarter. Also for the film slate, you have to assume slightly more conservative outlooks with the lack of talent being available to promote titles, et cetera. On the flip side of that, as we had already described earlier, from a free cash flow perspective, short term, this is a benefit. And I took the guidance up to north of $5 billion now for this year because we're just unable to deploy capital.

Right. So moving on to revenue. Can you give us some color on the '23 upfront by the various components? Linear, sports, news, direct-to-consumer. Were there any upside or downside surprises?

Well, as you've heard from others, a market that was a little more challenging than in the past, I think we did well. I'm very happy with the outcome. We took in a lot more volume than in the past. And that has been -- the lack of volume commitments in the upfront has been one of the headwinds, frankly, in 2023. So we have -- we've been happy with that outcome. On the pricing side, as you know very well, pricing was pretty much consistent with the prior year levels on average for us. And I think others have even made some pricing concessions forward. Some of our top networks were up in linear pricing but on balance, pretty much in line with the prior year. And you mentioned D2C. Clearly very significant, I think market-wide, very significant increases in volume. And that's how everybody have positioned from a pricing perspective as well. We were up more than 50% and Max volume, even more than that. So I feel very good going into the fourth quarter and these -- the next 12 months at the broadcast calendar with what we've been able to secure.

And what do you see in terms of the fourth quarter commitments?

Look, it's early, as I said, from -- purely from a technical perspective, volume commitment significantly higher than last year. We'll be doing better. And we're still hearing mixed signals. And with some people we talk to in the industry are still very focused on budget still being available, budgets still being around, sitting on the sideline, waiting to pull the trigger. There is this notion of this 18 months rolling recession expectation that never really happened. So that's clearly not great from an advertiser perspective. But we're also seeing small incrementally positive signals through the third quarter. September is shaping up to be a little better than the earlier part of the quarter. So cautiously optimistic.

Then can you help us think through the framework for news and sports? How they coexist in a linear universe? How do they coexist in streaming? How do you ensure you don't drive viewers, subs off a cliff in pay-TV?

Well, sure. I actually want to take a step back, Jessica, and talk about our role in the linear affiliate ecosystem first before we go into News Sports.

Sure.

Because it's especially reflecting a lot on what happened over the past 10 days here in the ecosystem. I just want to be clear. We have very, very strong and amicable relationships with our affiliates. And I think there are a number of points that are just important to call out. Number one, we're not breaking the bank. If you just -- and this is all outside, in analysis because it's not entirely public data, but you know kind of from [indiscernible] what the networks are worth, et cetera. I am 100% convinced that we are delivering significantly more value to our affiliates in terms of viewership, which in the end is driving their revenue, than our relative share of their programming expenses. And I think there is a very significant gap. And we've seen that over and over again, and that's why we've been able to get our renewals. Number two, something that also sometimes gets lost in the discussion is some of the [ rub ] on the Charter Disney side was the authentication into a D2C app, one thing that we don't talk about a lot. But if you think about -- when we introduced Max or HBO Max at the time, right, deals were done with all the affiliates that essentially allows the premium cable subscribers, authenticated access to what's now Max, which is a -- that is a multibillion dollar on-top content offering. And that's incredibly valuable from a consumer perspective and that's available on an authenticated basis. So I think that's an important point that sometimes gets lost in the discussion. And then the third point I want to make is we have -- I don't think we've ever worked through as many affiliate renewals as we have over the past 17 months, after forming Warner Bros. Discovery. And as you noted, not a lot of fanfare, not a lot of press. We've been able to work through these agreements with mutually beneficial solutions in every single case. One of them, by the way, Charter. And so I do think we clearly have a great relationship in that traditional ecosystem. And we will continue to honor that. It's incredibly important. Talking about News and Sports. Obviously, as many call it the glue of the bundle, a super valuable IP, very, very important for live viewership and engagement. The thing though that we can't ignore is that the traditional ecosystem has lost about 30 million homes from its peak. And so now, you're looking at some of the most valuable IP not being accessible for anyone who's not willing to still participate in that traditional cable ecosystem. Now that's not a good solution. And I think we -- all of us together as an industry, as programmers, MVPDs, sports leagues and most importantly, the consumer, we have an interest in finding solutions that makes this content available. And again, going back to the hard work over the past 17 months, we now have the flexibility of a live capable platform. We have worked through our agreements on both sides of the value chain to have the right flexibility. And again, we're super, super energized by CNN Max launching very soon. We talked about that already. We've got some experience from news on streaming in Europe. That's been very encouraging. And as David has said, we're also getting close to a solution on the sports side that we will talk about in due course. So stay tuned.

So with the NBA renewal coming up, could you talk about your overall sports investment? And you have different models around the globe, maybe touch on what some of those models are.

Sure. One thing that we've said many times before, is sports is almost just in an extreme case of any kind of content investment, right? Extremely powerful in terms of audience generation and stickiness, typically also extremely expensive. And so it takes a lot of discipline to play in that field successfully. And that's what we're going to be continuing to do. And I do think we have the benefit of running sports businesses, sports media business is almost everywhere in the world with a very, very strong footprint in Europe, very strong footprint in Latin America and then a very relevant footprint from our perspective in the U.S. market with Turner Sports. So -- and again, as I said initially, we're learning a ton from integrating the operation of that sports footprint, and we've been very successful in this space. And we have made a lot of money. We continue to make a lot of money in the space. And that's the lens to which we're going to be looking at any upcoming renewal, clearly, the NBA being a big one. Clearly, we'll have to have the flexibility to utilize whatever new rights in the most flexible way. I don't think anybody should expect a pure linear-only renewal of any sports right anymore. I think that's a given. But we're willing to be creative and flexible. We are a great partner to the NBA. It's a long, long, very successful partnership, and there's a lot that we bring to the table that others don't. But that said, we will take the time. We've got some exclusivity left for another half a year to have these discussions. And I'm hopeful that we're going to get to a good resolution. And that's going to be the same approach to every sport right. We will look at everything. You'll never not see us in certain processes, but we will come at it with a brutally rational mindset.

Do you think sports gets tiered in the U.S.? Is that like ultimately what happens?

I don't know, Jessica. I mean, the one thing that's striking is if you compare the U.S. market with other international markets, and maybe importantly in Europe as well, one fundamental difference is the fact that Europe doesn't include premium sports into the most widely distributed packages. And so in a way, that approach in the U.S. has contributed to the overstuffed turkey, in a way. I don't want to make a prediction here in terms of what's going to happen. But clearly, we're seeing success in Europe with sell-through bundles for sport. And by the way, what I said before was on the linear side, now I'm talking about our own digital and streaming offerings. So there's definitely opportunity there. And I think Charter came out and after they found the deal and talk about how the solution they found with Disney could add to stability in the ecosystem. And I think that's a very valid and important point.

Yes. It should be positive for all the programmers. So moving on to streaming on Max. Can you give us any updates on key KPIs for Max?

We're very pleased with how it's going. We're 100 days in. As I said before, we're careful interpreting too much into any kinds of metrics this close to a relaunch because we know that consumer behavior still has to find its new level and people might be sampling a little more than they would on a sustained basis. But we're very pleased with what we're seeing, very focused on churn. A number of the churn related metrics, churn drivers or drivers of churn reduction, I should say, such as viewership engagement, habituality, coming back to the platform multiple days a week. Sampling content across a much wider variety as opposed to just to what people were used to before. That's all trending in the right direction. And the platform continues to be stable and getting strong reviews. The other component here is obviously scale and subscriber growth. A reminder here that we're still working through that group of overlapping Discovery Plus and HBO Max subscribers, and we're still chipping away at that. And clearly, we're looking forward to when a lot of the iconic content that [ Casey ] and the team are producing is going to be ready to come to the platform. Very few things right now are progressing through production, of course, because of the strike. We've got a lot in the hopper and 2024 is going to be a big year in terms of the launch of new titles. And then, of course, we're excited to see what CNN Max can do.

Right. And can you give us your thoughts on future pricing, particularly in light of like the more competitive environment overall in streaming and what seems like price increases across the entire DTC universe?

Sure. Look, I think that's still a function of the practical reality that for a decade, in-streaming, an enormously valuable amount of quality content has been given away well below fair market value. And I think that's in the process of being corrected. And we've seen price increases across essentially the entire competitive set. We've increased prices, especially internationally where a lot of the HBO Max launches were very, very much targeted at the maximum possible subscriber number, not necessarily the maximum possible economics from the launch. So we've been cleaning up a lot of that. Generally, what you'll see from us is more upward pressure on the monthly subscriptions, trying to get people to commit for the longer term because you still have this were dynamic, whereby you could sign up for a subscription VOD service today and spend 2 or 3 weeks. You're going through an enormous amount of content and then move on. That's something that I think the entire industry is aligned in their incentives to work on that. The other point is we're continuing to see great success with our AdLite solutions. In the end, we want to be indifferent between AdLite and ad free from a monetization perspective. We've opened up some HBO content in a very measured way to advertise and see great demand for that inventory. So I do think that on the advertising side, we have pretty significant additional growth opportunities.

And can you walk us through how you go from negative couple of hundred million dollars of '23 to $1 billion in profit in '24? Like what are the building blocks?

It's across the entire roster of operating metrics and financial metrics, Jessica. It starts obviously with scale. Remember, we haven't really launched a lot of new markets or relaunched Max in a lot of markets. That was not a priority this year. For next year, that is going to change, and I'm hopeful that we're going to see some significant subscriber inflow from international markets. I do believe that we can continue to get better with the subscriber acquisition economics and subscriber retention economics. Churn is, obviously, a huge driver. Even a small amount in churn reduction can have outsized impact on the financial profile of the entire business. We've talked about pricing, that's going to continue to be a priority. Advertising, I mentioned briefly, is definitely a tailwind. And as I said when you asked me about it upfront, we did see very significant volume increases that are going to flow through over the next 12 months and certainly much beyond that. And we also still have expense opportunities. We will still learn more about what content drives what kind of behavior. And Casey always says, there's a specific role for each show that we're making. Getting better at that should drive further economics. And then also in terms of the operating expenses outside of content. Remember, we're still -- we've switched over to Max in the U.S., but we're still operating multiple platforms internationally. And so from a synergy cost efficiency perspective, we still have some more bites at the apple left with Max. We can still get a lot better. And I mean, I mentioned this briefly in one earlier speaking opportunity. We're still in the beginning stages of harmonizing our content supply chain, just the operational backbone of making content available within the company across different platforms. There's enormous efficiency opportunity there still.

So let's move on to film because I see we're running out of time. With your recent hire, Bill Damaschke, who was at DreamWorks Animation, what are your aspirations in children's content?

Children's -- Kids content is incredibly important. It is also an area that had historically not been that much of a focus area and partly rightly so because the HBO brand wasn't necessarily what parents would turn to if, they are looking for something for the to put their kids in front of, right? Now with the Max brand, I think we're in a different position, and it's one of the priority investment areas that Casey and JV have defined. Bill is mandated to build out a company-wide kids film strategy. And we have a lot of individual animation and kids programming pods already. Some of them very, very successful. Just was together with Michael Ouweleen, who runs Adult Swim, some real successes there that don't get a lot of attention. But it's clearly an area where we have a growth opportunity and where we have an enormous IP library that we can tap into in order to -- again, back to my earlier point, to get some projects launched that have better odds than others of being financially successful. As you said, he just joined. It's going to take a little while to get his fingerprints on the content output, but so far so good.

And themed experiences, studio tours like Harry Potter Studio seem to be doing well. Yesterday, Tony Vinciquerra was here from Sony and he said they're looking at some smaller kind of attractions, themed attractions. Are there opportunities for WBD to expand like Barbie World or something else?

Yes. Short answer is yes. And in fact, we just opened the Harry Potter The Making of Of Studio Tour in Tokyo in June of this year, and it's on fire. We've already reached the milestone that we had set for the year in terms of attendance. You got to wait for months to get tickets at this point. It was a phenomenal launch. We, obviously, applied a lot of the learnings from our studio tour in Leeds, which is in its 11th year now and just hit a visitor milestone, again a couple of days ago, much earlier than in prior year. So you think about it from that perspective, 11 years old, pretty much the same time since the last Potter film came out, but the IP is generating enormous returns in these experiential business model. So we're definitely looking at opportunities to do more in this space. And again, there's always some investment. As I said, these businesses have great return on investment. We'll be looking at opportunities to deploy more capital, maybe also find some smart partnerships in the space to get more active. It's not huge right now, but incredibly valuable. And that goes back to the point that we've been talking about for so long, the integrated diversified portfolio that we're operating, there is an enormous opportunity, a bit of a built-in hedge between the businesses. And in the end, the collection of business models and assets that we have will allow us to always get the best return, the best bang for the buck on every dollar of content spend.

And then try to sneak 2 more in. So there's been a lot of speculation about potential asset sales, including all 3, music, [ the full ] company, real estate, et cetera. Can you give us any color on what you might sell in timing? I think you need your other...sorry.

Yes. Can you hear me?

Yes, now we can.

Okay. There's not a huge amount of dormant assets in the company. But as we said, we're looking at a couple of things. Well, unusual approach, you should assume that we will approach that with, again, a purely rational mindset. There may be certain things that we define as noncore. And there's been a lot of press around -- you mentioned All3Media, a fantastic company that Jane Turton has built up. There is a lot of external interest, and we're exploring that. There may be other areas where we might be looking at a certain type of monetization, but where we would want to retain control. So that makes things a little more complicated, but we're looking at a couple of things as well. And then as I said, in the context of the studio tours, we'll also be smart about how to best finance some of our expansion and growth opportunities. Again, I'm fully committed to get leverage to where it should be, our 2.5x to 3x target range by the end of 2024. And so we're still working to find the best ways to finance some structural opportunities that helps us meet our leverage objectives and funding some growth opportunities at the same time.

Right. And then I guess a final question since we're almost out of time. As we look towards calendar '24, can you talk about the kind of the drivers, puts and takes for EBITDA? You just lowered '23 because of the strike. But next year, you have the benefit of cost synergy, which is almost your normal way of doing business at this point. Hopefully, a recovery in the advertising market. You've got the Summer Olympics in Paris. I don't know if I'm missing anything else, but maybe walk us through some of the drivers.

No, that was a pretty good summary, Jessica. Look, clearly, the big 3 that characterized this year were the ad market. We've lost about $1 billion in ad sales with a pretty steep profit flow-through. The strike is not helpful, obviously. And hopefully, both of these are going to look a lot better next year. And again, we don't even need a full-on recovery on the ad sales side, just not at the same headwind would make a huge difference. And then the synergy program or our cost efficiencies have been the biggest tailwind throughout the year. We did have some meaningful creative successes as well, a lot of them actually. But with Hogwarts Legacy and Barbie, obviously, 2 standouts that are going to be a little hard to lap next year. But so those are the puts and takes. And we'll have some tough comps in the film space. On the other hand, we've also had some disappointing releases. The ad sales environment should be a big positive. And then on the streaming side, as we continue growing the business, there may be additional opportunity as well, along the levers that we talked about a minute ago.

Thank you so much for joining us. Hopefully, feel better soon.

Thank you, Jessica. Thanks for having me virtually.

Thank you.