Warner Bros. Discovery Inc (WBD) — Q4 2024 Earnings Call Transcript

Good morning and thank you for joining us for Warner Bros. Discovery’s Q4 earnings call. Joining me today is David Zaslav, President and Chief Executive Officer; Gunnar Wiedenfels, Chief Financial Officer; and JB Perrette, CEO and President, Global Streaming and Games. Earlier this morning, we released our Q4 earnings results, trending schedule, as well as accompanying shareholder letter. We will begin this morning with some very brief remarks by David and then turn the call right to Q&A. Today’s presentation will include forward-looking statements that we make pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements may include comments regarding the company’s future business plans, prospects and financial performance, and involve risks and uncertainties that could cause actual results to differ materially from our expectations. For additional information on factors that could affect these expectations, please see the company’s filings with the U.S. Securities and Exchange Commission, including but not limited to the company’s most recent annual report on Form 10-K and its reports on Form 10-Q and Form 8-K. In addition, we will discuss non-GAAP financial measures on this call. Reconciliations of these non-GAAP financial measures to the closest GAAP financial measure can be found in our earnings release and in our trending schedules, which can be found in the Investor Relations section of our website. With that, I’m pleased to turn the call over to David.

Good morning everyone and thank you for joining us. Two and a half years ago when we brought Warner Bros. Discovery together, our vision was to combine Discovery’s leading position as a global force in media and entertainment with local content and local sports alongside the iconic storytelling brand’s IP and libraries of Warner Bros. and HBO. This powerful combination is a unique and compelling offering that we believe would resonate with consumers worldwide. It was the strategic guts of our transaction. Our direct-to-consumer business ended 2024 with about 117 million subscribers across more than 70 countries, and we still have nearly half the world to go with many key markets like the U.K., Italy, Germany, and Australia launching over the next few years. We added about 6.5 million subscribers in the fourth quarter and nearly 20 million subscribers in less than a year. Max continues to grow at a powerful pace, and we expect it to continue throughout 2025 and beyond. In this generational media disruption, only the global streamers will survive and prosper, and Max is just that. With the launch of Max internationally in 2024, we now have a global subscription business that is growing subscribers, revenue, and EBITDA. We have a clear demonstrable path to at least 150 million subscribers by the end of 2026, fueling further revenue and EBITDA growth. Max is one of the world’s very few global and profitable streaming services. Our direct-to-consumer business contributed almost $700 million in EBITDA, a $3 billion improvement in just two years, and we expect direct-to-consumer EBITDA to nearly double in 2025. As I mentioned in our last earnings call, we are laser-focused on getting our studios back to a place of industry leadership and generating $3 billion or more in EBITDA. We are showing growth and real strength in Warner Bros’ television business, which I believe is the highest quality and largest maker of TV content in the world. We are excited about our studio’s creative and financial outlook this year and beyond, particularly all of this coming from Warner Bros Pictures and DC Studios, kicking off with the release of Superman this July. Despite the headwinds facing linear television, we recently struck a flurry of multi-year renewal agreements with five of the six largest pay TV providers in America, many of which were a year early and all of which commanded overall rate increases. These long-term deals provide real security and stability to our linear business. Finally, we have been hard at work and have made real progress implementing the reorganization we announced in December, which went into effect on January 1. This new structure will provide investors with better visibility to the strength of our streaming and studios business and will give us real strategic value and optionality into the future. 2024 marked a year of significant progress in transforming Warner Bros. Discovery, laying the foundation for what’s next and positioning us as a global media leader committed to providing shareholders with sustainable future growth. We remain fully focused on enhancing shareholder value and welcome your questions.

Thank you, good morning everyone. I have two questions. First, could you provide an update on the restructuring that's set to begin on January 1? Can you also discuss any potential long-term transformative actions? Secondly, in the shareholder letter, there was mention of near-term linear pressure due to the addition of direct-to-consumer services and increased packaging flexibility. Can you elaborate on that and perhaps discuss the outlook for consolidated growth in 2025?

Good morning Jessica, this is Gunnar. I'll address those two points. First, regarding the corporate restructuring, this has been a major focus for us and we’ve made significant advancements. As mentioned in our letter, the new structure took effect on January 1. There are still ongoing projects to manage and implement the financial components of this reorganization. For instance, some processes are still being handled by the incorrect entities, which has tax implications, so we are diligently working through these issues and making good progress. We anticipate wrapping this up in the coming weeks.

I would just add that I believe this restructure provides clear insight into the strength of our studio, library, and global streaming business. It positions us to better respond to this generational disruption. The new structure will improve our strategic flexibility and potentially unlock additional shareholder value, which is a priority for us. We are also committed to executing our strategy while seizing broader market opportunities as they emerge. We anticipate that there will be opportunities in this disruption.

Yes, the last thing I wanted to mention is that we don’t anticipate seeing a significant change in our segment reporting from today’s viewpoint. However, we do plan to offer additional guidance to clarify our global linear network and our streaming and studios operations, which can be seen as a sort of sub-consolidation. Based on our progress, I’m optimistic that we can provide this information when we report our first-quarter earnings. Regarding your concerns about linear pressure and packaging flexibility, I want to emphasize the incredible work our affiliate team has achieved in 2024. They have managed to negotiate agreements ahead of schedule and secure rate growth in the current environment, which is truly a noteworthy accomplishment.

Having started in the distribution side of the business gives us a different rhythm. Typically, you would expect your deals to grow by 20% annually, which brings either opportunities or uncertainties. In my experience, we’ve never had such a secure foundation, where nearly all of our deals come with increases and all of our channels are secured for several years. This gives us a significant advantage as we move forward, removing one concern from our equation.

And as we look forward, the one thing I would want to call out, we’ve seen pretty strong rate increases in the prior year, in Q4, close to 6% rate increases in our domestic affiliate business. With the new set of deals, those rate increases are going to be slightly slower, more in the low single digits versus mid-single digit rate, but as we laid out, we have also as an industry come together and created some flexibility that will drive the sustainability and longevity of that ecosystem. Then specifically when we look at the international part of our business, it’s really remarkable how across our international footprint in the aggregate, we are already seeing positive net revenue impact from our affiliate renewals. What does that mean? In many of these renewals, we’re working together with our affiliate partners to make some concessions on the linear side, where they’re facing not as pronounced but similar pressures as domestically here, but we’re cooperating through soft or hard bundles on the DTC side and net-net in the aggregate we’re growing. Across our international affiliate portfolio, we’re up in revenue - that’s the kind of crossing of the line that we’re looking for. We’re not there in the U.S. yet, but it’s a great proof point that we’re seeing that strong value and demand for our content internationally already leading to consolidated growth.

Thank you.

Okay, let’s move to the next question.

Hi, good morning. Two for you guys. As you think about the importance of scale in DTC, curious does Max have enough diversity in programming as a standalone service to compete with those larger SVOD platforms; or maybe asking it differently, any updated thoughts on whether the smaller streaming platforms ultimately need to consolidate? Then on a related note, when you think about the strategy to use sports and news on Max, pulling that content from the ad tier, I think yesterday, can you talk more about how you plan to explore ways to evolve the sports and news distribution ecosystem? Thank you.

Thank you, Robert. We believe our offering is distinct, as there are very few global streaming services available. The demand and consumption we're experiencing worldwide is truly impressive, driven by the quality of our original storytelling, such as White Lotus, House of the Dragon, and The Pit, along with our extensive library of content and valuable intellectual properties. Additionally, we have 20 to 25 years of entertainment content from our free-to-air and cable channels globally, including sports, which creates a comprehensive content package that viewers desire, featuring classics like Friends and Big Bang Theory. Our offering stands out because, in addition to high quality, it includes significant local content, which is not only attracting consumer interest but also capturing the attention of distributors. We feel very optimistic about our position. JB, could you share more about our news and sports strategy, noting the differences between the U.S. and other markets?

Yes Robert, I think both on the diversity point also, we’ve never gone into a period, as we look out over the next two years and, frankly, well into 2027 at this point, where we feel better about the line-up, the consistency, the strength. You saw in our note we have 15 franchises returning that have been in our top 20 of all time, so we feel really good about the content line-up coming and the diversity of that content line-up over the next two-plus years. On the sports and news front, we recognize and we’ve said, I think fairly openly, that we’re continuing to experiment on what the right model is, and the reality is we have a variety of different models in operation around the world. In the U.S., as you rightly point out, we announced yesterday we’re moving sports and news out of the ad-lite and into the premium and standard ad-free. In Latin America, we have it across all of our packages; in Europe, we up-sell it as an add-on and a buy-through, and so we’re openly continuing to experiment as to what the right model is and what the best way is to both drive engagement and first views or acquisition through that powerful content, but at the same time make sure we’re figuring out a business model that works. We’re going to continue to experiment and see what works, and we have the beauty of a global footprint with rights across the world that we can experiment with.

One of the things we’ve pivoted on is Mark Thompson and Alex MacCallum, who built the digital business at the New York Times. We see this as an opportunity to create a completely separate digital and subscription line of businesses. Over the next few months, they will be discussing how they are leveraging CNN as the largest digital news brand in the world, the most trusted news brand with over 150 million visitors each month, and how we are working to establish a sustainable digital business from that. Regarding our overall strategy, we mentioned three years ago that it’s not about quantity, but quality, and that has been our focus. In Europe, when it comes to sports, we offer the best content, and we are committed to delivering high-quality material. The emphasis from KC, Channing, Mike, and Pam, as well as Gunn, is on ensuring that it’s not about how much we offer, but how good our streaming service is.

Okay, let’s move to the next question, please.

Thank you. Maybe a couple. First one on strategy, David, if you could just outline how you see the asset landscape right now. Obviously there’s a lot going on in the industry with different objectives, but in this environment, do you see yourself as a buyer or a seller? Is there an opportunity to maybe become the consolidator and do some kind of bigger spinoff of networks? Your thoughts on that would be useful. Gunnar, just to follow up on Jessica’s question on the full year, when you have easier comps on studios this year and if we just look at networks, despite the headwinds, if you just stay with the same trend line as this year into next year and then DTC profitability that you guided to, it would imply that you should grow EBITDA in ’25, so is there something that takes away from that algorithm? Would be great to get your thoughts on that. Thanks.

I guess fundamentally when you look at the marketplace, we really believe that the global players will be those that will really prosper in the years ahead, and ultimately the largest sustainable growth media companies, there will probably be four or five, or six, and our job every day is to fight to get a seat at that table. We feel that we’ve made real progress now with our global streaming service and the global appeal of all of our content and the consumer reaction to assure that seat. The consequence of that, I think, is there’s more and more pressure on regional players - can they build their own platform, do they have enough local content? One of the things that we’re seeing now is we’ve been talking about bundling for two and a half years, but many of the really high-quality local players have come to us now after two or two and a half years and aligned on our strategy of better together, so whether it’s Globo in Brazil or Televisa in Mexico, or all across Europe players coming to us, and I expect that’s going to happen. There will be a few global players, there may be some consolidation in getting there. The consolidation may simply come with bundles, and the bundles, you know, as opposed to just being an economic bundle, will be a consumer-friendly bundle where you can move between content from one to another. I think we’re going to be a very, very attractive player. We’re already having a number of discussions, and we’ll just have to assess how strong we are alone and who and when we need. In the end, we’ll always do what’s right. We’re a public company, we’re always going to do what’s right for shareholders. But JB, this idea of bundling, because this is something we’re attacking regularly.

Yes, I think at the end, as David says, there are two forms of re-aggregation: there’s a structural one, which is what David talked about, and then there’s a commercial one, which is the bundling strategy, and we’ve seen great success with it obviously here in the U.S. with Disney, seeing it both drive acquisition as well as significantly reduced churn. And to the earlier question that Robert had about diversity, the reality is the industry has gone from a model in the 2010 to 2020 period of everybody trying to do everything and, frankly, a glut of content and an overspend, to a much more rational spend where we’ve gotten all back to doing what we’re really good at and providing consumers access to all that goodness through these bundles. I think that is a commercial path to getting a lot of the value, and we’re seeing it happen already. As David said, the good news is people are seeing that and it’s gaining a bit of momentum across the world, not just with global players but, frankly, with regional and local players as well, so we think that’s an exciting new growth vector for us as well.

Yes, and sports will be a pressure point. Some regional players are becoming more and more dependent on sports and rental sports, and the ability to really build a long-term platform on short-term sports rights has not been a good story in the past, and it’s unlikely to be a good story in the future.

Then Kannan, regarding your financial follow-up, as mentioned in the letter, we’re not planning to provide consolidated financial guidance this year, similar to last year. However, we have several key points to recap and add context. Starting with DTC, you noticed the $1.3 billion EBITDA target, which we view as very achievable. After navigating a $3 billion fluctuation in profitability over the past two and a half years, we believe we now have the flexibility to make informed decisions to support what’s effectively driving growth, as well as to enhance profitability where opportunities are limited. This is specific guidance that can be modeled. On the studio side, we do anticipate a lower comparison in 2024. We mentioned last year’s limited availability for content licensing, but that is improving. Our TV production business is thriving, and we expect it to continue to grow and increase in profitability, thanks to the fantastic work from Channing’s team. Additionally, you may have noticed JB's restructuring of the games unit implemented towards the end of last year, positioning us favorably for 2025. I believe our film slate is now better balanced, and as we’ve discussed previously, our rigorous processes should lead to improved financial performance, despite the inevitable misses in a hit-driven industry. In summary, the studios are expected to significantly improve EBITDA this year compared to last year. Regarding the network business, I don’t want to mislead anyone—this area still faces challenges. We experienced weaker ad sales in Q4 than anticipated. While we did not expect extensive political advertising, we had hoped for more benefits from the elections at CNN, which unfortunately did not materialize. Looking ahead to the first quarter, we observe some mild positive signals in the ad market. Although it’s not a major turnaround, we are seeing fewer upfront cancellations compared to the previous year, and scatter CPMs have increased modestly. However, we recognize that we have work to do on our linear portfolio. Channing has taken on additional responsibility for ratings and delivery, and she has built a strong team. Numerous content initiatives are underway, including new shows like Baylen Out Loud on TLC, with the team known for past successes performing well. I am particularly excited about Channing’s plans to strategically utilize our extensive library at Warner Bros. and HBO, which aligns with our goal of synergy. Additionally, I want to highlight that we expect to see subscriber declines on the affiliate side. It may be premature to anticipate a stabilization or significant moderation, although we foresee slightly lower rate increases than in the past. Our sports portfolio is robust, and I’m pleased with the implementation of our sports strategy over recent years. However, this also means that we will incur some additional expenses in 2025, largely due to expenses associated with the half NBA season this year and new rights costs. Consequently, we anticipate a significant improvement in 2026. Beyond that, our focus on costs remains a top priority, even though we've already made substantial improvements to our cost structure in recent years. Lastly, concerning international markets, we see trends in the linear sector that are considerably better than those domestically. Although not growing overall, there is moderated pressure, despite some uncertainty due to the current geopolitical climate. This is why we are refraining from providing a firm number for this business or for the company as a whole. Nonetheless, we are making excellent progress in transforming our business, and our goal is to have those lines intersect at some point, especially as we identify vast opportunities in DTC and the studio sectors. We are confident in achieving this intersection, although I won’t specify a timeline.

Thank you.

Good morning and thanks for taking the question. I wanted to ask about free cash flow and the balance sheet. Gunnar, I know you just mentioned that you are not providing explicit consolidated guidance and walked through the moving pieces and the uncertainty ahead, so forgive me for the follow-up, but any chance you could expand on the free cash flow outlook for the year, particularly with the moving pieces across working capital? I ask in part to get a better sense of where net leverage can move to from 3.8 times today, because it seems like we could see a healthy year of deleveraging ahead, but I can’t really tell with the EBITDA commentary, so would appreciate your perspectives. Thank you.

Sure, look Kutgun, as you know, free cash flow has been one of our top priorities from a financial perspective, the most important metric, and we have really changed the entire company’s mentality here. This was not a fact anyone looked at three years ago, and we have a pretty well-oiled machine now, and that’s one of the reasons why we continue to put up these strong cash conversion rates, even with some top line pressures especially on the linear side. The balance sheet, I think is in very good shape now. By the end of this quarter, we will have paid down $19 billion of debt since closing the transaction, and we will continue to be super, super focused on this. At the same time, I also want to reiterate that I’m not worried about any maturities. I view our capital structure as a real asset. The terms that we locked in between the rates and the maturity profile are an absolute strategic asset for this company, so we’ll continue to focus on bringing net debt down further. I continue to believe that 2.5 to 3 times is the right leverage target for this company, but it’s not the end-all, be-all target of this company. Specifically for free cash flow in 2025, again we’re going to continue to focus on it. Talking through some individual building blocks, we want to continue growing content investments, albeit with continued improvement of our ROI against those investments, and I see evidence of that every day. Moving further through the free cash flow walk, working capital will be strong again in 2025. We did have a good result in ’24, even though there was a drag of almost $500 million from paying down some of our securitization facility opportunistically, which I don’t expect to happen in 2025. We’ll obviously benefit from lower debt load and corresponding interest payments. We are going to see a little more capex as we expand our production footprint, predominantly in Leavesden, expanding our capacity there, and restructuring expenses are going to continue to come down. But to your point, the absolute dollar amount in the end is going to be mostly driven by the resulting final EBITDA number, of course.

Very helpful, thanks Gunnar.

Thank you for taking my questions. I have a few that I hope will be quick. Considering your comments about sports costs impacting 2025 until the NBA season concludes after the first half, how should we evaluate the net sports cost savings for 2026 compared to 2025? Additionally, Disney is discontinuing several sports, and you'll likely have limited UFC access, all of the Formula 1, and Sunday Night Baseball is now available. In light of your comments on renting sports, should investors assume that you are not currently interested in acquiring any of those sports rights? Lastly, regarding your new affiliate deals, do you receive any minimum penetration guarantees for Max when it's included in these wholesale packages? I know you previously received minimum penetration for your cable networks, and I’m interested in how that applies to direct-to-consumer.

Thank you, Rich. We appreciate sports, but we are disciplined and opportunistic, and we are confident about nearly all of our sports initiatives within the company. We have put significant effort into building our free cash flow and EBIT to reduce debt. As we evaluate our streaming service, the critical factor for us is quality content—the movies and series produced by Channing and Casey. That represents the forefront of what attracts consumers, along with our library, and we own that advantage. When we introduce Harry Potter in a little over a year, we will have a decade's worth of content to amortize worldwide. This type of investment also benefits our merchandising and smaller themed parks, so our strategy centers on investing where we can achieve the best returns. There are sports rights we can pursue opportunistically that could yield a solid return, but we do not require additional sports rights globally to support our operations. We would consider acquiring sports if it would enhance our business. However, as the market evolves, it is becoming more challenging—some companies are choosing to focus on sports rather than our approach, which is long-term and complex, unlike what Channing, Casey, Mike, Pam, and James are doing. I see a trend towards paying more for sports to secure guaranteed audiences, which contrasts with building value around strong intellectual properties like Batman and the Penguin. This shift is beneficial for us since that’s how we establish our brand and create value.

On the topic of penetration and carriage commitments, there are a few points to consider. First, there isn't a one-size-fits-all approach, and we employ various models worldwide. Second, we are engaged in both soft and hard bundles. With soft bundles, there are no penetration or carriage commitments. However, in hard bundles, some do involve such commitments while others do not, resulting in a diverse range of scenarios. It's challenging to pinpoint a single model, but we do have obligations and commitments in several cases. This is why we pursue these options, as we have carriage commitments in markets like the U.K. with Sky, and in other regions globally, where our partners agree to distribute to a specific number of their subscribers.

I’ll just add one last thing on the sports side, to be specific. We will see several hundred million dollars of sports expense come out in 2026. To be fair, there will be some associated ad revenues as well, but this should be certainly a few hundred million dollar improvement in 2026 over 2025.

Thank you.

Hey, good morning. Thanks for the question. I just have two related to DTC. It was encouraging to hear about the 150 million-plus subscriber target by the end of 2026, of that, roughly 35 million subscriber growth over the next two years. Any thoughts on how much is domestic versus international? It sounds like the comments around the international launches and the hard bundles, it seems like it’s more international, but just wanted to get your thoughts around that. The related ARPU pressures because of these growth drivers, is that more of a comment around ARPU potentially being flattish from here, or could we actually see ARPU down a little bit before normalizing and returning to growth? Thank you.

The U.S. is a pretty mature market. We think that there’s still some growth, given the quality of our service, and we’re fighting for that. A lot of the growth may come from price as we play around with the quality of what we’re providing versus the cost of what we’re providing, as well as how many people in a home can use the service, and that will be rolling out. But this idea of global media company and a global streamer and being able to scale, that’s the point that we’re pushing on right now, on an open door, and that’s what we think when we look around. There’s not a lot of players playing that game, so. JB?

I believe that a significant portion of our growth will originate from international markets, as we have a substantial presence outside the U.S. that we have yet to fully exploit. This international growth will stem from entering new markets as well as increasing our market penetration. Regarding the ARPU, we anticipate some decline in the short term due to our ongoing expansion. For instance, our ad-lite offering, which was only available in one market about 15 months ago, is now accessible in over 45 markets. This shift will take time as we adjust to a lower-priced ARPU in some areas while working to build our advertising revenue. As we expand into Asian markets, which typically exhibit lower ARPUs, we expect to face continued pressure from that. Additionally, our priority is to get our product into more users' hands quickly. We are pursuing attractive bundle deals that may impact pricing in the short term to achieve immediate scale and distribution. You can expect to see some pressure from this approach. Nonetheless, we are committed to managing our business prudently by evaluating our subscriber acquisition costs and aligning them with an appropriate lifetime value profile. We believe there is still considerable potential in this equation based on our current data. In the medium to long term, we are optimistic about returning to ARPU growth, even after this expansion phase over the next 12 to 18 months.

Great. Thanks David, thanks JB.

Thanks for the shareholder letter; I think it’s helpful. There are three long-term goals you’ve mentioned, one for each segment. Could you elaborate on the networks segment, particularly your comment about stabilizing segment revenues over the next few years after the MVP agreements? That would certainly surpass market expectations, so I’d love to hear more about that outlook. Regarding the 20% margins at DTC, do you have a timeline to share with us? I expect it will be around 10-plus for 2025. Also, concerning the $3 billion-plus of studio EBITDA, last year was challenging, and the year before was in the low 2s, so how can you help us gain confidence in these three metrics, which I believe would create substantial value for your stock and exceed expectations? Thank you.

Thank you, Ben. Let me address your points individually. Regarding the network, I want to clarify our stance. We don't anticipate revenue stabilization to mean no growth or decline. Our goal is to strengthen our position within industry trends, and we are optimistic that recent affiliate renewals will positively influence the industry. However, don't interpret this as an indication of flat revenue from linear sources; I believe our current situation is significantly improved compared to six to nine months ago. On the DTC front, we aim for a 20% margin target, and I am confident we will achieve and surpass that. However, we won't focus solely on margin goals, as that would be misguided. As JB mentioned, we will consider lifetime value in our strategy. We now operate a profitable business and have the flexibility to make trade-off decisions. I would prefer to prioritize stronger growth in 2025, 2026, and 2027, even if it slightly impacts EBITDA margins because it will enhance long-term asset value. Meeting a margin goal early or late does not materially benefit us. Ultimately, shareholders will gain from the asset value being created. Nevertheless, I believe the margin target is well within our control based on our plans. On the studio side, let's revisit what we discussed in the third quarter earnings call. I highlighted several factors affecting 2024, including the limited number of availabilities in our content library. We anticipate much better availability profiles in 2025 and beyond, which will significantly contribute to the studio's profitability. While film and TV production replenishes the library, availability dates are crucial. I also believe 2024's experience in the games business was an anomaly, following 2023's positive outlier. Thanks to JB's restructuring, our position has improved significantly. We have made real changes in managing our franchises and driving ancillary revenues in consumer products—such as experiences, tours, and retail—all of which are now aligned with our initial project approvals rather than being considered later, presenting real margin opportunities for every dollar spent. I expect a significant increase in EBITDA in 2025; when David talks about reaching $3 billion for the studio, it represents not a final goal but a necessary step to improve our current status and grow from there. We strongly believe that the studio has tremendous potential beyond that.

Thanks Gunnar.

Great, thanks for taking the question. Maybe just a quick one on skinny sports bundles. Despite the wind down of Venu, it looks like this distribution model is going to proliferate - you have DirectTV, Comcast, it sounds like one’s coming from Fubo. Maybe David, what’s your initial thoughts on these bundles in terms of do you think they’re going to see meaningful adoption and drive any sort of meaningful change in either cord cutting or affiliate trends at Warner Bros? Thanks.

I think part of it is going to depend on the consumer value proposition. The idea of aggregating sports together and offering it on a contemporary platform, where instead of thinking about channels you can think about sports and go there and see it, is very compelling. It was one of the reasons that we were driving behind Venu. Some of these bundles, if you look at them as contemporary platforms that just provide a better consumer experience, is positive but it really depends on the value equation. If it’s very close to the price of the overall bundle, what we’ve seen over the years is that even though consumers might think that that is what they choose, when they do get the choice, unless it’s significantly less expensive, they opt for the bigger bundle where they can see a wealth of other quality content. I think ultimately, everything we’re doing is going to be driven by providing a better consumer experience, and everything we do here is driven by that. It’s one of the reasons why we’re so optimistic. When you put the TV set on and you see 18 apps and three people watching TV at the same time have their phones out, Googling where a show is or where a sport is, it’s not a good consumer experience. The value creation over the last 50 years almost always follows a better consumer experience, and that’s what we’re doing with Disney, that’s what we’re doing with Verizon when we’re together with Netflix, that’s what we’re doing on our own by having local sports, local content together with the best quality TV and motion picture content, and that’s why I think there will be an aggregation in a meaningful way behind a couple of the bigger global players because consumers, at some point, they’re going to say this is too cumbersome and too challenging. I just want to put the TV on, or I want to go to my phone or whatever device I go to and be able to see the content that I love without having to come in and out of products and without Googling where things are. I think that’s going to be the wind at the back of this industry, and I think everyone’s going to have to get on board with that because consumers are going to demand it. That’s where we’re going.

Thanks David.