Warner Bros. Discovery, Inc. - Series A · NASDAQ:WBD
Warner Bros. Discovery, Inc. - Series A — Warner Bros. Discovery — Q2 2022 Earnings Presentation
49 slides from Warner Bros. Discovery, Inc. - Series A's earnings presentation, Aug 4, 2022
Slide 1: Warner Bros. Discovery
WARNER BROS. DISCOVERY
Slide 2: Andrew Slabin, EVP, Global Investor Strategy
Andrew Slabin EVP, Global Investor Strategy
Slide 3: Important Information
Important Information Cautionary Statement Concerning Forward-Looking Statements Information set forth in this communication contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking sta
Slide 4: David Zaslav, Chief Executive Officer
David Zaslav Chief Executive Officer
Slide 5: JB Perrette, CEO and President, Global Streaming and Games
JB Perrette CEO and President, Global Streaming and Games
Slide 6: Content Business Model
Content Business Model Movies Theatrical DVD VOD/Rental Pay TV Broadcast Licensing Content TV Broadcast Pay TV Syndication VOD DVD/EST Licensing 6
Slide 7: Streaming Business Model
Streaming Business Model Movies Content Streaming TV 7
Slide 8: WBD Business Model...Strong & Diversified
WBD Business Model...Strong & Diversified Theatrical Broadcast Streaming Pay TV Licensing VOD (PVOD and EST) 8
Slide 9: Streaming Offerings: Something for Everyone
Streaming Offerings: Something for Everyone Focus for Today Future FAST Ad-Free Ad-Lite Free Ad-Supported Streaming Television 9
Slide 10: Strong Momentum
Strong Momentum “An insane amount of content.” – IGN “HBO Max, after barely two years in operation, has now emerged as – Apple App Store (4.9 stars) TV’s hottest streamer.” – Vulture “While there are plenty of streaming services out there for you to choose from, HBO Max is one of the best.” – CNET 1
Slide 11: Unique & Complementary
Unique & Complementary • Male Skew • Female Skew • Scripted • Unscripted • Lean In • Lean Back • Appointment Viewing • Comfort Viewing • Home of “Fandoms” • Home of “Genredoms” 11
Slide 12: Global Powerhouse
Global Powerhouse Brands Franchises Iconic Series and Characters International 12
Slide 13: Drama
ae J i Es - J ‘) H@USE TE y 7 DRAGON 13
Slide 14: Comedy
Comedy 14
Slide 15: Documentaries
ll SERENGETI T HAVLNY Documentaries 15
Slide 16: Factual
Factual 16
Slide 17: Lifestyle
Lifestyle 17
Slide 18: Reality
MY LIMMMr Reality
Slide 19: International
4; ‘ny. ee DSKARTENTE D2KVBSEWIE bioASt International 19
Slide 20: Sports
14 PARIS 2024 8 S TES Pg O° CHAMPIONS \ UE f Sports LatAm and Europe 20
Slide 21: Movies
Movies 21
Slide 22: Leveraging WBD Portfolio Strength
Leveraging WBD Portfolio Strength 22
Slide 23: Stronger Together
Stronger Together Shared Talent Original Content Cross-Channel Promotions 23
Slide 24: Global Product
Global Product • Single global brand • Customer experience & quality first • Common tech “best of both” platform • Efficient, scalable, and resilient • Scalable partner integrations • Modular capabilities: – On-demand & live – Ad-free, ad-lite, and ad-only options – Multi-tier (sports) and transacti
Slide 25: Global Product Rollout
Global Product Rollout (Markets Added) US LatAm Europe APAC New Markets (39) (20) (7) (4) Summer Fall Early Mid Fall 2023 2023 2024 2024 2024 25
Slide 26: Key Streaming Financial Metrics & Assumptions
Key Streaming Financial Metrics & Assumptions • Peak EBITDA loss in 2022 • U.S. to break even by 2024 • +$1B EBITDA for global DTC segment in 2025 – Includes EBITDA drag from less mature markets and new market launches • 130M global subscribers by 2025 • Healthy global ARPU growth from nearly $8 bas
Slide 27: WBD's Definition of Streaming Business Success
WBD’s Definition of Streaming Business Success Profitability $1B in 2025…20%+ LT margins ARPU Premium & growing ARPU Scale Disciplined Global Scaling Full WBD portfolio Diversification monetization strategy 27
Slide 28: Warner Bros. Discovery
WARNER BROS. DISCOVERY
Slide 29: Gunnar Wiedenfels, Chief Financial Officer
Gunnar Wiedenfels Chief Financial Officer
Slide 30: Warner Bros. Discovery Reporting Structure
Warner Bros. Discovery Reporting Structure (In Millions) 2Q22 REVENUES(1) Studios Networks DTC $10,823 Networks DTC Studios Corporate & Other 2Q22 EBITDA(2) Networks $1,764 DTC Studios Corporate & Other Corporate and Inter-Segment Eliminations 30
Slide 31: Studios: Solid Gaming and Licensing Revenue
Studios: Solid Gaming and Licensing Revenue 2nd Quarter 2022 Financial Results (In Millions) PRO FORMA REVENUE Revenues: +4% vs. prior year quarter(3) +4% $3,333 $3,364 Release of LEGO Star Wars – Skywalker Saga TV licensing – timing of new series availabilities Reopening of Warner Bros. Studio Tour
Slide 32: Networks: Stable Q2 Revenues Despite Underlying Macro Headwinds
Networks: Stable Q2 Revenues Despite Underlying Macro Headwinds 2nd Quarter 2022 Financial Results (In Millions) PRO FORMA REVENUE Revenues: +1% vs. prior year quarter $6,164 +1% $6,121 Advertising: +2% vs. prior year quarter Strong sports demand and audience ratings LATAM growth excluding Chilevisi
Slide 33: DTC: Investment Ramp-Up and Reduced B2B Distribution
DTC: Investment Ramp-Up and Reduced B2B Distribution 2nd Quarter 2022 Financial Results (In Millions) PRO FORMA REVENUE Total DTC subscribers based on harmonized definition: 92.1M +4% (+1.7M net adds vs. Q1 2022) $2,352 $2,410 Revenues: +4% vs. prior year quarter Distribution Amazon wholesale deal e
Slide 34: DTC: Sequential Subscriber Growth in Q2
DTC: Sequential Subscriber Growth in Q2 (In Millions) HARMONIZING OUR DTC SEQUENTIAL GROWTH SUBSCRIBER DEFINITION(5) +1.7M 100.5 0.3 2.0 90.4 92.1 10.0 90.4 Q1 Reported Total Adjustments Rebased Q1 Rebased 1Q Domestic Net International 2Q Global Global Subscribers Subscribers Subscribers Adds Net Ad
Slide 35: Consolidated: Results Reflect Legacy WarnerMedia's Full Focus on DTC
Consolidated: Results Reflect Legacy WarnerMedia’s Full Focus on DTC 2nd Quarter 2022 Financial Results (In Millions) PRO FORMA REVENUE PRO FORMA ADJUSTED EBITDA REPORTED FCF(6) $2,576 Elims Elims (31)% $789 (1)% $757 $11,211 $1,764 $10,823 2Q21 2Q22 2Q21 2Q22 2Q21 2Q22 35
Slide 36: Post-Close Legacy WarnerMedia 2022 Budget Baseline Below Expectations
Post-Close Legacy WarnerMedia 2022 Budget Baseline Below Expectations Foregone Revenue Company-wide focus on content exclusivity to support HBO Max leading to reduced TV and Film licensing efforts coupled with a de-emphasis on HBO Max B2B distribution Total Content and Project Investments Approved a
Slide 37: Course-Correction Measures Initiated
Course-Correction Measures Initiated Shut-down of CNN+ Restructuring of content portfolio for scripted linear, kids & animation, direct-to-HBO Max films, and International More balanced approach to extend content licensing while protecting certain key properties Implementing an HBO Max distribution
Slide 38: On Track Towards Substantial Synergy Capture
On Track Towards Substantial Synergy Capture (In Billions) • Initiatives implemented for $1B run-rate savings ANNUAL SYNERGIES • >1,000 initiatives staffed $3.0+ • Key opportunities: – Marketing: $2.0 – 3.0 • O&O portfolio • DTC combined product – DTC technology consolidation – Broadcast and enterpr
Slide 39: Targeting $9 – 9.5 Billion Pro Forma Adj. EBITDA in Transition Year
Targeting $9 – 9.5 Billion Pro Forma Adj. EBITDA in Transition Year (In Billions) $10.0(7) $9.0 – 9.5 Adjusted $3.8 Legacy WM 2022 Budget Baseline Streaming Industry Synergy Dynamics Capture Softer Strategic Macro-Economic Course-Correction Environment $6.2 2022 Pre-Close 2022 Current Projections Pr
Slide 40: EBITDA and FCF Forecast: FY2023 vs. FY2022
EBITDA and FCF Forecast: FY2023 vs. FY2022 (In Billions) PRO FORMA EBITDA REPORTED FCF $12.0 33-50% Beginning to normalize More normalized Conversion content spend Rate $9.0 – 9.5 underlying operating De-leveraging trends Incremental synergy capture Upfront tailwind ~$3.0 Working capital opportuniti
Slide 41: Supportive Balance Sheet to Drive Long-term Shareholder Value
Supportive Balance Sheet to Drive Long-term Shareholder Value (As of June 30, 2022; In Billions) DEBT STRUCTURE DEBT MATURITIES BY YEAR 13% < 3 years 29% Average cost 41% Average Fixed 3-5 years $53.0 of debt 5-10 years maturity of Variable Gross Debt(8) 4.3% 14+ years > 10 years 10% 87% 20% Delever
Slide 42: Future Powered By Three Strategic Priorities
Future Powered By Three Strategic Priorities Produce compelling and diverse content powered by the best storytellers Maximize content value with broad monetization strategy Operate as one company with one mission Stronger Together 42
Slide 43: David Zaslav, JB Perrette, Gunnar Wiedenfels, Andrew Slabin
David Zaslav JB Perrette Gunnar Wiedenfels Andrew Slabin CEO CEO & President, Global Chief Financial Officer EVP, Global Investor Streaming and Games Strategy 43
Slide 44: Warner Bros. Discovery
WARNER BROS. DISCOVERY
Slide 45: Appendix
Appendix WARNER BROS. DISCOVERY
Slide 46: Notes
Notes Numbers presented in the following materials are on a rounded basis using actual amounts. Minor differences in totals and percentages may exist due to rounding. (1) Pro Forma Combined Financial Information: The unaudited pro forma combined financial information in this presentation presents th
Slide 47: Notes – cont.
Notes – cont. (3) Foreign Exchange Impacting Comparability: In addition to the Merger with the WarnerMedia Business, the impact of exchange rates on our business is an important factor in understanding period-to-period comparisons of our results. For example, our international revenues are favorably
Slide 48: Notes – cont.
Notes – cont. (6) Free cash flow: The Company defines free cash flow as cash flow from operations less acquisitions of property and equipment. The Company believes free cash flow is an important indicator for management and investors of the Company’s liquidity, including its ability to reduce debt,
Slide 49: Warner Bros. Discovery
WARNER BROS. DISCOVERY
Warner Bros. Discovery — Q2 2022 Earnings Presentation on 6ix