Warner Bros. Discovery, Inc. (NASDAQ:WBD) reported fourth-quarter financial results before the market open on Thursday. The transcript from the company’s earnings call has been provided below.
- Warner Bros. Discovery stock is trading at elevated levels. What should traders watch with WBD?
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Operator
Ladies and gentlemen, welcome to the Warner Brothers discovery fourth quarter and full year 2025 earnings conference call. At this time, all participant lines are in a listen only mode. After the speaker’s presentation, there will be a question and answer session. Additionally, please be advised that today’s conference call is being recorded. I would now like to hand the conference over to Mr. Peter Lee, senior Vice President, Investor Relations. You may now begin.
Peter Lee (Senior Vice President, Investor Relations)
Good morning and thank you for joining us for our Q4 and full year 2025 earnings call. Joining me today from Warner Brothers Discoveries Management is David Zaslav, President and Chief Executive Officer Gunner Wiedenfels, our Chief financial officer and J.B. perrette, CEO and President, Global Streaming and Games. This morning we issued our earnings release, shareholder letter and trending schedule and these materials can be found on our [email protected] 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. Forward looking statements may include statements about the benefits of the plan separation or the proposed transaction with Netflix, future financial and operating results, future company plans, objectives, expectations and intentions before and after the separation and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations from Warner Brothers Discoveries Management and are subject to significant risks and uncertainties outside of our control that could cause actual results to differ materially from from our current 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 10K and its reports on Form 10Q and Form 8K. I will turn the call over to David for some brief remarks after which we will take your questions. Before doing so, I would kindly request that you limit your questions to topics related to our Q4 results and related business and financial topics. As noted in our shareholder letter, management will not be taking questions regarding the Netflix transaction and our discussions with Paramount Skydance. And with that I’ll turn it over to David.
David Zaslav (President and Chief Executive Officer)
Good morning everyone and thank you for joining us. From the beginning we set our goal for Warner Brothers Discovery has been to make this great company the most innovative and exciting place to tell stories in the world. Looking at 2025, it’s clear we fulfilled our ambition. Warner Brothers Motion Picture Group delivered a historic run of success with nine films debuting number one at the box office in 2025, seven consecutive films opening with more than 40 million in box office sales, a first for any studio, and our film spent 16 total weeks atop the global box office. We accomplished this through brilliant original films like One Battle After Another, Sinners, Weapons and global tentpole titles like A Minecraft Movie and Superman. And we revived IP like the Conjuring, Last Rites and Final Destination. Bloodlines. Fans responded and critics did too. Our film slate won nine Golden Globe Awards, including Best Picture, Musical or Comedy for One Battle After Another and cinematic and Box office Achievement for Sinners. Next month, we’re up for an industry leading 30 Academy Awards and we’re optimistic the incredible original films we produced and talent we’ve worked with will deservedly be recognized, and we are seeing momentum continue in 2026. Wuthering Heights, our ninth consecutive theatrical release to open number one, has generated over 160 million at the global box office in two weeks, including an $83 million opening weekend, further reinforcing our commitment to exceptional original storytelling and our position as a premier destination for the world’s leading creative talent. Building on the momentum, our 2027 film slate is set to deliver a truly monumental year for Warner Brothers. With Tentpole and franchise powerhouses on the horizon from Godzilla vs Kong 3, man of Tomorrow, from James Gunn, Minecraft 2, Conjuring, First Communion, Batman Part 2 from Matt Reeves, Gremlins and Lord of the Hunt for Gollum. We also brought innovative and exciting storytelling to television, both in streaming and through our linear networks. So many of the series that shaped global culture in 2025 were delivered to audiences around the world by HBO and HBO Max. Building on shows like the Pit, the White Lotus and the Last of Us, HBO continued to deliver hits in the fourth quarter with several breakout sensations. It welcome to Derry delivered the fourth strongest debut season in HBO history, averaging 27 million viewers per episode, and heated rivalry, which averaged 13 million viewers an episode and drove meaningful social media engagement. That momentum is ongoing. Both the pit and industry have become cultural sensations with their new seasons, which debuted in the first quarter of 2026, seeing 30% and 50% respective audience growth versus their prior season. A Knight of the Seven Kingdoms, the third installment of the Game of Thrones franchise, has also debuted strongly averaging over 24 million viewers per episode and growing with House of the Dragon, Euphoria, the Gilded Age, Dune Prophecy and Hacks returning this year, as well as the premiere of Lanterns and Stuart Fails to Save the Universe. This is just the beginning of what promises to be a banner 2026 for HBO. Our streaming segment also delivered terrific growth. Scaling HBO Max globally has been one of our core priorities for four years we’ve executed our plan with focus and discipline, now exceedingly the 130 million subscriber target we set out in August 2022. Following the successful launches of HBO Max in Germany and Italy and the upcoming launches in the UK and Ireland, we are on track to reach more than 140 million total streaming subscribers by the end of the first quarter, and we’re well on our way to exceed 150 million subscribers by the end of the year. Our Global Linear Networks also continue to create and tell stories that inspire and Entertain fans. With 17 of last year’s top 25 new cable TV series and improved general entertainment viewership trends in recent months, our Global Linear Networks teams clearly remain highly attuned to today’s audiences, while secular headwinds persist. Our portfolio of Networks attracted 30% of all primetime cable viewing in the US and we advanced critical initiatives like the launch of CNN All Access. Encouragingly, we saw a sequential improvement in advertising trends during the fourth quarter, which has continued into Q1. And of course the 2026 Milano Catena Olympic Winter Games, which closed this past Sunday, was a massive success for Warner Brothers Discovery. Over the course of the Winter Games, we saw more than 50% growth in linear hours viewed compared to the 2022 Winter Games, and we more than tripled our streaming audience on HBO Max and Discovery throughout Europe. Four years ago, Warner Brothers was a business in need of transformation. Over that time, we’ve invested aggressively in transforming Warner Brothers Discovery for the future. We invested big in making great original film and television and reignited important legacy Warner Brothers IP like our DC Attack plan which James Gunn and Peter Safran have been executing. Harry Potter, Lord of the Rings, Gremlins together telling stories that have shaped global culture. We invested in streaming technology and turned HBO Max into a world class D2C platform that we have now launched globally in over 100 countries and territories. And we invested in our global networks, evolving our brands, accelerating our digital future and empowering teams to adapt, innovate and continue entertaining audiences worldwide. The result has been a creative renaissance at Warner Brothers Motion Pictures, Warner Brothers Television, DC and HBO and is exemplified by our success in 2025 with the best and most talented people on and behind the screen. Since our Q3 2024 earnings call, when we made clear we were evaluating all paths to unlock value, we have taken decisive actions, first through our corporate reorganization, then announcing the planned separation of Warner Brothers and Discovery Global and ultimately a comprehensive strategic review. Our board continues to lead a rigorous, highly competitive and thorough sales process we engaged with four bidders which led to eight price increases and have thus far achieved a 63% increase in value versus the first offer received in September. Delivering significant value for WBD shareholders. Throughout the process, our focus has and always will be maximizing value and certainty while mitigating downside risks. And the board will evaluate any proposal against that standard with the objective of delivering the best deal for our shareholders. When we started Warner Brothers discovery in April 2022, the WBD stock was around $24. Since then we have been laser focused on transforming the business for the future, investing big in our creative culture and original storytelling at hbo, Warner Brothers tv, Warner Bros. Motion Pictures, New Line and dc all of which created meaningful shareholder value. With that, we now welcome your questions.
Operator
Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star key followed by the number one. On your touchtone phone you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star key followed by the number two. One moment please while we assemble the queue. Your first question comes from rich Greenfield of LightShed Partner. Please go ahead.
LightShed Partners Analyst
Hey, thanks for taking the question. Really the first one for Gunner. As you think ahead to the spinoff of Discovery Global this summer, there’s a tremendous amount of investor focus on what leverage it can handle and what is really achievable, I guess. Do you see any issues with Discovery Global being three to four times levered given the free cash flow dynamics of DG right now? And why do you believe? Because there’s been a lot of focus on Versant. Why don’t you look at Versant as a good comp for dg? Thanks.
Gunnar Wiedenfels (Chief Financial Officer)
Okay, good morning everyone and thank you Rich for those questions. Look, I don’t want to talk about sort of specific comparison with our competitors here, but I do want to talk about the opportunity for Discovery Global in general. And I have spent a lot of my time over the past half a year working with the great networks leadership team, you know, fantastic people. And I really do believe we have an opportunity to double down on what already makes us a global leader in the field. We have unmatched scale internationally and locally. We have iconic brands reaching a billion people. We have trusted journalism with CNN and TBN and other players everywhere in the world, fan favorite talent, a world class sports portfolio and I’ll say a little bit more about sport and how that differentiates and a strong digital footprint that is already contributing meaningfully to the Monetization of our brands and our network content and I think has tremendous growth opportunity as we get going here. I do want to start with the international opportunity a little bit because that’s typically harder to understand from a domestic perspective here. But number one, we have fundamentally different trend
LightShed Partners Analyst
Thanks.
Operator
Thanks Pritch. Next question. Your next question comes from Robert Fishman of Moffitt Nathanson. Please go ahead.
Moffitt Nathanson Analyst
Good morning everyone. Looking at all your premium Warner Bros. And HBO original content and the franchise IP that you start to talk about, what do you think is now finally being appreciated? That was overlooked before the sales process heated up. And how difficult is building new franchises from scratch? And then just separately, as we think about your internal forecast for streaming profits to roughly triple by 2030. Can you help us break down the drivers to reach that goal? What do you think is misunderstood areas of growth? Is it advertising, pricing, subscriber increases or even more efficient spending? Thank you.
David Zaslav (President and Chief Executive Officer)
Thanks Robert. You know, I think that there was a. We certainly had a team, me included, that was focused on delevering this company and paying back debt. And, and, and we needed to accomplish that, and we did. But most of our day was spent on this idea of investing in original content and bringing back the great franchises that Warner Brothers uniquely owns and investing more money in content. And so, yes, we made. We canceled a lot of movies and a lot of series when we first got here. The question we asked in each case is, how is this content and how are these stories helping us and are they doing well? And so we canceled a lot of stuff that was down 50% or 60% that we didn’t think was going to be successful. What I think was missed was we hired a great leadership team, creative leadership team, and we invested enormously in this mission of this question that we ask ourselves all the time, that what stories will we tell at this great company, at Warner Brothers, at hbo, at Warner Brothers Television? And so we really tripled down on investing in getting the best writers and directors back at Warner Brothers. We didn’t lose any creative talent in the last four years, and we added substantially to that and investing aggressively in original content at hbo, Warner Brothers Television, Warner Brothers Motion Pictures, and not just investing in, just doing in existing franchises. Batman 2 is very important to us, and Minecraft, too, is important to us. But original content, that’s, you know, that is really what Warner Brothers is about. It’s why we invested in sinners, it’s why we invested in weapons. It’s why we invested in one battle after another. And I don’t think anybody is investing in original content and television and motion pictures the way we have. It did take time. You know, we’re a long cycle company. And so our commitment to D.C. was mostly heard in terms of language. And then you saw it with Penguin and Superman. Our commitment to original content, you saw it coming slowly. It came out with Minecraft and talking about building new franchises. Mike and Pam were able to do that with Minecraft. And Minecraft 2 is coming back. It made almost a billion dollars and it’s coming back in 27. So I think when you look at Warner Brothers today and hbo, it’s a company that’s storytelling first, focused primarily on the creative culture and with a superb creative team that has been given great latitude to take risks to tell original stories, because we are a business of challenge and failure. But with the Warner Brothers library together with the creative talent we have, it’s been a great creative renaissance at Warner Brothers and You see it across our entire company and you’ll continue to see it. When you look at 27 on the motion picture side, it’s stunning. And it’s all coming together for Warner and for HBO as well. HBO has never been stronger. Casey and the team at HBO have shepherded, you know, an extraordinary creative slate and JB and his team fought to take that all around the world. And now that we’ll be launching in the uk, in the uk, Germany, Ireland and Italy, we’re not done yet, but it’s a huge accomplishment to take these, this business global and to see it soar.
J.B. Perrette (CEO and President, Global Streaming and Games)
Robert, on your question about the levers for growth and what makes us highly confident about the future growth of HBO Max for the streaming business, I’d say there’s five different levers that we look at. One is, we say oftentimes the product is the content. And it starts with, we’ve never been clearer about what we need, the kind of content we need, the customer segments we have to go after and strengthen. And we’ve been at work at that for the last four years, continuing to improve it. And some of the hypotheses that we had, like the need for a longer running series that ended up with the pit and with the strength of the team that Casey and his organization have, we have a track record of delivering an incredible batting average with the swings that we take. And so the content is strengthening. We go into 10 years of Potter starting in the beginning of 27. And so we have great visibility to a strengthening content slate, which is at the core of everything we do. The second is we are seeing, and we do expect further volume and penetration growth driven by a obviously relatively recent launches in big, sizable new markets, including the European markets that we are in the process of completing this quarter. And so there’s more growth to be had in those markets, penetration growth in our existing markets driven by partly the content slate, a sharper marketing focus, social outreach that is strengthening. And then we’re in the second inning of our password sharing enforcement. And so that is just beginning to get scale. It hasn’t expanded globally at all. That’ll start in 2026. And so that’s volume and penetration levers. The third is product enhancements. We talk about this all the time that we went from not good to good, but we’re still got a ways to go to get to great. And that is every day, you know, hundreds of improvements last year that we made that improve, move the dial, you know, inches every time. But to improve engagement and retention, the Fourth is obviously retention. You know, we have focused a lot, but the we still think there’s significant opportunity to continue to improve churn and retention. And we have a number of initiatives going forward this year and next that will continue to drive that lower. And then the last is just monetization, which is obviously a combination of both price on the subscription side and ad sales, where we are very early in the ad sales, you know, growth trajectory based on the fact that our fill rates are still relatively low internationally and we’re still launching in new markets with our ad tiers. And we think there’s further upside in the years to come. So we feel great about the next couple years. And the really kind of sweet spot of the flywheel we’re finally getting into to seeing content marketing, product enhancements all flow together to drive that growth.
Operator
Next question comes from Peter Cipino of Wolf Research. Please go ahead.
Wolfe Research Analyst
Hi. Good morning, everybody. I wanted to ask you to expand on the international expansion of dpc. You mentioned earlier in today’s Call that the programming is the product. And so I’m wondering if the amount of programming that you’re offering international audiences is today driving enough engagement to get you a level of ARPU that enables you to make money, or does that flywheel that you’re working on require more programming dollars and does it require any local programming?
J.B. Perrette (CEO and President, Global Streaming and Games)
Thank you. Yeah, Peter, I guess a couple observations. When we kicked off this journey four years ago, we said that we would focus on launching in markets where we thought we could actually turn be profitable within a three to five year time horizon of launch. I will tell you that that has turned out to be we’ve turned out to outperform that metric significantly and turn profitable in most markets within one to two years of launch. And so we are well ahead of where we thought and the international businesses are particularly the ones that have been around for a couple years, like Latin America for example, meaningfully profitable. And so we, we continue to see opportunities to drive that profitability further. The big benefit that we have compared to some is that a lot of the IPs that we’re working with have global audiences already. And so whether it be DC and our both DC theatrical slate as well as the DC series, we do. Whether it be obviously the HBO brands in a the Game of Thrones universe as an example and even on the theatrical side other series and other things that we have in development that piggyback off of a already established global franchises. We don’t need to actually our content appeals to those global audiences in a unique way that is different than most. And so our need to do a lot of local international content is a little bit different than other players, number one. Number two is we are doing and we have been doing select international content in markets that either there is a particular need or where the content seems to travel better than in most places. And so we, we had, we were early on a couple years ago to acquire the biggest leading local streamer in Turkey which is a content type that travels well. Turkish novellas across many parts of the world do really well. And so we target investment in markets where both there are strong big scaled opportunities as well as opportunities where the content tends to travel. We announced this partnership with CJ last year on Korean content which also obviously has a great track record of traveling well. And so we are already investing in local content. We don’t see a need to have a meaningful spike up. We will continue to invest in those markets as is currently in our plan and in the financials you see represented in the proxy. But that certainly local international content continues to be important but we don’t see a certainly major step change needed to continue to drive our growth.
Wolf Research Analyst
Thanks Peter. Thank you.
Operator
Our next question comes from Brian Kraft of Dutch Bank. Please go ahead.
Deutsche Bank Analyst
Thanks. Good morning. Ahead too If I could just. First on the studio, I was wondering if you could provide some more color on the video games pipeline and how your broader strategy is evolving there, including what’s coming in 2026 and just any kind of directional color on what your guidance assumes for 2026. EBITDA contribution from video games relative to 2025. And then I just want to ask on the network side, could you give a little more color on the advertising improvement? I know there was an NBA headwind, but how much improvement did you see in domestic advertising, excluding sports, versus the international side, which also sounds like it’s performing well and has some improvement. Thanks.
J.B. Perrette (CEO and President, Global Streaming and Games)
Yeah, thanks, Brian. On the first one on the game side. So obviously 2025 was a year of sort of reset for the games business. And we really went back to kind of the basics. And the largest part of it was we had allowed ourselves to sort of get distracted to going after too many IPs with a too broad a set of studios. And the core of last year’s reset was around getting back to proven studios with proven games and proven players. And so that’s where we are now. Obviously, 26 is a year, given that 24 we had, unfortunately, unsuccessful launches. 25 was this reset year, so we didn’t really replenish the pipeline. 26, we’ll see a sort of year that looks similar to 25, but the real fruits will start coming in 27, 28, when we return to some of our biggest franchises launching in that timeframe and returning to those franchises. We haven’t announced those yet. In 2026, we have two big IPs launching, one in May, which will be our LEGO Batman series from one of our most prolific studios in the uk, TT Studios, we are thrilled about. We announced that game last August. We just released another trailer yesterday. And the feedback and the trending and tracking is looking terrific for that game. And the quality of the game is fantastic. That’s on the console PC side. And the second game for 26 is out of our Boston studio with our successful mobile franchise, Game of Thrones Conquest, which will be coming out with a second game called Dragonfire that will be launching this summer. And again there, that’s a different profile. As you know, mobile games tend to have a more upfront cost based on the UA and the marketing cost. But we feel confident, just like its predecessor, Game of Thrones Conquest, which eight years on is still delivering significant financial returns, that that one will also see a similar trajectory and will help us build a even more robust library.
Gunnar Wiedenfels (Chief Financial Officer)
Thank you JB and then on the on the ad sales side, Brian, so generally speaking starting with the US market, you know, from our perspective the market itself has been relatively consistent with prior quarters. As you pointed out, we have done significantly better. And the sequential improvement that you mentioned is after digesting 100 basis points, NBA headwinds in terms of ad sales and look the driver here are number one the new upfront has kicked in where number two, we’re seeing good scatter premiums but number three, really some real health in terms of the underlying audience delivery. And that is across the board. On the sports side, once you correct for NBA, we’ve done really well with the MLB playoffs. NHL has done well. You know CN has seen improvement. And on the general entertainment side we mentioned this in our shareholder letter. We’ve had 17 out of the top 25 premieres for freshmen series and importantly we don’t talk about this enough but you know this is across all of our key networks. We had you know, top shows for TLC with Bailin Out Loud, you know, Fall of Diddy on id, Flip off on hg, Tournament of Champion on Food Network and Discovery with Naked and Afraid. So all of our top are continuing to create you know, high quality output and that I think puts us in a very good position for 2026 as well. We’re seeing those trends continue with an even more pronounced uptick on CNN audience. So underlying delivery has been a real helper. Turning to the international side, international again as an entire business line has outperformed relative to the US Obviously with with different trends in in the different regions but importantly EMEA or our largest region continues to do very well. And and you know as I as I mentioned earlier, I think you know we can see some real stability, potentially even a little bit of growth in ad sales going into 2026. Thanks Brian. Thank you. We’ll take the next question.
Operator
your next question comes from John Hodeluk of ubs. Please go ahead.
UBS Analyst
Great. Thank you guys. Maybe a couple of follow ups on the Discovery Global side. Gunner, you guys give some guidance for ad and opex savings for 26 on that side. One, anything you can tell us about the cost savings? Is it just the MBA or there are additional opportunities for cost savings there and then is there a way to sort of bottom line it in terms of how you see EBITDA trends in that business as we look out to 26 and maybe beyond. And then I’d love to get your your view on, on how you see the sports business. You talk about the TNT sports app. Just what’s your appetite for, for building a sports business and potentially securing additional rights and how you see that business going forward?
Gunnar Wiedenfels (Chief Financial Officer)
Yeah, thanks, John. So, you know, look in terms of cost guidance, you know, it’s a little bit of a weird situation because we have, you have our projections, our long range plan in the proxy and I think that answers your question to some extent. Again, there is a big benefit from NBA cost savings. Obviously it’s been a great outcome for us maintaining that profitability through such a transformation of our sports portfolio. We’re going to continue to be very focused on efficiencies in general. We are looking wherever we can at utilizing AI to further improve our efficiency and our effectiveness. Got some great projects ongoing that are creating much better visibility into our content, etc. Those are all going to be things that will help us drive efficiency and generate more output with the same cost structure. On the sports business specifically, we continue to have appetite for sports rights. It is one of the important strategic pillars, as you heard earlier. And you know, what hasn’t changed is we’re going to be disciplined. We’re not going to, we’re not going to be doing deals that don’t make financial sense for us. But we’re open for business. You will always see us involved in every process that’s ongoing and we will know what, what the value is and we’ll continue to be great partners. We’re very happy with the partnerships that we have and there will certainly be continued appetite as we, as we go forward, even after separation into Discovery Global.
Operator
Thank you. Ladies and gentlemen, there are no further questions at this time. That concludes today’s conference call. Thank you for your participation. You may now
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