Michael initially, it was lower, it seems to
have clawed its way into the green. What do
you make of this morning's report? Well, I
think it was a good report on balance. I
think that what you just referenced with respect to some
of the reaction shows that there's a little something for
everyone, but you know, I would focus on
a couple of the positive things that I think came
away. The most important of which is the progress
that the company is making in generating free cash flow
. As most people who follow the industry, recognize
the media industry, the television media industry in particular
is facing number of challenges with respect to consumer behavior
, moving away from linear TV and into streaming and
how the media companies are tackling. This is probably
the single most important issue for the industry. Um
Warner Brothers Discovery is a company that is generating positive
free cash flow as it is navigating this challenge,
which is a commitment that they made to the street
when they made when they completed their acquisition of the
former Tom Warner assets, and they're delivering against that
commitment. Both, you know, up to this
point on this quarter and as they look forward,
so there are a number of other things to discuss
, but you ask about the one most important thing
to take away. And I think that's what it
is, that seems to be a theme too.
If you look at some of the research that has
come out in the wake of that report, the
free cash flow, obviously a beat there. How
does that stack up against some of Warner Brothers peers
in the industry right now? A very fair question
. And the peer group can be described a little
broadly. Most people think about the traditional media industry
or the television channels based industry, companies like Disney
, Paramount and Fox, each would have different which
have different pros and cons. But in general,
the launch of streaming services and the growth of streaming
services by the companies I just referenced uh if they
have embarked on them. So Paramount and Disney in
particular has been accompanied by some pretty material losses.
Um We would call those investments, of course,
as the companies are looking to build a business with
long term growth potential. But by contrast, Warner
Bros Discovery uh has moved really close to profitability at
their streaming business and like we said, has maintained
a very a positive level of both profitability and free
cash flow um on a consolidated basis. The other
thing I would mention is that I do think it
is worth discussing Netflix in that conversation. Certainly Netflix
came from a place that didn't have the legacy baggage
and focused solely on a streaming business. But I
think that that type of business is what a company
like Warner Brothers Discovery should be thinking and targeting as
they think about their objectives. So when I look
at Warner Brothers Discovery and what it said, they
tempered their full year of guidance, saying the performance
will really depend on when the labor strikes get resolved
. And of course, the state of the advertising
market you mentioned Netflix. Netflix is a clear beneficiary
of the strikes because it doesn't have to spend as
much money. Does Warner Brothers Discovery also benefit the
longer the strike drags on? Um Well, it's
a complicated topic. I wanna point out a couple
of things. Um I'm not 100% sure. I
agree that Netflix is a beneficiary uh of the strikes
. I like there, there are puts and takes
. Uh both Netflix and Warner Bros Discovery have certain
characteristics uh that position them better than the industry at
large in the context of the strikes. Netflix has
a very diverse uh pool uh geographically that they're able
to draw from with respect to populating their service with
new content. So to the extent that the strikes
are a domestic phenomenon or event, this is a
company that generates the most the greatest amount of its
content on a percentage basis for markets outside the US
. And so that is a net benefit for them
even though I think the strike could be a challenge
for them. Similarly, with Warner Bros Discovery,
it's a, it's a business that generates a significant
portion of its attention and avenue uh from content genres
that are not strike impacted. So that's nonfiction content
. It's sports content, it's news content, you
know, we estimate on their linear businesses that over
90% of their ratings, uh come from those areas
rather than scripted. So relative to other businesses they
meet, they are somewhat better insulated. But overall
, every one of these companies for the long term
will be better off with a resolution on, on
these, uh, talent strikes.