Warner Bros. Discovery, Inc. Series A Common Stock 2026 Q2 Earnings Call

Thank you for joining us for our Q2 2026 earnings call. Joining me today from Warner Bros. Discovery's Management is David Zaslav, President and Chief Executive Officer, Gunnar Wiedenfels, our Chief Financial Officer, and JB Perrette, CEO and President, Global Streaming and Games. This morning, we issued our earnings release, shareholder letter, and trending schedule. These materials can be found on our website at ir.wbd.com. 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 include, without limitation, statements about the benefits of the proposed transaction between Warner Bros. Discovery and Paramount Skydance, future financial and operating results, the combined companies' plans, objectives, expectations, and intentions, and other statements that are not historical facts.

Such statements are based upon the current beliefs and expectations of WBD's management and are subject to significant risks and uncertainties outside of our control that could cause actual results to differ materially 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 10-K and its reports on Form 10-Q and Form 8-K. WBD is not under any obligation and expressly disclaims any obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise, except to the extent required by applicable law. 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 schedule, which can be found in the investor relations section of our website. I will turn the call over to David for some brief remarks, after which we will take your questions. Before doing so, I ask that you limit your questions to topics related to our Q2 results and related business and financial topics. As noted in our shareholder letter, management will not be taking questions regarding the proposed Paramount Skydance transaction. With that, I'll turn it over to David.

Good morning, everyone. From the beginning, we've said that our plan strategy is to build the world's leading storytelling company, one that attracts and retains the best creative talent, reaches global audiences, and ultimately creates shareholder value. For all that's changing in how people consume entertainment, we have held firm to our conviction that there is no substitute for creative excellence and quality storytelling. It's driving strong results. Nowhere is it more evident than our streaming business, where the breadth, artistry, and cultural influence of HBO programming across the globe is translating into great financial progress for HBO Max as a streaming offering. In Q2, our streaming segment delivered more than $3 billion in revenues for the first time ever as subscriber-related revenue growth accelerated 200 basis points sequentially to 10% ex FX with positive engagement and subscriber trends.

Just as important, streaming generated $512 million in adjusted EBITDA, a more than 60% EBITDA improvement over the same period in 2025 and a nearly 17% adjusted EBITDA margin. This all together represents a powerful and impressive business turnaround from a predominantly U.S.-only HBO streaming business, losing $2 billion-plus in 2022 to a global high growth asset where HBO is globally recognized as the highest quality streaming service in the world. HBO series are finding a bigger global audience more consistently than ever before. So far in 2026, "The Pit," "A Knight of the Seven Kingdoms," "House of the Dragon," and "Euphoria" have each averaged at least 25 million global viewers per episode, with several programs exceeding 30 million average viewers.

With the new season of "The Gilded Age" and the debuts of "Lanterns" and "Harry Potter" coming soon, as well as our strong content pipeline in 2027, we expect that momentum to continue. This year's Emmy Awards also attest to our commitment to storytelling excellence with WBD leading the industry with 150 nominations. HBO Max alone led the industry and garnered 122 Emmy nominations, spanning 21 individual programs, including 26 for season two of "The Pit" and 25 for the final season of "Hacks." Warner Bros. Television again showed that it is among the world's best television producers with 52 Emmy nominations including 28 for programs that we produce for third-party platforms like "Shrinking" and "Abbott Elementary." Our quality programming is also fueling our global networks' resilience as they contend with continued headwinds.

In Q2, our roster of premium sports properties showed its value as we saw the highest-rated national championship basketball game ever on TNT Sports, a more than 20% increase in viewership for the MLB regular season thus far, and a 50% viewership increase for the NHL playoffs. In a turbulent geopolitical moment, the quality, trustworthiness, and reliability of CNN's journalism again proved itself. In Q2, CNN linear viewership increased 24% over the previous year, and minutes spent across all CNN platforms increased 19%. Our network brands were home to four of the top 10 shows in general entertainment across all cable networks during the second quarter. Just recently, Discovery's "Shark Week" saw its highest year-over-year growth in more than a decade, with Discovery ranked as the number one cable network in prime time among people aged 25 to 54 across Shark Week's first three nights.

There's no question that media is by nature a business full of hits and misses, you see that reflected in our studio's results. While a handful of recent films have underperformed expectations, importantly, we've spent years transforming and diversifying our studio segment to better manage risk and volatility. The breadth of this business today across theatrical, television, licensing, games, experiences, retail, and consumer products has greatly improved its resilience and ability to generate consistent shareholder value. We are excited by what's in the pipeline from our remaining 2026 and 2027 film slate to "Ted Lasso" to opportunities generated by "Harry Potter." Over the long term, we continue to expect this segment to deliver our goal of generating over $3 billion in adjusted EBITDA. Taken together, our results this quarter show how much we've readied each segment of our business for the future.

We've succeeded in making HBO Max a highly valuable global streaming service, are seeing strong financial returns now after years of heavy investment. We've optimized our global networks and continue to invest in general entertainment, sports, and news that serve tens of millions of global viewers. Over the last year, we've shown our studios remain the industry's creative leader while simultaneously transforming its operating model and financial profile. As stated in our shareholder letter, we remain confident that our agreed-upon sale to Paramount Skydance will be completed. We are excited for what's ahead in the remainder of 2026 and beyond, with that, we welcome your questions.

Thanks. Thanks so much, Steven.