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Warner Bros. Discovery, Inc. (WBD) CEO David Zaslav on Q2 2022 Results - Earnings Call Transcript

Aug. 04, 2022 11:12 PM ETWarner Bros. Discovery, Inc. (WBD)6 Comments
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Warner Bros. Discovery, Inc. (NASDAQ:WBD) Q2 2022 Earnings Conference Call August 4, 2022 4:30 PM ET

Company Participants

Andrew Slabin - Executive Vice President, Global Investor Strategy

David Zaslav - President and Chief Executive Officer

Gunnar Wiedenfels - Chief Financial Officer

Jean-Briac Perrette - Chief Executive Officer and President, Global Streaming and Games

Conference Call Participants

Bryan Kraft - Deutsche Bank

Jessica Reif Ehrlich - Bank of America Securities

Doug Mitchelson - Credit Suisse

Ben Swinburne - Morgan Stanley

Robert Fishman - MoffettNathanson

Michael Morris - Guggenheim

John Hodulik - UBS

Jason Bazinet - Citi Group

Doug Creutz - Cowen & Co


Good afternoon ladies and gentlemen. Thank you for standing by and welcome to the Warner Bros. Discovery Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Additionally, please be advised that today’s conference call is being recorded. I would like to hand the conference over to Mr. Andrew Slabin, Executive Vice President, Global Investor Strategy. Sir, you may now begin.

Andrew Slabin

Good afternoon and welcome to Warner Bros. Discovery’s Q2 earnings call. With me today is David Zaslav, President and CEO; Gunnar Wiedenfels, our CFO; and JB Perrette, CEO and President, Global Streaming and Games.

Before we start, I’d like to remind you that today’s conference call 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 include comments regarding the company’s future business plans, prospects and financial performance. These statements are made based on management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from our expectations.

In providing projections and other forward-looking statements, the company disclaims any intent or obligation to update them. For additional information on important factors that could

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Comments (6)

ippobob profile picture
I can clearly see $15B EBITDA in 2025 with about 60% conversion to free cashflow and about $35-40 net debt.

I can't see an equity valuation of less than $120B in 2025. Which like like 3-4x from today's prices.

And I suspect that around that time, they will start massive buybacks...

The Discovery team did the exact same thing with Scripps acquisition. A few months after the merger they were producing like $3B of FCF on about $11-12B of revenue and they announced buybacks, until the WB merger was announced.

Only now, the combination of WB and Discovery is a much more quality and sustainable media company for the long term. They can be here easily 20 years from now. So FCF projection in the future can be extended.
@Ippokratis Boboras

"The Discovery team did the exact same thing with Scripps acquisition. A few months after the merger they were producing like $3B of FCF on about $11-12B of revenue"

And now the same team is producing $3 billion in FCF on $50 billion in revenue...
ippobob profile picture
@HPBunker Yes, after restructuring, synergies and by 2025, looks like $9-10B.
In manufacturing, projects are approved with consideration of payback. Payback is the period of time when revenue changes from the project return the funds invested. For example, if the project cost one million dollars and the return is 500k, the payback is approximately 2 years depending on the cost of money. The return may be a reduction in operating cost. Or the return could be from the added revenue from added capacity to produce something.

It looks like Zaslav is intending that the production of entertainment follows the same discipline. He used the word 'budget' numerous times in the earnings call and answer session. Though difficult to assess, the methodology is simple. A production may be assigned a budget based on anticipated viewership and ad return. If the production doesn't hold to budget, it may be better to shut it down then go forward with additional cost for promotion and distribution. I suspect the managers that are being assembled understand the concept and those that don't have moved on.

I received shares from the spinoff and have added more. I believe in the potential of WBD. Initially I thought the breadth of the channel lineup and depth of the content library would give WBD a competitive advantage. I am more confidant in WBD's potential with the stated focus on controlling cost. Entertainment companies fail when they become over confidant in their creativity and demean their audience.
ISTJ Investor profile picture
@LK106218 it sounds like they intend to run the business as a business that will consistently make money, rather than an artistic endeavor that might, perhaps, make money. And that they know how to do that. I was encouraged by the call.
Moats and Income profile picture
@LK106218 same…my biggest growth stock. Have added since spin and averaged down nicely. Will wait for 2025 when current pps is a big profit…
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