Michael Viola SVP, IR
John Stephens Senior Executive VP & CFO
Brian Lesser CEO, Advertising & Analytics Business
Randall Stephenson Chairman, CEO & President
John Donovan CEO, AT&T Communications LLC
John Stankey CEO, AT&T's Media Business
Lori Lee CEO, AT&T International and Global Marketing Officer
John Hodulik UBS
Simon Flannery Morgan Stanley
Phil Cusick JPMorgan
John Janedis Jefferies
Brett Feldman Goldman Sachs
David Barden Bank of America Merrill Lynch
Mike McCormack Guggenheim Securities
Mike Rollins Citi
Call transcript
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Ladies and gentlemen, thank you for standing by. Welcome to the AT&T Second Quarter 2018 Earnings Call. At this time, all of your participant phone lines are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. now Michael turn Investor Viola, would to conference Relations. I host, our Senior Instructions] like the to over [Operator Vice President, Please go ahead.

Michael Viola

second and Welcome Lori, afternoon, quarter the Thanks, conference Okay. call. good to everyone.

AT&T. we headquarters I'm broadcasting said, this and - of here first Viola, As in acquisition This call of Lori our after Mike is earnings we're WarnerMedia New our Investor York. call Head Relations from at closed first Warner, call Time

evening XX and on for followed on and York, meetings. the November leaders call in folks a of who this be on like by businesses financial meeting call and Warner's the earlier, of will quarter, that, you each we second And forward. about CEO, guidance. use talk save in perspective four meeting leaders Both units. We XXth. business the join team discuss Today's the going morning going agenda entire going that, business. As to the as CFO to participate is together this the only results Randall we're strategic unit the on then business would going that not perspective to the us our of buy-side Q&A but host to next Stephens, After cover a told one the session. to available their second mention provide will our do Time and be also those will results to to take will business outlook quarter we're of sell-side will all our item. as And brought John begin will New a here update and plan well more we've details quarter a and -- the provide strategy. give their I'd AT&T date of with

So details please come. to more mark and your calendars,

your forward and attention uncertainties. differ to to to that the subject the be risks, statement. is Now materially. It says such John, of our call some looking turn I harbor as over may will before safe call Results need to I today comments

is from the on CAF-II also you FCC about I website. we auction, remind period questions in quiet that address so In the today. Investor available the we're need that any addition, information Relations to can't

As schedule includes always, documents. our the materials the Warner X-K, quarter. website. Investor of website important investor materials on AT&T earnings second briefing, That our are and release, page other schedules, associated on news Media's available other available full includes trending the on are It and Relations

to turn now so I'd John AT&T's like And call the Officer, Stephens. to over Chief Financial

John Stephens

and Thanks, Mike, today. on the call and hello, everyone, being for thanks

with Slide our summary, X. which me financial Let is begin on

been fees. AT&T. I standards, revenue on recognition, which pension of of has reporting, of think impacts very a busy you standards FASB deal five most very, implementing accounting year cash include Those number know past impact direct have decision that fees changes flow this same We're the statements service an on with reporting. working regulatory to offset the the our These these impact record changes. company and to At universal understand as cash policy made a net flow. you our hard help income to time,

results financials addition as Time comparable help basis. well the second as the on recognition providing to you in decisions, historical we're from GAAP policy better on results information, a the So historical impact to understand and the Warner's financial quarter revenue

results referring during these comparisons to the historical our be in will We call.

with start let's EPS. Now

year-to-date. both have positive strong up to continues revenue continue impact Tax of quarter the adoption EPS XX% a to growth, reform than and show on the more We as adjusted recognition. EPS for does

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base. our We customer savings use to and our grow continue tax reform in to invest

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factor biggest transition sales be some smartphone customer the Solid to video. over-the-top continues margins, pressure drove to but to the of

now It substantially free at guidance Let's makes a Year-to-date, up the cash cash very comfortable cash us operations $X.X year-over-year sequentially. for from our quarter, free and is billion for which billion, look free flow the with flow. strong full year. about our was flow $X.X and cash both up

$XXX the that timing months. from to the spending trail Year-to-date, for Our received cash billion flow than organization. cash FirstNet comes reimbursements spending receive $X.X flows million did $X.X usually the pressure. we in more the quarter. before between the free and also we or reimbursements Capital differences This of spending several by reflect for FirstNet the million was of billion $XXX quarter

are domestic wireless on Solutions and Let's now segments. consumer from Slide cover Business AT&T's beginning results operations financial the X. divided between mobility operations

for supplemental U.S. information our For we're wireless providing purposes, operations. total comparison

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expect we ahead, a for revenue positive full growth Looking on comparable basis. the year service

Entertainment Turning to Group. our

next-generation going see stability the while the and of Donovan take that will impact on revenue and pricing some we video additional our are some robust new we revenues the revenues making in a work drive margins. that introduce additional of VOD the through, transition. We more and as and with going But an cloud We're and walk promotional opportunities rest changes impacted to options Also continue such stream now features revenues stream platform in to This annualized of to would plans few is revenue John double-digit pay-per-view has drive expect you which $X.X continues past, continue to revenues sequential a billion. to minutes. the have our transition is capability. a an helping seeing those our DVR, manage in at we now and a margins. year. it both new to effectively rate experience We're the through in over AdWorks, grow to and

investments offset than to group. foreign and in haven't X% yet. pressure down our tax declines wireless growth, revenues. produce expect to World continue pressures. just than communication spend, from EBITDA Solutions as Business Revenues we and service gains X%. our a Revenues exchange. while helped business, were We products strategic as by is were offset on down services up currency margins as seen reform but offset strong lift basis. business legacy slightly helped and In were by solid our Wireline International comparable in with Business year-over-year, revenues more were margins year-over-year. both performance it expenses Wireline stable This up more Cost were wireless customer driven Cup pressured in in well still to legacy efficiencies to services. FirstNet. equipment Moving a

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Randall. it Randall? to I'll Now over turn

Randall Stephenson

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AT&T's second like turn on over Donovan it Communications John? details I'd to for results. Now quarter John to

John Donovan

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Brian Lesser

good afternoon, John, Thank and everyone. you,

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Lori Lee

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turn Mike it back Q&A. Now to for I'll

Michael Viola

Lori. Thanks, to operator Lori - questions. are Okay. Lori, ready we take


our with question [Operator Instructions] UBS. And first Hodulik from John

John Hodulik

to expecting think, basis. some of that size press you line. first for then But your and the EBITDA think look I heard this And you I'm Donovan, down HBO addressable going about biggest that expect spends about about looks growth Should for What timing you HBO the addressable wireless did subscribers advertising for spend? are was within to lot hold return growth the forward? we numbers? one maybe EBITDA like terms growth obviously on talk in [ph] WarnerMedia. Stankey. margin then Could Thanks. billion. Brian, to maybe the and And then improvement. about and think these new opportunity Brian when got some obviously, a advertising, - I like-for-like to segment still the that interview X% maybe John to $X we be the as a Stankey, should bit lastly, recently we've And starts this John I little milestones of business, of you we in returned little of about John take a quarter bounce it the on advertising some around bit. But the X.X%,

$X could efforts terms overall the think how year, about if maybe I spend any Thanks. other financial much We've of we of NOW elaborate you You're and HBO of a -- numbers. should bigger heard looking DC of in be the on that other mean, the may company? billion competing you we And should profile with there's initiatives companies sort Universe for? D-to-C but have. DC if that

John Donovan

firing on We've year-over-year where our We Donovan. I'll right us. all John, a cylinders. was we compares good really unlimited which question on you've date, that momentum very wireless a a behind three Hey, crossed a where And We're stuff there quarters date reseller the of lot in the start had for in John row EBITDA. growth plans. a crossed got in on prepaid, all-important the good. subscriber become it's now. really seen business us that over We has lot of for now and over really nice rhythm

in We're now that over see right we get quarter, strength opening we're within in month John seeing in remarks starting mentioned each stronger some to beginning quarter. we're quarter what so And roll were events, and those us the earlier to his the of them. now this of

made if - And will, from so marketplace. because in value that counts, proposition some our each have of of the we the this consistent quarter - us subscriber pricing with pricing, strengthened month moves, you calibration in we also

EBITDA the So we margins year have the and that growth improve. we'll for expect to

Brian Lesser

John, I'll take the This next part of your Lesser. Brian is question.

the milestones advertising asked in about So business. you

a the acquired advertising important growing business quarter. and was we know to what outside billion $X in that I just XX% second we have Turner, business in posted think it's that of advertising

our the on business. value advertising showing of already and we're data technology So

I think more things look also publishers, you in value within already now the the and to but some forward, to the our for that mentioned we've firm increase have one, and going terms on should advertisers we of in increase and also ability here this that the number yield consumers. to value Turner inventory broadly call, WarnerMedia

additional develop develop mass critical that us in close ability is milestone attract advertisers. technologies other additional outside of important us ability our AT&T. see around the partner platform. then You'll we depend that on deal, AppNexus, for lean to platform. our continue inventory an And some is ad sources but to and with In our companies third to reach for will us, once to see success ways, media you'll of

John Stankey

that minutes we two Turner selling John, amplify within into the Brian using So team techniques had moved AdWorks been gave. we have that of we the of in same that over inventory has already piloted last just applying let broader the piece the advertising to applying the to Turner. me that the across has inventory begin AT&T into have AT&T team existing the company Data

at business and that, found of he near And would have to we of opportunity inventory. the pharmaceutical had initiatives come do great of a didn't variety do have XX-second with some those today, That's, not issue. how Teams cases Brian a that's avails. XX starting up that look to a So different including term. milestone the - That's advertising pharmaceutical wanted in around and companies we out we're that. space, addressable already seconds

bridging products that have new used to we're can bring so AT&T with what to inventory addressable in. inventory we Turner So be

- that's Brian intelligence even data occurring and to mechanization that now to without just the there's brought platform broad discussed. and table that's benefit the So that work that's

I company is single-digits will to number the scale. relatively the size. be they all to audiences, this what consider requires generating in generate So in on But there's the I WarnerMedia right. We own that know of millions. their scale all It's not tell want consumer, within to millions, companies, what And good space within it tens would you audience. mentioned our small and be a direct they're initiatives we is what underway you of about different

And way think better time direct-to-consumer efforts together. it's is I so our over about would the

on when they're So a one not generate the assemble very brands platform interest as gets of can And genre the lot of them they together basis, bring experience and audiences a one are they're of content and as brought powerful aggregates together. in that strong and that family you and stand-alone on groups scale. among

that you starts right more consistent to very developed. some come formula Still still a the want but need get We've got to time, bring we them unify approach to about be is properties, to them, important they the together. over strengthen in for in. to brands scale experience. how have think discrete we're So focused time, over them going what and It more ultimately should to we

your on of an reference new it the terms interview. In wasn't cycles to HBO,

because would to a projects yes HBO team was we're an with already not tremendous don't believe I amount What discussion Richard have we What of jumping is said, a open the to That as the more you, been on we we customers as are but down I I especially out subscriber drive about, that in it would the what constraints balance in up we the course position those HBO are a effectively act, tell great the additional in will we see, to funnel attempting they can I that think it of schedule, describe think resources. say growth. do platforms, certain on or throughout characterizing it, internal have and high, was very and churn projects about. have to that right so smooth is scheduling. on fact that in the can if we based we engaging you digital of out improve And that constraints on experience the schedule that top-quality retention can we improve have will and year. power

schedule funnel. our that into already up the subscriber so for, the is a want the we or the great a comfortable decisions the to exact give we running from get think of term get going way reinvest And base scoped at nicely. projects very we team number, pick that it's grow point going investment these you can up development that to on very near efficiencies the not I'm very fashion. in rights a we've would very, the investment but as out rounds make some we to them flex in companies out, and we reinvest it. back We be we together a in little we But feels So responsible it about way margin and think already will to may combining I we as different have the development

Randall Stephenson

of be playbook parcel here we’ll should in going and It that we've well. it different terms it's is merger. certain describe There probably the John take for in merger synergies heard consumer vertical that significant and to those Direct then this exactly capabilities in is going products. aspects next it's what portion this your John, question. same happen the and to content, that. just Randall. synergies different generates to back Thanks question. - well, HBO in are a your to it's to and the part and you they're as reinvest of that done the deeper just to That's expect Lori, past, your no you


Morgan And to Flannery Stanley. go we Please go Simon ahead. with

Simon Flannery

very you Thank Great. much.

Stephens, on with about give John, in given Time is How the divestitures or around the about we the you acquisitions? what assuming the guidance of the medium to what about thinking things you'd rate full like getting should this John 'XX? with DIRECTV guidance year? sheet, you X.X in And year past, that now? Warner just of Or terms a Can and color Thanks. then in you be that For us run right WarnerMedia additional on are term on any given EPS. some benefits spectrum have balance upside

John Stephens

of A things, the Simon. Thanks couple questions. for

the to debt. year, above down dividend First by flows of of all, cash end by beginning the cash with to - paying that's flows, on the the next rate X.Xx driven taking mainly and regard run

approvals under data the number. a that there, is have we're in XXX, planned and spectrum sales particularly to growth we wireless additions the is contract Well, the some continue for customer which normally for we're of for that couple do dollars we that. monetization, the billion We'll asset seeing that and synergies, of example, so a get underutilized we important constantly right it achieve EBITDA look growth at have the higher synergies Secondly, the EBITDA and broadcast for today. and seeing to waiting boosting and centers, assets

$XXX as to assets. today, it, you billion to a give scope in total we If of want have about

reasonable we've spectrum. kind commonly finding to underutilized so few and opportunities estate business of very more in seems that a And the things top of regard real be with other monetize done to assets to on

you do regard but to way. that. specifically it that number asset [ph], with any we're this year, this going to around sales, continue as So acquisition, to not And on I'll the guidance specific batch I'm giving proven we've say EPS

cash already. First seen that and flow, is, Warner, WarnerMedia foremost, immediately WarnerMedia, Time EPS, it we've point Revenues, accretive. the free is --

we'd continue prove and out that and that to we're already. by expect given, that So guidance expect have started we've standing to that that

specific a going to not with give but it to we're I'd Warner's Secondly, guidance Time regard impacts, suggest way. this

means $X.XX. for the high you end about And us, we to that $X.XX of that in $X.XX we EPS be that to range. If think just said range, expect

the you estimates, weeks the other's give for year. were, the as championship we indication that that second The an quarter out in playoffs, Warriors was, said, deal. I what NBA got the we two expense $X.XX be the before June own will recognized point we've uneven, and we because that'll specifically we Golden for of using was estimates, rest was the So that of X, I where contract the for content to your so in content extended State all got expected merged. before won

to in expect this But have I some expect continue those to profitability and 'XX otherwise accretive, days would months. coming be We'll no I'd expect. EPS. guidance transaction the we in So you flow give to suggest cash profitability XX what. we for higher matter EPS might just that revenue, continue specific free

Randall Stephenson

Lori, we’ll next question take the


go to JPMorgan. proceed. Phil Please We Cusick,

Phil Cusick

XXXX? accelerate see coming CPMs? to company? about ad done really be talking we're like in really about do to here load how And you the one be the what's raise XXXX same clearly, But and the Thanks. vision? for numbers impact or addressable to realize And this the potential to the Can you reduce on ad Seems start the material around - to guys. are Hi, while this we timing going you questions. talk what has of Can the Brian. through

Brian Lesser

In of terms Phil. - question, thanks for the

John as things in some already there do and are value of timing, and immediately that's inventory, to ad terms outlined, In we start can motion. Stankey Turner to add that

And of addressable XXXX. overall the I that's there out. a would opportunity, further bit there's so value say short-term in in terms we little think

technology that of but plus and value have in evolution We technology within the investments of prove we're of building about. the work also the Donovan terms amount making of is can direct-to-consumer talked WarnerMedia, to the John inventory there we that of that news data exists AT&T DIRECTV, our platform, do in the because the relationship within good out

I to DIRECTV partner [ph] we think using value across our across going to in keep really And AT&T of inventory XXXX, losses extract So to other start bring value. to and very then start we're from inside sources in our XXXX. effectively still inventory to WarnerMedia

John Stephens

mean, XX% that Brian's watch watched possibility, want to that U-verse people those Phil, the John here as humble footprint, sense revenue ones started that. add DIRECTV, Stephens, if getting those the I out he the growth who ads I point same to ads. Turner on could in by ads,

So works. got then this we've proof

internal the AppNexus when have we'll it deal closes, platform supply-side our activity put that that our ability will the take control. and be on Secondly, to within

So we right are optimistic to platform. we speak time it approved too, We've about the in of heading the AppNexus I'm We're get the get things need value DOJ out the so close got and optimistic [indiscernible] lot forward. going to But of that, a going probably approved before certainly. direction. to and to hope opportunities about next

Phil Cusick

in ad Thank And terms of you. the load?

Brian Lesser

but over to we start have that phone, do as to over experience our the because not of that in and load, mobile We terms just it of so exists to position the experience. for ad integration other innovating we today unique our traditional content relationship over can advertising in television, direct-to-consumer things of ad have a also devices. vertical a mobile improve the improve to because terms In a We're do consumers. Phil, is objective,

more experience experience therefore, a or have experience real-time yield generate the is traditional pause for in business in to better relevant an then that broadly. company media and ability a start better has television a experience a has content content a customer As an higher the customers number CPM year, higher the the on to ad interested better content. they in. with and on will they're a us show be room watching wall screen units a to movie is their a deliver ad ad the because to better Imagine table break, the that consumer in of they're ad big living customer the our and a see the a one, across consumer watching a device, create and we DIRECTV obviously, seeing in and where better mobile products year their a that to ability, for the on less example, a interruptive. their and which of interact on rest for introduce That seamless see more you'll icon And instead pocket, the coffee interested and next consumers, those car us and experience advertisers representing to our this or

our So start of that's really our the objective, relationship. is technology and to because innovate to data access to direct-to-customer

John Stankey

Phil, -- to like ad not innovative would I achieve that of formats this more and is ad would load. lighter just it. It's a important, comment I Well, notion just that's critical. we'd

from used formats loads but particular through. and isn't linear how is and loading what linear the understand kind we and going saw all linear fee, other are and moving the away, with platforms distributors as on-demand Everywhere for the that affair. with allows better to for traditional my experience of also product advertising viewing the that is is customized the they and consumption that working think habits to be so be many lay is more distributor raised the take my at a also of We such attach these targeted I in table out TV content available highly same content that instances, to right to goal partner my have that to stacked large to that then on-demand and mobilizing them who a individual start content is software-driven moving of what and that just here commercial the

runway to a incent distributors depth more library. the aggressive product another by trying have extend the a to we even in opportunity fairly think mature carry take in further pay-TV and being I more to

Randall Stephenson

Operator, we’ll the please. question take next


to go Janedis with We John Jefferies.

John Janedis

Thank you. Stankey. a on One for Maybe John follow-up HBO.

include XX direct-to-consumer As you domestic a investment. million wholesale any the have the over subs But distributors? price, promotional? existing to your as XX that have largely maybe reset And which steady more deals maybe to a there consideration or Thank more peers few there Turner many push And years. perhaps content be is a with the more would you. know, will you change million range or aggressive the maybe talked to bundle in past has remained been of been so about

John Stankey

got grow counts year. channel. that take traditional that in will help believe that that comes we distribution product, our remain make the would brought So the businesses we with that that really part to versions sub distributors we overall. of And SVOD steps continue and in our you a indicated, wholesale to regard we've improve brand tell I that important itself, retail. a We HBO can as can platform their distribution as that think we'd our want better and of I on I to well product we characteristics good for its and digital as improve be in typical of go goes of our technical through performance example, associated more and do invest it as the and the by the our for the and has incented complete through content of the term like the can to, course the some our product environment, to also schedule the direct OTT annual people to fully stay as direct-to-consumer that various some not it a bear of increase product in capabilities that jump improve getting platform in out the features

function play you I want run get as couple we that next well. that a incrementally so some will would months, rates tell but by of now over don't run success what And can -- regard. to our a step the having in on right we that think that's current change I I better call

other and particular some how have on a curated the more some I at of that look terms a focused WarnerMedia in have oriented we our match WarnerMedia I together think, customers. we to to I distributors ideas on I number and can understand think offer, move it, content strategy to want what that we paired out could they that offerings be retail function of that, offerings. brands together forward of great a increase strategy our broad other HBO their to start get as our see HBO In said, get there direct-to-consumer into as and more we depth maybe options with can have want our of content bring that around better and you more might how And step

John Janedis

John. Thanks,

Randall Stephenson

the next question Take operator.


with go we Feldman Brett And Goldman go Please ahead. to Sachs.

Brett Feldman


a but this look One ARPU, actually, some far quarter trends your in we've at saw of seen we stronger peers, the improvement nice if It's we and you've look more, and higher postpaid get the at if so introduction was pricing quarter. points. made, this something phone more. price we price pay the in market have similar an you'll moves Also, some of it's there's of of not others just you increases, really really made and

hoping could you think why for, how just durable to you willingness do trend has And was I be? you've what identified more that a expand maybe for your customers asking this a of pay are in So terms more. cohort might shown

John Donovan

our watching obviously commercials. That been more. you've and Brett, Yes. whole idea

trying the that to have do we're so with pricing. is don't rate in do speeds, to megabytes And differentiate what ways product rack or

price of wireless. has we're of so video based engagement. consumer that's I And a the combination they will what for. use be in the product say, of would heavily consumer value on And perspective, on and the why the with value in that our bundling focused strength customer from is any The been really

So lot spreading engagement. budgets that of value people offers we see increased to We're and we're of find fit and a it, finding for engagement. then kind the

seen and and combinations everybody's would price engagements that views in and that And they various they're do pricing. wireless. that so I we're look megabytes trying to not budget may And content value. you point focusing that out everybody to that points, fit that in pattern And so familiar getting find by just video, on that, you've

that and fits And think WarnerMedia. DIRECTV accidental actually with sister stumbled well us we merger over a were that onto. flexibility. that centered in, our a this trend pushing there of step not next provides strategy in I lot it's that's we So that with very It's an the

product we follow And we if the and I others which translates when that customer do some the to delight we moves their think I was important make and of most I price So now be And do us, own. think think -- for in engagement the thing, a that to value, - that, succeed, succeed it's will value. right going to trend. will improving. see we're and the

I so that. hopefully, the to to industry we to think look take and result rationalism will at - that continue, And -

path, we're successful. to be of of expected it to down going than it more rather less So continue this and

Brett Feldman

helps ARPU. if plans see of helping you the churn? don't A they mind. prices, clearly be to Are that content that seeing you quick are follow-up you also lot that and Obviously, include a higher tend the

John Donovan


churn, X again that this was industry, the we all-time If well. and the compared really comparing low. last think Compared well, we're year to to year we at was to you But the number look really I up our bps did did over. seasonality, that

strategy because consumers that I think for that So differential. things there after value working ARPU currency therefore, do could higher And you to that the we're is us. and some start a that trade for customers than it's working the that's

carefully and we this in video. So in strategy are managing same wireless portfolio,

Brett Feldman

taking the questions. for Thanks

John Donovan


Randall Stephenson

question to we’ll Lori, go next please.


Barden America to Merrill of Lynch. Bank David with go We'll

David Barden

yet. expenses the Googles industry, guy, the deciding is guys the my media they helpful. competitors Disney format we've to the be think question and to But first to of watching the I out I my in for got feel, Randall, Comcast bigger. Netflixes happening guess, Thanks so two on need in who the in for taking super it's even that would big Fox what's get the Hi, the there, telco a industry enough we've they're got they're And the thanks I'm be questions. call, competitor selling. definitely if wheelhouse be not large media not competitive order world, and with

do And the crunch you if take sit it as cusp content Brian And deal houses? bring the side hearing information going scale to That a the about the are will kind kind and business, look be the mobile what we us that's you the so I strategy see you with there you. give those how do mean opportunities? through sell is in I be my feel, one, of business. could will that super we some other content my you helpful? been the larger comfortable, and the guess, Turner. global that with from have of be of the question broadband it lot and business, And business, a John, business, could how directionality about the first of compete second then it over could. do We've you your to you WarnerMedia to what your business, try for But you for even now would examples, him into as having of on the of the business, to And at if you how - one kind let Thanks.

Randall Stephenson

this over Randall. and it is first, David, Donovan. go I'll hand I'll to John

not said descriptive. just very direct to That's You just I Donovan when finish. John. But John I'll that

it's of landscape, us. fascinating seeing terms the landscape, happen the in - In what to the media you're

see see models that what We see of back changing this consolidate distribution people expected changing scale and models, the companies you'd begin exactly would media and some you and time to forth. so importance happen, would is

believe information you so you you premium And scaled jumped be everything had in platform, for if was terms great ourselves, of out distribute to just what obvious can one it Warner to this that the obvious that It's you where advertising that's hard with able if was media. to asking And fast of that player Bros. believe when models, if was great second. choice. opportunities networks It to of was distribution And Time just actually own It creation scale and advertising your believe in are your scan But else XXXX business ought and and content content, a us, are going had probably and distant inventory different networks. to the scale going then seamlessly really your XXXX Warner is and terms valuable we drive there, it's early scale imagine. as in it deal, so move were did was a back it in we a at look out. the we and partner a distribution position the cable happen,

feel to what the CNN And digital we off-the-charts, great add good to and so being directly, then the an about you we have. properties property. And digital answer -- really your from question it

they together, most You put digital news the the digital the properties in accessed CNN world. are all sites

all so happier that is data, the and ad company, And so tech we this great be really not media forth, really, capability, putting moved we we and together think first. a with could combination,

you when I trend think -- rarely happen. it you moving you rarely regret see industry forget an first,

business first, So best we got media we saw was -- this would happen. the that think went on and We the we actually was that the in space.

JD, want you we about of So about feel good really it. to talk integration content?

John Donovan

Thanks. Sure.

wireless about So talked I John integrated talked form as start year And to to of Dave, saw learning think we synergies, you trend carrier. your when earlier the over about about. But days we we this. with video you Stankey so, manifest, the to and and some we the are had or deal straightforward XXX last started that as put together things -- an

you about of we being I versus a price and got lot So learn bundling DIRECTV, currencies at the the to about look of the same talked I back reduction economics up say, see start just start and tell we discount. you bundling remember, to it you and opportunities these bought forth, skepticism when here. and a pass value churn And you, of to up circle back how

broadband video. and is on app wireless see now You on because killer right -- the

start you So look buying economics, of to customers place value really doing sense good and and from or completely and you and had network. have our using on customers being us always move see at out to as go market as to we a what reselling are owner's you what that on

So how to how reduction, the cost we learned of you value to churn trade last customer versus a for dollar do we've over X off do dollar be you around. to now these able that into off how and economics know a muscle trade move trade pricing content, install solid start built off to years of currencies acquisition that an some those a

traffic we a that simple for the release We want store. and stores in Store our So way we found one of integrate we wireless can we rates synergy. stores thrilled find are the the up. a ways. traffic, from is can content close have mean about to a really what and traffic, strengths drive If business in more in -- studio in the our our are tent-pole us

move in and ARPU for franchises. like hours currencies basic figure to So video acquire customers, that does, how things to those retain strides consumption, value out traffic us across our to really of drive getting we and become assets and are

really what can we're and thrilled broadband about for do for So this mobility.

John Stankey

I shows of industry content I scale me suggest to would out this TV your the about HBO, and -- do slightly. the first going Didn't year worry coming what flip be unique, to out content. at outset high-valued, we're question let even premium discussion, David, Warner that's I mentioned XX around of series which the don't talk Bros. number of targeted. is about very of will incremental this

matters at operate is in to to or coming none probably just I'm rate close as ability company others sure that second produce scales, a the content Our to are to a decide that that's and industry, that. at that not

not scale our media I on shape a ability scale think is good We're bases, on the content. for race content. scaling on media to on customer

customer customer have to with relationships to million race that to. have and start We scaled base sell -- XXX we in a

dynamic. So worry I don't that about

Randall Stephenson

I Bleacher the frequented almost the over comments, users monthly put John those Stankey's site it was monthly, XXX add the to the add together, think about another XXX at And WarnerMedia, most Report it world, on users, unique million, when there's Media, talk each we has -- Otter news sites. in you being to of what million

big And already so a direct-to-consumer is scale this business.

so economics taking to owner's terms then just add that some and the And of content spoke going now that what exciting. you as these the owner's ability have Donovan pretty consumer the in to it of can of do HBO and with platforms, John economics well across Warner directly

David Barden

you. Thanks for question. Thank the taking


Mike go we Securities. And McCormack, to Guggenheim

Mike McCormack

as takes regarding costs NFL uptick. half. John that Thanks. second puts we maybe guys. and to should XX% of sort Donovan going some we for -- margin, John I in what Donovan, you've question, Stankey. Hi, guess, a And secondly, got guess, sustainability are then some about entertainment about just type I that just actually, maybe be But thinking and as John think Obviously, range? questions

successful I distribution revenue? how early Just that from Warner far Time WatchTV Thanks. risking firstly, the guess, take it of integration linear that you thinking a with product. And that without any product, you is? takeaways about And WarnerMedia can or legacy the also, use can more then sort how as for model assets?

John Donovan

have and follow-ups a Mike, try Thanks, to ask lot Yes. there. I in nested of I'll questions be if anything. brief you missed

video into this that therefore, margins, and as we're them, If of products at slots to the engagement get you for money. you start you high value I get beginning our where affordability mentioned with see the high of trying the earlier, evolution

fit these viewing that you the well about you in as -- not count different differentials, of think things the it's so stream ad is One published patterns.

to are delivered single be obviously, going next it. a having products, broadband pay what the early with the quarter the which NOW the to in two has WatchTV in product; satellite TV with So DIRECTV and stages, is coming stream we linear out of three, delivered here up a beta a version

of all points. a whole series price you'd a of sudden, have Now

the placeholder DIRECTV and And so NOW. to in tried you a deal do much little. market saw A we're the is was placeholder beginning to reshape market, the DIRECTV that too in of doing NOW what too product until the finished.

it up on find down We various value. the there be time, to customers hit for to price. right stretch we get to bundled - package But tried tried there value over in in So that it it. will price and so points we stretch think need

moves that of we into we And vertical rate a the on third put when it, product, and first top market DVR the for cloud got we added, the enhanced stream. price the that saw you So price. capabilities

DIRECTV a ads. NOW strong very NOW. quarter We seen we've had just DIRECTV So of

because at net Customers a minute we XX we XX we now. on with if in cord we were sub million of when out highlight watched rate, DIRECTV. cannibalization We cord their range. are fit. we replaced cannibalization product. given very affordability the that counts, our where you XX% their of the every fit We're is in month those and lost a subscribers don't - any this So cutters, million you and subscribers for bought there, costs given of XX% nevers to that products in to Roughly closely. TV drama It's all churn but engagement when start on listed linear likely X/X for

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you look then economics, which Stankey much the Lesser margins up look into that blend and to margins ARPU owner's start add having is now cost, getting on available, economics higher when you start the to video portion a at and higher at John markets, the addressable owner's you of So territory. these CPMs Brian

between movement share in an keeping look us player make counts at XX% we sure the our rungs, blended to the these all keep margin to that eye at very So the while XX% closely and subscriber marketplaces.

So And on point that's revenue also, is the deploy, basis, a The about lower. the you product more digitally a acquisition much cost heavily how the in we're I'll out to those the products, remind strategies that cost on costs much acquired stacked much thinking last that lower lower-end because the I'll maintain it's the is margins. cost is and to are lower. thing

and as missed if will stop margins. time, those there those volumes get are I'll up, over scalable see we build that I anything. So products

John Stephens

Stephens. John way. is on great that. I'll to job it JD, give this you This

Simon I talked cloud Mike, view, opportunities, out question asked deliverables, specific per margins the it's I to be the DVR, other think First you impact. revenue specific What as this. on the to opportunities. data going we'll businesses to I when will streams, about move giving not able insights provide regard DTV tell JD of of EPS Now's any specific future Warner's is pay before, fact we're with on guidance all, Time mentioned and

now the truck the a subscriber incline that that the from four hang one UPS that is going are up in got FedEx we've Secondly, of dish trucks future. acquisition a but moving only the shows our fact costs down that that truck products -- on to satellite the delivering now the or cut maybe

things those us that to the give can of we All margins improve. expectations continue the see

advertising learn help on and our effective, that continues more entertainment team out to will revenues advertising those get As margins. more

that we the fourth us team's the to process in of noticed go for compares overall when of - got achieve expect year-over-year XXXX, Group, on With some we're see in operating see tough that, have are giving but hard basis we it. so things quarter. improvement of as specific contributions guidance year, NFL this the Well forward. those the the a working of the We're Entertainment that. we'll all giving said, not aware that's coming to being we've third traditionally in and aware it. The -- on and the of of the So keep we're so going stabilization optimism forth margins rest with content we to improvement

Randall Stephenson

take Okay. Lori, will one Thanks, more Mike. we question.


with Mike ahead. That's go Please from Citi. Rollins you. Thank

Mike Rollins

could. taking for them your platforms? those it right to for and rights your strategy Turner DTV content for media sustainable put the differentiation NBA I Thanks view your the important how you Two How questions. TICKET emerging, into take and as between direct-to-consumer sports evolving points do if of is for SUNDAY Hi. strategy? And and

John Stankey

with. reflective me view and NFL as certainly in front the and models, their the Well, critical partners and sit address as can to their sports flexibility right of in are look, Turner side good evolving that strategy I the John and time. patterns pretty And technology importance changing those on think they consumption about relationship let right to how rights manner a that the on to content answer participate look being that at our of to how have how The new of platforms -- work how approaches which to of with view the feel right are things about want and things. at willing partners consumers behalf consumers, over DIRECTV. their all being move we leads they're the the Turner to new I sports and in And down evolving how put their and they product rights is around digital the is on speed I sports at

sports advertising Our business is a healthier with business in the mix.

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Randall Stephenson

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So joining seeing to everybody look forward thanks to us again for and again. talking and