Welcome to day two. We are thrilled to have Gunnar Wiedenfels here virtually. As you may or may not have heard, he has COVID, so he hasn't canceled, but he is kind of here with us, and Gunnar, welcome. It's great to have you back. I think you're giant sized, but anyway, he's- Oh, wait, you're muted.
Being there in person, but that's the thing we learned, I think, during the pandemic, right? Stay out of people's way if you're not feeling well. So thank you for the flexibility of being able to do this virtually. Morning, everyone.
Yeah, you can't see it, but we do have a full room, so we'll get, we'll get started right away. It's now been roughly 18 months since the combination of Discovery with the old Time Warner. And as an outsider looking in, it looks like you've basically done the impossible. You've broken down the silos of the old Time Warner, which were in place, I don't know, for decades, like, really, since they've started. What do you have left to do, and can you talk about the priorities for the year ahead?
Well, thank you, Jessica. But before we go in there, it really does feel, and David said this last week, like, you know, we've worked so hard over these past 17 months, and we've prepared the company to be ready to take advantage of the opportunities that are ahead and to respond to the challenges in the ecosystem. These were certainly the 17 months, the most intense 17 months that I've seen in my career, and we have chopped a lot of wood. And we've got a great team together really operating as one company. To your point, we've got a balance sheet that is getting stronger and stronger with a clear trajectory.
On the leverage side, we've got the most diversified portfolio in media and, with the launch of Max, a really state-of-the-art, profitable, live, capable platform. So I really do think we're ready to take advantage of the opportunities in the ecosystem. And to your point, this one company mindset versus a siloed management approach is really probably the single biggest change in Warner Bros. Discovery after we came together in April of last year. And it's remarkable.
I was just down in Atlanta earlier this week and realized that, you know, we even had colleagues that have been with one part of the company for 13 years, but had never been to Atlanta because it just didn't occur to be an opportunity. I'm talking sort of within the Time Warner, within WarnerMedia. And we got to see some great progress they're making on the sports side, Luis Silberwasser and Craig Barry really bringing together, you know, our broadcast operations team, Turner Sports, Eurosport, CNN to drive some synergy. So this is by far the biggest driver of all these opportunities, and as you know, we've taken the synergy target up.
You know, we've got $3 billion in the bag already, raised our expectation to $5 billion- plus now, and this is really one of the biggest drivers behind all of that. To your point, what's left to do? We still have a lot of opportunity. In many areas, we're still scratching the surface. We have changed the mindset to a more cash-focused mentality, which, you know, as you know, has been a huge priority for David and myself from the very beginning, especially in an environment where capital isn't free anymore. We can do more there. Capital allocation across, you know, our $20 billion content portfolio is a major opportunity.
The company has continued to create great successes, and I think we can do even more with funding the right projects with the best odds of success. We still have a lot of growth opportunities that we haven't fully captured. Again, consumer products, merchandising, franchise management as a general theme, other areas in the studios, Games has had some real success. We can do more. David has already talked about the number of films that we wanna make going forward, et cetera. There still is a lot left to do, but the most important point is we've really put ourselves in a great position here to tackle these challenges in the industry.
So on that synergy point that you just made, what were the key drivers of the increase, you know, to the $5 billion, at least $5 billion from $3 billion? Is there more to go?
Yeah, look, I hope there's more to go because, again, the way we look at it is we talk about synergies, but it's really a continuous improvement program. And we still have the team, you know, fully up and running. We're still generating new ideas into the funnel, and we will continue to do so, and increasingly also add growth ideas to the funnel, and we will execute those with the same rigor that we have applied to the efficiency measures that were implemented over the past 17 months. As I said before, the biggest drivers of these step-ups are really not individual new initiatives that we've added to the funnel. We've got over 1,000 individual initiatives in our tracking system, but more my increasing confidence in our ability to deliver against these, right?
Because, you know, everything starts with an idea. The next step is a business case, the next step is an operating milestone plan, and then the implementation. And obviously, as you move these initiatives through that funnel, you get more and more confident, and we do know from prior experience, typically you lose about, you know, a third- 40% of the potential on the way through that funnel. We've done better than that, this time, and we have added more initiatives to that process. So I feel very, very good about where we are, and we're at the point where, again, just like we did after integrating Scripps and Discovery, we're making this part of our management culture. It's part of how we run the company. This is not about an integration.
We just wanna do the best for the company, and as I said, there's still so much opportunity from, you know, applying that one Warner Bros. Discovery perspective to virtually every decision we're making.
... And as you drive to a 60% free cash flow conversion, what are the key areas of focus?
Well, one big driver obviously is profit improvement. And, you know, as you know, even with the slightly lower outlook for EBITDA, we're continuing to, you know, grow profits very significantly, and we intend to keep doing so. And that's obviously the biggest driver of free cash flow conversion from EBITDA because the below-the-line items become less relevant on a relative basis. There are a couple of other big items on the content side. Again, we've only just scratched the surface. We've closed the gap. You know, the company previously was, you know, amortizing significantly less than spending.
We've closed that gap pretty significantly, and I do think, you know, as we're bringing together, you know, our back office processes, our, you know, post-production processes, content management systems, et cetera, there is gonna be very significant efficiency potential in the content side—on the content side in and of itself, without any impact on the quality of the creative and the opportunity on the creative side. Another big, big factor is just what I mentioned earlier, the cash mindset, the cash mentality. That's something that has radically changed over the past 17 months. You know, we did have areas in the company where people didn't know whether an invoice had already been sent or not.
And if it was out there, you know, people didn't know whether, you know, the cash had been collected or not. It was just not managed that way. We have made enormous progress. We've got a full team, you know, with hundreds of individual improvement opportunities, down to the granular level of, you know, managing payables in Chile. Down to that level, we now have the transparency. We've just gone live with our central consolidation system, which creates a lot more transparency. That was one of the big finance systems projects. And with that transparency, comes accountability and comes management attention. And again, as I said in one of these discussions with you, I think, you know, what doesn't get measured, doesn't get managed.
We've started to measure it, and we definitely see the impact on managing it. And that is working capital, but it's also, you know, a closer look at when do we have to make what investment, and how does a certain investment stack up against other opportunities in the company? And again, one thing to keep in mind is, you know, with a production that might have a 10% margin, but it takes 24 months to get it done, and then we might not collect all the revenue right away, that gets more difficult in a higher cost of capital environment. And we're creating that awareness across the entire company, and we've made pretty significant progress.
One thing that is gonna come in a helpful way in 2024 and beyond is the fact that we're delevering the company, so interest expense is gonna be less of a cash drain. And you know, as we come off of some of the most important and some of the most capital-intensive integration exercises, you know, such as our personnel restructuring, the consolidation of the real estate footprint, and so on and so forth, that has driven a lot of cost to achieve, which is gonna come out of the cash flow number going forward. So that will be an additional tailwind. So again, I think we've got a lot more runway here, but I'm also super happy with where we are. I mean, we're gonna be generating more than $5 billion of free cash flow, you know, 17 months in.
Right. Can you just drill down on one of the points that you just made about your decision-making process on content now that cost of capital is climbing, or as you said, money is no longer free, what are you doing differently?
Well, we have this tremendous opportunity in the fact that we're such a greatly diversified media portfolio. We're covering virtually every genre on every platform in every market around the world. And historically, those businesses have been managed very, very, you know, granularly within their own, you know, silos or divisions, if you wanna call it that. That obviously leaves a lot of opportunity on the table, because to really get the best value out of every bit of content that we're creating, we need to utilize all of those cash registers, all of those windows. And we need to do that in a well-orchestrated and optimized way. And it begins with the content investment process.
I know that there are certain projects that we have, in the past, walked away from because it was driven out of, you know, one individual unit, and it didn't look like it made a lot of sense for that specific unit. We can elevate that now and look at these projects on a cross-WBD level, and there is much more monetization opportunity if you apply that broader lens. That's what we're trying to do. And again, we're early days there. It's still... There's a systems component to it, but we're making great progress. We've been at this now for more than a year, and we're really opening the aperture and looking at these investments from a much broader lens.
That's, that's also been a factor, not only on the investment side, but also on the monetization side, as we talk about, you know, windowing, you know, how do we sequence our content through those various monetization windows? What kinds of content do we, you know, keep exclusively versus do we sell potentially to third parties, et cetera? And we can talk more about that.
Well, yeah. So on that, on that point, how do you decide what to keep exclusively and what to sell to third parties? And can you give us an overall picture of what you think the opportunity is for third-party content sales?
Sure. The way I look at these questions is, you know, when we set out as Warner Bros. Discovery, David set three strategic pillars that are just foundational and fundamental to everything we do. We wanna be the greatest storytellers in the world... We want to be the best at monetization, distributing our content across all platforms everywhere in the world. And number three, we want to manage this company professionally, rationally, and as one company. If you apply that three-pillar framework to these decisions, the first thing we do is we try to collect as much data as we can, and we have an enormous amount of data. Not fully aggregated yet, still partly, you know, disjointed, in parts of the organization. We're working on that.
But we have a pretty comprehensive and pretty good view on what works, what doesn't work, what do our consumers want to see when, you know, and on what platform. And we can look at the data. It's never gonna be a complete picture. There's always gonna be management judgment coming into play. But we know, for example, that certain titles... This whole idea of warehousing content on the Max platform, on a streaming platform, to me, in retrospect, is incomprehensible because we know, looking at the data, that you know, you have that Pareto distribution. A small percentage of titles really drives the vast majority of viewership and engagement. So you've got to look at what to do with the rest.
And it's not only an opportunity to generate additional revenue, and one thing that's important is we almost all the licensing, syndication, content sales, whatever you want to call them, revenues that we're driving off of our own content are non-exclusive or co-exclusive. So we always keep, you know, the same content on our platforms as well, but we generate additional revenue by making it available to third parties. And Jessica, it's the same thing that we've seen over and over again over the past 20, 30 years, for as long as I can think. Content needs to get oxygen to stay alive and to stay vibrant. And we've seen this again and again.
You have a title where engagement and viewership drops off after, whatever, a number of months, six, seven months or so on, on the platform. It drops off because people on the platform have seen it, have seen it often enough. You then add a third-party co-exclusive deal, not only generates some revenue, but all of a sudden, you expose it to a new audience, to a potentially broader audience. And lo and behold, your own viewership on your own platform starts to benefit because people go like, "Oh!" And like, "I haven't, I haven't seen that in a while," or, "I missed that." So there, it's win, win, win. It's great for our consumers to get access to the content. It's great for talent because we want the greatest monetization for every piece of IP.
It's great for our platform, and it's great for my free cash flow as well.
Speaking of talent, can you talk a little bit about the impact of the strike, strikes, plural, from a content production standpoint as well as financials?
Sure. Look, it's an unfortunate situation, and, you know, I know that David is spending a lot of his time with his peers on trying to resolve this as quickly as possible. Content is the backbone of what we do. We got to get back to work, and we have to find a way, you know, to get to a solution that's fair and makes everybody feel respected and rewarded fairly. So that's the number one priority here. From an operational financial perspective, you know, as you know, in many areas, especially since we've got both the writers and the actors on strike, we're really shut down. There's very little content production going on right now.
I do think that, you know, we're gonna be ready to really get back to a normal production cadence as quickly as possible. And as we laid out on our earnings call, there is uncertainty. And, you know, we filed an 8-K a week ago, because by the time we reported earnings, you know, I was still hopeful that we could, you know, see a resolution early September, which, you know, obviously hasn't been the case.
But in that, in that framework that we laid out on the earnings call, you know, we're now seeing a slightly lower EBITDA number for the year because, you know, content delivery and monetization is subdued, especially, you know, in the third and potentially the fourth quarter. Also for the film slate, you have to assume a slightly more conservative outlooks, with the lack of talent, you know, being available to promote titles, et cetera. On the flip side of that, as we had already described earlier, from a free cash flow perspective, short term, you know, this is a benefit, and I took the guidance up to north of $5 billion now, for this year, because we're just unable to deploy capital.
Right. So moving on to revenue, can you give us some color on the 23 Upfronts by the various components: linear, sports, news, direct to consumer? Were there any upside or downside surprises?
Well, as you've, you know, as you've heard from others, you know, a market that was a little more challenging than in the past, I think we did well. I'm very happy with the outcome. We took in a lot more volume than in the past, and that has been, you know, the lack of volume commitments in the Upfront has been one of the headwinds, frankly, in 2023. So we've been happy with that outcome.
On the pricing side, as you know very well, you know, pricing was pretty much consistent with the prior year levels, on average, for us. And I think others have even made some pricing concessions. Some of our top networks were up in linear pricing, but you know, on balance, pretty much in line with the prior year. And you mentioned D2C, clearly very significant, I think market-wide, very significant increases in volume, and that's how everybody had positioned from a pricing perspective as well. We were up more than 50% and, you know, Max volume even more than that. So I feel very good going into the fourth quarter and, you know, these next 12 months of the broadcast calendar with what we've been able to secure.
What are you seeing in terms of the fourth quarter commitments?
Look, it's early. As I said, purely from a technical perspective, volume commitment is significantly higher than last year. We'll be doing better. And we're still hearing mixed signals. And, you know, with some people we talked to in the industry, you know, are still very focused on budgets still being available, budgets still being around, sitting on the sideline, you know, waiting to pull the trigger. There's this notion of this, you know, 18 months rolling recession expectation that never really happened. So that's clearly not great from an advertiser perspective. But we're also seeing, you know, small, incrementally, you know, positive signals, you know, through the third quarter. You know, September is shaping up to be a little better than the earlier part of the quarter. So, you know, cautiously optimistic.
Right. Then can you help us think through the framework for news and sports? How they coexist in a linear universe? How do they coexist in streaming? You know, how do you ensure you don't drive viewers, you know, subs off a cliff in pay TV?
Well, sure. I actually wanna take a step back, Jessica, and talk about, you know, our role in the linear affiliate ecosystem first before we go into-
Sure
... news and sports, because it's especially, you know, reflecting a lot on what happened over the past 10 days here in the ecosystem. I just want to be clear, we have very, very strong and amicable relationships with our affiliates, and I think there are a number of points that are just important to call out. Number one, we're not breaking the bank. And this is all outside-in analysis because it's not entirely public data, but you know, kinda, you know, from Kagan, what the networks are worth, et cetera. I am 100% convinced that we are delivering significantly more value to our affiliates in terms of viewership, which, in the end, is driving their revenue, than our relative share of their programming expenses. And I think there's a very significant gap.
And, you know, we've seen that over and over, again, and that's why we've been able to get our renewals. Now, number two, something that also sometimes gets lost in the discussion is, you know, some of the rub, you know, on the Charter Disney side was the authentication into a D2C app. One thing that we don't talk about a lot, but if you think about when we introduced Max or HBO Max at the time, right?
You know, deals were done with all the affiliates that essentially allows the premium cable subscribers authenticated access to what's now Max, which is a multi-billion dollar on-top content offering, and that's incredibly valuable from a consumer perspective, and that's available on an authenticated basis. So I think that's an important point that sometimes gets lost in the discussion. And then the third point I want to make is, I don't think we've ever worked through as many affiliate renewals as we have over the past 17 months after forming Warner Bros. Discovery. And, you know, as you noted, not a lot of fanfare, not a lot of press. You know, we've been able to, you know, work through these agreements with mutually beneficial solutions in every single case.
One of them, by the way, Charter. And so I do think we clearly have a great relationship in that traditional ecosystem, and we will continue to honor that. It's incredibly important. Talking about news and sports, obviously, you know, as many call it, the glue of the bundle, a super valuable IP, very, very important for live viewership and engagement. The thing, though, that we can't ignore is that the traditional ecosystem has lost about 30 million homes from its peak. And so now you're looking at, you know, some of the most valuable IP not being accessible for anyone who's not, you know, willing to still, you know, participate in that traditional cable ecosystem.
Now, that, that's not a good solution, and I think we all, all of us together, as an industry, as programmers, MVPDs, sports leagues, and most importantly, the consumer, we have an interest in finding solutions that makes this content available. And again, going back to the, you know, hard work over the past 17 months, we now have the flexibility of a live capable platform. We have, you know, worked through our agreements, you know, on both sides of the value chain to have the right flexibility. And again, we're super, super energized by CNN Max launching very soon. We've talked about that already. We've got some experience from news on streaming in Europe that's been very encouraging. You know, as David has said, we're also getting close to a solution on the sports side that we will talk about in due course. So, stay tuned.
... So with the NBA renewal, you know, coming up, could you talk about your overall sports investment and, you know, you have different models around the globe. Maybe touch on what some of those models are?
Sure. One thing that we've said many times before is, you know, sports is almost just an extreme case of any kind of content investment, right? Extremely powerful in terms of audience generation and stickiness. Typically also extremely expensive. And so it takes a lot of discipline to play in that field successfully, and that's what we're gonna be continuing to do. And I do think we have the benefit of running sports businesses, sports media businesses, you know, almost everywhere in the world, with a very strong footprint in Europe, very strong footprint in Latin America, and then, you know, a very relevant footprint, you know, from our perspective, you know, in the U.S. market with Turner Sports.
So, and again, as I, as I said, initially, we're learning a ton from, you know, integrating the operation of that sports footprint. And we've been very successful in this space, and we have made a lot of money. We continue to make a lot of money in the space, and that's the lens through which we're gonna be looking at any upcoming renewal. Clearly, the NBA being a big one. You know, clearly we'll have to have the flexibility to utilize, you know, whatever new rights in the most flexible way. You know, I don't think anybody should expect a very pure, linear-only renewal of any sports right anymore. I think that's a given, but we're willing to be creative and flexible.
We are a great partner to the NBA. It's a long, long, very successful partnership, and there's a lot that we bring to the table that others don't. You know, but that said, we will, we'll take the time. We've got some exclusivity left for another half a year to have these discussions, and then I'm hopeful that we're gonna get to a good resolution. And that's gonna be the same approach to every sport right. We will look at everything. You'll never not see us, you know, in certain processes, but we will come at it with a brutally rational mindset.
Do you think sports gets tiered in the U.S.? Is that, like, ultimately what happens?
I don't know, Jessica. I mean, the one thing that's striking is if you compare the U.S. market with other international markets, and maybe importantly in Europe as well, one fundamental difference is the fact that Europe doesn't include premium sports into you know the most widely distributed packages. And so, you know, in a way, that approach in the U.S. has contributed to you know the overstuffed turkey in a way. I don't wanna make a prediction here in terms of what's gonna happen, but clearly, you know, we're seeing success in Europe with you know sell-through bundles for sport. And by the way, that what I said before was on the linear side.
Now I'm talking about our own digital and streaming offerings. So there's definitely opportunity there. And you know, I think Charter came out and after they signed the deal and talked about, you know, how the solution they found with Disney could add to stability in the ecosystem. And I think that's a very valid and important point.
Yeah. It should be positive for all the programmers. So moving on to streaming on Max, can you give us any updates on key KPIs for Max?
We're very pleased with how it's going. We're 100 days in. As I said before, we're careful interpreting too much into any kinds of metrics, you know, this close to a relaunch because we know that consumer behavior, you know, still, you know, has to find its new level. And people might be, you know, sampling a little more than they would on a sustained basis.
But we're very pleased with what we're seeing, very focused on churn, a number of the churn-related metrics, churn drivers, or drivers of churn reduction, I should say, such as just, you know, viewership engagement, habituality, you know, coming back to the platform multiple days a week, you know, sampling content across a much wider variety, as opposed to just to what people were used to before. That's all trending in the right direction. And, you know, the platform continues to be stable and getting strong reviews. The other component here is obviously scale and subscriber growth.
A reminder here that we're still working through, you know, that group of overlapping Discovery+ and HBO Max subscribers, and we're still chipping away at that. And clearly, you know, we're looking forward to when a lot of the iconic content that Casey and the team are producing is gonna be ready to come to the platform. You know, very few things right now are progressing through production, of course, because of the strike. But we've got a lot in the hopper, and 2024 is gonna be a big year in terms of the launch of new titles. And then, of course, you know, we're excited to see what CNN Max can do.
Right. Can you give us your thoughts on future pricing, particularly in light of, like, a more competitive environment overall in streaming, and what seems like price increases across the entire DTC universe?
Sure. Look, I think, that's, that's still a function of the, the practical reality that for a decade, in streaming, an enormously valuable amount of, you know, quality content has been given away, well below fair market value. And, you know, I think that's, that's in the process of, of being corrected. And we've seen price increases across, essentially the entire competitive, set. We've increased prices, especially internationally, where a lot of the HBO Max launches were very, very much targeted at, at the, the maximum possible subscriber number, not necessarily the, the maximum possible economics, from the launch. So we've been cleaning up a lot of that.
Generally, what you'll see from us is more, you know, upward pressure on the monthly subscriptions, trying to get the people to commit for the longer term. Because you still have this weird dynamic whereby you could, you know, sign up for a subscription VOD service today and spend, you know, two or three weeks going through an enormous amount of content and then move on. You know, that's something that I think the entire industry is aligned in their incentives to work on that. The other point is, we're continuing to see great success with our Ad-Lite solutions. In the end, we wanna be indifferent between Ad-Lite and Ad-Free from a monetization perspective.
We've opened up some HBO content in a very measured way to advertise and we're seeing great demand for that inventory. So, I do think that on the advertising side, we have pretty significant additional growth opportunities.
Can you walk us through how you go from -$200 million in 2023 to $1 billion in profit in 2024? Like, what are the building blocks?
It's across the entire roster of operating metrics and financial metrics, Jessica. It starts, obviously, with scale. Remember, we haven't really launched a lot of new markets or relaunched Max in a lot of markets. That was not a priority this year. You know, for next year, that is gonna change, and I'm hopeful that we're gonna see some significant subscriber inflow from international markets. I do believe that we can continue to get better with the subscriber acquisition economics and subscriber retention economics. Churn is obviously a huge driver.
You know, even a small amount in churn reduction can have you know, outsized impact on the financial profile of the entire business. We've talked about pricing, that's gonna continue to be a priority. Advertising, I mentioned briefly, is definitely a tailwind, and as I you know, said when you asked me about the Upfront, we did see very significant volume increases that are gonna flow through over the next 12 months and certainly much beyond that. And we also still have expense opportunities. We will still learn more about you know, what content drives what kind of behavior. And Casey always says there's a specific role for each show that we're making. Getting better at that should drive further economics.
And then also in terms of the operating expenses outside of content, remember, we're still, you know, we've switched over to Max in the U.S., but we're still operating, you know, multiple platforms internationally. And so, you know, from a synergy cost efficiency perspective, you know, we still have some more bites at the apple left with Max. We can still get a lot better. And, I mean, I mentioned this briefly in one earlier speaking opportunity. We're still, you know, in the beginning stages of harmonizing our content supply chain, just the operational backbone of making content available, you know, within the company, across different platforms. There's enormous efficiency opportunity there still.
Let's move on to film, 'cause I, well, I see we're running out of time. With your recent hire of Bill Damaschke, who was at DreamWorks Animation, what are your aspirations in children's content?
Children's kids' content is incredibly important. It is also an area that had historically not been that much of a focus area. Partly, you know, rightly so, because, you know, HBO, the HBO brand wasn't necessarily what parents would turn to if they are looking for something to put their kids in front of, right? Now, with the Max brand, I think we're in a different position, and it's one of the priority investment areas that Casey and JB have defined. Bill is mandated to build out a company-wide, you know, kids' film strategy. And, you know, we have a lot of, you know, individual, you know, animation and kids' programming pods already.
Some of them very, very successful. Just was together with Michael Ouweleen, who runs, you know, Adult Swim. Some real successes there that don't get a lot of attention. But it's clearly an area where we have a growth opportunity and where we have an enormous IP library that we can tap into in order to... Again, back to my earlier point, to get some projects launched that have better odds than others of being financially successful. As you said, he just joined. It's gonna take a little while to get his, you know, fingerprints on the content output, but, you know, so far, so good.
Themed experiences, studio tours, like Harry Potter Studio, seem to be doing well. Yesterday, Tony Vinciquerra was here from Sony, and he said they're looking at some smaller kind of attractions, themed attractions. Are there opportunities for WBD to expand, like, Barbie World or something else?
... Yes, short answer is yes. And in fact, we just opened the The Making of Harry Potter Studio Tour in Tokyo in June of this year, and it's on fire. You know, we've already reached you know the milestone that we had set for the year in terms of attendance. You know, you gotta wait for months to get tickets at this point. It was a phenomenal launch. We obviously applied a lot of the learnings from our studio tour in Leavesden, which is in its eleventh year now and, you know, just hit a visitor milestone again a couple of days ago, much earlier than in prior years.
So if you think about it from that perspective, you know, 11 years old, you know, pretty much the same time since the last Potter film came out, but the IP is generating enormous returns in these experiential business models. So we're definitely looking at opportunities to do more in this space. And again, there's always some investment. As I said, these businesses have great return on investment. We'll be looking at opportunities to deploy more capital, maybe also find some smart partnerships, in the space, to get more active. You know, it's not huge right now, but incredibly valuable. And that goes back to the point that we've been talking about for so long. The integrated, diversified portfolio that we're operating.
There is enormous opportunity, bit of a built-in hedge, between the businesses. In the end, the collection of business models and assets that we have will allow us to always get the best return, the best bang for the buck on every dollar of content spent.
I'm gonna try to sneak two more in. So there's been a lot of speculation about potential asset sales, including All 3 Media, music and your film company, real estate, you know, et cetera. Can you give us any color on what you might sell and, and timing? Wait, yeah, I think you have... You need your other- Yeah, sorry.
Yeah. Can you hear me?
Yeah, now we can.
Okay. There's not a huge amount of dormant assets in the company. But as we said, we're looking at a couple of things. We'll usually approach, you should assume that we'll approach that with, again, a purely rational mindset. There may be certain things that we define as non-core. And there's been a lot of press around, you mentioned All3Media, you know, a fantastic company that Jane Turton has built up. There's a lot of external interest, and we're exploring that. You know, there may be other areas where, you know, we might be looking at a certain type of monetization, but where we would want to retain control.
So that makes things a little more complicated, but we're looking at a couple of things as well. And then, as I said, in the context of the studio tours, we'll also be smart about how to best finance some of our expansion and growth opportunities. Again, I'm fully committed to get leverage to where it should be, our 2.5x-3x target range by the end of 2024. And so we're still, you know, working to find the best ways to finance some structural opportunities that helps us, you know, meet our leverage objectives and funding some growth opportunities at the same time.
Right. And then I guess our final question, since we're almost out of time. As we look to calendar 2024, can you talk about the, you know, kind of the drivers, you know, puts and takes for EBITDA? You just lowered 2023 because of the strike.
Yeah
... but you know, next year you have the benefit of cost synergy, which is almost your normal way of doing business at this point.
Yeah.
Hopefully, a recovery in the advertising market. You've got the Summer Olympics in Paris. I don't know if I'm missing anything else, but maybe walk us through some of the drivers.
No, that was a pretty, pretty good summary, Jessica. Look, clearly the big three that characterized this year were, you know, the ad market. You know, we've lost about $1 billion in ad sales, with a pretty steep profit flow through. The strike, not helpful, obviously. And hopefully, both of these are gonna look a lot better next year. And again, we don't even need a full-on recovery on the ad sales side, just not the same headwind would make huge difference. And then the synergy program, where our cost efficiencies have been the biggest tailwind throughout the year. We did have some meaningful creative successes as well.
A lot of them actually, but, you know, with Hogwarts Legacy and Barbie, obviously two standouts that are gonna be a little hard to lap next year. But so those are the puts and takes, and we'll have some tough comms in the film space. On the other hand, we've also had some disappointing releases. You know, the ad sales environment should be a big positive. And then on the streaming side, you know, as we continue growing the business, there may be additional opportunity as well, along the levers that we talked about a minute ago.
Thank you so much for joining us.
Okay.
Hope you feel better soon.
Thank you, Jessica.
Thank you.
Thank you for having me virtually.
Thank you.