And so I think it was a very innovative deal by Charter and Disney and although it started out noisy and scary, I think it created potentially a very interesting bridge to more scale, lower churn and more stability to linear. We’ll have to see. It certainly is a positive. And so maybe to comment on a couple of the growth opportunities that you mentioned, Jessica, I do think there is tremendous opportunity and I do think we will be able to get behind that. That’s why David talked about shifting the investment focus a little bit. But starting with the games business, we’ve spent a lot of time over the past year going into a lot of granular detail across all of the areas of our capital allocation. And the games business has shown tremendous success, not only from a P&L perspective, really, as David said, contributing hundreds of millions of dollars to our consolidated profits, but also from a return on investment perspective.
I’ve double and triple checked some of the metrics here because it’s such a great investment opportunity. I’m stunned that we haven’t been investing more into this opportunity under JB’s and David Haddad’s leadership here, and I think we have to do more. There’s a lot more opportunity there and we’re going to start tackling that. On the D2C side, again just take a step back here. Over just a year and a half, we’re now looking for this year at a breakeven positive business after $2 billion of losses last year. We’ve right sized the structure. We’ve got a state of the art platform. As David said, we’re coming off of a quarter with virtually no fresh content on the platform. We want to get behind that. When we come back, when Casey’s content comes back to the platform, we want to get behind it.
We know that we can get tremendous returns on our marketing spend behind new content and we will take advantage of that. And I do think we have a real opportunity here. On the film side and the TV production side, as I said, it’s still a little fluid. Unfortunately, we still don’t have a resolution for the strike yet. But clearly that business should be coming back to growth after being a very significant drag in the second half of this year. So a lot that we want to get behind and a lot that I think is going to contribute to growth for the company. And also on the linear side itself, we’re not on the sidelines. I mean, we’re not just standing by and watching. There’s a lot that the team is working on, Bruce Campbell and John Steinhoff have restructured the sales team.
We’ve got more opportunities in dynamic ad insertion. We’ve got more opportunities in utilizing our data. With every additional AdLite subscriber, we’re going to get additional reach, additional scale, which helps on the pricing side. So there’s a lot going on. Again, I decided to be as open about the ad market this morning, as I was because we feel we have to be transparent here. But there’s a lot we’re doing. And as I said, we’re hopeful.
David Zaslav: The other side of growth is stability and sustainability. What we’ve done in the last 19 months, this is turn this into a real company with real professional management and real free cash flow. This is a generational disruption we’re going through. Going through that with a streaming service that’s losing billions of dollars is really, really difficult to go on offense, it’s difficult to maneuver. And with interest rates the way they are, the challenges in the marketplace, advertising, this is when you’re going to see which are the real companies. This is a company that’s generating over $5 billion in free cash flow. We’ve paid down $12 billion in debt. What that gives us is stability and sustainability. And ultimately, in a difficult environment, it’s going to give us optionality, because we’re surrounded by a lot of companies that don’t have the geographic diversity that we have, aren’t generating real free cash flow, have debt that is presenting issues.
We’re delevering at a time when our peers are levering up, at a time when our peers are unstable and there is a lot of excess competitive, excess players in the market. So this will give us a chance not only to fight to grow in the next year, but to have the kind of balance sheet and the kind of stability of a real company, diverse, gaming, TV, motion picture, HBO, linear, that we could be really opportunistic over the next twelve to 24 months.
Operator: Your next question comes from the line of Robert Fishman from MoffettNathanson. Your line is open.
Robert Fishman: Hi, good morning. I have one for David and one for JB or Gunnar. David, given the increased investment that you guys are talking about, how should we think about expectations for content spending, but where you’ll shake out this year and then just early thoughts on if that goes up or down next year after factoring in the video game spending and all the other factors there? Then for JB and Gunnar, given the accelerated profitability in DTC that we’ve seen so far, how should we think about your prior guidance about 2024 and 2025 profitability? And are you more confident in reaching the longer term margins of 20% plus? Thank you.
David Zaslav: Maybe I can start here. So clearly, again from a year-over-year perspective, we’re going to see increases in content cash spend next year just because we haven’t been able to deploy at full speed here over the second half of 2023. But again, if we look at the change in our overall posture for content allocation, there has been a bit of a strike impact, no doubt. But we have also, as you know, significantly right sized our spend across the various genres on the basis of a thorough analysis of return on investment. And some of that was expressed in some of the content write offs that we did early when we combined the two companies. But that’s also led to a reset in our overall capital allocation. And when we say we’re going to invest, that doesn’t mean that all of that has to come on top.
There is an opportunity to reallocate within our very significant and broad content portfolio here. But net-net, as I said a couple of minutes ago, there will be a headwind to free cash flow from reaccelerating content spend next year. And before I pass it on to JB, we stand by our profitability targets long term for D2C. We do believe that this can be a very profitable line of business as a part of an integrated media portfolio. If anything, I have to say, we’re doing better than we thought and we’re moving faster than we thought, which is expressed. If you just compare what we’re doing this year relative to what we guided a year ago, a year and a half ago, we’re well ahead of that curve, which puts us in a position to focus on growth a little more as we go into next year.
JB?
