Gunnar Wiedenfels: Yes, I was going to add, the only other thing, Ben, is you have to remember HBO and HBO Max and Max now have really been doing the opposite of what the industry has sort of been complaining about, which is for HBO subscribers, we’ve been giving more value to the bundle, not less. They used to get a number of HBO original series and movies. They now, in 2023, get all of that, plus a whole host of library content from Warner Bros. That they never receive Max originals that they never receive. And so our position in the market for years has been providing more value to the cable ecosystem for those subscribers, not less. And the charter deal really creates this very creative path of, instead of having two completely separate ecosystems, the idea that you could have a distributor that’s paying us a per sub fee for discovery+ and a per sub fee for Max.
And both of those being ad Lite is an incremental advantage. It’s an advantage to charter. And they and Bob came up with this creative road forward. But I think, and we think that it stabilizes the ecosystem, but it also is helpful in building more scale. JB, you and I were modeling it out the other day.
Jean-Briac Perrette: Yes. And I think David’s point on scale is exactly right, which is we know this business has always needed reach, and we’re looking, as we said in David, I think in Gunnar’s prepared remarks, the encouraging thing that we’ve seen already in the last month with both sports and news on Max has proven out further, is these customer segments are increasingly complementary versus cannibalistic. And so the age demographic we’re seeing the much younger demo on Max and the non-pay TV, the vast majority of the viewers being non-pay TV subscribers, leads us to believe that these two can coexist and should coexist if we want to be in a reach maximizing strategy, which we do. And so we like the profile of it, and we think we can continue to find constructive ways to work with our traditional affiliates to make it work.
Gunnar Wiedenfels: And we got the cash to invest in promoting it, to invest in taking it around the world, and to invest in whatever else we think we need to grow. I mean, the key element here of this company now, this company is a free cash flow driven company. Over $5 billion in free cash flow, $12 billion paid back so far in 19 months. We said we were going to be less than four times levered. We will be less than four times levered comfortably. So it’s all about, I believe, not only the quality of the content, but what’s the stability of the company. It’s all about free cash flow, who has it and who doesn’t.
David Zaslav: And then, Ben, to just comment on your first two questions, so starting with synergies, again it’s going to get incrementally more difficult to differentiate between what’s a synergy, what’s transformation, what’s just normal cost work. But to recap what I said earlier, I expect $4 billion total synergy to have flown through until the end of this year. We will have implemented initiatives that will generate $5 billion of run rate initiatives, and we’re still going, we’re still adding to the program. And I think that’s the most important point. While we might not be reporting on this in detail anymore, while we might not call it Synergy, we have had a continuous improvement team at work for the past five years. We never stopped after integrating scripts and discovery because the environment around us keeps changing, and we’re making sure that we change faster than the environment around us.
We’ve got a very capable team that’s got five years of experience. We will keep grinding through every cost opportunity in the company, and we’ll keep delivering. And then, to answer your strike question again, this is everything but a precise science, right? But my current estimate for the full year is there’s probably going to be a few $100 million of a negative impact on EBITDA. The TV production business and licensing business is a major part of our studio operation and has been essentially idle for the best part of this year. And on the positive side, at least from a short-term cash perspective, I expect several $100 millions of dollars of positive cash flow flowing through from the fact that we’re unable to deploy capital. Again, that’s a short term point, and those are my best estimates right now.
Operator: And your final question comes from the line of Brett Feldman from Goldman Sachs. Your line is open.
Brett Feldman: Great. Thanks for taking the questions, two. If you don’t mind, David, you obviously see the value in being able to get your streaming product into a deal similar to the one that Disney got with charter. Of course, the trade-off there was that Disney had to agree to drop some channels. So I’m curious if you’re willing to make a similar trade off in order to get that type of distribution and churn improvement for Max. I’m also curious whether that might lead to some cost savings if you were able to arrange something like that. And then Gunnar, you talked about having an average of about $3 billion in debt maturities over the next couple of years. That’s obviously well below the current free cash flow run rate. So I’m curious, from a modeling standpoint, should we be assuming that you’ll not only use your free cash flow to pay down debt maturities, but even go into the open market and repurchase debt at discounts?
In other words, is there any particular reason you would need to sit on cash? Thanks.
David Zaslav: Sure. Let me start by saying we’ve gotten through, including recently, all of our deals with all of our channels being carried. We really do have a different model. We have Affinity networks, HGTV, Food, TLC, Discovery, Animal Planet and we’re investing in TBS, TNT, we’re investing in all those channels. We still believe in linear. And with sports and news, we’re anywhere between 25% and 45% of the viewership on cable. So when you think of what is basic cable, it’s us. And when people think about what they love, the three, four, five channels that they love, it’s us. And we’re not that expensive. We’re not proud of it. But one of the reasons we’ve been able to continue to get increases is because we provide real value.
And we’re one of the few media companies that’s still investing significantly in original content and we’re nourishing our audiences. And if you look at our ratings in the last couple of months, Kathleen’s doing a terrific job. The ratings on our networks are going up. And so we feel really good about our deals. We feel good about partnering with the operators in building and continue to hold on as much as we can to the linear marketplace. And we can make some tradeoffs. There’s a few of our channels that are lighter. We can make some tradeoffs, but I think it’ll be additive. And I think it’ll be a real advantage to us to have somebody else in the marketplace that wants to retail and guarantee a payment of a significant number of subs to us.
Gunnar Wiedenfels: And then, Bret, to your question on the debt side, look, two things. Number one, there’s going to be a lot of cash flowing through here. And to answer your question directly, no, there is no need to sit on excessive amounts of cash. And as we said multiple times, we’re focused on reducing our debt to that target range as quickly as possible. And number two is our capital structure is a real asset. Again, I went through earlier the average maturity, the average interest rates and the trading levels of the debt. And I feel very good about our ability to further chip away at that overall debt quantum and potentially at the very attractive terms as, more and more cash becomes available here.
Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
