AMC Networks Inc (Pre-Reincorporation) (AMCX) 2011 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the AMC Networks second-quarter earnings call. (Operator Instructions).

Thank you. I would now like to turn the conference over to Mister Seth Zaslow, Senior Vice President, Investor Relations. Please go ahead, sir.

Thank you. Good morning and welcome to the AMC Networks second-quarter 2011 earnings conference call. Joining us this morning are members of our executive team, Josh Sapan, Chief Executive Officer, and Sean Sullivan, Chief Financial Officer. Following a discussion of the Company's second quarter 2011 we will open the call for questions. If you don't have a copy of today's earnings release, it is available on our website at AMC Networks.com. This call can also be accessed via our website.

Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to the Company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The Company disclaims any obligation to update the forward-looking statements that may be discussed during this call.

I will now turn the call over to AMC Networks' CEO, Josh Sapan.

Good morning and thank you for joining us for the first AMC Networks earnings conference call. We're glad to be here with you today.

After several months of planning and a lot of hard work by our employees and management team, we completed our spinoff from Cablevision on June 30 and began trading as a separate public company on NASDAQ on July 1. Since some of you may be a little bit less familiar with AMC Networks I thought it might make sense to spend a few minutes providing you with a quick overview of our Company.

At the core of our business are four cable TV channels, all substantially distributed across cable, satellite, and telcos in the US. The four channels -- AMC, IFC, Sundance Channel and WE TV are all programs with programmed with varying combinations of original and acquired content.

While our content strategy yields different types of shows for each of our channels, overall our focus is on investing and original shows to differentiate our brands, to drive ratings and to provide value to distributors and to advertisers. We often partner with studios on our original programming but over time we have and will continue to explore opportunities to increase our ownership and control of content and that plays out somewhat differently between generally fiction and nonfiction shows.

We believe that increased ownership of content allows us to take advantage of ancillary distribution windows in both traditional and developing digital platforms as well as to use these shows internationally.

For financial reporting purposes, we divide our businesses into two segments -- National networks and international and other. The national networks segment includes our four cable TV networks and makes up the vast majority of our financial results.

AMC is the largest of the four with over 95 million subs. That network is focused on high-quality original storytelling delivered through series and of course feature films. Our scripted original programs include Mad Men and Breaking Bad, a zombie series called The Walking Dead and a crime drama called The Killing. We're looking forward to launching a fifth original scripted series in the fourth quarter of this year. It's called Hell on Wheels and it tells the story in Western style of the building of the transcontinental railroad.

WE TV has 77 million subscribers and targets women 25 to 54. About half of WE TV's programming is original with a focus on what's commonly called reality shows.

The IFC channel has 62 million subscribers with its roots in independent film. The network is now focused on creating and acquiring TV shows that appeal quite specifically to our target, adults 18 to 49.

We acquired the Sundance Channel about three years ago. That network now has 40 million subscribers and features a mix of independent films and is also focused on original programming like the recent Golden Globe-winning miniseries, Carlos.

The critical success of our programming is instrumental in helping us grow our top line. Last month, the Company received 31 primetime Emmy nominations, more than any other basic cable TV group. AMC received 29 nominations and Mad Men had 19, making it the most nominated show of the year on basic cable.

The first season crime drama which I mentioned, The Killing, received six nominations and the zombie series, The Walking Dead, received three. The recently completed advertising upfront took advantage of this critical success and our growing ratings.

In what was a healthy market for cable networks in general, AMC Networks performed quite well. We saw significant demand for our scripted series and we were able to attract new quality advertisers to our shows. We were able to further diversify our ad revenue base, add volume and increased price.

The international and other segment is significantly smaller in size as I mentioned. It includes several very different and distinct businesses. Our global business includes AMC Canada and international versions of the Sundance and WE TV channels, which are distributed in Europe as well as in Asia.

This is a relatively new business for AMC Networks. We've been at it in total for about three years.

IFC films, or independent film distribution business, distributes films in theaters as well as on cable, video-on-demand and digital platforms. Together, these businesses are much smaller as I mentioned than our national channels and make up less than 10% of total Company revenue.

Regarding second-quarter results, total Company revenue grew 12.3% to $292 million, led significantly by strength in advertising at our national networks. AOCF grew 9.2% to $112 million, reflecting that increase in revenue, partially offset by investment in programming and marketing expenses at both the national networks and our international and other segment. Sean Sullivan will provide greater detail in the financial performance in his remarks.

Here are some operational highlights for the quarter. Good news. Second quarter was AMC's most-watched quarter in its history. The network saw significant increases among its key demographic adults 25 to 54 across all dayparts versus the prior year.

Our newest series, which I mentioned, called The Killing premiered in April to a great critical reception and ratings higher than the first season that Mad Men had when it premiered several years ago.

WE TV also saw a significant increase among its key target demo women 25 to 54. The network premiered a new reality show called Braxton Family Values in April which became WE TV's most-watched series ever in its target demo.

At IFC, we premiered several new original programs and saw strong ad revenue increases year over year.

With that overview I'll turn the call over to AMC Networks Chief Financial Officer, Sean Sullivan, to take you through the financial results in some greater detail.

Thanks and good morning. As Josh mentioned, for the second quarter, total Company revenues grew 12.3% and AOCF grew 9.2% versus the prior year. Revenue growth was driven primarily by the strength in advertising in our national networks, while AOCF growth reflected investments in original programming and marketing expenditures to support premieres in the second quarter.

Let me now take you through our results for the quarter by operating segment. At the national networks, revenues for the quarter increased 10.5% or $25 million to a total of $267 million. Advertising revenues increased 21% versus the same period last year. The main drivers of this growth were AMC and WE TV which saw meaningful increases in both ratings and CPMs.

In percentage terms, IFC had significant growth in the quarter off a relatively small base due to the introduction of traditional advertising in 2011. Affiliate revenues of the national networks increased 3.8% versus the second quarter of 2010, AMC and WE being the largest contributors to this growth.

Operating expenses increased by 13% or $17 million in the quarter, principally due to increased programming and marketing costs associated with our original programming.

It is worth noting that in connection with and anticipation of the spinoff from Cablevision, we incurred approximately $3 million of expenses in the quarter. A portion of these expenses were nonrecurring while a portion were incurred as we built out the corporate infrastructure to support our independent status. These expenses were in addition to the allocation of corporate overhead and management fees from Cablevision that were included in both periods.

For the quarter, national networks AOCF increased 7.4% or $8 million versus the prior year period to a total of $117 million for the reasons I previously noted.

Turning to our international and other segment, revenues increased 29.5% or $7 million to a total of $30 million for the quarter. The growth was driven primarily by increases at IFC films and to a lesser extent increases in international affiliate fees. Operating expenses increased 19.2% or $6 million, primarily due to increase in programming and marketing expenses. Litigation expenses related to the VOOM lawsuit were slightly less than $1 million in the quarter as compared to $2.6 million in the second quarter of 2010.

AOCF for the segment was a negative $5 million for the quarter, an improvement of $1 million versus the prior year period.

Total Company net income from continuing operations was $27 million for the quarter, compared to $31 million in the prior year. This decrease was a result of $20 million of costs associated with the redemption of debt incurred in connection with the spinoff from Cablevision, which was partially offset by a reduction in interest and income tax expense.

In terms of free cash flow, the Company generated $115 million for the six months ended June 2011. Capital expenditures were $4 million year to date and cash interest was $52 million for the six-month period, an increase of $15 million versus the prior year due to cash interest paid on the early redemption of debt. Cash taxes were $6 million for the six-month period and this amount reflects the use of Cablevision's net operating losses through June 30, 2011. Our NOL carryforward of approximately $265 million will be available to use in subsequent periods.

Turning to the balance sheet, AMC Networks had $2.4 billion of outstanding debt as of the spin date, consisting of $1.7 billion in term loans and $700 million of senior unsecured notes. In addition we have a $500 million -- we have $500 million available on our undrawn revolving credit facility.

Including cash and cash equivalents of $198 million, our net debt position was $2.2 billion. Our leverage ratio was 5.5 times based on reported [LTM] AOCF of $419 million. Two other items of note, subsequent to the end of the quarter, we entered into primarily amortizing interest rate swap contracts. As a result, the interest rate on approximately 75% of the Company's debt is now fixed. In addition, within the past few days we also prepaid $50 million of Term Loan A debt. This is consistent with our disciplined approach to managing our business, whereby we'll continue to execute our strategy, invest in original programming and use excess free cash flow to delever.

While we will not be providing formal guidance, I did want to take a few moments to discuss the variability inherent in our business. It is important to note that we manage our business for long-term growth. Results in any one quarter can vary due to the timing of programming airings and the associated marketing spend to support that programming.

On a longer term basis we expect to continue to invest in original programming across all of our national networks. We strongly believe that quality programming is the key growth driver for our businesses and expect this investment to lead to growth in advertising, affiliates, and other revenue streams.

In closing, we are pleased with our results for the quarter. We recognize that we still have a lot of work ahead of us to continue to grow, develop our businesses, and finalize the transition from Cablevision. However, the trends in our business look good, particularly given the recent success in programming as well as our ability to continue to make positive strides with advertisers as evidenced by the recent upfront.

With that I would like to move to the question-and-answer portion of the call. Operator?

(Operator Instructions). Richard Greenfield, BTIG.

A couple of questions. When you look at what the actual savings were, I think you mentioned it wasn't just a management fee but actually an overhead allocation. When you look at that and you combine that on top of a portion of that, I think you said $3 million of nonrecurring costs, I'm trying to get an understanding of how much of a step-up you're going to see in the back half of this year and the first half of next year when you net that against what you're going to have to pay for becoming a public company. Any clarity there would be helpful.

And then when you look at the benefit from -- when you look at what's going on with programming, you've obviously stepped up your original programming, relative to your amortization. I think there's been a good amount of confusion in the market about how your amortization steps up over the next couple of years. Without providing specific guidance, can you give us a sense of how you are managing the ramp-up in spending and the impact that's going to have on the amortization that hits the income statement over the next couple of years? Thanks.

Sure, Rich. I'll take the first question. I'll let Josh talk about the programming. In terms of the overhead corporate applications in Cablevision and the management fee, as well as the incurrence of cost to be a stand-alone public company, we are still very comfortable with what we socialized in the Form 10 which is a $14 million to $18 million range. So, I'm very comfortable with that. So certainly the management fee and the allocations from Cablevision have ceased as of June 30. We do have a transition service arrangement which will incur some costs as we transition off of certain functional reliance that we have with them, but generally speaking I would use the $14 million to $18 million as your guide.

How much do you have to pick up on top of that from you being new? Is that net within that $14 million to $18 million or is it netted down by some new amount?

That's the net savings. So, if we are effectively -- I think the management fee has been disclosed. So we're saving 14 to 18 so you can certainly calculate what the cost is that we've estimated to be a public company standalone.

And on the subject of original programming, as you point out we have ramped up and we particularly have ramped up on AMC where when we began five years ago on the scripted dramatic side, which is the more expensive material, generally then, the reality or nonfiction material that we have on the other channels we did go from one to four series on the air and we are adding a fifth. As I mentioned, it's later on this year.

So, that -- those shows are amortized over their life. Their useful life and over time. So the amortization is occurring in our business today and will be occurring as we go forward. We do evaluate what optimal levels of new content are both for AMC and for other channels and that evaluation include of course how it performs from a ratings point of view, how much advertising incrementally we are driving into those shows into the whole channel and, what affect it has on affiliate contracts which tend to come up on a longer-term basis in terms of monetary effect. So, I think it's fair to say that we think we're at a pretty good level of content expense in general today. But, we'll see some increases as we go forward and as we've seen in the past, we believe those increases will yield benefit on the top line.

So it doesn't sound like when you say it's going to be -- there will be a step up it doesn't sound like there is a huge step up coming in each of the next couple of years. It seems like it's been managed to grow at a pace relative to your revenue growth. Is that fair?

Yes, I think historically if you look back we would say that if you look at our margin in general, it's been fairly constant. So that over a five-year period would include the amortization for all that content and associated marketing expenses and so I think it's fair to say that what that five-year history would suggest is that we have had revenue increases in line with the expenses. And while I wouldn't want to offer guidance about exactly what we are going to do next year or the year after because it's a business that obviously has some judgment and changes associated with it, that history indicates a fairly, I hope, controlled and disciplined financial approach to monetizing that which we invest in. So that's where we're at about it.

Doug Mitchelson, Deutsche Bank.

I was hoping you could just update us on the state of the ad market as you look into the September quarter and any comments you want to make about level of pricing and volume you enjoyed in the last upfront and then, separately I think in the case I missed it in the discussion about programming, is there a desire based on what you're seeing in terms of negotiations for pricing on your successful shows to own more of your content in the future? And would there be any impact sort of on the way programming cost is expensed and amortized if you own your shows versus partner on shows? Thanks.

If I may, the first parts of it -- I may turn over the amortization question to Sean. As regards the upfront, we had a good upfront. It was quite strong for WE TV and for AMC. We saw double-digit increases for We TV. I guess as I understand where the market was probably at the top end of the market. And on AMC we had strong double-digit increases and we had, as I mentioned, a very, very good response to our original shows and so that has -- that was the upfront -- it was a good upfront both in terms, as I mentioned, of price volume and diversity of advertisers. So that flow in the way the upfront does in terms of its calendar effect beginning in the fourth quarter of the year.

As it relates to shows, and control of rates, it's a rich and interesting question. We have historically on the scripted material had studio partners who share the risk with us and share in the rights. And each of those deals differ so we may own different pieces of ancillary rights where we have a studio participate. We have had experiences where we have chosen to own and control comprehensively all the rights and those experiences to date have been very good.

Obviously, that decision is very show-dependent, meaning it's good to own a show that works well. It's not so good to own a show that doesn't work well. I'm stating the absolute obvious. We've had good experiences but we are aware that it's a business that is not entirely predictable.

So our goal would be ideally to maintain this sort of risk profile we had from an investment point of view and to increasingly have control over ancillary rights that come with great ownership. So that sounds like having your cake and eating it, too. We think there may be ways by degree to accomplish that.

So, where we can, we'll own more rights if we think it's prudent is the best answer I can offer.

And then, on the state of the ad market as we look into the third quarter I think you have some Mad Men comparisons but, scouting that's in terms of the pricing that you're seeing in the market place and sort of the volume flow, everybody else has commented that the market remains robust and people are not seeing a slowdown. Is that your experience as well?

So far, scattered market post the upfront is largely within our expectations. Largely what we thought.

David Joyce, Miller Tabak & Co.

Just a little bit more on the upfront. Can you give us some color on how much of your ad inventory you did sell in the upfront? Secondarily if you could summarize the kind of digital rights that you now have at this point? Thanks.

Sure. So we sold -- we have generally sold a fairly consistent level of total inventory and expected dollars in the upfront. And, this upfront was largely consistent with that. We did increase volume as I mentioned in that and that means that we are having the expectations for higher total revenue.

If you look back at an approximate level of our total annual ad revenues sold in upfronts, it's in the range of 40% or so and that's a number that's broadly consistent with what we did and how we are thinking about it. Your second question was on --.

Digital rights.

Was on digital rights and let me see if I can answer it. The -- as I mentioned -- this differs between fiction and nonfiction specifically. On reality shows so-called, they are nonfiction, because the price is lower than the risk profile is lower. Because a greater percentage of the shows that we have complete rights for which means that we have more digital rights in those shows.

So if you look across the shows on WE TV, Sundance, and IFC there will be a much greater percentage of the content that we have a broad spectrum of digital and ancillary rights for. On AMC where we've taken studio partners, the studio has come in for what are commonly called ancillary rights. That's the bargain. They put in X percent of the dollars in return for subsequent rights, digital rights and/or international rights.

Each of those arrangements is different, and we do frequently participate in some percentage of each of those buckets of ancillary rights. Where we own and control the show completely then we enjoy all the benefits of the ancillary rights.

So there is not a specific answer. It actually is a show-by-show question and as we make arrangements with our studio partners, be they Lionsgate, Sony, E1, etc., each arrangement is somewhat different. But we do of course observe the growing importance of digital rights and we would like to control and own more as we go forward if the risk profile is right.

Thanks, and could you provide some color on when the carriage deals might be coming up for renewal?

Sure. The nature of the broad business and our business is that the carriage deals are multiyear generally in arrangement and, for the most part, they are anywhere between two, three, four, and sometimes longer number of years with the major distributors. So they tend to come up every year, there is a couple coming up and they come up on a fairly regular basis. We do look at the business and attempt to not have them all come up simultaneously obviously so, in any given year there's a couple of expirations among major distributors.

Then I'd just add as a point of reference as you probably know in the Form 10 we've disclosed what percentage of our revenues are under contract through December of 2012 just as a point in time.

Marla Backer, Hudson Square.

Thank you. I have a couple of questions. First of all, has there been any update in the status of the negotiations on Breaking Bad?

Sure. Well, we are working with Sony, our partner on a renewal and we very much like the show. We think it's outstanding. It almost speaks for itself but its Emmy awards and its recognition and its ratings are very strong. And we think Sony has done a spectacular job and they are a great partner. So, we are actively working on a new arrangement with them.

And the timing? Does the renewal negotiations -- is there an expiration date? Is there a --?

No, we are hard at work on it as we speak and, we hope that both sides are well-motivated. We're in conversations with them and so we think -- we hope we'll have resolution fairly soon.

Okay, thanks. And on -- do any -- on your overall network portfolio, is there any how much of any [DR] do you have?

Oh, so we have a substantial component of DR as most cable channels do. In their mix. If you actually sort of drill down and take a look at it, there are different components of DR but we are probably in the standard mix of DR that might be on the low end, 10%, in a given period of time and on the high end, 20%, in a given period of time.

And, any thoughts to evolving some of that into traditional ad dollars over time, as the ratings continue to improve?

Sure. It's a question of price, perhaps obviously, and demand. And so, our objective is to increase price and, if cash deals are available at the right price because pricing tends to have a continuing effect, CPM has got a continuous multiyear effect. You create a base and then that base becomes a beginning point. So, if we can move more cash at higher price, of course we will.

Vasily Karasyov, Susquehanna Financial.

Thank you. Congratulations on the first quarter. Looking at the advertising revenue in the second half of the year, can you please highlight and maybe quantify if there are any year-on-year difference is due to scheduling of shows in Q3 and then Q4 too. Thank you very much. That would be helpful.

Sure. In the third quarter we did have two originals last year in 2010, being Rubicon and Mad Men. And this year, we'll only have one original show. In the fourth quarter, I believe this year we will have two shows being Walking Dead and Hell on Wheels whereas last year we really only had one show which was The Walking Dead. So that was that would be the comparability for a year over year.

So would it be correct to infer that sequentially you would see a deceleration in advertising revenue growth year on year and then as the new upfront year starts and your shows come up, you'll see reacceleration on Q4, everything else held constant?

I think it's actually somewhat hard to determine exactly how it will all play out. As we sit here today, I think there's a number of factors that will influence it. Scatter market, number of shows. The market demand and the broader economy, of course. And, that of course shouldn't be discounted particularly in the last -- events for the last week. So I think it all goes into the mix.

Anthony DiClemente, Barclays Capital.

This is actually Chris Merwin for Anthony. You mentioned that you paid $6 million in cash taxes for this first six months of the year. Does this give a run rate for the back half of the year and how do we think about your cash taxes in 2012 and then just generally for free cash flow, what kind of seasonality should we expect to see in the next couple of quarters? Is the $[115] million you did in the first six months a good run rate?

You know, I'm not going to necessarily comment and give you forward-looking guidance on the free cash flow in the back half of the year. I think we have obviously our historical results. We've commented a bit on our programming. We've strengthened the upfront and I'll let you draw your own conclusions. In terms of your first question, as I highlighted we have $265 million of NOLs, we begin using those here in the third quarter. When we file our Q, you'll see we have a current deferred tax at set related to those NOLs. So the inference there is that we intend to use the majority of those over the next 12 months.

Got you. Thanks. And then also I was just wondering if you could provide us with any update on the status of the VOOM litigation? I know that's been an overhang in the international segment. I was just wondering where we can expect to see some uplift at that segment once the lawsuit is resolved? Thanks.

Right. So it's in the courts and it's making its way through the courts and there have been a series of activities, the most recent of which occurred four months ago. It's been my best understanding somewhat hard to predict exactly what time frame the judge and the courts will move to and exactly when a trial might be.

Rich Tullo, Albert Fried & Company.

Congratulations on a good quarter and thank you very much for taking my question. Cablevision management fees -- was that $23 million?

On an annual basis, it's closer to $26 million so probably half of that in the six-month period.

And are those going to be levied -- were they levied on a fairly even distribution over the course of the year?

They were generally 3.5% of revenue related to AMC and WE. So, they only vary based on the variance of revenue from those two channels.

Okay. Will there be any fee incurred on the $15 million in debt repayment?

Any of the debt refinancing we did, the costs were incurred in the second quarter. So no, all the financing closed on June 30 so any deferred financing costs, etc., have been capitalized and will be amortized. There is no necessarily residual financing costs that are going to flow through the P&L in the future quarters.

Interest paid in the second quarter. Is that a good run rate for the rest of the year? Or are we going to step up a little bit?

It's going to step up obviously. During the six months we only had the RMS debts. We haven't raised the $2.4 billion. I think generally speaking, our weighted average interest rate is roughly 5%. So, it will step up from what you see here in the historical periods other than what I highlighted in my comments where we have to pay some incremental cash interest due to the early redemption of those -- the bond.

Yes, I must congratulate you on the new shows. My wife is actually a big fan of The Killing. I'm a big fan of Mad Men, so I can't wait for that to get back. What are the expected escalation for the exclusive content for next year? Are you going to have fewer shows of Breaking Bad if you can opine on that? and do you think revenue is going to be able to pace at such a rate to keep margins where they are?

Sure. So, the shows we tend to enter into as is the norm. Contracts that last for generally five years with studio partners and talent can often go longer. But, those are negotiated individually so, potential escalations in price on shows tend to occur in that arena of post-season four or five. That can be significant escalations.

So, if we look at the calendar and the portfolio of shows that we have, we have a couple of shows that are season one, season two. And then, we did extend the arrangement for Mad Men, and we are working on Breaking Bad now and we negotiate those with our commercial partners.

And as you look at the opportunity in these digital rights, where are you seeing them? In the OTT services, video games, all of the above?

The digital rights, I think we do see that there is greater interest in among the digital platforms in program material, particularly that is highly desirable and we all read about it in the papers. So, we are the beneficiaries of that inasmuch as either we or our partners have exploited and made arrangements to exploit those rights in subsequent digital platforms. So yes, it's a generally positive effect on the overall economics of our business.

Operator, let's take one more question please.

Your final today's final question comes from the line of Tom Eagan, Collins Stewart.

Thank you very much. With affiliate renewals for AMC and, I think at about 89% and 74% at December of 2012, it would seem especially important to further increase ratings through the next 12 months. So, I was wondering if you could just talk about in 2012 the potential to increase marketing or the original spending? Thanks.

Sure, it's a good question. I think that the importance of our channels to our distributors are -- I don't want to speak for all of them but we believe that they are a combination of ratings strength and brand strength and the engagement among the people who really like the channels. And, so, we pay a lot of attention of course to how we are doing from a ratings point of view which has a direct effect on ad revenue but also has a longer effect as you point out on affiliate traction, so to speak.

But, our view is that it's ratings and it's also sort of the importance of the channels to the constituency of people that really like it. So we look at it as a long-term objective and a long-term imperative, as opposed to one that occurs in any 12-month period which, is our channels need to be important, they need to be relevant. They need to have people who really like them and then we transfer value to affiliates and that helps us of course in those negotiations.

And I hope that broad answer is okay because it's exactly really what we do when we program the channels and how we look at the businesses and, any given six-month period while relevant is not as relevant as the overall importance of the channel among consumers and that translates to distributors over a somewhat longer time frame.

Meaning that you wouldn't have to like hurt margins in 2012 to create higher ratings in order to have higher fees afterwards?

That's right. I don't think it really operates on a month-by-month or a three-month basis or a six-month basis. I think if -- I think the importance of AMC is established on a multiyear basis. And, these expirations, as I mentioned, occur generally a couple every year. So it's part of the fabric of our business.

They are occurring sort of all the time, one or two all the time meaning in any given year and in the fabric of how we do business. And our history I think is, I hope, is indicative of a pretty successful track record of renewals and program strength and the perception of that by our clients, by our distributors.

Thank you.

Thank you, everyone, for joining us on today's call and for your interest in AMC Networks. This concludes our call.

Thank you for your participation in today's conference. You may now disconnect.