DISH Network Corp (DISH) 2003 Q4 法說會逐字稿

Good afternoon. My name is Lynn, and I will be your conference facilitator. At this time I would like to welcome everyone to the EchoStar 2003 year end earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. If you would like to ask a question during this time, simply press star then the 1 on your telephone keypad. If you would like to withdraw your question, press star, then the number 2 on your telephone keypad. Thank you. Mr. McDonnell, you may begin your conference.

Thank you operator. Thanks everyone for joining us. This is Michael McDonnell, I'm the Chief Financial Officer at EchoStar. I'm joined today by Charlie Ergen, our Chairman and CEO; David Moskowitz, our Senior Vice President and General Counsel; and Jason Kaiser, our Treasurer. I'm going to give you a recap of the financial performance for the quarter and the year, then I'll turn it over to Charlie for his comments before we open it up for some Q & A at the end. Before we get started we need to do our Safe Harbor Disclosures, so for that I'm going to turn it over to David.

Good morning everyone let me add my thanks to your for joining us. As you know we do invite media to participate in listen-only mode on the call so we ask the media not to identify participants and their firms in your reports. We also do not allow audiotaping of the conference call and we ask that you respect that. All statements we make during the call that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Those forward-looking statements involve known and unknown risks, uncertainties, and other factors that could cause our actual results to be materially different from historical results or from any future results expressed or implied by the forward-looking statements. Now, I'm not going to go through a list of all the factors that could cause our actual results to differ from historical results or forward-looking statements. I'd ask you to take a look at the front of our 10-K for a list of these factors. In addition we may face other risks described from time to time in other reports we file with the SEC. All cautionary statements that we make during this call should be understood as being applicable to any forward-looking statements we make wherever they appear.

You should carefully consider the risks described in our reports and should not place undue reliance on any forward-looking statements that we make. We assume no responsibility for updating our forward-looking statements. Please also note that during this call we will refer to the non-GAAP liquidity measure of free cash flow. Please refer to our 10-K for a reconciliation of free cash flow to net cash flows from operating activities. I'd also note for those of you who may be interested in EBITDA that our 10-K contains a reconciliation of EBITDA to net income. With that out of the way I'll turn it back over to Mike.

Thanks, David. Before discussing our financial performance for the quarter and the year, I would like to spend a moment updating you on the outcome of our recent discussions with the SEC. As we had previously disclosed the SEC recently informed us of their belief that we overreserved approximately $30 million for the replacement of smart cards. During prior years ending in 2002 we accrued the estimated cost of smart card replacements or receivers that are both sold and leased to subscribers. The SEC did not object to our accruals to replace smart cards and satellite receivers sold to and owned by subscribers, however the SEC believes that we should not have accrued a liability for the replacement of smart cards and satellite receivers which are leased to subscribers. As we have also previously disclosed on March 12, 2004, the SEC informed us that they would not object to our restating our 2002 financial statements to reverse the entire $30 million accrual in that year.

Our 2002 results as presented in our 2003 10-K filed earlier today have been adjusted to reverse this accrual. This adjustment results in a $30 million reduction of our previously reported 2002 subscriber related expenses thus reducing our previously reported 2002 pretax losses from approximately $809 million to approximately $779 million. This $30 million adjustment is comprised of $4 million originally accrued in 2000, $17 million originally accrued in 2001 and $9 million originally accrued in 2002 for smart card replacement. The reversal of this accrual does not have any impact on previously reported free cash flow for any periods. Because we currently include new generation smart cards in receivers that we sell or lease we no longer reserve for smart card replacements. Given this resolution a reaudit of 2001 results originally audited by Arthur Andersen will not be required. We are pleased to have this matter resolved and that we are able to file our 2003 10-K within the 15-day extension of the filing deadline that we requested. We are not aware of any other outstanding SEC issues concerning our accounting or financial reporting.

And now let's take a look at both the quarter and the full year. We'll start with the total company. All 2002 numbers that I will mention reflect the $30 million adjustment. Total revenue for the quarter was 1.5 billion an increase of 4% over last quarter and 14% higher than the same period a year ago. Total revenue for the year was 5.7 billion an increase of 19% over last year. Subscriber growth was the driver of these revenue increases. Net income for the quarter was 3 million a decrease of 32 million compared to last quarter, and 718 million higher than the same period a year ago. Basic EPS was 1 cent for the quarter compared to 7 cents last quarter and a negative 45 cents the same period a year ago. Net income for the year was 225 million, an improvement of 1.077 billion over last year. For the year, basic EPS was 46 cents compared to a loss of 86 cents last year.

It's important to note that net income for the fourth quarter of '03 includes the effects of 51 million in charges associated with bond redemptions which occurred during the quarter as well as 56 million cost reductions associated with the change in estimated royalty obligations. Net income for the year includes the effects of 97 million in charges associated with bond redemptions which occurred during the year, the 56 million cost reduction related to estimated royalty obligations that I mentioned previously, and a 34 million reduction in subscriber acquisition costs related to a litigation settlement which occurred during the second quarter. Net income for the fourth quarter of -- and all of 2002 includes among other things the effects of approximately 690 million of merger related costs which were incurred in connection with our previously planned merger with Hughes electronics. Free cash flow was a negative 156 million during the quarter this represents a 291 million decrease from last quarter and a 320 million improvement over the same period a year ago. Free cash flow for the year was 254 million. This represents a 623 million increase over last year.

It's important to note that free cash flow for the fourth quarter of 2003 was reduced by 41 million of premiums which were paid in connection with bond redemptions which occurred during the quarter. Free cash flow for the quarter was also reduced by significant changes in operating assets and liabilities including a 164 million reduction in payables from September 30, to December 31, 2003 as a result of the timing of certain vendor payments. Free cash flow for the year was reduced by 80 million of premiums which were paid in connection with bond redemptions which occurred during the year and a 50 million satellite deposit that was paid to SES Americom during the second quarter. Free cash flow for 2003 was positively impacted by the $34 million litigation settlement that I mentioned previously as well as a $30 million prepayment received during the third quarter for services to be provided to third parties. Free cash flow for the fourth quarter and all of 2002 includes the negative effect of a $600 million merger termination fee which was paid to Hughes electronics.

Now let's take a look at some of the DISH Network metrics. We added approximately 340,000 net new subscribers during the fourth quarter and 1,245,000 subscribers during the year. That puts us at approximately 9.425 million DISH Network subscribers as of December 31, 2003. This subscriber growth was due to the success of our marketing promotions as well as increased areas where we offer local content. We currently offer local stations in 110 markets and expect to be in over 140 markets by December 31, 2004. Churn was 1.53% for the quarter and 1.57% for the year. Average revenue per subscriber was approximately $50.65 per month during the quarter. This represents a decrease from last quarter of 14 cents, an improvement of 35 cents over the same period a year ago. For the year, ARPU was approximately $51.11 per month. This represents an increase from last year of $1.94.

Our cost of acquiring subscribers, or SAC during the quarter averaged $488 per gross addition, including capitalized leased equipment, net of recoveries that figure becomes $498, a decrease of $2 from last quarter. SAC for the quarter includes the effects of $43 million of the $56 million cost reduction associated with estimated royalty obligations. Absent this reduction, SAC for the quarter would have been $554 including capitalized leased equipment, net of recoveries. For the year, our SAC averaged $453 per gross addition, including capitalized leased equipment, net of recoveries that figure becomes 480, a decrease of $27 from last year. SAC for the year includes the effect of the $43 million cost reduction associated with estimated royalty obligations as well as the benefit of the $34 million reduction in subscriber acquisition costs related to the litigation settlement. Absent these reductions SAC for 2003 would have been 507 including capitalized leased equipment, net of recoveries.

Turning to the balance sheet at the end of the year we had cash and marketable securities of approximately $4.2 billion, which includes 197 million of restricted cash. The majority of this cash has been restricted for satellite insurance purposes. This balance was reduced by approximately 1.5 billion during the first quarter of 2004 as a result of debt retirement. During the fourth quarter we executed several financing transactions which will significantly reduce our borrowing costs over time. First we issued 2.5 billion of new senior notes. Next we repurchased 202 million of our 9 3/8 senior notes through open market repurchases and finally we acquired 190 million of our class-A common stock through open market purchases.

As of December 31, 2003 we had approximately 6.9 billion of debt, 1.4 billion of which we have since retired as of February 2nd of this year. Our debt includes 1.5 billion of convertible securities. On a straight debt per sub basis we ended the year at $736 per sub and on a net debt basis that drops to $315 per sub. Cash, cap ex during the quarter was 80 million with 25 million of that amount going for capitalized lease equipment and the remainder for satellites and general corporate purposes. For the year cap ex totaled 322 million with 113 million of that going for capitalized lease equipment and the remainder for satellites and general corporate purposes. With that out of the way I will turn it over to Charlie.

Okay. Thank you. I don't really have a lot of comments. I'll take your questions, other than, you know, as far as 2003 I think we, you know, certainly performed beyond what the kind of guidance that we had given and as a result of that, you know, we have made decision not to give guidance so some of you may take that the wrong way, but it's -- for us we obviously work on long-term management here, and giving guidance doesn't make us work any harder or any less one way or the other, but does it help us focus, not having to do that, I think the market is pretty predictable, I think you guys understand the industry pretty well, and I think we can focus on making good long-term decisions. Without having to worry about a particular quarter or a particular week.

You know, I think that we are strategically very well positioned as a company. At the end of 2003. And currently. I do think we continue to have some operational issues to work through, primarily inventory, which we have made major progress in, but certainly hampered some of our momentum in the second half of last year, but we are working through those issues and with minor exception we're in pretty good shape there now we still now have probably the biggest bottle-neck is installation issues today, which is a good problem to have. Because it means you've got some business out there. But all in all, I feel good about where we're positioned. Overall we had a pretty good year last year. We certainly have room for improvement, and we certainly shot ourselves a little bit in the foot with the inventory shortages when we changed our models out but we've got excellent product lineup now. We're a very unique product that are popular with customers and we're well positioned within the satellite industry and I think we're well positioned within the video industry. So with that, we'll take questions.

At this time I would like to remind everyone if you would like to ask a question, please press star then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q and A roster. Your first question comes from Marc Nabi with Merrill Lynch.

Thanks. Good morning to you guys. Two questions. One relates to if you look at, in your 10-K, Charlie, you had discussed that the dispute, and then the settlement of the Viacom dispute, was going to result in higher churn. Is that churn meaning it's going to be higher than the first quarter last year, are we talking about higher sequentially? It was kind of vague, that's the first question. Second question relates to capital expenditures. You said it's going to substantially go up. What percent of the customer base are you anticipating, in approximate level, to lease your equipment as opposed to do outright purchases, just from the level of equipment that you're putting out in the market today?

Okay. The first question, general answer on Viacom, I think that anytime you take CBS off the air, for 48 hours, you're going to have some negative impact short term, and I think that it came in two ways. One is we gave a $1 credit to everybody for basic and $1 for CBS, so you have a reduction in ARPU which translates down to cash flow and everything else. A little over $1 per sub. You also have customer confusion and dissatisfaction because they can't watch Survivor, or whatever it is. So that will have a short-term negative impact. I would say it's on the same lines that you have an impact when you raise prices. You have a short-term impact. From a negative perspective.

Having said that I think by negotiating a better deal than we otherwise would have had if we weren't willing to do those kind of things we have long term -- we believe it's the right long-term thing to do because it's obviously going to affect our margins in a positive way, vis-a-vis our competitors going forward because we had to get rid of a DBS premium that we're paying with Viacom. So we really don't, you know, I don't think us or DirecTV have a choice but to make sure that, you know, that we're not being stuck with historical premiums to smaller cable operators, or cable operators that aren't delivering as many subscribers as we are. So, again, it's a balance of short term versus long term, and, yes, it will have some short-term effect. I don't know whether it's sequential or not. We budget what our churn would be internally here for the first quarter and we would expect that because we did this all early March that we would have some customers who would disconnect when their bill comes up, so it's a little bit hard to get a handle on it, because sometimes you don't know if they've left you or not. We know it can't be -- we know it won't be a positive short term so we're just anticipating it will have some short-term impact, along the lines of a price increase, when you normally have that.

Second question was about cap ex, in terms of lease. We expect to lease more our current promotion. We have both a lease and a buy option, we think the lease makes a lot of sense. If you're going to give away something for free we might as well own the equipment. We think that reduce our SAC long term. It won't short term, but it will long term. That does have a negative effect on, Marc, on churn as well because you have guys -- today we have guys that are on one-year commitments. Those guys are rolling off, so you'll get hit with churn in the 13th month that you didn't get for the first year. At the same time if you're leasing new customers who can churn on average, an average amount every month you kind of get double whammied there. So you'll see that having more of an impact on churn than anything else. As far as how many people will leave, we don't know yet but I would anticipate that it would be considerably more than leased last year. I would think that our trend is more heavily weighted towards incremental leases than purchase.

Charlie, as a follow-up, with respect to SAC and, you know, talking about leasing, one thing we did notice in the fourth quarter was a substantial pickup in marketing advertising, $88 a subscriber. That's one of the highest we've ever seen EchoStar do. A lot of that, my guess had to do deal with the "stop feeding the cable pig" announcement you were putting out there. What's the normal seasonality or effects you see usually after that quarter? I mean, do you see a meaningful pickup if you expend a lot on marketing?

Well, I think that, again, it's -- you have to make those calls as you're doing it, but we think we had under marketed in the third quarter, and you saw, you know, we didn't have as many subs as we'd like to had. Even when the product shortage we could have done better. The pig campaign obviously was, we think pretty effective and got people's attention, and that was costly. So that built some momentum for you that hopefully carries into 2004. Those marketing dollars you spend in 2003 sometimes carry forward in 2004. With marketing it's kind of -- we under spent in the second quarter which hurt us in the third quarter, now we probably had to regain the momentum. For the total year I think we were probably in line, within budget of where we wanted to be, but you're right, we did spend more in the fourth quarter, and we did that consciously, and we think it was money well spent.

Great. Thanks very much. I'll let other people ask questions.

Your next question comes from William Kidd with Vintage Research.

Good morning, Charlie. I guess my question relates to DirecTV spending. It's up so substantially.

William, excuse me, we can't hear you. Can you speak up, please?

Sure. My question relates to spending at DirecTV. Their SAC spending seems to be up, I guess at least for 2004 to be up substantially, their retention expenses seems to be up substantially, and the differential historically between EchoStar and DirecTV SAC spending, at least by my calculation has been about $80, it seems like it's heading to 150 differential if you don't spend more. How much competitive pressure do you feel to spend for new subscribers, or sub size equipment down as a result of what DirecTV is talking about?

I think it's a good question, William. I think in general the market, the video market is under pressure to spend a bit more for SAC both on the cable and satellite side. Obviously as an industry for satellite industry we've gone to pretty much three receivers free, up from, you know, couple years ago it was one receiver free, now it's kind of started free installation, then free one receiver, now it's three receivers free. So that increases your SAC. The reverse of that is that we're getting customers with DVRs, and other revenue streams and much of that SAC is spent on customers you think are going to churn a little bit less. You have retention marketing where you've got customers that have been with you for four or five years and they've got old receivers that aren't capable of getting 500 channels on the guide, and you've got all those things to balance, and then you've got -- because you're a cable industry, you've got to give them a digital box, and the first-generation digital box is now obsolete, now the second generation is obsolete because you've got to do DVRs, and so everybody's go some of those problems. Having said all of that we are much better positioned probably than anybody else in the industry, and I think we'll always have the SAC advantage as a result of that because we make our own product, we have the -- our product -- we were a couple years behind DirecTV so our customer base is not quite as old, so some of our product is not quite as old in terms of upgrade. In the cable industry has got really kind of a tough situation, kind of schizophrenic between analog and digital and trying to figure out who they are.

They carry those set-top boxes on their balance sheet, you know, on a -- and it's hard to get a feel for what the value of those set-top boxes really are and if they're really worth as much as they are on their balance sheet. We really don't have that situation in our industry. So, you know, I think there's pressure on SAC. I think there's also some pressure on cap ex, because, you know, we all know satellite industry and cable industry's got to upgrade their plan equipment, we've got to look at broadband challenges and HDTV and more local to local, so everybody's got some challenges, but, on the other hand, satellite has a fair amount of momentum in the marketplace. It's the industry that's getting new subs and that's where people are tending to go when they make a change. So I think we are getting more bang for our buck as an industry, and I think EchoStar is getting more bang for our buck where we spend our money. It's one of the strategic reasons behind the lease. It gives us some extra flexibility on SAC down the road. We see all these things happen that you're saying, and we're saying how do you adjust to that. One of the things you want to do is make sure that you can -- when you do have churn you get the box back and your next customer costs you less in SAC and that number doesn't keep piling on.

I --.

That's why we manage the business to cash flow, because all those things affect cash flow. Whether we lease it or whether we -- or sell it, it still affects cash flow the same, and that's why we manage that way.

The net-net, is DirecTV doing a bit more in terms of their aggressiveness than you anticipated? I guess is there an impetus for them to kind of drive their growth more than you had probably thought?

You know, I'm not in their shoes. I don't know. I don't know if their growth was driven by just the fear that they're under some churn pressure, and they've got to do some things to keep their customers you maybe otherwise wouldn't want to do or whether they, you know, feel like they've got to be more aggressive to get a better share of the market or other strategic reasons. I'm just not in their shoes as to, you know, why and why they do things, but, you know, as long as they can invest in a customer and get an ARPU and a low enough churn, it looks to me like they're making a pretty good return on their customers, and even at the levels they are today, and as long as we're making a good return, probably makes sense for them to do what they're doing. They're pretty smart people. They're not doing something stupid, doesn't look like.

My last question is I guess related to the subscriber expense, programming and customer care, those two as a percent of DISH Network revenue have ticked up to around 51, 52%. I guess a little bit last quarter but prior to that we had been in the 49% range. When we look at 2004 with Viacom and all the other things you have in front of you is this an expense level at around 51% or so that you expect to kind of hold firm or should we -- can we expect that metric at least to have some ability to go back down to where it was a few quarters ago?

That's a good question. You know, the big thing I'll point out is the 30 million reversal that we did is what -- if you look at 2003 versus 2004, we actually, the $30 million extra income is actually -- was added now to 2003.

'02

I mean, 2002 versus 2003. So that number actually went down from 50.6% to about 50.1% for the year. The number actually went down, and that $30 million kind of threw things off. Having said that, the other thing that happens is we get price increases during the year but we only raise our prices once a year if we raise prices, so that margin tends to start out --.

Better.

-- better and go down. Everybody knows about ESPN's 20% rate increase every year. That comes in August, every year. So as soon as you get to August you automatically get a pretty big hit to your programming line. One of the reasons we have to fight the programming battles, and they may continue, for us, is that, you know, we pay a high -- we pay a higher percentage of our ARPU than the cable industry or DirecTV, so, you know, we're the ones that aren't, you know, -- we signed a lot of deals when we had no subscribers, and, you know, we're the fastest growing now, and we need to be treated fairly by the programmers. Those deals come up, we have to get a fair deal or we can be without some channels, and, that's just the way it's going to be. As long as we get a fair deal, then we're happy, but if we are able to get fair deals as our contracts come up, we've got a fair number that come up over the next two or three years, we hope that within two or three years we are in a fair and level playing field and, we would hope those margins would be pretty firm in the range they've been in historically.

Thank you so much, Charlie.

Your next question comes from Rob Kamowitz with Bull Tab Capital Management.

Hi guys. Charlie in the 10-K that came out today, you talked about increasing spending for maintenance of existing subscribers, which is a change for you, historically. Can you talk about what you -- what your plan to get in terms of a return on that investment and what your churn goals going forward might look like?

Well, our churn goal is to have as little churn as we possibly can.

Thanks for the detail.

And -- but in terms of, you know, we are certainly targeting certain customers, not all customers are created equal so we do some segmentation of our customers. We wanted to hold off on a lot of retention marketing because we didn't have DVRs or HDTV and we didn't want to upgrade a customer only to upgrade them a year later. That's the first point. Second point is when we upgrade a customer at HDTV or DVR we get an extra revenue stream that we think justifies the incremental retention marketing so those things make some more sense. So in 2004 going forward we will be more aggressive on retention marketing than we have been historically although probably not to the level of --.

Hello?

Hello?

I lost you for a second.

Did you hear that answer?

I lost the last part.

I just said that, you know, we think that we will be more aggressive on that front than we have been historically, probably less than others, but primarily because we get extra revenue return and the economics make sense to do it.

Can you quantify your goals there or what you have in mind?

No.

Okay.

I mean, other than to, you know, to, I mean, again, I'll say it one more time, you probably get tired of me saying this every quarter but we manage to cash, free cash flow, so, you know, there may be a customer that's paying us $29 a month that calls us six times a month and costs us a lot of money and complains all the time and has their DISH hooked up on a fence post, and that customer may call up, and we may give them DirecTV's phone number, and there may be another customer that's giving us $100 a month, great customer and wants an upgrade to a DVR, we may give that guy a special deal and upgrade to a DVR. That means we still have churn, because we lost that $29 guy, but free cash flow is maximized when we do that. So there's not -- I'm not trying to put you off with your answer, there's no way to make a relevant answer to it other than we manage to free cash flow, and if you invest in EchoStar you're going to have to invest in the management team that they know how to manage to free cash flow. If you want to buy a company that's got a certain churn metric, they are going to tell you go out and do a certain churn metric, we're probably not the guys because we don't know that that necessarily makes sense for us

Just trying to quantify my investment. Then going to the next part in terms of--

That's easy. That's easy, Rob. Take the free cash flow for the next 20 years, discount it back, and you get the value of our company. They haven't changed that law of economics since the Romans.

In terms of the quality of subs that you are adding now. Are you seeing an uptick in terms of the subs that you're churning off, or allowing to churn off versus the new subs that you're adding? Is there a quantitative uptick there?

We certainly striving to do that, Rob. I don't know that we can say we're far enough along in the process to do it, but, I mean, in general, we think if we get an HDTV customer or a DVR customer that they're probably a better customer than the guy who is just a straight basic subscriber that might have churned off. So time will tell, right? And, you know, we certainly have customers over the last five years that we probably shouldn't have sold to, you know, maybe weren't credit worthy or something, you know, depending on the promotion that we had going on, but we think that where our promotions are today and with the credit scoring and Social Security number and all the things that we do, we think, you know, that we're getting a pretty good class of customer that's economic for us.

Okay. Thank you.

Your next question comes from Tom Eagan with Oppenheimer.

Thank you. Charlie, if you could give us some idea about where you are in rolling out the SBC partnership service, and has anything changed in terms of your original expectations about the consumer interest or about how SBC is approaching this? And then I have a follow-up. Thanks.

I think that SBC's probably the guys to really give you any details on that, if they want to but we're pleased with their rollout, and, you know, it's obviously just started, so it's not a material impact today, but we're pleased with what they're doing and, you know, we have still work to do on our side to make sure we're the best -- doing all the things that they need us to do and they have some work on their side to do but I think that that -- again, because they made an investment in EchoStar, I think that that relationship is more solid than reseller agreements that we've done in the past or other people have done, and as a result, you know, we're -- we want to be a great partner for them, and we're committed to making sure they're successful in this, and, you know, time will tell. I would think that, you know, you probably won't get a real feel for that until you're in, you know, when you see how they did in the first, nine months of this, but, you know, I would say that again my expectation is that this will be a more material relationship than maybe some of the Teleco partnerships have been in the past.

Okay. And then secondly, regarding your rollout of local channels, could you give us a sense of how much of your revenue you estimate may come from local channels and what the penetration rate seems to be, either at the end of the year, among all subscribers, or those that you added in the fourth quarter? Thanks.

We don't give out that information, for competitive reasons, in terms of detail, but, you know, obviously we're in 110 markets today. We've announced we'll try to get to 140 by the end of the year. Obviously the next 30 markets aren't nearly the impact of the first 30 markets, you know, as you start getting down -- there's not as many subscribers to be had in those markets, but, you know, we charge $5.99. Local programming are the most important programs, and I would say they're essential programs, you know, to our customers, so I just think we're getting more competitive in another 30 markets from where we are today, that's going to help us. It will help us with churn, it will help us with ARPU, it will help us get new subscribers. You know, our industry is -- our industry, I would think that maybe by the vend this year, as an industry, we will offer local channels in more total homes than the cable industry does. So I think that's come a long way from the original vision of local to local, you know, we were fighting for in Congress back in 1997, you know, we've come a long way since then. Next fight is to get local HDTV, or get national HDTV in the interim. You know, that's kind of the next fight, and we'll see how we do this year on that.

As you roll out in each of these new markets, are you seeing the interest level in each new market as the -- as large as it was before, say, for example, if you go into Louisville is the interest in Louisville as strong as it was in a larger market, like Chicago?

A better example is if we go into Fargo, North Dakota, is the interest level as high as Louisville, because that's the place we're going now. Louisville is actually a top 50 market. In some markets yes, in some markets no. A lot depends on whether guys can get off-air antennas, depends on the local cable operator, what they charge for their basic tier. But in general, the vast majority of the people want local, and we'll take look when you have it in your territory and your business is generally better -- I shouldn't say generally, I think it's always better when you have local.

Great. Thank you.

Your next question comes from Michael Pace with JP Morgan.

Hi, thank you. I apologize if I missed it before but can you give some chore on what your expected increases over over the next couple months, then a couple of capital structure questions. Charlie, you have convertible notes that are callable in May. Smuf DBS notes that are callable in October. Any reason to think you would not call those securities when you have the ability to?

On the first question, in terms of rate increases, you know, we just did a price increase in February, then we gave basically the price back again to the customer in March, because of Viacom, so I wouldn't anticipate any major price increase the rest of this year. The second question was --.

what was the callable --.

We don't know. That's up for our board to decide, and they haven't made final decisions on that. I would say that strategically we want to improve our capital structure. I think we've come a long way in dag that by calling, you know, I like equity, so I don't really want to give it up, and, you know, I don't like paying 9 or 10% for interest if we can pay 5% or 6%, or 4%. So I think we still have a little bit of work to do to get our capital structure in line with, you know, where we are financially, and our board will make those decisions throughout the year as to how they might want to do that.

And along those same lines, you purchased some stock and some bonds in the open market in the fourth quarter. Do you expect to continue to do that during the course of this year? And then a bigger picture, historically you've kept quite a bit of cash on the balance sheet. Do you see the need to do that going forward, I guess now that you guys are generating some meaningful free cash flow?

In general I think there's probably less pressure on to us keep cash, but we do keep some cash because we have always looked at different opportunities, so we try to keep, you know, we always have four or five different opportunities that we think may make sense for us any given time, and we did do a transaction, for example, with Gemstar was only $238 million, but that was something that we needed cash for, and, you know, so we do need some working capital to make sure we can take advantage, and we think there's deals that can be bigger than that daily. We're pretty cautious investors, so most of the deals we look at don't make sense for us but you have to be prepared to do that. And we probably cost ourselves some arbitrage money because we keep a little extra cash, and there's definitely less pressure because we're free cash flow positive. In terms of whether we continue to bay back debt -- or stock, again, you know, based on our capital structure we think that we can still continue to improve that. How we would do that between stock or debt, or converts, you know, we would just make those decisions based on all the metrics and interest rates and everything -- business opportunities at the time, and we look at that -- I mean, we sometimes look at that on a daily basis and make decisions, change decisions and so forth, but I think you can see the trend is that we have continued to solidify our balance sheet based on our improved financial structure, and that we generally believe in our stock and don't want to have, you know, want to make sure from an equity perspective that we take advantage of the market gyrations.

Great. Thank you.

Your next question comes from Lee Cooperman with Omega Advisors.

Yes, thank you very much. I guess if you could help us out to open up your thought processes, I'd appreciate it.

You're assuming I have a thought process.

I think you got a pretty damn good thought process, my guess. I think you play your cards close to the vest. I think in this open mic and this open forum, perhaps could you share with us the thought process that you and the board have gone through in this repurchase authorization. One is a very simple question. What do we pay for the $190 million worth of stock we bought back in the quarter? Secondly, what valuation metrics have you folks gone through, determine to spend this billion dollars, or authorize this billion dollars, and is it likely that if the stock stayed in line with what you paid for it in the quarter just ended that you would continue to buy, and third I assume it's occurred to you and you thought it through that with 50% of the stock owned by yourself that you wouldn't be doing yourself any great favor if you bought back stock that was over valued. So I just want to understand how you approach the valuation going back to the Roman times, as you alluded to before.

Well, that's what we do. We go back to Roman times, go back to economics 101 at the University of Tennessee, right, where some old guy got up there and said here's the value of a company, discounted cash flow, how much cash do you take in, how much do you spend, if you get more cash in than you spend you probably have value, which would eliminate any value for cable companies, I might add, which I'm a little shocked at their valuations, so we're not buying any cable stocks. For that thought process. And then our thought process is look at at that for our company, based on where we think we can go based on all the factors. Then we factor in kind of what you guys are thinking, you know, like we say, you know, those guys are probably, you know, if it rains -- if it snows in New York tomorrow, they'll probably figure our business is down in New York so our stock will go down but it probably doesn't have a big impact on us long term, right? Because as soon as the sun comes back out people are going to buy DISH anyway, and they're probably inside watching a lot of TV during the snowstorm, or wanting to watch TV. So we take all those things into consideration and try to buy our stock when we think it's under value.

What did you pay for the $190 million? What's the average share price you paid?

We're not disclosing that.

I mean it's a matter of -- it's a requirement, basically, to disclose it in your documents, how many shares you bought and the price you paid.

I'm pretty sure, I'll look at my SEC attorney. I think we disclosed everything we needed to legally.

Not to get into a debate but basically the sources of uses statement you show you what basically spent in the way of uses, then you disclose somewhere in the document how many shares you bought back. I think that's a required disclosure.

Then you can figure it out. My point is, I mean, you might figure out some range that you can be comfortable with

Well, why don't you just make life easier and just say what the average price you pay I don't know of any company publicly traded that has refused to give that information.

We've provided all the information that we needed to legally. You can go do some homework if you want to. The key is that we buy our stock back based on what we think it's a good value based on the determination we make, and we also have to, by the way we have to compare that to other initiatives. For example we thought the Gemstar agreement for $238 million was also a good investment for us. We also thought buying back a billion four of debt was a good investment for us and we just evaluate those things and try to make relatively conservative judgments and sometimes we're right, sometimes we're wrong.

I'm just asking you a simple question. Rather than leaf through all the documents, I've never heard of this. I have a been doing this for 38 years.

Now you've heard of it. May we take the next question?

We're not going to provide information on this call that we haven't provided in the 10-K, and so it's not a question we could address to you individually.

Oh, it's not in the 10-K?

The data you want to the extent it's required is provided to you in the 10-K and, you know, obviously there are logical reasons why we want to be able to be flexible in our approach to these things moving forward, and we think that's kind of the line we're sticking with.

Maybe nobody will like this answer today and our stock will go down. Are we any less valuable because we didn't answer your question the way people have for the last 38 years? I don't think so.

It has nothing to do with --.

But maybe somebody will think that.

I don't want to give you a lecture. It has nothing to do with value. Which is inside of your thought process, because essentially you own half the company, you should share with people what your views of valuation are. That's my view, and I think you're wrong.

I could be. I think I did share my thought process. We like to buy our stock when it's undervalued. But we think it's undervalued, vis-a-vis the other opportunities we have. There may be times when we think it's undervalued that we don't buy it because of some other opportunity that we think is a better return for us. But in general our thought process is to make sound investments, we have done that on some occasion, we have failed miserably on that on some occasions, you know, as well.

Your next question comes from Douglas Shapiro with Banc of America.

Yeah, thanks. I wanted to try to get at the SAC question a little bit more directly if I could. The question is do you think the 545 this quarter is sustainable or, you know, with the cable pig campaign maybe dying down a little bit here do you think that that comes down sequentially, or generally in '04, and then maybe as part of that, if you can elaborate a little bit on the royalty payments reversal and whether or not that indicates that there's a little bit actually of downward pressure on SAC going forward.

Okay. I don't think the royalty reversal will have a material impact on SAC because it was obviously that's intellectual property we now feel confident we don't have a liability on. What that over the last eight or nine years, that's not a material impact. And as far as SAC, I think your question really is you kind of asked in a round-about way, you really want to know what SAC is going to do this year and you're looking for some guidance on that, and the guidance I can give you is that we, you know, we'll try to make a return on investment and obviously we're going to keep SAC as low as we can but there are also competitive factors out there that will affect us. The ARPU we get from the customer and the churn in the customer will affect us. And that's why, again, I know you guys want to build your models and stuff but for us my core concern is not your model. My core certain is that we run a company and the management team and our company focus on singular focus that everything drives it so we can manage the company that's gotten fairly large, and that's free cash flow. When we do that and we talk about SAC, our guys will have justify when they spend SAC, and they have to justify why they're doing it, and, you know, we spend different SAC for different customers. It may be -- because we have high fixed costs we have to react to what cable and DirecTV do as well.

I think the only conclusion you can kind of draw out there is that in general, in general, SAC has increased for DBS players each year, but so has ARPU, and churn seems to be fairly stable. So -- so I think that we try to get the same kind of return on our customers today as we did last year and the year before and the year before that, or even better if we can. The only thing that would be a little different is that because of our lease model which is unique in the DBS business we think we have set ourselves up for at least some leeway to keep a lid on SAC. That maybe other people don't have.

Let me ask a clarification, then, no guidance. Mike, did you say the churn was 1.35% in the quarter? Is that right?

For the fourth quarter of 2003?

Yeah.

No, churn for the fourth quarter of 2003 was 1.53.

Okay. That makes a lot more sense. And then the last thing also clarification, wonder if you could go into a little more detail on what's in that trade accounts payable line. Typically it seems like you're running positive working capital somewhere in the neighborhood of $200 million a year. What was it this year that changed so dramatically this quarter?

That's a good question. A lot of that is programming payments, but it's -- the inventory obviously we're building from inventory, and we basically took advantage of, you know, year-end discounts that affected us negatively and working capital perspective beyond what historically would happen. I think a logic -- logically you probably sea some reversal of that than the first quarter, right. In other words, we're historically -- we typically wouldn't be negative, or very negative in a working capital quarter, without extenuating circumstances, on a payable situation, we were because we think it made business sense for to us do it, saved us some money, and that probably will be back to more of an equilibrium next year.

Thank you.

Although it could -- fourth quarter, we get somebody offers some discounts, we got cash, we're happy to take advantage of that if that's a better return than we get doing something else.

Your next question comes from Ben Swinburn with Morgan Stanley.

Thanks. Good afternoon. Charlie, wanted just to ask two questions. One is on the SES agreement, I think there's now three satellites that you've agreed to lease the entire capacity on. Could you just talk about how much of that is KU related to local and the local HD versus trying, you know, another try at the data business, if you've changed your thought process on when broadband makes sense for you, and then -- and on the second question on the cash balance again, as you evaluate potential acquisitions out there are you still not really interested in anything on the programming side or have you changed how you view that issue given what's going on in the industry? Thank you.

Yeah. On SES we obviously entered into -- we obviously have a fairly strong strategic relationship with them now, where they have spectrum and a lot of skill sets in terms of building and launching satellites. And so we have entered in some agreements for satellites that really cover spectrum in both DBS, KA, and KU, you know, that we think we're going to get a return on, and we think position us strategically for things like broadband or local to local or HD. And so we think that you know, those are strategic things that we've done. They're putting ourself in position for things we think might happen in the marketplace, out there, there's no guarantee they will, so we're taking some risk to get -- to get something we think that we need strategically and will be a large return and we're really pleased to work with them because they have a lot of talents that are helping us. What's the other?

Programming.

In terms of programming we haven't done -- we really -- programming assets, per se, are pretty expensive, and, you know, we'd never say never but it's not a core focus for us. We'd really like to be an independent distributor, but we'd never say never. We did invest in a company with Comcast yesterday which is called TechTV G-4, and we are a small equity partner in that with Comcast. It made some sense for to us do that, and, you know, was again, a solid investment for us, we think. There may be other opportunities that are like that where we're minority partners or something where we take a look at it. If there was a big content play we could do that made sense, we'd certainly look at it, but, you know, that hasn't been our core focus, our core focus is every day we come in we're thinking about how we can be a better distribution company, not a content company.

Okay.

A lot will depend on what News Corp does. You know a lot will depend on how News Corp, which is a content company and a distribution company, how successful they are. Obviously to the extent that they start being wildly successful beyond most content companies or distribution companies it will put a lot of pressure on everybody else to do something.

Great. Thanks a lot.

Your next question comes from Craig Moffat with Sanford Bernstein.

Good afternoon, it's Amelia Wan calling in for Craig Moffat. I was wondering if you could comment on your ARPU on your marginal subscriber and just compare maybe the marginal ARPU, the average ARPU, just trying to get at what your marginal return on your investment from SAC is.

Well, we're -- every customer that we're getting we think we're going to make a return on today, and, you know, the marginal ARPU for an HDTV/DVR guy is higher typically than the guy who is a basic subscriber for a Spanish tier only. We would typically be prepared to spend more SAC on the HDTV customer than the Spanish-only customer, so we had -- kind of adjust that, we kind of focus on that and segment that, when it all comes together you see a total number out there. But we're not knowingly going out and getting subscribers today that we don't think we're going to make a return on. Again, the return that we think we're making today is historically within where it's been in the past, we think.

Right. Thank you.

Still on that marginal subscriber, so --.

All right. Thank you.

Your next question comes from Vijay Jayant with Lehman Brothers.

Thank you on SBC given the arrangement you have with them, can you talk about, since we have no real guidance here, how you're going to account for those subscribers, their impact on ARPU, subscriber acquisition cost?

Yeah. You know, I guess we'll have to -- we don't know yet, you know, we'll have to face that maybe -- it wasn't an issue for 2003, so we get into 2004, we'll have to look at how we do that. I think our general gist, would be, we would try to -- we think that the subscribers we report today, you know, all have about the same value, you know, rolled up, and if -- given the investment we make and we'll have to look at the SBC customer and see whether we think that's more or less valuable, and, of course, what percentage of our business is and how we report that but we haven't made final decisions on that.

Charlie, I understand that you have RFPs out there for some hardware for your broadband initiative. It's something that none of us really understand completely. Can you talk about timing, what you think of the economics, and given your bandwidth that you're going to have over the next couple of years how many subscribers could you eventually get?

Well, the economics are still tough. We're going to have to have some good strong partners to help us. We think that we see the trends moving towards, you know, that being an economical business for certain customers, primarily rural. And, you know, we're well positioned to add capacity at the time that we think we have -- this is really a 2005 product not a 2004 product for sure. So the earliest you would see it from the us would be 2005, and, you know, we're testing a lot of stuff and trying to make -- do it one time again and do it this time right, you know, last time we realized we couldn't make -- we didn't scale the way we did it last time. We didn't have specialized satellites, and we realize we're going to have to make an investment in specialized satellites to scale, so we're doing that, and we're not, you know, building a $2 billion spaceway program, but we are going to invest several hundred million dollars to see whether we can make a go of that. We think we can. Our gut instincts are that we can, but we haven't picked the final system yet.

Thank you.

Or the final partners. SES is a partner already, right, in general, kind of indirectly.

Your next question comes from Bob Peck with Bear Stearns.

Hey, Charlie, just wanted to clarify a couple of points here. First of all could you give us a little more color around the product shortages that lasted into the first quarter was it SuperDISH? Two-tuner PVRs, HD equipment? Could you also talk about how it relates to SBC? I've sort of heard indications either way, that SBC is getting the inventory, and that's causing shortages at DISH, and I've heard the exact opposit, could you just give a little more color there?

Yeah. It really was a factor, we've changed all of our models. It was supposed to be in an August time frame where we had new models coming out and they all had more advance modulation schemes and everything like that. We basically shot ourselves in the foot on every one of those models in terms of our delivery dates on those. Some of it was self-inflicted from us internally with software and things, some of it was the vendors or the chips. One factory burned down, or they lost a formula in the chip and didn't deliver the chips on time so we had a lot of different things that happened at one time. In general we had, in the third quarter had product shortages pretty much across the board in terms of product.

In the fourth quarter, it was more limited to the -- we had -- still had some product shortages but it was more limited to the DVR and HDTV, you know, type product, and that -- even that has continued somewhat, you know, this year but we think, you know, we're digging our way out of that. The SBC hasn't caused a shortage end of our retailers because they are just now getting product, so they weren't getting product in the third and fourth quarter so it really didn't have any effect on retailers. They had long term POs with us, that we are meeting their PO requirement, so I think we're treating everybody fairly. Could we have gotten more customers last year if we had had product? Yeah. I think we left some customers on the table. It's a frustrating thing to have happen, but we did leave some customers on the table.

The pig campaign was more successful than maybe we had planned, and, you know, we got a lot of publicity about it, external to the campaign and the cable guys reacted to it, which gave us publicity about it, and it seemed to strike an emotional cord with consumers, and so we just got -- it created demand that we, quite frankly, weren't ready for. So, you know, it's always a guessing game as to what you're going to do. We said we'd do a million subs last year. We did a million and a quarter, you know, we're almost 25% higher where we -- kind of guidance we'd given, so, we could have done better than that. So it's a nice problem to have. I think the satellite industry's got good demand.

Could you give us a little more color, then, around what percent of your gross adds in the quarter were coming from the new local markets you rolled out? I believe you rolled out 30 or so new markets, and what percent of them also were getting PVRs, two-tuner PVRs?

Again, we don't give out that specifically. I don't think we rolled out a lot of markets in the fourth quarter. I can't remember. To the extent we did, a lot of them were on SuperDISH, which we still continue to have shortages on, so probably, you know, we probably have not taken full advantage of our local rollouts at this point.

Last question, and I'll let somebody else go. In the K it talks a lot about new frequencies. K band, extended KU, several different new satellites, vision star. Could you talk a little bit about HD local into local must carry and whether DISH could actually handle that in a couple of years? Second of all I notice that you state in the Q -- or the K that you actually have rights to one of the tweener slots as well. Is that true?

No, we don't have rights to a tweener. We don't have rights to a tweener satellite. I think the property SES has rights to, potentially has rights, if it's approved by the FCC and can be coordinated. We have coordinated with them to some extent, but that hasn't been approved by the FCC. Should it be approved we would be able to utilize that extra capacity. We think. In terms of, jeez -- oh, HD, local-local, no, I don't think we could economically do any kind of HD must-carry local to local. I don't think that would -- I mean, it takes five times the bandwidth of an analog channel, and not all local markets are even economical for analog. So, no, I don't think under must-carry. There is not a must-carry HD law yet, so it's unclear whether we would -- that would be mandated, but I think you bring up a good point. I mean, I think that for the satellite industry, the satellite home viewer act authorization, or reauthorization this year, which has to happen this year, will have an impact on the DBS industry, and we don't know what shape that legislation is likely to pass in.

Could you talk about maybe what progress David's had down in D.C. in talking about the HD feeds into local markets?

Well, you know, I think there's -- other than from broadcasters, the consumer loves that idea. They'd love to be able to get their Masters golf tournament in HDTV because when their local broadcaster isn't providing it for them. I think there's a lot of consumer interest in that. A lot of people come out in favor of kind of our idea. Whether that, in an election year, would muster enough votes to pass, I think people think that's going to be a tough road to climb, but we think that the idea has merit, it took us three years to get local to local passed. We thought that idea had merit. We think our HD distant signal has merit, and a lot of other people do, too. Broadcasters tend to disagree with that, and they're pretty powerful.

Thanks, Charlie.

Your next question comes from Doug Mitchelson with Deutsche Bank.

Hi, guys. Part of maximum free cash flow in terms of what your competitors do. Anything so far, from DirecTV that surprises you or changes your view, that you could make changes for full subscriber returns now that they're fully under News Corp stewardship?

I think that based on what I've heard them say they're basically adopting the EchoStar game plan. We kind of adopted their plan from Sky in the U.K., so I guess some of the ideas originated with them anyway, but I think they've looked at improving their customer service and going more to their own call centers and more to their own engineering. A lot of things we're already doing. I think they've got more of an upgrade situation with multiple satellite locations and software. I think we were farther along in the long term process than they were because News Corp didn't own them until recently, and I think that News Corps thought process would be pretty similar to ours in terms of how they're going to approach the market. With them being a little bit different because they're in the content business. So they'll do some things diverse in that area, you know, that hopefully will open up opportunities for us with our partners who have to compete against News Corp.

So I just -- again, my feeling is that satellite is going to do better vis-a-vis cable than people expect. And part of that is the addition of News Corp to the industry. Who comes in with a lot of talent and a lot of experience and a lot of money, and a willingness to make a long-term decision for the good of what they want to do, and I think when you do that the satellite industry is going to benefit from that, and we hope we get our fair share. And so I think you're going to see a -- contrary to some popular beliefs I think you're going to see a more robust satellite industry as a result, you know, the next three or four years.

Okay. Following up on that, one more big picture question here, I was hoping you could discuss the rural versus urban marketing to focus, it seems to me that the gap between the products you're delivering now and rural cable operators is widening pretty rapidly with HD and PVRs and soon on high-speed data. What's the balance now in terms of your focus between urban and rural, do you think you should be spending more on the rural marking?

Well, I think rural is a tough one to spend a lot of money on. It tends to kind of go at its own steady pace. The thing that we did do is we spent money on Gemstar which had a couple hundred thousand rural customers. With big dishes that we hope to convert a majority of those customers over the next couple of years, we hope to convert those, and we did make an investment there, along with the intellectual property and other things that we're doing with them. But you really can't -- the rural customers are pretty, you know, I mean, they're still 400,000 people with big dishes that they've had for 15 years, or longer, that they don't -- they have a pretty good resistance to change, so they're pretty steady in terms of how they -- the markets not saturated, but they're pretty steady on how they come. The majority of our business is coming from urban areas and the majority -- we're getting most of our customers from cable. I mean, the bigger -- you're right, we're, against the small cable operators, our advantage is widening, probably, and it's -- it tends to be, you know, in some cases widening against other cable companies, some cases holding its own, some cases maybe a little negative like on broadband, right? And so that all kind of balances out to where, you know, we're still getting a pretty fair share of cable customers, you know, where a cable company is not providing good service or where their rates are too high.

So last question for you, then. So for the satellites that are going up the next few years that you detailed in your 10-K, I know you kind of just talked about you couldn't do HD must-carry but can you give us a sense if there is no HD must carry, at least in the next few years, ballpark, how many local markets do you think you could do high def into? Could you do the top 10? top 20? top 30?

The main focus actually on those satellites is not HD, HD local -- it's actually analog local. So we're really trying to get to all the markets in analog local first. We think that's a better return for us. Again I think a lot will depend on, you know, how legislation turns out and everything else.

Fair enough. Thanks a lot.

There may be some economic markets in HD local to local going forward. I don't think there is anyone today that is, but there may be some going forward.

Thanks a lot.

Operator I think we'll take one more call.

Your final question comes from Tom Watts with SG Cowen.

Hi, Charlie. How are you?

Good.

Dean Olmsted had talked about one, that he wanted your joint broadband venture to be the number one in the country. Does SES have any role in that other than providing space segment?

They are providing some technology as well, potentially, and they also have looked at all the technology. They have kind of worked hand in hand with our team to look at the different technologies that are out there because they could use -- whatever we pick in the United States they probably are in a position to use around the rest of the world for their own purposes since they have an international distribution business. And so we've worked with them. Doesn't mean we'd pick the same thing, doesn't mean that we would necessarily agree, but it is a -- we have a strong working relationship with SES and our teams have helped each other and, you know, they can provide things to us that we can't, and so where we can do some partnership things, which we've done with SBC, without having to go out and build broadband lines, and where have been able to do some suff with SES where we don't have to build the satellite. We're doing those kinds of things because that frees up our capital to go out and do the things that we do best, which is go out and get a subscriber and put a DISH in his house.

He also talked about potentially regions beyond that, and even outside the U.S. Is that anything that's on your radar screen?

Well, it's on their radar screen because I think whatever things we do technically they would have the distribution, you know, they have distribution outside the United States. It's not particularly on our radar screen. We're really focused on -- not that things couldn't change. There's a business opportunity, we'd look at it, but our focus really is on, you know, today is really getting to 10 million subscribers, so kind of the next thing we look at is how do we as a company get to 10 million subscribers, and at the end of the year we were about 600,000 subscribers behind that next goal, and how do we maximize our free cash flow while we're doing that. Pretty simple business.

Also just on product surges, you talked about surges in Q4. Some of our channel checks even February showed some shortages of HD product in various places. Also in certainly differences -- some of the product wasn't available even from your 800 numbers, and we've heard stories of shortages some places in SBC. What products do there continue to be shortages of, when do you see those being resolved, and are you going to be putting different products through different channels?

The biggest shortage, we still have some shortages, again, it's not affecting us as much as did it obviously in the third and fourth quarters but -- and that's primarily on the HD product, you know, we've been a little bit surprised by strength of that and also that's where we've had the biggest problems with chip vendors. And the other shortage is really is in SuperDISH where we've added those 30 local markets in the last three months or whatever and we just, you know, that DISH just doesn't scale itself to ramping up very quickly. So we're having -- we're not able to take advantage of all the local markets that we're in. I mean, they're nice problems to have, right?

Sure.

But are we leaving business on the table? We have in the second half of last year. We're leaving less on the table this year, but, you know, there are times when people can't get product they want.

Just a final question. On the outcome from any Viacom-related churn, is it your sense that all of that has subsided at this point? Was that a one-time spike, or has there been a longer tail on that?

Well, I don't think we talked -- I don't think we -- you know, you never really know, but my sense is that, yeah, it's about a two-day -- it's a two-day phenomenon and it goes on for a week or two as people have canceled appointments or got frustrated or whatever. It's about like -- it's very similar to a price increase. My experience has been that most of the damage you do when you do a price increase is over within 30 days, and I would feel pretty comfortable that the Viacom negative is probably kind of a 30-day phenomena, then the positive is going forward for five years based on the contract you got that you wouldn't otherwise have gotten, right. So you have to balance that out in terms of, you know, what you do, and, you know, we'll have other -- I'm sure that it won't be the last time that we have battles.

Okay. Thanks very much.

Hey, operator, I think we'd like to conclude the call at this time. We will be back soon.

Sooner than that. When's our annual meeting?

May 6th.

Yeah. So we'll be back May 5th?

May 5th or 6th. And we'd like to thank everybody for joining us this afternoon.

This concludes today's conference call. You may now disconnect. Thank you.