iMedia Brands Inc (IMBI) 2006 Q3 法說會逐字稿

Good morning, and welcome to today's ValueVision Media's third quarter earnings release conference call. [OPERATOR INSTRUCTIONS] I would now like to turn the call over to Ms. Amy Kahlow, Director of Communications. You may begin.

Thank you. Welcome and good morning. Today's conference call may contain certain forward-looking statements within the meaning of of the Private Securities Litigation Reform Act of 1995. Listeners are cautioned that such forward-looking statements may involve risks and uncertainties that could significantly affect actual results from those expressed in any such forward-looking statements. More detailed information about these risks and uncertainties is contained in ValueVision Media's filings with the SEC. I would now like to turn the call over to Mr. William Lansing, President and CEO.

Good morning. I'm happy to share with you our results for the third quarter and then take your questions. This was a record quarter for us up 16% in revenue to $184.9 million. The consumer is relatively strong and our own execution continues to improve. Historically, the third quarter is our toughest quarter. This year, though, we generated 2.1 million of EBITDA profit excluding options expense. This is a nice swing from the loss we showed in the third quarter a year ago. I'm pleased we're able to report our fourth consecutive quarter of EBITDA profitability. The strength was across all categories. We continued to get productivity improvements and get more out of our air time in all categories and we have a really nice discipline in place to shift product mix on the margins to maximize sales productivity.

Today, our jewelry business represents about 35% of total versus 42% a year ago, which is really a statement about the success we've had in diversifying our business. As you know, we've been implementing a product diversification strategy for several years now aimed at increasing our share of wallet with our customers and increasing the absolute number of customers who are interested in our products. That strategy is clearly working.

I must state that though I'm pleased about the growth in non jewelry categories, categories like electronics, and apparel and cosmetics and home, we do remain committed to our core jewelry business and would be perfectly happy if jewelry continued to represent a little more than 1/3 of our business. Our customers love jewelry and so do we. Today, we have a free market and air time and we allocate marginal air time to the highest productivity product, whatever it is. The major promotional events in the quarter were the Our Top Value Anniversary, Labor Day, Host Pick Day and October Customer Appreciation clearance. Our business does get incremental lift from well executed promotions and we continue to increase the frequency and the quality of of the promotional events in our calendar.

Gross margin. Gross margin was 34.4%, up slightly from 34.2% last year, down slightly from 34.9% last quarter. This partly reflects some additional hours in electronics. As we have indicated in the past, we are driven by absolute profit dollars, not gross margin rate and we are comfortable with where we are on gross margin. In our press release, we indicated that we launched a new electronics vendor enabling us to offer our customers big electronics brands, like Panasonic, and Sony, at great prices. We are happy about this new relationship, and also about the introduction of a number of other major vendors that we took from Shop At Home in jewelry and cosmetics. We've launched these new vendors on ShopNBC and they are contributing revenue and new customers.

Our Internet business grew 29% this quarter and now represents 24% of our total merchandise sales. We're happy with the growth we're seeing at ShopNBC.com and at the same time we feel there is additional untapped opportunity on the Internet. We announced two major Internet deals this quarter, eBay and Amazon. Let me say a word about each. We have had an auction business at ShopNBC.com for years now and its an attractive business and a way for us to get good recovery on seconds and samples. eBay represents a dramatic extension of our auction business, one that should able us to improve recovery rates on this type of merchandise by going out to eBay's huge member community.

Beyond that we hope that bargain hunters who are introduced to ShopNBC on eBay will visit us at ShopNBC .com to take advantage of the broad selection of first-run goods. So eBay represents both improved recovery on liquidation as well as a source of new customers. Amazon is a big opportunity for us. Our intent is to put most of our products up on Amazon, introducing our great values to the very large community of Amazon customers. We are in the process of integration now, and plan to have a great deal of product up for the holiday season.

Now, I would be remiss if I did not mention how excited we are about our new partnership with GE Retail Consumer Finance. We just launched the new ShopNBC-branded Master Card. This is a shiny black Master Card with a stunning NBC peacock logo on it. Besides making cardholders look classy when they take it out of their wallets, this Master Card has a strong awards program, three points on ShopNBC purchases an one point on purchases elsewhere. We also launched a new ShopNBC private label card with our GE partners. We believe these two cards will be stronger contributors to our business.

All in all, it's been a terrific quarter. We are looking forward to a strong holiday season and fourth quarter and we reiterate our confidence of being able to achieve our guidance of low double-digit revenue growth and better than 12 million in EBITDA excluding options expense. I know you would like us to take that guidance up. My caution is this. Our fourth quarter this year is a week shorter than the fourth quarter a year ago. So low-single digit growth is actually more challenging than it seems at first blush. That said, we are optimistic about the rest of the year. On that positive note, let me stop and take your questions.

Thank you. [OPERATOR INSTRUCTIONS] Mr. Michael Kelman, please state your company and ask your question.

Hi. It is Susquehanna Financial Group. Can you talk a little bit about what if any impact the closure of Shop At Home had on your business this past quarter and whether that came more from improved merchandisers or just getting more mind share with the consumer?

There is no question that Shop At Home's closures has really helped us. There are probably not very many Shop At Home customers who weren't aware of us and we wound up taking a number of vendors from them in the jewelry area, the cosmetics area, and the electronics area. And as you all know, in home shopping, some of these vendors have well developed brands, and franchises, and customer following and so when a major vendor comes to us another home shopping network, that vendor brings with him customers, and that's happened with us in this case, and so we're really pleased.

I would say it is early. I mean we're just really putting these new vendors up on the air now but the early results are extremely promising and we have seen revenue lift and more importantly we've seen new unique customers that have come in through these former Shop At Home vendors. We also -- you know, maybe more importantly than that, we hired some employees from Shop At Home, and our new head of Internet, Jeff Smith, is former head of Shop At HomeTV .com and he is a really talented individual. We're really pleased to have him with us. We've also picked up some terrific merchants.

Thanks, and I just had a question for Frank. Frank, you could talk a little bit about what the distribution and selling costs look like? And then also if you could give us what equity the affiliates contributed to the quarter? And then also on that front, when would you also start to start seeing some cash payments from your -- I guess -- relationship with Polo .com?

Okay, Mike, on the selling and distribution, that was just under 55 million for the quarter. So up about 6% over last year. So most of that was driven by the increase in our variable expenses. So a pretty modest increase versus our 16% sales growth. The equity income from Polo was about 650,000. And then finally, on the dividends, we are currently receiving periodic cash dividends from Polo, so some of that is coming in already. And you know, they're kind of updating that dividend schedule as their performance continues to improve.

Okay. Thanks, and then one last question. It looks like the jewelry category just in terms of classification was changed around. I think watches was moved out. And I know historically, you used to say that jewelry accounted for over 70% of sales. What would jewelry account for now if you kind of move watches out just so we have a sense of perspective of what 35% is relative to the past?

The watches are out, and that 35% is jewelery net of watches. And that is down from well over half of our business years ago.

Perfect. [overlapping voices] Thank you.

Bob Evans, you may ask your question.

-- commented on the guidance --

We didn't hear that, you can start over?

Can you hear me now?

Yes.

Can you elaborate a little bit more as it relates to the guidance in terms of kind of the impact -- I mean effectively, are you saying given that you've got 7% fewer days that you're kind of looking for low double-digit revenue growth effectively, and I mean is there -- I guess trying to read whether this is just kind of conservatism on your part, or is there something you're seeing in the business that is different? And I guess that same comment would apply to the EBITDA guidance.

That's a fair question. If you look at the fourth quarter this year, versus last year, it is is a week quarter, 13 weeks instead of 14 week, that is a 7% difference, so if you take our guidance of low single digits, you're really looking at fairly substantial growth on top of that 7% timing difference. And so I think that we're really seeing -- we're not suggesting that our business is in any way slowing or declining. We think that we have a lot of momentum now, and we expect that it will continue. And when we say that we expect low single-digit revenue growth in the fourth quarter, that really is equivalent to double-digit revenue growth on a sustained basis.

In terms of the EBITDA, we're very comfortable reiterating that we will make the 12 million of EBITDA and then some. We don't know how much more. And frankly, we only have three weeks more visibility than have you into the fourth quarter. And so it is early days. We're happy with where we are right now. I imagine we will do better than 12 million of EBITDA. How much better? Don't know. And so we will see.

Fair enough. Can you also comment a little bit more on the Shop At Home in terms of, you know, what -- I mean have you -- where are you kind of in deriving the benefits that you want to derive from the people and vendors? What stage are we at? What more can you do, do you want to do? And so forth.

I'm going to take the question and make it a little broader than that, because it is not just Shop At Home. There is really a question where is ShopNBC in the television home shopping industry today and where do we stack up against all of our competitors and I guess I would say that QVC just continues to be just a terrific competitor and their execution is terrific. HSN seems to be having a little bit of trouble and that's got to be benefiting us. We have to believe that some of their customers are coming our way. Same with Shop At Home. And their customers and vendors have come our way.

And then our own execution as it continues to improve, as we continue to deliver incredible values of high quality merchandise to our customers. You know, we get a bigger reputation, and that reputation is growing in the industry. Television home shoppers are recognizing who we are. And we are really the guys in the industry now to watch. It is really kind of of a pleasure to be in this spot.

Okay. And a final question. As it relates to the Internet business, you're drawing -- growing rapidly there, but where do you think you can take it in terms of a percent of the overall business given kind of the new relationships with Amazon and ebay and other things you're trying to do?

The Internet business is 24% of total today, which I believe is leading the industry in terms of percent of total revenue in shopping. And we think it will go up from here. How fast? Don't know. Our e-commerce business is growing faster than e-commerce in general. We expect that will continue, partly because we have technology that we think the Internet community is moving towards.

And that's really all around the Internet, video, and the quality of of the presentation that happens on the Internet, and as I've said before, the missing component in e-commerce is salesmanship, and there is lots of information, there is JPEGs and texts, and there is lots of information out there but there is not a lot of salesmanship. And salesmanship is what we're really great at. And as Internet video becomes a bigger factor, and we think that it will continue to become a bigger and bigger factor, we think that plays into our skill set. So we ought to be able to continue to grow faster than e-commerce in general. I hope that we would maintain our lead in terms of percent of total sales, within the home shopping industry.

And that's just on the organic side. I mean there is always the possibility that we could acquire some second tier Internet retailers that we could drive traffic to, and add some M&A growth on top of our organic growth. I wouldn't say there is any immediate plans to do that but I wouldn't rule it out either. I think that if you look out a few years, the Internet will be a substantially bigger part of our business. Somewhere between 1/3 and 1/2 of our business within the next few years.

Okay. Thank you.

Barton Crockett, You may ask your question. Please state your company name, sir.

Okay, great. I'm with J.P. Morgan and thanks for be taking the question. I wanted, Will, if you could talk a little bit more about the Amazon relationship and in particular if you could talk about what you hope to gain from a presence on Amazon, and you know, I assume that there is some risk that maybe you would get a customer from Amazon that you would pay rev share for that wouldn't come to your Web site but I imagine you guys have looked there and seen limited overlap. So if you could just talk about that and give us some sense how much revenue or expense impact that could have next year? And switching gears, for Frank, I just wanted to ask you a couple of questions about some of of the numbers that you haven't reported to make sure I get them straight. So first, with Amazon.

Thanks for the opportunity to talk a little bit about Amazon. We're really excited about this one. As you know, anybody can sell on Amazon. So the fact that we're selling on Amazon by itself is not a very big deal. My son Arthur can sell on Amazon and [inaudible] that was a thought at one time. We have a bigger arrangement with Amazon. We have negotiated the kinds of rates that you would expect us to be able to negotiate as a major player. And so we have an attractive commission schedule. Will we be sharing some of the profit with Amazon? Of course, and they will also be taking some of the expenses out of it for us. Net/net, we would expect slightly lower margin on our Amazon sales but we would expect also that is incremental business and there are incremental customers out of it.

You pointed out an important issue for us, which was cannibalization. And for quite a while, we wondered about whether we would have an issue with our customers buying our stuff through Amazon, and we would be giving Amazon a cut that otherwise we wouldn't have had to pay. And if we believed that was really a big part of the business, I think we would have a big problem, because that is not something we want to do, obviously. And yet, when we kind of scratched at it and looked at the problem, the only place that we really thought that there was some kind of a chance of that happening was with customers who have an Amazon credit card that they get Amazon rebate points on when they buy through Amazon who might have opted to buy ShopNBC product through Amazon to get the rebate points. And that is a small set of customers, but yet, it is a set of customers, and our customers are really savvy and we worried about that.

The good news is we now have the ShopNBC credit card, Master Card, that has points attached to it, and so there is no benefit to an Amazon customer for doing that -- there is no benefit for a ShopNBC customer buying that way through Amazon. They are equally well served if not better served by buying directly from ShopNBC. So we're much less worried about the cannibalization issue. We think it is a great opportunity to introduce our great values to the Amazon community. There are millions upon millions of users, and you know, we have great value, and the world doesn't know about them. So we really want to bring those two things together.

Okay. Can you give us any sense of the magnitude of revenues and the expenses that Amazon will drive? Does it start in the fourth quarter?

It is going to start here in the fourth quarter. We will get our product up in time for the holiday season. And we really have no idea. And I would say it is going to be a iterative process, if you think of the way Amazon works, assuming you have great values, which we do, it is about how clever are you in terms of tagging and classification of the product so they come up in the searches and the refined searches, and that is something that you don't know how to do well on day one, but something that I would imagine over time we will get very good at because we're very data driven and we study the numbers and we're always tweaking -- tweaking things to make them a little bit better. That's the nature of our business. And I imagine that is what will happen with Amazon too. Initially I think it will be small sales and I think it has the potential to grow to very big sales.

Okay. All right. And then switching gears here a little bit, Frank, could you give us a sense of what the average share count was in the quarter, what the exit share count was so we can kind of figure what the EPS was? And then also give us some sense of the cash flow from operations, and the CapEx, so we can get a sense of the free cash flow, and then give us some sense of, you know, if you can, what you think might happen with free cash flow for the year that is attached to this EBITDA guidance?

Sure. First on the share count, the weighted average for your EPS calc is 37.6 million shares. We exited with 37.4 million shares, which is down 400,000 from the prior quarter. That reflects the buyback activity.

Okay.

All right? On cash, we used 8 million in the quarter, which we were pleased with 5 million of that was in the buyback, with the remainder of it, working capital was use of cash of about 4 million. That's driven primarily by a slight increase in inventory, as we start to build through Q4. The capital expenditures for the quarter was 3 million, and then the offset to that is EBITDA, and some interest income.

Okay.

Then for the full year, our original guidance on the cash usage was 10 to 15 million and we're still very much in line with that. But now, we have the addition of the buyback. So I think you can still use the 10 to 15 million, but add on top of that whatever we use for the stock buyback. So, we used 5 million this quarter, unsure what we're going to use in the fourth quarter, but I would say we're probably going to land somewhere in the 60 to 65 million cash balance at the end of the year.

Okay. And then just remind us again, what is the balance remaining on the share repurchase? And what parameters do you guys have guiding your activity there? Is it -- is there a price on a level that is said in a plan or an accretion dilution analysis? If you can give us some sense there?

We spent about half of the authorization. We are in and out of the market. We expect to continue to be in and out of the market. We're not there on a daily basis. But we are trying to buy in our shares at these good levels, and we will see where it goes. We're happy we're able to reduce the share count. And put some of that cash to good use in this last quarter.

In terms of the guidance principle for this, is it an accretion dilution or just -- do you have a share price level or fair value calculation, or any sense that guides whether you're in or out?

No, we don't. We're actually at a point right now where we feel like the shares are a good value, and so we're in the market. I think at some future date, we can decide that they're more fairly valued and maybe sit to the sidelines a bit more.

One final question. And then I will let others ask. You guys have had such strong sales growth this year, aggregate for the year, and that obviously gives you good momentum going into next year but also tougher comparisons. Would you be disappointed if you guys are not able to kind of continue double-digit revenue growth next year over this year?

That's a great question. We are not ready to give guidance for next year today. And we are working through our plans right now for what '07 looks like. There is no reason to believe that our business is going to slow. If anything, we think it is getting stronger. But I am not in a position yet to be able to say, yes, we will for sure be at double-digit growth next year. I don't think we can say that right now.

Okay. Great. Thank you very much.

Kevin Foll, you may ask your question.

Hi, guys. Nice quarter. Just wanted to -- a quick follow-up questions, I'm not sure if you gave the gross margin rate. I missed the first part of the --

34.4%.

Okay. And looking ahead to your guidance for fourth quarter revenue, kind of mid single or low single digit kind of growth rate, would you expect this -- should we expect to see some leverage in the distribution and selling on a low single-digit growth rate?

Our distribution and selling expenses are tied to the days involved.

Yes, with -- [overlapping voices]

So it should match.

Right, with the reduction in the number of days in the fourth quarter, you will see lower selling and distribution growth. That is a true statement.

So. I mean -- [overlapping voices]

Arithmetic. If there's 7% fewer days, it should be -- [overlapping voices]

So as a percentage of sales, you should see a little bit of leverage, even on a low single-digit kind of growth rate?

That's right.

Okay. And then gross margin could be a little lower, given the mix towards some of this Amazon business? Is that --

I don't think Amazon will be a significant --[overlapping voices]

It will not be a significant piece?

Not in the fourth quarter. I think in '07, there is potential for it to move the needle a little bit but we will see. We should be so lucky.

No, no, it is all incremental business. It sounds like a great deal. And the share count will probably be closer to 43, 44 million in the fourth given you kind of revert back to profit?

That's true. You add back the 5.3 million. Okay.

And just kind of, you know, follow-up question, you said you may be interested in some Internet retailers out there. I don't know if, you know, what kind of valuations you guys are comfortable paying for different opportunities in terms of the price of sales, EB, EBITDA, how would you look at those?

Maybe I should calm you guys. We're cheapskates. So when we see the valuations on Internet retailers, we're not in a great big hurry to pay high valuations. That said, I said second tier, there is lots of second tier Internet retailers who don't get a lot of respect from the market and whose biggest issue is customer acquisition costs and they have nice little businesses but they can't make a go of it because the customer acquisition is too costly.

Right.

That's a place where we can really help because we have tremendous traffic, we have the reach of 65 million homes, and so if we can find complementary product line and things that make sense,where we can send our customers their way, particularly if they're part of the family, because we've acquired them, I think there is probably an opportunity to make some of these businesses more profitable. And, so, if we can pick them up at fair prices, and I won't go into what that means and you can assume we won't overpay, then I think it gets interesting. The flip side of it and the challenge for us is any time we pick up a retailer, we worry about nexus issues and cost in sales tax in those places and it would have to be reasonably compelling for us to do it.

Makes a lot of sense. Thanks a lot.

Robert Ross, please state your question, and please state your company's name.

Yes, Jefferies & Co. Good quarter, guys. I have a few quick questions. And a little late joining, so forgive me if you already answered any of these. First, I was wondering if you could give us an update on the progress you've been having with negotiations with the high-end retailers like Coach, Tiffany, et cetera? I was at the QVC investor day and Greg Maffei confirmed they are talking to these people too because they're looking for increased distribution outlet and home shopping makes the most sense and, obviously, you being the most high end of all shopping networks, I think you would get more attention than the others. And second if you could comment a little bit more on the Internet deals, in terms of you signed two, one was eBay, one with Amazon already, which means they were willing to do something with you, not only were you willing to doing something with them? and how you think the implications of that should be on your multiple going forward and how the Company should be looked at, because in effect, you're becoming an Internet company?

Okay. Boy, I agree with you Robert. Let me talk about the retailers first, the high end retailers, the high end brands first. And then we will talk about the Internet piece. I think if you go back in time, television home shopping had kind of a lower class character, and so some of the snooty brands really didn't want to be involved with home shopping, and I think that world is really changing very rapidly. I think what you see now is first of all, the industry is a classier industry than it was and there is really good product and good quality out there and respectable customers, really respectable customers, with high brand aspirations, who shop on television, and maybe Internet has helped with that, I don't know, but it is not the challenge that it once was. There is no question that these brands benefit from the air time they get put into this -- into their brands. And we're seeing it -- you know, we're starting with the electronics area where we can take name brand electronics and the manufacturers recognize that there is a benefit to them from doing it. I would say the QVC is ahead of us on some of this and they have a little more muscle in the area. But we are equally interested and you know, I can't disclose any particular brands but we are working on that, too.

In terms of the Internet multiple, boy, I couldn't agree with you more. I think that we have a very interesting business, which is a combination of television and direct marketing, and Internet, and the different channels play really well together, and there is a lot of truly synergy and leverage in using multiple channels. We become more and more of an Internet retailer, you see it in the percent of sales, and not just any old Internet retailer but one with some special differences. We have got the power of television driving a lot of traffic our way, which is huge and then we have the Internet video that is straight out of our television production.

And so on two counts, we look better than your average Internet retailer and so it is a little bit surprising to me that the world hasn't really started to recognize us as being the strong Internet retailer that we are. Our Internet revenue is really substantial at this point. And we are a player. So I think it is just a matter of time. And I think you're right. I think the fact that Amazon and eBay do deals with us is also a reflection of that.

Okay. Great. And just a few more quick questions. Obviously, the distribution costs help you and hurt you, because it creates a tremendous degree of operating leverage but as we all know, leverage works both ways. And you've gotten over the hurdle but that's got to continue in order to really get this thing moving the way it probably should and eventually will. I'm curious as to in terms of getting increased distribution carriage, has ValueVision considered, instead of paying a purse of $3 per analog sub and $1 per digital sub, which obviously your costs should go down as more digital subs or more channels are migrated to digital, has the Company considered giving equity to distributors in exchange for long-term distribution, rather than cash?

Not large percentage, say 4%, 5%, et cetera, to Comcast, so suddenly they are going to carry you across all of the networks and if the stock goes up as well, the John Malone method, and I was curious if you guys thought about it or approached it or even if it is possible. And next when it comes to your penetration levels, I noticed they continue to be flat, and obviously, you need to increase these in addition to the selling price and units shipped. What are your plans to really get that going? And how soon do you think you will be able to get the 1.3 up to a more QVC, HSN level?

Okay. Boy, that's a lot of questions. We could be here for a while. But let's try them, Robert. First let's start with the distribution piece. There are a lot of different opinions on what the landscape for distribution looks like over the next five years. We have long-term agreements in place for most of our carriage that carry us through 2008. Some of them go as far as 2012. We have contemplated doing equity deals for distribution. To date, we've never done one. But we've talked about, it we've thought about it in a couple of situations.

I would say more likely than that we would switch some of our fixed cost distribution to variable cost distribution as we renew and extend our contracts. And I would guess that it is a way for us to remove some of the uncertainty around what kind of productivity to expect from digital distribution in the 2009-2010 time frame but it may work well for the carriers, too. So we are headed down a path of shifting some amount of it to variable, maybe to be some fixed component plus a variable component, probably in that direction. We are always open to things that make economic sense, and if there was carriage that we could get for equity that made sense, we would explore it. To date, we haven't made one of those work.

On the penetration side, we care a lot about penetration, and yet, it is more of a -- it is more of something that falls out of our business. We don't chase it for its own sake because there are ways that we could get the number up. If we really thought that you evaluated us solely on the basis of penetration we could go out and do some things that I would consider not economic to get our penetration up. It's not what we want to do. We spend most of our energy on retention. Because as opposed to having -- as opposed to chasing, you know, additional customers that don't know anything about us, chasing customers who bought from us once, and getting them to stick around for more is really the best money spent.

And that doesn't move the penetration needle as fast as it might, but if we can get a second, third, fourth, fifth, 10th, 15th and 20th transaction out of a customer, at a lower cost than getting the first transaction out of a new customer, and that is the reality, that's how it works, we're better off doing that. And so most of our models are built around getting incremental sales from existing customers, and hanging on to people who bought from us once. I do think our penetration will climb. I mean it is going to climb. It is just not something we chase for its own sake.

Okay. Great. And just two more quick questions. And then the next person can go. I don't mean to take all this time. You mentioned acquisitions that you're looking at or you would look at, that would obviously be accretive to the Company or you wouldn't look at them or the potential to be, given where your stock is now, and let's say you found something that fits and you want to buy it and you want to buy it today, are you using cash or stock?

That is a question I couldn't answer today because I'm sure it would be a discussion in the boardroom and my guess is it would depend on the deal and if it were big enough it would have to involve some paper and if it were small it would be cash only and in the middle it would be a mix and a little premature to answer that question but if you're really saying how do we feel about our stock --

I mean, assuming you had $1 billion in cash.

If we had $1 billion in cash, we would use cash.

Okay, that's the question.

That one is really easy, Robert. I would even use cash if it were half a billion.

Ok. I just wanted to be sure. And finally, obviously you're talking to the high end retailers and I think something is going to happen in the home shopping space, it is inevitable, it is a question of when and who and how. In terms of personalities, I know there are various personalities that are also looking to get into this business, Trump has mentioned it. I was just with Martha Stewart the other day and she is interested in kind of having something along those lines. And other than a QVC relationship. And I'm wondering if you're talking to any other personalities that could really drive traffic to your network that currently you don't have that are in addition to your existing hosts?

Robert, you know, I'm not in a position to disclose anything like that. But we are always interested in relationships that can drive a lot of traffic to our network. And so we're always interested, and it is a continuum, ranging from a vendor with a big name, to a celebrity who could become a vendor. And you know, there is a continuum there and we're interested in all of the above.

Great. Thank you very much.

Thank you.

[OPERATOR INSTRUCTIONS]

Well, it looks like that's it on the questions. Thank you all for joining us. Really appreciate it. Have a great holiday season. We will talk to you soon.

Thank you for participating in today's conference call. You may disconnect at this time.