QVC Group Inc (QVCGA) 2003 Q2 法說會逐字稿

Good day, everyone and welcome to the be Liberty Media Corporation conference call. Today's call is being recorded. During this presentation, we may make certain forward-looking statements about business strategies, market potential, future financial performance, new service and product launches and other matters. These statements involve many risks and uncertainties that could cause actual results to differ materially from such statements including, without limitation, possible changes in market acceptance of new products and services, competitive issues, regulatory issues and continued access to capital on terms acceptable to Liberty. Please refer to the publicly filed document of Liberty Media Corporation, including the most recent form 10-Q, for additional information about the Liberty Media Corporation and for additional information about the risk and uncertainties related to the Liberty Media business. At this time, for opening remarks and introduction,s I would like to turn the call over to the President and Chief Executive Officer, Mr. Robert Bennett. Please go ahead, sir.

Thank you. Good afternoon, everyone. Thank you for joining us today. Here in Denver, I have with me Gary Howard, Mike Erickson, and the half of the Liberty corporate staff that is not on vacation. This may be Gary's -- it appears to be Gary's ultimate opportunity to participate in one of these calls, so feel free to pepper him with questions. We also have Mark Bauman and Bill Meyers from STARZ! Encore, and on the line we have Barb Bennett, the newly appointed CFO of Discovery Communications, and for the first time, joining our call today, Bill Costello, the Chief Operating Officer and CFO of QVC. They are all available to answer specific questions.

As always, I would like to encourage to you review the 10-Q that was filed yesterday. This filing is available on our web site. Also posted on our web site is our supplemental press release, which includes all of the financial and statistical information that will be discussed on today's call, and a reconciliation of operating cash flow numbers to the operating income numbers from which they were derived.

The purpose of our call today is to make a few comments on the SEC filing, to summarize the results of our large private assets at a very high level, and to touch on other activities at Liberty and answer any questions that you may have. Looking first at our filed GAAP financial statements, I want to remind you that, due to ownership and governance matters, most of our assets are not consolidated for GAAP reporting purposes. But for the six months ended June 30th of 2003, Liberty recorded $1 billion of revenue, which is about the same as last year. Decreased revenue at STARZ! Encore and Ascent Media was partially offset by revenue growth at our other smaller subsidiaries.

Liberty recorded an operating loss of $36 million in the first six months, versus operating income of $65 million last year. The decrease in operating income was primarily driven by increased non-cash stock compensation, resulting from the improvement in Liberty's share price. The company's net loss for the period was $332 million, versus a loss of $4.7 billion in the period in 2002. The improvement over the prior year is due to the $5.1 billion of non-temporary decline in fair value of investments, resulting from the weak equity markets in 2002. That $5.1 billion was included in our 2002 numbers. We provide the results of earnings guidance for our significant private assets as a supplement to our SEC filings in order to keep the public informed about how those assets are performing. These results and guidance are not and should not be taken as a numerical measure of Liberty's historical or future financial performance, financial position, or cash flows.

Overall, I think while we're facing a few challenges at STARZ!, we are generally pleased with the results for the second quarter. All of the businesses managed to register solid growth and operating cash flow. STARZ! was up by 20%. Discovery up 58%, QVC 13%, JCOM 96% and JPC 29%.

Looking first at STARZ! Encore, year-over-year, STARZ! Encore saw overall subscription units grow by 13%, driven primarily by increases in thematic Multiplex units and Encore units. Compared to the first quarter of 2003, however, as opposed to compared to last year, STARZ! had a minor decrease in overall subscription units due to a 5% decline in STARZ! units and a 2% decline in Encore units. This decline is due in part to the ongoing dispute with Comcast, as well as highly competitive promotional efforts by other premium programming services. While these issues contributed to a 5% drop in revenue, STARZ! was able to control the expense line during the quarter. Expense controls combined with a writeoff associated with Adelphia in the prior year contributed to better than expected year-over-year growth and operating cash flow of 20%.

Looking at guidance for 2003, given the factors that I just mentioned, we are revising downward our 2003 guidance somewhat. For the year, we are now expecting revenue to decline in the mid-to- single digits and operating cash flow also to decrease in the mid-single digits. Jumping to Discovery, Discovery's performance was very strong in the second quarter. It was able to grow revenue and operating cash flow by 18% and 58% respectively during the quarter. The affiliated networks now reach more than 962 million cumulative worldwide subscribers. Looking at Discovery Networks U.S., that unit increased their revenue by 25% in the quarter, and operating cash flow increased by 31%. The rebound in the advertising market, combined with solid growth and affiliate revenue, has driven the positive results on the top line.

In the international businesses, the international networks also had a very strong quarter, with revenue growth of 11%, and operating cash flow growth of 67%. Advertising growth across all regions, especially Europe, combined with strong growth in affiliate revenue, has driven the growth of the international division. In the other areas, the consumer products division experienced a decline in revenue due to the new retailing strategy combined with the closure of some unprofitable stores. However these actions resulted in a 15% or $3 million improvement in the operating cash flow deficit. Revenue at the international ventures is unchanged for the quarter, but the operating cash flow deficit has decreased to $4 million from $11 million last year, a 64% improvement.

In terms of guidance, we are adjusting our 2003 guidance for Discovery upward. Due to the strong performance we've seen in the first half of the year on a consolidated basis, we're expecting revenue growth in the mid-teens. That's up from our prior forecast of low teens, and operating cash flow in the mid 20s, up from our 15 to 20% prior guidance. The U.S. domestic division, we're expecting revenue in the mid to high teens. That's up from the low to mid-teens, and operating cash flow of approximately 10%. That's up from the mid to high single digits. International division, mid to high single digits revenue growth, that's up from low to mid single digits. And operating cash flow in the mid to high 20%, that's up from the high teens in our prior guidance.

Next is QVC. As we announced back in July, we've agreed to purchase Comcast's interest in QVC. The deal calls for to us give them total consideration of 218 million Liberty shares and 5.3 billion of three-year notes that bear interest at LIBOR (sp?) plus 1.5%. We have already received FTC approval for the transaction. A few other regulatory approvals are required. We hope to close the deal in the next few months. That price -- that consideration prices the business at a little bit under 14 times this year's expected operating cash flow, which we think is a full price for the company. But given the growth potential in the business, the great management team, the cash that QVC will have on hand at closing and the chief financing, we think this is a great deal for us.

At the current cash generation levels and the expected growth in the business, combined with our ability to shelter some of the taxable income, we ought to be able to pay off around $2 billion of the debt in the next three years. The remaining balance then should be around 2.5 to 3 times its operating cash flow three years out, which should be an investment grade credit. While we weren't especially eager to issue a large block of shares at $11.71, which would be effective issue price, we felt that was a reasonable price to pay to get access to a large cash flow pump. We stated in the analyst meeting back in May that increasing the ratio of private assets, controlling more of our businesses, and acquiring a source of recurring capital were high priorities for us, and this acquisition fits all of those objectives.

Looking at QVC's performance in the quarter, revenue was up 11% over last year , and operating cash flow increased by 13%. As expected the domestic business was a little bit sluggish again in the second quarter as it was in the first quarter, with 2% growth in revenue, and also in operating cash flow. Softness in the U.S. economy has had some impact on the results, and the team is focused on increasing the domestic growth rate. But the international operations, once again, showed spectacular results in the quarter and drove the entire business to double-digit growth. As of the end of June, QVC had no debt and over half a billion dollars in cash. Our guidance for QVC for the year is unchanged, which is revenue growth in the high single digits and operating cash flow in the low double digits - increases in both cases.

Next is our Japanese businesses, JCom and JPC. JCOM increased their revenue by 27% year-over-year, due to increased distribution across all product lines. These distribution gains included -- and this is referring only to their managed systems - included 10% increase in cable subscribers, 78% increase in telephony units, and a 34% increase in data units. JCOM's operating cash flow nearly doubled during the quarter, due to the revenue growth combined with increasing margins associated with the company's increased scale. Our guidance for JCOM, we are adjusting upward. Revenue, we're expecting now to be in the mid to high teens. Our prior guidance was mid-teens. And operating cash flow we're expecting, 70 to 75%. That's up from our 50 to 70% prior guidance.

Jupiter Programming, JPC, their revenue increased by 39% in the quarter over last year, due to the continued success of the Shop Channel, combined with strong subscriber growth of the company's other channel offerings. JPC operating cash flow increased by 29%, due to the increases in revenue offset by the cost of goods sold and other operating and administrative expenses. We are also increasing upward our guidance for JPC. We're now expecting revenue to grow at approximately 30%, up from our prior guidance of mid-teens, and operating cash flow to be in the high 20s, up from the high teens in our prior guidance.

Next, I'll spend a minute looking at our balance sheet and liquidity. We ended the quarter with over $4.7 billion of corporate cash and liquid investments, and about $8.5 billion in face amount of corporate debt including $4.8 million face amount of exchangeable debt. In addition to the cash, we have about $3.6 billion of value in our hedges that we have on some of our public securities, as well as as another $6.9 billion, roughly, of non-strategic public securities, for a total of about $15 billion in total liquidity. Given that the QVC deal doesn't require any of our cash and the business can easily support all the debt we'll incur in the acquisition, we feel very well positioned from a liquidity perspective.

Our corporate cash position during the quarter increased by about $940 million, as a result of a $1.2 billion net increase in debt, and $860 million of asset sales and proceeds from unwinding and expiring hedges. The primary outflow during the quarter was related to purchases of shares in InterActive Corp. In the second quarter we exercised preemptive rights with respect to 46.9 million shares of IAC and average price of $23.55 per share. We also purchased another 1.8 million shares in July. Between the two, we spent about $1.17 billion on shares. They are now worth about $1.6 billion.

And a couple of current events that I like to just update before we move on to questions. First, as you may have read in July, our subsidiary True Position signed a multi-year agreement with TMobile to provide True Position's Enhanced 911 Location Solution to T-Mobile's national wireless network. T- Mobile, as you know, operates an all digital, national wireless network based on a globally dominant GSM technology. This agreement, combined with the existing agreement with Cingular, gives True Position a presence in two nationwide wireless carriers. The team has been working very hard on this deal and these are both very significant accomplishments for the business. This will really now start to be producing revenue, where it's really been in the development stage up until now.

Second, I'm sure everyone is aware there has been an extraordinary amount of press coverage regarding the Vivendi's process to sell some or all of VUE. While I'm not prepared to discuss in any detail the status of that transaction, I will say that we continue to have an interest in the business and we continue to be involved in discussions with Vivendi regarding the transaction. I can't predict what the outcome will be or when it will be, but we continue to be involved. But we also continue to be disciplined in our approach. So I think we await, probably as eagerly as you do, how the transaction will turn out. With that, we'll go to your questions.

The question-and-answer session will be conducted electronically. If would you like to ask a question, please do so by pressing the star key followed by the digit one on your touch-tone phone. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will proceed in the order that you signal us and we'll take as many questions as time permits. Once again, it is star one to ask the question. We'll have our first question from Jessica Reese Cohen with Merrill Lynch.

Thank you. I don't know what exists with Vivendi, but can you talk about the time frame? And if you don't wind up getting it, what other things might you be interested in? Would you consider buying Discovery? Would you buy back stock? And I guess a final question, you alluded in the past about spinning off international or re-capitalizing international. Could you discuss that as well?

On the first one, I will tell you in advance, it's not going to be a very satisfactory answer. I'm not at liberty to tell you exactly what the transaction is or what the timing is, we are under an MDA. I leave that for Vivendi to discuss, if they wish, what the timing is. I just wanted to point out that, contrary to some public speculation, we do continue to be interested in the business and continue to be in a discussion, but I can't predict when or how that will resolve itself. With respect to what we might do if we are not successful there, it's hard to say.

You know, we have a number of good businesses that we own own part of and potentially would be interested in acquiring more, but that's -- you know, that's not necessarily in our control. You do have sellers on the other side that also have be to be interested in selling, and then you have to agree on terms. So conceptually, yes, we are interested in increasing our position in pretty much everything that we already have an interest in. Whether or not the opportunity will arise, I can't say. Stock buy-back is always a function of the stock price, and other alternatives. As I said before, we do have substantial liquidity, so it's a possibility, but I don't -- I can't tell you today, because I don't know what the outcome is going to be and I don't know when it might be be. So I don't really want to predict what we might do if something doesn't happen when -- when it doesn't happen.

On your second question on the international spinoff, yes, we continue to work on that. We are working on structure. The concept is to create a company that would hold our international assets. We have not made a final decision to go forward, but we continue to work on it, and to explore structures and how we would do it. And my expectation is that we will -- you know, in the next month or two, make a decision as to whether or not we're going to go forward. And when we make that decision, then we'll also be in a position to describe in more detail what the transaction will look like. But it is something we continue to work on. It's still on the drawing board and I expect that to be resolved over the next couple of months.

Can I ask just one follow up? On STARZ!, the change in revenue guidance. Did another cable operator change their terms following Comcast or did Comcast actually change the terms?

No, we had the litigation pending, and as I'm sure you know, it's a part of that, or related to that. Comcast is asserting that their contract is the appropriate one and so they are paying us at the lower rate. In addition to that, we don't believe that they are marketing it aggressively, and that probably is costing us some of the subscriber growth that, you know, this is a market where you need to be actively promoting the service, and with promotional offers to customers and advertising, et cetera. And if an operator chooses not to -- to promote the service, then it's difficult for us to promote it around them. And I think that's part of what we're seeing.

Okay. Thank you.

You're welcome.

And we'll have our next question from Vishram Sheehan of Wachovia Securities.

Hi, good afternoon. You have moved with QVC to take pieces and make it whole. Do you think going forward you are going to get more share holder savvy if you take some more of your partials and -- and take majority stakes, in other words, buy in a lot more of your equity affiliates?

I don't know if there's a blanket answer to that. It's always going to depend on what the terms are. You know, we're looking at it mostly in terms of what can create value for us and for our shareholders. Part of that is a consideration of how the market will react, but we're -- we're really more focused on, you know, is this creating a return on our equity? So, you know, I think generally the market gives us -- you know, is aware of what we own and does on some of the parts. I don't know whether consolidating versus not consolidating, owning the majority does not necessarily drive more value.

I think, generally speaking, we would rather control assets rather than not control them, because there's more that we can do with them and more ways that we can have them help other businesses. So, you know, I think it's a general matter, we would prefer to be in control of the businesses, then it comes down to what do you have to pay to get that? And is that a reasonable return on incremental equity? And that's a case-by-case decision.

Okay. Thank you.

And we'll go next to Doug Mitchelson with Deutsche Bank.

Thanks. I guess on the UPC numbers, Bob, it seems the subscriber numbers are not as stellar as one might have expected. Has your appetite and interest in international cable shifted at all over the last few quarters? And separately from that, on the STARZ! side - and obviously the aggressiveness of HBO here kind of begs the question, and also the plateauing of pay subs over the last few quarters - has growth run its course at STARZ! or is there another leg up and what would possibly drive that?

On the first question, no our appetite is not diminished at all on the international cable. Look at the results that we are having in Japan. It's a fabulous business. Each business is unique and has itsen set of challenges. I think it's fair to say for the last 18 or 24 months, UPC as been principally focused on expense reduction and capital cost containment and they've done a fabulous job at that. Whether that's caused them to suffer somewhat in the topline, I think it probably has, both from attention and from reduction in expenses and capital. And clearly, that's an area that they're focused on, is how do we grow the top line and keep the base growing.

So, you know, I think that's -- you know, we're still optimistic about that business and we're still interested in the business, and I don't think you could lump all the international businesses into one pile in any event. But I think it's fair to say that our interest has not diminished at all. Your second question -- can you repeat that? It was on STARZ! Encore.

Sure. It just seems like pay subs have plateaued for HBO and Showtime and STARZ! over the last year or so, and obviously HBO is getting more aggressive. It kind of implied that the business is maturing. Is that accurate or is there substantial growth left for STARZ! going forward? Absent, of course, the Comcast situation

STARZ! has always built its business around digital growth. To the extent there's a temporary stall in digital growth, I think that will affect STARZ! and Encore. To the extent that you can create services that drive pickup of digital packages, which is what movie packages have shown to do and why the Encore and Multiplex units are generally quite well packaged, individual packages, I think there's substantial upside.

You know, there are other ways, there will be other ways for people to get movies, but there always have been. People have been able to rent movies and had access to pay per view. The fact that you now have VOD or streaming or something else, I don't think is necessarily saying that the market is tapped out. We simply have be to be more creative in working with the distributors to come up with pricing and packaging that appeals to the consumer. But movie entertainment is still, I think one of the -- if not the primary driver, certainly one of the primary drivers of pay television. So we continue to believe there's growth there.

Thank you.

And just a reminder to everyone, it is star one to ask a question. We'll go next to Kathy Styponias with Prudential Equities.

A couple of questions, Bob. It looks like during the quarter you brought back some of your own debt . Given the interest rate environment, is this the more likely way you'll shrink your capitalization rather than buying back stock? And second is a follow-up question on STARZ! and their strategic positioning. Could you maybe go over what output deals you currently have, when they expire, and given that you're the only pay TV channel without original programming, in a world with increased VOD and DVRs, is that something you are going to need? Are you strategically just at sound without original programming? Thanks.

I will answer the first question and let Mark Bauman respond to the second. Yes, we did buy back some bonds. We have a substantial cash balance and I wouldn't be surprised to see us continuing to buy both bonds and stock. You know, one or the other, it will depend on the day and our appetite and what is offered to us. But I wouldn't be surprised to see us buying either or. I wouldn't look at it and say we're buying bonds and not stock, or stock and not bonds. On the STARZ! question, I don't know if we can really, in this call, give you all the contracts and all the expirations. That would be fairly lengthy. I can do that separately with you Kathy.

Okay. Thanks.

Could you repeat the second question, Kathy?

Give that you don't have original programming and HBO and Showtime have built their strategy and their positioning in part on these original shows, in a world where we are going to have increased VOD and DVRs, presumably there will be other ways for people to get theatrical movies, do you feel strategically that you will eventually need to get into that business in order to keep STARZ! strongly positioned from a strategic perspective?

Actually we think that the fact that they are focusing on the originals leaves a clear niche for us, with just theatrical movies. As we mentioned before, people always have the ability to get movies by other venues. When, you know VCRs came along, everyone thought that would be the end of movie theaters and pay TV, but, in fact, it was not the case. And with the advent of VOD, we believe that it's a great platform, but we believe the business model subscription basis is far better. And, in fact, some of the early results we have from one of our SVOD tests in Los Angeles has shown our STARZ! penetration to grow from 33% to 60% where STARZ! On-Demand is bundled with STARZ!.

So we believe that there's a lot of growth left in the category if you can provide a compelling offer to a consumer of convenience and pricing, and as the early tests have shown, we think that can work. The On-Demand has been delayed in a number of situations, Charter, Adelphia and some others, for other reasons, challenges they are facing, but we believe when we can get in there with them and market, we will do very well. I think we previously announced that we had done a deal with Insight, where they will be rolling out STARZ! On-Demand in all of their systems, bundled with STARZ! Superpack. And we feel within the next couple of quarters we should have some good results to share with you on that.

Can I ask a quick follow-up? Can you update us on where the litigation stands between STARZ! and Comcast? What is the next data point that we should expect to hear?

It's pending. That's really all I can say. There's actions pending in two different courts and I don't know -- we can't predict when they will be ruled upon.

So the setting has not determined yet, whether it will be Denver or Delaware, right?

Denver or Pennsylvania.

Right. Okay. Thanks.

You're welcome.

We'll go next to Matthew Harrigan, Janco Partners.

On QVC, can you talk about cloning it in the smaller European markets, particularly given your 74 percent ownership of Eucoma, and logistically is that fairly easy to do, or is there a lot of nuances with individual national markets that make it complicated? And secondly on the QVC, can you talk about your online strategy? And then lastly could Gary update us on how the Wild Blue technology is hardening and your thoughts on the cost liability of satellite high speed?

I think it makes sense for Bill to run that because he runs the international division. He will be able to be most responsive as far as what the individual requirements are, but I think they have to do mostly with size of the population and currency and other things. While there are areas we hope to be able to help, you know, the largest markets are UK and Germany, where we are not directly a large player.

Yeah, I think that's true. I mean, obviously we have to get a little bit of flavor or a better understanding of what Liberty has internationally, but quite frankly, I don't think there's too much potential in that regard. You know, our international plate --

One moment, gentlemen. Please go ahead.

Okay. You know, we're pretty satisfied with our international strategy right now. We don't see any other major markets that would have an effect on any of the financial models that you all might be preparing in terms of evaluating QVC. So I think from a financial perspective, what we're in now, at least for the immediate future, is where we'll be going forward. Now I wasn't sure with regard to the -- was the online question related to the Internet or was that something else?

No, that was related to the Internet.

Okay. Our strategy, with the Internet is and has always been, is to use the Internet as a complement to the base business. In other words we just look at it as a tool to service our current customer better. Our intent there is not to open up brand new markets for new customers; although, you know we're delighted when they buy from us. But most of the sales that happen IQVC.com are people who are using the Internet as an ordering mechanism, rather than incremental sales.

So, you know, our -- our estimates -- and I think they are pretty reliable -- indicate that approximately 80% of the sales that happen on QVC.com would have happened over the telephone anyway. But what happens is, we give our shoppers a better shopping experience. This is one of the reasons we don't break out QVC.com separately from the TV business in our financial results, because externally, as well as internally, we look at it as all part of an integrated whole.

Thanks. That's all I have.

Again, it's star one for questions. We'll go next to Paul Kagan of Kagan Capital Management. One moment, Mr. Bennett's line has disconnected. One moment. We will reestablish the line. We're still trying Mr. Bennett's line. Please remain on hold, or if you have a question for Mr. Barbara Bennett or Mr. Castello.

Okay, I can ask Bill a question. Bill, does the transfer of ownership of QVC indicate at all that there's going to be new directions in the expansion of the business, or is it just a matter of running what was there for so long and continuing to collect the cash?

I'm glad Don is not on for this one, but I certainly hope it's the latter. You know, I think we've got a great model that works here, and, you know, Don and his team addressed the management team out here and he said we just want you guys to keep on doing what you are doing. So I don't see any -- not only do I not see any radical changes, I don't see any small changes emanating from the change in ownership.

Great. Is he still off?

He's still not online.

Can I ask the question he and maybe we can tell one of the other guys and they can tell him?

Paul, I'm in another place. I'm in Philly. In Westchester. Barb is not with Bob either. So I think the Denver office got disconnected.

We're still trying to establish Mr. Bennett's line. We'll have our next question from David Joyce with Guzman and Company.

Thanks. Some of my questions have been answered, but maybe we could just fill in some other, you know, thoughts. You know, at QVC, are there any plans to expand into other markets internationally, other than Japan, UK and Germany, as a mode for future growth? Also, I don't know if you can answer this or not, but over the next few years, is there some sort of an inflection point on Discovery that anyone could see that would point to a deceleration in the growth of new affiliates? For example, are there other channels that are being planned? Thanks. If you can help.

Okay, well, the first one is easy, and I will take that and hopefully Barb is on the phone and she will take the second. With regard to international expansion, we don't see anything really hot on the plate for the next couple of years. We think China will be a tremendous market for us down the road, but we look at that to be at least three, four years away. And we have established an office in China in the last two years. But the primary purpose of that office is twofold. One is to QA our products, our quality assurance, products which are coming out of China, as well as to do some of our own sourcing out of China. So right now we have approximately 30, 32 people in China, all of Chinese origin, working for us, and so the third purpose I mentioned is QA, as well as product sourcing.

The third purpose is to, you know, establish the brand of QVC in China. We have our office in Shanghai and we opened another one last month Shin Jeng (sp?). But we think China could be a very, very, attractive market. For those of you who don't know, China has over 100 million cable homes and has a very excellent postal service. And with cellular phones, you know, we think the infrastructure is there. What we don't believe is there is the discretionary income on the mass of the population in order to support our model, number one, and number two, we'd like to see a little bit more guarantees in the court system in terms of people borrowing, operating it, and other things along that line. All of which, we believe is going to happen in the next two or three years. So I would say in terms of positioning internationally, China would be the next major effort that we'll make.

Dave, this is Barb. I am on the line. Would you mind repeating your question for me, please?

I'm wondering if you can speak in big picture terms when there might be an inflection point when there will be a deceleration for Discovery in terms of the cash flow growth and affiliate growth or, you know, are there plans to continue adding channels domestically and internationally that could be the -- you know, continued drivers of the growth?

Well, certainly we have -- we've done quite a number of launches over the last several years. In the late '90s we were doing considerable international growth in trying to take our brand to as many countries as possible. We don't feel that we need to continue at that growth, and we have a considerable amount of organic growth left. Our contracts in the U.S. are long-term in nature. Our first ones don't expire until the beginning of '07. So we have a fair amount of growth, that we have a very good amount of visibility over the next several years. I don't know if that answers your question, but I think we still feel that we have a tremendous amount of organic, without having to launch additional services.

That's fine. Thank you.

Okay. And at this time we have no further questions in the queue, as well as due to the power outage today, we do not have Mr. Bennett's line reconnected. At this time, we will have to go ahead and conclude today's conference. We do appreciate your participation and everyone have a good evening.