Sinclair Inc (SBGI) 2010 Q1 法說會逐字稿

Greetings and welcome to the Sinclair Broadcast Group, Inc. first quarter 2010 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded.

It is now my pleasure to introduce your host, David Amy, Executive Vice President and Chief Financial Officer for Sinclair Broadcast Group, Inc. Thank you, sir, you may begin.

Thank you, Operator, and good morning everyone. Participating on the call with me today are David Smith, President and CEO; Steve Marks, Chief Operating Officer of our Television Group; and Lucy Rutishauser, Vice President Corporate Finance and Treasurer. Before we begin, Lucy will make our forward-looking statement disclaimer.

Thank you, Dave and good morning everyone.

Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors. Such factors have been set forth in the Company's most also recent reports on Forms 10-Q, 10-K, and 8-K as filed with the SEC and included in our first quarter earnings release. Our earnings release was furnished to the SEC on an 8-K earlier this morning. The Company undertakes no obligation to update these forward-looking statements.

The Company regularly uses its website as a key source of Company information which can be accessed at www.SBGI.net. In accordance with Reg FD this call is being made available to the public. A Webcast replay will be available on our website later today and will remain available until our next quarterly earnings release. Redistribution of this call is prohibited without the express written consent of the Company.

Included on the call will be a discussion of non-GAAP metrics, specifically television broadcast cash flow, EBITDA, free cash flow, and leverage. These metrics are not meant to replace GAAP measurement but are provided as supplemental details to assist the public in their analysis and valuation of our Company. A reconciliation of the non-GAAP metrics to the GAAP measures in our financial statements is provided on our website under investor information reports and filings.

Thank you, Lucy. Before we go through the results I wanted to highlight some of our first quarter accomplishments. During the quarter we renewed our outsourcing agreements on WYZZ TV in Peoria and WUHF TV in Rochester with Nexstar Broadcasting. The JSAs were to expire in April but have been renewed until December 2013.

We entered into an agreement to multi-cast theCoolTV, a 24 hour music television network in 34 of our markets which is expected to begin broadcasting in June. We completed a second tender offer of the 3% and 4-7/8% senior convertible bonds, which Lucy will describe more fully a little later.

And for those of you who were not able to attend last month's NAB convention there was a lot of optimism about the economic recovery, the future of broadcast TV but especially mobile DTV.

Several recent news worthy items on that front is that this month's consumer mobile DTV showcased in Washington D.C. and the joint venture of broadcasters which includes both Fox and NBC networks which will be working towards creating a viable mobile DTV business model.

Now, turning to our results. Net broadcast revenues for the first quarter were $147.9 million, an increase of 12.7% or $16.6 million versus first quarter last year and within our guidance of up low double digit percents. Improvements came primarily from increased ad spending by the automotive sector, political spending, and retransmission fees, and this was without having Olympics or Super Bowl within our station group.

Television operating expenses in the first quarter, defined as station production and station SG&A expenses before barter, were $66.6 million, up only 1.1%, or $700,000 from first quarter last year. The increase was primarily due to higher sales commissions on the higher revenues, increases in employee compensation, and the new ABC license fees, offset by lower electric costs as a result of shutting down the analog transmitters.

Corporate overhead in the quarter was $6.6 million, 3.4% or $200,000 higher than first quarter last year due primarily to higher stock based non-cash compensation, which we did not issue last year, offset in part by lower healthcare claims across the Company and lower insurance costs.

We had operating income in the quarter of $46.2 million as compared to $23.4 million last year, excluding the impairment charges we incurred last year. The other non-broadcast operating divisions had $153,000 of operating income primarily due to the results of our alarm business. Plus during the first quarter the non-broadcast division made additional investments of $3.2 million net of cash distributions.

Television broadcast cash flow in the quarter was $56 million up $12.5 million or 28.6% from last year's first quarter BCF. EBITDA for the entire Company was $51.2 million in the quarter, up $14.5 million or 39.6% higher than the same period last year. The broadcast cash flow margin on net broadcast revenues was 37.9%, higher than our margin a year ago at 33.2%. The EBITDA margin on total revenues was 30.2% in the quarter, also exceeding last year's margin of 23.7%.

Net interest expense for the quarter was $28.9 million, that's $10.6 million higher than first quarter last year due to the restructuring of our debt in the fourth quarter. On a net cash basis, interest expense was $26 million in the quarter.

We had diluted earnings per share of $0.14 in the quarter. We generated $23.1 million of free cash flow in the quarter which equates to a 32% free cash flow yield on our equity market cap and that's at an EBITDA conversion rate of 45%.

So Lucy will take you through the balance sheet and cash flow highlights.

Thank you, Dave. Capital spending in the first quarter was $1.8 million, well below our guidance of $10.3 million. The shortfall is timing and is expected to be spent this year. We are still planning capital expenditures of $19 million for the year.

Cash programming payments in the first quarter were $27.4 million and are now expected to be $88.8 million for the year, $1 million better than our previous guidance.

Last quarter I provided you with longer term expectations for film payments. As we look at our programming grids we now expect 2011 film payments to be in the high $60 million and 2012 and 2013 film payments to be in the high $70 million. Overall, this represents about a $5 million decline to our prior guidance.

As Dave mentioned earlier in the first quarter we launched the second tender offer for our 3% and 4-7/8% senior convertible bonds. $12.3 million of the 3% were tendered leaving an outstanding balance of $15.4 million. $14.3 million of the 4-7/8% were tendered leaving an outstanding balance of $22.7 million. These tenders were paid for from restricted cash being held in a collateral account.

Cash continues to build as the business improves and free cash is generated. At March 31, we had zero drawn under the revolver, $52.3 million of cash on hand, and another $37.8 million of short-term restricted cash being held in escrow to fund the remaining amounts outstanding under the 3% and 4-7/8% senior convertible bonds.

Total debt at March 31 was $1.3381 billion, which includes $40.8 million of non-recourse and variable interest entity debt that we are required to consolidate on our books and another $32.8 million that relates to Cunningham's debt. On April 30, we used $25 million of our cash balances to prepay term loan B loans that have an interest rate of 6.5%.

Our covenant ratios continue to improve. At March 31, our interest coverage was 3.27 times on a covenant of 1.75 times. Our first lien indebtedness ratio was 1.66 times on a covenant of 3.5 times. And the total indebtedness ratio through the operating income was 5.06 times on a covenant of 7.5 times. We do not have a covenant requirement at the holding company. However, if you were to calculate a net leverage ratio excluding VIE and non-recourse debt, it would be 5.74 times.

Regarding the cap table we are extremely encouraged by the markets reaction to some of the recent high yield media deals that have been issued and believe that there are opportunities for us to further strengthen our balance sheet.

Steve Marks will now take you through our operating performance.

Thank you, Lucy, and good morning everyone. Net broadcast revenues were $147.9 million or up 12.7% in the first quarter. The improvement came primarily from the auto category, retransmission fees and political spending. We are extremely pleased with these results especially when you consider that we have only one NBC station and two CBS stations. We did not have the benefit of the Olympics or Super Bowl in our performance.

Political spending in the first quarter was $1.5 million versus $0.3 million spent in the first quarter of 2009. Excluding political, net broadcast revenues were up 11.7%. Local broadcast revenues which include local time sales, retransmission revenues, and other local revenues were up 14.1% in the first quarter or up 13.9% when excluding political.

National broadcast revenues which include national time sales and other national revenues were up 8.2% in the first quarter. Excluding political, national broadcast revenues were up 5.2%.

Categories that were up most in the quarter were automotive, services, schools, grocery, medical, and home products. Automotive exceeded our 20% expectation, growing 35.6% in part due to higher spending by Toyota. Auto now represents approximately 17.4% of our time sales. When you look at the top ten categories which represents 77% of our time sales, only two are down. Paid programming which was down 10.7% and telecommunications which was down 18.3%, which we discussed on our last earnings call.

Turning to our outlook, we feel very good about the core business for 2010. The visibility continues to improve although not back to where it was pre-recession. For the second quarter we were estimating net broadcast revenues to be up approximately 20% from last year's second quarter net broadcast revenues of $133 million. Included in our outlook is approximately $3.1 million of political advertising as compared to $700,000 in the second quarter of last year.

From a category perspective we expect a majority of advertising categories to finish the second quarter up versus the second quarter last year with the biggest gains coming from the automotive sector. We expect automotive to be up approximately 36% in the quarter. Other categories we expect to finish up are schools, services, furniture and telecommunications as well as medical, restaurants and home products.

Paid programming, entertainment and fast food are expected to finish the quarter down.

On the expense side, we are forecasting our TV production and SG&A expenses to be approximately $69.8 million in the second quarter, a 1.3% increase over second quarter's last year $68.9 million. Included in the $900,000 increase are our highest sales commissions on the revenue growth, higher compensation expense, the ABC license fee and expense to remove analog equipment offset by lower bad debt expenses booked last year related to GM and Chrysler bankruptcies.

Based on our guidance included in our earnings release provided this morning we are expecting EBITDA to be approximately $63 million in the second quarter. This would represent an approximate 50% increase versus same period last year. For other online item guidance, please refer to our earnings release provided this morning. And with that I would like to open it up to questions.

(Operator Instructions). Our first question comes from Marci Ryvicker with Wells Fargo. Please state your question.

Thanks, good morning. I have two questions. The first, Steve, can you tell us what national and local core are pacing up in the second quarter? And then secondly for Lucy, it looks like program expense guidance came down a bit for the year. Is this at all related to what you're paying ABC or is it something else?

Yes, let me do that question first. The ABC license fee is in the line item which is production and programming expense, not in the film payments expense, film payment cash line. So the decline in the 2010 and really 2010 through 2013 decline in film payments that I talked about is really coming from a couple things, some of which we discussed last quarter which is doing more barter deals, less cash deals. And then just also, as I mentioned, looking at some of the programming grids and some of the programs we had in there that we're not going to do. But it's primarily related to barter.

Okay, just one clarification. The actual program contract amortization line, it looks like you're guiding $66.3 million and you were guiding $69.1 million?

Yes, that's primarily related to not having as many writedowns as we had anticipated.

Okay, thanks.

To answer your question, Marci, presently the second quarter, local is approximately pacing around plus 16%, national is in the high to mid 20%. First quarter, as we mentioned before, we didn't have the benefit of the Super Bowl or the Olympics so our pacing was, I don't have it right in front of me, but I believe local is somewhere in the 8% or 9% area and national a little bit lower than that. But we could get you those exact figures, I don't have it right in front of me at this point.

Okay, are the pacing figures you gave me including or excluding political for the second quarter?

Excluding political.

Thank you so much.

Our next question comes from Aaron Watts with Deutsche Bank. Please state your question.

Good morning everyone. One clarification, I don't know if David touched on this in his comments but the other operating division revenue line, around $7 million, was down from last year. Is that the alarm business or what's in there?

Yes, we pulled out a couple companies that we shut down. It was Acrodyne transmitter and G1440, the software company. We sold the G1440 in December and we shut down our Acrodyne transmitters last fall. That's what you're seeing.

Okay, and then second, can you just comment a little bit on any differences or variances in geography or market size in terms of the strength you're seeing? Just curious if your larger markets are performing better than smaller and the certain pockets of the country how they look versus others.

Actually, our larger markets are really driving our pace and we're starting to see a rebound in the state of Ohio where we're dominant in Columbus specifically, having a great first six months in that market.

Seeing a lot of strength in our other markets that are big cash flow markets, like Asheville and Baltimore and San Antonio. They are a core of the Company, the strength of the Company. Our biggest building markets are our biggest achievers so far in the first six months.

Okay, thank you.

Our next question comes from Bishop Cheen with Wells Fargo. Please State your question.

Hi, everyone. Thanks for taking the question. Just two brief questions. One, do you think national is going to continue to be the lead steer? I know it was different in Q1 but in Q2, it seems to be flip flopped on the pacing. Will local achieve some parity as we get deeper into the year?

I think nationally, you would expect to be top heavy in the second quarter. There's a lot of reasons for that. Certainly the special events that took place in first quarter, now you've got the second quarter. The automotive category is really starting to pop well. The dominance of that category does come from a national level and their spending is continuing and it's been pretty impressive. So I don't think it's that highly unusual.

You have a lot of accounts also that we're noticing on the national level that we didn't have at this time last year and it's a significant amount of dollars they're contributing. So I wouldn't necessarily categorize it as new business but it's new business in a sense that they were sitting out on the sidelines for at least 12 months and now coming back and placing their dollars on a national level.

So it speaks to the economy turning around, advertisers having a little bit more of a comfort level and their expenditures in terms of their budgets. And we're witnessing that with new spenders coming in in second quarter with a pretty significant amount of money.

And then you take a look at the guys that have always been there and stayed throughout the tough time, their budgets are increasing pretty dramatically. So we're seeing a real strong national market right now and I would expect that to continue throughout the remainder of the year.

Okay, that's helpful. And Lucy, on the residual outstandings on the two converts, about $38 million between the 3% and the 4-7/8%, how do those retire? Do they just wait for the maturity or do they come out in little bits and spurts?

They are currently, the holders of those are allowed to put the threes right now and then the fours have a put date of January 2011.

So you just live with them on your balance sheet for the next eight months or so, couple months?

Right. That's correct.

Okay, and then any color as hot as the capital markets have been, and I know that you're always opportunistic on your balance sheet. Any feelings or color you want to share about how you would like to go about taking care of the eights and the last convert?

That's a very valid question, Bishop. As I mentioned in my opening remarks, we've been watching the activity in the high yield market. We're very encouraged by that. And as Dave mentioned, a lot of the optimism coming out of NAB. So we're watching it. As you know we've always been a Company focused on having a strong balance sheet. We were, I believe, the first Company to come back to the term loan B market last year and one of the first with the senior secured bond.

So we're watching it. We think there's opportunity right now for it and we're looking closely at it.

Okay, fair enough. Thank you.

Our next question comes from Edward Atorino with The Benchmark Company. Please state your question.

Hi, the question on national -- it was what I was going to ask. It sounds like business is coming back, budgets going up. You could probably give me a laundry list of whose doing it but I don't think that's necessary, thanks.

Our next question comes from Avi Steiner with JP Morgan. Please state your question.

Thanks for taking the question. Perhaps I missed it in the commentary but I know retrans is blended in your numbers. Can you give us any color on that and anything we should be aware of coming up for this year? Otherwise, my questions have been answered, thank you.

Sure, Avi. As you know, the retrans is in there. We continue to see, as we mentioned, improvement on the retrans line. A couple of deals that are coming up this year is one we're working on right now is Charter. And I think that's really the last major that we have that's for this year and we'll go from there.

But we do have Time Warner and Mediacom. They come back up at the end of the year.

Right, but they're done for the year.

And if I could add one follow on to that. Again, I know you don't disclose the numbers as you used to but presuming you have renewal and it's up, which at least I expect. How would that interplay with the ABC affiliation renewal, if at all, and what it may do to the expense line as you referenced earlier, Lucy? Thank you.

As we stated, when we entered into the ABC deal that we have, the forecast for the full year included the license fees to ABC. So there shouldn't be any change to the expense line as a result of renewing the Charter deal.

Our next question comes from Andrew Finkelstein with Barclays Capital. Please state your question.

Hi guys. Just wanted to follow-up on expenses a little bit. It's really remarkable I think with the revenues up high teens, 20% and expenses basically flat or just up a couple percent. And then looking out through the year, it looks like though with foreign change percent growth, I think for the full year you guys are guiding to, there's going to be a more meaningful step up in the second half of expense growth.

So could you just talk about what happened in the first, second quarter? Are we still annualizing some cost saves and then what we're looking at in the second half of the year?

Yes, sure. The drivers in the second half are going to be really going back to business as normal in a lot of ways from what we saw last year to this year in regards to a couple of things. One is just the amount of promotion dollars we are putting back into the stations and that's a big driver that you're seeing here.

And of course the commissions as the second half will be, at least we expect to see, real growth in the second half. We haven't provided specific guidance in that regard but political is a big number and most of that comes in both third and fourth quarter so that will really drive the expenses as well. And then as you already are aware of, what's in there is the ABC license fees we didn't have last year.

And some of the offset that we enjoyed in the first half was the shut down of the analog in the first half of last year versus this year, so that comparison isn't available to us as we go into the second half of '10. We were all digital for the second half of '09. So those are the primary drivers.

Were there any changes to 401(k) matching and benefits and stuff like that that are coming around?

Yes, but we did not have a 401(k) match in '09, we did have one for this year. At least we have that anticipated.

And I assume also you're accruing some bonuses at this point. And I don't know if there's a wage freeze that's been lifted or not.

Yes, wage freeze was lifted and you are correct, we would expect to see bonuses paid at the pace that we're seeing now and the growth in the business that we wouldn't have seen last year.

Okay, great. Thanks.

Our next question comes from John Kornreich with Sanders Capital.

I just have a few questions, some of them looking backward, I apologize. What did you calculate as your 2009 BCF and OCF?

BCF in 2009 was $217 million and EBITDA was $190.2 million.

And when you talk about the leverage of 5.7 that's based on calculated net debt of what?

That's taking total debt less the cash.

All the cash?

All the cash. And less the non-recourse VIE debt and the Cunningham debt.

So what does that work out to net debt?

That's about $1.174 billion.

And that's the 5.7 TTCF that you use?

5.74 times, right.

But that's 12 months trailing?

Yes, right. The trailing EBITDA in that case is $204.7 million, that's just a straight trailing. Under the bank definitions there is adjustments but I don't adjust for that.

So when you talk about $63 million of OCF in the second quarter, that is after overhead, correct?

Correct.

And the first quarter you calculate, I get BCF of $48.5 million in the first quarter?

How about, John, maybe after the call why don't you and I, we can sit. We also have up on the website, there's a reconciliation of how we calculate free cash and EBITDA.

Why is there this year such a huge disparity between program contract amortization and what you're actually spending which is like a 26% disparity, which is very unusual. Usually the two numbers are pretty close together. Last year, I think they were $10 million apart and this year they were going to be according to you $22.5 million apart.

I think there's a couple drivers there. One is the write-offs we've had in a number of programs so that will drive down our amortization versus our cash payments will continue to be whatever they are. And as we roll off of cash, a lot of the cash programs and into more barter type programs you'll see less amortization as a result of that. So you'll see cash payments and really not amortization that's involved there.

So next year they line up pretty close?

You'll see that getting closer and closer over time here.

Last point I'd like to make. Lucy has heard me say this before I think and I just want David to hear it. I think that when you make a presentation to a brokerage sponsored group, I think you have one with Jefferies coming up, you should be Webcasting it. It is selective disclosure not to make it available widely on the Web. It is unfair that when you make a presentation at Jefferies that somebody has to be a Jefferies client to hear what you have to say. That's not fair, so that's my point. Thanks for your help.

Thanks, John.

Our next question comes from Matt Swope with Gleacher & Company. Please state your question.

Good morning guys. Just on Avi's question on the ABC payments, is there anything that's variable about those payments to Avi's question? If you get more retrans than you expect this year, does your payment to ABC go up with that?

No it doesn't.

So it's a flat fee?

We're not going to go into a lot of details about the agreement, I'll say that much.

Okay, and on the issue of potential market opportunities is the 5.5 times incurrence test in your second lien, what guides you're thinking there, as you think about where you might put any new financing?

That's certainly a control point on what we can do. It's a television subsidiary, so we have to be aware of that. As far as availability to be able to borrow at the holdco, it's very each expensive. It's not just outright unavailable to the market despite how much improvement we're seeing in the credit market itself, in the availability of credit. It's not really affordable to look at the holdco in that regard.

I think we've talked in the past we would like to be able to look at our sixes that sit at holdco and look at ways to refinance those sixes or take care of that piece as they come due. Try using the holdco level. And we've talked about alternatives that may be available including the possibility of converts down the road as the convert market starts to improve and our equity starts to improve. That may be an alternative.

But I'm not telling you something that we're going to do right here, it's just there's optionality at that level that we wouldn't have at the TV subsidiary. But basically today, we're really focused and have to be focused on what we can do at TV that's affordable to the Company.

Great. That's helpful. And just on the way you're going to ultimately take the 3% and the 4-7/8% converts out, Lucy, is it true that those are callable from your perspective too, not only puttable by the holders but callable by you?

Correct.

So would you, just to get the 3's out of the way, is there any reason you wouldn't just call those right now?

It's a very low cost of debt for us.

Okay, but if you sit there with the cash, you still theoretically have a negative carry with what you're earning in the cash and what you're paying those, right?

That's correct, but the cash at some point becomes released to us.

And then just one last one. On the other investments line, I think you mentioned a little over $3 million that you spent in the first quarter. Could you give us an estimate for what that number might be for the year?

I could tell you that we have very restricted limitations on what can be done in that regard. Under the current credit agreement we can't exceed a total under the life of the credit agreement of just under $20 million.

Where the big investments would come from are a couple million dollars here and there so it shouldn't be much more that we're seeing on the horizon. There's a Company called Patriot II that we have to fund under contractual obligations when they have a capital call. Our total exposure there is probably another $8 million, $9 million over the life of that. So that won't happen this year. All of it will not happen this year.

And there are some opportunities given the nature of the market that we might be able to avail ourselves of during the course of the year. But I couldn't give you a hard and fast number but it won't be much.

Do you know where you stand against that $20 million limit at this point?

We have about $15 million remaining.

That's just in the credit agreement so if you were to replace the credit agreement that would go away.

Maybe, it depends on how that goes, so it may go away, it may not.

Thanks guys.

Our next question comes from Michael Meltz with JPMorgan Chase & Co. Please state your question.

Three questions. I'll be quick. You got a few questions on expenses. Just to make it easier for us, your guidance implies expenses will ramp a little bit as the year goes by as comparisons get tougher.

As we look into next year, are there any one-time items this year or contra expenses that you're benefiting from that will go away next year? Because I think you're done with the Nextel credits, for instance, and is there anything else we should be factoring into numbers for next year?

The only thing that comes to mind, Mike, and it's not the expense side, it's the revenue side, and that's the Super Bowl, which I believe goes back to Fox next year. So that would actually be a pick up for us on the revenue line.

Okay, and then the question on the ABC deal. So that isn't something next year, there's not a ramp in your license payments each year going forward, is that how we should understand it?

To get into all that kind of detail, there are increases that will take place but there's also increases that we anticipate on the top line as well, but to give you a complete picture of exactly how that all comes out would be very difficult.

Okay. Political advertising, what's your current expectation for the year? Do you still think you'll beat the $31 million you did in '06?

I think we're on target. The first six months we're right on top of the number that we suggested we would make. I think that's a good start because typically the first six months are the challenge, and I do expect political to be extremely heavy in the back half of the year. And we budgeted for it to be extremely heavy but I'm very confident that we'll make the numbers that we have set out to make, and I don't see us falling short of them. I think there's a good chance that we'll be able to exceed them.

Okay. Lucy, do you expect to be a cash taxpayer this year?

We do but we do have some refunds coming in in the second half of the year. So on a net basis, after the refunds, we'll have net refunds coming in but we do expect to be paying taxes for the current year.

Okay, and last question, this is another modeling question. Your share count was down I think sequentially but your share price was up a good amount. What were shares out, diluted shares out at the end of the quarter and why did that number trend where it ended?

I'm just trying to find the number here. The weighted average shares were rounded to $80 million.

Okay, and that's where you ended the quarter on a diluted basis?

At the weighted average shares, right, assuming dilution.

Okay, all right, thank you for your time.

Our next question comes from Edward Atorino with The Benchmark Company.

I'm done, thanks.

Our next question come from Marci Ryvicker with Wells Fargo Securities. Please state your question.

Hi, thanks, just a couple of follow-ups. The first, can you remind us what's causing the increase in CapEx this year versus last year for the full year?

If you'll recall last year, our number came in very low. I want to say it was about $8 million that we did and that was well below the guidance we had given going into 2009. We had about $2.5 million of the '09 projects that rolled into 2010 and then we had some expense reduction and revenue generating projects we had built into this year; some tower and antenna projects.

We're building out our My TV Station down in Pensacola so it can cover more; get into the Mobile, Alabama market. And then as I mentioned just some expense reduction; looking at some new technologies, try to have more efficiencies there.

How should we think about this line post 2010?

The maintenance is typically about $10 million to $15 million so I think if you're at $15 million, you're probably going to be at a reasonable place.

Okay, perfect. And then relating to ABC, are you able to assign your retrans rights to them and have them negotiate on your behalf if you chose to do so?

We're just not able to talk about that, Marci. There's a lot of confidentiality wrapped around these things.

Okay, and then the last question and then I'm done. I know you're very involved in the Open Mobile Video Coalition. Is this why you're not part of this national mobile content service that includes Belo, Cox, Scripps, Fox, et cetera?

No, I wouldn't read anything into that at all. That's nothing more than a bunch of broadcasters who decided to get together to see if they can come up with something that makes sense. We're all trying to figure out what the perfect model is, if there is such a thing, on a going forward basis. So those folks are comfortable sitting amongst themselves and my guess is you'll see other things like that happen.

Other groups of broadcasters get together to ponder about where is the money, how will we execute on it and who is going to partner and under what circumstances. It's a very large issue to deal with in terms of getting us together in a unified national group to be able to do what we need to do. So I just view this as the first round of people trying to figure out what they have to do, nothing tricky.

And Marci, just from a standpoint of the OMVC itself was not put together as a business planning organization. It was more about the technical side, developing a standard and making sure that mobile TV is a viable option for us as broadcasters and they've done a terrific job in doing that. So the standards developed, like we had mentioned, the Washington DC test coming up here as we go here over the next few months and the results of that coming out.

And it really was a lot of initiation there at OMVC saying that we can't act in a way that's going to create a business plan. We need some initiation that comes outside of OMVC and that's where you're seeing why things are going in the direction that they are.

Thank you very much.

(Operator Instructions). Our next question comes from Harry DeMott with Knighthead Capital Management.

Hi guys and Lucy, a quick question for you. I was thinking about all of the retrans stuff going on and you're back and forth with Fox and/or ABC, et cetera. And I'm wondering, could you characterize the different tactics or the different tacts these guys are taking?

Obviously, ABC provides you with a lot more programming during the day giving you a lot less opportunity to benefit from the good job that you guys do putting on syndicated shows and news. Versus Fox, which obviously just gives you a couple hours at night but they happen to be very highly valuable hours in terms of the ratings they draw. Could you just talk a little bit about that and just fill us in on what you think going forward on these different things?

I really don't think we can chat about those kinds of things. There's just too much confidentiality and proprietary information that's involved in the content of each one of these transactions. So we're certainly not interested discussing them openly under any circumstance for competitive reasons, and certainly the networks and cable companies don't want us talking about them. It's unfortunate that we can't because we would just love to be an open book and put it all on the table but that's not the way it works.

All right then, thanks.

Ladies and gentlemen, there are no further questions. I'll turn the conference back over to management for closing remarks. Thank you.

Thank you, Operator, and thank you everyone. Business has certainly improved and we look forward to our next earnings call with you. Okay, thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.