E W Scripps Co (SSP) 2009 Q1 法說會逐字稿

Welcome to the E.W. Scripps first quarter earnings report. There will be an opportunity for your questions. (Operator Instructions). As a reminder, today's call is being recorded.

Now, with that being said, I'll turn the conference now to Mr. Tim King. Please go ahead, sir.

Thank you, John. And good morning, everybody. We appreciate you joining us for this call. In just a minute, I'll turn the call over to our CEO and CFO for their prepared remarks before we open up the phone lines for your questions. But first, let me tell you who is with me on the call today. Rich Boehne, the President and Chief Executive Officer, will give you a brief strategic overview. Followed by Tim Stautberg, the Senior Vice President and Chief Financial Officer. He'll discuss the first quarter operational and financial highlights and he'll also cover some nonoperating data for you as well. Joining us then for the Q&A portion of the call are, Mark Contreras, the Senior Vice President of Newspapers; Brian Lawlor, the Senior Vice President of Television; and Doug Lyons, the Vice President and Controller.

Now, just a couple of housekeeping items for you. If you can't stick with us for the duration of the call, you can access a streaming audio replay by going to Scripps.com and clicking on the Investor Relations link at the top of the page. We'll have it there in just a few hours and we'll leave it there for a few weeks. Now, you can also use that link to find today's press release and the quarterly financials. As a reminder, when you're reading the release and the financial tables, the results for the Scripps Networks and interactive media divisions are presented as discontinued operations, as they have been since the third quarter of 2008.

As always, our discussion this morning may contain certain forward-looking statements and actual results may differ from those predicted. You can check page 11 of the Form 10-K from 2008 to read some of the factors that may cause results to differ from what you're about to hear. With that, I'll turn it over to Rich.

Thanks, Tim. Good morning everyone. Ad revenues from the first quarter were flat-out terrible. Not unexpected or out of line with our peers but still, what we experienced in the first quarter is a real world example of what happens when a nation's economy jumps the tracks. Let's all pray America gets its mojo back soon but in the meantime, at Scripps, we intend to stay focused and work our long-term plan. And obviously, we must be willing to cut costs, make hard decisions and endure some pain to protect our financial health.

As I'll talk about later, we believe our low debt and financial flexibility is a big competitive advantage in this environment. It's a strategic asset we must protect during the depths of the recession. As you saw in the first quarter, we're aggressively revamping our cost structure. Employee compensation is being reduced in a number of ways, including straight-up salary and bonus cuts and deep reductions in retirement benefits. These cuts are wrenching. They're hurtful to our employees but necessary for short-term financial health. These changes are also some of the first steps in a redesign of employee compensation aimed at keeping and attracting the talent we must have for future success. Although it may not look like it, based on our actions during this recession, our industry's future is dependent upon its access to great talent.

We also, in the first quarter, made one of the most difficult decisions I've ever participated in. We closed one of the nation's very best major market newspapers, the Rocky Mountain News in Denver. And we had to separate, from the Company, a newsroom of highly talented journalists. The reason was very simple. We were losing money in Denver and we did not believe recovery was possible, particularly given the challenges of the two newspaper partnership there in Denver. Believe me, if there had been a better option for our owners, our employees and for the market of Denver, we would have taken it. The financial damage from Denver is now contained and that greatly improves our flexibility going forward. It was a sad but very necessary step toward a successful future for the rest of the Company.

As Tim will discuss in a few minutes, we will continue to reduce expenses as needed, while we work through the economic recession. Much of what we've already done is yet to reap full benefit on the bottom line and you'll hear about that a little bit later as well. In some areas, however, we have so far protected our resources because we believe our long-term strategies for building value are more important than short-term cuts. I know it's difficult to discern, especially by looking at our current financial performance, but this is a season of opportunity for those able to gain audience and revenue share in local markets. In this period, Scripps is afforded a competitive advantage by its low debt and good financial flexibility. We're not alone but we are among the very fortunate.

So sometimes, as we say, it makes sense to run toward the fire. Here are three examples. First, head count in the television station division. We're racing to restructure our news rooms so they can deliver lots more valuable content, 24 hours a day, across multiple platforms. In many of our markets, competing stations are cutting local news resources. Instead, we're redeploying our people to actually increase the amount and quality of local news content. Additionally, we're entering partnerships with other local stations, so we can more efficiently gather commodity content and then use our talented people for enterprise reporting that builds audience. Brian Lawlor, he'll talk more about that a little bit later.

Second, we're investing to broaden the TV station's reach on the Internet and other digital platforms, including mobile. Some of that investment is for infrastructure but it also includes content that never appears on air. These are important new revenue streams, especially in tough economic times. Third, we're spending some money to examine the newspaper business model. This is very serious. It's way too early to make any promises but our recent experience as a member of the Yahoo Newspaper Consortium leads us to believe there is much more that can be done to simplify the business model and take advantage of scale. This is not easy and any changes will take time and money to implement but we're very determined.

Finally, one other point. We're also protecting our Internet investments in the newspaper markets. We're making progress. The incremental revenue is growing and we don't intend to let slip away our position as the leading providers of local news and information. We plan to hold our lead and hopefully to expand. Bottom line, these are very difficult times. Ad revenue declines of 20% in any quarter is a dead serious challenge. But this is also a season of opportunity for those with conviction and some resources to work with. At Scripps, we have both. And intend to use them for the benefit of our many stakeholders. Now, here is the CFO, Tim Stautberg to walk you through the numbers.

Thanks, Rich and good morning everyone. As you read in the press release this morning, our revenue in the first quarter came in at $205 million, which was 20% lower than in the first quarter of 2008 but in line with industry peers. Unfortunately, there was nowhere to hide during the current storm as declines in both local and national advertising accelerated. We reported a loss from continuing operations for the quarter that included several non-recurring items I'd like to highlight.

First, we recorded a preliminary non-cash charge of $192 million, after tax, to write down the carrying value of the goodwill and other intangible assets at our TV station group. Now, due primarily to increases in the cost of capital for local media businesses and declines in our stock price and that of other publicly traded television companies during the first quarter, we determined that indications of impairment existed for our television goodwill as of March 31. Under the two step impairment testing process required by FAS-142, we then went through a preliminary valuation process and determined that the fair value of our television business did not exceed the carrying value of our television net assets as of the end of the quarter. Causing us to write down to $0 the value of goodwill and making a small adjustment to other intangible assets.

The second non-recurring item is related to our newspaper interests in Colorado. As Rich mentioned, we were unable to find a buyer for the Rocky Mountain News and proceeded to close the paper at the end of February. As part of the process of exiting the Denver market, we have agreed to transfer our 50% interests in both the Denver Newspaper Agency and Prairie Mountain Publishing, to MediaNews Group later this year. The operating losses and wind-down costs related to our newspaper interests in Colorado amounted to $13.3 million after tax in the quarter. During the first quarter, we also made the decision to freeze our pension plan later this year. That decision caused us to record a noncash curtailment charge of $2.6 million in the quarter, again, after tax. Excluding these three non-recurring items, the net loss attributable to Scripps shareholders would have been $13 million, or $0.24 per share. Including these items, the loss from continuing operations was $221 million or $4.12 per share.

At our TV station group, total revenue was down 20%, as the impact of the weak economy spread to most of our advertisers, especially our largest. Automotive advertising was down 46%, retail was off 17% and our services category was down 18%. We're also on the wrong side of the political cycle, attempting to replace nearly $3 million in political advertising garnered last year. On the upside, our efforts to capture business from new customers, those who are new to TV or who have not advertised in our markets for the past 12 months, was up nearly 5%. And our drive to strengthen our stations' Websites continues to show success, with a 17% increase in online advertising.

Our expenses at the stations were up slightly compared with last year, driven largely by an increase in the cost of syndicated programming in key markets. Employee costs were higher due to a more than doubling of pension costs and the curtailment charge related to the freeze. Excluding pension and programming expenses, total expenses were down 6% compared with the prior year period.

Turning to our newspaper group. All advertising categories declined by double digits, classified, as you know, is the category that is most under siege these days. Within classified, both automotive and real estate were off 43% during the quarter and help wanted was down 66% from last year. Online advertising fell by $2.6 million or 27%, largely due to the sharp declines in the online ads that are tied to print classified. Online advertising that is independent of classified upsells, what we call pure play, continued to grow impressively, rising 30% during the quarter. Pure play is now about half our online revenue and growing at a steady pace due to the early successes of the Yahoo behavioral targeting initiatives that we've talked about in previous calls.

During the quarter, our monthly unique visitors rose 30% year-over-year, which is a very encouraging sign. While total ad revenue dropped nearly 30%, circulation revenue held steady year-over-year, cushioning the total revenue decline for the quarter to 22%. Total cash expenses in our newspaper group declined nearly 10% in the quarter, despite a doubling of pension expense and the curtailment charge related to the pension freeze. Excluding pension related expenses, employee costs were down 15%, due primarily to a 16% reduction in employees year-over-year. Despite a 27% jump in news print prices, our news print expense declined 15% due to a significant reduction in consumption. And good control over other cash expenses kept that category down 8% year-over-year.

We still have a reporting segment in our release called JOA's and other newspaper partnerships, although you're already familiar with the changes that will affect this segment. During the first quarter, we reported a pretax segment loss of more than $21 million, which includes a full quarter of newsroom expenses and an accrual for the costs associated with shutting down the Rocky and exiting Colorado. Once the transaction with MediaNews Group is closed this year, these results will move to discontinued operations for all periods presented.

Before we stop and take your questions, let me address a few nonoperating items. Capital expenditures in the first quarter were approximately $14 million. And the full figure is now projected to come in under $50 million. For 2010 and beyond, the maintenance level for CapEx should be about $25 million a year. Early in the first quarter, we borrowed an additional $12 million under our revolver to fund working capital for general corporate purposes and then capital expenditures tied to our Naples project. Bringing our total debt to $73 million but the $12 million increase in debt was eclipsed by and $18 million increase in cash and marketable securities. Thanks in large part to a March payment of $16 million from Scripps Networks Interactive, reimbursing us for their share of taxes we paid in the third quarter. At the end of March, we had $45 million in cash and marketable securities on our balance sheet.

We talked a little about the pension plan in our February call and I'd like to fill you in on the current status. As a result of the plummeting equity markets last fall, the asset value of our pension plans was $145 million less than our accumulated benefit obligations at year end. Consequently, our pension expense was projected to be roughly $45 million this year versus $15 million in 2008. As a result of the changes to our workforce, both in numbers and in projected compensation and our decision to freeze our pension plans later this year, our actuaries are now projecting that pension expense will be less than $30 million for 2009.

From a funding standpoint, we're not required to make any cash contributions this year to our defined benefit pension plans. And based upon our current actuarial assumptions and the IRS guidance regarding funding calculations, we do not anticipate a contribution being required in 2010. Now, that could change if interest rates or the return on planned assets differ from what we've assumed. And there's always a risk that the pension funding rules will change but we're encouraged that it may be 2011 before we need to begin making cash contributions to our defined benefit plans.

For more than a year, we've told investors that 2009 would be one of the most difficult periods in the Company's history. With a plant to be completed in Naples, with news print near historic highs, with no political advertising on our TV stations; we knew this would be a tough stretch, even if the economy was stable. The results of the first quarter validate those warnings. We don't see activity in our markets that would allow us to boldy call the floor to the country's economic difficulties. So, we continue to navigate 2009 with a combination of short term discipline and long term optimism. With that, let's open up the lines for your questions.

(Operator Instructions). And first go to the line of Alexia Quadrani with J.P. Morgan. Please go ahead.

Thank you. A couple of questions. The first question is, in the newspaper business, if you look at the different regions you participate in, are you seeing any signs of maybe stability or bottoming out in certain regions? Is Florida still the worst area? And then, in the broadcast side of the business, if you could maybe talk about forward pacings, what you're seeing there?

Alexia, it's, Rich. We'll let Mark talk about the newspapers first and then, Brian will talk about TV.

Alexia, Florida, as you know, kind of went into things first. I don't want to say or signal that they are out of the difficulties that they've been in. But the best way to characterize them, is that the entire group is performing similarly. And so, Florida doesn't stand out like a sore thumb like it had in quarters and years past. Hope that's helpful.

Yes.

And on the broadcast side, I would tell you that Florida continues to struggle. The challenges that we've had in that market are probably slightly greater than the profile of the rest of our group.

And general pacings, just across broadcast, are things looking just as bad in April, May?

Yes, to be honest with you, they're pacing kind of in line with the way they had paced in the first quarter. And with the business breaking differently, we're seeing much different habits. Business is coming in much later than it has in the past. But I would say that the second quarter pacing reflects a similar trend to how we saw things going in first quarter.

And then, just a quick question on your online business in general. You mentioned in the prepared remarks or in the release, that online advertising was down but if you exclude the advertising associated with the print product, you are seeing some pickup there. Is there certain verticals? I assume it's in the retail sector, that you're seeing pickup in the online business. Is that correct?

Alexia, this is Mark. Probably the biggest place where we're seeing growth and the biggest contributor to that 30% growth in pure play is behavioral targeting with our Yahoo partnership. All of the verticals, auto, real estate, help wanted, even, are down. But our ability to sell behavioral targeting has really caught on with our advertisers and particularly, with our sales forces. We compete in the Consortium with other companies. We're members with other companies, I should say, and we're very proud of the results that we've driven so far. We're kind of at the top of our -- of the Consortium in terms of gross dollars sold in that. So that's really what's driving the pure play number the most.

Okay. Thank you.

Our next question is from Craig Huber with Barclays Capital. Please go ahead.

Yes, good morning. A few questions. Can you give us an update of how April is trending or trended, I should say, so far, for newspapers, how April was? Was it similar to the first quarter? I realize there's an Easter effect in there but normalized for that?

Craig, this is Mark. Slightly better on the revenue side but no great shakes and we're going to get the full benefit, in the second quarter, of the expense actions that we took in terms of the 401(k) match and particularly, the salary reductions. So we anticipate expenses to get a couple of points better in April and we're hoping that that continues throughout the rest of the year.

And then also, on online, can you just in total for online, what was your total dollars online? You said -- but was your total online TV revenue, please, in the quarter.

This is Mark. For newspapers, we were about $7.3 million for total online advertising for newspapers, about $3.3 million of that was pure play and then, the remainder was combo.

And on the broadcast side, our online revenue is about just under $1.5 million for the quarter.

And then, also in the quarter, if you could just break out, in total, how did online help wanted, auto and real estate do year-over-year?

Craig, I'm going to have to dig those up for you and get back to you, if that's okay.

Okay. And then, my last question, if I could sneak this in. In your newspaper division, excluding news print and these one-time items, how much are you saying non-news pricing cash costs were down? Were you saying it's down mid-teens?

Well, I didn't calculate it without the pension but just non-news print cash expenses, your regular question, it was down 7.5% and we'll calculate for you what it is without the pension. Pension expense for us in the first quarter was about $5 million. So, we'll recalculate that for you.

Great. Thank you.

And next, go to the line of John Kornreich with Sandler Capital. Please go ahead.

Yes, there are a couple of minor questions that -- in the $44 million of cash and short-term investments, $34 million, $35 million is short-term investments. What is that exactly?

John, it's Tim. Those are -- we invest those in short-term money market funds, mutual funds.

Okay. So it's -- there's no equity securities in there?

No, no, no, no, no.

Okay. And I'm a little confused. On the pension expense, which you now think may be $25 million to $30 million, is the pension expense a cash expense?

No.

I didn't think so.

No. That's just the reported expense running through the P&L, separating the funding. So I'm trying to be clear about that on the call and in our financial statements and we'll be filing the Q shortly with more details.

Okay. Now, I'm going to try to trap you into an answer. which you may not want to give. Your CapEx will be $50 million. Your net interest expense, your net debt is about $30 million, it can't be more than $2 million or $3 million. And taxes will be de minimus in a year like this. Do you expect to have free cash flow this year?

I'd say that as we headed into this year, we did.

Yes.

And so, we'll see how the rest of the year plays out.

I'm excluding the non-recurring stuff.

Yes, that's right.

So it's tight one way or the other?

Yes.

Okay. Next, retransmission revenues, alone, in the first quarter were what?

I believe those were maybe $2 million or $3 million, John.

So $10 million or so is a good number for this year?

$9 million.

Okay. That's it. Thanks a lot.

All right. Thanks, John.

And we'll go to the line --.

Craig, this is Mark. We got the non-news print cash expense number for you, excluding pension expense, is down 14% Q1 this year to Q1 last year. And I'm working on the other stuff for you too.

And we'll go to the line of Barry Lucas with Gabelli & Company. Please go ahead.

Thanks, good morning, Rich and Tim. A couple of items, if you could. I'm looking at the charge related to JOA, but what was the cash impact in 1Q and how does that look going forward if you're accruing losses until the closing with MediaNews?

Sure, John -- Barry. Sorry, still thinking about John. First quarter operating losses at the Rocky Mountain News, in terms of newsroom expenses, was about $6 million. And then, we've accrued and will likely pay in the second quarter another $12 million or $13 million. The newsroom, we paid those folks through the end of April and then, just severance and related wind-down costs are probably another $9 million or $10 million. So all in, another $12 million in the second quarter, for a total of about $20

Okay. So -- and after the second quarter, we won't see a cash impact from the paper there?

We don't expect that.

Okay. If we switch gears to TV, you mentioned that programming costs are up and that you've got an investment in the newsroom as you try to expand your presence, particularly on the Internet. Others in the space, as you rightly pointed out, have cut expenses in television pretty dramatically across the board. So maybe you could just talk a little bit more or drill down on the variance? And in particular, where do you see programming costs going forward?

You identified programming and that is one of the areas that we've shown a significant expense increase this year, up 12% in the first quarter. The reason for that expense is that we had some programming on several of our stations a year ago that was barter only. "Martha Stewart" being the biggest of that. And we made a conscious decision to move to some other programming that we thought would be -- that would perform better for us but it had cash expense. So that would relate to why we have such a significant increase there and I do expect that programming increase to continue through the year. That will catch up in September but then we've made an investment in five of our markets for "Dr. Oz" for next year. So we will have programming increases all of the year.

We have been disciplined as it relates to our expense, the way we're managing expense. We've had salary reductions among senior managers. We've eliminated bonuses in many of those cases. We've had a freeze on open positions. We've had a significant reduction in overtime. We've strictly managed travel and all operating. And so overall, if you took out the pension and the programming expense, our expenses were minus 6% for the quarter.

One follow-up on TV, if I may. Auto receivables, particularly Chrysler, how much of a hole might you be in?

Our exposure is not great, about $300,000.

Okay. Thanks. That's it from me for now.

And we'll go to the line of Alfred M. Anderson with the Anderson Family. Please go ahead.

Yes. Good morning. I'm talking to you from Washington. I have a couple of questions. The first one, is Rich mentioned something about spending some money to look at the newspaper business model. And I was wondering if, first, he could explain to me a little bit more in detail what that scope of that you study is going to be? What sort of results are expected? And secondly, how much money is going to be expended on it?

Hi, Mr. Anderson, this is Rich. Yes, we -- as I've said, coming out of our experience with the Yahoo Consortium and then, some other efforts. We really do believe that one of the challenges the newspaper industry has is completely duplicating its costs, market, after market, after market, after market. And it's a business that has traditionally has not taken advantage of scale in expenses or in activities that don't necessarily directly touch a reader or an advertiser. So yes, we've set back and spent, not a great deal of money so, far but a little bit. Spent an awful lot of time and effort to see if we can find a way to simplify that business model. And the results of that are some months out from here yet. It's a big effort but we're very serious in believing that we have to take a look at the fundamental business model that sits behind the newspapers. I'll let Tim and Mark, if they want to say anything else about it because they're right in the middle of

Alfred, this is Mark. I just would caution, we're in the middle of considerate a pretty comprehensive study and we're internally calling it Project Simplify but the idea is to eliminate the complexity embedded in our business. Just a quick example, we have lots and lots of advertising rates across all of our markets. We probably, given the environment and the complexity of those, don't need to have all those. Same thing with circulation. Same thing with all of the internal workings of a paper, that really a reader or an advertiser really doesn't care much about. So, that's the essence of the project that we're working on. When we have conclusions from that and when we have specific tangible results from that, we'll get back to you with specifics. But right now, I think we're too early in the process to give you anything but the bare bones outline of what we're after.

Thank you. I'd like to ask one more question. And that is, I've noticed that there was considerable grant of options in early March. And I'm wondering if -- a little bit was obviously meant for service and incentive to the management to perform well in the future. But I'm wondering, if you have any sort of incentive plan for the editors of the various newspapers and television stations, the managers? And whether you have any specific incentives for the advertising managers in each of your newspapers or TV stations?

Sure, I'll let Mark talk specifically but let me say a little bit just generally. The approach to the Company has always been at trying to incent long-term good performance. So we have always leaned more toward equity than we have toward cash. And especially, in this period, all of our managers have taken large pay cuts, most of them did not receive bonuses. And we have dramatically reduced our bonus opportunity across all managers in the Company. And feeling that short-term, that's the right thing to do from a cash standpoint. But we still do believe we have to try to incent people for the long-term. So, we're using those options. I'll let Mark talk about how they come down.

Alfred, yes, I would just add that we're having discussions this year really rethinking our entire compensation structure for publishers, for ad directors, for editors. And we're, again, in the middle of those rethinkings. One of our core beliefs is that if you build audience, both in print and online, that's going to deliver value and that will be one of the kind of pillars of what gets built, in terms of a new incentive plan for '09 and going forward.

That's great. That's it from me. I'll see you tomorrow.

And we do have a follow-up from Craig Huber. Please go ahead.

Yes, good morning. Just historically, if you just think about Denver, for years and years your Company's management was hopeful that the Denver operation would turn around. And of course, it didn't and of obviously, the economy reeled this whole thing out of control. Do you have any other markets, for a number of quarters here, that have not made money or close to it? As you kind of revaluated what went wrong in Denver, you apply to other markets. And think, "Perhaps I have some other markets here for newspapers or TV stations, that may not recover here and potentially could be losing money." Do you have anything like that right now, that you could potentially shut down other markets in the next six months, to help your free cash flow, EBITDA? Thanks.

It's Rich. The good news is, the answer to that is, no. Denver was truly a unique situation, not just with Scripps but in the newspaper industry, with a joint operating agreement with two morning newspapers, a fair amount of debt there. And it's a large market, suffering all of the ills of large markets. So that was a decision that was made that really would enable the rest of our markets to have a much better time through the recession and then beyond. So luckily, as we said, we've got low debt, good financial flexibility. And across the board, for the most part, we're in good markets that we think over the long term should support good, strong, local media businesses on a lot of platforms. So, we're not afraid to make hard decisions, as should be obvious by what we did in Denver. But at this point, thankfully, we don't see anything quite like that coming in the near future.

And then also, just a nitpick question. As you look at newspapers back here in the first quarter, was there much difference between the year-over-year percent change for January, February or March or were they all pretty similar to the overall quarter, the ad revenue?

Craig, this is Mark. Not really. It was just a cavalcade of fun every month. It was just not terribly different month by month. I do have a follow-up for the previous question that you asked for online by category. Help wanted for online was down 54%. Real estate in the quarter, down 16%. Auto, down 39%. And other, down 2%. And again, that's just the online revenue by category.

You said other, down 2%?

Other, down 2%.

Great. Thank you.

And we do have a follow-up from John Kornreich. Please go ahead.

Three quickies and then I have a suggestion for you. And if you follow it up aggressively, I want a 5% commission. (Laughter) But first, three minor questions. On the programming expense, what's the outlook for 2010, could it flatten out?

I think 2010, the increases will not be as significant as this year but because of our commitment to "Dr. Oz," we will be showing programming expenses through 2010.

Okay. In Albuquerque, just curious, what's the surviving newspaper and who owns it?

John, it's Rich. That's owned by the Lang family. What we have today is just an interest in the cash flow and we do have some rights and participation of the partnership. But it's owned and controlled by the Lang family.

On unit circulation, can you give us a flavor of daily and Sunday? I know the revenue was flat. I assume it was price increases, less unit decline. If you could just give us an idea on daily and Sunday, what was the magnitude of the declines?

For copies?

Yes.

About 2% daily, John, and 1% Sunday.

So, that's pretty good. Very good. A suggestion, I'm always hearing from newspaper companies about their, "unduplicated reach," 72%, 79%, we have just tremendous reach, especially among unduplicated upper demographics. If that's the case, why can't you guys get some real meaningful political dollars? Political, by my calculation, on an average annual basis, average, is now TV's third largest category. You guys are nowhere.

John, I'm going to kick this one to my partner, Brian because we have talked about that and we do have plans coming up to address that.

Yes, and John, I don't want to disclose too much but it is something that Mark and I are talking about. Within our broadcast division, we've got a strategy that we execute on the political side. And we're going to be increasing our commitment to our political focus. And I think there's an opportunity for us to include newspaper within that strategy.

Especially, in the newspaper side where you're so heavy in Florida, which is always a battleground, it's a perfect fit. Anyway, that's it. Thank you.

Without the 5%, thank you very much.

Okay.

And we have a question from Scott Davis with J.P. Morgan. Please go ahead.

Hi, good morning. Two questions, actually. First, is on the broadcasting side, are you seeing signs of national spot buyers, kind of poking around, given that the pricing on the local side has been probably decimated more than at the network side? So, maybe the arbitrage is changing a little bit?

National is relatively weak, as is local. I don't see a dramatic change between the two. However, I do see some new entrants on the national side that had not been there that I do think are taking advantage of the pricing opportunities that are probably new to us this year.

Would you expect that trend to continue? It depends on who's holding price and who's not at the local level, right?

Correct, and yes, I would expect that trend to continue.

Okay. And my second question was, you've mentioned a few times, the behavioral targeting aspects of the Yahoo Consortium. And I'm wondering -- and Yahoo's, obviously, quite pleased with the Consortium, as well and the "we sell, you sell." And it seems like everyone has been pleased since the beginning before Yahoo turned on behavioral targeting, specifically, because they have other things that they bring to the table that presumably is good for everyone. So, I'm curious, with the chances increasing that behavioral targeting might not be possible in the same way in the coming year because consumers might have to opt into it instead of opting out of it, just given some of the talk down in Washington. What would your view be on continuing with the Consortium? How much of an impact do you think that would have if the behavioral targeting, specifically, was taken out of it?

Scott, this is Mark. We're very attuned to the discussions related to, particularly, some of the Federal Trade Commission's thoughts on opting in and opting out. They, as you know, recently, as recently as December, issued guidelines, which prescribe voluntary compliance to behavioral targeting practices by Yahoo and other large pure play companies. At the moment, Yahoo did change their practices and only stores, I think, it's 90 days worth of personal data and that complies with what the FTC rolled out. So, we're going to stay very close to the national debate. We're going to make sure that we understand what that is. But we're really -- the way to think about our exposure and our experience with behavioral targeting is that we're basically in the first hitch of the first inning of this game. And whatever results and however pleased we are right now, we anticipate improving as time goes on. But I don't, at the moment, see in '09, for example, the regulatory environment getting terribly more constrained than it already has been.

Okay. Thank you very much.

And gentlemen, no further questions in queue.

All right, John, we appreciate your help. Thanks everyone for joining us on the call.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.