Starz Entertainment Corp (STRZ) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Q4 fiscal 2011 year-end analyst conference call. At this time all participants are in a listen only mode. Later we will conduct a question-and-answer session. The instructions will be given at that time. (Operator Instructions).

As a reminder this conference is being recorded. And I would now like to turn the conference over to our host, Mr. Peter Wilkes. Please go ahead.

Good morning. Thank you for joining us. Jon Feltheimer, our CEO, will give opening remarks and then we will open the call to Q&A. Joining us on the call are Michael Burns, our Vice Chairman; Steve Beeks, our President and COO; Joe Drake, President of our Motion Picture Group; Jim Keegan, our CFO; and Rick Prell, our Chief Accounting Officer.

The matters discussed on this call include forward-looking statements, including those regarding the performance of future fiscal years. 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, including the risk factors set forth in Lions Gate's Annual Report on Form 10-K filed with the SEC on May 31, 2011.

The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

Thanks, Peter. And thank you all for joining us this morning. We are pleased to report our fiscal 2011 numbers, and as you can see, we had a very solid year.

Our revenue of $1.58 billion, excluding TV Guide Network, grew about 6% from $1.49 billion last year. Our EBITDA of $68 million grew from $62 million last year, and our adjusted EBITDA again exceeds $100 million.

Free cash flow continued its positive momentum, swinging more than $110 million from negative $102 million last year to positive $10 million in fiscal 2011.

We are particularly encouraged that these numbers were driven by strong library performance and growth in our high-margin digital business for both our first run and library product. In fact, our library achieved its sixth consecutive year of record revenue.

We had library revenue of $329 million in fiscal 2011 compared to $323 million last year. When we include our syndicated TV product our library revenue was $374 million compared to $371 million, and our total library generated about $130 million in cash flow in fiscal 2011 with record margins.

As I mentioned, we also achieved strong growth in our digital and on-demand business, with revenue of $140 million in fiscal 2011, reflecting a 69% increase from $83 million the previous year.

We closed the year with strong momentum, achieving EBITDA in the first quarter of $59 million and free cash flow of $168 million compared to EBITDA of $12 million and negative free cash flow of $17 million in last year's fourth quarter. Net income was $46 million or $0.34 per share.

These huge swings are one of the reasons why we dropped our quarterly guidance a few years ago, and are currently evaluating whether yearly guidance is an informative measure of our Company's future performance, especially at the beginning of the year. We will update you on our thoughts on the Q1 call in August when we will have finalized our theatrical slate for the year.

Let's take a look at recent developments in our motion picture, television and channel business that contribute to this strong performance. We released back-to-back feature films, The Lincoln Lawyer and Madea's Big Happy Family, and each grossed more than $50 million at the North American box office.

Part of our recent marketing emphasis is finding more efficient ways to reach our audience in this digital age. One of the reasons for the The Lincoln Lawyer's strong box office performance was that we set in place the first studio deal with Groupon right before the film's release, translating a modest P&A spend into an even more efficient marketing spend with greater reach.

In addition, we are coming off our strongest year in terms of assembling motion picture franchises that have the capacity to generate more consistent year-end, year-out performance from our film business.

The Hunger Games began production last week in North Carolina for a March 23, 2012 release. The property is generating tremendous buzz and excitement, and all signs point to a major Lions Gate franchise in the making.

To remind all of you, this franchise includes three books from which we will make four films, and we have already signed major cast for all four of them. Expendables 2 reprising Sylvester Stallone and his gang, and is targeted for an August 17, 2012 release.

What to Expect When You're Expecting, based on the best-selling book, and starring Cameron Diaz and an all-star cast, will begin production on July 27 and will be released next Mother's Day.

And of course, we are excited about Conan the Barbarian, which we will release on August 19. The early materials are already creating a buzz on the Internet.

We have made significant progress as well on the micro-budget film initiative we discussed with you on the last analyst call. Since that call we have groomed five films that fit within this initiative -- Gay Dude, Nurse 3D, Rapturepalooza, 6 Miranda Drive, and the second project from YouTube sensation, Fred Figgelhorn, Night of the Living Fred.

This micro-budget strategy allows our film executives to be even more entrepreneurial, find fresh creative talent and make clearly identifiable niche films without taking big risks. Not only are we excited about returning to our Lions Gate roots, but we have seen tremendous response from the creative community.

Our diversified approach to our film portfolio is reflected in a very strong upcoming plate that includes our Sundance acquisition, The Devil's Double, which will be a platform release on July 29; Conan on August 19; the inspirational sports drama, Warrior; Abduction, starting starring Twilight's Taylor Lautner; the next film from our Lakeshore partners, One for the Money, starring Katherine Heigl; and The Possession from horror master Sam Raimi.

This slate builds to the release of The Hunger Games, and we believe it is our most diversified and potentially most profitable slate in a long while.

Our international division is coming off a very strong Cannes Film Festival that underscored buyers' appetite for our content worldwide. And we achieved near-record international sales of $105 million that generate distribution fees and cover a large portion of our production and acquisition costs, improving the risk profile of nearly all of our films.

In terms of pictures that are being produced at the Company for other studios we have strong expectations for Great Hope Springs, starring Steve Carell, Meryl Streep and Tommy Lee Jones, which sold very well in Cannes, which we just licensed to Sony for North American distribution.

We have achieved equally strong momentum in our TV business. As you know, Mad Men have been picked up for three additional seasons by AMC, including a new three-year deal with creator Matt Weiner.

On the heels of that announcement we also announced that we sell 91 episodes of Mad Men into syndication in a unique deal with Netflix that reflects the growth of new digital buyers for our content in the marketplace and the underlying value of that content.

We view Google, Netflix, iTunes, Amazon and other new digital media players as partners, not adversaries. And as we have done in our EPIX venture, we are committed to balancing their interests with those of our traditional partners to deliver value to our consumers.

The growth of these companies is not just a US phenomenon. We recently licensed Mad Men to HBO and a major digital buyer in Latin America in deals which increase its revenue from these territories 600%, and will bring in an incremental $10 million in total Mad Men sales in Latin America over the next several years.

This is indicative of the upside potential we see in the world marketplace with the emergence of new digital players, and we expect to replicate these types of deals around the world.

I recently spent a week in Beijing and Shanghai, and recent results from films like Pirates of the Caribbean, The Expendables and Kung Fu Panda at the box office there show a market that is undergoing rapid expansion.

We are looking to tap this huge emerging market particularly by exploring advertisers-supported transactional and subscription VOD deals for our content with companies like Tudou, Youku and [Byluchi]. These are companies that each have hundreds of millions of online monthly subscribers.

When we look at growth in Asia, Latin America and Europe, coupled with increasing demand for our content in digital and VOD platforms and rapid expansion of digital screens, we believe that our media business is beginning to transition into an exciting new growth phase propelled by a perfect storm of international and digital opportunities.

The content creation driving this growth continues to be strong. We just received the season four renewal of Nurse Jackie, both during our strong lineup of signature series of long-term production and syndication prospects. Blue Mountain State was previously picked up for a third season on Spike, and it will premiere in the fall.

We are also very excited about our partnership with Chris Albrecht and his team at Starz for our new series Boss, starring Kelsey Grammer and directed by Gus Van Sant. Boss started production in Chicago in April and looks terrific. It will premiere this fall.

We have increased our investment in nonfiction TV programming and in TV syndication, two of the most cost effective ways of growing our TV business. Flipping Vegas premieres on A&E on June 18. And Nail Files, the first show of our next wave of original programming for TV Guide Network, premieres on June 21.

We have added a third Tyler Perry TV series, For Better or Worse, to our syndication roster, using a front-loaded business model that will result in a 100 episode sale to Turner, if the first 10 episodes of the show hit their ratings target.

Our second talk show, Jeremy Kyle, a long-running hit in the UK, launches in the fall. And we will also have a five-week test of our Father Albert talk show beginning next month. If it is successful, the FOX station group will launch our third syndicated talk show in fall 2012.

Turning to our channel business, we just completed our first wave of linear carriage deals for FEARnet. Most channels launched with linear channels can then develop complementary on-demand services. We went the other way with FEARnet, which achieved success as a leading on-demand and Internet horror and thriller channel, and has now picked up carriage from Verizon, Comcast and Time Warner as a linear channel, with a number of other operators looking at carriage within the next 12 months.

These agreements are part of an expansion targeted at bringing FEARnet to 10 million US homes as a linear channel this year, in addition to its current availability in 26 million VOD households.

EPIX is living up to its promise as a technologically sophisticated network, and we are pleased to see it make its first contribution to our bottom line this quarter. The next phase of this multiplatform growth strategy has begun, and new apps will enable authenticated subscribers to stream over 3,000 EPIX movies and original programming on over 100 devices, including Google TV and Android-powered smartphones and tablets, with other platforms and devices to follow.

SVOD usage continues to be robust, averaging over 1.5 million views monthly. And the first EPIX WBC Heavyweight Championship Fight aired live March 19 on EPIX and EpixHD.com, with nearly 100,000 viewers streaming the fight live online in an afternoon timeslot head-to-head with March Madness.

We are announcing today that TV Guide Network has just extended its carriage deal with Time Warner Cable, the second-largest cable distributor in the United States. Time Warner is committed to distributing TV Guide Network programming in full screen to all of its TV Guide homes. And, therefore, we are on track for our network to be at 80% full screen penetration by the end of the year.

Lions Gate continues to operate efficiently even as our businesses continue to grow. We are reducing our overhead by approximately $10 million on a run rate basis this year, again, keeping it one of the lowest percentages in the business.

Even as we reinvest in profitable niches within our growing TV and channel businesses, and redeploy our assets in our motion picture business, we are on track with the process of simplifying our business and monetizing some of our non-core assets, being especially cognizant of the recent growth in valuation in the digital media space. We will have further announcements in the very near future. We think our investors will be pleased with the outcome.

As you know, we also issued $200 million of senior notes. We saw it as a good opportunity to strengthen our balance sheet by paying down our floating rate revolver and short-term maturities with longer-term fixed-rate securities, while increasing our operational and strategic flexibility.

We are pleased with the year we have just completed. Our businesses are on track and we're looking forward to the ongoing growth of all of our businesses.

I want to thank all of you for your attention and support, and I welcome all of your questions.

(Operator Instructions). James Marsh.

I just wanted to circle back on the The Hunger Games. I would say certainly my household is very excited about this. I have got a couple of older teenage -- or teenage boys that are excited about it.

It seems pretty clear this is going to do very well domestically, but wanted to get a sense for what you thought the international opportunity was. Are there other kind of ancillary revenues that you guys might be able to monetize?

Then just lastly related to that, I just want to make sure that you haven't given up any rights related to this movie, but maintained most of them.

Hi James, this is Joe Drake. We just held -- we just got back from the Cannes Film Festival. Jon talked a little bit about how well we sold there. Hunger Games was the highest selling film we have ever had. We actually [did a successful four].

One of the things we did there was held a summit with all of the international distributors -- which was one of the most impressive things I have ever seen this Company put on -- where Lions Gate presented the strategy for the next 12 months, as well as we had three other distributors around the world from Australia, Scandinavia and France also present.

And interestingly enough we believe that it actually has -- as much as we think it has enormous value here, and the books have started to really penetrate overseas and haven't penetrated quite as much as they have here, we see even more potential at the box office there. There is just incredible growth happening overseas. We have distributors who have essentially dubbed this as their big brand for next year, the movie that can actually change their company. So very excited and very bullish about what it can do overseas.

In terms of retaining the rights, we love our financial model on this movie. In addition to signing up all these actors for the film, for all four pictures, we retained the majority of the upside.

Okay, excellent. Then just remind me what your all-time top domestic box office movie, is it Madea Goes to Jail -- like 90 or so?

No, it was Expendables last year.

Oh, Expendables last year. Okay, all right, thanks very much.

Matthew Harrigan.

I just had a question on your digital revenues and the conversion ratio. Obviously 69% is not a replicable performance, but even if that is ramped down quite a bit, it is a real game changer. You referred already to some of your remarks in the preamble on some of the one-time events, but can you give us more of a sense -- maybe Steve can -- for what the core growth rate is apt to be for a few years?

You gave very explicit guidance on digital a few years ago. I know you're not going to do that again, but I would still love to get your thoughts.

Matthew, this is Steve. Well, speaking to the first part, a lot of the growth in this year had to do with the fact that we started releasing our VOD on the same date as DVD release. So obviously there is a significant lift in that area.

I think in the future you're going to continue to see growth in VOD and [ESG] across all the platforms. You are seeing a lot of growth in SVOD with other players coming into that area. We think there is a tremendous amount of opportunity.

In terms of projecting growth, I think that is tricky there. I would just say we are going to continue to see growth there with a tremendous amount of opportunities. If you want to talk more about it, we can talk off-line in terms of exactly what we see coming up.

Just a quick follow-up, on the P&A side, I assume you're going to defer giving guidance on that until the next conference call when you've got a better feel on your release slate?

I think that is right.

Okay, great, thank you. Congratulations.

Ben Mogil.

Thanks for taking my call. So, two questions. Looking at the international market, you obviously were highlighting a lot of the growth there. As you look at your slate and you try to do between say 12 and 14 pictures a year, internationally or domestically you've got a lot of pictures that are still very domestic centric versus some of the ethnic titles. As you look forward and the market changes, do you add more titles a year or do you drop some more of these US centric titles?

We don't really look at it that way. Part of the job of the Motion Picture Group is to feed each leg of our business to maximize its potential. And I think that we have done that well and will continue to do it.

The opportunity on the international side isn't to take away what we do well domestically here. The Tyler Perry business is still a very strong brand for us as well as other domestic movies. However, there is the potential for us to grow our international side with third-party product.

We are a leader in this business on the international side, considered probably the strongest international company out there. So we are a go-to company, both in terms of producers who finance their movies elsewhere and access to the marketplace as well as for buyers. So I think that the growth will come in our third-party business, as well as just the performance of our titles in the various markets.

I would add though -- I would add that we are -- obviously we pride ourselves a little on being an opportunistic company. As we can cover for certain kinds of pictures more and more of our production risk from international sales, obviously, in terms of new productions that will have some impact on some of our greenlight decisions.

Okay. Then, second question, shifting gears over to TV Guide, so it looks like EBITDA is down a little bit this year in the March year-end from the March year-end the year before, despite -- and advertising is sort still down again despite, obviously, a good ad market.

You have talked about the carriage deals. You have talked about the full-screen penetration. Can you give us a sense -- I'm not asking for guidance -- but can you give us a sense conceptually of how you think you get EBITDA in this business back up to say the $25 million to $30 million level that it was at before you bought it?

I think -- just to be clear, our EBITDA is exactly where we expected it to be. It is where we budget it to be. I think if we go back -- I think we have -- our strategy has been very visible to everybody, which was we had an asset that we thought great penetration in terms of homes, 80 million homes, but real estate that was tarnished in the sense (technical difficulty) screen product, kind of a navigation guide for some people.

We have done exactly what we anticipated, frankly, a little bit better with the Time Warner Cable deal in the sense that we started with 32% full-screen penetration. We are 60% today, and by the end of the year we are going to be 80%. And that is really exciting.

And when you look at satellite -- the satellite ratings, which really are a proxy for full-screen viewing, they are up about 29%. So we expected some of our ratings to go down as we transition from a split-screen analog product to a full-screen digital product. That is exactly what is happening. But in the homes that have had it with full-screen, meaning DIRECTV and DISH, particularly, you are seeing ratings up.

So while we haven't had the opportunity to benefit from the uplift in advertising, I think it is quite obvious that as we start putting more and more original program -- of course that comes at a cost, it comes with an investment -- we expect to see our ratings continue to go up and our ad sales to follow. So we very much on track.

I think, again, the specific answer to your question is when we are a full-screen product as our new shows, what we have invested in and continue to grow [at], I would expect to see -- really within the next year I would say -- year to 18 months -- I think you're going to start seeing significant growth from a financial point of view.

Okay, great. That's it for me. Thanks, guys.

Marla Backer.

A couple of questions. First of all, you have had several 3D releases theatrically, including the last Saw film. Given what seems to be a potential softening on the 3D contribution does that in any way impact your strategy going forward on your 3D -- the 3D portion of the slate?

It doesn't impact our strategy really that much. We just have never thought of 3D as the one-size-fits-all solution to the movie business. The great news is there is a little over 11.5 million screens out there now, so there is no shortage of screens for 3D.

We have always said that we are going to go in 3D where we really think and enhances the experience. A perfect example of that is Conan. We also think that when you do go 3D it is somewhat audience specific, still relatively strong in that young male demo, where we like to play, and yet important that when you release the film you always have -- you have enough both 2D and 3D screens so that you can maximize the offering while giving the consumer the choice.

It makes sense. And on Conan, was that produced in 3D or are you converting it postproduction?

I am sorry, could you say that again?

Marla, it was shot in 3D.

Shot (multiple speakers).

Shot in 3D, yes. I'm sorry, I think I said 11.5 million, I meant 11,500 screens.

Thank you for that clarification. Then on the Groupon deal, that obviously had tremendous success. Are you thinking of additional deals with either Groupon or Fandango for any upcoming titles?

And just in terms of housekeeping, how did the accounting for that work? So was it -- did you recognize the revenue as if all the tickets had been sold at full price?

Listen, the Groupon deal was a fantastic deal for the Company. It is a perfect example of our ability as a smaller nimble company to act first in the marketplace. And, frankly, we looked at it more as a -- we looked at it more as a very, very cost effective CPM versus looking at the revenue side.

If you think that we were able to put that trailer in front of 30 million homes -- 30 million people in the target demographic, largely women 25 and up, it was a super use of capital for us.

And we did recognize those as if the tickets were sold at face value, correct.

Yes, we did. And yet on the revenue side we did.

Okay, thank you. I have just --.

We will look at it again for movies that are right for that demographic for sure.

Okay, it makes sense. One last question is on Hunger Games, I think every single day there is something in the press about Hunger Games, which is great. And there are a lot of high-profile people attached to this project. So should we expect that the back-end payouts on this particular film will be a lot higher than we generally see for your titles? How are you thinking of that in terms of the overall economics?

No, actually, you shouldn't. One of the beauties of this is it is a book that we acquired very early before it had the level of awareness and buy-in that it has today. We have been very successful at doing deals with all of our talent that keep those that we require in the franchise for the course of the four movies. Our business affairs group did an extraordinary job. And yet although everyone is being treated fairly, we do retain the majority of the upside in all of the pictures.

Thank you very much.

[Alan Gold].

I've got a few questions. First, for Steve. Steve, your home video revenue was up another 5% this year despite how lousy the home video industry is in general. What is happening with your TIE ratios, yours versus the industry? And how are you up in such a tough environment?

Actually, you look at conversion rates, our conversion rates have actually been pretty stable. In fact, our conversion rate of 74% in fiscal 2011 is essentially the same as it was in fiscal 2010, and that really reflects our continuing focus on better converting genres when constructing the theatrical release slate.

And on top of that our on-demand conversion continues to increase and has actually increased to around 15% of box office, which obviously, when you combine those two things, helps.

We have driven -- on top of that, we have driven a lot of costs out of our packaged media business, so our operating margins have actually increased over the last couple of years pretty dramatically.

Okay. Then for Jon. It looks like there is fewer films being released by most of the majors. It looks like there are going to be fewer films released by you. Does this create an opportunity in the marketplace or are there other independents that are coming in and filling that gap?

Well, I think, there are a couple of newer players that have done pretty well for a couple of movies. But I think we are pretty consistent about where we want to be around 13, 14 films a year. We think that is a sweet spot for us. Then, of course, we supplement that with starting our (inaudible) business, which is a very small operation for us. But we think it is a great way to try to reach out and create affinity with the largest growing demographic in our country.

And we like the optionality, again, of this micro-budget strategy we've got. As I said, we have already green lit since our last call basically five movies. We don't expect to necessarily release all of those theatrically, but it gives us tremendous optionality that we are going to have those kind of genre films.

So we reserve the right, obviously, when we see something start taking off like a Paranormal or a Blair Witch, where we take it around, we start doing a limited release going out to colleges. Obviously, if the numbers start working then this gives us tremendous optionality to go and expand it in a smart way.

But, no, we like where we are. There is always going to be new players, but all of the new players if you look at them, they have a tremendous disadvantage. They don't have a huge library throwing off recurring cash flow covering their overhead. They don't have -- none of them have television businesses, none of them have channel businesses. So, again, we don't go for worrying about what the competition is doing. We are looking for our spot and running our business.

Last, for Jim, I noticed in your borrowing base disclosure you show the eligible film library at $595 million. I think this is some new disclosure. Is that based on third-party evaluation, and how has that valuation changed over the last year?

That is based on independent third-party valuations, and actually it has been tracking up every year that it is done. It is required disclosure as part of the high-yield offering we did.

Okay, thank you very much.

David Miller.

Just a couple of questions on the balance sheet. I noticed that your restricted cash balance went up by about $24 million. Jim, if you are on, can you just talk about the mechanics there?

And then on the recent debt raise, is that reflected in your convertible senior sub notes balance? I guess it [isn't] in the March 31, 2011, statistics. I notice that your senior revolving credit facility went way down by roughly $150 million. So did you already take out the credit facility with the $150 million that you raised or is that not reflected in the debt balance at this time? Thanks.

The restricted cash is primarily up due -- The Lincoln Lawyer release is a service deal, therefore we receive the cash from an outside third-party to release the product. So the mechanics where we put that in cash and basically put the other half into liability, so what happens you don't see any actual P&A flowing through my income statement. All we have is basically our net fee from the revenue from the distribution of the film.

Secondarily, as of March 31, there was -- the paydown on the revolver was all from free cash flow from operations. It had nothing to do with the additional high-yield raise.

David, it is Michael. We paid down our credit facility completely with the high-yield raise. We also bought back some converts, and we currently have about $110 million in cash on our balance sheet.

Okay, thank you.

David Bank.

A couple questions. The first one is, can you talk a little bit about -- congratulations on the Mad Men syndication deal, by the way, with Netflix. Can you talk a little bit about the timing over which the Company is going to recognize the revenue as it comes in?

The second question is, Saw 3D, this one on an international basis really outperformed a lot more than I think a lot of us expected. Can you just remind us of how you handle the rights to the Saw franchise internationally? Are there a lot of presales there? Will you potentially approach the Saw franchise internationally a little bit differently given that success?

Last -- thanks for taking three questions -- can you talk a little -- because the budget on Hunger Games, it is reportedly in these $75 million to $80 million range on the negative side. We never know if the price is right, but that is what is out there. And there is going to be a substantial P&A involved in this movie, even if it is managed as well as I think you guys are going to manage it.

Can you talk about -- how do you deal with the risk involved in this kind of project? Is it -- how -- are you sharing the risk? How does the financial model of this kind of project look relative to the other things you have done? Thanks for taking so many questions.

First on the Mad Men and the -- the revenue recognition will be a huge pop. The way our accounting will work with that, as we deliver those episodes to the people that revenues all comes -- is recognized upon delivery 100% at that time. So that you will see that as immediate impact when those titles are delivered.

But you're not going to -- are you going to wait until you have a total of 96 episodes or when do you start delivering?

When they are available, when the license period, when the windows begin -- when the windows open.

Can you tell us when that is?

(multiple speakers). July 27, we are showing -- correct. (multiple speakers).

(inaudible) available in July and then it rolls out year after year until we have completed delivery.

Great.

This is Joe. As it relates to Saw, those are -- every one of those movies was handled the way we handle all of our movies overseas. We self-distribute in the United Kingdom, where I believe the last one did record business. And then we license them territory by territory, largely with the same distributors that have released the prior ones, and have very successfully sold those at premium values, as well as seen overages on the titles.

So that is how we handle those. We still think there is a lot of value in the franchise, thought it was the right time to put it away. And as time goes on here we will certainly have a conversation with our friends at Twisted Pictures about how to realize additional value out of that.

On The Hunger Games front, for competitive reasons we don't give out budgets or box office estimates. What I can tell you is although this is at the higher end of the range of where we live, it is still within the range of the risk tolerance that we play in.

You have to remember that this book has been on the New York Times bestseller list for 140 consecutive weeks. It has sold 9.6 million copies, 1.4 million of those in the last 60 days. And yet we haven't budgeted it relative to the value in that brand. We have been very conservative about it. We make a nice return at a reasonable level of box office, but retain the majority of the upside and success. And it is certainly positioned to be one that could have outsized success for all of us.

As well as keep in mind that this is a four-movie franchise that we have. So I think that there is significant downstream value to cultivate.

Okay, all right, thank you.

David Joyce.

I have another type of Mad Men timing question. Given the delay in getting the deal signed, should we expect you delivering the episodes all in your fiscal third quarter this year or would some of that spill into the fourth quarter? And would you be back on track for like the summer deliveries next year?

I can't speak to -- you're clear in terms of when this season is going to be delivered. The fifth season will be a work in progress. I can't really give you the timing of that. My guess is it will probably stay on a similar pattern to its new -- a new release, but I can't guarantee that at this point.

Okay. And if I can just add -- tack on one more question. On your various digital and minority owned investments, it was widely discussed that you were probably looking at some -- the financing or some form of alternatives for those assets. Could you talk about any build to buy or best sell decisions there?

No, as I said, I think we are very much on track where we expected it to be, looking at all of these nonconsolidated investments. And, as I said, I think you'll probably see in the pretty near future some specific comments about those. Other than that, I don't want to forecast for you what is happening.

All right, thank you.

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