Starz Entertainment Corp (STRZ) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Lions Gate fiscal 2012 first-quarter earnings conference call. At this time, all participants are in a listen-only mode.

(Operator Instructions)

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

Thank you for joining us this morning. We will open with remarks from our CEO, Jon Feltheimer, and then we will open the call to Q&As. Joining us on the call are Vice Chairman, Michael Burns; Steve Beeks, President and Co-COO; Joe Drake, President of the Motion Picture Group and Co-COO; 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 Lionsgate'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. Jon?

Thank you all and good morning. We continue to build momentum across our film and television businesses during the quarter, and we're making rapid and accelerating progress in the critical transition from traditional to new digital businesses.

With demand for content growing both domestically and internationally across multiple platforms, we believe that long-term indicators for the entertainment industry are generally promising, although this past week has been a clear reminder that the health of the overall US and global economy is uncertain and must be carefully monitored. Our EBITDA of $29 million and net income of $12 million during the first quarter compared favorably to last year's first quarter. Our backlog reached a record $546 million and our cash and availability was $436 million on June 30.

In addition, our most recent library valuation, which is beginning to reflect the growing recognition of digital revenue, reached the highest level in our history. Our significant backlog combined with the sustained growth of our library and the growing proportion of repeatable franchises on our film slate is creating a perfect storm of lock and load at high margin revenue that gives us greater confidence about our ability to continue our long-term growth trajectory.

This morning I'd like to highlight our progress in 3 key areas that are driving this growth -- building new film and television franchises and extending our existing brands; growing our high-margin digital operations and establishing ourselves as a leader in monetizing our content in the digital space; and simplifying our business and monetizing our non-core assets. The strategy of building our brand is achieving results. HUNGER GAMES will complete principle photography in North Carolina on Labor Day weekend. More than 12 million books of the trilogy have already been sold, 6 million of those since we announced the film and 2 million since our last call. The film was just featured on a second Entertainment Weekly cover in 3 months, again underscoring the growing momentum of THE HUNGER GAMES cultural phenomenon.

We are also very pleased with the all-star cast of WHAT TO EXPECT WHEN YOU'RE EXPECTING, opening on Mother's Day 2012 and featuring Cameron Diaz, Jennifer Lopez, Chris Rock, Elizabeth Banks, Dennis Quaid, and Matthew Morrison. EXPENDABLES 2 opens on August 17, 2012, and on October 5, 2012, we will bring back TEXAS CHAINSAW 3-D.

We recently added several new titles with franchise potential to our slate -- CABIN IN THE WOODS from Joss Whedon, the director of THE OFFENDERS and the creator of the television series "Buffy the Vampire Slayer," opening on April 13, 2012; DREDD with Karl Urban reprising Sylvester Stallone's iconic character, opening on September 21, 2012; THE BIG WEDDING starring Robert De Niro, Diane Keaton, Susan Sarandon, Katherine Heigl, and Robin Williams, opening on October 19, 2012; and THE LAST STAND starring Arnold Schwarzenegger, opening January 18, 2013.

So, listen to this slate -- CONAN; ABDUCTION; WARRIOR; Sam Raimi's THE POSSESSION; Tyler Perry's GOOD DEEDS; HUNGER GAMES; WHAT TO EXPECT; CABIN IN THE WOODS; EXPENDABLES 2; DREDD; TEXAS CHAINSAW; THE BIG WEDDING; and THE LAST DANCE; all significant branded properties with targeted audiences, all coming down our movie pipeline.

While these slates dramatically increase our up-side potential, they also adhere to our business models of risk mitigation. Our investment in films for fiscal '12 is about even with fiscal '11 and Lionsgate's projected P&A spend of approximately $220 million in fiscal '12 is actually down about $60 million due to our disciplined spending and focus on bringing in partners to help finance our equity and P&A. Our upcoming film and television slates resemble those of a major studio in size, scope, and diversity; but, even with all of our potential franchises, our film slates still average only $15 million of production capital at risk per title before marketing spend.

Our pipeline is deep enough that looking out to fiscal year 2013 and 2014, 6 of the 12 titles we already locked in place are strong brands with franchise potential. Even as we build new brands and franchises, we are continuing to extend existing franchises within the Lionsgate family. While it's early to be thinking of HUNGER GAMES as an existing franchise, we are confident enough that we announced this week that CATCHING FIRE, the second film in the franchise, will open Thanksgiving 2013.

DIRTY DANCING is one of our most enduring brands. It continues to sell between 500,000 and a million DVD units a year, 25 years after its original release. We are very excited to announce yesterday that we are bringing DIRTY DANCING back to the big screen under the direction of Kenny Ortega, the choreographer of the original classic film and the director of HIGH SCHOOL MUSICAL and MICHAEL JACKSON'S THIS IS IT. As part of this exciting initiative, we will also launch a DIRTY DANCING social game this fall. Our DIRTY DANCING Facebook page already has more than 10 million fans, including 2 million new fans in the past 2 months alone.

Tyler Perry's next film, GOOD DEEDS, opens in its traditional slot around the President's Day holiday on February 24, 2012. His third TV series, "For Better or Worse," debuts on TBS in November. The first episode looks great, and we have high hopes that the show will follow in the footsteps of "House of Pain" and "Meet the Browns," which together have generated 352 episodes. You may have seen the media reports yesterday about a branded Tyler TV channel and, although we can't comment officially at this stage, suffice to say that we strongly support extending Tyler's highly successful film, television and home entertainment brand to an exciting new platform.

We have been equally focused on building our television franchises. "Mad Men" continues to gain momentum on the heels of its 3-season pick up from AMC. Its first 4 seasons just became available to Netflix subscribers, and you will see approximately $40 million of net revenue in the second quarter. The show earned another 19 Emmy nominations and the fifth season began shooting this week with John Hamm directing the first episode. "Weeds" season 7 debuted on Showtime in June with strong numbers. Production of season 4 of "Nurse Jackie" will begin next month as it continues its progress toward syndication, and the production of season 3 of "Blue Mountain State" is under way. In terms of extending our brands on television as well as film, in addition to planning a sequel to our LINCOLN LAWYER film, it was announced in the past couple of days that we have sold the concept for a television series to ABC.

Betting on talent is another way of extending our brand. We are very excited to be in business with 4-time Emmy-award-winner Kelsey Grammer who stars as the mayor of Chicago in the edgy political drama "Boss," which debuts on Starz this fall. We are betting that Jeremy Kyle, a huge talk show brand in the UK for the past 5 years, will duplicate his success in the US when his show launches on September 19. And, we are very excited about our partnership with Joe Roth and Charlie Sheen on the perhaps aptly named "Anger Management," the television comedy adaptation of Joe's hit film. The project offers tremendous up side and success, while adhering to a unique and disciplined business model. Our television business is very backloaded, and our prime time series talk shows and syndicated series like Tyler Perry's shows and "Are We There Yet" will have a more and more significant impact on our bottom-line financials as they mature and enter their syndication windows.

I would like to spend a few minutes now talking about the continued transition of our businesses into the digital marketplace and the importance of digital operations to our future growth. Our digital and on-demand businesses contributed $140 million in revenue last year. We expect this number to not only increase this year, but we expect the digital marketplace to help drive growth opportunities across transactional and supported and subscriber platforms; and let's not forget the growth is taking place internationally as well as domestically. We have 42 million Facebook fans for Lionsgate content, a number that is growing at the rate of 5 million fans a month. We have 260 ads supported and 180 on-demand titles on YouTube. We have nearly 500 feature films and television episodes available on Hulu. Industry wide, [F5] transactions increased from 500 million in 2009 to 2 billion last year, and we expect them to exceed 3 billion this year.

Already, much of the back-end revenue of our television shows are starting to be driven by significant long-term deals with digital players. 7 seasons of "Mad Men" were licensed into syndication with Netflix instead of a traditional cable channel. Our EPIX partnership was bolstered by its multi-year streaming content deal with Netflix; and 9 seasons of the culinary show "Hell's Kitchen," which we acquired from ITV North America for distribution, were licensed exclusively to Hulu Plus for streaming to its subscribers along with upcoming future seasons.

Internationally, new digital players are creating competitive environment for budding content where little or no competition previously existed. For example, it was recently reported that Lionsgate UK has a multi-year content deal with Netflix in the UK. Although we are not prepared to comment on the speculation, we are prepared to say that we will end up with a state-of-the-art major studio-level paid television deal in that territory capable of taking Lionsgate UK to the next level of performance and contributing millions of dollars a year of profit to Lionsgate on a consolidated basis.

We reached a new output deal in Latin America with Netflix for "Mad Men" and a number of our library titles that increases our licensing revenue in that region 5 times over. We are currently in negotiations on numerous licensing opportunities for serious dollars with significant well capitalized online video companies in China. Just from the digital licensing deals we have already done in the international marketplace, we expect to receive at least $12 million of incremental EBITDA each year over the next several years.

As we predicted a few years ago, digital pennies have become millions of digital dollars. We also see our alliances with the big digital players as a great opportunity for new content creation. Although we can't confirm the recent media report that Jenji Kohan, the creator of "Weeds," is creating a Lionsgate television series directly for Netflix, this is certainly the kind of premium content we are looking to generate for the expanding array of digital distribution platforms shaping the global marketplace.

Facebook is another great destination to connect with our fans, and we are utilizing a Facebook platform to launch new social gains from our branded properties. Both the "Weeds" and DIRTY DANCING social games, which I mentioned earlier, are already on beta and we expect to launch them in the fall. We are also looking at new ways of windowing our product that wouldn't have been possible without the flexibility that digital platforms provide. Look at a couple of the different windows we will be trying over the next 6 months.

As you read yesterday, we are making ABDUCTION, releasing theatrically September 23, starring Taylor Lautner, available 91 days post-theatrical release for a 2-week period over the Christmas holiday prior to its DVD release and priced at $6.99. We are making the Kevin Smith film RED STATE available on a premium VOD window 30 days prior to its theatrical release, priced at $9.99. Not just that the digital platforms offer alternative windows -- with new and modified windows, variable pricing, and on-the-run marketing changes, we can customize our product offerings to specific affinity audiences. Throughout this process, we will work to protect the interest of our traditional distribution partners at the same time we meet the needs of our new distribution partners.

Finally, we are making progress in simplifying our business by looking for ways to monetize non-core assets that don't meet our long-term EBITDA and free cash flow targets or our strategic growth trajectory. We are closing our Maple Pictures transaction this week, and we continue to explore options for monetizing other non-core assets.

In closing, we see a number of the areas in which we have been building our portfolio of assets coming together to begin unlocking the value we created and to translate this value into long-term profitable growth. We anticipate that fiscal 2013 will benefit from strong carry-over profits from this year's film slate, particularly given the release of HUNGER GAMES at the end of the fiscal year. The back end of television series like "Mad Men," "Weeds," and the Tyler Perry shows will have an increasing impact on our bottom-line financials going forward. We anticipate growth in high-margin digital revenue from new players, traditional players getting into the digital game, and new window strategies; and we expect to generate additional cash from the sale of valuable enterprises that we built that are no longer essential to our growth.

There remain a number of uncertainties in our broader environment in terms of both the global economy and our industry's ability to adapt to an increasingly rapid transition to the digital world. But, we believe that our own business is becoming increasingly focused, consistent, and predictable as we continue along our long-term growth trajectory. Now, I'd like to open the call to your questions.

(Operator Instructions). Our first question today comes from the line of James Marsh with Piper Jaffray. Please go ahead.

First, I just wanted to follow up on your comment on the potential Tyler Perry channel. Maybe you can tell us some of the potential distribution options there. Is this something that would you use on TV Guide to block out a segment event to launch this network?

I don't want to get specific, James. We haven't confirmed, that particular report just came out yesterday. I can certainly say that if you look at Tyler's success across virtually everything he has done, I don't believe I have ever worked with any talent with as loyal and deep an audience as Tyler has. I think, again, we think this is a rare piece of talent that can bring an audience anywhere. He has changed the composition of the audience on TBS. I think certainly, as reported, there would be a number of different options in terms of looking at a perhaps not fully distributed channel that we could buy, perhaps some kind of a nesting strategy or conversion with a channel that we might already have. And, again, I think Tyler is one of those rare resources that one could actually launch a channel with. So, I think we have a lot of options if we choose to go down that path.

Okay. And then just wanted to follow up on EPIX. We had some time now to kind of evaluate that model and we have got some visibility going forward. I was wondering, can you provide a little perspective now that we have that kind of history and better visibility about what has worked, what hasn't and what has kind of surprised you most about EPIX?

Well, interesting question. I think that we had a -- we started the model for what ended up being called EPIX about three -- more than three years ago. I think that having a digital partner with part of the earliest plans we had and I think it turned out, it wasn't the digital partner we thought we would have, but I think that has worked out well, it's been kind of critical to what has gone on. I think that we certainly felt that given the content that we have had, a film offering frankly as good as any other channel I think we would have liked to see more significant traditional linear carriers carrying us, no question about it that we think we will be getting them. We are confident of that. We have a great channel, but obviously to be in profit this early in the trajectory of a channel and to have a channel that is so advanced in terms of technology, it's ability to be on so many different devices, to be a forward thinker in terms of authentication, et cetera, I think we are very, very pleased with that. So, in general, I would actually say that we are more or less ahead of where we thought we would be.

All right. Thanks very much.

We have a question from the line of Doug Creutz. Please go ahead.

Yes. Thank you. First, a quick question. You said earlier that your film production spending should be even with last year. I just wanted to clarify if that does include television as well? And then on G&A you had obviously a massive year over year decline and some of that was due to costs that were obviously one-time last year, but it seemed like you had nice organic cost reduction, too. I wondered if you could comment what you think the G&A run rate might look like for the rest of the year? Thanks.

This is Jim, Doug. I'll take that. As spending for the motion picture division is going to be pretty consistent with last year. Probably cash out the door is about $335 million. The TV division will have a slight increase. Last year we spent about $175 million. It should go to about $215 million of cost for the TV division.

For the G&A you are correct. You are seeing organic reductions. We have had some staff cuts internally and actually if you want to take a run rate for the year, you're probably going to run maybe might get close to about $115 million, $116 million; however, it may come down with the Maple transaction. We will cut out about another $3 million out of that cost. You will absolutely see run rate G&A coming down.

Great, thank you.

We have a question from the line of Ben Mogil.

It's Adam [Cappington] for Ben Mogil. I just have two questions, and an accounting question. With TV Guide we continue to see weak revenue trends. Can you talk about some of the initiatives and when we should expect growth to return? And then just looking at the digital revenues, can you talk about the trends beyond the numbers in terms of is the digital [revenue] surprising you, which genres are doing better or worse than you expected? What are you finding to accelerate digital sales?

Jim, do you want to take the first part and Steve the second?

Yes. In terms of "TV Guide,' the revenues we are seeing the revenues -- the [fill in]-type revenues I have seen going up in the year, year-on-year, a little bit of pressure on the ad network, but it's really been some of the ad revenue that has come down for the year.

Okay.

Adam, this is Steve. In terms of the digital revenue, we continue to see obviously great trends there. In terms of what works and in some cases it's the same thing that works in packaged media but it tends to be pictures, picture like, for instance, we just released the Lincoln Lawyer in July, July 12, I believe. Not only is that over performing on DVD but it's proving to be incredibly successful in its digital world including internet based as well as conventional VOD. I don't know if you need more on that question or not?

No, that's great. And just a quick accounting question. On the senior notes boring basis, any material seasonality to the figures and have you had the opportunity since quarter ended to repurchase any of the convertible notes on the market?

Well, speak to the seasonality, the borrowing base does tend to mirror and track the receivables that you can see. The borrowing base actually went down from the March to the June really if you look at the detail associated with the major holders and that is really all receivables from the home entertainment division that we collected the receivables that were there at the end of March and came down at the end of June. So, that is a little seasonality as Q1 tends to be a little bit light. You will see seasonality with the borrowing base coming down in Q1.

In regards to our purchases of bonds, we report those in the Q as that happens.

Adam, this is Steve. Back on your digital question, it occurs to me one of the things I may want to point out, the trend is obviously moving more toward the on-demand platform. Just look at two years ago, I think our On-Demand made up only 13% of our total home entertainment revenue. This year we are projecting somewhere close to 25%. That shift is even more dramatic when you look at the operating contribution. Two years ago operating contribution I think was more like 18%. This year it is going to be approximately 34%. Our operating margin is higher than it was even two years ago. I think the trajectory is good in that regard.

Okay. Great. Thank you very much.

We have a question from the line of Matthew Harrigan. Please go ahead.

Good morning. As of [yesterday], everything our of Comic-Con and the success you had with linear HD channel, FEAR Net has a lot of momentum, it creates a great environment, it's very distinct and it feels like that is one of the assets obviously strategic to you, you are not going to sell it, that has a lot more potential and potential recognition in the marketplace. Could you talk about that? Secondly, it looks like we have a descent hiatus in the second "Hunger Games" release. I know you are very tactical and savvy when you release the movies, but what is your rational for waiting that long when you are doing all four movies at once right out of the blocks for the variety of reasons you elaborated on last time?

Jon, I'll handle. FEAR Net is a great channel. They are doing a great job, obviously. A good [SVOD] penetration. We just started rolling out the linear with Comcast and a new deal we made with Time Warner. Obviously that is where we need to be. We need to have a multi platform channel. They just announced their first original. They are searching the globe for the best horror and thriller content and, again, I think it is going to be a unique destination. We just have to get more distribution, easier said than done, but I think the guys are making good progress. Joe, I will let you take the "Hunger Games" question.

Hi, Matthew, it's Joe. On the "Hunger Games" question it's very simply a function of two things, picking the right release date and then having enough time, frankly, to build the project given our schedule. We had a very accelerated production schedule on the first one to make our May 23 release date. It has been on all hands on deck exercise. It looks absolutely fantastic. Gary Ross is doing a superb job. So then we look forward to the next one as to what the best date was and that November date is just as good as it gets. We wanted to jump on it early. It also gives us the time that we need between the release of the first to get the script right, get the crew back together and build it properly as well as give us a lead time we need to mark it. So it was purely a function of finding a great date and then maximizing the creative side of the film.

Joe, it's Michael. I just want to - I know you meant to say March 23, not May.

Sorry about that. March.

Great, thank you.

We have a question from the line of Marla Backer. Please go ahead.

Thank you. Forgive me if this question has been asked already, but I have two questions. First of all, on the "Hunger Games," can you give us a little bit of color on what kind of ancillaries you plan to have around the release of those films? I am assuming you will have a video game. Can you talk about whether there is any other kind of a platform in tandem with the movie release?

On the "Hunger Games" we made a very strategic decision to get the first film right. So while we are looking at what we are going to do on the game side, we have to do that in conjunction with Suzanne. Our efforts have been on getting the movie right then building on the back of that. We are using the digital landscape very heavily from a marketing and promotion perspective and have had partners coming out of the woodwork and we will use those all the way through to release. There is an enormous amount of user created content that we are starting to feature to bring the fans into the fold with the idea of after the release of the first film is when we hope to become much more aggressive on the ancillary side. I think it's really important for us to establish the film brand first.

Yes. That makes sense. And you have done such a great job with marketing it well in advance of the film release. Are you expecting to take what you are learning from "Hunger Games" and apply that to so some of the other movies you have coming out in terms of leveraging social media?

We do that on all of our movies. The "Hunger Games" just happens to be such a big brand that it avails us of a lot more. I think that what we will see and are already starting to see is when you have a brand that is this strong, it does create sort of a halo effect in the rest of your slade. We are -- it helps drive interest at retail, it helps drive interest from partners that want to be part of this movie. They suddenly get much closer to our overall slate and our team and we get advantages there. So there are certainly things that we are learning. We have a very sophisticated digital group and marketing group. We have been doing this a long time, but we are getting benefits across our slate from having a film that is viewed as something that can really be a game changer.

Okay. Thank you.

We have a question for the line of David Miller. Please go ahead.

Yes, hi, good morning. A couple of questions actually. Two for Jim, one for Joe. Jim, I noticed the receivables declined 23%, roughly 23% quarter over quarter. So your receivables balance $252 million. That receivables balance was $400 million, I believe, six months ago. So, a lot of us analysts on the sell side kind of use that receivables balance as a subtracter against your film obligations in order to get to kind of a real debt balance. And with that receivables number now lower than it was six months ago, it makes your debt balance kind of almost artificially look a little higher. I am wondering if you can comment on that? Thanks.

David, this is Jim. It's due to the timing of the releases. Again, we didn't have any real strong releases in our Q1. So with only one theatrical release in Q1, receivables were down and our DVD home entertainment we again had no DVD releases going initially into the home entertainment in our Q1. Again, that was about $60 million down in receivables. So it really is a matter of the timing of the releases. So as new releases come out, you get those, like Lincoln Layer comes out and all that, you will see receivables go back up.

Okay. Then can you comment at all on the tax basis for the Maple Pictures transaction?

With the Maple transaction, we are assured we have $31 million of Canadian NOL. That should shelter any tax complications related to the Maple transaction. But, again, one thing as you are looking at the AR, again, our backlog number is the highest it has ever been. Don't just look at AR, you have to look at backlog. For instance, we have the "Mad Men" sales to Netflix, that is in backlog, it's not in AR.

Okay. Then, Joe, I just wanted to make sure I have this straight, so with "Hunger Games" are you -- correct me if I'm wrong, are you filming four films or three films and for the first two films are you filming those back to back as a hedge against inflation or are you just going to film the first film, see how it does, then maybe do two and three back to back like the Matrix trilogy, et cetera?

We are not filming them back to back at the moment. Our current plan is to, as soon as we get this one delivered, to start working on the second. Given the logistics of it, there is a chance we can do two and three back to back, but very likely we are going to be doing them individually just because of our scheduling and the focus we need to maintain on each. We are right now fully focused on getting this first one finished. We have the ability to make four and we think there is a smart way to do that. That is in the plans, but certainly today we want to get the first one right.

And due to time constraints we have time for two more questions. We have a question from the line of David Bank. Please go ahead.

Thanks, guys. Obviously the digital distribution deals you have done, you are sort of cutting edge on this and have done a tremendous job. John had mentioned in his opening comments in talking about some of that distribution some deals were exclusive, some deals were non-exclusive. How do you manage that process to sort figure out what the optimal policy is in terms of selling this stuff exclusivity versus non-exclusively (inaudible) and how do you decide that at this point and how is it -- will it change? Do you see more exclusive than you have been doing historically? Thanks very much.

It's kind interesting, David, a number of the digital players, when we started, actually didn't care about exclusivity. They actually saw themselves as less than traditional buyers. I think that we have seen now a lot of folks really want to be exclusive. They want to kind of create their brands with some of our premium and other people's premium content. Obviously the measuring stick for any transaction we do like this is where we can maximize the dollars, but I would add to that, that we do want to see competition in this space. We don't want to be back in the place I alluded to in certain territories where you ended up with one (inaudible) dominant player. Part of the consideration is that we want to have multiple players in the digital space just like we want multiple players in the traditional space. So those are some of the considerations. Obviously, again, we want to keep the terms as short as possible. We want to maximize the value within that term, but there is going to be a lot of splitting windows and multiple players in the space.

Thank you very much.

We have a final question from the line of David Joyce. Please go ahead.

Thank you. Just some little things. On the film production pay downs, how should we model that and expect that to flow? Is that going to be more along the lines of when you have more releases coming out, you will pay more down because that seemed like it was a little light given the amount of cash that you do have right now?

Yes, this is Jim, David. I would tend to pay for films generally about the month of or the month prior to release. That is generally when you will see the money go out. That's how we tend to structure all our payments. Following our release pattern you will see just before payments of cash out to pay those films.

Thanks. On the TV production side, do you have capacity to produce more series than you have been given that you are looking at ways to reduce staffing? Just wondering what we should expect on growth out of that.

Well, we certainly are emphasizing television. Sometimes people think of television as a sort of prime time scripted series. We have a new talk show coming out that I mentioned in my remarks that is a significant commitment, 30 weeks of production. We have another Tyler Perry series, 10 episodes hopefully going to 100 or 200. We have made a number of deals recently. We had deals with two top reality producers. Between them, I believe they have sold 14 projects to over ten different networks in the last three months. We mentioned Lincoln Lawyer selling that to ABC which is kind of a unique situation, one of the rare times we felt we could do features to our films with Matthew McConaughey and have a television series on at the same time with a different actor. So, we are definitely emphasizing growth in our television business but frankly we do tend to do it with a pretty small staff. We invest in outside resources, writers and producers and so far obviously it has been pretty effective.

Thank you.

Thank you, all. We will talk to you on the next call.

Ladies and gentlemen, this conference will be available for replay today after 8.00 AM Pacific through August 17, 2011, at midnight. You may access the AT&T teleconference replay system by dialing 1-800-475-6701 entering the access code 212557. International participants can dial (320)365-3844. That does conclude the conference for today. Thank you for your participation and for using the AT&T executive teleconference service. You may now disconnect.