Starz Entertainment Corp (STRZ) 2012 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Lionsgate fiscal 2012 third quarter earnings call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time.

(Operator Instructions)

As a reminder, this conference is being recorded. I'd now like to turn the conference over to our host, Senior Vice President of Investor Relations, Mr. Peter Wilkes. Please go ahead.

Thank you for joining us on our Q3 call this morning, Jon Feltheimer, our CEO, will open with remarks and then we'll turn the call over to Q&A. Joining us for Q&A, our Vice Chairman, Michael Burns; Steve Beeks, President and Co-COO; Rob Friedman, Co-Chair of the 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 risk factors set forth in Lionsgate's annual report on Form 10-K filed with the SEC on May 31, 2011 and Lionsgate's 10-Q filed with the SEC on February 9, 2012. 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?

Good morning, thank you for joining us today. We had a very active quarter on several fronts, so I'll jump right in by discussing our most recent transactions. As you know we signed and closed the acquisition of Summit Entertainment last month. This transaction will have a number of strategic and economic benefits, but we were also able to meet our financial goals of completing the transaction without significantly diluting our shareholders or adding significant leverage at the Lionsgate corporate level. We refinanced summits existing debt with the $500 million term loan collateralized by Summit's assets and we expect cash flows from them to eliminate this debt in less than three years. We were committed to making acquisition that would be accretive, and we expect Summit to begin contributing significantly to fiscal 2013, our fiscal year beginning April 1, 2012.

Just as importantly, the Summit acquisition continues to build our leadership as a modern, diversified, pure play content company, equally well positioned to capitalize on opportunities in the traditional and digital media space. The deal brings together the two premier young adult franchises, Hunger Games and Twilight, expands our content portfolio, and strengthens our leverage with all of our buyers. We now have a strong pipeline of franchise properties lead by Hunger Games opening in March, Breaking Dawn 2 in November, and Catching Fire, the second Hunger Games film slated for the Twilight slot in November 2013. This rollout should significantly increase the consistency, predictability, and profitability of our near-term film performance with highly visible cash flows. As part of this transaction we brought aboard two very talented executives, Rob Friedman and Patrick Wachsberger as co-chairs for our Motion Picture Group. Rob is joining our call this morning for Q&As, while Patrick is leading our sales and acquisition efforts at the Berlin Film Festival.

The key to a successful integration is moving quickly and decisively. We just announced Erik Feig as Head of Production or the Motion Picture Group, and we expect to have the rest of our key management team in place by April 1. Throughout this integration, we are being very selective with a best in class approach, not only in terms of personnel, but in evaluating our vendors, distribution deals, and partnerships. The industry and financial community response to our transaction has been extremely positive. Shortly after the acquisition, S&P upgraded our corporate credit rating and Moody's places on credit watch positive. The combination of Lionsgate and Summit is creating immediate and significant benefits. I'm pleased to announce that the eagerly anticipated Breaking Dawn 2 trailer will debut exclusively on every Hunger Games print on its opening night for what will be Lionsgate's largest release ever. I'll discuss a few of our other cross promotional synergies in a few minutes.

We continued to grow the Company on other fronts during the quarter as well, most notably in the television business where our diversification continues. We extended our Pantaleon Films theatrical joint venture with Latin America media powerhouse Televisa, launching a new business designed to expand our television development pipeline while also mitigating our risk. The Latino audience in the US is one of the most voracious consumers of television content and Televisa's brand recognition among this audience is unparalleled. While the new partnership will create broad mainstream programming, we expect its marketing, content, and talent to have particular resonance for this Latino audience. The complementary strengths and resources of our two companies, backed by a significant share development fund, is expected generate six to eight scripts in development each year for broadcast and cable networks. Were already developing adaptation of the Pantaleon comedy From Prada to Nada and the Televisa weekly series format Terminales.

Last year we talked about expanding our successful scripted television business from pay TV and basic cable to the networks and our efforts are paying off. Coming off one of our strongest all seasons to date, we have to network pilots in preproduction Nashville for ABC and the Next Caller Please for NBC. We also saw an opportunity with the Charlie Sheen comedy series and Anger Management were producing for FX to replicate the low risk, high reward business model we pioneered on the Tyler Perry TV shows and Are We There Yet? with a star who resonates with audiences not only in the US, but around the world. The early results are very promising. We have already tripled our international revenue estimates based on just our first three sales to Canada, Latin America, and Germany. The series begins production on its first 10 episodes next month, and we have every indication that if these first 10 episodes hit the ratings threshold we prenegotiated with FX, automatically triggering the next 90 episodes, Anger Management will be one of our most profitable series ever.

We've been aggressive in exploring opportunities to extend our TV business to reach new digital buyers as well. Orange is the New Black, based on the author's account unexpected stint in federal penitentiary will begin filming this summer and marks the second original series commissioned by Netflix. Written by Weeds creator Jenji Kohan and Liz Friedman, the producer of House, the one hour drama with comedic elements is expected to begin streaming on Netflix in early 2013. Meanwhile, we continue to build on our traditional strengths in delivering primetime programming to the cable networks during the quarter, as current shows continue to work through or toward their syndication windows and new shows were added to our pipeline. The fifth season of Mad Men begins airing on March 25. We'll have an opening bell ceremony with most of the Mad Men cast at the New York Stock Exchange the week before its debut and we hope to see some of you there. Season eight of Weeds has been picked up by Showtime and we're currently negotiating a season four pickup of Blue Mountain State with Spike. Kelsey Grammer won a Golden Globe for his role in Boss and we believe that the growing critical acclaim for the series will help us continue building an audience as it heads toward its second season on Starz.

One other aspect of our diversified TV business I'd like to talk about today is our talk show programming. We turned an important corner with The Wendy Williams Show this year. The show recently achieved its best rating ever and even more importantly, it's beginning to match and on occasion even exceed the ratings of such evergreen staples as Ellen and Live with Kelly in its key demographics. Since its ad rates and integration fees continue to be only a fraction of those for the leading talk shows, the upside potential is enormous if Wendy continues to achieve ratings on a par with leading talk shows. In short, we believe that Wendy is now positioned to be in business for a very long time with growing returns on our investment.

As always we continued our focus on monetizing our content and we had very big sales and licensing quarter. As a matter of fact, our films entertainment backlog reached a record $607 million at December 31, driven in part by recent large library deals with Starz and others. We were equally active in licensing content to new digital buyers domestically and internationally, ranging from an s-filed licensing deal with Amazon Prime, the official launch of our output deal with Netflix in the UK, the acquisition and licensing of the Canadian TV series End Games to Hulu Plus, and content licensing deals with some of the premier BOD and internet companies in China.

I do you want to touch on one specific development in our digital business in the quarter. We launched one of the first new channels on YouTube last month. Our BeFit channel leverages our industry-leading 28% share of the fitness DVD market and capitalizes on our strength in creating and distributing fitness content. We have launched over 200 minutes of new programming, encompassing our exclusive new BeFit in 90 workout system along with content from key brands such as Denise Austin, Jane Fonda, and Jillian Michaels. In its first three weeks, our BeFit channel has already attracted hundreds of thousands of viewers.

Turning back to motion picture business, we're at 42 days and counting until the March 23 release of Hunger Games and our momentum continues to build. Rob will be pleased to answer your specific questions about our slate and Hunger Games, but I'd like to note a few highlights. There are now 23.5 million books of the Hunger Games trilogy in print, up 7.5 million since our last analyst call in November. Hunger Games holds the top three spots on the USA Today best seller list for the fifth week in a row. Our acquisition of Summit has created significant opportunities to tap into the enormous Twilight saga fan base and cross promote our young adult franchises. We generated a very enthusiastic response to our Hunger Games' Premiere Ticket Giveaway program from the 28 million Twilight friends on Facebook with more innovative cross promotions on the way. And while I didn't try to time it this way, millions of Breaking Dawn DVDs go on sale at midnight tonight. But even beyond Hunger Games and Twilight, the great news is that the acquisition of Summit has made two strong film slate even stronger, and much of our focus in the coming months will be on the best way to combine, rationalize, and date our film slates for maximum impact at the box office and maximum profitability.

Between our two studios, our pipeline is full of repeatable, branded franchise properties including What to Expect When You're Expecting starring Jennifer Lopez, Cameron Diaz, and Chris rock opening on May 18, Step Up 4 set to open in July, Expendables 2 reprising Stallone and his action heroes in August, Twilight Saga Breaking Dawn 2 which opens November. And for calendar 2013, Last Stand starring Arnold Schwarzenegger; Red 2 with Bruce Willis reprising his starring roll alongside Helen Mirren, John Malkovich, and Mary Louise Parker; Ender's Game starring Viola Davis nominated for best actress this year for The Help, Harrison Ford and Ben Kingsley; Dirty Dancing directed Kenny Ortega, the choreographer for the original Dirty Dancing and director of High School Musical. And last but not least, Catching Fire, the second installment of our Hunger Games franchise.

Our emphasis on quality continues undiminished. We were pleased that our recent six Academy Award nominations came from three different companies within the Lionsgate family, with nominations for Nick Nolte from Lionsgate's Warrior, Demian Bichir from Summit's A Better Life, as well as three nominations for Albert Nobbs, and one nomination for Margin Call from our sister company Roadside Attractions. We continue to believe that this is the right time and the right place to be in the content business and we believe that the Summit acquisition has further strengthened our position as content creators and distributors. To put it simply, we believe that we're very well-positioned for the future. We like how we stack up against our competitors, and we're pleased with how we're positioned to continue supplying content to digital and traditional buyers alike. And now I'll open the call to your questions.

(Operator Instructions) Ben Mogil, Stifel Nicolaus.

Hi, good morning and thanks for taking my questions. A couple questions. Just in terms of timing, obviously you've got Twilight DVD this evening. I know that Universal's the distributor or the logistical partner behind it, should we be looking at Twilight for a contribution in your fourth quarter or does [Uni] report on a lag and therefore, it flows into fiscal '13?

Jim will take that.

We're going to get that recorded as they incur, as they shipped in the quarter, we get reports from them, it will absolutely appear in my fourth quarter.

It will be Q4, okay. In terms -- and I'm not sure if you can answer this, but in terms of going forward, do you anticipate using Universal going forward for the Summit stuff? Or is there a deal that you've got to live out, or can you move stuff over to your own system and Fox?

I'm going to let Steve take that one, Ben.

Hi, Ben. So, in the future, we'll look to consolidate our operations through one logistics system and one vendor. Until that happens, we're operating two separate slates under both the Lionsgate and Summit labels and we'll distribute each through those existing vendor relationships for the time being which means will be disturbing through both Fox and Universal for some time.

Do you think by the time say Summit 5 DVD -- Breaking Dawn DVD goes out, let's call it in year from now, that you're able to be under one system?

I think it remains to be seen. We're just getting familiar with the Universal system obviously tonight with Breaking Dawn, and I think that's something that we're going to determine over time.

Okay. On the financials I know that you haven't published yet the '11 financials for Summit. Do you have a sense, even a ballpark number of how much -- what your obligations are going to be to finish off the Summit films that are in preproduction -- or that are in the production that have not yet finished -- giving a sense of what your outflow obligations are going to be to finish off what you inherit?

I'll let Rob -- this will be Rob's first answer for an analyst.

Hi, Rob. Congratulations.

Now You See Me is the only film that's in production currently, and with our very robust international license fees our risk cash, right now going out is in the low double-digit.

Okay. That's great. Then I think lastly and just back to the TV side or the digital side in general, on Epix, in the September quarter was Epix still exclusive with Netflix and are they exclusive through the December quarter?

When you say exclusive you're really basically just saying for the first window, if you will, and the answer is yes.

Okay. For December as well?

I think so, yes.

Okay. Then last thing, I think the only thing that was to me a negative was the TV Guide trajectory. Can you talk a little bit about what the plan is there, if you will?

Yes, again, I think I said this on the last quarter, we are basically been on track for our numbers both, before and after one-time expenses, essentially severances -- we continue to change the channel over into the digital world. What was interesting actually is that we did expect to lose some subs transitioning to the digital and actually we picked up some subs. So, we thought that was rather robust.

Part of, as you lose analog buyers and move over to a different audience, if you will. You certainly would expect to have some of your ratings go down a little bit because again, your traditional viewer is leaving. You've got to attract a new viewer. So, we certainly would like to see our ratings pick-up, but at the end of the day again, we're pretty much on track for our financials for the year. Again, more importantly, we've done I think a really good job of continuing to clean up the real estate, maintaining our subs while we do that, move away from the navigational component of the channel. Again, we think this is a fantastic -- don't agree with your valuation in your note, we think this is a unique non-replicable asset. There are no other channels out there independently standing that have 82 million homes. We think this is a really, really valuable asset.

Fair enough. I hope that I'm proven wrong. Great, thanks guys.

Alan Gould, Evercore Partners.

Thank you, I've got a few as well. First a simple one, what is the cash and debt today of the Company?

Debt right now is about $98 million into my bank line, my cash balance is between $69 million to $80 million, so in that range.

Availability?

Availability will be a $200 million right now, absolutely.

Jim, what would be the total debt that with your convert, your senior subordinated, et cetera?

Alan, let me take a shot at that, it depends on whether your counting the convert as true debt or whether you think that's going to turn into equity. If you take a look at -- you know what the high-yield balances out right now and then on top of that, as Jim said, we have $340 million facility which we have less than $100 million drawn. So, we have about a $0.25 billion of cash and cash availability in the Lionsgate level, and as of last night, Summit had about $63 million in cash on their balance sheet.

Okay, thank you. Then on Breaking Dawn, Steve, can you tell us what the initial shipments are and how that compares to Twilight 3?

Sure, we don't really talk about specific numbers. The amazing thing about this franchise is it's consistency. So, what I can tell you is that it's positioned to perform at a level that's fairly close if not right on the results of Eclipse. So, I can tell you there's a lot of excitement at retail. We've got Target opening hundreds of stores tonight at midnight for the first time, it's the first time they've ever done that. Yet the -- Walmart's supporting the release with its own midnight release in hundreds of stores as well. One of the things that we did -- or that really the Summit team did in their planning was go with an earlier release window to capture what we think is a perfect opportunity with the Valentine's Day shopping timeframe. So, we're positioned for this title to convert at a level pretty close to where Eclipse did.

Okay. Patrick, let me take advantage of the opportunity with you on the call, I know it is very early days, but how did you do things differently at Summit that when they were done at Lionsgate, and your early read on how you are going to change things are you going to work? Also, what is the potential of getting a fifth book and a sixth film out of the Twilight series?

Okay, so Alan, Patrick's not on the call. He's in Berlin. It's Rob.

Sorry, Rob, I apologize.

It's Rob who's here. I'm happy to answer that question. There were a number of things that they've done a little differently, but both Companies -- the interesting thing at the end of the day is both Companies took the same approach about the risk, if you will. Which is that we both look to minimize what we call the gap against the domestic territory. What Summit has done very successfully -- Patrick was in this business for 25 years. One of the things they did a little differently is they have a number of output deals around the world that create a certain amount of certainty, if you will, for that foreign pre-sale and an ability to forecast the sales a little bit more efficiently perhaps.

Sometimes there's value in going territory by territory, but that's created a certain consistency. They concentrate very significantly because of those output deals on putting together a team that is very good at looking for overages and helping the international distributors, distribute market and make as profitable as possible those pictures. They've built a great group of people who really stay on top of the international numbers and particularly look for overages -- and that department, we're going to keep that department intact virtually as is. They do a great job in that respect. So, they almost treat the international territory as somewhat of a distribution territory as opposed to just a pure sales territory.

The third thing that they do, is they created a distribution network called IDC in Latin America and that has been very, very effective. If you look at the difference in terms of what we sold, Hunger Games for in Latin America -- for the first one. As you recall, I've mentioned this before, we do not have the next, hopefully, three Hunger Games attached. So, we have our freehand to maneuver internationally for the next three. The difference between what they are going to get from Breaking Dawn and what we sold Hunger Games for is a multiple of 10. We think is a terrific opportunity for us there to approach the international marketplace with Patrick and Rob on board now in a more robust, more profitable way.

Alan, also -- it's Rob. In answer to your cultural question, the great thing about our two companies is number one, we're neighbors. So, we've been friends and happy neighbors for long time and culturally we're very, very simple and similar. We've had very creative thought process, independent spirit, all about the product and bringing a very successful and branded and repeatable franchises to the marketplace. So, it's very, very similar culture. So, we don't see a lot of dramatic changes. We just see a great combination.

Okay, and with respect to potential Twilight 6?

Stephanie Meyer has been very, very happy and successful author. She's also a producer on the franchise, and it is totally into her creative desires. If she wishes to do it, we'll be there to support her.

Okay. My last question is, Jon, the OTT deals, do they continue to expand? You mentioned it on your opening remarks. Are they growing in value per film, value per hour?

OTT, over the top?

Yes, Netflix, Amazon, Hulu, et cetera.

I think the great thing about it is we are big Netflix fans. We've done extremely well with them. We love the fact we're doing an original series with them. We love the fact that they were there to create a whole new revenue stream for serialized shows like Mad Men and Weeds. But I think the important thing about my comments was that there's a whole bunch of other new buyers out there, not only in the US but internationally.

I think that's what's great and that leads me to believe competition, obviously, creates demand and demand creates upward pricing. So, we think it's pretty clear if you look at what happened in the UK for the last 20 or 30 years there was a monopoly over there, and frankly, we weren't maximizing our value. All of a sudden there's two new buyers in the UK and all of a sudden we have a state-of-the-art pay television deal. So, I think you're going to see that all around the world frankly.

Okay, thank you.

James Marsh, Piper Jaffray.

Great, thanks very much. A couple of questions here. First, I was hoping you could discuss some of the other book adaptations you have in the pipeline, maybe Ender's Game and Chaos Walking. If you could just discuss with us maybe the potential timing, your economic interest in those films, and just potential budgets, et cetera? Just elaborate a little bit on them and your current thoughts.

Chaos Walking we own, it's early, we're in development on it right now. Obviously, we think it's great. What we love again is that we are now the purveyors of what we hope will be the two by far largest young adult franchises. They will go on, obviously, if we're right about Hunger Games, they're going to go on for a long period of time. So, the opportunity to work with that audience on Chaos Walking hopefully is a real opportunity. We own that property. I'll let Rob talk about Ender's Game.

Ender's Game is a property that will come out in fiscal -- end of fiscal 2013 approximately. It's a co-production of which we're a 25% participant, after very, very robust international licenses.

Okay, that's very helpful. Secondly, can you elaborate a little bit more on the Starz licensing deal that you announced recently? Just how does it reconcile with this, what the films that you have that are going through Epix -- is this just the same content in different windows? If you can just help us understand that?

It's not all the same content, but when it is the same content it's windowed beyond our Epix windows.

Just lastly, I noticed recently you've doing a number Groupon related promotions. Just wondering, is this something that you think the industry is changing or is this just a new tool to go out and market films? How are you guys looking at that and what's the success rate been so far?

Clearly, when you looking at Lincoln Lawyer and One for the Money -- although it's always hard to know what something would look like if you didn't do it. But I think it's pretty obvious for us, that regardless of the economics for us or Groupon that the marketing push that we've gotten from that promotion was very significant. The main thing for us is we like trying things that are different. We like being first when it make sense. I think, our theatrical distribution guys did a really good job yet again on One for the Money. We think it's working for us.

Great, thanks very much.

Doug Creutz, Cowen & Company.

Thanks. I just want to make sure I understand how the accounting is going to work for the Summit debt that's off your balance sheet. So, you'll be consolidating all the revenue from its properties. I assume there's going to be some a liability book that you will amortize off as a participation against their films, and how will that work in terms of the timing and the sizing of those participation dollars? Thanks.

From the -- we'll look -- because we own Summit 100%, it's look-through. There won't be any participation to them, from them. It's just the revenues that they've -- the theatrical rental from the Summit film is going to flow through just like from a Lionsgate film. So, there's not an internal back and forth participation. It's a wholly owned sub. So, on a consolidated basis, that's what you'll see in the financials.

Where does the collateralization against the debt come into your P&L?

You'll look at my balance sheet and you'll see -- it will look like a complete balance sheet and you'll see a line item of debt for the $500 million loan for Summit on my balance sheet there. But the -- so it's collateralized, what you see on the balance -- but the Summit that is collateralized by and entity that really is just Summit. But because we're consolidating them and own them 100%, you see it all combined.

So, the debt will be on your balance sheet?

Yes.

It's on our balance sheet, Doug, but it is non recourse debt back to the Lionsgate level. The collateral, so to speak, for the Summit facility are the Summit assets.

Okay, thank you.

Matthew Harrigan, Wunderlich Securities.

Thank you. A number of my specific questions were answered. I was just curious, Lionsgate has really been an outlier on the conversion ratio in digital and home video. With Summit, so much of it is Twilight that it's difficult to draw the comparison. But just identically when you [rep'd the] CES, you see everything happy in the connected TV side streaming. You look at the health of the video market. You look at old school media. I know this isn't what you look at in a conversion ratio, but just the very rapid growth on the international box office relative to domestic. How do you feel about the multiplier over the next three years relative to domestic box office, both on the digital side and then looking at the international markets as well?

Hi, Matthew, this is Steve. I think the good news is if you look at overall home entertainment spend, definitely in the US primarily, we ended up the year down only 2%. Had a great second half, actually second half was up 1% when you include package media with Blu-ray coming up, SVOD games, et cetera. So, you got to look at the entire package when you're thinking about it. Transactions hit an all-time high, and obviously package media conversion rates were down in the year, even though we actually had a very good year of conversions as did Summit. I think their conversion rates are pretty much close to ours. So, with VOD conversions coming up, internet VOD conversions coming up dramatically with all of the new SVOD providers, as Jon mentioned, not only here but around the world. We're very bullish on the home entertainment business overall, in that we think that business should be flat to maybe growth this year. We're expecting conversion rates for that decline to slow down.

As we've mentioned before, the great news about where we're going is that, our operating margin in home entertainment continues up. In our third year to date in fiscal 2012, our operating margin is the highest level it's ever been. So, what we're really -- we're looking at the operating margin as opposed to revenue, and that continues to grow. So, we feel pretty positive about it.

Then on the old school, this international box office, which is obviously more volatile sometimes than domestic, but you have some huge growth markets there. Do you see a big, big improvement particularly, for the hit franchises that you have?

I'm sorry, the questions was how do we feel about the --?

Growth in international box office particularly for the category killer movies like Twilight and all that.

This is Rob. International growth is continuing. The support for film continues to grow. It's consistently outperforming domestic especially on the franchise properties.

Thank you.

David Bank, RBC Capital Markets.

Thanks, good morning guys. There's a lot of things that sound similar about this original Tyler Perry Debmar-Mercury arrangement and your Anger Management deal as well, in terms of the ratings hurdles. But there are things that are different. So first, could you actually tell us -- give us a general sense of what the ratings hurdles are for the automatic pick-up? Then how -- is this show going to get stripped or is it more of a weekly show? What is the time over which you will be delivering these shows and therefore, recognizing the revenue? Do have the rights to syndicate them off FX, basically whenever you want? Or how can you syndicate it off FX, if you can? Thank you very much for taking all these questions.

Again, the model is very similar to what we've done with the Tyler three shows up and with Are We There Yet? I can't tell you what the ratings hurdle is, that would be inappropriate. Obviously, it's one that we think we can hit. The whole point of it is it is exactly what you were referring to which is for us to be in syndication, double running the show much earlier than you would typically in syndication, it would be -- call it six years. We would expect to be stripping the show on stations and stations indication, at the same time we'd be running it in repeat on FX. We're going to call it 2.5 year period of time, and I don't think even FX has determined how, if we go to the 100, or we would hope 150 episodes, how they would run it. We would be shooting it again much more rapidly than we would typically shoot, probably about twice as fast as you would typically shoot a network show. Again, they will determine their order pattern. I certainly wouldn't want to say that for them. But again, the key thing is to try to maximize the cash return through a double run in syndication much earlier than normal.

So, you think you could theoretically get to the off FX runs as soon as 2.5 years? That's what you just said?

That's exactly right.

Terrific, thank you very much.

David Joyce, Miller Tabak & Company.

Thank you. I was just wondering if you could comment somewhat on the TV production side on Debmar-Mercury? Were the deliveries -- some deliveries there, maybe shifted here into the fourth quarter, just because that revenue was lighter than we expected? Then on Mad Men, are all of the new episodes in the can? Would you be therefore recognizing all of the revenue here in the fourth quarter, even though it'll only be starting to air in the final week of this quarter?

The Debmar-Mercury revenue as I look at those, you're going to see significant House of Payne revenues in our Q4, significant Wendy Williams. So, Debmar-Mercury right now is on track with what we have planned, actually probably going to be somewhat consistent with where we were actually in Q3 to give you the ups. From a revenue recognition standpoint, I will record the deliveries of Mad Men as of on delivery, it doesn't matter when they air. I should deliver the majority of them by my end of Q4.

Okay, that is helpful. Thank you.

All right everybody, thank you and we look forward to our next call.

Ladies and gentlemen, that does conclude your conference for today. This conference will be made available for replay after 8.00 AM today through February 17. You may access the replay system at any time by dialing 1-800-475-6701 and entering the access code of 236751. International participants may dial 320-365-3844 with the access code of 236751.