TKO Group Holdings Inc (TKO) 2004 Q3 法說會逐字稿

Good day, everyone. (OPERATOR INSTRUCTIONS). At this time, I would like to turn the program over to your host, Ms. Michele Goldstein. Go ahead, please.

Thank you very much. Welcome to World Wrestling Entertainment's third-quarter conference call. My name is Michele Goldstein. I am the Vice President of Planning and Investor Relations here at WWE. Joining me today is Linda McMahon, our CEO, and Frank Serpe, Senior Vice President of Finance and acting CFO.

We issued our earnings release earlier this morning and will be referencing a presentation as part of our discussion. Both are available on our corporate website at corporate.WWE.com.

As always, we will be making several forward-looking statements today as part of our discussion. These statements are based on management's estimates. Actual results will differ due to numerous factors of which they are called out on page one of the presentation.

Today we will review our operating highlights, third-quarter results, to be followed by a Q&A session. So to start off by turning to page three of our presentation, we have summarized the third-quarter and year-to-date financial results. Third-quarter revenue of approximately 82 million compared to 79 million in the prior year quarter. EBITDA of 15 million is in line with prior year, and earnings per share from continuing operations of 16 cents compares to 13 cents.

So at this time, I would like to turn it over to Linda.

Thanks, Michele. Good morning, everyone. As Michele just reviewed, overall our results for the third quarter were in line with the prior year results. Our domestic live event attendance, pay-per-view buys and television ratings are even with the prior year, and we are experiencing growth in revenue from international sources and the sale of DVDs.

We stated in the past our internal budget for full-year fiscal '05 is EBITDA of 66 million. At this point in the year, we believe a more likely expectation for EBITDA is between 60 and 62 million. As always, our range of expectations includes many significant assumptions or events that have yet to occur. Key assumptions include levels of fourth-quarter pay-per-view buys and home video sales. Pay-per-view buys are assumed to be approximately 2 million for three events of which 1 million are obtained for WrestleMania 21 compared to approximately 2.4 million for four events in the prior year fourth quarter.

Home video gross unit sales in the fourth quarter are assumed to be approximately 600,000 for six titles compared to approximately 800,000 for seven titles in the prior year. The decline in unit sales is expected because several titles are being released on an exclusive basis to Wal-Mart and Best Buy. One less new title is released, and last year included the release of WrestleMania 20.

The DVD release of WrestleMania 21 will occur in first quarter of fiscal '06. For the full-year fiscal '05, combined DVD and VHS sales are expected to be about 2.1 million units compared to 1.8 million in fiscal '04.

In my view, WWE had several emerging channels from which we began to benefit in the third quarter. The first emerging channel is to continue to strategically exploit our brand in the international territories. In the third quarter, international revenue grew 40 percent to 19 percent of our total revenue compared to just 15 percent a year ago. This increase is principally driven by higher sales for license products and increased pay-per-view buys, partly offset by lower Live Event revenue which is simply due to the timing of the event. I'm very encouraged by the increase in licensing revenue, which doubled in the current quarter as compared to the prior year quarter. These results validate our strategy to leverage international touring with television productions in what we refer to as power periods.

The second channel is demonetization of our programming library by way of emerging and growing technologies. During the third quarter, we released a video on the history of ECW called the rise and fall of ECW. This DVD has quickly become our second best-selling title ever. Over the next few weeks, I expect to announce distribution agreements for WWE 24/7, our subscription SVOD service that will provide classic footage from the libraries of WWE, WCW, ECW and the AWA.

The third channel is the production of feature films starring our superstars. We will have the benefit of exposing our talent to new audiences, as well as bringing a built-in fan base to these movies. We are currently in post production for our first two movies and soon after will be working with our distribution partners to solidify the release date.

The Marine is an action adventure moving starring John Cena and will be distributed by 20th Century Fox. Goodnight is the tentative title for the horror film starring Kane and will be distributed by Lion's Gate.

We also have two new scripts in development, one which will feature Stone Cold Steve Austin and is entitled The Condemned. This story deals with a cop who is given a second chance when chosen to compete on a deadly reality show.

Now let's look at our Live Event business on page five. During fourth quarter '05, we will have 21 international live events. In early February we conducted a three event tour of Japan and Korea. The two events from Saitama Super Arena in Japan were produced for the first time in partnership with Fuji TV. During April we will have a six-event tour in Australia, followed by a 12-event tour in Europe. Our RAW and Smack Down! television shows will be produced from Birmingham, England. These locally produced television shows have served as marketing tent-folds to build local brand awareness and drive increases in our other revenue streams.

Although average North America attendance of 4000 is unchanged from the prior year quarter, it does compare favorably to 3800 in the second quarter of '05.

On page six, we have displayed the key drivers for the pay-per-view business. We had three pay-per-view events in the quarter which achieved over 1 million buys compared to two in the third quarter of last year with buys of approximately 800,000. New Year's Revolution was a new RAW branded event and has received 275,000 buys to date. Our first pay-per-view event of the fourth quarter, Royal Rumble, is currently estimated at 455,000 buys, which is slightly lower than the initial buys estimate for the prior year event.

For the first time, our marquee event, WrestleMania, will be available as a pay-per-view event in the United Kingdom. In the past, it was aired as a television special and we were compensated for it within the television rights fee we received from BSkyB.

Page seven provides household ratings information. Third-quarter ratings for both RAW and Smack Down! were unchanged from the prior year quarter. This reverses the slightly negative trend we have been experiencing for the first six months of the fiscal year. We are currently in negotiations with Spike TV and others for our package of programming that is now aired on Spike TV.

For the second consecutive year, Armed Forces Entertainment invited WWE to perform for the U.S. troops in Iraq during the Christmas holidays. Over the three-day tour, Smack Down! superstars visited more than 20 military locations. The tour culminated with a performance for the troops near Tikrit, which was televised on UPN.

In March we will release a DVD exclusive to Wal-Mart and the Armed Forces retail outlets that showcases the time our superstars spent with the troops over the last two years.

We also announced two international distribution agreements in the past quarter. Ten Sports and WWE entered into a five-year arrangement to carry our programming in India and on the subcontinent. The new agreement started on January 1st and includes nine first run hours per week. Ten Sports is available in more than 30 million households via cable and satellite network. Viasat Broadcasting launched the WWE brand throughout Scandinavia for the first time in more than a decade. The Viasat platform has acquired RAW and Smack Down! for broadcasts across Sweden, Denmark and Norway and reaches more than 4 million households in three countries. This television penetration will ultimately open new Live Event end licensing markets.

The highlights of our branded merchandise business are on page eight. For the second quarter in a row, we achieved significant growth in our international licensing business. The 100 percent increase in international licensing revenue reflects strategic alignment with our international touring.

The key to our ongoing success includes building strong relationships with major retailers such as ADSA in the United Kingdom. ADSA, which is owned by Wal-Mart, will feature WWE on 2.5 million of their private-label cereal boxes over the upcoming year. Since the beginning of the year, we have introduced 18 new licensing arrangements, bringing the total number of agreements covering territories outside of North America up to 42. Over the next 12 months, we expect to add an additional 20 licensees.

The videogame category continues to be very strong for us. To date THQ has sold nearly 2.4 million units of our current year releases. In March they will release WrestleMania 21 on the Xbox platform. Home video has only just begun to reap the benefits of releasing new titles from our 75,000 hour programming library. However, this is changing as we are rebuilding our library of titles.

In the third quarter, library title sales increased by 18 percent to account for approximately 13 percent of units sold. The year-over-year increase of 30 percent in home video revenue is largely due to the release of the rise and fall of ECW compared to the ultimate Rick Flair DVD in the prior quarter.

I am very enthusiastic about our business growth potential. We have spent the last couple of years reshaping our business for international growth, to monetize our extensive library through SVOD, DVD sales, the Internet and through additional digital media expansion and through conservatively budgeting film production.

At this point, I want to turn it over to Frank Serpe to review our results for the quarter.

Thank you, Linda, and good morning, everyone. Our revenues for the third quarter were 82.7 million as compared to 79.1 million in the prior year quarter, an increase of approximately 5 percent. The increase reflects the fact that there were three pay-per-views in the current quarter as opposed to only two in the prior year, and as Linda mentioned, the third event, New Year's Revolution, was a new event and it delivered 275,000 buys. Additionally our home video sales continue to grow, performing better than the prior year.

Page 10 of our presentation shows the detail of our revenue increases as compared to the prior year. The additional pay-per-view event increased revenues by approximately $4.2 million. Excluding the additional event, pay-per-view buys for the quarter were flat compared to last year. International buys, however, continue to increase as a percentage of total buys, growing from 16 percent last year to 33 percent this year. Given the fact that international buys generate a lower revenue per buy than domestic buys, the change in mix resulted in an approximately $2 million reduction in pay-per-view revenues.

In the quarter, we held five more Live Events in North American than we did in the prior year. The average attendance of our North American events was approximately 4000 people, comparable to the prior year and slightly better than our nine-month year-to-date average. The decrease in Live Event revenue is primarily due to the lower number of international events scheduled in the current quarter. This year we had one international event as compared to three in the prior year quarter.

Turning to branded merchandise, home video sales continue to be strong. During the quarter, we sold 524,000 units, an increase of 130,000 units or 33 percent over the prior year.

The continued monetization of our video library is reflected in the success of the rise and fall of ECW. As Linda mentioned, this title is now our second best-selling DVD title of all-time, selling approximately 166,000 units to date. This is behind only WrestleMania 20 which remains our leader at 185,000 units.

Also, as Linda previously mentioned, although our licensing revenues were basically flat year-to-year, there were significant increases on the international front where revenues doubled compared to the prior year quarter. The increases were primarily related to sales of toy, videogame and novelty products. The increases were offset by reduced revenue in domestic book publishing.

Our EBITDA for the quarter was 15.4 million as compared to 15.1 in the prior year quarter, an increase of 2 percent. The key factors of this increase are detailed on page 11 of our presentation. The increase is driven by increased pay-per-view and home video revenues, offset in part by increased SG&A expenses. SG&A expenses over the prior year is approximately $2.8 million higher. Most significant increases were in professional fees which reflect cost of Sarbanes-Oxley compliance, legal fees related to international copyright and trademark protection, and increase in advertising and promotion costs.

Page 12 shows our normalized EBITDA where we adjust for those items that we believe are unusual in nature. As you can see, there are no such items in the comparison of the third quarter to the prior year quarter.

Our profit margins increased in the quarter to 46 percent from 44 percent. As summarized on page 13, the increase reflects higher revenues in several of our higher margin businesses, primarily pay-per-view revenue and home video.

One other item of note is the reduction in the effective tax rate for the quarter from 38 percent the year ago quarter to 28 percent this quarter. This rate reduction primarily is the result of a onetime benefit of approximately $1.3 million related to the assignment of our lease for the Company's former entertainment complex, the World in New York City.

Turning to free cash flow, our free cash flow for the quarter was approximately 7.6 million versus a negative 3.3 million in the prior year. During the quarter, as Linda alluded to, the Company spent approximately $50 million on the production of two films. As we have stated in the past, we did not expect to recognize any revenues from these projects until late in fiscal 2006 or possibly 2007, depending on the actual release date of the film.

Free cash flow for the prior quarter included the acquisition of the Corporate Jet, which we formally were leasing for approximately $20.1 million.

This concludes this portion of our call, and I will now turn it back over to Michele.

Thank you very much. Kevin, we are ready for questions.

(OPERATOR INSTRUCTIONS). Alan Gould (ph), Natexis.

Do you want to try to go to the next caller, Kevin, and we will come back to Alan?

James Clement, Sidoti.

Good morning. If I could ask you a couple of questions about your guidance. It looks as if SG&A October quarter and January quarter were up on a year-over-year basis, and looking at your full-year '05 SG&A guidance of I believe it is $86 to $90 million, it looks like that would imply that April quarter's SG&A would actually be down compared to last year.

Is there any specific reason for that? Because my assumption was that typically WrestleMania promotional spending, you know the SG&A typically ticks up in the April quarter, so is there something different this year than last year that we need to think about?

Actually, the marketing for WrestleMania will be slightly lower this year compared to the prior year. In total (technical difficulty)-- spending on advertising promotion will be in line with the prior year and basically shifted some dollars to the third quarter in 2005.

Besides that, all other costs are pretty much in line with the prior year or slightly down given management's focus on cost structure.

One follow-up question to that. It looks like you all sort of fine-tune your EPS estimate, your EPS guidance for the full-year. It looks like slightly up. I thought it was at 46 to 50 cents prior. Why is the EBITDA estimate or EBITDA guidance going down slightly, but the EPS estimate or the EPS guidance not going down slightly? Am I missing something there?

I think in the original guidance if you noticed we issued we originally had ranges for all the items with the sole exception of EBITDA which we issued as a single number which reflected our budgeted EBITDA. I think that range is now -- that number has come down slightly for a variety of reasons. Had we had a range, it would have not probably been quite so significant, and that is the reason there.

As far as the EPS goes, that also reflects an item that we mentioned in the financial highlights, and that is we are anticipating a slight favorable impact in our effective tax rate over the year.

Okay, okay. If I could change gears and then I will let somebody else get on the call. It seemed to me that last year that the Hall of Fame induction ceremony surrounding WrestleMania and again this year is something you guys have publicized a fair amount both on your weekly television shows, as well as press releases and that sort of thing.

With the SVOD launch imminent, is there going to be a merchandising angle that is going to be associated with the SVOD launch? I know you guys don't do anything in the back-end and I know things tend to be integrated. So can you give us a sense of what something could look like?

Well, let me address it this way. You know our Hall of Fame is clearly something that we began several years ago in its recognition of past stars who had such an impact on our business.

However, commensurate with Hall of Fame and our whole Legend series that we will be launching on WWE 24/7, it is a nostalgic look back at the superstars really of yesteryear. The footage that we now own in our library combined with new VOs, etc., we're assigning several. In fact, I think we are up to over 30 or more at this particular point of stars that we consider to be part of our Legends group like Superstar Billy Graham and stars of that ilk -- Chief Jay Strongbow, who will be coming back to participate not only on ticket sales personal appearances, but launching a new merchandise line that will be integrated very closely with 24/7 and further monetization of the library. So that is a very exciting program and project for us that you will see over the next year.

Robert Rouse (ph), Jefferies.

Good morning. Just a few quick questions. First, I was wondering if you could comment a little bit more on the SVOD rollout in terms of what cable operators you are targeting? I assume it is everybody, but maybe if you could give us a sense of if you are making more or less progress with how many potential subs you could be looking at and what type of revenue split you are looking at? Are we looking at the Playboy type revenue splits or more of the 50-50 type revenue splits given the type of content you have?

Second, I was wondering if you could comment a little bit on the timing that you expect to have some kind of resolution regarding the Spike television situation?

Okay. First, let's look at SVOD. We are a bit really -- I think the little bit of lag time in the rollout of 24/7 really is relative to the MSOs and their ability to roll it out with their digital set-top boxes and putting it into their programs, etc..

We are not currently announcing any deals that we have, but let me say we have approximately eight to nine contracts that are out with some of the major MSOs, and we expect to be making those announcements very soon.

Programming is up on a soft launch in a couple of markets and has been well received, and we are pleased with the response that we are getting. Also, we're very happy when we get calls from MSOs who say, wow, you guys are blowing out our call systems because everybody wants to know we're going to have 24/7. So we are getting some of that as well, and that is very encouraging to us. So we look really over the next 60 to 90 days to be making substantial announcements about where that coverage is going to be. And the split with the cable systems, you know is at worst is 50-50, and most often it is more favorable to us than that still within a price range of $6.00 to $8.00 per subscriber.

I don't have an updated number on potential subscribers for next year, but I would be happy to forward that out.

And relative to our negotiations with Spike, again we and others we are looking probably over the next 60 days to have that result.

Okay, great. And just one quick follow-up. I know you cannot comment too much about the RICO suit that is pending. I'm just curious, are there any expenses that WWE is accruing related to that suit, or are there are none?

We're just accruing legal fees at this point.

Just legal fees?

Just legal fees, right.

Okay. Thank you very much.

Dennis McAlpine, McAlpine & Associates.

Thank you and good morning. And I guess the main question I had related to both the Spike contract and the Jakks suit. I know you cannot go into much detail, but can you explain what the various alternative outcomes are on both of those?

For example, Spike I had assumed was part of an overall CVS contract or Viacom contract. That does not appear to be the case now, but what could you do in terms of options? And the same thing with the Jakks suit.

Relative to our Viacom strategic alliance agreement, which was done in 2000, that has expired. And so the two separate television distribution agreements that are in place at this point, one is with UPN for our Smack Down! program, and that deal goes through at the end of September of '06. The programming that is currently being carried on Spike will expire at the end of September/October of this year.

So we're moving now to negotiate with other cable networks for the distribution of those hours, determining if we will have the full complement of those hours, if we will move any of them to other distribution platforms, and so those negotiations are very concentrated and moving forward at a fast pace at this point.

But that would be separate -- Spike would be completely separate from UPN as opposed to one blanket deal?

Yes, it would. As you probably recall, just this past January UPN exercised its option to carry Smack Down! through the broadcast year of '05/'06. So it was actually a two-year option that they picked up in January, so we are just really in the full throes of that pickup.

Did they have an option for Spike?

No, that was strictly an option that was negotiated for UPN. UPN and Spike -- at the time, it was TNN -- were negotiated as part of a strategic alliance, but the UPN deal was actually done prior to entering into the strategic alliance with Viacom. It is a stand-alone deal. So while the strategic alliance had other tenants, which included some publishing opportunities, some pay-per-view carriage outside of the United States up in Canada, etc., the UPN and Spike deals were always stand-alone separates in negotiation.

And the possible alternatives on the Jakks situation?

Well, we feel that we very much have the evidence on our side in the Jakks THQ suit. If it goes to trial, it will probably be 12 to 18 months. If there is an opportunity for settlement, that could occur at anytime. We believe that there is nothing but an improved situation for us in the licensing venue as a result of this lawsuit.

(multiple speakers). In the interim, we are conducting business as usual with THQ and with Jakks on distribution of product, etc.. We would like very much to resolve the lawsuit.

One last thing, in terms of the character development, where do you stand or what do you see now as likely superstars emerging and what sort of timing?

Well, I believe our creative folks have been focusing very hard over the last year and half, really developing emerging stars. I think if you are watching the RAW programming, you are seeing new celebrities coming from the RAW programming, as well as John Cena on Smack Down!, and John, as we mentioned earlier, is the star of our new movie, The Marine.

So I think we've got good stars emerging from both sides. It has been a sound program. It has taken time to develop, but I think you'll see in the next year those stars coming out and driving several of our revenue sources.

Mike Wallace, UBS.

A couple of questions. Let me start with the movies and the cash flow. It looks like you spent about 23 million so far. Could you give us some guidance on Q4 spend for feature films and what the cash flow guidance is going to be for the year?

And along those lines, as we go into '05, should we expect similar spending if you got another two movies in the queue, and what are the economics of the movies in terms of when they actually hit sales and marketing, how much costs you're going to bear, that sort of thing?

Pretty much starting most of the money for the development of the first two movies is spent at this particular time. The script development that we had the two new movies I will let possibly Frank or Michele talk about the cash flow and when those are budgeted to come out. But primarily what we have spent at this point is in the script acquisition and rewrites for those scripts.

And also I think you noticed that over the last couple of months we did announce a three picture deal with Stone Cold Steve Austin, and one of the first new scripts that we have in development will feature him as I mentioned earlier.

In terms of the production, we would expect in this next fiscal year to enter into production of both of these two scripts that we have in development with similar spending for these two that we experienced -- I would say similar spending as we spent for The Marine. Because they will both be more on the action adventure genre, so in the million $20 million range or $20 million plus, but certainly still a very conservative budget for this genre of film.

We don't know when the release dates are going to be yet. Where we are with the first two films is in the process of what is called the editor's cut, which will be finished around mid-March. Then the two distribution studios will take a look at those and figure where the best place to slot them into their release schedule will be. So that is pretty much where we are at this point, and we will look to announcing more of our production schedule for the two new movies maybe by next quarter's conference call or shortly thereafter.

And what are the economics? Is there any money to come from the distribution partners?

The distribution partners will put up the P&A cost. Our marketing costs will primarily be dollars that we will expend throughout our network and all of our vehicles through our Internet distribution, through our television programming, through our publications, etc.. DVDs, they will be behind the scenes, etc.. But the P&A costs will be borne by the distribution studios, so obviously they are in a recruitment mode for those before we would start to see any distribution to us on the box office sales.

And what sort of split are you looking at?

Split with the studios?

Yes.

They take a distribution fee. It varies. There are incremental spots along, if you will, incremental tiers for participation. Fox, I believe begins at 15, and I think Lion's Gate begins at about 17.5. And then they have domestic -- well, they have worldwide distribution for both those movies.

And then looking out into the next fiscal year, should we assume you are going to do more international events? Is there going to be any change versus the domestic schedule?

I believe we will continue to do more international events, and as we have seen, we are so -- I am very enthusiastic about the response that we have had in the international marketplace. The strategy that we put in place approximately last October and which we would tour internationally in what is called our Power Period has really proven to be quite successful.

The Power Period includes going over, having a series of Live Events with both our touring brands of RAW and Smack Down! culminating in producing the television program from in the case of last October and will happen again this April from one city back-to-back nights. It has been incredibly successful for us, and we just toured in Japan in the month of February and produced both RAW and Smack Down! again from Saitama Super Arena, and the results there of just growing our licensing product, the partnership with Fuji TV for marketing and promotion, we are seeing such positive results, which is exactly what we expected when we laid out that strategic plan.

So we will continue to aggregate more of our events on an international basis. But there again we will pick our markets, seed the market well, grow them, develop the licensing products around it in a way not to burn out the marketplace, but to return often enough to give our retail partners and our licensing partners the opportunity to build the sound licensing and sponsorship packages.

One of the things that we really will be focusing on internationally bringing that same philosophy back domestically for Live Events is a long enough leadtime in particular markets for sponsorship. We have hired a new sponsorship person who is based out of our UK office, and they hit the ground running to develop those sponsorship programs.

So we have a couple of things that are developing in Italy. Italy has been an incredibly growing market for us. We have a licensee out of Italy on Stickers that has just I think paid us about $.75 million so far just on the Sticker album, and that was a licensee that did not exist.

Jakks and THQ have both seen increased distribution in Italy. For toys and for game and our DVD sales, we're going to launch in April at the first translations in Italian for DVDs sales.

So all of those bode well. I really believe that we are sowing good seeds internationally, and we will continue to capitalize and be in new markets over there.

Thanks. One more question. Now that you are a couple of years into the split brand, Linda, is there any change that you are thinking about making you happy with the strategy? Just going to stay the course here, or going forward are you going to do some comingling and you are rethinking the split brands? What are your thoughts there?

I think we achieved the success we were looking for with the brand splits, and it did take awhile. However, I think we still have not achieved the crossover viewership for the two brands that we would like. Really only about 28 percent of the people who watch RAW or Smack Down! watch the other program as well. So we think there is tremendous upside opportunity to sample those brands from already a good strong sound base.

We do have occasionally stars of one brand who will make an appearance on another brand. As we are moving into WrestleMania, you will see that we have challenges across both brands, and that is really the event, the onetime where we do that. So we have an opportunity to increase the sampling of our viewing audience and to create that interest.

But the brand split I believe has worked finally in the way that we look for it. We have the opportunity to tour independently if we choose with the two brands, or we can do a super tour as I explained before that is coming up in April in Europe.

So we're pleased with the brand split. I think the developing stars now in the split -- of course, you never can develop enough stars or create the kind of storylines that you are always satisfied with because it is an ongoing process -- an exciting one -- but I think we have really gotten to the point that we are starting to reap the success now of those splits.

For instance, when we were in Japan while our Smack Down! was being produced on Tuesday night -- I am sorry, Friday night from Saitama Arena, our Smack Down! -- our RAW group went to Seoul, Korea and performed for a Live Event. So that is working incredibly well I believe in the strategy which we developed.

But thanks for the question. I think it has been kind of a hard road, and you know the success that we are seeing now proves that it was a good idea.

And in order to increase the cross viewership, would you do more of the mainland characters instead of just once a year for WrestleMania? Is that one of the things that you do, or is it something else?

Well, I really leave that to the creative folks. I'm not trying to dodge the question. It is just that they are the ones who are working on the storylines every week as to whether or not they redraft someone or they have someone who comes over from a different brand, I pretty much leave that to them to sort through, and they seem to be doing that very well.

Alan Gould (ph), Natexis.

Sorry. I had some phone problems before.

Well, we're happy to have you now.

Thanks, Linda. First on the films, I heard the comments before, but typically don't Lion's Gate and Fox, they may not get dailies on a product like this, but don't they see it prior to the editor's cut?

They did see dailies as did we because we saw them on a secure Internet system. So we have gotten -- I'm sorry I'm interrupting your question -- let me to let you finish asking it.

It would be unusual to have a film sit in the can for a year if it is -- and an editor's cut by the end of March. You know you would expect it would be released within the next six months or so.

That is pretty much the timing we are looking at, and we don't have any indication to think that that is different. But if a study is coming out with -- I make this up because it is not so -- but the next Spider-Man release or whatever, we would want to and our studio would then pick the slot where they felt it would have the most success. It could be released early summer you know, and those are kind of the indications we are getting. But it is not locked down yet, so it would be premature for me to really speculate on the release date.

Okay. Second thing, WrestleMania 21 I saw in the press release you're talking 1 million buys. That would be greater than WrestleMania 20. Is this because of BSkyB?

Well, actually WrestleMania 20 now with our out of period buys, everything all totaled it did sell over a million pay-per-view buys. So we expect that the attraction and that the excitement for WrestleMania 21 will be equal to or greater than 20, and also yes, the international buys, especially with Sky or BSkyB for the first time airing on pay-per-view will add to the number of buys. But again, as Frank mentioned, it has increased the number of buys, so it is slightly less revenue just because their price point is different.

Okay.

We are incredibly excited about Sky's carriage of WrestleMania for the first time.

Sure. And then lastly, Frank, the tax rate for the fourth quarter will be back to the normal 37 percent, or will it be more like this third quarter's 27 percent?

I would think it is probably going to be somewhere around that 37 percent. We will wind up the year at 35 percent.

Marcelo Descio (ph), Triotto Capital (ph).

I guess we lost Marcelo. (multiple speakers)

(OPERATOR INSTRUCTIONS). It appears that we have no further questions at this time.

Thank everyone for joining us this morning, and we look forward to talking to you again very soon. Thank you. Please feel free to contact me or Michele Goldstein at WWE should you have any further questions.

Once again, this does conclude today's teleconference. You may disconnect your lines at this time, and we thank you for participating today and everyone have a great day.