© Reuters.
In the recent earnings call, Fox Corporation (FOXA) reported a mix of growth and declines in its second quarter of fiscal year 2024. CEO Lachlan Murdoch announced a 10% growth in affiliate fee revenues for the Television segment and a return to growth for the Cable segment.
However, the company saw an 8% decline in total company revenues and a significant adjusted EBITDA loss in the TV segment. The launch of a new sports streaming platform, in partnership with Disney and Warner Bros. Discovery (NASDAQ:), aims to target 60 million households outside the traditional pay TV bundle. CFO Steve Tomsic discussed financial outcomes, including a free cash flow deficit and capital allocation measures such as share buybacks and dividends.
Key Takeaways
– Television segment affiliate fee revenues increased by 10%.
– Cable segment returned to growth, with a 4% increase in affiliate fee revenues.
– Advertising revenues declined, but sports advertising remained strong.
– Tubi experienced a 62% increase in total view time and a 17% revenue growth.
– A new sports streaming platform is expected to target 60 million households in the US.
– Adjusted EBITDA for the TV segment showed a loss of $138 million.
– Free cash flow deficit reported at $615 million, attributed to normal seasonality.
– Company repurchased $550 million in shares and announced a $0.26 per share semiannual dividend.
– The company ended the quarter with $4.1 billion in cash and $8.4 billion in debt.
Company Outlook
– The new sports platform will offer 14 linear networks and is not expected to significantly impact the traditional pay TV bundle.
– Positive trends in advertising expected to continue with upcoming sports events.
– The company anticipates a strong political cycle to contribute to future growth.
Bearish Highlights
– Total company revenues declined by 8%.
– FOX News Media saw a decline in advertising revenues.
– The TV segment experienced a substantial adjusted EBITDA loss compared to the previous year.
– The company reported a deficit in free cash flow.
Bullish Highlights
– Growth in affiliate fee revenues for both Television and Cable segments.
– The launch of a new sports streaming platform is seen as a significant opportunity.
– Positive advertising trends with solid NFL and College Football seasons.
– Fox News and local stations are showing improving ratings.
Misses
– The company did not provide specific details on the impact of sports sublicensing on profitability.
– No expectations set for sports sublicensing to be a recurring revenue and profit source.
Q&A Highlights
– CEO Murdoch expressed confidence that the new sports service will attract incremental subscribers without harming the traditional pay TV bundle.
– The new service will include advertising, potentially increasing reach and engagement.
– Sports sublicensing revenue in the Cable segment is variable and not expected to repeat in future quarters.
– An anticipated 8% decline in affiliate revenue despite all renewals being completed for the fiscal year.
InvestingPro Insights
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InvestingPro Tips indicate that Fox Corporation’s management has been proactively engaging in share buybacks, which is often a sign of the management’s belief in the company’s value. Additionally, the company has raised its dividend for three consecutive years, offering a current Dividend Yield of 1.77%, which is an attractive point for income-focused investors.
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Full transcript – Fox Corp B (FOX) Q2 2024:
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation’s Second Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.
Gabrielle Brown: Thank you, Operator. Good morning, and welcome to our fiscal 2024 second quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer; John Nallen, Chief Operating Officer; and Steve Tomsic, our Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and then we’ll take questions from the investment community. Please note that this call may include forward-looking statements regarding Fox Corporation’s financial performance and operating results. These statements are based on management’s current expectations, and actual results could differ from what is stated as a result of certain factors identified on today’s call and in the company’s SEC filings. Additionally, this call will include certain non-GAAP financial measures, including adjusted EBITDA or EBITDA, as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are available in the Investor Relations section of our website. And with that, I’m pleased to turn the call over to Lachlan.
Lachlan Murdoch: Thank you, Gabby, and thank you, all for joining us this morning. Against the backdrop of an active news cycle and another robust fall sports schedule, our fiscal second quarter again illustrated the strength of Fox. The growth we delivered in affiliate fee revenues was the standout this quarter, with the Television segment growing by 10% and the Cable segment returning to growth, once again demonstrating the power of our brands and our programming. We now largely completed our fiscal 2024 affiliate renewal cycle, having achieved our commercial goals without disruption and setting a solid foundation for renewals in fiscal 2025 and beyond. As expected, advertising revenues in the quarter were down, primarily due to comparisons to last year’s major cyclical events, including the mid-term elections at the TV stations and the broadcast of the Men’s World Cup in the Cable and Television segments. Parsing through the cyclical comparisons, our concentration in News and Sports coupled with the outstanding performance at Tubi is clearly an advantage in a mixed advertising environment. More specifically, sports advertising was very healthy during the quarter and we saw particularly strong demand for the NFL and College Football, which continued into the NFL playoffs. At News, the second quarter was more nuanced, while preemptions and the direct response market adversely impacted quarterly growth, we sequentially narrowed the gap between the current and prior year in ratings and in pricing. We were also able to increase our viewing share over the previous quarter, and the positive trends in share ratings and pricing have carried over into the current quarter. Last week, I visited our bureau in Jerusalem, met with our talented and dedicated staff there, and saw firsthand the devastation wrought by Hamas on October 7. Our hearts, our thoughts and our prayers go out to the victims of that day, the innocents killed in Israel, and in Gaza, and the hostages still denied the embrace of their families and loved ones. The work our correspondents, our camera people and our producers do reporting on these events is important, outstanding, and deeply appreciated. Now, on to Sports, in calendar 2023, 96 of the year’s 100 most watched telecasts were live sports. Fox was responsible for 29 of the year’s 100 most watched shows, more than any other network. This marks the fifth straight year that Fox has topped the industry in live sports viewing and demonstrates the unparalleled reach and engagement our content achieves. The 30th NFL regular season on Fox concluded with an average of 19 million viewers across all games, with America’s game of the week averaging 25 million viewers, an eight-year high. And Fox NFL Sunday logged its 30th straight year as the number one NFL pre-game show. That strength continued into the post-season, with Fox’s three post-season windows delivering a best ever playoff average of almost 45 million viewers across the wildcard, divisional, and championship games. In digital, we saw strong engagement at Tubi, which finished with a very impressive 62% growth in total view time and 17% growth in revenue. Tubi’s library of over 240,000 movies and TV episodes coupled with ubiquitous distribution drove engagement, helping Tubi reach 78 million monthly active users, log almost 2.5 billion streaming hours in the quarter and set a new monthly record of 855 million total viewing hours in December alone. Tubi has consolidated its position in the streaming landscape, ranking as the most watched free TV and movie streaming service in the United States, according to Nielsen, and surpassing Peacock, Max, Paramount Plus, and Pluto TV in view time for seven consecutive months. At FOX Entertainment, the second quarter saw programming strength, with Fox having the season’s number one new broadcast entertainment series in Krapopolis, hats off to Dan Harmon, the number one new game show debut in Snake Oil and the number one cooking series in Hell’s Kitchen. We’re also pleased with the very strong start of our mid-season lineup and the early success of We Are Family and The Floor. Before I hand over to Steve, I’ll comment on the sports platform we announced last night between Fox, Disney and Warner Bros. Discovery. This new and unique digital distribution platform is focused on sports fans outside of existing paid TV offerings. Upon launch in the fall of 2024, the platform will offer a broad suite of sports, including those from a combined 14 linear networks that broadcast sports today. The inclusion of our networks in the platform is consistent with our strategy, being proudly consumer first and distribution agnostic. Across the distribution ecosystem, our traditional Pay TV market will remain our dominant customer base for some time to come. As such, we remain committed to our existing distribution partners, where our strong portfolio of leadership Sports, News and Entertainment brands thrive in their bundled offerings. This unique new platform opens up a new market for us, one that we at Fox have not accessed before and that we’re excited to participate in. As always, we are focused on delivering value for our shareholders in a thoughtful and disciplined manner, and we will continue to explore every opportunity to maximize that value over the long-term. Let me now turn it over to Steve for his comments on the quarter’s financial results.
Steve Tomsic: Thanks, Lachlan, and good morning, everyone. With the vast majority of our fiscal 2024 affiliate renewals now successfully completed, Fox delivered 4% growth in total company affiliate fee revenues, led by 10% growth at Television and a return to growth at Cable. This growth reflects the must have nature of our content and the value that our distribution partners place on it. Consistent with our expectations regarding event cycles, advertising revenues this quarter were impacted by the absence of the FIFA Men’s World Cup at FOX Sports and mid-term political revenues at the local television stations, along with lower advertising revenue at FOX News Media. Collectively, these factors contributed to a 20% decline in total company advertising revenues. Total company other revenues grew by 14%, driven by higher sports sublicensing revenues. All in Fox reported total company revenues of $4.23 billion, down 8% from the prior year. Total company expenses decreased 5% over the prior year, primarily due to the absence of the Men’s World Cup at FOX Sports and fewer hours of original scripted programming at FOX Entertainment due to the strikes. However, this was partially offset by the first year step up under our new NFL rights agreement. Quarterly adjusted EBITDA was $350 million as compared to the $531 million reported in the prior year quarter. Net income attributable to stockholders of $109 million or $0.23 per share, compared to the $313 million or $0.58 per share reported in the prior year period, largely due to the EBITDA impact I just mentioned, along with the net changes in the fair value of the company’s investments recognized in other net. Our effective tax rate for the quarter came in at 12%, reflecting a one-off remeasurement of our deferred tax assets as a result of changes in state tax laws. Excluding this impact on other non-core items, adjusted EPS was $0.34 per share versus last year’s $0.48. Turning to our segments, starting with Cable, which reported 2% growth in total quarterly revenues. Cable affiliate fee revenues increased by $5 million with growth in pricing from our distribution renewals, outpacing the impact from industry subscriber declines running at approximately 8%. Cable other revenues increased $124 million, largely driven by higher sports sublicensing revenues associated with our college sports and international soccer agreements. This growth in affiliate and other revenues was partially offset by a 23% decline in Cable advertising revenues. At FOX News Media, advertising revenues were impacted by a softer direct response marketplace, low comparative ratings, and higher levels of preemptions due to our breaking news coverage of global events. Meanwhile, at the national sports networks, we measured against last year’s broadcast of the Men’s World Cup. Expenses at the Cable segment were 14% lower than the prior year, with savings mainly gained from the absence of the Men’s World Cup, as well as lower legal programming and production costs of FOX News Media. Taking all these factors into account, quarterly adjusted EBITDA at the Cable segment grew 60% over the prior year quarter. Moving to our Television segment, which reported total quarterly revenues of $2.54 billion, down 13% from the prior year. The TV segment reported strong 10% growth in affiliate fee revenues as price increases across all Fox affiliated stations more than offset the impact from industry subscriber declines. TV advertising revenues were down 19%. The solid growth of Tubi was more than offset by comparisons with last year’s cycle of major events, including the FIFA Men’s World Cup and mid-term political revenues, as well as the relative mix of World Series matchups and game counts. Also at TV, revenue from our entertainment production companies was impacted by the SAG and WGA related disputes. This contributed to a $64 million decline in TV other revenues, most of which was offset by a commensurate reduction in expenses. Overall expenses at the TV segment remained flat as higher costs under the NFL agreement and a modest increase in investment at Tubi were offset by lower costs from the absence of the Men’s World Cup, lower college sports rights costs, and fewer hours of original scripted content due to the strikes. Together, these revenue and expense impacts led to a quarterly adjusted EBITDA loss of $138 million to our TV segment, compared to an EBITDA contribution of $256 million reported in the prior year quarter. Turning to free cash flow, where we recorded a deficit of $615 million this quarter. This is consistent with the normal seasonality of our working capital cycle, where the first half of our fiscal year reflects the concentration of payments for sports rights and the buildup of advertising related receivables. In terms of capital allocation, fiscal year-to-date, we have repurchased an additional $550 million through our share buyback program, bringing the total cumulative amount repurchased to $5.15 billion, or 25% of our total shares outstanding since the launch of the program in 2019. In addition, today we announced a $0.26 per share semiannual dividend. These capital return measures are supported by our robust balance sheet, where we ended the quarter with $4.1 billion in cash and $8.4 billion in debt. These balances are before taking into account the repayment of our $1.25 billion note in late January. With that, I’ll turn the call back over to Gabby to open up the Q&A.
Gabrielle Brown: Thank you, Steve. And now, we would be happy to take questions from the investment community.
Operator: [Operator Instructions]. We have a question from Ben Swinburne with Morgan Stanley. Please go ahead.
Ben Swinburne: Good morning. Lachlan, obviously, big news in the news, sports joint ventures. I’d love to get your thoughts, really around that product and opportunity in kind of two areas. First is, what is the opportunity that you guys see in the United States for a product like that? Obviously, we’re all focused on the cord cutter sort of TAM, but how many people do you think are interested in a product like this? And then do you see any risk to particularly Fox News, this is the first time you guys have offered a product with just Fox broadcast. So how’d you balance that when you thought about putting this business together? Thanks so much.
Lachlan Murdoch: Hey, thank you very much, Ben, and good morning. So the opportunity is huge. And that’s really because this sports focused platform is focused entirely on cord — not cord cutters, but cord nevers. So if you look at the American market, roughly, say, 125 million households in America, and roughly half of those are not within the traditional bundled cable ecosystem. And so the target for this product, which is going to be, I think, incredibly innovative when you see it roll out is really that universe of, call it, 60 million odd households that currently don’t participate in the bundled cable and pay television ecosystem. So we think it’s a tremendous opportunity. We’ve been working on it for; I think it’s been reported this morning fairly accurately for several months now. I’ve been lucky enough to — I have seen some of the prototypes for this service. And again, it will be unique. And I think very innovative when you see it rollout. In terms of the risks, and particularly for Fox News, I think the risks are very low, and that’s because of the focus of the sports product being on the cord nevers. Fox News continues to be the top rating cable network. And our distributors, our partners, really value that channel and that brand as it really drives tremendous viewership and audience and engagement for them and we think we’ll continue to do so within the traditional cable and pay television bundle. Thank you, Ben.
Gabrielle Brown: Operator, next question, please.
Operator: We go to Robert Fishman with MoffettNathanson. Please go ahead.
Robert Fishman: Good morning, everyone. Sticking with the sports news, so we’ve long discussed with you the benefits of Fox to a sports led skinny bundle. So I’m just wondering, any additional background you can share on what pushed this deal forward now, including maybe any flexibility you built into your recent affiliate fee renewals? And then on a related note, should we expect to see any changes in your approach to negotiate future sports rights and any comments you want to share about the Netflix (NASDAQ:), WWE deal that might impact these negotiations going forward. Thank you.
Lachlan Murdoch: Well, let me start back to front, Robert. So there’s no impact on the Netflix, WWE deal at all. So I don’t think that plays a factor in this. And in fact, in how we approach our portfolio of sports rights, we will be aggressively competing in the sports market for sports rights that nothing has changed there. The primary business and value in Fox Sports is competing both for every subscriber in the traditional cable — Pay TV bundle and advertiser viewer and ultimately advertiser. So sports remains a competitive business, which, we — frankly, we thrive in, and we don’t see any difference to that. What led to this? Now, I think we’ve answered many questions on these quarterly calls over many years about that when we are ready to launch a streaming service such as this, and we will do it. And we’ve been monitoring the space, obviously, for years, past few years in particular. And as we developed with our partners the concept around very unique and innovative products, we felt now was the right time to launch such a product really into a new market, right? It’s a new market where there’s no product serving the sports fans that are not within the cable or TV bundle. So it accesses — for us, it accesses a whole new market and really drives tremendous amount of new reach that we weren’t servicing before.
Gabrielle Brown: Operator, next question, please.
Operator: Next is John Hodulik with UBS. Please go ahead.
John Hodulik: Great. Thank you. First, just quickly on the sports TV, just any cash contribution or can you size any cash contribution required from Fox? And then turning to advertising, obviously, a number of things affecting the numbers this quarter. You guys have some positive color as we look into next quarter. Just any color, one, I’d say, on the TV side, what you’re seeing at this point in terms of political, and then with the improvement in the ratings and the year-over-year, the gap that you’re seeing closing, can we assume that the 23% on the cable outside is sort of the worst number and any color on the sort of slope of the improvement we should see as we head through the year? Thanks.
Lachlan Murdoch: I’ve lost track forgive me. Okay, so [indiscernible] advertising and cable —
Gabrielle Brown: Cable advertising.
Lachlan Murdoch: Cable advertising.
John Hodulik: Gabrielle, you got it.
Lachlan Murdoch: After this, we won’t need any more questions. We’ll cover the whole gamut. Thanks, John. On the cash side, I’ll let Steve fill in. But it’s some — obviously this business has both the marketing and other costs associated with running the business in the partnership. But there’s also the revenue that we garner through affiliate fees for our networks that come out as the business grows. But I’ll let Steve on the details.
Steve Tomsic: Yes. So John, I think it’s a touch early for us to be giving some forecasts around sort of the contribution or deficit from the JV, but sort of as we look at it, it’ll be accretive to us from a net-net perspective when you take into account the affiliate fees that we’ll collect as revenue versus whatever funding we need to make to the JV. We think from a net-net to Fox perspective, it’ll be accretive pretty quickly.
Lachlan Murdoch: And then, on advertising, I think the advertising outlook is, as I — as mentioned with news, but you could apply this term to the overall market. It’s nuanced as we look at it. If I start with sports, we had a very solid regular NFL season from an advertising perspective, and I think a stronger NFL post-season, which we were very pleased by, but also that was a smaller revenue line. But we had a fantastic College Football season, really, I think the story of this past autumn was really the strength of College Football, and particularly as advertisers, you sort of founded and appreciated the quality of the audience watching College Football. Coming up, if we look forward, obviously we have the DAYTONA 500 and then the start of the regular Major League Baseball season in March. And there’s a lot of positive momentum with advertisers with those. Fox News, you have positive trends of VR pricing. Direct response pricing is still down, but as you start to lap the comparisons from last year, it’s certainly improving quite a lot. We have an impact from preemptions with election and unfortunately with war coverage. So the preemptions are affecting and ratings are continuing to improve. So we’re happy with where we are at Fox News as all those trends are improving steadily. Local stations is probably the most mixed. But you have a bad comparison, particularly in the current pacings with Super Bowl comps this time last year. It’s probably about $50 million in Super Bowl revenue, just in the station group this time last year. So the comparisons are quite tough as we go forward, but we remain confident that we’ll see a record political cycle. This is slightly ameliorated, I think in the current quarter with the lack of a competitive primary competition, but we’re already seeing business in the first half of next year start to flow in from a political perspective. And it’s — obviously, it’s sort of natural because our stations, we have large number of stations in key political markets like Georgia and Michigan, Pennsylvania, Arizona and Wisconsin. So we’re very confident in a very strong political cycle once that really starts to flow. And then finally with Tubi. Tubi’s TBT is continued to grow, I think at 62%, 63%. And obviously with the TBT growth, the revenue is following, the revenue growth is slightly less or somewhat less than it was last year. But in the sort of streaming environment, we’re very happy with its growth. So that’s — on advertising, scattered pricing is all up above upfront pricing, so that’s positive. And then finally, on the cable affiliate subscribers and fees, we are in an environment where I think we called out it’s roughly 8% cable erosion, and yet our cable affiliate fees have grown in this quarter. So I think that really shows the strength of our brands and our programming in the cable universe. So we’re very pleased with that. Thanks, John.
Gabrielle Brown: Next question, please, operator.
Operator: It is from Jessica Reif Ehrlich with Bank of America Securities. Please go ahead.
Jessica Reif Ehrlich: Thank you. Back to the sports platform, Lachlan, you seem really confident that it won’t affect the Pay TV bundle, which is, I just want to get some color on that, given that sports has been really the glue that’s kept it together. So why do you feel so confident that it will not impact that? And then what is the openness to ad partners, and will this have a separate advertising organization? How will the ads work in your content?
Lachlan Murdoch: So, hi, Jessica, by the way, so the — first on how it affects the overall Pay TV bundle, again, the key market, the market that we will be driving towards is the market that sits outside the sports fan who sits currently outside of the traditional Pay TV bundle today, and there’s tens of millions of them. So we are very confident that this is a large market and a large opportunity that we can address without undermining the traditional bundle. We — obviously, we’ve been working on this for several months. We’ve done lots of sensitivity analysis, and we would not be launching this product if we thought it was going to significantly affect our Pay TV affiliate partners, and that’s very important to us. We remain, I think, the biggest supporters of the traditional Pay TV bundle. We think there’s tremendous value in the Pay TV bundle for the consumer who wants to get it all at an affordable price. The big bundle is still the best way to get that programming and those brands. So we are confident that this product will be additive and will give us incremental subscribers and not affect significantly the traditional bundle. And the openness to add partners, that’s not something that we’re considering at this stage. We think that the 14 linear networks that this service offers gives people a tremendous amount of content between ABC affiliates, Fox affiliates, ESPN, ESPN2, ESPN News, the SEC Network, Fox affiliates, Fox Sports 1 and 2, the Big Ten Network, TNT, TBS and others. It’s a tremendous offering that covers the majority of the key sports in this country: NFL, NBA, WNBA, Major League Baseball, NHL, et cetera, college, obviously NASCAR and so on. So we think it’s an incredibly strong offering and at this stage, we’re not contemplating adding partners to it. I think the third question, Jessica was on advertising revenues. And so advertising revenues will flow through this, so that the advertising that we have on our linear networks will flow into this service and will just give us increased reach to market that hasn’t seen those that advertiser engage with those clients before. So we think it’s a net positive. Thank you, Jessica.
Gabrielle Brown: Operator, we have time for one more question.
Operator: Very good. That will come from Michael Morris with Guggenheim. Please go ahead.
Michael Morris: Hi, good morning. Thank you, guys. So I wanted to ask about two areas of strength in the quarter. The first one on the sports sublicensing. Can you share a little more detail on what that was, how it impacted profitability, and how to think about whether or not that’s a recurring revenue and profit source? And then my second question is on the affiliate acceleration, which is great to see. We know that the rate of cord cutting is going to be impactful on that number. It’s very hard to predict. But on pricing alone and the precedent that you just set, should we look at this as the first quarter of a sustained stronger pricing dynamic? And how long do you think we should anticipate that you can continue to see this type of growth being fueled by those new contractual relationships? Thank you.
Lachlan Murdoch: I thought it was unfair that Steve would get the easy question and then you asked the second question. So anyway, good morning, Michael. I’ll let Steve address the sports sublicensing first.
Steve Tomsic: Hey, Mike. So our sports sublicensing revenue we have in the Cable segment. So we have — we earn sports sublicensing income in relation to various sort of college sports properties and international soccer rights. Some of these rights come with some variable based economics to them, which we saw in the quarter. I think you should see this as somewhat a one-off. It’s not going to repeat like this in future quarters, future years. And if you want to try and dimensionalize it, then the size of the increase in cable other revenues between this quarter and previous quarter last year is a pretty good guide to the net benefit to us from those sublicensing arrangements.
Lachlan Murdoch: So on the affiliate revenue acceleration, I think the — if you look at it in two, can we sustain that? We’ve now completed all of our distributions or renewals in this cycle that will affect the remainder of this fiscal year. So there’s no more renewals negotiated that will affect this fiscal year. And obviously then we’re rolling into renewals that will take effect after this fiscal. If you look at the underlying rate of decline around 8%, and this goes back to a little bit of what John’s question, if we look at that 8%, actually in September and October, it was better than 8%. It was a little bit better. And then — and this, we believe was the impact of football and sports viewing in the fall. But then after October, sort of as you get into November and December, the rate returned, decline returned to its sort of baseline at 8%. So for the immediate future, we don’t see that changing. There’s some cyclicality within that. But I think the 8%, yes, number that we’re sort of baking into our assumptions. With that, we believe as we’ve achieved in over the last year, where we’ve renewed over a third of our distribution, we’ve been able to achieve rate increases that have made up for those declines. And that is because of the strength of our brands, the strength of our programming, and really where they sit, having sort of a focused strategy on a key number of very core brands that are essential for the — for distributors and for their customers that will be able to maintain similar rates of change going forward. Thanks, Mike.
Gabrielle Brown: At this point, we are out of time, but if you have any further questions, please give me or Dan Carey a call. Thank you again for joining today’s call.
Steve Tomsic: Thank you.
Lachlan Murdoch: Thanks, everyone. Have a good day.
Operator: Ladies and gentlemen, that does conclude your conference call for today. Thank you for using AT&T executive teleconference. You may now disconnect.
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