Fox - Q3 2024

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation third 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. I would like to emphasize that functionality for the question-and-answer queue will be given at that time. If you should require assistance during the call, please press star, then zero. As a reminder, this conference is being recorded. I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Gabrielle Brown (Chief Investor Relations Officer)

Thank you, operator. Good morning, and welcome to our fiscal 2024 third 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 EBITA 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. With that, I'm pleased to turn the call over to Lachlan.

Lachlan Murdoch (Executive Chair and CEO)

Thank you, Gabby, and thanks, everyone, for joining us this morning. This quarter, Fox continued to distinguish itself from its peers, delivering 7% EBITDA growth and demonstrating again the strength of our brands and the advantages of our strategy. This result is even more impressive when considering we are comping to last year's third quarter, which enjoyed a significant tailwind from Super Bowl LVII. In the fiscal third quarter, total affiliate revenue fees grew 4%, with positive growth at both our television and cable segments, driven by pricing benefits from our recent renewals. Headline advertising revenues were down during the quarter, as expected, due to the absence of the Super Bowl and fewer NFL broadcasts than in the prior year. If not for the difference in our NFL postseason schedule, our total advertising revenues would have increased a few %.

Overall advertising trends at Fox are clearly moving in the right direction, both in the scatter market and in early upfront discussions. Demand for sports remains robust, while trends at Fox News are improving across the board, including the fact that we have now fully lapped the direct response market issue that had adversely impacted Fox News DR revenues. While there wasn't much of a primary season this year, we do expect strong political advertising for national and local races, as well as local ballot issues in the first half of our fiscal 2025, which should largely benefit our station group.

As we look to our annual Upfront presentation next week, our focus on live content and must-watch events, such as the coming presidential election cycle and next year's Super Bowl, combined with Tubi's position as the most-watched free TV and movie streaming service, will favor our enviable position with advertisers across the Fox portfolio. Operationally, Fox News again ended the third quarter as the most-watched cable network in total day and prime time. Fox News also strengthened its leadership position inside the category, gaining share to now again command 50% of total day viewing. These gains are underpinned by a dedicated team of journalists and staff who are focused on delivering coverage and insights on current events most relevant to our viewers.

Building from our strength in programming in prime time, we are expanding our leadership across day parts, whether that be mornings with Fox & Friends, afternoons with The Five, or late nights with Gutfeld!. We expect this momentum to continue as we ramp our election coverage heading into the fall. Tubi ended the third quarter with 22% revenue growth, driven by a 36% increase in total view time and 20% growth in monthly active users to just under 80 million MAUs. Our expansive content library and our differentiated user base have solidified Tubi's position as the most-watched free TV and movie streaming service in the U.S., with 1.6% of total TV viewing, ahead of Peacock, Max, The Roku Channel, Paramount plus, and Pluto TV, and only marginally behind Disney plus.

From its debut on the Nielsen Gauge in February 2023 to the most recent gauge in March 2024, Tubi's share of total U.S. TV view time grew 60%, which is faster than any other streaming service over that same period of time. Apart from just its growing scale, Tubi is also unique and uniquely valuable to advertisers through its reach and through its engagement. Over 60% of Tubi users are classified as cord cutters or cord nevers, and 90% of those users' time watching is proactively on demand, as opposed to passively watching a FAST channel. This positions Tubi very well as an important part of the growing digital streaming advertising marketplace. We are looking forward to showcasing Tubi's strengths at next week's Upfront. Fox Sports had an impressive quarter, with strengths across all areas of our portfolio.

We finished the 30th anniversary of the NFL on Fox on a high note, with three NFC playoff games on Fox, averaging an incredible 45 million viewers. This was capped with the NFC Championship Game, drawing over 56 million viewers, which is 19% higher than last year's NFC Championship Game, and the most-watched in over a decade. This season also reinforced Fox's solid position in college sports, with strong viewership in both college football and college basketball. In fact, in the current academic year, Fox has aired the most-watched college football, men's college basketball, and women's college basketball games across the regular season. College sports has grown to become the second biggest source of Fox viewership, behind only the NFL. Total consumption of college sports on Fox has grown by over 40% through the last 5 years.

And in the March quarter, we launched the UFL, United Football League, the result of the merger of the USFL and XFL. With this merger, the outlook for spring football is promising, and we are pleased with the results through the midpoint of the season. While the sports calendar in our upcoming fiscal fourth quarter tends to be quieter, Fox Sports is excited to present its Summer of Soccer, featuring over 200 hours of live soccer coverage across our platform, starting with the UEFA European Football Championship on June 14th and Copa América on June 20th. This summer will also feature a new schedule from Fox Entertainment, with returning favorites like Gordon Ramsay's Food Stars and exciting new shows like The 1% Club.

This follows a successful spring slate that featured two of the top five new primetime series in Krapopolis and The Floor, with Krapopolis ranking as the number one new primetime entertainment show, and The Floor as the number one game show season to date. Last quarter, we announced the formation of a new sports-focused digital distribution platform with our partners, Disney and Warner Bros. Discovery. We are happy to have hired a truly world-class CEO in Pete Distad, and he is off to a flying start. In just several weeks, the JV now has over 150 engineers and executives dedicated to building a unique, innovative product, which focuses on sports fans outside of the traditional TV bundle.

We've already launched an internal beta service, which I have been trialing this past week, and I have to say, it's an incredibly exciting product, and we can't wait to launch it this fall. Today's media market is certainly dynamic, but the strength and leadership of our brands, and their capacity to convert those strengths financially underscores our considered strategy. Underpinned by our best-in-class balance sheet, we ended the quarter with $3.8 billion in cash and just 1x net leverage. We remain committed to driving long-term shareholder value creation through the thoughtful balance of managing our existing businesses, pursuing new adjacencies, and returning capital to our shareholders. With that, I'll hand it over to Steve.

Steve Tomsic (CFO)

Thanks, Lachlan, and good morning, everyone. Fox's strategy continues to deliver solid results. Even with the comparison to our blockbuster NFL schedule of the prior year, we posted total revenues of $3.45 billion and grew Adjusted EBITDA by 7% to $891 million. Total company affiliate fee revenues grew 4% over the prior year, with growth, with growth at both our television and cable segments, supported by a recent cycle of affiliate renewals. Reflecting the event-driven nature of our business, advertising revenues on a headline basis were down 34%, as we compared against last year's broadcast of the Super Bowl, along with two less NFL playoff broadcasts in the current year quarter. As Lachlan just mentioned, if not for the impact of these NFL schedule items, total company advertising revenues would have grown low single digits.

Total company other revenues were down 22% versus the prior year, primarily the result of the timing of sports sublicensing revenues, which were more weighted towards our fiscal second quarter this year. Total company expenses 21% YoY, primarily a result of the NFL postseason schedule differences I just mentioned. Net income attributable to stockholders of $666 million or $1.40 per share compares to the net loss of $54 million or -$0.10 per share reported in the prior year period. This YoY variance reflects the growth in EBITDA, as well as the absence of last year's Fox News Media litigation charge and a current quarter book gain on the merger transaction of the USFL, which has now been deconsolidated in connection with the formation of the United Football League.

Excluding these and other non-core items, adjusted EPS was $1.09, up 16% against last year's $0.94. Now let's turn to our segment results. At Cable, revenues were $1.47 billion, down 6% from the prior-year quarter, while EBITDA grew 3%. Cable affiliate fee revenues were up 1%, with growth in pricing from our distribution renewals, outpacing the impact from industry subscriber declines running in the mid-8% range. Cable advertising revenues fell by 6% or $20 million. At the national sports networks, advertising revenues were down due to the absence of last year's Super Bowl-related programming and the World Baseball Classic. At Fox News, ad revenues were impacted by moderating direct response pricing declines and lower digital traffic, partially offset by higher national pricing.

Cable other revenues decreased $89 million, primarily a result of the timing of sports sub-licensing revenues, which were more weighted towards our fiscal second quarter. Cable expenses were 16% lower than the prior year, primarily due to the timing of the associated sports sub-licensing expenses, lower costs at Fox News, and the deconsolidation of the USFL. All in, and despite segment revenues being down 6%, quarterly Adjusted EBITDA at Cable grew 3% over the prior year quarter to reach $819 million. Turning to our television segment, where revenues were $1.94 billion, down 22% from the prior year, while EBITDA increased 24%. TV affiliate fee revenues grew 9% over the prior year, as price increases across our owned and operated, as well as third-party Fox-affiliated stations, more than offset the impact from subscriber declines.

As mentioned previously, TV advertising revenues were impacted this quarter by the composition of our post-season NFL schedule, namely the absence of last year's Super Bowl and two less NFL playoff games. As a result, on a headline basis, TV advertising revenues were down 40%. TV other revenues increased $13 million, primarily the result of the timing of deliveries from our entertainment production companies. While total TV revenues were down versus the prior year, this was more than offset by a 24% decrease in TV expenses. Expenses were lower in the quarter, primarily due to the impact of the NFL schedule, along with fewer hours of original scripted primetime content, including the impact of the industry labor disputes. All in, we delivered quarterly Adjusted EBITDA at the TV segment of $145 million, up 24% over the prior year quarter.

Turning to cash flow, where we generated strong free cash flow of $1.39 billion in the quarter, reflecting our normal seasonal cycle of collecting advertising revenues from our fall programming, coupled with our major sports rights payments being concentrated in the first half of our fiscal year. From a capital return perspective, from the commencement of the third quarter through today, we've repurchased $300 million under our share buyback program, along with returning nearly $125 million to our shareholders via our semiannual dividend payment. Our total cumulative buyback activity since the launch of the program in 2019 now amounts to $5.4 billion, or 26% of our total shares outstanding, and we remain committed to fully utilizing our current $7 billion authorization.

These capital return measures are supported by our robust balance sheet, where we ended the quarter with $3.8 billion in cash and $7.2 billion in gross debt. With that, I'll turn the call back over to Gabby to open the Q&A.

Gabrielle Brown (Chief Investor Relations Officer)

Great. Thanks, Steve. Now we'll be happy to take questions from the investment community.

Operator (participant)

Ladies and gentlemen, I'd like to emphasize the functionality for the question-and-answer queue. If you wish to ask a question, please press one then zero on your touch-tone phone. You will hear a tone indicating you have been placed in queue. You may remove yourself from queue at any time by once again pressing one then zero. If you're using a speakerphone, please pick up the handset before pressing the numbers. It has been requested that you limit yourself to one question. Once again, if you have a question, please press one then zero at this time. One moment, please, for your first question. Your first question comes from the line of John Hodulik from UBS. Please go ahead.

John Hodulik (Telecom and Cable Analyst)

Great, thank you, and good morning, everyone. Strong growth again at Tubi. I guess a couple of questions on that. I mean, first, what's driving the growth in TVT? Any color you guys can provide on CPMs? Disney, yesterday, gave a little color on some weakness in connected TV CPMs. And then three, any color you can provide on dilution at Tubi and maybe how you guys view future profitability of that business? Thanks.

Lachlan Murdoch (Executive Chair and CEO)

Thanks very much, John. So, let me... I'll start. I'm not quite sure when I understand what you mean by dilution at Tubi, but let me start with the other two. You know, the growth at Tubi continues to be incredibly strong. I think TVT growth comes from both new subscribers or new viewers finding the platform. As you'd be aware, you know, we've very efficiently been marketing the platform to bring more people to it, and it's becoming, you know, a wider and wider known and loved brand in the marketplace.

And the reason for that is, you know, we have we've talked about it on calls before, you know, with 250,000 movies and television series on the platform, and now over 250, in fact, I think around 270 live fast channels on the platform, it really does offer a tremendous product for everyone who's utilizing it. But it's very interesting because,

... Of all those FAST channels and all those 250,000 movies and a TV series, 90% of the viewing comes on demand. This is very important because when that viewing comes on demand and it's proactively on demand, as opposed to passively sort of sitting back and watching a FAST channel, that's much more valuable to advertisers. And that certainly is something that we're gonna make a big deal about at our Upfront presentations next week. So because of that, we are very confident we can hold our CPMs at Tubi. We're already very efficient with our CPMs. I think some of our competitors priced themselves when they entered the AVOD market over the past, you know, 12 and 18 months very high.

We're seeing in the marketplace them having to drop CPMs as new entrants add supply to the market. So that's affecting the market overall. It certainly, you know, has an impact on the market for advertising for Tubi. But from a CPM point of view, it's not really gonna be a big impact to us. I should just say, though, that next quarter we are gonna be facing difficult comps in the fourth quarter. I think if you remember, this time last year, Tubi was up 47% in revenue, and that's gonna be a very difficult comp for us next quarter. So, there will be some headwinds for the whole marketplace, but from a comp point of view for Tubi as well in the next quarter. So that's just a slight word of caution.

Operator (participant)

Your next question comes from the line of Robert Fishman from Moffett. Please go ahead.

Robert Fishman (Senior Research Analyst)

Hi, good morning, everyone. Given all the press about the NBA negotiations underway, I'm just curious if you can think a little bit as far as your broader sports rights go. And how do you think about the value of Fox broadcast network as you negotiate those future sports rights? And then the flip side of that is, do you feel like you're at a competitive disadvantage without your own SVOD service to compete for future rights? And then if I can, just separately, given all the M&A discussion in the industry, what are your latest thoughts on monetizing some of your strategic non-core assets, like your FanDuel option and Studio Lot? Thank you.

Lachlan Murdoch (Executive Chair and CEO)

Thanks, Roger. So with the NBA, obviously, I can't sort of comment on other people's sort of negotiations and where that may or may end up. But in terms of how we think about it affecting the value of the Fox network and our sports portfolio, we're very happy with our sports portfolio.

We obviously look at, you know, rights packages as they come up, but we see them as a portfolio or a bouquet of sports rights that we have, and we feel very strong with the current portfolio that we have, which is one of the reasons why we didn't pursue the NBA in this round of negotiations. But I think it does go to the value of broadcast television, because, you know, sports leagues still need reach. Reach is, you know, still incredibly important for them to drive their fan bases, for them to get the maximum amount of viewership to their games and matches.

So the value of the Fox network and frankly, our strategically kind of positioned station group to any sports league you know only increases over time is what we're seeing. And therefore, I don't think coming to the second part of your question, you know, I don't think we are strategically disadvantaged with not having a subscription video-on-demand service because we found in the past, we can partner with others. Well, frankly, the leagues tend to partner with others. We can take the rights where we can broadcast to the most amount of Americans you know possible and they can allocate rights to SVODs as needed. But they're never gonna be able to live entirely without a broadcast network and then broadcast distribution. M&A?

Steve Tomsic (CFO)

Yeah. So Robert, just in terms of the M&A picture, like our posture on sort of what you term non-core assets, like we're strong believers in the sports betting market in this country. We read with interest your note that put a $1 billion value on it, and so listen, our intention is to see that through and eventually exercise. And in the Studio Lot, we think is a long-term asset for us. We have development plans for that, and so we don't have any change in posture around early monetization of those assets. We think they're incredibly valuable for the long term.

Lachlan Murdoch (Executive Chair and CEO)

I just remind you, it's not only the value of the option, but also the equity that we have in Flutter, which is today worth over $900 million.

Gabrielle Brown (Chief Investor Relations Officer)

Right. Next question, please, operator.

Operator (participant)

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Please go ahead.

Ben Swinburne (Managing Director and Head of US Media Research)

Thanks. Good morning. Lachlan, just sort of a question around kind of your products coming to market, the streaming JV, and also maybe how Tubi might fit in. Any more you can share with us on sort of what you think is really differentiated about the product? We haven't seen it yet, you have. And I noticed in the Disney deck yesterday that it says that a definitive agreement hasn't been signed yet. So I didn't know if there was something, you know, holding it up, or if that meant anything, or any update on sort of the go-forward plan? And then with, you know, I'm wondering, you know, Tubi, with its reach as an app-based service, is that an opportunity for maybe bundling the JV product or merchandising it in some way?

You have a pretty interesting direct customer relationship with Tubi. I know it's a different kind of product offering, but I was curious if you'd thought about, you know, leveraging that asset or those two assets together to create more value for the company. Thanks a lot.

Lachlan Murdoch (Executive Chair and CEO)

Thanks very much, Ben. First of all, as I said, I've got—actually, in the room behind me, I've got the beta version of the streaming app, and I don't think we've announced the name yet, so I won't inadvertently do it on this call, I hope, not yet anyway. But it. Look, it's something that we've been able to engage with, and it is really looking tremendously exciting, as I said in my comments. It's very innovative.

It's designed to be entirely focused on, you know, the cord nevers, cord cutters, people who are not in the cable bundle, and who, frankly, can't, won't be able to compare it to a tier of, you know, live channels. It's a very different digital-first product, which, when you eventually get it and get to enjoy it, you'll understand how groundbreaking, certainly in this country, it really is. In terms of the speed, you know, everyone is, you know, are running at a sort of full pace to get the product finished and delivered.

Obviously, there's the fun side of it, which is, like, the user interface and how you use it, which has been great to use, but there's a ton of work, obviously, in engineering behind that, in ingesting content from, you know, multiple partners, and being able to combine that into one sort of seamless platform. So there's a tremendous amount of work that's being done to get us over the line this autumn. But we're incredibly excited. And so there's no- I wouldn't read in anything into you know, final deal terms being signed. It's just a matter of everyone running on all cylinders to get this finished, so. Tubi.

Oh, and Tubi, sorry. Tubi, we don't see... Tubi's a very different product. We don't see an opportunity at this stage, or we haven't contemplated an opportunity at this stage to bundle the sports service with Tubi. I think it makes potentially more sense to bundle sports with other SVOD services, you know, which you'll likely see as we go forward.

Gabrielle Brown (Chief Investor Relations Officer)

Next question, please.

Operator (participant)

Your next question comes from the line of Jessica Reif Ehrlich from Bank of America. Please go ahead.

Jessica Reif Ehrlich (Managing Director and Senior Media and Entertainment Analyst)

Thank you. A couple of questions. First, on political advertising. Lachlan, you seem pretty confident that it will come back, but I guess the question is really: will it come back to linear the way it has in the past, and what's your overall outlook? Second, on M&A, you may have the strongest balance sheet in the industry, so just wondering if you could explore what opportunities you see out there. There seems to be a lot of things going on in the industry. And then finally, just a follow-up on Tubi, which has, I mean, such incredible momentum. You've really pulled away from certainly all the other FAST channels and competing with the big SVOD company channels or network platforms. What does it look like over the next three years or so?

Lachlan Murdoch (Executive Chair and CEO)

Great. Thanks, Jessica. So on... Let me start with political. You know, we are confident. We obviously were disappointed for multiple reasons that there wasn't a more competitive primary season. But we certainly know this is an election which both sides of politics or all sides of politics are very focused on, have raised a tremendous amount of money, and that money will flow ultimately to local television. And we are extremely confident of that.

One of the reasons we're confident, in addition to the amount of money that we know has been raised, are you know just the position of our stations, specific stations within the group and how that aligns with the political map. If you look at you know the tight... So putting aside presidential election, everyone focuses on, it's easy on a you know a call to talk about sort of national trends, and people focus on presidential, but you have to look below presidential and look at sort of Senate races. So we have tight Senate races in you know key markets where we have big stations. And you have to remember, Jessica, these are big news stations, right?

Political money tends to run alongside news, local news. So there's tight races in Arizona, in Michigan, these are for Senate, in Michigan, tight races, Senate races in Pennsylvania, and in Wisconsin. And also, of course, our D.C. station will benefit from a tight race in Maryland. And in addition to that, you've got a lot of issues on the ballot in different markets. So Arizona, Florida, I think Maryland, again, all have a lot of issue money flowing into those onto the ballot. So, you know, we think it's gonna be an incredibly strong political season.

It's just starting later than we had first expected, than you traditionally have when you have a primary, a more contested primaries. So you'll start to see the benefit of that in the first half of our next fiscal 2025, for us. The next question on M&A and the balance sheet. I agree wholeheartedly. I think we have the best balance sheet in the industry. I think that's the math. Just, that's just a fact. And so, you know, we continue to look for accretive opportunities, yeah, that would align with our kind of strategic goals and initiatives. And we'll continue to do that.

We obviously don't want our balance sheet to go to waste, but we haven't found anything yet that we're immediately gonna do or follow. But it is something we are keeping a close eye on. And then on Tubi, how does Tubi look over the next three years? Well, Tubi continues to grow. Obviously, as you get to scale, you know, the growth trajectory, which is just harder to comp with the growth that we've had over the last couple of years. But Tubi continues to grow.

Money will continue to flow from linear entertainment television, you know, particularly cable entertainment networks into streaming streaming AVOD and, and SVOD with advertising-supported SVOD services. That, that trend will, will not slow, and Tubi will be one of the main beneficiaries of, of that money flow. So, so we're, we're confident in the continued growth of Tubi and under the leadership of, of Anjali it just goes from, from strength to strength.

Gabrielle Brown (Chief Investor Relations Officer)

Operator, we have time for one more question.

Operator (participant)

Okay, that question comes from the line of Michael Morris from Guggenheim. Please go ahead.

Michael Morris (Senior Managing Director and Equity Research Analyst)

Thank you. Good morning guys. Two questions, if I could. The first one is on the JV and, you know, some of your existing distribution partners have brought up concerns that it's, in some way, unfair to them for you to have a sports-only JV. Seems that you would disagree by virtue of the fact that you're moving forward. So I'd love if you could address, you know, those concerns and whether you think there will be changes in the marketplace, or whether you think those concerns are unfounded. The second question, a bit more on the model, perhaps for Steve. Television profit was, I think, notably strong in the quarter, given that on a YoY basis, you did not have the Super Bowl or those extra playoff games.

So can you maybe unpack a little bit? We would think that, that those types of events would be uniquely profitable. So to show profit growth as you comp those challenges, I'd be curious if you could talk about sort of the sustainability and, and whether maybe we're overestimating how profitable those games are. Thank you.

Lachlan Murdoch (Executive Chair and CEO)

Thanks, Mike. Well, let me start. So on the sports joint venture and how, you know, we certainly view it and then how we discuss it with our distribution partners, I think the first thing, and this is incredibly important to us, is that we are wholly and fundamentally supportive of the traditional cable television bundle. It will continue to be, for a very long time, our number one revenue stream. And we are all in to support our distributors in every way we can, in that bundle and supporting their subscribers and their business. So that's, that is absolutely a fundamental fact for us.

Having said that, we've always said it's important for us to put our brands where viewers are, right? And in the universe of sports fans that don't currently take a cable bundle, that is the universe that the sports joint venture will be entirely focused on. And it's frankly important to us that because we are so invested in the cable bundle that the sports joint venture will be very targeted and very focused on the non traditional pay TV viewer universe. And we think we can, you know, very cleverly and very, in a very targeted way, market to those subscribers so that we minimize any cannibalization of the traditional of traditional subscribers.

So we're very open with our distributors. We're very open with how important they are to us and also how, because of that importance, how we can, you know, focus a sports joint venture in the areas it needs to be, to be focused on.

Steve Tomsic (CFO)

Mike, Mike, it's Steve. Just in terms of television profitability, so, quarter to quarter, we were up close to $30 million. The way to think about it is that the single biggest event was Super Bowl, which was a high tens of millions dollars EBITDA contribution last year versus this year. But then you look at it this year, to offset that, we grew affiliate fee in the segment by about $70 million. And so one for the other basically is a push. Tubi was a push, a push quarter on quarter in terms of EBITDA deficit there. And so then the...

What's left is the biggest EBITDA sort of driver of contribution when you look at it from a quarter-on-quarter perspective, is the change in entertainment programming costs, which was an ongoing push towards from scripted towards unscripted to get dollar cost per hour down without harming viewership, as well as the impact of the strikes. So that's-- there's a lot of other puts and takes in there, but they're the sort of the big three things that drive it.

Gabrielle Brown (Chief Investor Relations Officer)

Great. At this point, we are out of time, but if you have any further questions, please give me or Charlie Cenatiempo a call. Thanks so much for joining us today.

Operator (participant)

Ladies and gentlemen, that does conclude your conference call for today. Thank you for using AT&T Executive Teleconference. You may now disconnect.