Warner Music Group Inc. Q2 2010 Earnings Call Transcript

Aug. 7.10 | About: Warner Music (WMG)

Warner Music Group Inc. (NYSE:WMG)

Q2 2010 Earnings Call

August 05, 2010 08:00 am ET


Jill Krutick - SVP, IR

Edgar Bronfman, Jr. - Chairman and CEO

Steve Macri - EVP and CFO

Michael Fleisher - Vice Chairman, Strategy and Operations


Bishop Sheen - Wells Fargo

Marla Backer - Hudson Square

Ingrid Chung - Goldman Sachs

Tuna Amobi - Standard & Poor’s Equity Group


Welcome to the Warner Music Group’s Fiscal Third Quarter Earnings Call for the period ended June 30th, 2010. At the request of Warner Music Group, today’s call is being recorded for replay purposes and if you object, you may disconnect at any time. (Operator Instructions). Now I would like to turn today’s call over to your host, Ms. Jill Krutick, Senior Vice President of Investor Relations and Corporate Development. You may begin.

Jill Krutick

Thank you very much. Good morning, everyone. Welcome to Warner Music Group’s fiscal third quarter 2010 conference call. Both our earnings press release and the Form 10-Q we filed this morning are available on our website. Today Chairman and CEO Edgar Bronfman, Jr. will update you on our business performance and strategy. Executive Vice President and CFO, Steve Macri, will discuss our quarterly financial results and then Edgar, Steve, and Michael Fleisher, our Vice Chairman, Strategy and Operations, will take your questions.

Before Edgar’s comments, let me remind you that this communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. Words such as estimates, expects, plans, intends, beliefs, should and will, and variations of such words or similar expressions that predict or indicate future events or trends, or do not relate to historical matters, identify forward-looking statements.

Such statements include but are not limited to estimates of our future performance, such as the success of future albums, projected digital sales increases and declines in physical sales, expected expansion of the digital music business, success of strategic actions we are taking to accelerate our transformation as we redefine our role in the music industry, the impact general economic conditions may have on us, market share fluctuation, and our intentions to deploy our capital, including the level and effectiveness of future A&R investments.

All forward-looking statements are made as of today and we disclaim any duty to update such statements. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, and projections will result or be achieved.

Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that can cause actual results that differ materially from our expectations. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our earnings press release and Form 10-Q and other SEC filings.

We plan to present certain non-GAAP results during this conference call. All of the revenue data we will provide on today's call will be on constant currency basis. We have provided schedules reconciling these results to our GAAP results in our earnings press release posted on our website.

With that, let me turn it over to Edgar. Thank you.

Edgar Bronfman Jr.

Welcome everyone and thanks for joining us. This quarter we continue to focus on our core strength of A&R and the development of new business models to both speed our digital transition and to diversify our revenue mix. All these activities has occurred while we remain sharply focused on managing costs and generating significant free cash flow. This quarter's anticipated decline in both revenue and OIBDA reflect our very late release schedule as well as the ongoing effects of the Recorded Music industry's transition.

With over half of our active global roster of artist signed to expanded rights deals. Releasing the right content at the right time in order to maximize profit potential and artist career development has become even more central to our strategy. I like to discuss the company's quarterly performance in four key areas. First our A&R marketing and promotional efforts continue to yield success.

Second, we sustained our industry leadership in the digital arena by maintaining a significant digital share advantage over physical share in the US, greatest of any of major music companies. Third, we continue to transform the company by entering into expanded rights field with new recording artists and building our worldwide artist services business. And fourth, we continue to invest in our Music Publishing business by further strengthening our artist roster business mix and catalogue.

Now let's look at the quarter's results more closely. As expected given our light release schedule and the challenging industry backdrop, Recorded Music revenue which was primarily driven by carryover releases declined both domestically and internationally of 13% and 22% respectively. Still there are notable bright spots this quarter. For example or US share held flat to 21% and grew sequentially by two percentage points. Our disciplined A&R investment strategy continues to yield high returns on capital.

Recorded Music results benefited from the soundtrack of the motion picture Eclipse, the third installment from hugely popular Twilight series. Atlantic Records leveraged the movie's promotion and the established Twilight fan base to maximize soundtrack revenue and raise visibility for all our artists such as Muse, The Black Keys, the Dead Weather and Cee-Lo and (inaudible).

In addition, as our policy now requires for all major releases, offered a deluxe digital version of the soundtrack as an iTunes exclusive preorder priced at $14.99. Reinforcing the price and elasticity of demand for must-have premium product and consistent with past experience, 96% of the soundtrack preorders were for deluxe version.

In addition, our Recorded Music results were enhanced by exciting new artist such as Jason Derulo, B.o.B and UK Artist Plan B as well as carryover and related catalogue sales from established global superstar Michael Bublé. Jason Derulo, an expanded rights artists like virtually all of our new artists has become a worldwide sensation selling more than 10 million tracks worldwide or the equivalent of a million albums during the rollout of his eponymous debut album.

Nominated for three Teen Choice Awards, this Warner Brothers artist is growing his fan base as our touring and record sales climb internationally. To get a better look at how our long-term strategy has become part of our D&A, let me tell you about the collaborations we have helped to create among a number of emerging Atlantic artists. B.o.B is a new Atlantic artist whose debut album spend its first week at number one on the Billboard 200 and has already launched three hit singles collectively selling nearly 8 million tracks to date.

Another Atlantic artist Lupe Fiasco, helped B.o.B reach a new audience by having B.o.B support his recent soldout U.S. tour. Atlantic is creatively building the profile and popularity of yet another expanded rights artist Bruno Mars. Bruno doesn't even have an album of yet, but he has already been prominently featured on two big recent Atlantic singles, both of which he co wrote and produced. Nothing on new from B.o.B and Billionaire from Travis McCoy.

Our efforts to build the careers of these developing artists are at the core of our companywide A&R strategy, which aims to establish sustained, creative, successful artists across all genres that we believe will yield strong returns across their many revenue streams.

Our international recorded business saw some solid performances from both local and international artist in the strong digital business. However, we saw declines in the Recorded Music revenue across most major European territories as well as the Asia-Pacific region. Bucking this trend in the third largest music market in the world, our UK company was standout. Our UK business continues to benefit from our consistent investments in A&R and executive talent over the last few years. As with the March quarter, in the June quarter, Warner Music UK again achieved the greatest year-on-year unit share growth of all the music majors, up 3.2 percentage points to 15.5%.

Warner Music UK has been impressive delivering sequential unit share growth in each of the past four quarters driving growth in both revenue and profits. Contributing to these results was Plan B's recent breakthrough album which has been the highest selling new release of the year in the UK.

Taking a closer look at our digital business, we've recognized both our challenges and our opportunities. Industry wide US digital download unit sales grew 5% over the prior year quarter consistent with the rate in the December and March quarters. Our US units grew 6% for the quarter despite our liability schedule.

We continue to post solid growth in our international digital revenue which increased 12% year-over-year. This growth was boosted by our implementation of variable pricing for downloads, the international demand for iTunes and iPhones and new business development activities around the access models. Achieving healthy digital gains remain the top priority and is one of the key elements of our long term growth strategy.

Based on industry developments we continue to believe that the rate of digital growth can improve. The key to that growth is the development of well crafted business models that cater to consumer demand and fairly compensate content owners. In addition to our focus on expanding our digital revenue, we continue to transform our place within the music value chain and to diversify our revenue mix in the music industry, including sponsorships, fan club, artist websites, merchandising, touring, ticketing and artist management among others.

An important ongoing element of this diversification strategy is our focus on direct to consumer initiatives. We continue to work on more fully monetizing our artist website and maximizing the promotional value in revenue which we derived from our growing video content. We remain proud of having built the most artist centric video strategy in the business. As part of that strategy in June we announced the partnership with MTV Networks.

Going forward in the US our online advertising inventory will be handled by MTV Networks substantially in industry leading ad sales team. In addition MTV Networks will provide our artists with exclusive promotional opportunities across all those properties including its leading cable networks, websites, mobile sites and ads. This agreement with MTV Networks allows us to focus all of our energy on developing our artist brands while offering an opportunity to generate revenue for the value of our video content.

Now let's turn to expanded rights fields and artist services. This quarter we once again expanded our international artist services offerings and continue to demonstrate our successful territory specific approach to those investments. Using the opportunity to further extend the breadth of our touring presence in France we recently acquired new production, a major concert promotion company in France. This acquisition complements our January ’08 acquisition of Camus Productions, another leading tour production promotion in a company in France.

While Camus focuses on French artists a few production has hosted and produced concerts in France for many major international acts including Black Eyed Peas and Katy Perry as well as Warner Music artists like Metallica, Red Hot Chili Peppers and Green Day.

Let's turn to Warner/Chappell music, as we said before the Music Publishing business enjoys very attractive financial attributes such as the high conversion rate of free cash flow and favorable working capital dynamics. This quarter Warner/Chappell’s mechanical revenue grew up but this was more than offset by declines in each of the other revenue components.

Digital revenue was affected by the timing of cash collection and the Music Publishing industry’s synchronization and performance revenue is yet to fill the benefits that need recovery in the ad market. In contrast, mechanical revenue was better that expected rising 19% in the quarter. Warner/Chappell’s mechanical revenue benefited from the heavier mix of physical Recorded Music product primarily relating to Michael Jackson, Susan Boyle and Michael Bublé as well as a shift to accrual based accounting for US collection society.

We continue to selectively invest in song writers as we build out our Music Publishing catalog. Warner/Chappell recently extended its administration agreement with rock legend Van Halen which includes all of the group’s past and future work. In May Warner/Chappell was named BMI’s Pop Publisher Of The Year. That award recognizes Warner/Chappell song writers and publishers as making the most significant contribution to the BMI top songs played on US radio and television.

In addition Warner/Chappell song writers received recognition with 12 BMI Pop awards for their 2009 hit songs. Before moving on to our financials let me take a moment to describe a couple of recent developments related to intellectual property protection. In May Vice President Biden made a firm public statement against intellectual property piracy, stating simply that piracy is best.

The Vice President was joined by US Intellectual Property Enforcement Coordinator Victoria Espinel who recently released the National Strategic Plan on intellectual property enforcement. This report contains over 30 recommendations on how the US can better protect its intellectual property. Vice President Biden also emphasized the cooperation between the content community and ISPs as an essential component to achieving protection for intellectual property.

We are pleased to see the US government focusing on the vital issue of protecting the creative works of its citizens and retain a workable solution to protect intellectual property requires the government’s continued determination. IP is one of America’s leading economic and creative exports. To further America’s interest in this area will require a collaborative approach between content owners and ISPs.

While litigation is rarely our preferred course of action, it is sometimes necessary to protect our artists and copyright. We are gratified that in May the four Recorded Music majors achieved a significant victory when Linewire was found to be liable for copyright infringements and further Linewire’s founder was held personally liable. There's a three-trial schedule for January 2011 to determine damages in the Linewire case.

Steve will now run through the financials before Michael, Steve and I take your questions.

Steve Macri

Thank you and good morning. For the three months ended June 30, 2010 we reported revenue of $652 million down 15% year-over-year. As expected our revenue was affected by a very light release schedule and the continued impact of the Recorded Music industry transition.

For the quarter domestic revenue declined 11% while international fell 19%. Our quarterly digital revenue grew 1% to $179 million or 27% of total revenue, that is up from 23% in the prior year quarter. Strength in international download performance was partially offset by our light release schedule and the declined the mobile revenue primarily related to ringtone demand.

Digital revenue was down 9% sequentially due to our release schedule in the seasonal pattern of digital sales. We continue to give cost management as the top priority. In the quarter we incurred $9 million of severance charges compared to $3 million in the prior year quarter. As a result of the severance charges and decreased revenue, our operating income before depreciation and amortization or OIBDA fell 29% and our OIBDA margins contracted to 10% from 12%.

Efforts to manage costs and to leverage our highly variable cost structure will help us to mitigate the pressures from the ongoing Recorded Music industry transition. Looking at our different business segments for the quarter, Recorded Music revenue fell 18% to $519 million. Recorded Music digital revenue grew 2% from the prior year quarter to $169 million or 33% of total Recorded Music revenue. That is up from 26% in the same period last year. The increase in recording digital revenue was more than offset by contracting demand for physical product and lower revenue from our European concert promotion business.

Non traditional revenue amounted to about 10% of our Recorded Music revenue in the quarter. International Recorded Music digital revenue grew 12%, given strong iTunes momentum outside US. Domestic recoded music digital revenue declined 3% to $102 million. This represents 41% of domestic Recorded Music revenue as compared to 37% in the same period last year. Recorded Music OIBDA totaled 24% year-over-year due to lower revenue and the severance cost I just mentioned.

Moving on to our Music Publishing business. Music Publishing revenue of $139 million was down 4% versus the prior quarter. Synchronization revenues declined 17% and performance revenue fell by 11% as we are yet to benefit from the ad market pick up. In contrast, mechanical revenue grew 19% as result of Warner/Chapel’s compositions being used in a heavier mix of physical products and a benefit from the shift accrual-based accounting for a US collection society.

Digital revenue declined to $13 million from $15 million or 9% of Music Publishing revenue. This reflects the timing of cash collection. Music Publishing OIBDA dropped 36% to $18 million over the prior year quarter, and OIBDA margin contracted to 13%. This decline is primarily the result of our revenue mix as mechanical revenue tends to have a lower margin than other Music Publishing revenue streams.

Turning to our balance sheet and cash position. We continue to execute on our effective balance sheet strategy. We ended the quarter with cash balance of $400 million, up sequentially from $383 million at March 31, 2010.

We achieved a growing cash balance despite our increased semi-annual cash interest payments. As we have discussed, as a result of our May 2009 refinancing, all of our cash interest payments are now made semi-annually in the fiscal first and third quarters. Previously, under our now retired credit agreement, interest payments were made quarterly.

In addition, the company’s senior discount notes have now accreted to their full principal amount. As such, the company made the first cash semi-annual interest payment of $12 million on June 15, 2010. Therefore, our June quarter included $88 million in cash interest compared with $43 million in the prior year quarter.

Free cash flow grew to $29 million from $11 million in the prior year quarter. Our free cash flow is calculated by taking cash provided by operating activities of $49 million, less capital expenditures of $15 million and cash used for investments of $5 million. The increase in operating cash flow was primarily related to the timing of sales and collections versus the prior year quarter.

Our cash taxes continue to benefit from our tax planning strategy. We had tax provision of $9 million and net cash taxes of $5 million, and a pre-tax loss for $46 million. In the prior year period we had a tax provision of $4 million, and net cash taxes of $20 million and a pre-tax loss of 32 million. We generated a net loss of $55 million or $0.37 per diluted share compared to a net loss of $37 million or $0.25 per diluted share in the prior year quarter.

Severance charges had a $0.06 per diluted share impact in the current quarter and a $0.02 per diluted share impact in the prior year quarter. Also, interest expense in the prior year quarter included $18 million or $0.12 per diluted share of previously unamortized deferred financing fees, related to the company’s senior secured credit facility. These fees were written off in the prior year quarter when the company repaid the credit facility in full, in conjunction with our May 2009 refinancing.

As a matter of policy, we do not provide financial guidance. As you noticed, business traditionally includes fluctuations based on Recorded Music release schedule and associated marketing and promotional expenses.

Now I will the turn the call back to Edgar for closing remarks.

Edgar Bronfman Jr.

Thanks, Steve. I am gratified by our ability to continue to leverage our highly variable cost structure and be proactive in reducing our fixed cost base as we work to transform our business and leave the industries transition to new offerings and expanded business models.

I would like to highlight critical strategies on which we continue to focus: manage our balance sheet by generating significant free cash flow while controlling our overhead costs and other expenses; diversify our revenue streams by growing our digital business; our number of expanded expanded-rights deals; our artist services business and our Warner/Chappell business; and investing in our marketing and promotions, which remain the core strength of our Recorded Music and Music Publishing businesses.

We are proud of our team which in the phase of significant and prolonged challenges has consistently proven its ability to not only maintain focus and discipline in our core businesses but also to innovate. We are developing compelling new digital products, unique and powerful partnerships and a revenue mix that is far more diversified than the one we had when we arrived six years ago.

Michael, Steve and I look forward to answering your questions. Thank you, operator. Please open it up for Q&A.

Question-and-Answer Session


(Operator Insrtuctions). The first question is from Bishop Sheen from Wells Fargo.

Bishop Sheen - Wells Fargo

Hi, everyone. Thanks for taking the question. Edgar I am not trying to put you into a 'give us guidance' situation but can you give us color because so much has been put into the release schedule which we understand is not even throughout the year but you are in your traditional historical sweet spot, being the summer and then going through to the December quarter. As you look out, and you tell us what we can look forward to, is it the release schedule and your efforts of direct-to-consumers and investments in A&R in August, the benefits that can bring?

Edgar Bronfman Jr.

Sure. Bishop, we, I think had tried to be very clear that we knew that third quarter was going to be extremely light in terms of our release schedule, the only major release time period we had in the quarter was the Eclipse contract which compares to last year when we had a number of major releases including Green Day. So, we anticipated a very late release schedule in this quarter. We are very pleased with what we’ve got from now frankly through December and in Q4, we will be releasing a new album from the iconic rock band Linkin Park. Seal will be releasing his follow-up to Soul which was a huge seller.

We just released Avenged Sevenfold which just debut at Number 1 on the Billboard Chart. We'll also release new albums from Phil Collins and Eric Clapton, and Zac Brown and (inaudible) all in our fiscal fourth quarter, and that’s before we even get to our December schedule. So, this was just an unusually likely re-schedule. I think we have tried to let the market know that just the way releases fell, it was particularly light, but it is an anomaly and our release schedule strengthens in Q4 and Q1.

Bishop Sheen - Wells Fargo

Concurrent with that, do you see any rebounding on the consumer front in Europe?

Edgar Bronfman Jr.

Well I think, as I mentioned our UK business continues to be very strong and we anticipate that that can continue, I think frankly the European businesses are a mix of reasonably strong markets like France and even Germany with much weaker markets like Italy and Spain. Fortunately our business in the UK, Germany and France is much larger than our business in Italy and Spain.

But again those markets are reasonably dependent on a robust release reschedule and we just as I said not only for international releases, but even for domestic releases and particularly France and Germany had very light release schedules in Q3.

But as I said this is an anomaly in terms of release schedule. The fundamental underlying trends that we’re seeing for sometime have not really changed.


The next question is from Marla Backer from Hudson Square

Marla Backer - Hudson Square

I'm wondering if you could provide a little bit more granularity on some of the markets in Europe that seem to be a little stronger. You mentioned France and Germany. And from what I've read the UK has not only been strong for you, but strong overall. Are there any factors you can cite that create greater strength there that you can import to your US operations?

Edgar Bronfman Jr.

Yes, I think the environment in Europe particularly in those countries is generally better for the industry though and I would like to point out that in those markets particularly in France and especially in UK, we continue to gain share in a business that is doing better then the US.

I think the fundamental difference is probably twofold, one the digital strength that we are staying in Europe is a result of frankly the digital businesses being introduced somewhat later there. So growth is also somewhat based in Europe than it is in the US. And secondly there remains a far more robust retail footprint for physical products in those markets than it exists in the US where the physical footprint has contracted far more dramatically. And so, we see though not robust, but a stronger physical business in those markets than we see in the US and as I mentioned we are earlier on the digital growth curve in those markets as well.

Marla Backer - Hudson Square

So does that imply that those markets may weaken before they stabilize again?

Edgar Bronfman Jr.

I actually think that those markets will continue to perform pretty much as they have. It’s been ten years since the physical business started to decline and those retail footprints have held quite strong. As a matter of fact we saw that over all music sales in the UK were actually up in 2009. So I don’t see any deterioration in the physical footprint in those markets and I actually think digital growth as I mentioned in my remarks has the opportunity to return to more robust growth rate as we see the introduction of more broadly of access models and new business models beyond the iTunes model.

Marla Backer - Hudson Square

And then one other question about seeking new revenue models. Sony, last year, had the Michael Jackson 'This Is It' concert and then earlier this year, they had a Kenny Chesney concert which they showed in movie theaters. Are you thinking in terms of other venues other than live events or taking some of the live events and repurposing them for movie theaters or for television or other venues that could also help with branding, promotional and revenue opportunities?

Edgar Bronfman Jr.

Yes, I think rather than looking at those one-offs, but what we have employed is a much broader expanded rights through a 360 deal partnership with our artists. And I think it’s important to know that our growing share in the Recorded Music industry comes as we require our artists to sign really only expanded rights deals with artists.

The other record companies do not manage that process as stringently as we do. So, I would sort of point out that our share growth is even more remarkable by the fact that we only sign expanded rights deals when we sign new artists and the reason we do that is that we are the risk capital of that creative opportunity for an artist to have a career which of course in success reaches across many revenue streams. Whether that’s video, audio or for live and all the streams from those as well as online and we share as a result in all of those streams.

There is no question that video content is becoming more important, I am not sure that concert films in theaters is going to be a particularly robust part of the overall revenue picture going forward. But certainly the iPAD as Rupert Murdoch said yesterday is a gamechanger. I agree with him, it’s going to put more of an emphasis on video content and rather than just audio content. And I think given our partnerships with our artists and the products that we are building and creating, we are in a very good position to capitalize on that growth.


The next question is from Ingrid Chung from Goldman Sachs

Ingrid Chung - Goldman Sachs

I was wondering if you could tell us whether you see anything on the horizon as being a gamechanger for digital. Do you see perhaps maybe the launch of Google Music later this year as a catalyst for the music industry?

And then just as a follow-up, I was wondering if you could give us some color around the European concert promotion weakness in the quarter? Was that a function of having fewer artist tour or was that due to the macro environment?

Edgar Bronfman Jr.

Let me the second question first, that was simply due to having fewer artist tour and not to the macro environment. I believe last summer we had a Johnny Hallyday Tour back in France which we didn’t have this year. And just given the still relatively narrow size of our touring footprint, things like that can skew our results more dramatically. The underlying European concert business is just fine.

In terms of gamechangers for digital, Google is yet to make any announcements about its music plans and I surely don’t want to preempt those, but I would say that in general as the economic hierarchy in the mobile space or perhaps better said the wireless space has yet to be written.

There are a number of companies jockeying for position. So if you think about the economic hierarchy in the computer world, both PC and Mac-based. It's pretty much clear who the winners and losers in that world are and their position in that world are relatively clear, if not necessarily, absolutely stable. I think that’s not at all true in the non-wired world, and companies like Apple, like Google, like Microsoft, network operators, device manufacturer, Sony et cetera, all recognize that that economic hierarchy is yet to be established. And in that race to establish, our position in the hierarchy in that much larger world than the computer world, we see a great deal of opportunity because quiet frankly we think content and music specifically is a critical enabler to those companies that seek to have a permanent and profitable position in that hierarchy.

So, without being specific about Google's plans or other people's plans, we are optimistic about the next 12 to 18 to 24 months as the struggles for supremacy in that hierarchy occurs amongst major corporations, we're really quite optimistic about the role we can play in that regard.


The last question comes from Tuna Amobi from Standard & Poor’s Equity Group.

Tuna Amobi - Standard & Poor’s Equity Group

I wanted to get a little bit more color on the MTV deal. A little surprised that you decided to go on the exclusive side so I guess the question is what kind of guarantees if any did you get and if you can provide some color on how you expect that deal to scale over time? Any color on the term, the length of the deal et cetera would be helpful?

Edgar Bronfman Jr.

Well, first of all, it’s not with the deal, in the sense that MTV really has the first opportunity to sell our video content, and to be said, exclusivity exists. It is really only around the right to sell advertising inventory. That actually puts us in a much better position than we where without Vigor, which is a fine company and did a good job for us, but, you know had a sales force approximately one-tenth of the size of MTV Network.

In addition, as a result of the agreement to have MTV selling our video content we have a broad based agreement with them across all of their properties including their cable networks for increased promotion and visibility or artist. As we talked about, from day one, our video strategy is very artist-centric. We think there is ultimately more value in promoting our artist as brand than having our artist serve as promoters for a unified brand. That is simply not our strategy.

A unified brand has the opportunity to sell advertising. We think the individual brand have the opportunity to aggregate advertising revenue but to sell much more in terms of their regular commerce, whether that’s merchandizing, thickening or other opportunities. So we think actually it’s a better strategy from a monetary standpoint and trying just to create a single brand across a single revenue stream, and MTV Network allows us to monetize that strategy without us having to build our own resources.

It's not a long term deal but it is an important partnership for us. We are very grateful that we've been able to reach that agreement with MTV Network. And frankly in success, we will extend that deal. We have every expectation that such an occurrence will be the case.

Tuna Amobi - Standard & Poor’s Equity Group

Okay, thanks for the clarification. Thank you

Edgar Bronfman Jr.

Thanks very much and thanks everyone for taking the call. I know this was a busy morning and we appreciate the time and attention. See you next quarter. Thanks.


That concludes today’s conference. You may disconnect at this time.

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