CEO Discusses Q3 2010 Results - Earnings Call Transcript

Nov. 6.10 | About: TheStreet, Inc. (TST), Inc. (TSCM) Q3 2010 Earnings Call November 4, 2010 4:30 AM ET


Daryl Otte - CEO

Greg Barton - EVP, Business and Legal Affairs, General Counsel and Secretary

Tom Etergino – EVP & CFO


Vik Mehta - J. Goldman

Michael Moskoff - MRM Capital


Good day, ladies and gentlemen and welcome to the third quarter 2010 earnings conference call. My name is Lucy and I'll be your coordinator for today. At this time all participants are in listen-only mode. Later we'll facilitate a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr. Daryl Otte, CEO. Please proceed, sir.

Daryl Otte

Thanks, Lucy. Hi everyone. I'd like to welcome you to's third quarter 2010 earnings call. I am Daryl Otte, the company's Chief Executive Officer. With me today are Tom Etergino, our Executive Vice President and Chief Financial Officer; and Greg Barton, our Executive Vice President of Business and Legal Affairs and General Counsel. This is Tom's first earnings call with our company as he started in early September. We are extremely pleased to have him augment our team with such a strong hire and I am sure you, the investors, will enjoy interacting with him.

Before we start, I’ll hand the call to Greg who will read our legal statement.

Greg Barton

Thanks Daryl. Welcome, everyone. All statements made on this call other than statements of historical facts are deemed to be forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are subject to risks and uncertainties including those described in the company’s filings with the Securities and Exchange Commission that could cause actual results to differ materially from those reflected in the forward-looking statements.

Although the company believes that the expectations reflected in the forward-looking statements are reasonable, the company cannot guarantee future results or occurrences. The company disclaims any obligation to update these forward-looking statements, whether as a result of new information, future developments, or otherwise. You may obtain copies of the company's filings with the SEC at the Commission's website, And additional information related to matters discussed today also will be set forth on the company's quarterly report on Form 10-Q for the third quarter of 2010, which we expect to file shortly.

And now I will hand the call back to Daryl.

Daryl Otte

Thanks Greg. I think it will be useful to begin this call with an overview of market conditions we saw in the quarter that are relevant to our business. The markets were somewhat unkind to our sector this past quarter where the flash crash of May 6 appears to have unfavorably affected the behavior of retail investors and consequently the businesses of our major advertising and marketing partners.

You all may be familiar with some of the statistics, but as a reminder many brokerages reported that their retail trading volume declined in the range of 30% year-over-year and the Investment Company Institute reported that equity mutual funds saw net cash outflow to almost 40 billion during the quarter as compared to net cash inflows of 3 billion in the year-ago period.

As you might imagine as well, interest in the financial markets coverage also declined. Two independent measures of this interest, Nielsen and the Google Investing Index, which tracks queries related to investing terms such as stock, bonds and ETFs, each showed a double-digit decline during the quarter as compared to a year ago.

In a word, our business faced some substantial market level headwinds in the quarter, while all these areas we could do better, I believe we did a good job of navigating through this environment and then our results reflect the benefits of efforts we have been undertaking in the last six quarters I’ve been here to refocus the company. Indeed by most measures, our results moved contrary to the market trends.

But before moving onto the quarter results, I think it would be useful to recap the progress the company has made and to reiterate our strategic vision. First, one of the most important areas of my focus has been to recruit a new and outstanding management team and I am very pleased with the exceptional executives who have joined or been promoted from within the company in the past several quarters. This is now a team whose strength extends beyond that which you’d expect company our current size to have.

Next we needed to put behind us the distractions of the restatement and divestitures. Having done so I felt we were in a position to move forward, move to a forward-leaning stance and we commenced our investment program to support our strategic plan to build long-term profitable growth and value. The strategic plan rests solidly on the proven and possible business model of vertical publishing and we are working hard to apply this model against our key assets, that is our market position and brands which are lucky to have and which are firmly situated around finance and which we believe to be among the highest value verticals in the media landscape.

As a remainder of our strategic plans, we believe in original content produced through high journalistic standards, with deep domain experience and overlaid with strong, well publishing skills. To that end, we are producing over 3000 original articles per month, 500 videos a month and a growing suite of data tools and utilities. All this content is produced by our professional in-house editorial team and through a select group of hand chosen practicing professionals.

That content because of its quality and relevance attracts highly engaged-users, affluent, involved, educated professionals who come to our content for a purpose. They see the value of our content, even pay for it and engage with advertiser not as a distraction, but as a source of information. Our audiences are of the type that many advertisers would like to reach as our audiences like to make and spend money, attracting then both endemic advertisers in the financial category and non-endemic advertisers who are attracted to the demographic characteristics of our audience.

We seek to facilitate this, not just through standard advertising units, but through customized marketing packages which add value and directly speaks to our advertisers objectives. The point of all this is that it leads to good opportunities for monetization, both from premium advertising revenue measured by share of market relative to our reach and by revenue per page

, but also through an overlay of user revenue in the form of premium services, indeed today our largest source of revenue. I’d like to underscore this point that TheStreet has a 15-year history of offering paid content on the web, something that is in our DNA. Thus over the long term, we feel we can be competitive and grow by attracting audiences with strong content and monetizing those audiences through premium advertising sales and premium paid fee for services.

For those that follow the company carefully, you will recall we began an investment program last quarter with the objectives of strengthening of our platform and building our team to support this strategy, but with a commitments to remain operating cash flow positive and adjusted EBITDA positive for the year.

So how are we doing emphasis backdrop of market conditions and with our strategy in mind? We’d argue that there have been signs of good progress. We could of course always accomplish more, more effectively and faster, but the signs are there. With that in mind, we will head on over to our overview of financial results. Revenue from ongoing businesses for the quarter was up 8% overall, with advertising revenue up 9% and ongoing premium services revenue up 8%.

When I refer to ongoing businesses, I am excluding the results of our former subsidiary which the company divested in December 2009, the banking and insurance rating business of our Street ratings division which we divested in May 2010 and a revenue of our Street Ratings division, which enjoyed revenue from the government mandated settlement, which expired at the end of last July.

With that overview, here are some details on our Premium Services business. Premium Services revenues were up 8% year-on-year to a nine quarter high. Our churn rate improved slightly on a sequential basis to 3.8% from 3.9% last quarter. Subscriptions booking for the third quarter declined 14% on a sequential basis.

As I mentioned on our last call, the slow down in our rate of subscription bookings commenced in the second quarter with the flash crash of May 6, improved but did not fully recover in the third quarter as many retail equity investors stayed on the sidelines. These results were the first decline in a while which was disappointing. However, set against the metrics we've cited at the top of the call, they show what I feel is a respectable result against some fairly strong headwinds.

In a broader context of the overall trend, year-to-date bookings are marginally ahead of last year, and that taking into account the past summer’s difficulties and against the backdrop of a fairly strong 2009. As we noted on last quarter's call, we set about managing the shift in retail investor sentiment in a couple of ways. We have been working to broaden our suite of product offering and refining our marketing to be more effective in these conditions.

We are seeing some early signs of success. For instance, our options profit product, which was launched in late June has already become our fourth largest product in terms of quarterly bookings.

Also, we have been placing greater focus on selling our equity oriented premium services at lower initial cost entry points such as monthly prescriptions. This is important to note because monthly prescriptions generally help revenue growth in the short term, but of course produce much lower bookings during a quarter than with the sales of an annual subscription. These lower initial cost entry points are an easier way for our customer to commit in times of uncertainty. This strategy had the desired effect and subscription counts grew by 9% as compared to the third quarter of 2009, adding new customers who we will seek to upgrade through our growing tele sales force over time.

As a side note, I should point out that it's possible that this shift in our mix to monthly subscription may impact churn in some modest amount in future quarters, something should it come to pass, we would not be as alarmed. To the point, we believe our ability to pivot quickly and achieve the revenue and subscription growth count results we did in a challenging environment reflect our new team's expertise and the early returns in the investments we are making to expand the quality of our premium content offering and sales and marketing teams.

Now on to ad revenue. Ad revenues registered the fourth consecutive quarter of year-over-year growth. As we noted in our earnings release, this ad growth is notable during a quarter in which many of our growth rich clients reported that overall trading volume declined substantially. Our growth in this environment demonstrates that TheStreet's professionally created and curated content, attracts a passionate user base that remains highly engaged with our sites through thick and thin, and that our premier set of advertisers recognize the value of getting their branded message out in the front of the key audience.

Syndicated research released last month underscores the exceptional demographic characteristics of our growing audience. According to the current Nielsen Netratings @ Plan Release 2 of 2010, TheStreet ranks number one in concentration of users with the household income above a $150,000 a year, number one in concentration of users with a portfolio of above $250,000, number one in concentration of users who our own securities, number one in concentration of users who shopped online for stocks for mutual funds or for any investments, and number one in concentration of users who are C level executives or owners in companies of any size, all higher than any member of the online competitive set that includes Bloomberg, CNBC, CNN Money, Forbes, MSN Money, Reuters, The Wall Street Journal and Yahoo Finance, among others.

In addition, comScore August 2010 data indicates that TheStreet ranks number one in concentration of users who plan to buy a luxury vehicle within the next six months as compared to the same competitive sets.

With that in mind, I'd highlight a couple of key progress points in growing our advertising business. First, we are happy to have had Goldman Sachs' asset management business, make a strong commitment to our sites. The purpose of their buy is customer acquisition at the heart of what we do; second, we continued over the third quarter, with a very interesting small business success story webinar series launched at the end of Q2, sponsored by American Express OPEN and powered with the help of our friend at SCORE. This program is a great example of how the company is combining our marketing and content creation skills to attract audiences with terrific useful content while serving the needs of our marketing partners.

Finally, the non-endemic advertising in our business grew by almost a third year-on-year, and it is becoming an important overall contributor to our advertising revenue line. We are continuing to make progress in Detroit with Chrysler and GM now new to us in Q3, and the automobile category generally and in travel where continental part of the great package which included the premier sponsorship of our new mobile web service.

The point you should take away is that we believe we are seeing a growing pay-off from our investments and improving the quality of the free sites, mainly that more and better users are coming to us for our high quality focused content which value the audience, is garnering more advertising dollars from our growing advertising mix. Our expenses from ongoing businesses largely reflects the fourth quarter effect of the increased level of investments we initiated in Q2 and discussed on the call then, particularly in editorial sales and marketing resources to support the growth of and add long-term value to our subscription and advertising supported business, the early fruits of which we feel are emerging in the quarter’s results.

We feel our investment program has largely matured and point out that the rate of sequential increase overall declined markedly this quarter. We also feel that we are currently at the right scale to support growth, and we presently don’t anticipate significant increases in infrastructure. We will be rigorous in conducting a hard headed ROI analysis of our spending as part of our 2011 budget process with Tom's able assistance. Our adjusted EBITDA from ongoing businesses reflect the seasonal nature of our advertising business, as well as the impact of our investment program, recording a loss of $300,000 for the quarter as compared to a profit of 2 million in the prior year period. Again, we are remaining disciplined on our spending, limiting ourselves by maintaining at least a positive adjusted EBITDA and operating cash flow for the year.

The financial summary over, we will hit some operating highlights.

First, as we’ve discussed, we made a key addition to our management team in September, where Tom Etergino joined as Chief Financial Officer. Tom brings over a decade of experience in senior, financial and operating roles at digital advertising and subscription based businesses, including DoubleClick and EMusic, including serving as CFO at private and public companies for seven years. We are already seeing the impacts of Tom's presence and we look forward to expanding our efforts to engage with the investment community under his leadership. In addition, to do everything a CFO does, Tom has already lent an additional perspective to our strategy and is contributing in developing potential new lines of revenue in his short time here.

As I noted in last quarter's call and most importantly I am particularly happy that Tom is on board as I can now pass off all your hard questions (indiscernible).

We also announced a number of important initiatives during the quarter which helps position the company growth for the future.

First, we announced an agreement with PBS' Nightly Business Report to produce weekly pieces by TheStreet editorial talent titled Word on TheStreet and aired every Tuesday by this widely watched and influential television program. Second, we announced a content sharing agreement with Newsweek to feature TheStreet editorial content in both the print and online editions of this iconic news property. Third, we announced content and audience sharing agreement with GigaOM, a leading voice in technology media, as well as with Bundle, a new socially informed money management website backed by Citigroup, Microsoft and Morningstar.

Our ability to partner with such highly respected partners speak to the quality of our content and our ability to help such partners deliver to their audience the deep expertise we bring to covering financial media content.

Lastly, we launched a mobile-web version of our flagship website, TheStreet, optimized to deliver increased speed and ease of navigation to our investment-oriented users wishing to access our content through their mobile devices. The new mobile website is accessible at

While not wanting to dip our hands too much, you should expect to see from us this quarter a new and I think impressive iPad application launching and a new premium service also launching on the heels of the options profit of service, this time centered on the quickly growing ETF markets, another market like options, which has defied market trends and is indeed now leading in trading volumes. With that I hand the call to Tom who can provide some additional financial details.

Tom Etergino

Thanks, Daryl, and welcome everyone. I am very excited to join TheStreet at this exciting time in the company’s evolution. What I personally found compelling about the opportunity to join the company is that I feel the company has tremendous brand assets, a smart, energetic and motivated management team with deep digital media experience who are laser focused on creating stockholder value and a strong balance sheet that will enable the company to take advantage of strategic growth opportunities.

This management team clearly has made large steps in turning around the company’s operations during the past year. I am still somewhat drinking from a fire hose coming in a couple of weeks before quarter end and the beginning of next years budgeting cycle. But I couldn't be happier to be where I am and looking forward to helping the company expand its efforts to engage with the investment community going forward.

So enough about my personal views, now I will do some financial data points for the quarter. As Daryl noted earlier we will assume everyone has read the earnings release, so I won't repeat every data point in the earnings release, but I will note certain key results. The company’s ongoing businesses recorded revenue of $14.3 million in the third quarter of 2010, an increase of 8% as compared to the prior year period with $9.6 million of revenue from ongoing premium services businesses and $4.7 million from advertising. The increase in the company’s premium services revenue for ongoing businesses is primarily a result of a 9% increase in the number of subscribers during the quarter offset in part by a 3% decline in the average revenue per subscriber during the quarter, as compared to the prior-year period. This is in line with our strategy of bringing in subscribers at lower price points and using our newly expanded tele sales force to upsell them to higher-priced premium products.

The advertising increase was driven by new advertisers who are interested in reaching our very attractive demographics while our historic advertisers continue to advertise at similar levels to the past. Operating expenses for the company's ongoing businesses was $16.4 million in the quarter of 2010, an increase of 12% as compared to prior year period. The increase of operating expenses for the company's ongoing businesses is largely a result of $1.4 million increase in sales and marketing expense and a $700,000 increase in cost of services in the third quarter of 2010 as compared to 2009.

General and administrative expenses related to the Company’s ongoing businesses were flat year over year, as a decrease in costs related to a review of certain accounting matters in the company’s former subsidiary were offset by increased compensation, professional and recruiting fees and certain other costs.

The increase in cost of services is primarily related to increased headcount and increased payments to non employee content providers which as Daryl noted we believe has helped to drive the top line growth. The increase in sales and marketing was driven primarily from our investment in the sales and marketing of our premium subscription-based products, including an increase in headcount primarily resulting from our December 2009 acquisition of Kikucall, and increase in our commission teller sales marketing personnel were instrumental to the up sell process described earlier as well as higher advertising and promotion cost as we are testing new distribution channels.

The company had a net loss of $1.8 million in the quarter -- in the third quarter of 2010 from its ongoing businesses as compared to a net loss of $1.1 million from such ongoing businesses in the prior year period. As Daryl noted, adjusted EBITDA for the company’s ongoing businesses was a loss of $300,000 in the third quarter of 2010 as compared to $2 million in the prior year period.

The company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of $79.7 million, a decrease of $2.9 million as compared to June 30, 2010. The decrease is primarily due to capital expenditures of $2.9 million and payments of $900,000 of dividends offset in part by receipt of $900,000 related to the sale of

Capital expenditures in the third quarter were larger than is typical for the company as they related primarily to renovation of the company’s headquarters, and according to the terms of the company’s lease agreement. This lease provides for substantial rent abatements to the third quarter of next year that will allow us to recoup much of the renovation cash currently being spent. The renovation of the company’s headquarters should be concluded in the fourth quarter of 2010. Additionally capital expenditures included spend related to the development and implementation of an upgrade to the company’s technical infrastructure and its content management systems.

With that, I’ll hand the call back to Daryl.

Daryl Otte

Thanks Tom. Prior to turning the call over to Q&A, I want to again extend thanks to our shareholders who have shown their support this quarter. To our employees who in my view manage the market turbulence deftly, and of course to our subscribers, advertisers and distribution and content partners, the ranks of all of which are growing daily.

With that, we’ll open the call to questions.

Question-and-Answer Session


Thank you. (Operator Instructions). And our first question will come from the line of Vik Mehta with J. Goldman, please proceed.

Vik Mehta - J. Goldman

Thanks, it's Vik Mehta from J. Goldman. Can you comment about your sales force, how the headcount there is being enhanced, and what your key initiatives are over there this year, next year?

Daryl Otte

Yes, hi Vik, how are you doing? So I think as I mentioned or alluded to in the call and I hope it wasn’t the lines that I flubbed, we are really building the telemarketing sales force and that's based here in New York but also in our great facility out in Fort Atkinson, Wisconsin. And the idea, as I think we've alluded to in the past is that we are bringing folks in, and at sort of an entry levels to our premium services and developing account relationships with them, with these folks on the phone and then selling them increasingly higher priced packages of services. And so that’s really the larger part of where our spending is going.

Vik Mehta - J. Goldman

And then as we look towards the bottom line, how should we think about what it takes as far as revenue scale or other key operating metrics that might be a driver to actually start to show profitability?

Tom Etergino

I think as we have alluded to again in my script that we feel like we've kind of reached the point where we are at scale in terms of spending and that we are now focused solely on incremental revenue growth and converting that at a very high rate to profit.

So incremental advertising sales and incremental subscription sales net of distribution costs or whatever, we use partners to sell the services, should drop to the bottom-line very effectively and then that’s where we are really focused on.

Vik Mehta - J. Goldman

Last question I have is, of the key relationships announced during the quarter, I'm not sure if those, the content relationship deals that were announced have been made active already, but of the ones that are, how are they tracking versus your expectations with regards to providing you incremental traffic?

Tom Etergino

They are all up and running and they are all providing us with incremental traffic, and I think also in addition to that, they are providing us brand awareness and positioning our editorial talent as thought leaders in this space. And so it’s both a direct traffic and the brand halo that we are really seeing and if you look at kind of the direct load and the partner traffic, direct load onto our site is increasing and also if you look at obviously the partner traffic, if you look at partner level even that increased. So the strategy is working.

Vik Mehta - J. Goldman

Should we look upon these relationships so far as kind of a handful of many more that will come or because these are pretty big brands you've already partnered with I'm just wondering if there is any nature of exclusivity or could partner with hundreds of entities globally in distributing content like this?

Daryl Otte

Yes. I think hundreds is a lot. We are being very judicious in picking brands and partners that work for both sides of the equation and which bring an incremental audience to us and which we can contribute our content and add a lot of value for them. And so I would expect to see a drumbeat of these rolling out over time, but again we are going to be – we're not --it is not a numbers game, it’s a quality game and so we are handpicking them.

Vik Mehta - J. Goldman

And I guess based on how you described it then, each of these relationships should result in incremental traffic over time?

Daryl Otte

And ours. Yes.


And our next question will come from the line of Michael Moskoff with MRM Capital. Please proceed.

Michael Moskoff - MRM Capital

As far as clarification on the PP&E where you spent in excess of $2.1 million and you talk about how you are going to get rebated, so can I assume that you're going to get rebated when and is it going to be in the amount of that 2.1 million or can you give me an amount.

Tom Etergino

So it'll actually be – there's some additional capital expenditures I think I mentioned as the build out be done in fourth quarter, the amount of rebate would actually exceed the 2.1 [ph]. We will have rent abatements next through third quarter next year .

Michael Moskoff - MRM Capital

Normally is that the way it works? Why do your guys have to lay it out upfront and they give you back rent?

Tom Etergino

We actually had a choice to make, we actually could have taken it up front. So we decided to take it over time this way because it actually allows us to save on certain taxes as well. So the actual math would work that we actually save more money by doing it that way than the opportunity cost that we are giving up on the interest.

Michael Moskoff - MRM Capital

Okay. So the abatements are going to be in excess of $2.1 million is what you are saying?

Tom Etergino

That’s correct.

Daryl Otte

The plan is to have the renovation, the part of the contract which we inherited when took over the company. The idea that the renovation is going to cost basically the same, roughly the same amount as the abatement. So it will be cost neutral.

Michael Moskoff - MRM Capital

Now, exclusive of that, the operating expenditures which you are now saying in your press release is going to be dropping markedly, can you give me like a run rate approximately of what that would be?

Daryl Otte

I don’t think we – the way that reads I don't think it's going to drop, we don’t expect it to drop markedly. But I think what we are saying is it's plateauing. So I don’t expect large increases from where we are.

Michael Moskoff - MRM Capital

Is it going to be like last quarter of about 15.2, or this quarter like 16.4 or somewhere in between kind of thing?

Daryl Otte

I wouldn’t really give guidance on that, but I think if you look at the kind of sequential expense growth, you'll see it diminish dramatically and we would expect that to happen, some of what we are spending on to kind of get the strategy implemented is structural as that will continue on going, but there is a strong element to one-off or multi-period expenses which will diminish over time.

I think we've spoken about these on the call in the past so, for example getting our IT team trained on the new systems that we are implementing, obviously takes a couple of quarters to get that done, but that will diminish over time. We've also recruited two strong C level candidates, which involve recruiting costs. That's a one-off cost. Then there are some structural costs as well like building our sales force which are ongoing.

Michael Moskoff - MRM Capital

Okay. When you talk about trying to drum up new subscribers as a result of what's transpired since the flash crash, so hence the revenue number may be a little lighter as far as the average, but then you're going to try to upgrade them. As far as if you had to segment all your subscribers and you have professionals, let's say like me in the business, to just joking public out there, that may be high net worth or relevant just that he's been a subscriber, or she has been a subscriber for a long time. As far as the pro side, did you see a lot of degradation in losing subs as well?

Daryl Otte

Yes, this is a great point which our script maybe could have done a better job of highlighting, so thank you very much for setting this up. But you know our churn rate actually went down. So, we are not losing people, it’s really just finding new people was a little bit more challenging to get into our system than it had been in the past, and so when some people come into our system we are very comfortable that they love the content quality and they get value for services.

And really, it’s just about new account acquisition slowed because it's tougher to convince people to commit money to pay up for Premium Services at a time when the stock markets were doing what they were doing. And so, that’s when our clever subscription marketing team pivoted to lower cost entry points, let's keep the subscriber roll growing and we have the confidence now with our strong telemarketing team and other things that we are doing, that we’ll be able to convert them to annual subscribers and convert them to higher ARPU over time and they are laser focused on that now.

Michael Moskoff - MRM Capital

When did that plan actually start, would you say?

Daryl Otte

It was really being implemented, kind of at the time of our last call. I think I might have alluded to it.

Michael Moskoff - MRM Capital

So, have you seen some reasonable results in the last month or so, especially with the fact that the market now doing what it's done in the last 2.5 months or 9 weeks or what have you? And I'll just follow up with another question, how are your bookings in the fourth quarter based on the advent of the market now?

Daryl Otte

Yeah, I would like to maybe try, but I don’t think we are going to tell you that until the next call. But again, we did describe that our subscriber accounts are going up by 9%, and so you can see that we are definitely getting folks into the system.

Michael Moskoff - MRM Capital

Okay. But you have talked in the past about how businesses, in the current quarter you've talked about how things are looking. Like last quarter you talked about how things were looking for...

Daryl Otte

Fair enough, yes. I think some of the brokerages have announced that kind of seeing much more robust trading volumes in October than they did earlier in the year and we have noticed that capital in now starting to inflow versus outflow for the market and so I think that we are heartened by that and I hate to call like a turn and then be called on the next quarter but I think we feel that people are returning back to the market and they see opportunity much more this year and we are working to make most of that.

Michael Moskoff - MRM Capital

Okay. And then last but not least, two other things. Tom, when you talk about taking advantage of growth opportunities, since you being the new guy on the block, can you expand on that a little bit?

Tom Etergino

Sure. I think that there's actually a lot of places I think we can grow. I think on the subscription side there is a lot of new channels that we can go into to grow and I think that’s one of the things Daryl mentioned that I've been focused on a little bit since I started. And I think that could – that’s actually real growth opportunity for us. And I think on the advertising side, on the non-endemic advertisers, we have seen some traction there. I think there is lot of growth potential there as well.

Daryl Otte

I will just add, jump on top of that to say Tom came to us from EMusic which is a large scale consumer online subscription business. And they are doing that for a long time and have a different perspective or additional perspective on how to acquire new subscription and we are now kind of systematically shifting through some of their best practices and overlaying that against our business to see if there's opportunities for us.

Michael Moskoff - MRM Capital

One observation, I was at -- my mother-in-law passed away about four months ago unexpectedly. And so I am at the funeral, and I'm talking about three older gentlemen, and they say "Hey, do you ever watch that show with Kramer, that crazy guy?" And so anyway I said "Yes, I know all about it." And so I started talking to them. I said "Did you know that this show, that he founded" They said "What is" And then I basically kind of ended the conversation with them. Yeah I was talking to them a little while, and my thing to you guys is I don't know if, out of all the viewers that watch this show, I don't know if they use the connotation of Kramer and your site. Even though he talks about it a tiny bit, I just don't think they put two and two together, which I kind of find mind-boggling in a way. Also, you're missing out on something possibly. Somehow, if there could be some synergies that you can have them put two and two together because you could see, just when he talks a lot of times, he can move a stock or this and that. And obviously, he can't tell your company, but somehow, someway, people that watch that show should know that the two and two go together.

Daryl Otte

Yeah, I would say that you know the show is not part of our operation and Jim has a lot of operating interest and he has the relationship with CNBC in producing that show and he has to live within certain restrictions, as do we with respect to that. And you know Jim is a huge supporter of our organization as he is of CNBC and this show in particular and within those restrictions we look to make the most of the relationship.

I think also I've alluded to this in the last couple of calls, there are others who would argue or express concerns that the company was too much about Jim and we are working very hard to find the right balance when we have enough room for lots of different voices, but also of course staying within the spirit of how Jim founded the company. And he's certainly still a part of our operations and publishes actively for us almost every day. So he's a big supporter of us and we are of him.


(Operator Instructions). And at this time and I show we have no further questions in the queue, I would like to turn the call back over to Mr. Daryl Otte, for any closing remarks.

Daryl Otte

Not much for today, thanks everyone for participating in the call. We look forward to our fourth quarter results early next year. Thanks Lucy and thanks everyone for participating.


Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Have a wonderful day everyone.

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