Time Warner Earnings Call Nuggets: Upcoming Affiliate Renewals and Deals Outlook
Upcoming Affiliate Renewals
Alexia Quadrani – JPMorgan: My question is just on the affiliate renewals that are upcoming. The one you referenced, having signed last month, I believe, I assume that kicks in 2014 and not right away. And then just staying on that topic, the real positive move you’ve seen in ratings at CNN recently, is that – do you expect – the timing of that is real good given your upcoming renewals or ongoing renewals. Do you expect as much sort of upside opportunity at CNN as you would at TNT in these renewals given the addition of NCAA?
John K. Martin – Chief Financial and Administrative Officer: It is John. Just with regard to the affiliate renewals we are really not going to speak specifically. We have non-disclosure agreements with regard to the specific deals. But what was important and the reason why we felt like it was relevant to mention on the call is because going back to a year ago when we said we expected double-digit compound annual growth for the three year period ended 2016. We said that during the middle of this year, we were going to begin what was the most ambitious rate renewal cycle that the Company had experienced in years. So, this was the first big deal that we were entered into and we successfully completed it, and the construction surrounding the agreement were quite constructive. So, bolsters our confidence in our ability to get that and those rates will kick in the not-too-distant future. As we said before, just to repeat the domestic sub revenue should grow double-digit compound annual growth from ’13 to ’16, and the only other thing I would mention is that the way that the increases should come in over time over those three years is that we are going to see the biggest impact in terms of growth in 2016. So beginning next year, we absolutely expect to see an acceleration in Turner’s domestic affiliate rates off of current year levels. If I was going to forecast right now, I would say that probably close to double-digits. In ’15, it will probably moderate somewhat and then into ’16, you will see the biggest overall growth rates, so that over the three year period you get through the double-digit rates.
Jeff Bewkes – Chairman and CEO: Alexia, were you asking something about CNN ratings?
Alexia Quadrani – JPMorgan: Yeah. I think there is a bigger opportunity, it sounds like in terms of the potential to move up in rate to probably TNT, I was just saying that with the incredible turnaround you are seeing at CNN more recently. Do you think there is also an opportunity there?
Jeff Bewkes – Chairman and CEO: On CPM rate?
Alexia Quadrani – JPMorgan: Yeah, the renewal…
Jeff Bewkes – Chairman and CEO: Absolutely, I think John said it well. We do our affiliate rate renewals across our networks and so the strength of CNN, which as we have said and we certainly believe it. It’s essentially worth a lot more on affiliate rates than the current rate that it’s getting. It’s just not just a function of rating, as we mentioned in the call, the ratings are up 50% in total day and we are taking share, but the ratings have moved around, that’s really not the only thing, it’s actually not even the main thing, it’s simply the role of in depth, trustworthy, non-partisan global news that CNN fills and the strength of CNN in online and mobile broadband delivery, which is the number one source to go to for that, whether there is breaking news or not and certainly during breaking news. So, it’s very valuable. We think everything at CNN is on the uptick of really the quality of what it’s doing and also both the ad rates and the affiliate rates.
Doug Mitchelson – Deutsche Bank: Further clarification on the Turner affiliate. It looks like, John, it’s obviously encouraging to sign the deal, the top-five operator. I understand the reticence on giving too much detail, but could you tell us are there other meaningful deals that you’ll strike around this year-end that’ll bolster confidence in the real cycle further or should we look to 2014 for the next piece of news on that? And the question for Jeff, just curious your updated thoughts around online video distribution, Disney and FOX decided that Hulu is an interesting business to own. Do you see the feeling value of having direct-to-consumer online video retail business or remaining an independent wholesaler the right strategy, and to the extent the answer is different for international versus U.S., would love to hear about that?
Jeff Bewkes – Chairman and CEO: Doug I’ll start. I think this answer is going to be pretty short. So, yes, we’ve got some negotiations and deals that come up for renewal before the end of this year. Some of them are big distributors. But having said that, we are not going to see the impact of those deals kick-in in 2013, which is why I said that we are not really going to expect to see anything in terms of the overall affiliate growth until 2014. But yeah, we’ve kicked-off the cycle, so to speak in terms of affiliate deals and we’ve got number of them coming up before the end of the year. But as I said just at the risk of repeating myself, we feel good about the hand we got, we feel good about the value that the networks have with respect to affiliates and consumers and we have every confidence that we are going to succeed in what we are trying to do…
John K. Martin – Chief Financial and Administrative Officer: Doug, on your question, I think it is a good question. Look it is for Disney, Newscorp and NBC to talk about what they are doing with Hulu and why. But having said that I think our view of what they are doing and it make sense to us is more about supporting the value of their networks and their programing across platforms then it is particularly about the discrete business of broadband-only delivery at Hulu. I think those things can be complementary and I think they are searching to get there seems like a good decision. What we are doing and to answer your question we think that the best place for us for now is essentially emphasizing the very large wholesale networks and packages over both the video plan and increasingly broadband plan because as you know we’ve been very – while we have said it over and over again. We think the move of television to an on-demand service on television and on broadband devices is a major move to support the value of TV networks, TV program. We think it is huge. We see it all over the world and as we look at the ways that we’re going to distribute our shows and our networks across the world, we essentially try to optimize the distribution opportunity in whichever countries. In the United States, it’s a very powerful penetration of the giant packages of TV networks, in certain other countries there are times when you actually better off going really broadband delivery, we did it recently in the Nordic countries. But if it’s kind of the case-by-case thing at this product, I think it’ll all converge and the key point, I think is not which platform is essentially getting everything to be VOD with an interface that consumers love, and there should be deliberately and there is a lot of attention on the kind of excitement consumers and viewers have for on-demand programming some of it from broadband delivered sources, but most of it from television network sources that are becoming on-demand programs networks like HBO, which I think is probably the leader across the world in delivering the largest package of on-demand programming in all the hemisphere, this is two hemisphere, we’re thinking of a third hemisphere, but we haven’t gone there yet.
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