Viacom Class B Earnings Call Nuggets: International Growth Outlook and Industry Trends
International Growth Outlook
Doug Mitchelson – Deutsche Bank: Philippe, with the U.S. outlook gaining visibility, can you refresh the outlook for international growth? I think over the last few years, you’ve emphasized and international margin opportunity and there is a wide variety of growth rates among the various media companies in terms of international cable networks. Where should Viacom shake out looking forward and how do you drive that business?
Philippe Dauman – President and CEO: Our international networks have been hurt this year by the slow environment in Europe. We had negative ad sales growth in the quarter just ended, although we expect that we’ll turn back to positive ad sales growth in this quarter. As we are launching new networks, which we have been doing, and turning certain networks into wholly owned networks, we expect the performance to improve as we go forward. In the meantime, we’re using this opportunity to expand our footprint and really build value for the future. There’s a lot of value there. We’re building very valuable assets, really, across all continents right now.
Doug Mitchelson – Deutsche Bank: Do you see a point where…?
Thomas E. Dooley – COO: And as the foreign markets recover, especially in Southern Europe, I think the group is very well poised to really take advantage of that and put up some very significant growth statistics.
Philippe Dauman – President and CEO: Yeah. Meanwhile, we’ll continue to drive affiliate revenue growth in our international footprint.
Doug Mitchelson – Deutsche Bank: Could you see a point where international growth is actually accretive to the overall growth rate for the division?
Thomas E. Dooley – COO: Absolutely.
Philippe Dauman – President and CEO: Absolutely…
Doug Mitchelson – Deutsche Bank: Then just a clarification. The July repurchases pace was a little bit slower; and you gave a lot of details around increasing the buyback. But just timing-wise, does that mean that $700 million pace isn’t the right number for the September quarter in terms of the – I was trying to figure out, is it $700 million a quarter, plus $2 billion? Or is it a little less than $700 million because July was less?
Philippe Dauman – President and CEO: Well, we have a blackout period ahead of the earnings, so that accounts for the – what appears to be a slower pace at the beginning of the quarter. But we – as we discussed in the last earnings call, we had budgeted for $700 million of buyback in this quarter. Obviously, today, with the announcement of the augmented buyback program, we will add $2 billion over the next several months to our normal $700 million pace for this quarter and next quarter.
Alexia Quadrani – JPMorgan: You’ve got some very favorable sort of industry trends in the back half of the calendar year now through December with a pick-up in kids-oriented films and then the two competing videogame console launches. How should that – I mean, should that impact have an incremental sort of boost to how we should think about advertising revenues for sort of the next sort of five months or so?
Philippe Dauman – President and CEO: Well, certainly, we do have a favorable environment generally and a favorable environment as it relates specifically to Nickelodeon ratings. As you recall, in last year’s December quarter, we were having ratings issue, so we were unable to meet demands and that we didn’t have enough inventory to meet the holiday season advertising demand. So, as you pointed out, we have more inventory to sell as our ratings have improved, and as you correctly pointed out, particularly in the games area, there are a lot of new consoles and big games interesting kids.
Alexia Quadrani – JPMorgan: Then when you’re looking at the ratings at MTV, could you give us some color? Is there a more meaningful pick-up between the sort of the standard day ratings we typically see and either the C3 or maybe even the C7 kind of data that you may get that would potentially be a benefit if we do see a change now from sort of a C3 to C7 system down the road?
Philippe Dauman – President and CEO: Well, we certainly get – I mean, right now, we monetize C3. We certainly see across many of our networks a lift when you go to C3. And we’ve been investing in our programming in our key networks where there are revenues to be had. So, our ratings performance has improved, and MTV included. If you look at the beginning of this fourth quarter, our ratings are up year-on-year across – pretty much across the board, with the exception of Nick Jr. where we strategically moved some programming off on to Nickelodeon.
Thomas E. Dooley – COO: Alexia, we’ve also had good strength, very good growth in ratings in primetime demos across certain key monetizable networks, which really helps us drive advertising sales, as the value of ratings in those times period is critical for us.
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