Q3 2019 Earnings Call

October 24, 2019

Mr. Jason Armstrong. Please go ahead Mr. Armstrong.

Mike will make former arc and Steve Dave and Jeremy will also be available for queuing <unk>.

Thank you, Jason and good morning, everyone.

From my perspective for things stood out as we wrapped up the quarter.

Our incredible strength in broadband.

Our strong global footing, just one year after the Sky acquisition.

And how the combination of these things puts us in a unique position to compete including in the streaming market.

Starting with broad band it goes without saying the utility and demand for high speed and reliable internet access or ever increasing.

We see this in our customers' behavior monthly data usage more than doubled in the last three years and our power users are connecting nearly 20 devices in their homes daily.

That's great. It enables us to further differentiate ourselves from the competition.

It's more customers continue to choose expenditure.

With these three pillars speed coverage in control or X by experience is resonating with customers.

Flex, we just added a fourth pillar streaming designed to meet the growing needs of customers, who only consume video over the top.

Flex enables these streamers too quickly and easily search access and enjoy content across their favorite apps on the TB using our award winning voice remote.

It's a wonderful product.

And now we are providing it to our broadband only customers for free.

And it's Sky, we plan to follow a similar playbook by using X fight to differentiate the experience for our broadband subscribers in Europe , starting with next year's launch in Italy.

This drove our best total customer net additions on record for any quarter contributing to a 3.4% year over year, increasing customer relationships and.

EBITDA per customer relationship grew 3.2%.

And what is even more impressive our net cash flow per customer relationship grew 13%.

Beyond broadband or content continues to resonate with consumers.

NBC place number one in primetime among adults 18 to 49 for the six consecutive 52 week season.

Telemundo is number one in Spanish language weekday prime for the third consecutive season.

Overall household viewership of Sky branded channels increased 10% in the quarter led by sports.

And skies highly acclaimed Chernobyl received 10, Annie's, which bodes well for our newly created Sky Studios.

On top of all this the teams with NBC, universal and sky or truly producing and delivering content.

For example, we Greenlit our first co productions shared over a thousand hours of sports content and are creating a global news channel.

Our company is strategically stronger today than we were a year ago Sky brings 24 million customer relationships in Europe .

Including the 482000 net additions in the last 12 months plus additional premium content and exclusive sports all anchored by a leading European brand and an outstanding team.

And what are tough macroeconomic conditions.

Guy is doing a great job.

Finally, our recent announcements on Peacock and flex or terrific. Examples of how our combined company is working together and well positioned to compete.

With our leading scale in distribution and premium content, along with our focus on innovation. We can continue to produce superior products like these for our customers.

And deliver strong financial results for our shareholders.

So all in all we had a great quarter led by broadband and it also demonstrates what a fantastic set of businesses and leaders we have.

That positions us well for the future Mike over to you.

Thanks, Brian and good morning, everyone I'll begin on slide four with our third quarter consolidated results.

As a reminder, we completed our acquisition of Sky in the fourth quarter 2018.

Our reported results include Sky from the acquisition date, while pro forma results include Sky is if the transaction had occurred on January Onest 2017.

Also one housekeeping item on Peacock are forthcoming streaming service similar to our approach with expanding mobile during its startup phase We report peacocks results in the corporate and other segments.

So now let's move onto today's results.

On a reported basis revenue increased 21% to $26.8 billion and adjusted EBITDA increased 17% to $8.6 billion.

On a pro forma basis revenue was consistent with the prior year and adjusted EBITDA increased 7.4% reflecting growth across all three businesses.

As Brian mentioned adjusted earnings per share grew 16% to 79 cents and free cash flow was $2.1 billion, bringing the year to date totaled $10.9 billion, an increase of 3.7% compared to the first nine months of last year.

Now, let's turn to our segment results starting with cable communications on slide five.

Cable delivered excellent results driven by our connectivity centric strategy and highlighted by strong performance in three key metrics, we used to run the business.

Growth in total customer relationships EBITDA per customer relationship and net cash flow per customer relationship.

Overall cable revenue increased 4% to $14.6 billion in the third quarter led by the increase in total customer relationships as well as higher ARPU.

Total customer relationships increased 3.4% year over year to 31.2 million, including 309000 customer net additions the best on record.

This growth was driven by 379000 high speed Internet customer net additions the highest third quarter net additions in 10 years.

We've added 1.3 million broadband customers over the last 12 months.

Overall, our connectivity businesses residential broadband and business services continued to drive the growth that cable.

Our revenue in these businesses collectively reached $6.7 billion in the quarter up 9.3% year over year.

Video still an important profitable component of most of our relationships, but we continue to be disciplined and are not chasing unprofitable subs.

Total video subscribers declined by 2.8% year over year to 21.4 million.

Total cable expenses increased 2.3% year over year, reflecting strong cost management, even as we increased customer relationships by 3.4%.

Non programming expenses increased by 3.6% year over year, but were relatively flat on a per customer basis.

We continue to expect EBITDA margin improvement for the full year 2019 to be slightly above 100 basis points compared to the 2018 margin of 38.7% based on our strong performance year to date and our outlook for continued year over year margin improvement in the fourth quarter.

Cable capital expenditures in the third quarter decreased 6.7% to $1.8 billion, leading to capital expenditure intensity of 12.4%, primarily reflecting lower spending and scalable infrastructure and line extensions, partly due to the timing of plans construction and other network invest.

However, as we've said consistent with the broader shift in our business toward connectivity, we will continue to invest in our network to stay firmly ahead of our customers high and increasing expectations and to further enhance our leading competitive position in broadband we now expect cable capex intensity for the full.

Your 2019 to improve by at least 150 basis points compared to the 13.8% in 2018, driven partly by timing of network investments as well as decreased CP spend as video subscribers decline and the rate of our deployment of X one has moderated.

In summary, we're very happy with the team's strong performance.

We continue to see the benefits of consistently investing in our network innovating to deliver the best in class products services and experiences and increasing our operational efficiency.

We believe our approach will continue to strengthen our leading competitive position and drive profitable growth.

With that I'll turn to Nbcuniversal is results on slide seven.

Nbcuniversal EBITDA increased 1.6%, reflecting expected difficult studio comparisons in TV infill.

Cable networks revenue decreased 2.8% $2.8 billion and EBITDA was flat at 955 million, primarily due to a 27% decline in content licensing and other revenue, reflecting a challenging timing related comparison to last year.

As we noted last quarter, our studio benefited from the considerable level of programming license to third parties in 2018.

Offsetting some of this decline was a 1.6% increase in distribution revenue, reflecting the ongoing benefits of previous renewal agreements, partially offset by subscriber losses that have moderately accelerated driven by increased satellite losses and slowing virtual MPPD growth.

Lastly, advertising revenue was consistent with last year's results as a strong pricing environment was offset by audience ratings declines.

Lastly on the expense side lower programming and production costs were primarily driven by cost associated with the FIFA World Cup in the prior year.

While the fast and furious spin off Hobbs and Shaw delivered strong results in the quarter. It was a tough comparison to drastic world falling Kingdom and a higher number of films in last year's third quarter.

Despite experiencing a crowded box office so far in the second half of this year. We currently expect healthy growth in full year film EBITDA over 2018 results.

Looking ahead to 2020, we believe we can achieve even better results as our strategic slates includes three major animated sequels, and another installment and our fast and furious franchise.

These results reflect higher attendance as well as an increase in operating costs.

And we remain bullish on our growth opportunities with Super Nintendo World opening in Japan in 2020 and domestic launches thereafter.

Moving on now discuss results on slide eight.

As a reminder, I will be referring to our pro forma results as if the Sky transaction had occurred on January Onest, 2017, and growth rates on a constant currency basis.

And with what's reflected in our earnings release.

Direct to consumer revenue increased 1.9% to $3.8 billion benefiting from customer growth, but partially offset by decline in average revenue per customer.

In the third quarter customer relationships decreased by 99000 following record strewn growth in second quarter related to game of Thrones and the debut of the highly acclaimed Sky original Chernobyl.

Year to date Sky added 317000 customer relationships and we expect to return to customer growth in the fourth quarter.

Content revenue increased 15% to $315 million, reflecting increased monetization of our original programming slate and wholesaling of sports programming.

Investment in sports continues to be a key differentiator.

Audiences viewing tent pole sports programming are increasing with household viewerships on sky sports channels up 21% year over year, reflecting great starts to the Premier League, Syria Bundesliga as well as broadcast of the cricket World Cup and the ashes.

Advertising revenue declined by 14% to $446 million, largely reflecting the impact from a change in legislation, resulting in certain gambling advertising restrictions in the UK in Italy, as well as advertising market weakness across all territories.

Pro forma EBITDA at Sky increased 46% to $899 million, excluding certain nonrecurring items in both periods growth would have been in the mid teens on a constant currency basis.

For the full year at today's currency rates, we expect skies reported EBITDA will be close to $3.1 billion.

For the third quarter, we generated $2.1 billion in free cash flow and paid $955 million in dividends.

Cash flow in the third quarter was largely impacted by the timing of Sky sports rights payments, which are heavily weighted to the start of the new soccer season.

In the third quarter, we monetize a substantial portion of the minimum for lower value we negotiated for Julio.

Which brought in $5.2 billion in proceeds.

In addition, starting in 2024 to the extent the total equity value and who is worth more than total floor value of $27.5 billion, we will realize our share of that upside.

Year to date, we've paid down roughly $11 billion of our consolidated net debt.

As a reminder, the rating agencies make certain adjustments in their leverage calculations that can add up to a quarter turn to our leverage ratio.

Looking ahead, we remain confident in our ability to continue executing on our long term growth strategy and to deliver value to our shareholders. So with that I'll turn it back to adjacent to lead our culinary.

Thanks, Mike Regina, let's open up for Q Anite. Please.

Thank you we will now begin the question and answer session.

Question, Please press star and the number one on your Touchtone phone.

Using a speaker phone you maybe you can pick up the handset first before pressing the numbers. Once again is there any questions press star and the number one on your Touchtone phone. Our first question comes from the line have been Swinburn with Morgan Stanley . Please go ahead.

Thank you good morning.

Yes, just follow up on some of your comments on streaming both from a cable and NBC perspective.

For Brian or Dave how are you guys thinking about flex what does that mean to the business overtime in your view.

And how do you think about investing in the X one platform going forward, obviously, the video business going through a transition, but you've invested a lot of money into that.

That platform, it's done well for you I'm just curious how you think about the product evolution, there and how important is to Comcast cable and I'll just ask Steve on Peacock in sort of the NBC strategy. How are you thinking about content exclusivity and sort of the volume of original programming that you want to see overtime and when you look at some of the.

The numbers out there for talent, so runners from the apples and.

Netflix is of the World. What is your reaction do you view this is as healthy or irrational or how do you see yourself navigating this spending landscape. Thanks everybody.

So let me just as Brian Let me just quickly kick it to Dave and then we'll go to Steve follow the order of your questions but.

Fairly pleased with the innovation team and how we made a pivot few years ago.

Onto broadband.

In addition to video and in some ways.

Making that the lead lead part of where we're going and one of the results was the X by whole brand.

It's now.

To answer a much more than speed and with flex in particular.

Across the entire platform, whether you have or gateway or not so theres real.

Innovation ahead on that platform.

And I think that that can reveal itself over the time as we go forward, but the point being that the team recruiting retaining of the people to do the technology for this company I think is second to none and I'm really pleased with it Dave.

Great example of leveraging the innovation engine that we've had on X. One for some time. So we'll continue to make sure that relevant content is available.

Delivered through X, one and flex, but it's.

We just have such scale with X, one and so really efficient way to.

Leverage this platform with flex and our view with flex and provide a more value to broadband and with streaming. It's just a great option fruit for those customers that want an integrated experience I think.

We see often bolt on one off options of different apps that are available we are delivering to our customers. It's just a great streaming experience with flex and it's completely integrated.

The content is available through the voice remote just like X. One. So we're we're pleased with the innovation focus it's been able to put us in this position with flexo off we go as Brian said very soon.

I think the most important thing to think about as you're thinking about peacock and its role inside NBC, you and broader Comcast.

We're not we're not doing the same strategy that Netflix and people chasing Netflix have adopted were primarily working with.

The existing ecosystem and doing a lot of eight thawed.

Activity and what what that's going to do we think is make the.

We're also playing to our strengths we happen to be part of a company that has 55 million video customers and is the biggest provider of television advertising in the United States. So we'll have a mix of originals.

Exclusive acquisitions like the office and a lot of nonexclusive product as well importantly, we're going to keep selling too.

There are companies we.

If you take movies for example, we plan to keep selling into the premium wind that we're not taking all of our movies off of premium platforms like HBIO were sky or other platforms around the world. So I think our approach is different.

I think it fits the strengths and characteristics of our company well.

And we're very optimistic we're planning on launching in April .

We're going to use the Olympics as sort of an afterburner after our launch.

Then we'll be adding content pretty pretty significantly throughout 2020, and I'm very pleased with the technical progress our team is making it's a wonderful product that product is.

Beautiful and very different and I think something that we're all going to be very proud of when we launched in April .

Thank you Vince next question. Please your next question comes from the line of Jessica Reif Elevates with Bank of America Merrill Lynch. Please go ahead.

Thanks, a couple of questions.

Continuing on Peacock can you talk about the ramp up in spends and that the reason why does such a big swing in working capital.

In this quarter.

So far since your ratings and then the last question on cable a number of units in your contracts are expiring in the next year.

I don't have you can talk about expectation for step up in cost, but maybe.

Hi, guys thinking about the next round of negotiations, but what are the key considerations, especially as programmers roll out there on streaming options.

Just gets Mike I'll just jump in ahead as Steve on the working capital working capital this quarters primarily.

Change is sky both inclusion this guy versus prior year together with.

Second half of the year, particularly third quarter is when football rights payments Cross blunders legal Syria and Premier League kick in so that's that's what's going on in working capital pleased with working capital and free cash flow, obviously for the year to date, but lumpiness in working capital.

In terms of the details for competitive reasons.

Telemundo has been a huge success for our company Weve as Brian mentioned in his introduction Weve beaten Univision, which was at one point unsinkable. They were so far ahead weve beaten Univision and Prime time every year for the last three years, and we're making real progress during the daytime.

We have not close revenue gap in terms of retransmission consent, which leads into your next question about the cable channels, we have a lot of deals expiring.

In the next 12 to 24 months and channels like Telemundo that have made big strides MSNBC is another one MSNBC is.

Solidly, beating CNN, almost every night and via fair margin.

And CNN has a much higher affiliate fee than we do I think you can expect to see us make some real progress there.

But we're not going to we're not going to be precise about numbers until the negotiations are completed.

And the question for from the cable operators.

Good day, so yes, so we won't comment.

Future time periods, but it's clear that a couple of years.

Where it's been a cycle, where we've had lower cost increases in programming certainly recognize that future times there.

Could change and have more headwinds, but a couple of things one whole landscape is evolving and changing for those that go directly to the consumer that is game changing we all know that I think the key thing we talked a little bit before X one is strategically.

Important to us it just gives us flexibility and either the customer has choice a ton of choice on different platforms define content and we want to be a great platform for all the content that makes sense for customers. So we're going be disciplined as we approach all these matters and we're going to use data to us.

Understand the real value and.

To the extent that.

It is available on other platforms will consider all those things.

Your next question comes from the line of John I would like with Bbs. Please go ahead.

Great. Thanks, maybe a couple of questions more for Steve on DC.

First of all will.

The pickup product be bundled with flex.

And.

Maybe more broadly have you been surprised at how promotional.

The landscape has been on that on the on the DTC side, thus far and as you look out into 2020 do you think that all these launches and the uptake and frankly, how aggressively. These these things evolve and price will have an incremental impact on the traditional ecosystem in terms of both yours.

Yes and subscribers. Thanks.

Well most definitely flex is a huge opportunity for peacock and Peacock will be front and center.

On flexion date may want to speak to that more but I think it's not only an opportunity for peacock, but it's a great opportunity for flex to be able to give a lot of.

Great NBC programming shows like the office to people at no additional charge to broadband subs or cable sub.

I think in terms of the overall echo system and the promotional intensity I don't it's not too surprising to me I think you've got to three biggest media companies Disney time, Warner and Nbcuniversal launching.

Streaming platforms and this is that moment in time and a lot of people are.

Being very very aggressive about it and I would anticipate that to happen until.

At some point there'll be an inevitable slowing down and shake shake out in the market will get a little bit more rational, but I think it's a moment in time and consumers are making their choices of apps and viewing habits and you want to be aggressive to get in there and make sure that your services one of the consumers handful of favorite services.

And then just this is David just one other comment.

Importance of Peacock to flex in cable I think its enormously important and a showcase on what really matters, how we work well together to make the experience even better. So we we are very much going to be active and promotional but were extremely focused on the experience.

The two teams are working so well together.

Does it concern you guys that bundling these products together could could accelerate the trends that we're seeing in terms of the traditional TV ecosystem.

I think that the trajectory is pretty clear and it's.

Marketplaces evolving anyway, and so flexes I think going to be a targeted focus for us towards the high speed Internet only segment will continue to do that but we're going to make sure that all of our broadband customers know.

That will be included and we think this is the right step and.

Okay. Thanks, guys.

Thank you John next question please.

Next question comes from the line of Doug Mitchelson with Credit Suisse. Please go ahead.

Just on the broadband side, David anything unusual driving the quarter were always asked and I imagine you're always asked about the longevity of subscriber growth and broadband and so any update on DSL subs in the footprint and how you're competing against fiber and.

For you again, Dave on the wireless side, obviously, you have continued hot topic any thoughts about your MBS, though and the leverage that you might be building as you grow that subscriber base and grow the amount of revenue that you are paying out of rising and also were asked a lot about strand mountain and if you've tested that have any thoughts on the effectiveness on strand mounds and weather.

That would help wireless network partner.

Thanks, Doug So let me start with broadband.

Very pleased with the quarter.

Had solid performance in broadband all year, so there's another quarter consistent quarter solid performance in so clearly well over another year of <unk> million.

Plus net customer growth.

In the drivers for from our think are very consistent I think the marketplace is growing.

Penetration upside and that's going to continue our focus as Brian said shifted gears is our innovation engine is Ben.

Absolutely focused on broadband and so the key for us is to differentiate the product.

And it's the combination of speed coverage control and now streaming with flex and this is all X spine. So were I think we have a very different product in the marketplace and a key thing that we that we have is consistent focus while others that may change from time to time.

We've been squarely focused across the entire enterprise on having a great broadband experience and Thats, how we compete so that our innovation engine is all over the me aspects of that talked about.

And so nothing has changed competitively nothing has changed in segments, whether its internet essentials or anything else night spend pretty normal activity in that regard, but what we've seen is broad based strength across the entire geographic area and across all segments. So.

It's just robust growth on I think an important point to bring up is not only share growth, but it's also strong financial results that were delivering residential broadband ARPU was up 4.2% and residential overall broadband revenues up 9.3%. So just robust growth in both categories.

I'd like our position going forward.

In wireless.

I would say that we're.

Our first experience is always to deliver also here the best experiences that we can.

And but we absolutely looking at options and.

And leveraging our infrastructure with wireless options, we're always studying and we are actively testing.

The options of being able to food and any number of different ways. So.

We look at the.

Trade offs between price and volume and then.

The amount of data on our NVNO network and then when you offload data to.

Our own network. So we will continue to test will continue to look at this very closely.

We think we'll be opportunistic when things come up more more to come later.

Alright, thank you.

Thank you Doug next question. Please your next question comes from the line Marci Ryvicker with Wolfe Research. Please go ahead.

Thanks, two questions first we've seen video subs decline I didnt accelerated pace or while now can you comment on who you're losing and you have any visibility and select video levels out and you're in a place where you maintain this core customers you really appreciate the bundle and then secondly earned Scott.

What's driving expected customer growth in the fourth quarter. So we're still needs. This assets can you remind us why skytouch down the first couple of quarters that the year any seasonality just think about anything in particular, thank you.

You Marcy, Dave So we start with video.

And remind.

Everyone our primary focus cable.

So I think in the video results.

To also remind folks, though that we added a record 309000 total customer relationships in Q3, ending the quarter 31 million customer relationships up 3.4% year over year and EBITDA per customer relationship is up 3.2% in net cash flow is up.

We're going to video is important to us.

For those key segments, we package it with broadband will continue to stay very disciplined focus around that.

Yes, yes, yes, so yeah in terms of Q4.

Total video first of all.

Just as a vehicle owns remains a big quarter for us in video in Europe Bear in mind of course, we go lower penetration typically over here to evolve market. So the idea of upgrading you'll TV for Christmas.

To pay TV to Sky remains.

A strong idea for US here, it's still has a Q does it used to be in the past went on business Im sorry, excuse, but it remains important to the business really quite quickly shifts to the room to.

Full this summer.

I'll focus on screen really moves to entertainment and Sky Studios not run originated.

From TV, it's pretty much steady as she goes both in broadband and mobile Im very pleased with the progress in particular will making on mobile.

We will see now as a service leader.

I think that growth from comms business should be pretty strong I hope over the over the next 13 weeks and again mobile.

Sense is quite a good Christmas product, so we'll get behind them.

Great. Thanks.

I would just added from my perspective for the first nine months the year I think sky added in the last 12 months running close to 400000 subs I think Jason or Jeremy So I think it's.

You know tough economic headwinds over there we read about it every day and uncertainty is never your friend in in business climates, and there's an awful lot of uncertainty, but we're really pleased.

I certainly am with Sky one year later, what it's done for the whole company, giving us all the plans that Steven Dave and talking about it's completely integrated and terminals team I think are executing great.

Okay. Thanks Marcy next question please.

Your next question will come from the line of Brett Feldman with Goldman Sachs. Please go ahead.

Thanks for taking the question you continue to see I think slightly more than 100 basis points of margin expansion in cable communications this year.

We've done 100 basis points are more every quarter. So far this year. So I'm wondering are there going to be any headwinds in the fourth quarter that prevented you from improving that outlook and maybe just to be more specific it does look like the technical and product support cost the grille a bit more quickly in the third quarter I was hoping you could give us some insight into that I think maybe your NVNO costs are in there.

To be better than a 100 basis points improvement in margin as we've said and in the fourth quarter, particularly we expect to see healthy year over year margin improvement in cable.

In that quarter as well, but net of all that healthy fourth quarter margin growth coming in cable and that will flow through to the full year.

Specific to Q3 always remember Q3 is technically a little busier with back to school activity.

And so they always good welcoming the kids back.

So, but Mike talked about Q4 important are the fundamentals going forward.

The.

Non programming expense and that are positively impacting margin. One continued focus on the conductivity business stay business services residential broadband.

Improves margin in doing that we're making significant improvements in the serving customers through digital means so we're going to continue to press on that we think it's a great opportunity. We're in early innings on that and then overall cost control remain very focused on that as well so I expect.

And to the point Mike made.

Given.

Flex flex think of that as Capex, but as we've said before I don't give multiyear guidance, but on capital intensity. The improvement that we've seen of greater than 150 basis points projected for this year. We've always said the trends behind that are we expect to see them continue and I don't think the initiative around flex would change is going to.

Change that.

Thank you you if I may one back to wireless sorry, the numbers spectrum auctions coming up Pbrs next summer see bands the impact that even millimeter wave.

Year over year I know in the past you had mentioned timing issues. There should we expect that continue to be honest steady decline all right is that.

And as mentioned on track for at least another 150 basis points reduction this year and it's a consistent approach that there were going to we'll continue to invest where we need to into conductivity business, but we're going to realize.

The reductions.

Quarter versus I look over 12 month period, rather than quarterly on that one.

Great. Thank you.

Next question comes from the line Philip Cusick Jpmorgan. Please go ahead.

Hey, guys.

One and then if I if I can I guess two follow ups one Mike just follow up on what you just said it sounds like there's some push out on the network Capex side I just wanted you to expand on that a little bit.

And then just one other question growth in parks, it's been a volatile around storms and may be competitive issues and you are opening gates like you had been once how should we think about the underlying growth at the parks business. Thanks, guys.

So Phil it's Mike not too much to add to what I've said, thus far on.

Well Capex I mean, I do think hard to look at one quarter to the next to the next to the network. We're happy to invest in the network as usage of the network keeps going up and want to continue to stay ahead of customer expectations. So expect that's very healthy capex going into the into the network, but it just is a little lumpy I wouldn't say.

Things are pushed out so much that it follows its own timing based on what folks in the field are doing.

And so stepping back up we are getting more efficient on capital intensity.

Two years in a row now this year heading towards the 150 basis points of intensity improvement year over year and as I said, we don't we don't get into multiyear guidance, but I think the expectation of the ability to scale the network scale the business and what's going on in CPG gives us.

Broadly it looked I'd say about is that a third of his markets TV market advertising markets in Europe .

Since you have a pretty much will under pressure with mid single digits helps a little bit more declines gets quite different from what you're seeing I think in the us from the moment and probably the fall into that is really down to gaming legislation change here, which is specific to UK until the housing derived and in Germany and left probably disproportionately affected by the of course.

On the other schools leader in Europe , but will work its way through over the course of this yet in terms of color and so they're up so I feel that progress, we're making and content sales as we saw commission more of our own content is good it is down quarter on quarter, but theres nothing structural now, it's just a bit lumpy, obviously as well as we scale.

Oh peaceful about Lumpiness will disappear, but at the moment, we see a little bit above.

So in terms of the theme park business.

Six years ago, we made about $1 billion in the theme Park business and now we're at about two and a half billion. So theme parks have been historically one of the fastest growing parts of our.

Portfolio and we have a lot to look forward to we're opening and kendo in Japan.

Hey, Craig So first on wireless were absolutely testing.

You add up all those things were for those products, it's still early innings on that.

Great. Thanks, Greg.

So we will note from the residential markedly UK into the business services mall, and obviously try and replicating some of the success will be seen.

Stateside and albeit you certainly precisely to talk.

That's a great point, Germany Weve between match Strauss going to flex up from flex to Peacock.

We're learning all the realities of a new business extremely well and the technology the innovation in the handsets.

We've taken a leader of that mobile aireon, given some more responsibility to so just a lot of good momentum across the board.

Thanks, Craig Regina will take one last question place. Our final question will come from the line, it's Michael Rollins with Citi. Please go ahead.

Expanded to new direct.

Direct locations overtime.

And finally, how do you view the value of bundling.

Create an additional hook, whether it's to acquire or retain customers. Thanks.

Well.

The Android side. So were we kind of have got full slate covered in terms of channels retail I think the good news as we were able to sort of upgrade our existing retail without having to.

We look at.

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