Q2 2019 Earnings Call
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For calling me I have your confirmation.
Please.
Yes. It is.
Sixthree eight to 878.
Okay.
And May I have your name please.
Ryan Healy VR Y.A.H.E.A.
Okay.
I'm, sorry that was double L.Y.
Yes.
And what company do you work for please.
Era a I.
Okay.
And this is for the W. W E second quarter earnings call.
Right.
Okay, Oh, please see when that one moment please.
House.
That is really really good thing it for a long term as well as short term actually you're seeing a big results already.
In addition to that.
We're excited about our future.
Particularly on Fox when a first week in October we debut there, it's really going to be awesome. As you know Fox broadcast reaches about 33% more homes.
You know that where we are with U.S. USA. So.
We're anxious to and great promoters and.
It's more of a notwithstanding public companies, but it's more of a family type situation in which we do very well and notwithstanding our relationship again, but NBC, you, which is a deeper relationship as well.
So in any event we are now.
We're really excited about about our future in terms of where we're just it's almost like another kick off for us.
That's about all I have to say George Thanks, Ben.
Thanks, everyone for joining us today for a review of our Q2 financial performance, our progress on key strategic initiatives and our business outlook.
During the quarter, we achieved adjusted OIBDA of $34.6 million, which exceeded our guidance primarily due to enhance revenue recognized in conjunction with our recent event in Saudi Arabia.
That enhance revenue is expected to reverse in connection with an anticipated fourth quarter event in that country.
As we attained our second quarter financial results, we made important progress on key strategic initiatives as Vince mentioned, we completed content distribution agreements in the UK Latin America in China.
And prepare for the next phase of our WWD network, which initiated yet just yesterday and we achieved improvement in our engagement metrics since April .
As a reminder, in our first quarter earnings call. We discussed our belief that our metrics were negatively impacted by the absence of several talent I'd like to provide an update on these important measures before discussing our content distribution or the evolution of W.W. network.
As shown on page three of the presentation domestic TV ratings for RA, which declined 14% in the first quarter 2019 improve to a year over year decline of 11%.
In through June and that occurred despite a tough comparison to gain five of the NBP Championship on June 10th.
Similarly, domestic TV ratings for Smackdown, which declined 13% in the first quarter improved to a 7% decline in June matching the aggregate ratings performance of the top 25 cable networks.
In addition, domestic TV ratings for raw and Smackdown showed steady steady improvement throughout the quarter from April to June June showing the best performance.
You should also note that raws TV ratings for the first four weeks in July through July 22nd reflect an increase of 1% year over year and this includes the ratings for the raw reunion special this past Monday, which were up 15% on a year over year basis.
For the same four week period in July Smackdown, TV ratings improved to a 2% year over year decline.
Consumption of WWF content across digital platforms as measured by the number of use rose from a year over year increase of 15% in the first quarter the growth of 38%.
Finally average attendance.
Companies like events in North America, which declined 12% in the first quarter.
Improved a decline of 4%.
Down 2% for the second quarter.
We believe these favorable dilip developments stem from the return of our talent as well as the emergence of new storylines and superstars following a successful Wrestlemania mania.
As we emphasized last quarter, we remain very excited about the debut of Smackdown live on Fox on October 4th.
Which marks the first time that WWD, we'll be available live 52 weeks, a year and one of the four premier broadcast platforms.
In terms of our financial performance adjusted OIBDA declined approximately $9 million based on lower revenue from our median length of businesses.
The impact of strategic investments to support our content creation, digitization and localization strategies.
To discuss our business performance in the quarter, let's turn to page five of the presentation, which shows revenue operating income and adjusted OIBDA contribution by segment.
As compared to the prior year.
Looking at our media segment, adjusted OIBDA declined $7 million versus the escalation of core content rights fees was offset by a reduction in network subscription revenue and the impact of the aforementioned investments.
The timing of original series that has fewer episodes delivered for programs such as total Bellas contributed to a decline in media revenue, but had a limited impact on the change in profits.
Wwt networks average paid subscribers decreased 6% to approximately $1.69 million for the second quarter, and we projected an 8% decline for the third quarter.
Given this trend we no longer expect to achieve record subscribers for 2019.
As we look ahead, our primary focus for Wwt network is this continued evolution.
Late last night, we initiated the transition of W.W. network to a new platform created and delivered in partnership with the never streaming and massive interactive.
The new platform provides subscribers with a better user experience more intuitive user interface and much better discovery and search.
More importantly, this new platform enables the introduction of new features that we've discussed previously and experiences over time, including the addition of a free tier a premium tier and the localization of the network into multiple languages. So we remain very excited about the long term opportunity of Wwt network.
During the quarter. We also made progress on other critical strategic initiatives, including our content distribution plan in key international markets as both Vince and George mentioned, we completed content licensing agreements with BT sport in the UK.
Fox Sports in Latin America, and Pp sports in China.
We believe these partners provide both Ron snack down with strong distribution to reach both current and new WB can helpful.
While producing the two highest rated programs on USA network Monday night Raw and Smackdown Live. We also continued to produce and develop other new original programs across platforms.
On television, we launched a new season of businesses on USA network earlier this week.
And Weve renewed total Bellas for a fifth season on E.
And our direct to consumer network, we added more than 90 hours of original content, including light and ring fence special such as the shield final chapter and new talent documentaries, such as W to be 20 for the year and Ronda Rousey.
Our social and digital platforms, we created over 200 hours of content, including our op up down down you to feature a WB superstars Avior woods at E. Three.
We also are developing a new unscripted series entitled fight like apparel for the mobile first platform cuisine, and a live action family movie entitled The main event to premiere on Netflix in 2020.
These new shows build upon the plans we previously discussed for a weekly studio show on Fox Sports, one which will debut this fall.
And we're also producing documentaries on R.W. to be legends on the under the Amy biography banner, which will premiere in the first quarter of 2020.
Turning to our live event business as shown on page seven of our presentation.
Adjusted OIBDA from our live events declined $1.5 million, primarily due to lower revenue from our international events.
Outside North America, lower ticket sales reflected the staging of six fewer events and weaker performance as average attendance declined 14% to 4900.
During the quarter, we continued to successfully stage large scale events, where fans, including Wrestlemania, which attracted more than 82000 fans to a sold out Metlife Stadium.
And Super Showdown in Jeddah, Saudi Arabia.
To further develop eye to our diverse talent base that supports such events, we held our largest ever Talen trial in China last week, which featured 40 participant.
And finally, we announced that we were performing China for our fourth straight year with an event in Shanghai in Shanghai than Mercedes Benz to Arena. This September .
In our consumer products segment, adjusted OIBDA declined slightly based on a $3.6 million reduction in revenue from the prior year quarter, primarily due to lower sales of merchandise on WWD shop, and lower royalties from the sale of toy products.
As a key initiative of our consumer products business, we continue to expand our mobile game portfolio with the launch of W.W. universe.
The game was developed in partnership with Glu mobile a more key publisher known for its popular tap sports baseball game franchise.
As we launch the game, we continue to increase the penetration of our mobile games.
At quarter end, we had nearly 115 million installed across our entire mobile game portfolio.
Additionally, in collaboration with Mattel, we secured premium merchandising space at Walmart and supported that placement with retail payment activity in 1300 stores over a four week span.
On page nine of our presentation shows selected elements of our capital structure as of June Thirtyth 2019, W.W. yield approximately $296 million in cash and short term investments and we estimate that we have approximately $200 million in debt capacity under our revolving credit agreement.
In the quarter, we had negative free cash flow of 27, and a half million dollars as compared to $66.4 million in the prior year. The change was predominantly due to the timing impact of our recent event in Saudi Arabia on working capital. This year's event was held in June and last year's event was held earlier in the quarter in April .
To a lesser extent the change in free cash flow also reflected a $12.1 million increase in capital expenditures the majority of which was related to the execution of our workplace plant and lower operating performance.
For the third quarter 2019, we estimate adjusted OIBDA of 17 million to $22 million. This range of results represents a year over year decline adjusted price of OIBDA, primarily due to increased fixed costs, including the impact of strategic investments as well as lower W. every network revenue, which more than offset the escalation of core content rights fees.
For the full year, we continue to target record revenue of approximately $1 billion and adjusted OIBDA of at least $200 million. This guidance assumes continued improvement in our engagement metrics.
A second large scale events in the Mena region.
And the completion of a media rights deal in the media Mena region.
We believe we have agreements in principle with the Saudi in principle with the Saudi General Sports authority on the broad turned for the latter two items. However, this understanding is non binding.
It is possible that either or both of these business developments do not occur unexpected terms and or that engagement does not improve as assume.
Weve validated these potential outcomes and currently believe that the most likely downside to our adjusted OIBDA would be approximately $10 million to $20 million below our current outlook.
Our full year guidance reflects strong fourth quarter results substantial revenue growth from both our new content distribution agreements in yet in the us which become effective in that period and the aforementioned media rights deal in the meat Mena region.
As you know we're in the process of finalizing our distribution plans for raw and Smackdown, and two international markets, India and the Middle East as we stated in our last earnings call. We expect to finalize. These plans later this year and once we have added visibility for 2020 and the rest of our business provide additional perspective on our long term strategy key initiatives 2020 financial performance and a longer term business outlook.
We believe in the context of the ongoing media industry trends that we are well position to leverage our focus on content digitization and globalization to drive long term growth and shareholder value.
That concludes this portion of our call and I'll now turn it back to Michael Thank you George.
Alan Please open the lines for questions.
Yes, Sir thank you.
Once again, everyone that is star one if youd like to ask a question over the phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again star one to ask a question.
Well take our first question from Korea, Baker with Guggenheim, Sir Im sorry, what did our first question from Laura Martin with Needham.
Hi, guys. Thanks for taking the question I appreciate it.
Yes. So this 10 to 20 million lower based on it sounds like some of that is on the Saudi Arabia could you remind us what's going on in Saudi Arabia under the deal terms because I remember you sort of came up last quarter too and why that's having such a big impact and then also George could you talk about free cash flow lower by 100 million. This year was that related to the working capital and what's your free cash flow outlook.
For the rest of the year. Please.
Yeah. So.
We just didnt event on June seven that event was part of the 10 year agreement that Weve signed and Laura what we're saying is right now in our forecast, which is what some tens our guidance. Our guidance is our internal forecast we are assuming that we'll do a second event.
In the region and that we will also complete a media rights deal in the region and that those do come to fruition. We believe we will hit our $200 million.
And what were saying on the downside is some if some combination arms is not the ultimate downside case, but our best estimate of downside case around either those developments are coming to fruition or the engagement not improving to the level we expected to.
No we estimate the most likely downside attempted to $20 million.
On the free cash flow side in the quarter because of the timing of the event in the <unk> and the accounts receivable for our collection of that because it happened. So much later in the quarter last year. The Mena event happened on April 27, So we've collected in the second quarter. So we didn't have an outstanding aer.
At the end of the quarter. This time, we expect to collect in the third quarter, which is why you see that you'll see that reverse while we don't give.
Forward looking free cash flow guidance.
What we will say is we expect another $30 million to $40 million in Capex in the second half of the year. The reversal on the IR that I mentioned and obviously because of the improved performance in the fourth quarter, we expect positive free cash flow year over year.
Super helpful. Thanks, guys. Thank you.
All right next we'll go to Curry Baker with Guggenheim Securities.
Hey, Thanks for the question I have two so first on your 500 million share repurchase authorization you weren't very active in the quarter I think you did like 900000.
Can you maybe help us think about how you're thinking about repurchases in the back half of the year.
Given where the share price is now I think you'd want to be opportunistic and then I have one more on India. Thanks.
Yes currently as we've said before to the extent, we do repurchase is based on a variety of factors first and foremost we evaluate the intrinsic value.
Some of the business and future cash flows we apply a margin of safety. We also look at the liquidity and capital needs of the business, how we feel we're in the market that.
The regulatory compliance requirements, we have to comply with in any other corporate considerations, we have so thats what goes into it and.
In Q2 after evaluating all that we were in the market for about 12000 shares average price of 74, and like you said about $1 million and we'll continue to evaluate it validates and into the back half of the year We'll act.
What we feel will be approved manner, but we're not going to give any guidance on that.
Okay. Thanks, and then on India, I know you can't really speak to negotiation at this point, but could you maybe provide us with any incremental color you have just on how TV ratings, there and a lot of Consumptions tracking and then also just on the market in India broadly can you can you speak to the overall state of the pay TV market there.
As well as any specifics in terms of competitive dynamics in the demand for content.
Specifically Ww content, India. Thanks.
Yes, correct.
I really don't want to get into characterizing.
Discussions that are ongoing so long and stay away from that.
Our general belief.
Is that over the next 10 years, the Indian media and entertainment sector is going to grow fairly significantly and so our focus is how we deepen the brand over the long term and Vince mentioned localization localized content.
India certainly at the top of the list potentially on on doing that.
Okay can you provide any just consumption.
Data there just in terms of what you are seeing how consumptions tracking and the first half of the year was there anything you can provide.
To start talking about our.
Internal data.
Market, just given where we are.
I think there are reports out there on the Indian media and entertainment sector I read one recently by you I think it came out in April or May and you get a sense of who is consuming what what's being consumed and long term outlook at least from you wise perspective, but ultimately at this point I don't really want to talk about our internal did just given where we are in all these discussions.
Okay understood and thanks for the question George.
Yes. Thanks.
Well take our next question from facility currently off with Cannonball research.
Thank you good morning.
Since we are getting closer to Q4 hundred 2020 I was wondering if you could comment on this massive for if I were trying to extrapolate from what's implied by Q4 for 2020, if I were just to take.
What's implied by your guidance takeout. This mean, a agreements and annualize that number and add the Saudi Arabia events to would that would that be a decent a back of the envelope approximation of what EBITDA should look like for 2020 , and if I'm wrong, where where am I going wrong here.
Yeah, obviously, I'm, sorry, but I'm not going to get into trying to architect the 2020 model on this call. When we're ready to talk about 20 point in the future will give oh, our view of that but I'm uncomfortable getting into that right now.
Okay, but if I ask this question.
Q4 is closer to the run rate of.
Quarters, there there will be no such a pronounced seasonality quarter to quarter studying and 2020 because of the media rights deal is kicking and would that be correct.
I think a lot of it will depend on how we choose to invest in the future and something we're still evaluating so again I don't want to start talking about how to best calculate 2020 or what's an applicable threats.
Away from 2020 right now.
All right. Thank you very much.
Well next go to David Karnovsky with JP Morgan.
Hi, Thank you or the appointment of Paul having inherited Chavez executive directors can you just comment on why now was the right time for this move and just maybe expand a bit on what their responsibilities will be and how much latitude they'll be given in the process.
On why now question.
Logical one.
Okay.
Personally.
In the weeds any longer and we have these two individuals who have a longer range.
Our point of view and a developmental point of view both of these individuals who have extensive backgrounds in the business from various aspects I had with the organizational aspects that they have in the depth of talent I executive John writing Joselowitz, even now we're on track.
Is is really going to be.
Really good for our business.
And okay.
How much latitude you have that's you know again it allows me to have a broader overview things.
And and escape from just getting in the weeds, so they'll have a lot of latitude.
Okay, and then just shifting a bit.
Saudi events, George can you just clarify and what's actually reversing here does this mean that some revenue you thought that was coming in in Q4 ended up being part of the key to that.
Yes, some something like that David we have made you know again, our forecast is our guide and we've made a forecast around what we bought the.
You bet would generate yeah.
There was a reversal of that were.
Moving our original expectation for Q2 into Q4 and vice versa. So.
Okay, and just one more if I can regarding the Q3 outlook I think back at Q4 earnings.
You had stated that given the investment cadence or would a would be potentially flat to down just trying to understand the change relative to today's guide and you know whether that potentially it reflects a shift there maybe overall increase in your investment spend.
Thanks [laughter].
Oh.
The engagement metrics that we've seen.
The result was a little bit lower we believe and then there is a a an impact on the investment side, both the some of the year over year.
Lapping as well as a we as I mentioned in the prepared remarks, we made additional investments into the into our content.
Creation or Digitization strategy and our.
Localization so there we were.
We thought it was important to do now.
And we've done that so that's what's driving the that that change that you referenced.
Okay. Thank you.
Your next question comes from the line of Eric Handler with MKM partners.
Good morning, Thanks for the question.
I Wonder if you could talk a little bit.
About the about the Wwb network relaunch.
How.
How how long will it take do you think before we start to see.
The tiered pricing how long before we see.
Some some.
Some additional interim foreign languages being introduced or increase localization efforts.
Yes, I think the.
The cadence will be.
To your first which we're really excited about.
Hey, tier premium tier second.
And then.
Our first Additionally, we believe.
After that.
I think you'll start seeing things this year around that and probably all three.
Yes, not within the next 12 months or so depending on how the rollout goes but you'll you'll begin to see.
Those are hope is this year.
Great and just as a follow up.
With regards to the international TV deals that are done I know you don't want to talk.
You know the economic value of those deals.
But maybe you could talk about maybe some of the reasons why you went.
With BT and structurally some of the.
Differences, maybe based on the tiers that you are going to be.
On or just how it increases how it increases reach both then.
Latin America and.
And the UK.
Yeah look ultimately.
We make our choices based on the value the market evaluating potential partners and coming to conclusion on the balance between economics reach and engagement in all three cases.
Given the current market dynamics, we feel.
Really good where we ended up I don't want to talk about specific.
Clauses in agreement, but I will say generally rule in across all three we've been able to from a scope or rights perspective.
Yes, more flexibility to what we think is reach more and diverse audiences like Vince touched on in his remarks. So we're really excited about that but I don't want to get into the specifics again some of this is confidential.
Fair enough. Thank you very much.
And once again, everyone that is star one if youd like to ask a question start to to remove yourself from the queue. If you find your question has already been asked.
Next question comes the line of Ben Swinburne with Morgan Stanley .
Thanks, Good morning, I have two questions.
Yes, there's been a lot of press written about this sort of a state of the product or state if the content. They variety article recently about some of the engagement and ratings trends you guys sound pretty optimistic that you've turned the corner.
I know George you have caveated the guidance around continued improvement and I'm. Just wondering if you could spend a couple of more minutes.
Talking about how you see the state of storylines and the product on on the screen currently relative to the past two three quarters, where it's been moving in the wrong direction just to see if we can address some of the controversy that's out there and then I just wanted to ask following up on the network do you think some of the network. This subscriber trends have been impacted by.
Your transition in platform in other words.
I don't know if you've maybe had less product innovation or marketing behind it because you've been waiting to move off of Bamtech on these new platforms or if you just tickets, it's more chalked up to the to the content cycle. Thank you.
As far as the content as concerned on the rest of that.
We have definitely turned the corner and again as I mentioned, we have.
Alright executive directors with each brand now I'm going to go into more depth I think that notwithstanding that we've spent more time on our story lines are good ones.
And also talent development.
It's a combination of a lot of things all good things thus far.
Coming together and what I guess I'd call a re launch in terms of our content.
And then then to your question on the network I think it would be factually correct to say that as we put our engineering resources over the last 12 months to design. This is create this new experience that we're rolling out now.
That meant there was less time and resources to.
Innovate on the what will be now the legacy platform. So you could argue that maybe that had some impact however from our perspective.
We think the major impact was related to an engagement metrics. It didnt translate to the same level of year over year roll.
Around Wrestlemania that we've seen in the past and you know just as you know subscription businesses are driven by.
Both the gross add as a retention and for US our biggest gross add moment as you'd expect is around Wrestlemania is when that doesn't perform was down year over year has just a mathematical repercussions.
Into the forward time period. So we think it was more of that but to your point and it's hard to parse. It all out there is no doubt all you have to do is look at iOS or Android version, Mr. You'd see that we haven't done a lot of updates in the network for about 12 months, because we have to make choices. We have limited resources and those engineering resources have been really around creating and developing the new platform, which we're really excited about.
Great that makes sense. Thanks.
Next we'll go to Marci Ryvicker with Wolfe research.
Thanks, I have two clarification questions first of all I thought the issue with the buyback that you had material non.
Information public information related to all of the international deals and that's why you can buy back stock. So can you just talk about that and then secondly, we're getting asked during the call about cost phasing because I think everyone was expecting you to lap the big increases coming into the second half of the year.
Thanks.
Yes, I don't want to comment specifically on your question, Ron MMP I'll say, what I said around when it when I responded to Curry regulatory requirements are part of our evaluation on whether or not to execute within the buyback.
Oh Graham on the cost side.
I mentioned it before earlier in the year, we had expected.
That the overlap of 2018 investments that the comp would get easier as we move through the year third and fourth quarter, which itself, which it does however, we've chosen to make some additional investments.
Based on our view that it will create more value than delaying them.
So thats why you saw the Q3 changes something we've decided to do.
Okay. Thank you.
Next we'll go to Eric Katz also with Wolfe research.
Hey, guys.
So a one housekeeping thing.
As far as Q4, one timers or Nonrecurrings, we have.
I guess, the U.S. steel the Saudi deal in the Saudi is that is there anything else that we should be aware of.
Well.
The deal in China, and Latin America year over year impacts more than that which is why we didnt call them out and I, just think generally the engagement trends and the impact that those that engagement have on the more transactional areas of our business, which includes our digital advertising or consumer products businesses, though.
We didn't call out independent line item, but if you think about the transactional side of our business being more impacted by the day to day, that's why we need those engagement metrics to at a minimum state stabilize we're continuing improved to a point, where they are back where they were.
First half last year.
Okay, and then I'm, just coming back to the engagement a bit more clearly you're addressing it head on with the big hires can you talk a little bit about the intended direction of the constant going forward, because if it's going to be a bit edge, you're I'm just kind of curious how your partners feel especially fox because the sensors are probably bit stricter from broadcast.
We are going to be.
But still remain in Fiji environment.
There's ever going to come anywhere close actually to going into.
Another level. So we never be something we'll do in terms of Ah you know a direction of content or more controversy better story lines et cetera.
But at the same time, we're not going to go back to the gold attitude era, and we're not going to do.
Blood and guts and things of that nature such as.
Being done in one.
Perhaps a new potential competitor.
I'm just not going to go back to that already you know crap we graduated from.
And again, a more sophisticated product.
Again, we're attracting a much better writers and tracking you know better management and things of that nature. So again, I said, if I feel really good about it.
Okay. Thanks, maybe just one more if there were some rumors out there that there could be some more content.
Coming to one of your partners I know you can't discuss any negotiations, but just the rubber was that an X T could be something that comes to television is there a thought process on whether you'd rather keep that on the network or a scenario where that could come to television. Thank you.
Well I think.
Before.
800 hours of content.
A variety of different genres.
300.
In ring.
And.
We need to evaluate what's the best.
No it wasn't that long ago that if you wanted a constant theme.
One choice multiple partners around the world to reach any audience.
Hey, you can still do that you can go direct inhabit supported by advertising and reach.
The world's population.
In doing direct inhabit supported.
In advertising so that the your question applies to everything and we've got to always evaluate them were trading off things like.
Economics engagement reach reaching new audiences, though.
It applies to everything, including I think Stephen I'm going to talk about <unk> and specifically, but it's it's a constant discussion right. What we spend the most amount of time internally talking about.
What caused them to create what's the best place for it.
Great. Thank you.
Now, we'll go to Alan Gould with loop capital.
Thank you I've got two questions first can you give us some sense on how much promotion Fox is going to do a once a programming goes our October 4th I mean, I assume at least Thursday night football will promote Friday night wrestling et cetera, and secondly on Indian mid East you just give us some sense when those deals expire I am assuming they have not expired yet or I assume the content is still on the air in both markets. Thank you.
So I'll take the question is as Dan mentioned, we're extremely excited about the opportunity Martin with box in terms of exactly what they're going to do for any of you that have been watching NASCAR or any of the other broadcast that box has been doing there already promoting smackdown I'm through integration into their current broadcast of they're already doing that what I will say that that will be dialed up significantly as we get into the month of September obviously as as we've talked about in the past and they put together one of the strongest promotional plans I've seen.
In my time in terms of leveraging their Thursday night football packages on what they have with baseball again, what they do is NASCAR. So on the sports side absolutely in every major sports broadcast that they have W. W. We knock down will be promoted in addition to that they obviously have a strong programming on the entertainment side. So it won't be exclusive to John Fox Sports and will also be either entertainment programming as well they are doing some really.
Besides just kind of the traditional promotion with I.
Spot if you will they're also looking to integrate it into their programming organically, whether it's the math thing or are some of the other shows that they have coming out so again I'm not going to get into the specific detail around the the economic value of what they're promoting but suffice it to say that it is significant and to Vinces point earlier given the.
Number of households, they reach this is you know 35% higher than what we do on USA network partnered with that level of promotion is the reason why we're really excited coupled with on where storyline is going that we see this as a real opportunity come October .
At the same time as far as promotions or.
We've been led to believe as well that NBC you is going to have their promotional efforts and that equal or not flocks, but.
Again.
They do now or in a more of a competitive situation, obviously and what to do much better with wrong.
And Alan on the questions on in India. The our current agreement expires at the end of this year.
In the Middle East our pay TV agreement terminated, but our free to air agreement continues to be in place.
As a reminder, you do.
All of you to has the highest per capita consumption in the world in that region. So.
We're pretty good at activating using the digital channels, we continue to be pretty aggressive on that right now.
And one last time that star one if youd like to ask a question. We'll next go to Laura Martin with Needham.
Yeah. Thanks again for taking the follow up on that so Vince I'm one of the things you said last quarter was that content or that your story lines and your content lots of talent was affected ratings and although ratings got better in the quarter, we still have negative comp in not only ratings, but live a life event attendance and that's affecting consumer products and you're you're like the best businessman I cover and my question to you is at what point do you decide that investing this extra money in hiring extra writers actually doesn't solve the problem because the problem is structurally shrinking ratings for the past that that linear platform and the fact, there's just more competitors coming to entertainment programming over over the top so at what point do you stop spending extra money trying to get the ratings up 'cause they actually can't go up what metrics you're looking for.
As far as your competition.
The old adage of competition is good for everyone. I think that's generally occurs.
Well again, we're hoping to.
To the extent that they are competition that they don't continue on.
Great. Thanks.
They have been doing.
That would be bad.
I can't imagine.
I can't speak for GMT, but I can't imagine they would put up with that but nonetheless.
As far as investment is concerned.
Into the product to their content.
No. It's not one of these sizable type things, it's just more of a restructuring and more of utilization, yes, bringing a new new faces you bloody well different kinds of ideas.
And connections and so forth. So again, it's just not one dance vision.
It's a combination of what happens in the future. So again I'm bullish on and all of that when you look at not just television ratings metrics you know from.
Social and digital whatever that's really is a new way of promoting notwithstanding the fact that we are going to continue to build the mothership says it were you know what raw and Smackdown zone.
Again for me investment standpoint, that's where you should obviously investor dollars, but it's not sizable at all.
And thanks.
Hi, Dan.
That is how we think about the opportunity in the size of the opportunity because it's important.
You don't think there is no upside that might change your perspective on investing and you're right. We also believe there is going to be continued competition, because there's going to be fragmentation more and more content. Our belief right. Now is that if you have the scale to cut through the quarter.
Even if it on an absolute basis, you may be getting slightly less share of the pie, but if you are cutting through the winter.
That.
Do you have an economic opportunity and we continue to be in the U.S. and one of them.
The livers of life eyeballs on a consistent basis, even with the declines were still in that in the top effect other than the NFL across broadcast and cable. We're in that next year with the Nbn Baseball. For example, we believe that content is going to continue to get more valuable because it will be harder and harder to cut through the clutter and so we do think it makes sense to invest to maintain that position.
Thanks, very much so very helpful. Thanks.
Alan do you have any more questions on the line.
No Sir we have no further questions.
Thank you everyone. We appreciate you listening to the call today. If you have any questions. Please do not hesitate to reach out to us. Thank you.
That does conclude today's conference we thank everyone again for their participation.