Warner Bros. Discovery, Inc.
Q4 2014 Earnings Call Transcript

Published: 19 Feb 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Q4 2014 Discovery Communications, Inc. Earnings Conference Call. My name is Gem, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Ms. Jackie Burka, Vice President of Investor Relations. Please proceed, ma'am.

[Jackie Burka:]

Good morning, everyone. Thank you for joining us for Discovery Communications' 2014 Fourth Quarter and Year-end Earnings Call. Joining me today are David Zaslav, our President and Chief Executive Officer; and Andy Warren, our Chief Financial Officer. You should have received our earnings release, but if not, feel free to access it on our website at www.discoverycommunications.com. On today's call, we will begin with some opening comments from David and Andy. After which, we will open the call up for your questions. [Operator Instructions] Before we start, I would like to remind you that comments today regarding the company's future business plans, prospects and financial performance are forward-looking statements that we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are made based on management's current knowledge and assumptions about future events, and may involve risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, the company disclaims any intent or obligation to update them. For additional information on important factors that could affect these expectations, please see our annual report for the year ended December 31, 2013, and our subsequent filings made with the U.S. Securities and Exchange Commission. And with that, I will turn the call over to David.

[David M. Zaslav:]

Good morning, everyone, and thank you for joining us. Last year, Discovery's investment in content, brands and new international platforms generated more impressions and scale than ever before. Better than double-digit growth in international audiences, expansion of our global flagships into new markets and establishing the leading sports provider in Europe is creating strong operating leverage across the company and long-term value for advertisers, audiences, distributors and shareholders. 2015 marks Discovery's 30th anniversary. And we built our portfolio and brands through a consistent strategy, a strategy of investing in our channels and programming to take market share in the U.S. and market share around the world; investing in local teams, infrastructure and boots on the ground to drive our global business; and owning our rights and IP across platforms and regions to strengthen our network portfolio and provide the foundation for our direct-to-consumer offerings. The core of our strategy is to continue investing in content, which feeds in average of 10 channels in more than 220 countries; and to grow our market share in markets around the world. This investment has paid off and our share of prime time viewers, 25 to 54 in the U.S., has risen from 7% in 2008 to 12% today. Our international viewership continues to set records, gain share and grow dollars in key markets around the world. We ended 2014 with nearly 3 billion cumulative global subscribers, up from 2.5 billion at the end of 2013. And we grew our average international audience by 13%. More people are spending more time with our content than ever before. Consumers all over the world are consuming more video and more programming than ever. Because we own the vast majority of our worldwide content and IP, we can take advantage of new ways to distribute and monetize our program. New distributor entrants, over-the-top platforms and SVOD expand our optionality and our chance to bring in more dollars and reach more people. Last quarter, we reached our first-ever long-form distribution agreement with Hulu in the U.S., providing another strong brand and linear TV friendly environment for our content. And in terms of new marketplace entrants, we closed a favorable deal for all of our U.S. channels with Sony for its new cloud-based service, PlayStation Vue. Discovery has a direct-to-consumer business that is profitable and growing, something very few media companies can say. And our opportunities within this landscape are growing rapid rapidly. A look at our recent progress in Europe gives us good reason to be optimistic about our near- and long-term growth in this area. In Europe, we've gained subscriptions, valuable insights and a new marketing and sales platform with our own direct-to-consumer products. One is Dplay in the Nordics and the other is the Eurosport Player, which we distribute across the continent. Those services have almost 0.25 million subscribers, bringing in an average of $8 per month in U.S. Our European OTT offerings is giving us a growing revenue stream, a growing direct-to-consumer offering and valuable learnings that we can apply in the U.S. and other markets. And we're just getting started. For 2015, our goals are to launch a new integrated platform to scale the back end for both services; deploy Dplay to additional markets across Europe and acquire specialty rights at a low cost to strengthen Eurosport's Player and have its growth accelerate; and take all of our learnings and expertise to support the strategy we will be taking to distribution partners and consumers in the U.S., Latin America and around the world. You will hear much more about our products in this area in the months to come. Further demonstrating the value we continue to earn from our distributors, we completed strong renewals with all of our U.S. distribution partners for deals expiring at the end of 2014, including Suddenlink, Cablevision, NTTC and our latest distribution agreement, a strong renewal with Mediacom that we are announcing today. In addition to favorable economic terms, each agreement offers subscribers authenticated access to Discovery content inside and outside the home, a good start to building a robust U.S. TV Everywhere offering in earnest and another element of our strategy of capturing a growing share of the streaming audience. These renewals are critical components in growing our U.S. affiliate revenue line, driving our over-the-top offerings, like TV Everywhere, and it demonstrates that the marketplace continues to place a high value on quality content and brands. Comcast announced last year that our deal with them is up at the end of June. As we all know, Comcast is the largest cable company, a key platform for any independent programmer, of which Discovery is the largest. With our deal coming up, we are hopeful that Comcast will negotiate in good faith, like all of our other distributors have over the last several years. We continue driving hard on development and a new pipeline of content across our networks here in the U.S. Discovery Channel was the top 4 cable channel for men last year and had 5 of the top 10 cable shows for men, led by Gold Rush at #1; Deadliest Catch at #3; and Fast N' Loud at #4. So far this year, Discovery has vaulted to the #1 nonsports cable network for men 25 to 54, a very strong position in the marketplace. And while Discovery Channel has some nice momentum, we believe its best days are ahead. In January, Rich Ross officially started, a terrific creative leader, who in less than 2 short months, has reinvigorated our flagship channel. Rich secured the key strong leaders at Discovery and in addition, has hired seasoned executives onto his leadership team, including John Hoffman, a 17-year HBO veteran, to lead our big tent-pole specials and event programming; and John Goldwyn, a long-time producer, who has developed many feature films and most recently, Dexter, to oversee Discovery Channels' scripted and miniseries strategy. Rich and his team are planning on being very aggressive in developing both of these categories, such as Racing with Extinction (sic) [Racing Extinction], which debuted at Sundance and will be a global television event this fall, as only Discovery can do with reach into over 500 million homes around the world. Following ratings softness last year, Animal Planet continues to build ratings momentum on the strength of series such as Treehouse Masters, Pit Bulls & Parolees and, of course, Puppy Bowl, which was once again the #1 cable telecast on Super Bowl Sunday, drawing nearly 11 million total viewers, nearly 3 million streams and reaching more than 17 million fans on social media. TLC also experienced some softness last year, largely driven by the cancellation of Here Comes Honey Boo Boo. We're moving forward by adding compelling new series like 90 Day Fiance, TLC's highest-rated freshman series of the year; and My Big Fat Fabulous Life, which has been renewed for another season and performed extremely well, joining our established series like 19 Kids and Counting, which helped made TLC the #1 cable network for women on Tuesday nights. And last night, was another big Tuesday for us. Our other U.S. brands continued to post impressive gains. ID was again #1 in length of tune in all of TV, meaning ID viewers spent almost twice as much time watching ID on average than other cable networks. The network had its highest year ever for prime and total day and was the #5 cable network for women 25 to 54 for all of 2014. The channel continues to defy gravity with passionate superfans. And Velocity continues to attract new audiences and posted impressive double-digit ratings gains in prime and total day for the year. Velocity also added 5 million U.S. subscribers in the past year and now reaches 61 million homes. We are focused on optimizing the programming and performance of the U.S., leveraging this content across our global footprint and unlocking the value of Discovery's distribution advantage around the world. Demonstrating our ability to light up our strong brands on a global basis, we launched our new brand, Discovery Life, in the U.S. and Poland on the same day in January. While we are not satisfied with our U.S. ratings performance in 2014, and with the softer U.S. ad sales in the second half of the year, it is important to note that we program for a global audience. River Monsters, Fast N' Loud, Dual Survival, Naked and Afraid, Gold Rush, MythBusters, Say Yes to the Dress, all reached more than 200 million global viewers each year. Developing such globally appealing shows drives our ability to gain share and reach new audiences around the world. While our ratings were down for the year in the United States, we set a new international record with the highest average audience in our history, up more than double digit in market share. With new leadership at our flagship Discovery and momentum out of the gate in 2015, I am confident we have some real creative wind in our backs and a growing and dynamic development pipeline. The strengthening U.S. dollar had a big impact on our financial results last year across our entire global footprint, however, we are focused on the operating leverage we are creating. And concerns about currency headwinds aside, our international business remains the key differentiator among our U.S. peers and an engine that continues to have strong organic growth. During 2014, we hit 2 major inflection points. More than 50% of Discovery's revenue comes from outside the U.S., so we generated more than $1 billion in international OIBDA. Discovery's strong organic growth around the world is being driven by our distribution advantage, strong global brands, local managers and staff and smart, strategic acquisitions, led by our new Eurosport brands across Europe and Asia. TLC launched in Germany last year and has grown audience across the Central and Eastern European region by 36%. We also supersized TLC in Australia, with an improved channel position and tripled our female viewers. ID and Turbo are our hottest new global brands, set to fuel the next generation of worldwide growth. Now reaching over 100 million global homes and since its launch in Denmark in November, ID has had fantastic success and already ranks as the #4 of our 9 pay-TV channels in Denmark, regularly generating between a 2% and 4% share despite not yet being fully distributed. Velocity's international brand, which we call Turbo, is also taking off, particularly in Latin America. We've invested in Turbo and doubled the channel subscribers across the region to over 20 million homes. In fact, Turbo has greater distribution in Brazil after 1 year than many other major brands have after 20 years in the market. We're on track to reach more than 125 million homes for Turbo by the end of 2015. Latin America continued to lead our organic growth with prime time ratings up 14% year-over-year and our flagship channels, Discovery Channel, Discovery Kids and Discovery Home & Health, ranked as top 10 channels across the region in the key market. Discovery Kids just earned its sixth straight year as the #1 pay-TV channel in all of Brazil. Brazil is also a great example of the power of our global content engine. Dual Survivor Brazil, a U.S. format with a locally produced version, delivered the highest-rating ever for Discovery Channel in the country. This is our fastest-growing market in Latin America. Ad sales rose more than 40% year-over-year and pay-TV penetration rates are still just 30%. So we're excited about our continued strong position in this important market. In Europe, it has been nearly 9 months since we took majority control of Eurosport, and I am more excited than ever about this acquisition and the opportunities that lie ahead. Discovery is now the largest sports player in Eastern and Western Europe by number of subscribers and feeds. Our integration efforts have been focused on going to market as one team, bringing greater scale and depth to distribution and ad sales, bolstering our strategic investments in sports rights to enhance Eurosport's offering and strengthening the bundle of our combined portfolio of leading global brands. We're strengthening Eurosport's pan-regional strategy of being the home of sports that are popular across Europe, such as tennis, cycling, winter sports, with all rights and additional exclusivity. We reach 130 million homes across Eastern and Western Europe. From May to year-end, we signed 24 incremental deals, including Spanish cycling, alpine sports across Europe, FIFA Women's World Cup Soccer, handball and hockey in the Nordics, and we continue to bolster our tennis and soccer rights. But we're doing it in an efficient and effective and cost-effective way. In addition, we're strengthening Eurosport's local relevancy by acquiring must-have rights to both marquee sports and local sports incredibly important to European fans, while maximizing the distribution of our portfolio of channels. In addition to the content and sports rights, we have leveraged our local infrastructure and expertise to merge our distribution teams and have already completed 30 combined distribution deals. And our ad sales teams have sold our joint offering at many upfronts across Europe, highlighting the power of our combined brands and content offering, more than 10 channels in every market, which reaches all the key advertiser demos. To bolster our strategic leadership and capability in sports, we've hired sports industry veteran, Peter Hutton, as CEO of Eurosport. Peter will use his more than 30 years in the business to lead our negotiations of key sports rights, launching new local feeds into larger advertising markets and to grow the Eurosport Player, which we're very excited about because it's our first real success in direct-to-consumer across Eastern and Western Europe. And finally, in Asia, India's portfolio of our established global brands achieved best-ever audience levels for prime time and all day, with now 8 networks in 5 languages, reaching 260 million cumulative subscribers. And we're looking closely at what else we can do in India to capitalize on our local team, infrastructure and strong brand position. With organic growth opportunities across our global platform and more ways to display and sell our content than ever before, we remain confident that Discovery is well positioned to continue taking market share, deliver long-term growth and increase shareholder value in the years ahead. With that, I'll turn the call over to Andy for details on our financial results.

[Andrew C. Warren:]

Thanks, David. And thank you, everyone, for joining us today. As David highlighted, despite industry challenges in the domestic ad market and increasing foreign currency headwinds, our expansive network portfolio drove audience and market share gains around the globe. On a reported basis, total company revenue for the year increased 13% and adjusted OIBDA increased 4%. As expected, given that over half of our revenues are now outside the U.S., the strengthening dollar was a major headwind in 2014 as changes in currency rates had an approximately $100 million negative revenue impact and $70 million negative adjusted OIBDA impact versus 2013, and reduced our full year reported revenue growth by 2% and our adjusted OIBDA growth by 3%. It's important to note that the additional negative FX impact since our November 4 earnings call, we would have been within our then guided full year OIBDA range. Total company organic revenues, which excludes the impact of foreign currency, SVOD licensing revenues, newly acquired businesses and the consolidation of the Discovery Family, grew 7% and adjusted OIBDA grew 6% for the year as we further demonstrated our ability to deliver consistent financial results, even as we continued to invest in building our networks and operations worldwide. Total company margins on an organic basis were 42%, in line with 2013. Full year net income available to Discovery Communications grew 6% to $1.1 billion in 2014, primarily due to improved operating performance as well as a $105 million decline in mark-to-market equity-based compensation, a $56 million decline on losses from hedging derivatives and a $49 million decline in tax expense, partially offset by a $74 million increase from restructuring costs associated with Discovery Family and Eurosport and $62 million less in gains related to Discovery Japan and Eurosport transactions. Our full year book tax rate came down 300 basis points to 35% as we remain laser-focused on lowering both our effective and cash tax rates by fully utilizing the increasingly international mix of our business. We remain confident on our ability to bring our global effective tax rate to 30% or less for fiscal 2017, which will drive net income growth, as well as accelerate our free cash flow growth. Earnings per diluted share were $1.66 as adjusted earnings per diluted share, a much more relevant metric from a comparability perspective as it excludes the impact from noncash amortization of acquisition-related intangible assets, was $1.84, a 13% improvement year-over-year. For the full year, free cash flow increased 2% to $1.2 billion, driven by solid operating performance, partially offset by higher content investments and cash tax payments. Content spend for the full year, excluding newly acquired businesses, increased mid-single digits, and as David discussed, this increased programming spend is delivering global audience market share growth and higher advertising revenue. Free cash flow per share, a critical metric for us and the metric that most influences our strategic and planning execution, was up even more as our share count continued to decline due to our buying back over $1.4 billion worth of our shares over the course of 2014. Focusing now on the fourth quarter, results only. Foreign exchange had a 5% negative impact on revenue growth and a 6% negative impact on adjusted OIBDA growth. Excluding FX, licensing revenues, Eurosport and Discovery Family, organic revenues were up 4% and organic adjusted OIBDA declined by 2%. Net income available to Discovery Communications decreased to $250 million in the fourth quarter, primarily due to the before-mentioned restructuring charges and lower equity earnings this quarter, as positive earnings from OWN and other nonconsolidated investments were more than offset by losses from our 50% stake in All3Media. All3Media had positive nonconsolidated adjusted OIBDA in the fourth quarter. But amortization and acquisition-related intangible assets and mark-to-market losses on both foreign currency and debt-related interest derivatives led to a net equity earnings loss as hedge accounting was not applied. Going forward, we expect All3Media's adjusted OIBDA profits to continue. However, mark-to-market adjustments on derivatives used to hedge foreign currency and interest rate risks are included in their earnings and may cause their net results to fluctuate. Fourth quarter earnings per diluted share was $0.38 and adjusted EPS was $0.43 compared to $0.46 a year ago. Free cash flow increased an impressive 23% in the fourth quarter to $390 million, as improved operating performance and lower tax payments were partially offset by higher content spend. Moving now to the individual operating units. U.S. Networks fourth quarter revenue grew 1% on a reported basis but declined 1%, excluding the consolidation of Discovery Family in the quarter and licensing revenues in the fourth quarter of 2013. Reported advertising revenues decreased 3% in the quarter due to lower delivery and demand. Delivery did improve slightly from Q3 but was still down mid-single digits versus the fourth quarter of 2013. Looking ahead to 2015, we expect U.S. ad sales to improve from the fourth quarter results, driven by scatter pricing holding up nicely versus the upfront and modest volume growth. Our current assumption is that the overall advertising market will be relatively tepid this year, similar to 4Q '14. But our ultimate full year ad sales outcome will depend upon a variety of factors, with the most important being our network delivery performance. Distribution revenues, excluding the impact from Discovery Family and licensing agreements, were up 6%, consistent with this year's previously reported quarterly growth rates. Looking ahead to the first quarter 2015, until there's a new Comcast carriage deal, we expect our organic distribution growth rate to continue to accelerate as we benefit from the higher rates we garnered from our new deals with NTTC, Cablevision, Sony and others at the end of 2014, as well as from our now recognizing revenues from our new Hulu deal. Note that unlike our SVOD deals in prior years, we expect the revenue recognition from Hulu to be relatively smooth over the life of the contract. For the full year, our domestic advertising revenues were up 2% as higher ad pricing and volume more than offset lower delivery. And our distribution revenues were up 6%, excluding the impact of licensing agreements and Discovery Family consolidation. Turning to the cost side of our U.S. Networks. Fourth quarter organic domestic operating expenses were up 6% as cost of revenues were up 15%, primarily due to the Wallenda event; while SG&A was down 8%, driven by aggressive base cost productivity and lower marketing costs. For the full year, domestic adjusted OIBDA was down 2% on a reported basis but increased 2%, excluding the impact of Discovery Family and licensing agreements. Turning to the International segment. Our International Networks delivered another quarter of strong results, capping off another exceptional year. Our reported Q4 international revenues were up 17% and adjusted OIBDA was up 11%, while reported full year revenues were up 28% and adjusted OIBDA was up 18%. Foreign exchange reduced fourth quarter international revenue and adjusted OIBDA growth rates by 10% and 13%, respectively, and full year revenue and adjusted OIBDA growth rates were reduced by 4% and 8%, respectively. Reported results also include the results of Eurosport for May 2014 and of SBS from April 2013. For comparability purposes, the international commentary that follows will refer to our organic results only. They exclude Eurosport's results for all periods and excludes SBS's first quarter 2014 results. They also exclude the impact of foreign exchange. Fourth quarter international revenues were up 8%, led by 10% advertising growth and 8% distribution growth. Advertising, again, grew double digits in the fourth quarter, led by Western Europe, primarily from the continued success of our free-to-air initiatives, and to a lesser extent, the Latin America from higher volumes, especially in Brazil. Affiliate revenues had another robust quarter of 8% growth, driven primarily by subscriber growth and higher pricing, especially in Latin America. For the full year, organic advertising revenues were up 14%, and organic distribution revenues were up 9%, both very impressive growth rates that reflect the vitality of our international business. Looking ahead to 2015, we expect organic international advertising to grow consistent with the double-digit increases we delivered in the fourth quarter 2014, even including the ad sales ban in Russia. While organic and affiliate revenues should grow high single digits despite the overall slowing growth of the international pay-TV market and a negative impact from renegotiating several affiliate deals in Russia as a result of the heavy devaluation of the ruble and the collapse of their economy. Turning to the cost side. Organic operating costs internationally were up 4% in the fourth quarter, primarily driven by higher content amortization, partially offset by a decline in SG&A. Our focus and ability to grow revenues faster than costs led to international organic adjusted OIBDA growing 15% and organic margin expanding 300 basis points in the quarter to 41%. For the full year, international organic adjusted OIBDA was up 16%, and organic margins were up fully 200 basis points to 40%. Focusing now on Education and studios businesses. We reorganized all of our existing and newly acquired global studio production assets into a stand-alone operating division and reclassified these results out of our U.S. and International Networks segments and combined them with the Education segment. This redefined and growing segment posted a 14% increase in revenues for the year, mostly driven by the acquisitions of Raw on the studio side and Espresso in the Education side, as well as strong acceptance of our recently launched Education digital textbooks. Adjusted OIBDA was down year-over-year. Going forward in 2015, there will, again, be minimal profits with this division as we continue to invest in growing both our Education Techbook business and our studio IP and owned content. Now moving to our go-forward capital allocation policies and commitments. It is very important to remind investors that our first priority remains investing in our core business to drive sustained, long-term organic growth. Our second priority is investing in strategic, bolt-on acquisition, such as Eurosport, to strengthen our global platforms. And our third priority remains returning capital to shareholders through execution of a share repurchase program. In 2014, we repurchased over $1.4 billion worth of over shares. We have now spent over $5.7 billion buying back shares since we began our buyback program at the end of 2010. And we have reduced our outstanding share count by 27% as we find the return on repurchasing our own shares very attractive. As we articulate our 2015 capital allocation expectations, we remain highly committed to our BBB rating, especially given current global economic uncertainties. Therefore, we currently expect to have approximately $1.5 billion of our available capital for full year 2015 to fund both share repurchases, as well as to fund any additional strategic M&A investments, including the potential TF1 put for the remaining 49% stake in Eurosport. As you may recall, TF1 is a put right for their 49% stake from this July through September as well as for the same period in 2016. Separately, our calculated free cash flow per share IRR remains very compelling. So we expect to continue to allocate a sustained and growing amount of our capital to share repurchases in future years. Now let's focus on our 2015 guidance. We expect foreign currency headwinds to persist this year and are, therefore, changing the way we issue guidance to exclude the impact of currency movements in order to provide investors a clearer view of our local currency-based business. Given this, we expect that full year 2015 revenues will grow in the high single- to low double-digit range, adjusted OIBDA will grow in the low to mid-single-digit range and adjusted EPS will grow in the high single- to low double-digit range, driven by the solid operating performance and a lower tax rate, partially offset by approximately $25 million of higher interest expense. It is important to highlight and appreciate that the difficult geopolitical situation in Russia is adversely impacting this revenue guidance range by approximately $50 million, driven by the cable ad sales ban as well a necessity to renegotiate several pre-existing affiliate contracts in the region. Revenue growth in 2015 will outpace adjusted OIBDA growth, mostly due to increased content spend at Eurosport. After 9 months of controlling the asset, we have now determined that we must bolster our investments in sports rights in the near term in order to fully maximize the growth potential of the asset in the medium and long term. While we will be very diligent and selective about which sports rights we pursue to drive long-term, cost-effective, market-influencing growth, we do intend to make 2015 a year of real investment in the business, with full year Eurosport margins down from high teens in 2014 to high single digits in 2015. As David highlighted, we see very compelling potential for Eurosport, even more upside than we thought when we brought the asset in the business 2 years ago and fully expect these increased sports rights investments to pay off, both at Eurosport as well as across our entire international portfolio. Let me to further clarify the foreign exchange impact on our 2015 results. At current spot rates, FX is reducing our constant currency guided revenue by $350 million or roughly 6% and adjusted OIBDA by $150 million, also roughly 6% versus our 2014 reported results. Looking at our International Networks mix of currency exposures. The revenue mix in 2015 is expected to be around 30% euro, 30% Nordic, 20% U.S. dollar, 10% British pound and 5% Brazilian real. Our International Networks adjusted OIBDA currency mix is forecasted to be about 25% euro, 25% Nordic, 15% real, 5% Russian ruble, 5% U.S. dollar and still slightly short the British pound as our international headquarters are in London. Lastly, we anticipate reported free cash flow growth of low single digits in 2015, with growth and cash flow from operating businesses partially offset by higher cash taxes due to prior year timing benefits related to Section 181. We do expect cash taxes in 2016 to decline significantly as the cash tax deferral effect of 181 subsides. Thanks again for your time this morning. Now David and I will be happy to answer any questions you may have.

[Operator:]

[Operator Instructions] First question comes from that line of Ben Swinburne from Morgan Stanley.

[Benjamin Swinburne:]

David, could you talk a little bit more -- I know you said there's going to be more information over the next couple of months. But there was some really interesting comments about direct-to-consumer in your opening remarks. What are you learning so far in Europe about the appetite for consumers to buy your content directly? And it sounds like you think that's the way the world's headed in the U.S., which, at least to me, seems like a shift to maybe your thinking. Can you talk about how that thinking has evolved? And then I just have a quick follow-up for Andy on some of the guidance points.

[David M. Zaslav:]

Sure, Ben. Look, I think that the existing marketplace in the U.S. is going to stay as is. I don't think it's going to grow the ecosystem in terms of the basic cable bundle, but it seems to be quite stable. What we are learning outside the U.S. is that if we have superfan content, our Eurosport app, that's $8 a month, we're getting big spikes before the Australian Open with people signing up, where they can get 8 courts. It's not affecting our viewership on Eurosport at all. We got a big spike right before the Tour de France. So that owning sports rights, particularly for affinity groups, we don't need to own the big soccer. And so we've been out acquiring a lot of specialty rights that we think can really bolster that business. And with 250,000 people and growing, we're talking to them, we're seeing what they like and so I think if anything, we've learned that the superfan group is really valuable, that people still love to watch TV traditionally. But when they're going out of their home and their's something that they really love, and sports is probably the easiest one -- the other area that we think we have a real chance to monetize is down in Latin America, where we have Kids, which is another. Sports and kids being probably the 2 areas that most lend themselves to a superfan and the direct-to-consumer. But we're also offering an over-the-top service in Northern Europe, in Norway, Denmark, Sweden and Finland with Dplay, and we're finding some success with that. Here in the U.S., we're hoping that TV Everywhere continues to grow. We were very effective in getting our deals done at the end of the year, with big step-ups and double-digit increases. You see that -- you see our increased distribution fees coming through. It was 6 last year. We expect that they will grow outside of Comcast, high single and drive to double digit. So we're getting real value for our content. TV Everywhere will help that. It will be additive. We did Hulu. We did Sony. The good news for us is we own all of our content. There's great superfans for Oprah. We have superfans for Science. Discovery is the #1 network for men again. And so we believe our content has a lot of value. We just have to figure out how to do it. The best way would be a broad deployment of TV Everywhere in the U.S. and maybe taking some of our superfan affinity groups and going after them, the way Oprah is now with offering courses for $60 or $70 to go -- to do deep dives. But I think that the ecosystem here in the U.S. is going to stay basically as is for the next 3 years. And the question is, 4 or 5 or 6 years from now, will there be peel off of this direct-to-consumer business? I think mostly in the U.S., if TV Everywhere doesn't develop the way that it should, which would a positive for all of us. And if it doesn't, it would be -- it will require all of us to go directly to consumer because the cable guys aren't getting it done.

[Benjamin Swinburne:]

That makes sense. And then just Andy, you gave us a lot to chew on there right at the end on guidance. On your domestic advertising comments, can you just give us a little bit more color on what you're expecting for Q1? I couldn't tell if you were saying you think that the business will grow or just improve. And then, your comments for the year about the market being tepid. It sounds like you're assuming a pretty flattish year for ad growth in '15. But I just wondered if you could add any comments there.

[Andrew C. Warren:]

Yes, sure, Ben. So look, for the first quarter, what we said was we expect U.S. ad sales to accelerate from the down 3% we experienced in the fourth quarter. So we do see pricing that's solid relative to the upfront. We're seeing cancellations and options that are kind at or better-than-normal levels. Look, the biggest determiner for us will continue to be the variability of our delivery. So we definitely see still a relatively tepid environment, is kind of word we used and carefully chose that word. But we do think we'll have a slightly better performance in the first quarter, and that kind of continued slightly better performance than the fourth quarter throughout 2015.

[David M. Zaslav:]

The area that we're seeing improvement is in volume. For our guidance, we've assumed that it will remain tepid for the year. So far, 5, 6 weeks in, it's better than what we've projected. But we really don't have a lot of visibility to how it's going to be for the next 3 quarters. And so we've assumed that it's going to be tepid.

[Operator:]

The next question comes from the line of Anthony DiClemente from Nomura.

[Anthony J. DiClemente:]

I just had one for David and one for Andy. David, just on the Discovery Channel and the evolution of leadership at the network. Now that Rich Ross has started, I'm wondering if you think there's going to be a shift in the programming strategy there maybe to broaden the appeal of Discovery. You mentioned you guys are global and the global appeal of your program strategically. But I'm also thinking in terms of broadening perhaps the target demographics for Discovery here in the U.S. And then for Andy, I just had a quick one, which was you guys in the quarter reclassified some of your OIBDA. OIBDA losses, I guess, from your U.S. and International segments into Education. And just to kind of help us get the model right for 2015, I was wondering if you could quantify the impact of that. What's implied in your guidance just in terms of the different breakout of OIBDA in those 3 segments?

[David M. Zaslav:]

Thanks, Anthony. Look, I think that when we look at Discovery Channel in general, we feel great about it. First, it's terrific to have a strong creative leader with Rich there, and he's brought on a few good people in areas where we thought that we could build on. And he -- we also have a great team at Discovery. But when you look at Discovery last year, it was flat. Outside the U.S., we were up double digit. So we're up in 229 countries, double-digit, and in the U.S., we're flat. One thing to remember is we program our channels, Discovery, Animal Planet, Science, TLC, ID, we program these globally, Velocity. It gives us tremendous leverage. So the fact that in 229 countries, we were up double digit, and in the U.S., we were flat, that actually was a successful year for us. We're not satisfied because the U.S. is a big market and we want to drive it. The good news is that Discovery has shown a tremendous amount of strength coming into this first -- into the first 6 weeks of the year. We're up more than 20% from where you were in the third and fourth quarter. Discovery is now the #1 non-sports network in America, every week of the last 6 weeks. On Friday nights, Discovery is the #1 network in America, including the broadcasters for men. And to your point, one of Rich's key initiatives is to bring more women back. If you look at Discovery outside the U.S., we have much more co-viewing in terms of a younger demographic, and we have much more women watching. And we've taken a big step on Friday nights, where we have Gold Rush and Alaska Bush. Not only are we the #1 network, beating the broadcasters, but Alaskan Bush is the #1 network -- we're the #1 network for women on Friday night from 10 to 11. And so this drive of bringing back women and bringing back a younger generation to co-view, which is something we saw here in the U.S., we got away from a little bit in the last 2 or 3 years. Rich is target focused on that, but Discovery is very strong. It's strong here in the U.S. It's strong around the world, and I think Rich is going to take it to the next level. The -- on the issue of pushing our programming a little bit? We -- right now, we have -- we're going to get back to some of our traditional programming, a little bit more of our natural history, science and space. That stuff is working much better outside the U.S. and we want the blue chip stuff, so we'll drive that. And we'll also push on some -- in scripted, but it's going to be -- it won't be a lot. It'll be just some because we think it all needs to be part of the overall recipe. And when we do it, we'll be doing it with content that works around the world. And we do make choices. If we wanted Discovery to be up 5% or 6% last year, we could've done it. We opted not to do certain programming that we thought would do well in the U.S. but wouldn't play well outside the U.S. And so our sharing ratio is up to 85, which makes us more efficient and the scripted programming that we'll do -- and Rich has one scripted series that we think is going to be very strong around the world.

[Andrew C. Warren:]

Then your question, Anthony, about the segment reporting, a couple of comments. We wanted for investors to clarify and simplify kind of how we look at the business. Obviously, the studio business is very different from the networks business. So as we've invested in IP, as we've grown our presence in the studio business, we wanted to separate that and have it clarified so that the U.S. Networks, International Networks were truly stand-alone. So within this new segment called Education and studios, we do expect for 2015 Education to have a slightly lower OIBDA than it had in 2014, as we invest in a longer-cycle Techbook. And also, we expect Studios to have a continued loss profile as again, we build that asset and own more and more global IP. So think in terms of that segment -- well, understand the OIBDA was meaningfully down in the fourth quarter, driven by, again, investment in assets, particularly long-cycle Techbook as well as studio IP. And we expect in '15 again, that to be roughly breakeven OIBDA for that segment.

[Operator:]

The next question comes from the line of Kannan Venkateshwar from Barclays.

[Kannan Venkateshwar:]

Just a couple of questions. The first is on the operating leverage and the international business. Looks like the content investment there, especially in sports, will keep going up. But on the other hand, is there any offset in terms of maybe integrating the sales forces or cost items that we can expect, now that we've been a few months into the Eurosport? And the second question is on the FX side. Could you break out for us what the cash impact of FX is? Is it largely a translation impact that we're looking at right now?

[David M. Zaslav:]

Thanks, Kannan. Look, on the international rights that we're acquiring, one of the advantages that I think we have with Eurosport, we reach 130 million homes with our Eurosport Pan-European feed. And then we have another 2 to 3 channels in 55 countries across Eastern and Western Europe. Unlike the U.S., where it's football, baseball and basketball, which are very popular and if you're in sports, you have to have those 3. The equivalent of that would be soccer. But aside from soccer, there are affinity sports that are very popular in some regions and not so popular in others. So we've been able to pick up sports rights, I think, for very good -- very, very good values. Now we're investing because we think having those rights will build our over-the-top service, where we make almost $100 a subscriber. We also see that we don't -- when we look at Eurosport, we look at it as, how does it build our whole package? So we might have 3 sport channels, but then we have another 10 channels. And we have integrated on distribution and on the ad sales side with very little incremental costs, because we already have local teams in place. And we're finding that the ability to go to the distributor with all of it will get us more value. And so you might see Eurosport's margins dropping as it's broken out individually, but the overall package of international will be rising and we think will accelerate. Because having these must-have rights together with our 10 channels -- where in almost every market, Discovery's the #1 channel for men, we have women's channels, will give us more strength. In addition, we are going to be careful. We looked at Formula 1 and we liked the idea of Formula 1 because it's popular in 220 of our 230 countries. But the valuation was just way too high. So we walked away. Andy?

[Andrew C. Warren:]

Yes, Kannan, to add to that, we have said that a strategic and financial imperative for us is to grow our margin for our international business. And you could see that we did that by 200 basis points in the -- in 2014. So to your point, we're definitely seeing and driving that leverage. So as we think about 2015, while investing in sports and that will create a lot of long-term leverage and value, will depress margins, outside Eurosport and outside foreign exchange, we still see margin accretion for international business even despite what I mentioned was the $50 million bad guy associated with the collapse of the Russian currency and the economy. So we still see that operating leverage. We're having a lot of success on cost productivity. We've done a really good job on driving cost synergies at both SBS and Eurosport. So we're going to invest in content that drives value, and we're going to continue to look at cost productivity to ensure base organic margins are up year-over-year over year.

[Kannan Venkateshwar:]

And could you help with the FX question, which is, is it largely translation and there's no real cash impact?

[Andrew C. Warren:]

No, there's definitely a cash impact as well. I mean, while it is translation, there's -- when the day is done, this is both a transactional and translation risk. So our all-in reported free cash flow expectation of up low single digits certainly includes the fact that FX is depressing our currency impact of cash flows as well.

[David M. Zaslav:]

And when we look at our international business, we have full conviction. And we have full conviction because these things are cyclical. We're looking at growing our international business double digit. We're looking at drive -- we have our local teams in place. Our market share grew over 13% last year. We think we can do that again this year. A lot of others are not investing internationally. Our model of global brands and global content gives us tremendous efficiency, and we love our international business. I think over time, things can flip the other way, where it's working for us. But we're continuing to drive our market share, and we're being helped by the fact that others are walking away. We also have conviction in Russia. We have a big business there. We have great brands and there is some challenges in terms of the politics. But having said that, by the end of the year, we need to restructure where we own only 20% of the entity. But there's been a lot of interest in our brands and our content and getting us value for that. And there's also been some green shoots around Putin looking again at pay-TV. So for us, we think Russia is a long-term growth market. There's certainly a lot of turbulence there, but our cost of content is very low. We have a huge amount of content in Russian language that's already and relationships. So while others are saying, "Let's invest less internationally and let's walk away from Russia," we're staying in Russia. And we're continuing to push very hard on international, where we see not only great growth, but a lot of what we've talked about in terms of what's facing the U.S. market, the slowing behavioral changes in the way content is consumed. The Latin America is 4, 5 or 6 years behind. There are markets in Eastern Europe that may be more than that, so we see it as a big hedge and a big opportunity to take advantage of what we've built over the last 7 or 8 years.

[Andrew C. Warren:]

And just to add one other point. Because we had the most profitable international business, obviously the strengthening dollar impacts us significantly. But it's important to realize that a lot of the things that we've done with regard to, like, issuing euro debt 1 year ago, the TF1 put that's opened, all of those actually are helping us the other way. In dollar terms, that euro debt is now less expensive. The put in dollar terms is now less expensive. And so a lot of those activities actually helped offset the dollar translation of our very profitable business.

[Operator:]

The next question comes from the line of Doug Mitchelson from UBS.

[Douglas D. Mitchelson:]

David, you talked a lot about programming strategies on the call. Nancy Dubuc, CEO of A+E, recently lamented the lack of creativity and risk taking. She's been seen in the nonfiction genre the last couple of years, and so a pretty sort of core genre for you. I'm curious, David, would you agree with that characterization? And whether you agree or disagree, can you walk us through how the market for nonfiction has been changing over time in your view? And Andy, I'm not very good at math, so I just wanted to make I'm doing the guidance correctly. Is the $1.82 to $1.91 sort of basically the EPS after FX impact range? You're giving us FX impact about $0.16. Am I doing that math right?

[David M. Zaslav:]

Thanks, Doug. Nancy is a good friend. I've spent many years on the board of A+E. I think in history, she's doing a very nice job for them and she's a great programmer. I would say that I somewhat disagree. I think the risk taking has been too much. We're actually going in the other direction. If you look at what's happened to nonfiction, you see the aggressiveness of picking really kind of wacky characters of -- it's almost become scripted in the way that it's presented. And I think the audience here in America gets it. They get that this isn't really nonfiction. That some of these fights aren't real. That some of these characters aren't real. And so what's really been working for us is, forget about what everyone else is doing, which is looking for more extreme characters, more extreme contention, to get back to basics. And we've actually made a strategic decision to do that and it's working for us. If you look at Treehouse Masters, no one's throwing mud at each other in Treehouse Masters. This past Tuesday night, we did 19 and Counting. We're the #1 network in America for women, and we have got a 2 6 in the demo. And what is it about? It's about a family that homeschools their kids. And we followed it with another very wholesome family that's struggling with the issues that everyone in America's struggling with. And so for us, whether it's Alaskan Bush, Gold Rush, Last Frontier, 19 Kids and Counting, Treehouse Masters, we think that a lot of the nonfiction challenge has been going into this extreme area. We're getting back to great characters, heroic characters that are doing jobs, that are facing challenges, that all of us, as we sit on the couch, look at and admire. That's what -- that's why people love Gold Rush. That's why they still, after 11 seasons, love Deadliest Catch. Last Frontier and Bush are about families living off the grid. And so I think that nonfiction is working very well for us, and we have to remember what we do best, which is great authentic characters that are fighting the fight to live, to make the best of their lives. And when we do that, we do very well.

[Douglas D. Mitchelson:]

Andy?

[Andrew C. Warren:]

Yes, Doug, to answer your question, your math is very much in line with kind of our thinking. Our pre-FX adjusted EPS, up high single to low double translate to the kind of math and process you just laid out.

[Operator:]

The next question comes from that line of Jessica Reif Cohen from the Bank of America Merrill Lynch.

[Jessica Reif Cohen:]

I have a couple. First on advertising, I heard what you said about the near term. But the -- your change in the upfronts, does that signal any change in longer-term advertising outlook or your strategy in selling in the U.S.?

[David M. Zaslav:]

Okay, I take -- look, I think -- we came well off of a slowdown in the second half of last year, where the volume just stopped. Volume is better now but we're just not prepared to give guidance to say that volume is going to continue at this level and accelerate. So I think your guess is as good as ours. On the upfront, that was really a decision that was driven by Joe Abruzzese and the team. We looked at who's been coming to the upfront over the last couple of years, and then we looked who comes to the -- a number of the dinners that we do around that time. And we find that the more senior players are coming to the dinners and that we weren't getting the real -- the buyers that are making a difference in the upfront. So we're going to have a lot of the same material. We're going to have the same sell, but we're going to do it in small teams going directly to the buyers and the agencies. And we think this -- that, that could be more effective. We'll assess how it goes. It was really Joe feeling that going to the offices of the actual buyers will be stronger, getting directly to the buyers themselves.

[Jessica Reif Cohen:]

Right. And then given the currency headwind, I mean, looking at it another way given the dollar is so strong, don't you think it's a great time to go shopping? I mean, given your comments on the international markets, is this the time to be a little more active?

[David M. Zaslav:]

Well, look, the fact -- obviously, it plays both ways. So to the extent there are assets outside the U.S., they're more than 15% cheaper than they were a few months ago because of the currency. Having said that, we have a -- we now have more than 10 channels in 220 countries and we have a business that we think we can grow significantly over the next several years. So we don't want to buy anything that's going to -- that would slow us down. And so we have the advantage of having probably more synergy than anyone else. We have boots on the ground to make the assessment. But I -- we are going to be disciplined because I think we have a very good hand. We're way out front internationally. We're growing and most of our competitors are not investing and walking away. So we're getting a lot of growth just by doing what we're doing. So I think that, that's what you'll see. If we can get good synergy and we can buy and grow faster, we'll do it. Otherwise, there's no reason to stretch.

[Andrew C. Warren:]

And just to elaborate on that from a purely financial perspective. We still very much hold the -- any deal criteria has to have a low-teen unleveraged IRR. And when we compare any allocation of capital to M&A, we compare it to the IRR we get on repurchasing our shares, which has an extremely high IRR, not only given where our stocks hits today but also sort of given our free cash flow per share growth profile. So while you're right, the assets are cheaper in dollar terms, there still is very much that hurdle around IRRs in comparison to share repurchases.

[Jessica Reif Cohen:]

Great. And one last one. On Eurosport, what was the stand-alone growth in 2014? And how volatile will it be in 2015 and beyond, given all your comments about investing and driving growth through sports rights?

[Andrew C. Warren:]

Yes, in 2014, the business performed very well. It was kind at or better than our deal expectations for the full year, which we only consolidated 7 months. But for the full year, revenues were up nicely and profits were up nicely as well. Part of the commentary around '15 is, while we're going to be consolidating the full year, we do expect the margins on Eurosport stand-alone to go from high teen to high single digits. But one thing David talked about was, it's less relevant, I think, today more than ever to look at Eurosport by itself because of the overall leverage we're getting across the whole international portfolio. So I think as we talk about Eurosport, it's got to be on the holistic view versus just Eurosport itself, because so much of the benefits we're deriving are outside the 4 walls of just Eurosport performance.

[Operator:]

The next question comes from the line of Todd Juenger from Sanford Bernstein.

[Todd Juenger:]

First, on international advertising. Listen, I hearing all the good news about the share you're gaining with audiences, new networks, new distribution, still posting double-digit ad revenue growth globally x currency. I guess my question is for the year, I think it was a 14% number. For the quarter, it was a 10% number. So my question is, sort of what's the difference? What changed? How much of that is -- is it Russia? Is it just overall demand sluggishness? Does that tie to macro? Or is does it tie to something about the maturation of pay-TV? Then I do have a follow-up, I'm sorry, Andy, about guidance, which I'll come back with next.

[David M. Zaslav:]

I'll hit it generally. A piece of that was Russia. And piece of it was -- you take a look at our market share growth. Our market share growth in the fourth quarter was a little bit better than 10%, whereas the rest of the year, it was more like 13% or 14%. And so that is sort of a measure that we follow like a laser. How many people -- are we getting more people spending more time with our channels? Our market share's doing a little bit better now. And part of it also has to do with the marketplace. In -- aside from just Russia, we saw strength across Eastern and Western Europe. We saw a lot of strength in Latin America. And for the first time in the fourth quarter, Asia was not double digit where it's been, but it's been mostly made up for the fact that Brazil has been exploding. One of the things that we're seeing in Latin America is how important Brazil is to us. Advertising revenue, up almost 50% last year in Brazil, and in the first quarter, we're seeing -- even though it's lapping, similar. So the fact that it's gotten to 30% penetration in Brazil, that's kind of triggered the advertising marketplace to start spending more time there. So I think we're losing -- we lost Russia. We picked up a lot in Brazil. And the rest of the marketplace is pretty strong, with the exception of Asia.

[Andrew C. Warren:]

And just to add to that, Todd. Part of this is just the law of large numbers, where we had almost $1.2 billion of total ad sales in 2013, international. In 2014, it's almost $1.5 billion. And so we're still expecting that, as we said in the guidance, for that to be still in that low double-digit range throughout 2015. So the proof point is still there. We still very much have a larger share of audience and share of economics, and we still see that momentum continuing in most of our markets, with Russia and the Russia ad ban being a significant issue and one reason why, to your point, the growth is slowing a little bit.

[Todd Juenger:]

That's very helpful. Pick up, Andy, again I'm sorry, on guidance issue, I'm just trying to square my math here as well. Really on the top line revenue guidance, which I think I heard is high single, low double-digit sort of constant currency. But then if I look at each of the line items of revenue, major line items, the only one that's double digit, I guess, is international advertising. And I heard high single digits for international distribution. You didn't give specific U.S. but it sounds like that's sort of maybe mid-singles for U.S. So I'm trying to figure out how we get to high single, low double given those -- you could see the line items. Obviously, some of that is Eurosport and even more the Hub. So maybe you could help us, if you take those out, what the sort of underlying core revenue growth rate is x those 2 pieces?

[Andrew C. Warren:]

Got it. Well, no, Todd, you're right. I mean, the commentary about high single, low double includes Eurosport, includes Family. And so there's a benefit of consolidating more periods of time for those assets. But if you exclude those on a core basis, you're really kind of at mid- to high single on organic revenue. To your point, we said that advertising will be better than the fourth quarter result. So call it in line or maybe a little lower than we had for the full year U.S. in 2014. We said we've seen acceleration of U.S. affiliate, because the deals that we successfully gotten done as well as the inclusion of Sony. And then for international, we said kind of high single affiliate and low double ad. So all those together kind of gets you to that mid- to high-single organic, excluding Eurosport and Family.

[Operator:]

The next question comes from the line of Alexia Quadrani from JPMorgan.

[Alexia S. Quadrani:]

Just to follow up on your comment about the investment spending in Eurosport, is that really going to be largely a 2015 event? Or do you think it's something, given the timing of some contracts, that's go into '16 and beyond? And then I would just love your general comment, if you have any, on the current measurement system. And domestically, how that may be hampering your ratings? And any color -- any further color on decision, I think yesterday, to drop the life of [indiscernible].

[David M. Zaslav:]

Great. Let me handle the Nielsen piece. As you look around the world, it's sad that you look at the U.S. as being on the very -- on the lower end of antiquated measurement systems. It's one of the -- it may be the most robust advertising market in the world and the most efficient. And yet, the measurement is very weak. You look -- you go to markets like Norway and it's cue tone based. So anybody that watches anything, whether you're watching in a bar or you're watching at your vacation house, whether you're watching on your iPad, it counts. And viewership on -- in Norway is up 15%. Before they implemented last year this new system, it showed that viewership on television was down double digit. And it was a huge swing. We're working with Nielsen, all the programmers are. The problem is it's a monopoly here in the U.S. it's a real -- it is a real challenge and there's no question that it's under-measuring, but it's the system that we have. When you look at, for instance, how we do when you aggregate -- one of the reasons we went to live plus 3 is our viewership is up dramatically. And there's just a lot of unmeasured here in the U.S. So it is what it is. Outside the U.S., we do a little bit better. I think they'll fix it over time, but it's a problem.

[Andrew C. Warren:]

And then on Eurosport, Alexia. Look, we will be and continue to be extremely cautious about which sports rights we go after. And again, it's all about a combination of both strengthening our Pan-European but also probably more importantly, the hyper local aspects of Eurosport and how we can get it to benefits. So yes, we're going to have increased content spend in '15. We will continue to have increased content spend in '16 and '17. It will moderate relative to what we see the opportunity being this year. But again, I want to make sure everyone understands that we're going to do it in a very thoughtful, cautious and careful way. But we do think it's an asset that if we invest in, will drive a tremendous amount of long-term value for the entire international portfolio.

[David M. Zaslav:]

And it's a playbook that we've been playing for a long time. It's how we went from 5% of viewership with 14 channels here in the U.S. to almost 13% of viewership now, when almost the majority of media companies have lost market share. We picked up hockey rights. They're not that expensive in Northern Europe. So we know that we have this Eurosport channel that's in 130 million homes, the only platform like it. We know we have an average of 10 traditional channels in every market. But we have 2 to 3 other sports channels that we're getting paid on. They're in basic. And so when we buy the hockey rights, we now have a hockey -- a regional hockey channel in -- that we have launched in Sweden. And so it wasn't very expensive. And we've seen the value of the regional sports networks here in the U.S. with the YES Network -- the YES Network been more valuable than the Yankees themselves. And so we see the playbook. The cost of a lot of this content, when we can pick up affinity sports, is not that high. We already have the channels. We won't have these, what we're calling a regional sports networks in every country. But the ability to pick up rights and just flip a switch and have a Pan-European Eurosport, our 10 channels and then, boom, we got a hockey channel. Now we're going to distributors; we're going to advertisers; our incremental cost, not that high. We think that could be a real accelerator for us.

[Operator:]

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.