Urban One, Inc.
Q2 2015 Earnings Call Transcript

Published: 7 Aug 2015

[Operator:]

Welcome to Radio One Second Quarter Conference Call. I've been asked to begin the call with the following Safe Harbor statement. During the call, Radio One may share with you certain projections or forward-looking statements regarding future events or its future performance. The company cautions you that certain factors including risks and uncertainties referred to in the 10-Ks, 10-Qs and other reports periodically filed at the Securities and Exchange Commission could cause the company's actual results to differ materially from those indicated by its projections or forward-looking statements. This call will present information as of August 6, 2015. Please note that Radio One disclaims any duty to update any forward-looking statements made in the presentation. In this call, Radio One may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release which can be found on its Web site at www.radio-one.com. An audio replay of the conference call will also be available on Radio One's corporate Web site at www.radio-one.com under the Investor Relations section of the Web page. The replay will be made available on the Web site for seven days after the call. No other recordings or copies of this call are authorized or may be relied upon. I will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Radio One, who is joined by Peter D. Thompson, the company's Chief Financial Officer. Mr. Liggins?

[Alfred Liggins:]

Thank you very much operator and welcome everyone to our Q2 conference call. We released our earnings and as you saw in the press release we had a pretty strong quarter in terms of adjusted EBITDA growth of about 11.7% and that's on the back of a very strong performance from TV One which is performing better than we expected so we're very happy that we ultimately consummated the acquisition of the other half of that, you know, from Comcast. We also recently announced last week, but we reiterated it in the press release, that we have signed a new 11-year extension with AT&T which is ultimately going to be the largest distributor once they complete the acquisition of DIRECTV. And if the AT&T and DIRECTV and Charter and Time Warner mergers close as anticipated 90% of TV One's distribution will be under long-term carriage renewals; anywhere from five years to 11 years, giving us a lot of runway to grow that business. And something that's not in the press release, through that renewal process we were able to negotiate an additional approximately 8 million new subs that will come online over the next 18 months and we believe it's a little bit of a moving target because the industry sub numbers ebb and flow but we believe that we're going to be able to get TV One up from its almost 60 million homes to closer to 70 million homes over the next 18 months. Some better news in radio, although our radio division continues to underperform and we're very focused on turning around the radio division in our key markets, the key markets or our markets, are actually sequentially improving from Q1 to Q2 which we think is very good news and the results for the industry have been mixed, you've seen some people report some good numbers and some report bad but the market seems to be getting healthier and that's a good sign because you can always fix your own performance but it's much tougher to fix the market. One of our big drags has been, as the market knows, our Washington, DC market and people have been asking, what are we going to do about that and this week we announced the hiring of a legendary radio personality, Donnie Simpson who's returning to Washington radio after a five-year absence and accompanying his return to Washington radio will be a revamp of our station, WMMJ which he'll be on which has been our largest revenue producer for many years including a new music revamp, a new marketing campaign, Donnie joining the staff. We're excited about that. We said we were going to make some big changes there and we're looking forward to improved results in Washington. Peter's got much more detail to go into and I'm going to turn it over to him and then when we come back for Q&A I'll elaborate on what's going on with MGM and our investment in National Harbor as well.

[Peter Thompson:]

Thank you Alfred. So for the second quarter net revenue was approximately $119.8 million, an increase of 10.5% year-to-year. Adjusting for timing difference for two major events, consolidated net revenue increased by 2.9% driven by advertising and affiliate revenue growth from our cable television segment. And a breakout of revenue by source can be found on Page 5 of the press release. Net revenue for the radio division was down 4.5% or 6.9% when adjusted for the timing difference on a major event. Philadelphia, Dallas and St. Louise clusters show revenue growth in the second quarter, however, these gains were offset by declines in our other clusters; most notably Houston, Washington, DC, Atlanta and Baltimore. For the second quarter, local revenue was down 10.4% and national was down 4.1% for our radio stations. The radio markets in which we operate were down 1.6% for the quarter which, as Alfred noted, was a sequential improvement over the first quarter. Revenue was 10% up in our services category and plus 4% in the financial category but then the retail category was down by 17% driven mainly by grocery and department stores and the food and beverage category was down by 18% year-over-year and the Telecom category was down by 12%. For the third quarter pacings our cable television advertising revenue is currently pacing up 25% and our core radio business is pacing down 4.8%. Net revenue for Reach Media increased 9.6% when adjusted for timing difference of the major event. The increase was mainly due to higher event revenue and stronger advertising demand. Net revenues for our Internet business decreased 23.6% for the three-months ended June 30, 2015 mainly due to a decline in alliance revenue. We recognized approximately $45.6 million of revenue from our cable television segment during the three-months ended June 30 compared to approximately $38 million for the same period in 2014. The increase was due to higher advertising demand and an increase in our subscriber rates for certain affiliates. Advertising sales were up 13.7% and affiliate sales were up 27% year-over-year. Cable subscribers, as measured by Nielsen, finished the quarter at $56.9 which was unchanged from the end of March. Operating expenses, excluding depreciation, amortization impairments and stock-based compensation increased to approximately $84.9 million in the second quarter from approximately $76.8 million in 2014 mainly driven by the timing difference on events. Normalizing for the event timing difference, consolidated operating expenses were up by 2%. We had higher event expenses and some higher non-cash compensation expenses and also higher allowance for certain doubtful debts, that's what drove the 2% increase there. Management has identified approximately $9.4 million of annualized cost savings of which we've executed against approximately $8 million which will help to partially offset a decline in revenues from our radio division. The balance of the reduced costs is a mixture of savings from renegotiation of supplier agreements and customer related initiatives and that will occur in the coming months. For the second quarter, consolidated station operating income was approximately $46.9 million, up 14.3% from last year. Adjusted consolidated EBITDA was $36.0 million, an increase of approximately 11.7% year-to-year or 6.4% when adjusted for the event timing differences. Interest expense was approximately $20.0 million for the second quarter, up from approximately $19.3 million for the same period last year. The company made cash interest payments of approximately $2.6 million in the quarter. Cash interest payments were lower than in the prior year due to the timing of semi-annual payments on the 2020 notes. Net loss was approximately $13 million or $0.27 per share compared to a net loss of approximately $10.8 million or $0.23 per share for the same period in 2014. For the second quarter capital expenditures were approximately $1.6 million compared to $1.7 million for the second quarter of 2014. The second quarter cash taxes paid were approximately $276,000. There were no dividends received from TV One during the quarter. The company repurchased 345,293 shares of Class D common stock in the amount of approximately $1.4 million during the three and six months ended June 30 which related vesting of employee shares issued net of taxes. The company's cash and cash equivalence by segment are as follows; radio and Internet approximately $19.6 million, Reach Media approximately $8.8 million and cable television approximately $32.1 million. As of June 30, 2015 Radio One had total debt net of cash balances and original issue discount of approximately $963.1 million. For bank covenant purposes, pro forma LTM bank EBITDA was approximately $137.5 million which includes adjustments for the new Comcast carriage agreement including the add back of noncash launch amortization expenses. And with that I'll hand it back to Alfred.

[Alfred Liggins:]

Thank you Peter. Some additional color on TV One and a few other things. TV One ratings, you know, year-to-date through Q2 are on fire. It's just the network is performing exceptionally well ratings-wise fueled by new programming, better scheduling, better marketing, we've got a new president in place, Brad Siegel is doing a fantastic job and the team has really rallied around them. They're up 31% in primetime against adults 25 to 54 and going into the upfront that's a really strong hand giving, given excuse me, our competitors are down significantly again this year even from last year because they had a down year last year so BET is down 23% in prime, we're looking at Bravo down 14%, Centric down 18%, Oxygen down 29%, Oprah's Network is about flat, UP is minus 20%, excuse me, 51%, VH1 is minus 22% and WE Entertainment which we count as a competitor because they actually have a number of African-American target shows is plus 14%. So, that's resulting in a number of positive things occurring with our advertisers especially in the DR segment where we're getting record rates and we're actually beating our advertising budget this year. We're hopeful that the trend continues. Our upfront so far has gotten really, really, really positive momentum and we're going to be up in volume going into next year and probably flat to slightly up in CPM's; got a strategy of actually taking down as much money as we can to increase our volume. So we're really excited about what's happening at TV One and think that it will perform better than the numbers that we've discussed with a number of you all when we did our road show for our refinancing. The radio markets, as I said, are improving sequentially. Houston has stabilized, their pacings going into Q3 and Q4 are promising. Next up on the fix list is Washington, DC., excited about the hiring of Donnie Simpson on the 17th the station will get a total revamp, a new afternoon drive show, big marketing campaign and we expect a rebound there. Next up are Atlanta and Baltimore on our fix list. Atlanta and Baltimore are both markets that are negative as markets and we're underperforming those negative trends but still there's a negative headwind in those markets and hopefully as the advertising environment and radio continues to improve the markets won't continue to be negative. But even with that we've got a plan to fix that. People ask about our investment in MGM National Harbor all of the time and even though we don't actually control the timing of when that casino opens, I did recently have a significant amount of time spent with the MGM folks and that casino is on target to open next year probably in the second half of next year. One of the -- it's still promising, it's going to be a fabulous project. They're investing real dollars into it, it's going to be a first class resort in a great location and we should actually be able to recognize revenue from that investment the first month after they file with the Maryland Gaming Authorities on how much gaming revenue they did. So provided it opens in the second half of next year we actually should be able to book some revenue associated with that investment in the second half of next year. So we're in a position right now where things are going, I would say, better than expected and we did expect radio to be soft but we're offsetting that with Reach Media and also significantly with TV One and we've got more good things to come. So with that operator, I'd like to turn it over to Q&A at this point.

[Operator:]

[Operator Instructions]. We'll go to Aaron Watts with Deutsche Bank. Please go ahead.

[Aaron Watts:]

A lot going on so let me jump right in. Alfred, on the deal with AT&T, the 11-year deal, it's obviously I think a little longer than the average we typically hear about. What got you comfortable signing a long-term deal like that just given kind of the ratings appreciation you're seeing and what do you think got AT&T comfortable with that as well?

[Alfred Liggins:]

So, look, we're not CBS, ESPN even Viacom even though they've been struggling so one of the questions we always would get from investors and people, well, hey, you're a single standalone network, aren't you afraid in this new ecosystem and the bundle maybe being under pressure that you're going to get squeezed and essentially you put out a business or have a lid put on your growth and I always responded, no, I think we're different one. We're unique in who we target, we're unique in that we're an African-American owned service we're also a fairly loud service since we have all of these radio stations and online property to kind of bark our story, if you will. But with that said, I've never believed that we were a network that was going to go out and be able to demand 25% license-fee increases so from the moment that we created this network my strategy was always if the industry just lets us exist and gives us a fair increase in license fees for a very long time then that's a very good business for us and that's exactly what's happened and what everybody has done. We get mid-single digit annual increases in our license fees and we lobbied and asked and negotiated for long deals because we don't know what the ecosystem is going to be like. We don't know what over-the-top is going to be like and so I want as much time to figure that out and how we play in it whether we ultimately create an over-the-top service. I do believe that the bundle is not going to disappear. I believe to some extent the industry will unbundle and then re-bundle again; nobody is going to want one television channel. I don't think anybody is going to want just ten television channels, they just want a reconfiguration of the 300 there are now and what they pay for them and so I think the longer deal is a much safer play for a network like us particularly if you feel like you have a fair affiliate fee and we've got -- it's not a secret because everybody is on a rate card now but our affiliate fee is close to $0.20, it's $0.19 and so it's not a nickel and so I'm really happy with the long-term nature of it. Now, what got them comfortable to be honest with you I was not involved on this deal and the details but my sense is based on the press release that they signed off on that our people crafted is they see the value in the network. They can read the Nielsen ratings just like we can and the performance of TV One as a 60 million sub-network against other fully distributed networks is amazing and they see our continued investment in original programming and I'm sure that they've got data on demand from their customers and diversity does matter so they know who owns the network and so I think all of those things got Comcast comfortable, Verizon comfortable, Charter comfortable with saying this network has value and should exist in our platform for the long-term.

[Aaron Watts:]

Can you remind me, I know you signed up a lot of new distribution deals in the recent past. How does the 11-year duration of this one stack up to the average of kind of the others you've signed recently?

[Alfred Liggins:]

It's the longest. Yes, there is one that's five years and it's one of the smaller ones but the rest of them are anywhere from 8 to 11. We've got a long time. I've always said this network has the ability to get to $100 million of EBITDA and I believe that with this successful round of renewals we've cemented that probability.

[Aaron Watts:]

Okay. And if I could just a couple of questions on the radio side of the house. A lot of different data points you can look at that say our economy is fairly healthy on the whole at least more healthy than it's been in a few years but you have markets like you pinpointed, Atlanta, Baltimore, that are still down. What is it going to take for those markets to go positive?

[Peter Thompson:]

They haven't is the sure answer. So, year-to-date they're down but both Atlanta and Baltimore were actually up slightly in the second quarter. So the second -- so they are sequentially, as Alfred said, improving so, you know, overall our markets were down 1.6 but actually in the second quarter Atlanta, Baltimore--

[Alfred Liggins:]

Yes, I mean, Q2 is a good quarter in my view for the prognosis of radio and I've maintained -- yes. I don't know exactly there's only theories of why, for me, some markets are up and others are down but you've seen pressure in a number of the large markets and one theory is that's where a lot of the digital advertising competition is and that puts pressure on local advertising but the guys at iHeart are saying it, [indiscernible] of doing a number of things to better the radio industry but the folks at iHeart talk about radios, cost efficiency, its reach, all true, closest to the consumer, still undervalued; all true. [indiscernible] just made a great deal with AT&T to get radio [indiscernible] on their smartphones, that's, to me, that's a big, big positive so you've got Sprint, AT&T, hopefully Verizon and T-Mobile to follow. The smartphone is the radio. If you go into Best Buy you can't buy a Walkman with radio anymore, your smartphone is a radio so the fact that you're now going to be able to get FM frequencies on millions more handsets is a big positive and so I think that even though you have this digital competition at the end of the day advertisers like to look for reach and value; how do I reach the most people for the least amount of cost which is one of the reasons that digital and digital video is starting to proliferate more now. So I think ultimately that competition settles out and radios value rises to the top again because all of the things that I just mentioned are true and so that's my theory based on the data points that I'm seeing and at least from Q1, I mean, from Q1 to Q2 the numbers seem to support an improving environment.

[Aaron Watts:]

I do miss my yellow Sony Sports Walkman but --

[Alfred Liggins:]

Well, you know, the world has changed, I mean, you know, if you're in a car, great, you have a radio right? And if you're at home and you've got a stereo system, yes, but a portable radio doesn't really exist so it has to ultimately end up on your smartphone.

[Aaron Watts:]

Yes. One last one for me and I'm done. Just understanding the changes that you're making in some of your markets is what's kind of driving the local performance. What would you say about national being down, I think you said, 4%. How should that trend going forward, what's kind of weighing there?

[Alfred Liggins:]

So, a couple of things. We've definitely had some ratings challenges so I'm not at all saying that it's just the markets. You know, Radio One has got a problem that's been specific to us and it's been interesting. It's been a perfect storm because it's like all of the sudden a lot of stuff started going bad all at the same time in markets with stations that have traditionally been extraordinarily stable, well rated and we hadn't changed. And one of the things and we haven't talked about it publically, but it's a big controversy in the industry is this whole issue with Voltair and Nielsen and PPM and quite frankly I think that most people in the industry believe that PPM has been undercounting radio listenership and somewhere along the line a tech manufacturer created a processor, a sound process -- an audio processor that boosted the PPM watermark and made it more susceptible to get picked up by the PPM technology and quite frankly we missed that curve, that curve. And pretty much all of our competitors, most of our competitors to our knowledge had these boxes installed on their signals in many of the big markets which may have contributed to this sort of across-the-board odd radio ratings decline. We have started to catch up on that and have gotten, you know, involved in the Voltair game. One of the things that people are saying and you can read it in the press, is that not only does Voltair help increase your ratings it also increases the overall level of persons using measured media in the entire radio market which actually will lift the revenue in the radio industry. Nielsen is in the process of creating their answer, you know, if you will, to Voltair because they don't like it if there's another party out there manipulating their rating system so I guess they've got something that's going to roll out in Q4 but as a company we missed that curve. Now, there were also some places where we took competitors like in Houston and Indianapolis so you've got some down markets, you've got competitive pressures, you've got maybe a technology issue where we weren't up to speed and our competitors were so it -- you know, there's a lot of those issues and we're on top of them now and we're fixing them.

[Operator:]

And we have a question from Lance Vitanza with CRT Capital Group. Please go ahead.

[Lance Vitanza:]

Back on TV One, I guess the first question I had is as you think about the upfronts, I heard your commentary regarding you're going to get some volume increases, you're going to get maybe some CPM increases, maybe not, but on the volume increase side should we be thinking about those as proportional to your ratings increase or how exactly should we be thinking about the magnitude of those increases?

[Alfred Liggins:]

Yes, that's a good question. I don't want to answer that. Yes, I think the upfront we're probably 50% registered, maybe a little more, yes, I'll give you actual numbers in the next conference call so I don't want to go out on a limb because I'm not close enough to it today to feel comfortable giving you a number that you can take to the bank. And we may -- there's some things happening in the company that actually may require us to come to the marketplace with some public announcements, you know, before the next quarter and if there's another opportunity to speak then I'll talk to it then but suffice it to say that we're exceptionally happy with the momentum that we have, we've always managed -- we've got a number that we believe we're going to hit this year and next year we've got another number that we believe that we're going to hit and that number is going to be bigger than this year's number. So, you know, we're going to get there.

[Lance Vitanza:]

On the carriage deal with AT&T, presumably there are annual escalators in that arrangement, is that correct?

[Alfred Liggins:]

Correct.

[Lance Vitanza:]

And are those -- I mean, I believe from my recollection typically they would be sort of in the 3% to 5% range but is that still the case or has the world perhaps changed since the last time I dug in on that?

[Alfred Liggins:]

We're on the higher end of that range.

[Lance Vitanza:]

And then I think my last question is, look, long-term distribution deals are great but if your distributors are themselves losing customers they don't help you much, how concerned are you about cord cutting given recent reports out of Disney and Fox and so forth?

[Alfred Liggins:]

Yes, well so a couple of things; one, you're right that if the industry loses subs there's nothing that we can do about that. You know, my sense is they're not going to lose subs at an exceptionally rapid pace, that's one. Two, we're going the opposite direction in terms of sub growth because were an under distributed network. ESPN is in every television household in America so highly sensitive to any sub losses in the paid TV ecosystem. Even with all of these renewals we still do not have Dish as a distributor so we still have continued upside and we believe we've got ratings upside. So, you know, I believe we're still going to be able to grow our sub-count even if the industry declines and hopefully the industry will find an equilibrium to stave off the cord cutting or they will create more OTT services themselves and we'll be in those bundles, in those packages. Sling TV is a great example; we're not in Sling TV yet but, you know, they don't have any African-American service in Sling TV, not even BET, but the more people who create over-the-top services are targeted to people who don't want to pay as much money for the traditional bundle; that's got to be a perfect target for the African-American consumer which has historically had a lower household income than the general market. You know, so yes I'd like to say that we're in a business that has no risk whatsoever but that's, you know -- but you and I know that's not true and we know the media business right now is figuring out how it's going to morph in the new shift in technology but I feel that we at least have a mix of assets and a platform that's going to allow us to ride that out and find our place in the new media economy so --

[Operator:]

We have a question from David Faber with Credit Suisse. Please go ahead.

[David Faber:]

I had a couple of follow-up questions. I think in your prepared remarks you mentioned that the pacing was up some 25%, was that correct? Did I get that right?

[Peter Thompson:]

Yes, that's cable TV advertising pacing. Yes.

[David Faber:]

Very good. And then you also mentioned that on the cost savings side which has been an area of focus, I don't think you spent a ton of time but you're sort of looking for $9 million to $10 million and $8 million has already been realized in the second quarter. Is that right?

[Peter Thompson:]

Yes, I mean, that's an annualized number David so obviously it's going to take some time to cycle through but, yes, those numbers are broadly correct, yes.

[David Faber:]

Okay and then I believe last quarter you talked about a cost savings program, is this the extent of the program or should we expect more or less from you as the year goes on and then I had a couple of follow-ups, thanks.

[Peter Thompson:]

I think there are some more to come. I think this is the bulk of it though. I think there's some other things that we're looking to address and can address going forward but this is the bulk of it and then the rest is kind of follow-up sort of long-term, more long-term structural things that need to be tweaked. This is kind of low-hanging fruit combined with smart stuff that we're doing in terms of attrition, replacing people who leave, cutting back on NTR stuff that's not being particularly profitable, renegotiating supplier agreements where we can so just some basic stuff that we can and have taken care of so this is the bulk of it, they'll be a little more to come but this is the big piece.

[David Faber:]

And then on the casino investment when that does in fact open you'll obviously have some incremental revenue and cash flows from that I would assume. I'm curious if the magnitude is a decent size. Do you have any expectations on what you'd look to do with that cash flow and then I had one follow-up for Alfred.

[Alfred Liggins:]

Yes, so we've made public, I don't know if we've done it on a conference call, we've certainly don't it on the road when we were issuing debt and the whole bit but, you know, our deals -- we're going to get 1% of the gaming revenues and the State of Maryland hired two consultants that essentially are forecasting National Harbors gaming revenue to be $700 million to $750 million and so we've been kind of looking at the lower end of that number so we think, you know, that we're going to end up with about $7 million a year from it. Now, they could do less but the competitor -- the market leader right now, Maryland Live! is doing like $50 million a month, maybe a little bit more, so they're doing like $600, $600 and -- yes, I think they're doing about $600 million a year and they're basically -- they're a smaller casino, no hotel, they're in a mall in Anne Arundel County and this is going to be a billion plus dollar resort in a much better location in Maryland across the Woodrow Wilson Bridge from Northern Virginia and two of the highest income counties in the country, in fact, Loudoun County Virginia is the highest income county and then across also another bridge to Washington, DC. So can they do more gaming revenue than Maryland Live!, I think the answer is yes. So, that's how we're looking at it and the good thing about this investment is that we'll have immediate current income associated with it.

[David Faber:]

Just to be more clear my question was more over the $7-odd million you're sort of implicating for cash flow, potentially that alongside of the balance sheet which at this point seems pretty clear with TV One and do you guys have thoughts around uses of free cash flow, will you intend to do anything with it in particular? Have you had those conversations and can you share with us thoughts around the incremental free cash flow with the casino as well as the business? Thanks.

[Alfred Liggins:]

Well, we've got the additional $35 million that we have to put in for National Harbor but our focus is on paying down debt. Now, we're looking at only M&A transaction that will allow us to bolster our existing positions, our existing businesses whether if it was radio it would be in market radio, if it was in TV or digital it would be existing competitors where we can essentially make deleveraging M&A transactions; those are the ones that we're looking at and preferably with low use or no-use of cash and -- but we're focused on delivering. We believe that our stock will improve as our leverage profile improves because even though we've improved the free cash flow profile of the company dramatically I think the leverage level -- it doesn't allow people to look at us on a free cash flow storage so to the extent that we get our leverage down from seven to six and then to five, you know, rapidly, I think that is the best thing for the equity. So that's where we're focused and that's -- I hope that answered the question as to what the use of tax is.

[Operator:]

[Operator Instructions]. We'll go to Jason Bernstein with ODEON Capital. Please go ahead.

[Jason Bernstein:]

I joined the call a little late, could you give a pro forma LTM adjusted EBITDA figure?

[Peter Thompson:]

We did for bank covenants purposes Jason and that was $137.5 million and the pro forma adjustments there are really for the new Comcast carriage agreement.

[Jason Bernstein:]

And it looks like the cable segment is certainly on the trajectory to post better than sort of mid 60-ish guidance than you gave in 1Q, are you going to be updating that at all?

[Alfred Liggins:]

We just did, it's going to be better. I mean, what do we want to do here? It's going to be better than that mid 60-ish so I'm just looking at Peter as to whether or not we're going to throw a number out here. Yes.

[Jason Bernstein:]

Okay.

[Alfred Liggins:]

Yes, we believe today that it will approach 70.

[Peter Thompson:]

Well, I think it's between the two numbers if you want to give guidance I think it's between the one that we said before and the 70, you know, it's kind of high, getting up into the high 60's.

[Alfred Liggins:]

So, yes, did you hear that?

[Jason Bernstein:]

Yes, I did.

[Alfred Liggins:]

Okay, good. So we hadn't made a formal decision internally but we believe it's going to be better so I guess the official, you know, answer is somewhere between the mid 60's and 70's that we said. And look, this is still a moving target, right, so we're only halfway through the year in ratings so it depends on what the continued ratings trajectory is, etc., but six months in we're doing really, really well and we've got a lot of new stuff still coming but it's - we're not to a point -- the only thing that we feel certain about is we'll beat the original guidance.

[Jason Bernstein:]

And if I could follow-up on the casino. Is there a mechanism by which you guys have sort of a put-back to MGM and is there any sort of guidance you can give?

[Alfred Liggins:]

After year-three we have a put to them and each year, every year, after that and there's no call on it.

[Jason Bernstein:]

And is that at like set multiples?

[Peter Thompson:]

It's at a set multiple, I think it starts at five and it goes up to seven, seven times EBITDA and there is no impact of debt, seven times essentially an enterprise value. The thing to note, I think is, obviously the 1% distributions. If we were to put in, then the 1% distributions go away at that point once we liquidate the investment it's not in perpetuity, it's only so long as we stay invested and don't put.

[Operator:]

Thank you, we have no additional questions at this time. Please continue.

[Alfred Liggins:]

Well that's it, thank you very much and as I always say at the end of this, if you have any questions and want to talk offline Peter and I are available any time. Thank you very much.

[Operator:]

Thank you ladies and gentlemen, this concludes our teleconference for today, thank you for your participation and for using AT&T Executive Teleconfernce Service. You may now disconnect.