Paramount Global
Q4 2011 Earnings Call Transcript

Published: 16 Feb 2012

[Operator:]

Good day, everyone, and welcome to the CBS Corporation Fourth Quarter 2011 Earnings Release Teleconference. Today's call is being recorded. At this time, I'll turn the call over to the Executive Vice President of Investor Relations, Mr. Adam Townsend. Please go ahead, sir.

[Adam Townsend:]

Thank you. Good afternoon, everyone, and welcome to our fourth quarter and full year 2011 earnings conference call. Joining me for today's conference are Sumner Redstone, our Executive Chairman; Leslie Moonves, President and CEO; and Joe Ianniello, Executive Vice President and CFO. Sumner will have opening remarks, and we'll turn over the call to Les and Joe, who will discuss the strategic and financial results. We will then open the call up to questions. Please note that during today's conference call, the fourth quarter and full year 2011 financial results and prior year comparisons, with the exception of revenue, will be discussed on an adjusted basis, unless otherwise specified. Reconciliations for non-GAAP financial information related to this call can be found on our earnings release or on our website. In addition, statements on this conference call relating to matters which are not historical facts are forward-looking statements, which involve risks and uncertainties that could cause actual results to differ. Risks and uncertainties are disclosed in CBS Corporation's news releases and Securities filings. A webcast of this call and the earnings release related to today's presentation can be found on the Investors section of our website at cbscorporation.com. And with that, it's now my pleasure to turn the call over to Sumner.

[Sumner M. Redstone:]

Thank you, Adam. Good afternoon, everyone. I thank all of you for being with us today. I am more than pleased that CBS had such a tremendous year once again in 2011. And as you will all hear, momentum continues to build and build. Our world-class content continues to be the cornerstone of our success. We have the #1 television network. We have the top TV and radio stations in the big market. We have Showtime and all its critically acclaimed programs. We have Simon & Schuster and all its best-sellers. We have Outdoor in all the right places. Every one of these assets is becoming more and more valuable than ever in new digital area. I am confident we have the right strategy in place to help us grow this company year after year after year in the future. And the reason for that is we have a first-class management team that knows how to make such things happen. And that starts at the top with none other than my very good friend and colleague, Les Moonves. But let me tell you, as you know, I have often called Les a genius. Les' unparalleled success in operating CBS is indeed the work of a genius. And now I will formally turn this over to my friend, my colleague and the man I call a genius, and he is, Les Moonves.

[Leslie Moonves:]

Thank you, Sumner, very much for that overly kind introduction. Good afternoon, everybody, and thank you for once again joining us. The fourth quarter numbers we're reporting today capped off a terrific and much better-than-expected 2011 for the CBS Corporation. Quarterly EPS came in at $0.57, up 24%, and we posted full year EPS of $1.94. That was a record for our company and up 75% over 2010. Quarterly OIBDA was also very strong, up 9%. And for the year, OIBDA was up $753 million to $3.1 billion, up 32%. We did this in a year when the overall economy faced lots of uncertainty. And as you know, the S&P was flat. It is very encouraging that we were able to be so successful in this kind of environment. Clearly, our ongoing strategy of de-risking and diversifying our businesses is paying off and it's only getting better. As we sit here today nearly 7 weeks into the new year, I'm truly excited about what we're seeing. The first quarter alone is looking to be extremely strong, leading to an extraordinary '12. For a number of reasons, I'm confident this will be an even better year than the last, and one in which we are poised to break records in financial metrics across-the-board. Here's why

[Joseph R. Ianniello:]

Thanks, Les. Good afternoon, everyone. Today, I'll give you some more detail on the results for the quarter and for the year, then I'm going to update you on what we're seeing in 2012. But first, let's start with 2011. We had a great year in 2011. We achieved our strong result despite some difficult comps and economic uncertainties. As you've seen and heard, the actions we've taken to implement our strategy of producing great content and receiving our fair share of recurring revenue is having a clear impact on our results. The best part is that we're still in the early innings of this multiyear growth story. Turning to the fourth quarter. OIBDA of $837 million rose 9% despite a 3% decline in revenue, which is attributable to the second cycle syndication sale of CSI and strong political advertising during 2010. These 2 items combined contributed more than 100% of the revenue decline. Affiliate and subscription fees were up 8% for the quarter, showing the steady growth in cable and retransmission consent fees. Our OIBDA margin of 22% expanded 200 basis points. This increase was driven by the growth in high-margin revenue, including streaming deals, higher international syndication revenue and retrans fees as well as our efforts to control costs. Operating income of $701 million was up 11% for the quarter. Also during the quarter, we took restructuring actions that resulted in a $46 million charge, which reduces our costs on a sustainable basis by more efficiently utilizing real estate that we own. We will realize the benefits of these actions in 2012 and beyond. Now let's quickly go through the full year results. For 2011, revenue was up 1% to $14.2 billion. This is despite lower revenue from our new, profitable NCAA arrangement that started in March 2011 and the absence of the 2010 Super Bowl on CBS. These 2 items alone affected our total revenue growth by 3 percentage points. Content licensing and distribution revenue was up 6%. And affiliate and subscription fees were up 9%. These 2 increases speak to the improving stability in our business model, which is driven by the growing number of committed revenue streams that serve to de-risk our business. For the year, OIBDA of $3.1 billion was up 32%. And as Les said, that's $753 million higher than 2010. And our margin grew 500 basis points to 22%. Operating income for the year was up 43% to $2.6 billion, and Les already mentioned our record EPS for the year. Now let's turn to our operating segments. Q4 Entertainment revenue of $2 billion was down 1%, again due to the CSI syndication sale in 2010. For the full year, revenue was up 1% to $7.5 billion, driven by our new digital streaming agreements, growth in underlying advertising revenue at the network and higher retrans fees. During the quarter, OIBDA for the Entertainment segment was up 28% to $318 million. And for the year, OIBDA was up 60% to $1.4 billion due to the combination of revenue drivers I just discussed as well as lower programming costs. In our cable segment, revenue for the quarter was $395 million, up 7%. And for the year, it was $1.6 billion, up 10%. Our Cable Networks continue to see healthy increases in rates and subscribers. And we're getting more revenue from licensing our Showtime original series internationally and on new platforms. Cable OIBDA of $175 million was up 4% for the quarter with a margin of 44%. These results were affected by the timing of promotional expenses related to the launch of 2 new shows, Homeland and House of Lies. For the full year 2011, OIBDA of $707 million was up 24%, also posting a solid margin of 44%. That's up from 39% in 2010. Publishing revenue was $229 million for the quarter and $787 million for the year. Both were down 1% as we continued the shift to more profitable e-books, which sell at lower price points but also with significantly lower costs. Digital revenue now represents approximately 17% of our overall Publishing revenue for the year. Publishing OIBDA grew 40% to $28 million for the quarter and grew 28% to $92 million for the year, again reflecting the benefit of our transition to digital and lower bad debt expense. Strong OIBDA growth and operational efficiencies led to margins of 12% for both the quarter and the year. Local Broadcasting revenue and OIBDA, both for the quarter and the year, were affected by the absence of significant political advertising. In addition, the NBA lockout affected our fourth quarter revenues, which were down 12%, and not having a Super Bowl also affected our annual results, which were down 3%. Underlying nonpolitical revenues at TV stations grew 1% in the quarter. We also continue to see growth across a broad base of advertising categories at this segment with automotive, financial and other professional services growing the fastest. Local Broadcasting OIBDA was down $56 million for the quarter to $266 million, and down only $16 million for the year to $849 million. We expanded our Local Broadcasting OIBDA margin in 2011 by 100 basis points to 32%. This is the first time we grew our margin in a nonpolitical year in well over a decade. This was achieved through our continued cost containment measures and by increasing retrans fees, of which only about half are recorded at this segment. And finally, Outdoor revenue for the quarter was up 1% to $514 million. And for the year, it was up 4% to $1.9 billion. We posted gains despite the softness in the European economy as well as the non-renewal of some transit contracts. The base business continues to grow with U.S. billboards leading the way. In Q4, pricing for our U.S. billboard business was up 2% on the same high occupancy levels. For the quarter, Outdoor EBITDA was up 30% to $131 million. And for the year, it was up 20% to $346 million, again helped by our more profitable contracts and the settlement of the London Underground legal matter. Turning to cash flow in our balance sheet. We had a use of cash of $44 million in the quarter due to a $200 million voluntary pension contribution. For the year, free cash flow came in at $1.5 billion, up 2% despite the absence of the Super Bowl and a more than $200 million increase to our discretionary pension funding. During the quarter, we spent $170 million on our share buyback program, retiring 7 million shares, reaching our target of $1 billion of shares repurchased in 2011. As a result, for the year, we bought back a little over 42 million shares at an average price of $24 per share. Our cash on hand at the end of 2011 was $660 million. Now let me tell you what we're seeing in 2012. As Les said, the momentum is building towards a record year. Scatter pricing at the network is up mid-teens on increased demand. In Local Broadcasting, we're seeing an acceleration from Q4 trends. Our non-political revenues are currently pacing to be up low single digits in Q1. And of course, political will build throughout the year, significantly benefiting our second half of the year, especially Q4. In addition, the automotive category is a great story. Domestic spending continues to be strong, and we're seeing a sizable rebound in Japanese spending as well. And in Outdoor, the first quarter is pacing to be up mid-single digits. So the marketplace is steadily improving, making us optimistic about 2012 and our future. Plus, there are a few other factors that I'd like to point out that will also drive EPS going forward. First, we expect our CapEx spending to remain at current levels for the foreseeable future. However, when you look at our income statement, depreciation expense is still significantly higher than our capital needs. Over time, our depreciation expense will trend down in line with our CapEx levels, giving us more operating leverage on the P&L. In addition, all of our debt is fixed rate, and most of it was issued years ago at much higher interest rates. As we refinance our debt and bring down interest cost to current market rates, you will continue to see a notable benefit to the interest expense line. And finally, we will continue with our remaining $2 billion share repurchase program to meaningfully reduce shares outstanding. All of these factors will help strengthen our bottom line. So in summary, as you've heard today, we continue to make good on our commitment to produce high-quality programming, grow our non-advertising revenue streams and maximize the monetization of our content through new platforms. Plus, we are staying focused on controlling our costs. And as the general economy improves, we stand to benefit even more. So we're very excited about what the future holds, and we look forward to speaking with you on our next earnings call. With that, Jay, can we open the line up for questions?

[Operator:]

[Operator Instructions] We'll go first to Ben Swinburne with Morgan Stanley.

[Benjamin Swinburne:]

I have 2 questions, both about the Entertainment segment. Maybe starting on the cost side, Joe. If you look at the quarter and the year, expenses were down, I think, 5% to 7%. I know there's a lot of moving pieces in there, particularly around the studio and syndication. But I don't know if there's a way to isolate out the noise and help us think about going forward what you think the expense trends are, maybe particularly for the network and your schedule. I think everyone understands qualitatively the schedule's in a great place, but how does that translate on the cost line as you look into '12? And then related to that, Les, I think everyone has seen Q4 advertising trends across the sector. Scatter ones have been pretty light. You guys have a lot of ratings strength and particularly compared to some of your competitors who might have some make-goods. Are you able to benefit from that either in Q4 -- or were you able to in Q4 or do you think you can start to benefit from that in Q1 if volumes come back? Are you seeing them come back? Can you sort of talk about that strategy in the marketplace on the ad sell side.

[Leslie Moonves:]

Yes, I'll -- let me go first. Number one, in terms of pacing, we have kept our scatter pricing up. But obviously, because of our ratings strength, we are commanding the bulk of the scatter market. There were some decisions on our part to push some of the scatters because we weren't getting the pricing that -- we weren't getting the demand at that pricing to push some of it into the first quarter. So once again, we're in a very, very strong position, and I think we're going to benefit it -- for it more in Q1 than we did in Q4.

[Joseph R. Ianniello:]

And Ben, this is Joe. On the cost side, yes clearly, again, as total company, you can see operating costs down 7% for the quarter and for the full year. So as we look forward, we -- as we said, we're going to continue to obviously drive the top line, but we think we can control the costs, particularly in the Entertainment segment, kind of low single digits.

[Leslie Moonves:]

Yes. And let me expand on that a little bit. We’re only going to be doing 16 pilots this year. We've put on 5 new shows last season at the beginning of the year. We're probably going to have less than that now. Some of our competitors are doing over 30 pilots. So in certain instances, I would state that our development expenses are less by -- than some of our competitors by over $100 million. The ability to promote within our schedule -- I'm confident we're going be exceedingly strong next year and be able to keep our costs down and the trend continues.

[Benjamin Swinburne:]

And maybe if I could just squeeze a follow-up on the retrans side. Les, you talked about, I think, at least $250 million in 2012. I don't believe that includes reverse comp, but correct me if I'm wrong. Now that you've got this DISH deal done, and you've probably got some other reverse comp deals finished, any update to that number for 2012?

[Leslie Moonves:]

All I can say is the $250 million number is low. You're right, it is a retrans number. It does not include reverse comp. More and more, the reverse comp deals are going to come up this year. So it is low, but we're not going to quantify exactly how low at this point. But it is a low number.

[Operator:]

We'll go next to Jessica Reif-Cohen with Bank of America Merrill Lynch.

[Joseph R. Ianniello:]

Jessica, it's Joe. Look, we think we -- usually, 12 to 18 months, we expect to get that return on our money. So it's $46 million. The charge is $46 million. So kind of 12 to 18 months as a general rule of thumb.

[Leslie Moonves:]

You know what? They're talking about the number of $2 billion. That's the number I've seen thrown around. And generally speaking, we get 9% to 10%. That's generally the ballpark. So that's what we're looking at. Whether that number goes up or down, the $2 billion, I don't know. But what I'm especially pleased about is not only we taking a large share from our TV stations, but radio is now becoming a bigger player in that area as well. So we're looking forward to a lot of nastiness on both sides.

[Leslie Moonves:]

Well, the good news is obviously, we already have deals with Netflix and Amazon. At the CW, we also added to that Hulu Plus, which we support Hulu Plus, not Hulu without the Plus, which is an SVOD. And there's a possibility that could happen there. And there are a lot of conversations due -- you know what? It's hard to predict where -- whether there'll be a major deal, but we're talking to an awful lot of people. I also want to remind you and everybody else, as soon as we pull a show from our schedule, that automatically goes into one of those deals. So we expect our numbers of our preexisting deals to go up. In addition, as you mentioned, there's a lot more international players in this getting involved, and so we're making more deals internationally as well.

[Joseph R. Ianniello:]

And Jessica, it's Joe. I'd just add that just from the deals we've signed today, we're going to be receiving more revenue in 2012 than 2011.

[Leslie Moonves:]

Right.

[Joseph R. Ianniello:]

No, I think -- Jessica, it's Joe. Look, we look at that as a long-term strategy, so we don't really manage it day-to-day. It's just we said we're going to target $1 billion. We hit the $1 billion. We have $2 billion remaining, which right now, where our stock is, it's 10% of our market cap. So we're focused and committed to returning capital. And if you just look at our free cash flow for 2011 of $1.5 billion, between the buyback and the dividend, we've returned over 80% of our cash to our shareholders. So that remains our primary focus.

[Operator:]

We'll go next to Michael Morris of Davenport.

[Michael C. Morris:]

A couple of questions on the television studio, the production side. It's definitely a great asset that you have and, arguably, still has a lot of runway ahead of it. So I guess my questions are a couple. Number one, when you look at the capacity to produce new content, where do you think you are with respect to your current production versus what -- where you could be? And if you think about what the opportunity is there, do -- how are you thinking about whether or not you need to buy another outlet to push the content through relative to what you currently have? And then also, with the -- some of these digital players now putting new, original content or looking to launch new, original shows, do you see yourself as potentially being a player in that space? Or is there more to think about with respect to that being another place that you could sell content?

[Leslie Moonves:]

Yes, Michael, I'll put my answer into 3 different areas. Once again, having the studio is an extraordinary benefit to us when you -- we're able to produce a property like an NCIS. And as we look down the road, we have going into syndication, which we haven't accounted for yet, which will happen in '12 and '13 NCIS

[Joseph R. Ianniello:]

There'll be over 300 episodes we have in the can by 2013.

[Leslie Moonves:]

By 2013. That will be going into syndication, and that will return to our studios since we own 100% of those shows. We are approximately producing around 20 shows, most for CBS and the CW. We're also doing a show for TNT. Right now, we have a pilot for USA. We still have more capacity. And when you look at the Netflixes of the world and the Amazons of the world doing new production, we welcome that. We are talking to Netflix about a potential deal to produce a show for them. Once again, we do not look at them. Until they are doing 22 hours a week of premium content, we don't look at them as a competitor but rather another place to put our content, whether it's original or buying our libraries as they have. So the good news is the production company is very strong and there's a lot more room to do more.

[Michael C. Morris:]

So when you look at -- and we've discussed this in the past, but you look at potentially expanding your portfolio, if you will, I guess, specifically, buying cable networks beyond what you have with Showtime, is that a possibility? Or you think that given all these different places that currently exist that you could sell into, it's really not something that you need to consider?

[Leslie Moonves:]

We don't -- with the valuation right now, what these cable networks are, and we're getting paid so much for our content through all these various platforms, we do not find any need to go out and purchase one of them. When you see that in NCIS, each one of them is going to make north of $1 billion profit, each one of those shows, that's a very good business for us to be in, and it's a better business than buying a cable network.

[Operator:]

We'll go next to Laura Martin with Needham & Company.

[Laura Martin:]

Two questions, one on international and one on TV Everywhere. On international, we have dried [ph] in Greece today, and I'm just wondering whether -- I know international is a key driver of your revenue. Talk to us about the content. Is there any risk there? Do you have long-term contracts? Do you get prepaid? Is some of this growth potentially at risk as we get more disruption in the European markets? And then on TV Everywhere, it seems like best practices here is Time Warner where they take their linear feed, they put it directly on to the Internet with all the commercials and Nielsen is able to measure that. And so they're aggregating that 1% to 2% lift of a very attractive demographic into the TVS [ph] and TNT overall ratings. Could you update us on where you are on TV Everywhere and whether you think that's a good idea? Or do you want to keep ripping apart the programming and putting in new commercials online?

[Leslie Moonves:]

Well, first, I'll deal with international. No matter what has happened with the economy, internationally our numbers have grown in leaps and bounds. As you've seen in the last 5 years, we have doubled the amount of revenue we're taking in internationally. A lot of them are long-term output deals. But in addition, there is such a demand for the top-quality programming that we have seen no slowdown whatsoever in our major European markets or in Canada or in Australia. And the good news is it continues to grow. As long as we keep producing original, top-notch content, we're going to get paid for it, and those numbers should continue to go up. In terms of TV Everywhere, look, we are a supporter. If someone is paying us a retrans fee, then we welcome people being able to get our content whenever or wherever they can. As long as Nielsen is counting them, we are welcoming that even more, because what we want eventually to have happen is an eyeball is an eyeball is an eyeball, that we get Nielsen ratings and we get advertising for everything. And I would prefer to keep the system where the commercial load is exactly the same, and we get paid the same, whether it's TV Everywhere, whether it's online or on the air. Once again, as the MSOs get ready to do it, we're prepared to do it. But at the same time, we're able to sell wherever we want.

[Operator:]

Our next question comes from Doug Mitchelson with Deutsche Bank.

[Douglas D. Mitchelson:]

I was thinking about exploring your comment that retrans should accelerate significantly. Maybe we'll leave that for another day. On the scatter market for the first quarter, we're all poking around in volumes because of some of the setbacks we saw in December and in the fourth quarter generally. And you said mid-teens. I think scatter pricing was stronger last year. How should we think about scatter pricing? What's a good number given it was higher last year? How are you balance the upfront in the scatter?

[Joseph R. Ianniello:]

I think we said again -- Doug, this is Joe, it's mid-teens over the upfront. Again, I think the good news is, is what we're saying is we're seeing increased demand. And again, obviously, the strength of our schedule is really kind of giving us a lot of confidence. We're seeing -- in terms of categories, we're seeing a big pickup for auto. So that continues to be strong. It's a big category. So we're pretty optimistic about the rest of this broadcast season.

[Leslie Moonves:]

Yes, the absolute numbers last year, you're right, the scatter numbers were higher, higher percentage up off of the lower number at the upfront. So this year's upfront was we were up between 13% and 14%. And then, you add that mid-teen number, and it's pretty strong. Once again, we think that our demand is higher than our competitors' right now.

[Douglas D. Mitchelson:]

Yes. And I guess just to paraphrase what you already said in your prepared remarks; it's more likely that strong upfront flows through in the March quarter than what we saw in the December quarter.

[Leslie Moonves:]

That's right. That's absolutely right.

[Douglas D. Mitchelson:]

And then just a clarification, Joe. That Outdoor mid-single-digit revenue growth, that's x any unusual items, right? That's sort of what we would see in the print?

[Joseph R. Ianniello:]

Yes. Well, that's on a constant dollar basis. We -- obviously, we don't -- I don't know what the exchange rate is going to do, plus or minus. So that's what we've done, an underlying apples-to-apples basis. So obviously, if the exchange rate moved plus or minus, we'll adjust for that, but that's constant dollar.

[Operator:]

We'll go next to Michael Meltz with JPMorgan.

[Michael A. Meltz:]

So can you help us a little bit with the earnings progression throughout the year? Any factors that we should consider that might skew the numbers a bit in terms of the -- either the syndication deals or the online video deals?

[Joseph R. Ianniello:]

Well, like I said, we just said the online streaming deals on a full year basis will be higher. Obviously, you'll have some quarter issues. I think last year, second quarter, we had a big inflow of those deals. So we might have a comp issue here in the second quarter. But our fourth quarter, obviously, will be very strong because of political. So I think, again, you'll have your normal seasonality, I think, with the year. But again, if you step back and you look at the full year, we're pretty confident. As we said in our remarks, it's going to be a record year for us.

[Michael A. Meltz:]

All right. And what about the tax rate, please?

[Joseph R. Ianniello:]

The tax rate, as we're filing it in our 10-K, you'll see that -- again, what we've said is -- what we're saying is comparable to 2010 and 2009. So the effective tax rate, somewhere between 36% and 38%, is what we're anticipating.

[Operator:]

We'll go next to David Miller with Caris & Company.

[David W. Miller:]

A couple of questions. Les, on March Madness. Correct me if I'm wrong, but last year at this time, or it's last year for the tournament, the Final Four games were actually in April, and the championship game was also in April. This year, I think the Final Four games are on March 31 with the national championship in April. So is it nice and neat and clean where you'll capture most of that ad revenue, or at least your share of it, on March 31? Or is there sort of a couple day delay? I'm just trying to sort of model this out as best I can and then I have a follow-up.

[Leslie Moonves:]

Joe, why don't you answer that and we're [indiscernible].

[Joseph R. Ianniello:]

Yes. Yes, I think the Saturday games will fall into Q1 this year as opposed to Q2 next year -- last year. So we will have a little calendarization issue. But again, that's only the Saturday games. The final will obviously all be in the second quarter.

[David W. Miller:]

Right. Okay, great. And then also, just with regard to your exposure to the London tube as it applies to the Outdoor business, I mean, it just seems like you guys can get really aggressive here come the London Olympics and just telling marketers that "Hey, look, if you want your brand or if you want your sign out there displayed in front of an extra 4 million people that are going to be descending on London, you got a buy a contract now." Can you characterize how aggressive you guys are right now in selling that inventory right now?

[Leslie Moonves:]

David, there’s not too many people ask us how aggressive we're going to be. I think they generally know the answer to that question. And you're absolutely right. This is -- it's an event we're looking forward to, and it makes the investment in London Underground very valuable because we're going to cash in well. And there is a lot of activity right now over there for our group.

[Joseph R. Ianniello:]

Yes. And they're putting -- I think people are booking early, getting those orders booked. And obviously, it will benefit our third quarter.

[Operator:]

We'll go next to David Bank with RBC Capital Markets.

[David Bank:]

Two quick ones. The first is, in terms of upfront option activity, I think we're sort of bumping around the deadline here. Can you comment in terms of what you're seeing for 2Q option taking? And GM had canceled a bunch of buys not long ago. So are you seeing them come back into the scatter market? And anything -- any more of the automakers falling behind? And then second, it looks like, in terms of first quarter, you did a kind of nice needle-moving syndication deal with respect to CSI

[Leslie Moonves:]

I'll do the first and I'll let Joe do the second. The upfront options are remaining very, very strong. Nobody -- it's no different than any other year. What General Motors did was de minimis. And frankly, with our schedule being as strong as it is, we're having no trouble replacing the money at much higher rates. So we're seeing very few options. And it's sort of a normal, normal year, nothing abnormal. As a matter fact, it may be just the opposite. And people want our schedule, and it's good to be in the position we're in.

[Joseph R. Ianniello:]

Yes. As far as AMC, look, we're obviously very pleased that they see, again, the value in of our core franchises, CSI. So it will be incremental, David. There's nothing, again, comp-ing against something kind of unusual there. So again, just another example of our content in demand and us monetizing it.

[Leslie Moonves:]

And new people getting in and wanting the content. A channel like AMC, which has made a pretty good name for themselves on original programming, getting into the syndication market, there are more and more of those and being, as we have, the most valuable current content and library content, new ways of maximize it.

[Adam Townsend:]

And Jay, we have time for one more question.

[Operator:]

Our final question will come from Marci Ryvicker with Wells Fargo.

[Marci Ryvicker:]

Two quick ones in Local. OIBDA was helped in Q4, the press release said, by cost containment and the NBA lockout. So how should we think about costs in 2012 and beyond? Is there more room to cut costs? Or will most of the margin expansion come from increased revenue? And then my second question is, in Outdoor, what was the London Underground settlement?

[Joseph R. Ianniello:]

Okay, Marci, let me start with the Local, the cost. I think, again, we always look at -- we're always looking at our costs on our Local segment. So we think we can manage that cost effectively. So I think margin expansion will clearly come from the top line, driving the top line. But again, we've demonstrated year in and year out that we're able to cut cost, control costs and manage it very effectively. So 2012 is going be no different. But obviously, again, the top line, we should be benefiting from -- again, our #1 category in automotive is strong, and we have an incremental category in political. So we're feeling pretty optimistic about that. Regarding the London Underground, because of confidentiality, we can't provide details. But what we can tell you is we're pleased with the outcome, and we're positioned, again, with the Olympics coming near, to really kind of enjoy the benefits of this contract for the next few years. So again, we're pleased with the outcome, but that's really all we can say.

[Leslie Moonves:]

And Marci, the NBA; we have KCAL, we have the Lakers. So we had a few games that were missed during the quarter for the Lakers. But that's, once again, not a huge number. But it did affect the cost.

[Adam Townsend:]

And this concludes today's call. Thank you, everyone, for joining us. Have a great evening.

[Operator:]

That does concludes today's conference. Thank you for your participation.