Jeffrey L. Bewkes: We think margins will continue to improve at the network. We continue to invest in original programming and so essentially what happens is when you have a hit, there’s a question of when the hit TV series goes into your syndicated or after-market sales. When that happens, you have a big revenue slug coming in and it increases the margin.
John K. Martin Jr: It is worthy of mention that in the second quarter, particularly at Turner, our margins tend to be lower than the rest of the year because we do carry the NBA play-offs and we carry a significant amount of sports programming amortization in Q2. To put that in context, half of our sports costs get amortized for the year in Q2 and two-thirds of our NBA costs hit in Q2 and we saw the same trend last year.
Looking out to the rest of the year and we’ve got good visibility with this, despite the increased investment, or the continuing investment in original programming, we are going to be comping against investment in original programming last year too. Thus we’ve got good visibility on that and we feel good about the potential for margin expansion in the back half of the year.
At CNN, margins have been and are continuing to expand there and the performance of CNN has been the fastest growing network in the Turner portfolio now for some time and that’s coming on the domestic as well as the international side.
David Joyce (Miller Tabak & Co.): Are there any significant cable network affiliate contracts coming up for renegotiation and are there any differences in your up-front selling in this environment on the cable networks?
Jeffrey L. Bewkes: On big affiliate agreements, they come up fairly regularly.
We feel very good given the strength of the networks, the performance of the ratings, the ad sales, everything that we mentioned in our remarks in terms of affiliate.
We were at the top end of the entire TV universe. The CPMs were up in the high-single-digits. The current market is pacing ahead of where the up-front was in varying degrees of strength. It’s healthy. We sold the same amount of inventory, a very key point, as we did in last year’s up-front in order to get those significant gains. The scatter is moving up from there, not quite as much on the entertainment side as it was in the second quarter but still up.
It’s a good picture and Turner particularly is performing relatively better than all of the competition.
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