DISCA
#Sure.
It's really too early, <UNK>, to get a sense of where the calendar upfront is going or cancellations.
We don't see right now anything that gives us a sense that things are better or worse.
The only thing that we see that's attractive is the advertising market in the third and fourth has been consistent, and is better than it was in fourth, first, and second.
On the Eurosport side, we've been quite aggressive about going out and doing deals.
So far what we've learned a couple of things.
We've learned that we can grow viewership significantly without buying big-time soccer.
We've also watched as big-time soccer has grown in terms of rates across Europe ---+ 60%, 70%, 80%, 100% in terms of fees; and in many cases it's big distributors that are fighting for that; and in many cases there has to be more than one distributor that gets it.
So it's created a feeding frenzy around that content.
The good thing for us is we've ducked our heads on that.
And because so much economics has gone to soccer, and because we're the only player that can offer a pan-European platform, we've been able to sweep in 60-plus deals of very compelling rights ---+ whether it's speed skating, ski jumping, most of winter sports, summer track and field, more cycling, more tennis ---+ at mid-single-digit.
And we're even having discussions with some players that bought soccer that are looking to pick up some extra economics by selling some of these niche sports.
For us, those niche sports are looking like those are the drivers that are quite attractive for the Eurosport app.
Those are the super fan groups that love ---+ that want to see all the speed skating or want to see all the cycling.
So right now I think we're quite comfortable that we already committed that Eurosport will not go upside down; it will be profitable.
We took the profitability margins down from in the 20%s to single digits, and we think over time that we should be able to not only be profitable but we should start to get some of the benefit of the app, which is all incremental, and the viewership gains that we're getting now, which we'll get the benefit.
And we've seen in some markets already that when you put Eurosport together with our 10 traditional channels, we get benefit.
And by selling Eurosport locally we're getting benefit.
So I'd say so far so good.
And just, <UNK>, some financial parameters on that.
One thing that we've spoken about is this investment in sports not only is going to allow us to at least double our Eurosport-specific ad sales over the next five years, but as you know the combination of the sports and the Olympics and our share of viewership across pan-Europe is going to really help drive the top-line affiliate as well.
And we will ---+ after Rio the Olympic rings will go on our Eurosport channels.
We also have Eurosport.com, which is the number 1 online site for sports scores and clips; the rings will go on that.
We're working very effectively with the IOC.
It's very early days but we're having some very interesting conversations on multiple platforms about the fact that we own the Olympic IP for the next decade.
Yes, sure, <UNK>.
Look, there's no question that you're right, we are seeing a ramp of our nonlinear ad sales.
Looking specifically at the third quarter, the majority is still very much from linear.
<UNK> talked about the traction we're seeing, the 200 million monthly views.
Clearly there is a growing, growing opportunity for us to monetize that.
But specifically for the third quarter, it still is very much our linear ad sales driven by pricing and demand.
The good news ---+ the bad news is we haven't done a great job in monetizing that.
And when you look at the overall effort, it's about breakeven, with all the effort that we've made.
That's the bad news.
The good news is that more and more we're talking to advertisers that like the scale that we have.
We're changing our approach in how we're selling, to take advantage.
We see a lot of players like Vice who have done, candidly, an extraordinarily good job of monetizing their streams.
So this is another thing that Paul and our team is looking at, that we've been, I think, best-of-class with linear and over the next two to three years if we could really build up our capability and our expertise in digital, I think that will be a significant upside.
Because we haven't been great at it.
It's way too difficult to prognosticate where the advertising market is going.
It moved away quickly in the fourth quarter; we didn't quite know why.
It flattened out, and now there is no question that volume has been much stronger and pricing has been good.
A piece of that, candidly, is that we're outperforming.
There are a number of players in the industry that are ---+ ratings have dropped significantly, and so there's been a meaningful ADU issue in the marketplace.
So if you want to put money to work, the fact that our ratings are up ---+ and more importantly our share is up ---+ we didn't have that issue, so we were open for business.
The other thing is that our channels are on-brand.
Discovery has never been stronger, and the ability to get aligned with the number 1 network for men and now we have ID, which was the number 1 network for women ---+ ID is still meaningfully underpriced.
And when you look at the CPM differential between broadcast and cable in general, it's still over 30%, and we can deliver with Gold Rush.
We can be number 1 for men and beat the broadcasters.
ID's length of view was so high.
We have super-fan groups around Oprah and Tyler and Science.
So I think that being on-brand has really helped us, and we have a good momentum story by having gone back to brand and the fact that our share is growing.
So we're just going to have to see.
I think right now Joe Abruzzese and his team are doing a very good job, and so are our programming teams in the aggregate here in the US.
So we're going to continue to ride this out and hope that the advertising market stays.
We'll see.
Yes, <UNK>, look, it's a very fair question and one that we talk a lot about.
The good news is this.
We talked about earlier this idea that we're going to ---+ we expect to buy back about $1.5 billion of our stock the next 12 months.
The good news is, given our still prudent but slightly more aggressive leverage target as well as our really expanding cash flow profile, we're still going to have a lot of powder on top of the $1.5 billion.
So we still sit here today and say: our stock is cheap; it's a smart allocation of capital; and we still have an enormous amount of capital available beyond that for some opportunistic either buying of IP or investing in scale.
So it certainly is not one or the other.
The good news is ---+ and maybe surprising for investors ---+ is that we still can achieve both, given what we see as our cash profile and given the slightly increased level of leverage.
Thanks, <UNK>.
First, the cycle internationally in general tends to be more like three years versus five or six or seven years here in the US; that's first.
And this won't surprise most of you, but there really is a difference historically in pricing of distribution deals.
The way that it's worked historically is that you get your extra pricing by growth.
So price has been relatively flat over the last 10 years for most of us in the content business, and it's because distribution was growing pretty aggressively almost around the world.
We still see aggressive growth, meaningful growth, in Latin America ---+ particularly Brazil and Mexico, although Brazil has slowed down a little bit with the economy.
And India we're seeing meaningful growth, and Eastern Europe.
There are a lot of other markets that are more mature now, like Western Europe and a number of the markets in Japan.
What we've been able to do or our strategy, which is starting to come through and will take a shorter time than it did here in the US, where the cycle is longer, is we have been scaling up in Europe over the last four or five years.
With the Olympics, with Eurosport, but more importantly just with the overall scale expansion ---+ because we've been growing our market share double digit for the last six consecutive years in Europe and Latin America ---+ we now sit with distributors, and we started about a year and a half ago where, in Western Europe, since there is very modest sub growth it's not going to work for us.
So the good news is we have enough scale, we believe, to drive price, and we've been able to do that as our deals come up.
The same way we had an attack plan to drive a step-up in pricing here in the US, we have that outside the US.
We're not executing it everywhere, because there are a number of markets where you're getting better than double-digit growth just because gestationally these continue to be higher growth markets.
And then those markets we'll play the old game, where we're continuing to grow share, we're getting our channels carried, distributors are promoting us, and we're getting double-digit growth.
In the more mature markets, we are being quite aggressive.
Look, in Sweden, we pulled our signal and we were off for four days, and then we went back on; we were able to get better than double-digit increase.
Across much of Europe on renewals we have been very clear that our scale is up, our investment is up, and we need significant increases.
So you'll see those come in over the next couple of years.
You know, one other point, <UNK>, that I think we could provide that I think is meaningful is that TV Everywhere and SVOD is becoming a big part, particularly TV Everywhere and VOD, across those mature markets.
We have a 20-year library in language, and we also have the Olympic IP, and we also have sports IP.
So the ability for us to have a win-win ---+ which is you take our channels, but in addition we'll give you some more content for TV Everywhere, because we have a ton of it ---+ it's a win for them, it's a win for us, and it helps us further substantiate the pricing rather than just the old shootout at the OK Corral.
Thanks, <UNK>.
As you know from our Investor Day, we assumed as the industry started to show very slight decline that that was going to continue.
There is a lag because we tend to get paid two to three months later.
But looking at the earnings reports from the distributors, I think it was very encouraging.
Some of them have gained subs; others are declining at much lower rates.
If that flows through, that will be meaningful upside for us to what our plan is, because we've assumed that there'll be a slight decline.
And even at the numbers that we were seeing in the recent earnings reports, that's better than what we have in our plan.
So we'll just have to see.
It's a ---+ for us, the good news is we're very protected on the bundle.
We could've gotten more price and structured deals where there was more flexibility to move some of our channels.
We opted to have the maximum security for our channels and get price.
So we will track pretty closely what the universe estimates are, because we did build into our deals over the last four years less flexibility to play ---+ to move around our channels.
Well, <UNK>, we certainly don't want to give too much expectation today about 2016.
But look, we're very encouraged by that 12% trend, and I think it continues to speak to our share of viewership being meaningfully higher than share of wallet.
We talked about the third quarter, the second quarter being a bit of an anomaly; so us being back in the double-digit range is where we should be.
For me, I continue to think that's where we're going to stay for a while.
We just have so much growth potential and opportunity across so many of our key markets and regions, and so I think the third quarter trend not only is encouraging but I think indicative of a lot of the core ad sales metrics we're seeing across our International markets.
<UNK>, look, this is something that we've thought about and debated the merits of for quite some time, quite frankly.
We had one of our Board meetings in October.
And look, when we look at our portfolio we look at our free cash flow growth; we look at the fact that 80% of our US affiliate deals are done with tremendous rate CAGRs; when we look at our cash tax rate and what we're doing there to drive that down ---+ when we compare ourselves not only to those operating metrics but then we compare ourselves to our peers around, as I mentioned I think before, our interest coverage ratios, our free cash flow to debt yield, it's the right capital structure for us.
We have a derisked US business model.
We have an accelerating cash flow model.
I'm extraordinarily comfortable with the seat I'm in that we can sustain this higher level of leverage, still being fully committed to and maintaining our investment grade, and allow ourselves to drive a higher level of return on equity while still being very prudent with our debt and capital structure.
So it just was very much the timing of not only Board discussions but then just operationally how confident I feel now about our growth profile.
