Kenneth Lee - Reuters Gillian Wee - Bloomberg News Shira Ovide - The Wall Street Journal George Silino - The Hollywood Reporter

Ladies and gentlemen, thank you for standing by and welcome to the News Corp fourth quarter 2008 earnings release conference call. (Operator Instructions) I would now like to turn the conference over to our host, Mr. Gary Ginsberg, Executive Vice President of Global Marketing and Corporate Affairs for New Corporation. Please go ahead.

Thanks, Mary and welcome to our fourth quarter and fiscal 2008 year-end earnings conference call. I apologize to those of you in New York for our late start today. Joining me today are Rupert Murdoch, Chairman and CEO of News.; Peter Chernin, President and COO; and Dave DeVoe, our CFO. As is our custom, Dave will begin the call with a brief summary of the results, focusing on items not immediately obvious from the reading of the earnings release, which we assume you all now have. Rupert will then give some deeper commentary on a couple of our international initiatives, including Sky Italy and our international cable channels, and then offer some perspective on our printer operations, including our latest acquisition, The Dow Jones Company. Peter will then speak about what you can expect from our leading entertainment assets in fiscal 2009, including some forward commentary on our television and cable businesses, as well as an update on what’s ahead at the film company. We will then of course take your questions. Just some legalese: this call is of course governed by the Safe Harbor provisions. On this call, we will make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those described in News’ public filings with the SEC that could cause actual results to materially differ from those in the forward-looking statements. Finally, please note that certain financial measures we will use in this call, such as EPS and net income, are expressed on a non-GAAP basis and have been adjusted to exclude certain items. The GAAP to non-GAAP reconciliation will be posted on our website on our investor relations earnings release page. And with all of that, I’ll now turn the call over to Dave.

Gary, thank you and good afternoon, everybody. As you have seen in today’s earnings release, News Corporation once again posted very solid results, with double-digit revenue, operating income, and net income growth for both the fourth quarter and the full fiscal year. Let’s start with our full year first. We achieved 21% operating income growth on a total company basis and 17% growth when you factor out those items we were excluding from our guidance, namely the $126 million gain on the U.K. land sale and the Dow Jones operating income contribution. This 17% growth is consistent with the upper end of the expectations we provided to you six months ago and well above the low teens guidance we provided about a year ago. This strong financial performance was driven by 15% overall revenue growth and double-digit earnings growth at our television, cable, DBS, and newspaper and information service segments. Bottom line, the company reported net income of $5.4 billion versus $3.4 billion last year. The related earnings per share was $1.81, a 68% improvement over last year’s reported earnings per share of $1.08. Included in net income in earnings per share are a couple of items I would like to highlight. We reported pretax other income of $2.3 billion, which includes a gain of approximately $1.7 billion related to the Liberty DIRECTV transaction. Gains from disposal of our interest in the Bay area RSN in Gemstar, as well as the positive mark-to-market adjustment on our [BUX] liability. In addition, our equity earnings reflect a $485 million charge for our share of BSkyB’s write-down on its ITV investment. Excluding the net income effects of these items, adjusted earnings per share was $1.22 this fiscal year, an increase of 22% over similarly adjusted $1 in fiscal 2007. Now let’s look at…

He may be on mute.

It will be just one moment while we reconnect his line.

Thank you. If everyone can just hang on one minute, we have some technical difficulties. Rupert is in Beijing on a separate line. We’ll get him shortly. I apologize. We’re going to change over. Peter’s going to go ahead and give his comments now.

Yeah, why don’t I go first and then we’ll turn it back over to Rupert once he’s reconnected. Before I go back to Rupert, I want to touch on a few of our core businesses that continue to perform well despite the increasing economic pressures that Dave just described, and give a little more color on why we think that they are positioned to weather the turbulence we are all currently feeling to some degree. Let me start with Fox Broadcasting, which finished its fourth straight season as the number one network with the largest margin of victory -- And in a first for any network in the past decade, Fox ranked number one across all key demos. We think this momentum will result in a ratings upswing as we enter the Fall season in just a few weeks with a stable schedule of hits. House returns as the number one scripted show on television for the second year in a row. Terminator: The Sarah Conner Chronicles, was last season’s top new scripted show on any network, and Moment of Truth was the number one new series on broadcast television. And finally, American Idol continues to dominate primetime with a 57% average advantage over its closest competitor last season. Going forward, we believe we have the single most buzzed about new show --

I apologize for that glitch, everybody. Good afternoon and thank you very much, Dave.

Rupert, hang on. Peter is in the middle of his because we didn’t have you on the line. He’ll finish his and then we’ll go to you, if that’s okay.

Okay.

Going forward, we have the single most buzzed about new show on network television in Fringe from J.J. Abrams. There’s also tremendous excitement for the return of 24 in January, so much so that we are producing a two-hour prequel TV movie for November. We had quite a strong up-front this year on our network in terms of volume, with solid pricing increases and a low level of cancellations. The scatter market also remains robust. Last month’s all-star game beat our goals even without the extra innings. We’re in the middle of the football up-front and pacing strongly ahead of last year, and our three big American Idol sponsors -- Coke, Ford, and AT&T -- have all already renewed for the upcoming season and in our top categories, spending is up across the board. While the network outlook is bright, our local stations are feeling the effects of a worsening economy. The total local ad market was down 10% in the fourth quarter and pacings for Q109 continue to be weak. We are starting to see some presidential political spending in several markets but spending in key categories, like automotive and telecom and financial services, remains down. While we continue to generate a growing market share of the ad markets, with actually a record market share in July, the overall local ad market is highly challenged at the moment. Moving back to a bright front, moving back to cable, we’re seeing significant growth on a number of fronts, especially internationally. Last year Fox International channels launched 40 new channels and generated revenues close to $1 billion with margins of 25%, among the highest in the international cable industry. Notably, almost all of the revenue comes from either emerging markets or mature markets with low but growing cable and satellite penetration,…

Thank you very much, Peter and good afternoon, everyone. I’m sorry for that telephone glitch and I’m sorry for the lateness of the call, but I’m joining you, my New York colleagues, from Beijing. If I sound a little distant, you’ll new why. News Corporation is a global company and I’ve spent the past few days with our team in India, which is building a remarkably successful and very profitable television and multimedia operation. For all the talk of international downturn, even the gloomier Indian economists are still forecasting GDP growth in the coming year of at least 7%. As Dave just outlined, fiscal 2008 was a very good year operationally and financially. We finally completed our tax-fee asset swap with Liberty Media, recognizing a nearly $1.7 billion gain on our divestiture of DIRECTV, while at the same time reducing our outstanding share count by 16%. We also completed our acquisition of Dow Jones, with its information services businesses and the Wall Street Journal, include arguably the most important and vibrant brands in business news worldwide. We also raised over $1.5 billion in capital by selling a non-strategic ownership position in Gemstar TV Guide, a minority interest in other cable assets, as Dave has already mentioned. And in July, since the end of the year, we’ve just received $1.1 billion in proceeds from the sale of eight smaller television stations. The financial success we’ve enjoyed should come as no surprise. It’s a steady continuation of the growth we’ve sustained really since 2002. In fact, over the last five years, using almost any metric, few if any companies in our sector have matched our revenue, operating income, or earnings per share growth. Revenue growth of almost 14% a year on average, with average operating income growth of 18% and earnings per…

Thank you. Operator, can we get right to the questions?

(Operator Instructions) Our first question comes from the line of Rich Greenfield with Pali Capital. Please go ahead.

Thanks. Can you give us a sense of how big enterprise media now is within your newspaper segment, and particularly within Dow Jones? And what the growth profile of that business looks like. I think very often, everyone just wants your entire newspaper business as a newspaper business and are missing the growth profile of that enterprise business. Just wondering how significant the earnings contribution now is within that overall newspaper segment and what it’s profile over the next few years could be. And then second, Dave made some comments about the difficulties in the advertising environment for both newspapers and TV. You sold TV stations at 10 times EBITDA earlier this month. I’m wondering whether -- what your thought process is for shedding other assets, given the attractive valuation you were able to exit TV stations at recently. Thanks.

I could just pick that up, certainly on the Dow Jones side -- I would think that -- I know that more than half the profits already come from various digital efforts there, or digital delivered products, such as the newswires, Factiva, the indexes, and so on. All of these things are growing very fast. We see Dow Jones as being the whole, right at the forefront of the digital revolution. For instance, just the very basic thing, wsj.com, is expanding extremely fast. It leads into the subscription service, of which we have now well over 1.1 million subscribers at a healthy price, which it will -- and one that can be increased and will be increased, and that of course also leads into very specialized wires for which we can charge very high premiums. It is an information service, not a newspaper, an information service which will be neutral to all platforms, whether it comes on a Kindle or a mobile telephone or a PC or whatever. That really goes for all our newspapers. Our newspapers should be seen as services to their public and their communities but will be available in every way.

Thank you. Our next question comes from the line of Jessica Reif Cohen with Merrill Lynch. Please go ahead.

Hang on one second, Jessica. Peter is going to answer --

I think the second part of your question, Rich, was about television stations and would we sell anymore of those businesses in this environment. First of all, I’m not sure. I think we sort of timed that sale pretty perfectly and felt good about the multiples we got for it. Secondly, I think it’s important to point out that we’ve got a pretty good group of television stations right now, including I believe nine duopolies in major markets, so a big chunk of our television station inventory is now tied up in duopolies which continue to outperform the market. While I guess we’d probably be open to discussing anything, I’m not sure I’d be looking for us to see us selling some additional television stations in the short-term.

I would support that. We need those major stations and that number of stations really to be the backbone of our network.

Jessica.

Thanks. Can you talk about the leverage at FIM? It sounds like you pretty much have guaranteed double-digit revenue growth between branded pacings and the step-up in search. So I was just wondering if you could talk about what your cost outlook is for fiscal ’09 and talk about your strategy there in terms of potentially getting bigger or gaining scale? And secondly, local advertising is clearly weak for everyone but national still seems to be strong and Peter, you’ve been quoted all over as saying a tale of two worlds today. Are you not seeing any spillover in key categories like auto into national? And Dave said 4% to 6% OI growth -- what is your revenue guidance for ’09?

First on the FIM side, I guess the key thing I’d say is certainly we believe that we are still in a scale gain business and it’s important -- a very, very competitive environment and it’s important that we keep growing and we keep investing to grow, investing to grow in terms of development, in terms of technology, in terms of international, in terms of new features, in terms of content and we will continue to do so. That being said, our expectation is that we can grow our margins in the FIM business in fiscal ’09, so our costs will continue to grow and we are expecting right now I think our projections are we can have revenue growth of 30%. Our costs will continue to grow but we expect the margins to grow also, so that we will outpace our cost growth with the revenue. But we will certainly continue to focus on growing the overall category, into the making the right kind of investments and frankly, I’m pretty proud of what they’ve achieved over the last six months. I think the homepage redesign, their new app products, the work they’ve done on hyper-targeting, the work they’ve done on optimization -- all those have been investments that I think have been very worthwhile investments and have really grown the overall business. In terms of the national versus the local advertising business, we are seeing real strength in national and particularly in some of the cable up-fronts, but also on our broadcast network business. In terms of key categories, certainly the auto category is probably the one that is a little bit weaker but we have a couple of key advantages. One is that our single biggest advertiser is Ford and they chose to renew their advertising in American…

And then the revenue guidance?

Jessica, I can’t give you just one number but I would say broadly, with the exception of our TV stations, which you would say probably down mid-single-digits, the rest of the business is likely to grow, and not including obviously Fox Interactive, low- to mid-single-digits broadly is what we are planning for.

Thank you.

So obviously to the extent that the economy improves [inaudible] to do better.

Thank you. Our next question comes from the line of Doug Mitchelson with Deutsche Bank. Please go ahead. Doug, your line is open. Please go ahead.

Why don’t we go to the next one, Operator?

Sorry about that. So you indicated that the cable start-up losses were $200 million in fiscal year ’08 I think, so just curious what the fiscal ’09 number. And if I -- I think I missed it, but you just said revenue guidance of low-single-digits for fiscal ’09, is that right, Dave?

What I said was that it’s difficult to give a total number, to give a number but you really have to look at it business by business. I said broadly that we would expect our TV stations to be down mid-single-digits and the rest of the business to grow low- to mid-single-digits excluding the Fox Interactive business.

I guess my question on that, Dave, is to the extent that you have an advertising assumption underlying your guidance, is that advertising assumption based on your current pacings or are you assuming a deterioration or an improvement in the ad market throughout the year?

That’s based on the markets as we see them today.

And in terms of the cable channel, the cable channel investment number, the losses were probably a little bit closer to about 160 or so, and we would expect those to come down probably by about 40% in fiscal ’09, and continued investment in Fox Business and a real turnaround in Big 10.

Thank you. Our next question comes from the line of Jolanta Masojada with Credit Suisse. Please go ahead.

Thanks very much. With the $1.1 billion of cash you received from the TV stations and the upcoming cash you’ll receive from the sale of NDS, can you talk about your plans for corporate strategy, whether those funds are largely to be diverted into investments such as premiere or into the share buy-back or other purposes?

We’re going to be opportunistic and we are going to be careful like everybody else. We think there’s enough uncertainty around for us to put the strength of our balance sheet as our absolutely number one priority. As to premiere, we now -- we’re very happy with that. We have 25%. We have cartel office approval I think to go to perhaps 30%. We’re just really looking at that, to be perfectly honest. We think it may be a big opportunity. We have now two senior directors on the board plus an independent -- that’s out of six directors. We’re working very well with the management and it’s too early to indicate any intentions there because we really haven’t come to any conclusions.

And how about the buy-back -- can you make any comments on your intentions there?

We’ll look at that as the year develops. If you think that it’s such a good buy, you should be telling people to buy shares. We’re not here to liquidate the company.

Thank you. Our next question comes from the line of Benjamin Swinburne with Morgan Stanley. Please go ahead.

Thanks. I’ll just ask two -- first on Sky Italia, Rupert, if you could talk about the long-term expectations you have there for penetration growth. If you look at what Sky did in Britain, sort of changed the strategy a few years ago to become a little bit more aggressive at the lower end, get involved by Easynet and use broadband and phone to drive additional penetration. As you look at the Italian market, are there additional products that you’d like to sell alongside Sky to help reaccelerate or drive further penetration? Or do you feel like the business is set up to get where you’d like it to get under the existing structure? And then, if I could just ask a question on MySpace -- the usage numbers obviously are impressive, the target-ability we all understand. Has the economic environment -- and this is for Peter or Rupert -- made it more difficult to get advertisers on board with the targeting technology, or is that sort of irrelevant given the early stage of this business?

We’re just taking the first half of your question about Sky Italia -- we see several more years of this level of growth. It’s very popular, it’s doing well, it’s got a great name there. There’s no reason why it shouldn’t -- now, we are cooperating with broadband suppliers and helping them and they help us, rather than buy into it in a big way ourselves as we did in Britain. We don’t think it will be necessary in Italy and we don’t intend to make that sort of commitment.

On the MySpace piece, what I would say is look, I think anecdotally probably that market is a little bit weaker but you know, we’re in a pretty nascent stage, so I think we are seeing actually pretty strong demand for the targeting technology, because it’s new enough. And to be honest, I think as we announced, we made a change in the ad sales management sort of five of six months ago and we think we’re reaping the benefits of a new, aggressive focus there. So while the market may be a little bit soft, I think our experience in that market certainly over the first month of this fiscal year, we’re encouraged by what we are seeing out there right now for ourselves.

Thank you.

Our next question comes from the line of Michael Morris with UBS. Please go ahead.

Thank you. On the international cable channels networks, it sounds like you did about $250 million in operating profit against I think it was about $180 million that you were targeting at the beginning of the year. Can you talk about -- I guess how much of that growth is organic versus consolidation, I think in part of National Geographic? And then also, can you give some more specifics, I guess, about whether if it’s specific channels that are being taken up in different markets, specific programming? And I know you talked about Latin America, but I guess just more specifics on both the content and the markets to help us understand where the opportunity is and where the risk would be.

First of all, I don’t remember what we projected but I think your numbers are fairly accurate. Of that total number, probably about $80 million represents Nat Geo consolidation, so the rest of it is organic growth. What I think we’ve done, and we talked about this a little bit maybe two calls ago, is that we’ve done a pretty good job of creating a sort of modular model where we have certain channel brands, whether it’s Nat Geo, whether it’s Fox Life, whether it’s Fox Crime, whether it’s Nat Geo Wild, et cetera, whether -- and we are able to sort of open up new channels in markets for relatively little money. We can -- a lot of these markets can launch a channel for $3 million, $4 million, reach break-even within eight or 10 quarters. And so I think one of the things I said earlier was that we launched 40 new channels last year. That’s almost a new channel a week, and in all sorts of territories, ranging from -- I think just in the last week or so we just launched Fox in Germany, which is a big event for us. But we also launched small channels during the year in places like Serbia and small places in Eastern Europe. We are seeing pretty good growth across lots of these developing markets, across Latin America, across Eastern Europe, and also the maturation of some of our channels in bigger markets. Italy continues to be very, very strong for us. We seem to be delivering the bulk of the ratings, or the single biggest content driver on Sky Italia. The U.K. continues to be strong for us. Our Asian markets continue to be strong. So it really is a mix of all these things -- and I’m sorry, I just wanted to clarify, that $80 million Nat Geo number was actually the total global number. Of that, $50 million is international and $30 million with Nat Geo domestic, so of the number, $50 million was -- of the international number, $50 million was the Nat Geo consolidation, not 80. I apologize -- 80 is the total number.

Thank you.

Thank you. Our next question comes from the line of Anthony DiClemente with Lehman Brothers. Please go ahead.

Thanks for taking my question. Just one question for Peter -- it’s clear that the viewership of both professional and user generated video content is growing really quickly on the web. You see that with your own usage numbers on MySpace and we see that on YouTube. The question is, is that growth of mine share on sites like MySpace and YouTube, is that a fragmentation risk that could impact viewership at the TV network and stations in a secular way? And if not, I imagine your answer would be no but even if that’s true, even if the Internet is additive to the total, do you think that the web could add incrementally to overall media consumption but at the same time be cannibalistic to revenue at some of the more traditional forms of distribution, like the TV network, the TV stations, or even DVD sales? And given News Corp's content ownership on both sides of that equation, old media and new media, I hope you can comment. Thanks for taking the question.

Well first of all, I guess I would say on an absolute level, probably the use of user-generated content is competitive. It’s eyeballs going someplace but that’s the world in which we live in. We live in a world of infinite choice and people are going to have plenty of opportunities to watch whatever they want. And our job as programmers on our traditional business is to make sure that our programming is so compelling that people would rather watch it than all of than all of the -- you know, if they are not going to watch user-generated content, they are going to play videogames or they are going to surf the web for other things or they are going to look at their cell phones. So I don’t want to pretend it doesn’t exist but it’s just one more competitive drop in the bucket. I think -- a couple things I want to say; first of all, I believe that we need to look at user-generated content very differently than we are looking at sort of premium content on the web. And we have the number two user-generated content on the web on MySpace and one of the things, just as an aside that I would like to say, there is -- we are doing a -- we are working very aggressively to offer advertisers segregation opportunities so that advertisers, one of the things, they can be segregated from content they may not want to appear next to, while at the same time those advertisers who are interested in that traffic, we can guarantee them that maximum traffic. On the premium site, one of the things we feel really good about is the growth of Hulu. We’re not a top 10 site. We’re seeing 3 million weekly uniques…

Our next question comes from the line of Alan Gould.

-- the network DVR and Rupert, I was wondering, I see that you’ve put for review some TV stations in Eastern Europe. I know you’ve also got the outdoor business in Russia for sale. That may be for different reasons but I was wondering if you could give your view of what’s happening in Eastern Europe. I know you are very bullish in Asia. Are you becoming less bullish in Eastern Europe?

Alan, we missed the first part of your question.

The first part is simply if Peter could comment on the court’s ruling on Cablevision’s network DVR.

Look, we are still reviewing the ruling. As you know, we were part of, through the MPAA, we were part of the consortium that appealed the original ruling, so we obviously had a strong position that we did not think was appropriate before this. But before -- we need to review the specifics before we decide what our next step is. But historically, you can assume we weren’t in favor of that ruling.

Right, and what was the second part?

Do you want to answer the question on Eastern Europe?

Eastern Europe, yes -- no, this is really a slight change of strategy. We believe that our position in Bulgaria, which is extremely strong, can’t get any stronger. We thought we’d try and monetize that while it was at its top. We don’t quite know yet whether we scale back a bit in Poland, which is proving more difficult than we expected or whether we can sell that but basically it could be for a diversion of those resources elsewhere. The sale of Russia is a different matter all together. We have great growing business there but just -- this is purely me, I’m sorry, I’m -- the more I read about investments in Russia, the less I like the feel of it. The more successful we’d be, the more vulnerable we’d be to have it stolen from us, so there we sell now.

Thank you very much.

Thank you. Our next question comes from David Bank with RBC Capital Markets.

Thanks very much. Just to follow-up on a previous question, you guys have said that you would approach the buy-back issue opportunistically but you are levered right now at about one times debt to EBITDA. Your stock is trading somewhere in kind of the six times range and the growth at the company actually looks, especially in light of the challenging environment, pretty impressive. So I guess the question is with that kind of dry powder, this low a stock price, and such a favorable outlook for the company, what kind of better opportunity could there be?

I don’t know. Why don’t you buy more stock? We’ve seen other companies go into heavy, heavy debt to buy back stock and it’s done nothing for them. All they’ve got themselves is several years ahead of them sweating to pay the debt off. So we want to just hang loose for a little while yet. We’re not saying we’re not going to buy back stock. We may well do so but right now, we are not in the business of liquidating the company by buying back stock. We want to -- although we’ve just had the biggest buy-back in history in selling DIRECT for stock, so let’s just take it step-by-step. There are too many uncertainties out there at this moment.

Okay. Thanks for taking the follow-up.

Thank you. Our next question comes from Jason Bazinet with Citigroup.

This will be our last question, Operator, just because of the lateness of the hour.

I’ll make it quick -- some of your competitors seem to be moving aggressively into day-and-date on the film side and I was just wondering if you could share your current thoughts on that potential transition. Thanks.

We continue to look at it on a case-by-case basis. We find that for certain kinds of movies, it seems fine. For other kinds of movies, we still have some concerns that it may cannibalize our DVD business. We are continuing to do more tests and we certainly don’t feel in any rush. Again, it sort of relates to my earlier answer, which is what is paramount in our mind is protecting our overall margins and we certainly don’t want to be overly aggressive until we are sure that any move like that is going to be margin accretive.

Very good. Thank you.

Thank you, everyone. We’ll now go into our press call, Operator, and if there’s any further investor calls, feel free to call Reed, myself, [or Barbara in New York].

(Operator Instructions) Our first question comes from Kenneth Lee with Reuters.

Rupert, you talked about launching new channels in India, backed by $100 million in funding. How much of that is for launching new channels and how much of that has been earmarked for investments or partnerships with existing channels in the region?

That’s entirely new channels and it’s probably a slightly exaggerated figure. It would be closer to 60 than to 100. It’s really just extending our existing channels into different languages and in some cases, more localized programming as you go from area to area within India. The growth there is really extraordinary and we will be doing more and more there, and we would like to be doing more in China.

Any plans back to India to invest in existing properties?

No, in fact, we’re looking at a couple of small divestments at the moment, which would probably pay for anything like that. But we’ll be opportunistic if things turn up that can’t be resisted but we don’t see very much at the moment.

Thank you.

Thank you. Our next question comes from Gillian Wee with Bloomberg News.

I just wanted to ask about Cablevision -- would you have any interest in looking at any of their businesses or any other media assets in the U.S. right now?

Not at the price they’d be asking but yes, I think it’s possible that a couple of their big cable channels could be interesting at the right price.

What about the AMC or the whole Rainbow Media group?

Well, it’s pretty mixed -- it’s a pretty mixed group but we’re not looking at Rainbow per se. I don’t think we’ve been offered it.

So at what price would be suitable?

I don’t know. We’d need to look at what the current market multiples are for cable channels.

Next question, please.

Thank you. Our next question comes from Shira Ovide with The Wall Street Journal.

Thanks. I wanted to ask if you’d elaborate a little more on whether you are seeing signs that the local advertising weakness you’ve talked about in broadcast TV and in newspapers is affecting cable advertising?

I’ll answer that. You know, look, first of all, we honestly wouldn’t know, with one exception, which is we sell our cable advertising on a national basis and that’s quite strong. The one area where it does affect us, and it’s pretty significant, is through our regional sports channels. We’re a big seller of local advertising and that business, while it has some unevenness, is actually quite strong and has been holding up quite well. I think a lot of that is a function of the overall strength of sports. We’ve also worked hard to integrate a number of sponsorship deals as opposed to straight advertising deals. So our revenues in that business, which is a pretty sizable exposure to the local cable market, have been quite solid and are holding up quite well. The other part of the local cable business, you’d have to ask the local cable MSOs and their inter-connects, and we don’t participate in that business so you’d have to ask them.

Okay, but in terms of the national cable ad market, you’re not seeing weakness there?

The national cable market, we’re seeing quite good strength.

Okay, thanks.

Thank you. Our next question comes from George [Silino] with The Hollywood Reporter.

Peter, I was wondering if you can talk a little bit about whether you are still thinking or talking to any partners in the Internet space for FIM -- Yahoo! or Microsoft, any of those guys?

No, we’re not talking to anyone right now. I think that we said fairly consistently that we were willing to look at those things opportunistically and if there was something that made sense to us we were willing to have a conversation but hopefully as you could tell from our previous answers, we certainly never felt like we had a defensive issue with FIM, that we were somehow handicapped. We actually feel quite good about our progress across multiple fronts in that business and feel strong about our position. So we were happy to have opportunistic conversations but they obviously led nowhere and we are not talking to anybody right now.

Thank you.

I’ll just add to that -- we’re already moved on from those conversations.

Speakers, I’ll turn it back to you for any closing comments.

We have on closing comments. Thank you very much for joining us. Thank you for waiting of the lateness of this call and if you have any further questions, call us in New York and thank you. Have a good evening.

Ladies and gentlemen, this conference will be made available for replay after 7:00 p.m. Eastern Time today until August 15th at midnight. You may access the AT&T executive playback service by dialing 1-800-475-6701 and entering the access code of 953360. International participants may dial 1-320-365-3844 and enter the access code 953360. Those numbers again are 1-800-475-6701; international, 1-320-365-3844 and enter the access code of 953360. That does conclude your conference for today. Thank you very much for your participation and for using the AT&T executive teleconference. You may now disconnect.