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spk11: Good afternoon. My name is Chris and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Endeavor third quarter 2021 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star then one on your telephone keypad. And to withdraw your question, please press star one again. Thank you. James Marsh, Senior Vice President of Investor Relations.
spk12: You may begin. Good afternoon and welcome to Endeavor's third quarter 2021 earnings call.
spk03: A short while ago, we issued a press release, which you can view on our investor relations site, investor.endeavorco.com. A recording of this call will be also available via that site for at least 30 days. Today, you'll hear from Endeavor's CEO, Ariel Emanuel, and CFO, Jason Lublin, before we open for questions. The purpose of the call is to provide you with information regarding our third quarter 2021 performance, in addition to our financial outlook for the balance of the year. I do want to remind everyone that the information discussed will include forward-looking statements and or projections that involve risks, uncertainties, and assumptions, as described in the risk factor section of our filings with the Security and Exchange Commission, including our 10 Qs. If these risks or uncertainties ever materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements and projections. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them publicly in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release issue today, as well as on our IR site. With that, I'll hand it over to Ari.
spk04: Thanks, James. Continuing our positive momentum from last quarter, we once again surpassed our quarterly revenue and adjusted EBITDA targets. Given the outperformance and our positive outlook for the balance of the year, we have also raised we have also raised our full year outlook, which Jason will discuss in more detail shortly. Before he does, I want to discuss three important themes. UFC record performance year to date, the continuation of pent up demand for entertainment, and the attractive prospects of sports betting. UFC posted its best nine month year to date period in the 28 year history. in terms of revenue and adjusted EBITDA, and this despite lower event output in the third quarter versus third quarter 2020. During the third quarter, UFC sold out all three pay-per-view events, and UFC 264 became the third highest grossing event in UFC history. Gate revenues at all events was enhanced by our own VIP experience offering from On Location, that puts fans in the center of the action. Meanwhile, commercial pay-per-view saw the highest worldwide grossing revenue quarter since the pandemic began, driven in large part by the many US restaurants and bars starting to open in full capacity. We also saw strong performances across our consumer products and licensing and sponsorship categories, UFC sponsorship revenue is up 59% compared to third quarter 2019, the last non-COVID impacted year. We're seeing similar sponsorship increases across the balance of our owned and operated sports and events portfolio. In terms of international media rights, we've closed nine new deals throughout Asia Pacific during the period. If you combine these nine with the prior five international rights deals we discussed last quarter, the aggregate average annual value is up more than 80% over the prior deals. Beyond the UFC, our businesses continue to benefit from the pent-up demand for entertainment created by the pandemic. While reopening rates continue to vary geographically, We are seeing increased activity across all lines of our business. Linear and digital platforms are in a race for more content, creating an uptick in television and film productions. Meanwhile, our talent representation business, excluding music and theater, is up double digits this quarter versus third quarter 2019. And we have room for more optimism as Broadway recently reopened and music artists committing to multi-year tours in large venues. On the sports side, fans are filling stadiums and sponsors are eager to spend dollars to reach those fans and make up for lost time. If you look at Super Bowl 56, ticket sales from on location, they are pacing meaningfully ahead of 2019 sales for Super Bowl 54. The average ticket price is up over 50% on a like-for-like basis, now turning to sports betting, a fast-growing complement to sports media rights and live events. The combination of the pandemic's role as a catalyst for online sports betting, the increased betting legalization among US states, and the opening of new territories globally has laid the foundation for further growth of our IMG Arena and soon to include OpenBet sports betting business. As it currently stands, IMG Arena is part of our events, experience, and rights segment. Upon closing of our OpenBet acquisition, which we announced at the end of the third quarter and which is expected to close in the first half of 2022, IMG Arena and OpenBet will combine to form a fourth operating segment. This will create greater transparency and enable us to better focus on this growing business. IMG Arena is already a major global player in the sports betting market, serving more than 470 sportsbook brands by supplying data and video feeds from rights holders, including PGA Tour, UFC, ATP, and MLS. layering in OpenBets betting engine, which processed nearly 3 billion bets in 2020, and its modular suite of content offerings with IMG Arena's feeds and virtual products, will create a unique end-to-end solution for sports books and rights holders. It's a fully integrated tech solution combined with a fan-first approach to content. a completely turnkey solution that we can take to existing rights holders within our broader media business while also making us more attractive to prospective clients. We expect this integrated offering will help rights holders drive increased fan engagement and new monetization opportunities, in turn increasing the sports betting handle. As I mentioned, While we don't anticipate the acquisition to close until sometime in the first half of 2022, we've already received a high level of interest from sportsbooks and rights holders around the combined entity. And we are extremely encouraged by the growth opportunity ahead. And with that, I'll turn it over to Jason.
spk12: Thanks, Ari. And good afternoon, everyone.
spk06: Before I get to our revised guidance, I'll start by walking you through our financial results for the quarter and providing you some additional color around what we're seeing in each of our segments. Any comparisons I give will be in reference to last year, which was impacted by COVID. So the quarter ended September 30th, 2021. We generated approximately $1.4 billion in consolidated revenue, up $526.8 million or 60.9% over the prior year period. Adjusted EBITDA for the quarter was approximately $283.3 million, up $105 million, or 58.9%. Our own sports property segments generated revenue of $288.5 million in the quarter. The segment is now $10.6 million in revenue in comparison to the prior year quarter. This is attributable in part to a $25 million contract termination fee recognized in the third quarter of 2020 that did not recur in 2021. It is also due to more events being held in Q3 2020 as a result of events shifting from Q2 due to COVID-19. The revenue decline was partially offset by UFC's continued strong growth across live events, residential and commercial pay-per-view, consumer products, licensing, and sponsorship, as well as additional PBR events held in the quarter. The segment suggested EBITDA was $134.7 million. U of T posted its best nine-month year-to-date period in its history in terms of revenue and adjusted EBITDA. Outside of its strong live event and pay-per-view performance, we signed several new licensing and sponsorship deals. These included a partnership with Icon Meals, a healthy, ready-made meals company, and multi-year sponsorships with Battle Motors and Zip Recruiter. Internationally, as already mentioned, we also secured nine new media rights deals in Asia-Pacific, significantly increasing our distribution throughout the region. Meanwhile, live events on ESPN and ESPN Plus continue to perform well, with viewership up across platforms. The return of The Ultimate Fighter also proved a tremendous success. Viewership on ESPN Plus indicates the season performed better than the last three seasons that aired on Fox Sports 1. On the fan engagement front, where UFC continues to have one of the most engaged follower bases among all major U.S. sports. Social followers grew over 40%, and YouTube subscribers grew over 30% year over year. Lastly, in this segment, PBR also continued its positive momentum, taking its Ride Pass streaming service to Pluto TV, bringing its linear and streaming content all under the ViacomCBS umbrella. The company also signed several new national partnership and licensing deals in the quarter and launched its first NFTs last month. Now turning to events, experiences, and rights. This segment recorded revenue of $446.3 million, an increase of $62.1 million, or 16.2% year-over-year. The increase was primarily driven by greater events and production revenue attributable to the return of live events in 2021, as well as the addition of the recently acquired NCSA. This was partially offset by a decrease in media rights revenues, primarily due to the return to a normal schedule of European soccer matches in the quarter and the expiration of two European soccer contracts in the second quarter of 2021. Adjusted EBITDA improved 94.6 million to 85 million compared to the third quarter of 2020. This was primarily driven by the growth in revenue and a decrease in direct operating costs. To give you a little call around the activity we're seeing in this segment, there were several major sporting events during the quarter in which the Endeavor flywheel was on full display. The first was Wimbledon, a relationship that dates back over 50 years. IMG produced the event's official TV and radio channels, showed the tournament in-flight on its Sports 24 channel, secured 80% of its official partnerships, and brokered a deal to launch a commemorative NFT. At the Open Golf Championship, IMG served as a host broadcaster and the official commercial representative for the event, showed the event on Sport24, and ran hospitality. Meanwhile, our experiential marketing agency, 16790, created the tournament Spectator Village. And lastly, at September's Ryder Cup, On Location handled all consumer travel and ticket exchange programs for the event, while 160 over 90 operated consumer experiences and hospitality programs across the event footprint. IMG Arena packaged and delivered all official event data for Sportsbook operators via its golf event center, and Sport 24 carried the event in-flight. Meanwhile, dozens of clients competed across all three events, including Novak Djokovic, who claimed the men's single title at Wimbledon, while Patrick Cantlie and Jordan Spieth helped power the U.S. to a win at the Ryder Cup. Across the rest of our event portfolio, we held one of the largest New York Fashion Weeks ever, and several of our European festivals hit milestones. The Big Feastival celebrated its 10th anniversary with 50,000 attendees. The Hampton Court Palace Music Festival welcomed 30,000 visitors on its 25th anniversary. And Taste of Paris saw a record 32,000 guests attend the biggest food festival in France. And lastly, Freeze London returned with its first in-person event since 2019. Moving on to our representation segment, revenue was $664.7 million. an increase of $481.1 million over the prior year period, which saw most productions and touring events come to a halt due to COVID. Growth in this segment was primarily attributed to a significant increase in Endeavor content project deliveries, agent-client commissions, and marketing and experiential activations. Endeavor content deliveries included See Season 2 to Apple TV, Nine Perfect Strangers to Hulu in the U.S. and Amazon internationally, the final four episodes each of Truth Be Told to Apple TV, and The Wall Season 4 to NBC, as well as docu-series McCartney 321 to Hulu. Last quarter, we referenced that Endeavor content revenues were impacted by a shift in content deliveries into Q3, which subsequently had a positive impact on this quarter. Adjusted EBITDA for the quarter was $141.8 million, an increase of $100.1 million, primarily driven by the growth in revenue. As mentioned last quarter, we continued to pace ahead on WME bookings for the second half of the year. As concerts resumed in the quarter, WME had five of the six top tours and seven headliners at the Lollapalooza and Bonnaroo festivals. On the film front, the agency was behind summer blockbusters such as Cruella, Jungle Cruise, A Quiet Place 2, and Shang-Chi. the latter of which became the top-grossing film of the pandemic era in North America. On the sports side, more than 50 clients competed in the Tokyo Olympics, and nearly 20 broadcast clients covered it, while the men's, women's, and juniors' U.S. Open singles titles were all won by clients. We also continued signing stars like Dallas Mavericks' Luka Doncic, while pushing further into NIL representation, signing a number of collegiate basketball players. On the brand side, IMG Licensing was named Best Licensing Agency for its work with Goodyear, and also launched a number of new product lines on behalf of talent and brands, including Shinola, Dolly Parton, Fortnight, Bugatti, Jeep, and Aston Martin. Meanwhile, once 60 over 90 continued gaining steam with its brand clients looking to activate at major sporting events with increased fan capacities. At the Summer's Olympic Games, The agency worked with several official partners, including managing the athlete relationships for Team Visa and Team Coca-Cola. Finally in this segment, we shared last quarter that we had initiated the sales process for a portion of Endeavor content. As a reminder, our plan is to divest the required portion of the WGA restricted business and retain the non-restricted businesses. We continue to have positive conversations and are very bullish. We've narrowed down to a short list of potential buyers, and we'll let you know when we have more to share on that front. The updated guidance I'll share shortly assumes Endeavor content is status quo for the balance of the year. Now, before I discuss guidance, I do want to briefly touch on our capital structure. In Q2, we paid down a portion of debt under both the WME, IMG, and UFC credit facilities. And in October, we raised $600 million of debt under our UFC facility. We remain focused on strengthening our balance sheet and are on track to achieve our sub-four-time leverage target. Now on to our updated guidance for the full year 2021. As we've said before and will continue to say, what we believe looking at our business on an annual basis is the best way to view it given the quarterly fluctuations related to timing of events, timing of business transactions on behalf of our clients, and timing of content deliveries. As Ari mentioned earlier, we've been pleased with the pace of reopening, which has led to an uptick in productions and increased attendance at events. We, of course, continue to monitor vaccination rates and variants globally and plan for any potential impact. As it currently stands, we remain generally positive in our outlook for the remainder of the year and into next. We are therefore once again raising our revenue guidance from a prior range of between 4.8 and 4.85 billion to now between $4.89 and $4.95 billion. And on adjusted EBITDA, we've raised the range from $765 to $775 million to between $835 and $845 million. At the midpoint, this implies an over 17% margin, also in excess of our previous expectations. With that, I turn it back over to James.
spk12: Great. Chris, can we take the first question, please?
spk11: Absolutely. And just as a reminder, if you would like to ask a question, star 1 on your telephone keypad. And our first question is from Ben Swinburne with Morgan Stanley. Your line is open.
spk09: Hey, good afternoon, everybody. I have two questions, maybe already on sports betting. One question I've gotten from investors since you announced the open bet acquisition is, why do these businesses make sense at Endeavor? You know, what is it that you guys bring to the sports betting business from a platform point of view that can make these assets more valuable at Endeavor than they would be elsewhere, you know, in the ecosystem, particularly under sort of pure play sports betting companies. So maybe you could talk about what you've done with Arena and what you think you can do when you bring OpenBet in. And then second, if Mark's on the call, I think he is, just on the UFC, You know, there's obviously a number of years left before the ESPN deal is up, but I'm wondering what you guys have done and will continue to do to try to enhance the value of those rights with your partner, including adding new content or expanding the rights and distribution, making the business bigger, whatever you guys think is possible or that you've worked on to help us understand what you can do to make sure that that business is as valuable as possible to your partner when the deal does come up down the line. Thank you.
spk04: First of all, I'll answer the second part first. As Bob Chapek mentioned on his call, the driver for ESPN Plus was actually the UFC. And I can go into a lot of drivers that we think are going to add value to the UFC on a go-forward basis. But he and himself kind of mentioned the value of the UFC to drive subs, which I think is an indication of the value proposition. In addition to that, They have added Fight Pass. We have now the Contender Series. We have local Contender Series. So I think the programming length and depth that we have at ESPN is pretty significant, meaning that I think we're kind of pretty valuable to them in the growth of that platform for ESPN. If you want, later on I can go into growth drivers for the UFC. And as it relates to sports betting, we have a completely different approach to sports betting. You know our footprint as it relates to to our representation of sports rights on a global basis. We represent 150 and 160 territories, different from our competitors who are just in the sports betting business. And right now in the marketplace, sports betting is a complete complement to the sports viewing experience and a complement to it that is required. And if you see it on ESPN or any of the other platforms, actually crucial to that. And with our understanding of where sports are going, meaning the rights for sports are going, when you add this plus our other elements that we bring to the table, which differentiates ourselves, meaning the production business and the distribution business, plus the sports business, it's a unique offering that nobody else can bring to the table, which enables us to get a view when you go to a league and you offer all those segments, you have a unique opportunity for them internationally. And when you combine ARENA with OpenBet, I think our number was revenue synergies of a significant amount. I won't go into a specific number, but it's a large number. And we own the data and the feed on ARENA. They own all the content, the player wallets, integrity, et cetera. It's a one-of-a-kind offering that nobody else has in the marketplace. So I think that's why between what we have at IMG, IMG Arena, and this, I think we're in a unique situation.
spk12: Thanks, Ari. That's helpful. Operator, next question, please.
spk11: Our next question is from Alexia Quadrani with JP Morgan. Your line is open.
spk01: Thank you very much. Just two questions, if I may. First, on live events, can you discuss, I guess, what's embedded in your Q4 forecast and then how we should think about, you know, 2022? And at this point, what percentage of your portfolio do you think can operate without any restrictions? And then on Endeavor content, I guess, if you can discuss the long-term outlook, you see the unscripted piece of Endeavor content, the piece that you're keeping. And with the sale of the scripted side, eventually, I guess what kind of role you'll have as a 20% partner. Thank you.
spk06: Yeah, I'll take the first part of that question, then I'll hand it over to Ari for the second question. As far as events go, you know, we feel very good about our events and our portfolio coming back, as Ari mentioned, and as I mentioned in our preferred remarks. We've seen some great events and great ticket sales in Q3. We've seen Super Bowl tickets on a like-for-like basis be up over 50% year-over-year. A good Q3 with events like Big Feast Bowl and Taste of Paris as well. All of our UFC pay-per-view events year-to-date have been sellout, so really strong performance on our events across the board. As far as Q4, some of our larger events in Q4, we have Winter Wonderland, which is launching next week in Hyde Park, Miss Universe, as well as Freeze London. So those are some of our bigger events that are taking place in Q4. On the cancellation or timing side, we're still seeing some on some areas geographically, particularly in China, where our WGC HSPC has been canceled, as well as the Buick LPG. So still for some geographies around the world, we're seeing some impacting to our events. But overall, we also see music coming back and Broadway reopening. So going into 22, we feel very good about the momentum behind our event business and returning to pretty much as close to a full event calendar as we've had in some time. Given that certain geographies around the world, we still have some limitations.
spk04: And then as it relates to EC, We will sell the restricted portion of the scripted side, movies and television. On the non-scripted side, we have a very active business now in EC. We'll continue to have a very active business. We won't model it out right now, but we are very successful in that advisory business, non-scripted documentary space and will continue to be. And we see the demand from the streamers, the linear players, only increasing the mix. So that's going to be a very good business for us, and it continues to be a good business for us.
spk11: Thank you. Our next question is from Steven Lazacek with Goldman Sachs. Your line is open.
spk07: Great. Thank you. One for Ari or Mark on location. Last quarter, you signed a pretty sizable deal with the Olympics. Could you talk about what other opportunities, especially ones of a similar size, that you think On Location could go after the next year or so to continue to grow that hospitality platform? And then one for Jason, you mentioned Endeavor is in the process of selling Endeavor content, like we just spoke about, as well as breaking out the sports betting business into a separate segment. Could you speak to what investors could expect to see in the remaining parts of the events, experiences, and rights in a representation segment once that takes place, maybe in terms of revenue growth or margin profile? I think that would be helpful. Thank you.
spk04: So on the on location side, I really can't comment on specifics around future business. There's a ton of growth opportunities out there for us. I also just want to remind you that it's not just the professional sports platform that we see. We have massive travel, hospitality business in that space, and beyond sports, on location comes across fashion, music, entertainment more broadly. So we'll continue to see us looking for opportunities in these areas of business, given where we sit at the center of that on a global basis. So yes, there's sports opportunities, but also it's in all those different areas also where we sit.
spk06: Yeah, as far as the segments go, you know, post-closing, as we've said, for open bet, we expect to move the IMG Arena out of the EER segment, creating a new sports betting segment. That should provide increased transparency to help evaluate our sports betting business. But given the high quality of our assets that remain in EER on our businesses, including on location and our performance business, as well as owned and operated events such as Miami Open, we continue to be very bullish on our revenue outlook and our EBITDA growth potential in that segment. And as it relates to representation, As we said, we're going to be selling the restricted portion of the EC. We'll move out. We'll still have the remaining EC business, the non-scripted film sales financing consulting services in this segment. We do think that once the restricted portion of the EC is sold, we would expect to see margin improve for this segment overall. And also, we think the representation segment should be simpler to evaluate without the challenges of determining production and episodic delivery timing in this segment.
spk12: Great. Thanks for that. Our next question is from David Joyce with Barclays.
spk11: Your line is open.
spk08: Thank you. A couple questions, please. First, if you could please break out how much revenue and EBITDA in the quarter came from acquisitions. And secondly, on those new Asian distribution deals for UFC, if you could provide some more color on those. I appreciate the comment that the recent announcements aggregate the 80% increase in rights revenue, but How much of these are incremental distributors or incremental footprint or incremental rights and what's on the horizon for more renewals? Thanks.
spk04: So on the 80, you know, over 80%, it's same geography, new distributors. So actually instead of just being one, there's multiple and therefore we'll have actually bigger audiences. And so it's over 80% with the current nine, and as in last quarter, I mentioned five new ones. So it's a significant increase in our international economics.
spk06: Yeah, and as far as revenue and EBITDA associated with the acquisitions, they're embedded in our segments that they're representative. We're not specifically calling those out.
spk12: All right. Thank you. Thanks, David.
spk11: Our next question is from Jason Bazinet with Citi. Your line is open.
spk13: Thanks. I just had two balance sheet questions. One, I guess your cash balance came in a lot higher than I was expecting. And I think it's because we had maybe a $400 million use of cash to buy the balance of UFC. So I just wanted to make sure that that is yet to occur sort of later this year, next year, if you can just provide some color there. And then second, I was surprised how big the assets and liabilities are on the assets held for sale related to Endeavor content. Can you provide just a little bit of color? Is all of that just content?
spk06: Yeah, on the first part, we had positive working capital in Q3 this year. So as far as our cash balance goes, we are done with all the acquisition of the USC. So there's no more to be done there. And then as far as the assets held for sale, yeah, there's been a lot of production. The vast majority of that production and the buildup of those content assets until we actually make delivery of that content.
spk12: Okay. Thank you.
spk11: Our next question is from Maghan Durkan with Credit Suisse. Your line is open.
spk00: Yeah, thanks. I wanted to ask about the sponsorship growth opportunity at UFC. You talked about the growth versus 2019. I wanted to see what is driving that really. Is it the new categories? Is it pricing? I think sponsorship's been pretty hot lately. And then what product categories are still out there to be tapped at UFC? And then on the open vet acquisition, what are the biggest hurdles ahead for the closing and then integration of the business? And then how soon do you expect to see that business start to really scale?
spk04: So, as I said, um, on the sponsorship revenues are up 59% compared to Q, uh, three 19 and non COVID year. Um, so we continue to sign and, uh, renew large multi-year deals, draft Kings, cryptic monster. We've opened up new categories. As Jason mentioned, icon meal, zip recruiter, battle motors, uh, auto and QRS are categories that we're going after fairly significantly. And we're feeling good about that. And each one of our ones that are coming up, we're getting significant increases in the current sponsors that are getting renewed. And I think that's an indication of the power of the sport and the brand that exists now in the marketplace.
spk06: As far as OpenBET goes, no, we don't see any hurdles except normal regulatory approval and the timing it takes to get that done. And we're doing some pre-integration planning, whatever we can at this point. But as far as when we actually close the transaction, we expect to integrate as quickly as possible and try to get all the revenue synergies quickly. So we'll be doing as much as we can pre-integration and be ready to hit the ground running as soon as we close.
spk01: Okay, great.
spk11: Our next question is from Rich Greensfield with Lightshed Partners. Your line is open.
spk10: Hey, thanks for taking the question. I've got one big picture and then sort of a housekeeping point for Jason. But Ari, you know, I guess from a really high level, it seems like one of the final nails in the regional sports network coffin was sort of drilled down today by Dish into the whole Sinclair situation. But It seems like all of the leagues, people that you know really well or your whole company knows well in terms of baseball, basketball, and hockey, all need a solution for their streaming future. And I was just hoping, like, is there a – I mean, clearly they're looking for new partners and to figure their way out of a very difficult situation for sort of the local media rights that go well beyond cable networks. And I'm just – you know, high-level – Is there an opportunity for Endeavor? What role could you play? What do you think happens? And then just a quick follow-up for Jason on housekeeping in terms of, I think one of the things you mentioned for the better than expected performance this quarter was strength out of Endeavor content. I was just wondering if you could size for us how much in the quarter or year to date on EBITDA basis, revenue basis, what could you tell us about the business that's obviously leaving the company at some point over the coming year? Thanks.
spk04: Well, I mean, I would say the following. I think there will be a solution. Either they'll, on the local level, go direct if the situation doesn't rectify itself with the RSNs, or one of the majors will step in. None of these guys are not going to be in the local markets. I do think this is... for those leagues uh it's it's going to impact them but there will be a solution either somebody's going to come you know figure out the rsn situation on an over-the-top basis on a local base level um i don't really have a solid there it's not our that's not an area that we're going to play in um so um no that's not an opportunity for us
spk06: As far as never content goes, we're not going to break out what the revenue was there, but we did mention at the end of Q2 going to Q3 about revenue shifting from Q2 to Q3. We had a pretty big Q3, as we've also outlined by outlining a bunch of the deliveries we've made in Q3. We've also noted about a descriptive part of that business on a margin basis being typical studio margin. So obviously it's contributed some EBITDA on the quarter, but you know, overall, you know, we're happy with the results of the segment for the quarter and Endeavor content.
spk11: Thanks so much.
spk06: Next question operator.
spk11: Our next question is from Connor Murphy with Deutsche Bank. Your line is open.
spk02: Hey, how are you doing? So I guess the one question I have was, you know, the Hollywood production crew members just approved a new contract that would you know, limit hours, et cetera. And I just was wondering if you had any thoughts on if it would significantly impact the length of delivering content and, you know, how it might impact the industry going forward. Thanks.
spk04: Can you repeat the question? It came in and out at the beginning, so I really didn't hear that. This is Ari.
spk02: I'm sorry. No problem, Ari. So I just see the highway production crew members just approved their new contract. I think it's limiting some hours. And I was just wondering how you think that might impact the delivery of content over time. Will it string out, you know, how long it takes to get production done, et cetera?
spk04: No, I mean, I think it's going to be fine. I mean, they approved the contract.
spk12: So I don't think there's going to be any disruption. Great. Thanks, Connor.
spk11: We have no further questions at this time.
spk03: Thanks, everybody. Thanks for joining. If you have any follow-up questions, reach out. Thank you.
spk11: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
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