Charter Communications, Inc. (CHTR) Q3 2012 Earnings Report, Transcript and Summary

Tom Robey Glenn A. Britt - Chairman and Chief Executive Officer Robert D. Marcus - President and Chief Operating Officer Irene M. Esteves - Chief Financial Officer and Executive Vice President

Benjamin Swinburne - Morgan Stanley, Research Division John C. Hodulik - UBS Investment Bank, Research Division Richard Greenfield - BTIG, LLC, Research Division James M. Ratcliffe - Barclays Capital, Research Division Jessica Reif Cohen - BofA Merrill Lynch, Research Division Douglas D. Mitchelson - Deutsche Bank AG, Research Division Vijay A. Jayant - ISI Group Inc., Research Division Craig Moffett - Sanford C. Bernstein & Co., LLC., Research Division Jason B. Bazinet - Citigroup Inc, Research Division Bryan D. Kraft - Evercore Partners Inc., Research Division Thomas W. Eagan - Canaccord Genuity, Research Division Frank G. Louthan - Raymond James & Associates, Inc., Research Division Michael McCormack - Nomura Securities Co. Ltd., Research Division Amy Yong - Macquarie Research Stefan Anninger - Crédit Suisse AG, Research Division

Hello, and welcome to the Time Warner Cable Third Quarter 2012 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. And now I'll turn today's call over to Tom Robey, Senior Vice President of Time Warner Cable Investor Relations. Thank you, sir. You may begin.

Thanks, Candy, and good morning, everyone. Welcome to Time Warner Cable's 2012 Third Quarter Earnings Conference Call. This morning, we issued a press release detailing our 2012 third quarter results. Before we begin, there are a couple of items I need to cover. First, we refer to certain non-GAAP measures. Definitions and schedules setting out reconciliations of these historical non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release and trending schedules. Second, today's announcement includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management's current expectations and beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to various factors, which are discussed in detail in our SEC filings. Time Warner Cable is under no obligation to and, in fact, expressly disclaims any such obligation to update or alter its forward-looking statements whether as a result of new information, future events or otherwise. And finally, today's press release, trending schedules, presentation slides and related reconciliation schedules are available on our website at twc.com/investors. With that covered, I'll thank you and turn the call over to Glenn. Glenn?

Good morning, and thanks for joining us. I want to begin by thanking all of our employees who worked in many ways to help keep our customers informed and connected during last week's storm, as well as those who've been dealing with the many aftereffects. I'm truly inspired by the tremendous dedication of our residential and commercial operations and customer care teams, as well as our news channels, including New York 1, News Channel 14 in the Carolinas and YNN in upstate New York. They did an amazing job covering the approach, impact and now the aftermath of the storm. Our customers have noticed that hard work, and they appreciate it, as do I. I would note that we have sustained some damage to our facilities, vehicles and outdoor plant almost entirely here in New York City. We're still evaluating the loss and the extent of insurance coverage, but we don't expect the amount to be very significant. Certainly, on a relative basis, it pales in comparison to the losses that so many families, businesses and communities have suffered. Our third quarter was in many ways like the quarter that preceded it, more than 9% revenue growth with very steady margins and increasing return of capital to shareholders. We've been able to generate these steady results despite a fair amount of noise in the environment around us. In particular, the economy continues to bounce along the bottom, and we have intense competition, especially here in New York City. We continue to grow our business services revenue at a very healthy clip. And again, we captured share in residential broadband. In addition, we're benefiting from the election cycle. Advertising was a big driver of our results in the third quarter, and political spending in Ohio and Wisconsin had been very strong in the weeks leading up to the election. This is a great business for us. The rates are attractive, and the margins are more attractive still. The downside, of course, is that federal elections only happen every other year. We completed the Spectrum sale to Verizon Wireless in the quarter. And clearly, we're pleased with the return we generated on this investment. And as important, we think we're pursuing the right wireless strategy. We're now engaged with Verizon Wireless, selling each other's products in much of our footprint. And we're aggressively investing in WiFi. So far, most of our WiFi investment has been focused in Los Angeles and, to a lesser extent, in New York, Charlotte and Kansas City. It's early days, but we're excited by the potential of WiFi to significantly enhance our broadband customers' experience. So although there's no shortage of challenges, we're in a strong and stable business, we're executing well, and we're investing to capture attractive long-term opportunities. And now I'll turn the call over to Rob and then Irene to dive into the details. Rob?

Thanks, Glenn, and good morning, everyone. It's my pleasure to report on another solid quarter. As always, there's a lot to talk about, but I'd like to start with business services, which is clearly becoming an increasingly significant part of the TWC story. To give you a sense of just how significant, this quarter, business services contributed more than half of our organic revenue growth. We're driving that growth by investing in people and plant. Sales headcount is up by more than 300 account execs year-over-year. And we increased the number of commercial buildings connected to our network by roughly 30,000 in Q3 alone. At the end of the quarter, we had around 700,000 buildings on net, with more than 30,000 of them lit with fiber. We now have 550,000 business services customer relationships. Most are still small businesses, but we continue to move up market with Metro Ethernet and direct Internet access products, which generated more than 1/3 of business services' high-speed data revenue in Q3. Nearly 60% of our business customers are single plays, mostly broadband onlys. We view that as an opportunity. So we've not only been seeking to expand our customer base, but we've also been focused on selling more products to existing customers. All of our Q3 net adds were bundles. And in just the last 2 years, we've increased the portion of business customers in bundles from 33% to 43%. A lot of that is due to the availability of Business Class Phone, revenues from which grew almost 60% in the third quarter. We think there's still more opportunity to upsell customers within the 3 primary products. And with our ongoing investment in new products, including cloud-based services, the opportunities are greater still. NaviSite is performing well. NaviSite revenue has continued to grow nicely,…

Thanks, Rob, and good morning, everyone. I'll start with some third quarter highlights on Slide 4. We continued to drive solid performance and returned a lot of capital to shareholders through both share repurchases and dividends. And we remain on track to meet or exceed all elements of our full year financial guidance. But please note, none of our guidance includes any impact from Hurricane Sandy. We're still evaluating the potential impact to our business. However, we don't expect the impact to be significant. In the next 10 minutes or so, I'll give you some insight into third quarter trends and point out some of the key drivers of our performance. So let's jump right into our financial results on the next slide. Our 9% revenue growth in the third quarter was driven primarily by acquisitions, which added $290 million of revenue. Excluding that, revenue was up 3%. As you can see on the slide, we continue to drive revenue by increasing total ARPU per customer relationship, which increased 3% over last year to over $117 per month. Moving on to Slide 6. Third quarter business services revenue was up 27% or $106 million. Excluding the impact from acquisitions, business services revenues still grew 22.5% year-over-year. That's our 10th consecutive quarter of at least 20% organic growth. And we continue to see growth accelerating at our more stable end user-driven revenue, which is becoming a larger part of our mix compared to less predictable wholesale transport. And looking at organic growth only, the $87 million increase was driven by 20% growth in HSD from shared and dedicated Internet access, as well as Metro Ethernet, 54% growth in phone and 20.5% growth in wholesale transport revenue, including cell tower backhaul. So we remain well on our way to achieving total business…

Thanks, Irene. Candy, we're ready to begin Q&A. [Operator Instructions]

Our first question comes from Ben Swinburne, Morgan Stanley.

I just have a clarification and a question, so hopefully, that's not breaking Tom's rules. So I'll try it. On the guidance, Irene, for earnings that you gave, I just want to be clear. It's the old range plus the impact of just the gains this quarter, is that the comment?

The special gains, that's correct.

Okay. And then, Rob, you mentioned the telco competition, and I'm just curious, particularly in New York City, if you a sense for how much of the sort of potential passings or likely passings you think Verizon has already gone through in the city. And I realize given sort of co-ops and things, it's a slower process. But any sense for sort of how far along we are in that buildout and how you're competing with FiOS from a marketing and bundling perspective versus, say, the rest of your footprint?

Yes, Ben, I -- it's very hard to know specifics on exactly how many buildings the FiOS product is available in. They've been at it for quite a while, and we think they're fairly well along, although Manhattan has clearly lagged the rest of the New York City footprint that they've entered. From a marketing and sales perspective, I think the story is very similar to what it's been over the past couple of years since they've been in the market. And that is ensuring that we've got the very best product offering in New York City and continuing to make the customer experience as good as it can possibly be. In addition, we're doing a bunch of things on the logistics side in terms of improving our acquisition and retention cues through better scripting and sales training. And I think we're doing a very good job overall on the marketing side, not only in New York City, but across the footprint. We're spending our dollars more wisely than we have in the past, and I think the dollars we're spending are having a better impact. In fact, over the last -- each of the last 3 quarters, our marketing spend per connect is down year-over-year. So I would argue we're getting more efficient on the marketing front, and that applies to New York as well.

Next question, John Hodulik from UBS.

Maybe again for Rob. Just on the modem rental fees, is there any sort of early reads in terms of what the reception has been in terms of have you seen higher churn or maybe what percentage of customers may be going out and buying their own modem?

Yes, it is early days. But so far, we're tracking roughly 3% of customers buying their own modem as opposed to renting ours. I would say, overall, the reaction has been entirely predictable. As with any rate increase, there are certain customers who do call in and resist taking the increase. But by and large, this is a more broad-based price increase than we generally do in that it hits somewhere in the order of 80% to 90% of our customers. And I think it's been very manageable, and we're pleased with the reaction so far.

Next question, Rich Greenfield, BTIG.

Really just wondering on the broadband side, when you look at the key drivers of your market share, I mean, you're growing and you're certainly taking substantial share from the R box [ph]. I guess, just given how fast broadband usage is soaring in this country, one of the questions we think about is, why isn't the cable industry, and specifically, why aren't you guys even taking share faster? Like what is the big constraint on people continuing to be on DSL? And how do you move that line faster in terms of people shifting over to you for broadband and therefore, taking your other products? I mean is it simply a relative pricing issue? I see that you're increasing speeds it sounds like over the next few weeks. Do you need to get to even a wider gap versus the R box [ph]? Is that the kind of the reason you're doing that? Just trying to understand how you move that line faster because I think everyone is focused on the cable stocks, and certainly your stock, based on your broadband penetration growth.

Yes, Rich, I think that your assessment is generally consistent with what we're doing. The goal here is to increase the value proposition of our broadband product across a range of customer segments. So for customers at the high end, I think we're doing a very good job offering faster speeds, premium services, mobility, where we're placing our WiFi Hotspots, and the continued availability of an unlimited offering, I think, is very important for those users. Where I think we can do a better job is providing additional products at the lower end, for economy customers who are -- who might be priced out of enjoying the fastest speeds, unlimited usage and WiFi Hotspots. So we're very focused on ensuring that at every spot along the demand curve, we've got a product that's appropriate for our customers and ensure that no customers are seeking the cheap price offered by DSL because we don't have something for them.

If I could just follow up, you didn't mention Signature Home customers. Can you give a sense of where that is now year-over-year?

We added 7,000 Signature Home customers in the quarter. That's pretty much of a 10% -- roughly a 10% increase in the base. I think we're at 67,000 total now.

Next question, James Ratcliffe, Barclays.

One, on capital structure as you look forward to '13, how do the potential changes in tax and particularly on dividends affect your thought process around buyback or dividend mix for next year? And secondly, you've clearly been pushing the WiFi deployment pretty hard in L.A. How do you assess the return on these WiFi investments? I mean, where should we expect to see them pop up on the plus side effectively?

On the share repurchases and dividend question, we've been paying a healthy dividend since we first introduced it, and we've made 2 increases to that dividend. We think that our investors appreciate the dividend and will continue to even if tax rates change on that rate. And then there are other shareholders that prefer share repurchases. So we're trying to -- we're managing our balance sheet in order to provide both a strong dividend and continuing dividend, as well as leave the flexibility to the extent we're below our leverage ratio for share repurchases. So we'll watch and see what's happening with the tax front, but as it stands today, we haven't changed our philosophy.

On the WiFi question, the main impact that we're seeing is a reduction in churn. And as Rob said, it is very early days. I mean, the usage isn't that great yet, but we're seeing very promising reduction in churn, promising enough that we're encouraged to keep going in both L.A. and other cities.

Next question, Jessica Reif Cohen, Bank of America Merrill Lynch.

I didn't hear you guys mention anything in terms of how you will use the SpectrumCo proceeds. Will they be returned to shareholders, in what form and what timeframe?

Jessica, it's Irene. Our pace was up this quarter, about 14% versus prior quarter and 42% from the quarter before that. It also represented 160% of the quarter's free cash flow. So we do feel our repurchase pace is increasing and is strong. And really, as you know, it's an outcome of our balance sheet philosophy and where our target leverage ratio is closer to our -- when we're closer to our target ratio, obviously, we're going to have a slower rate. And when it's -- we're further, we'll have an increasing rate. And we may not be there exactly at 3.25 every quarter. We tend to take a measured approach on this, as well as most things, but we'll get there over time.

And can I just ask one other question on the impact of the Verizon JV? How do you feel about the progress that you're making? Do you feel like you're -- I mean, it's hard to say, I mean, I know it's still early days, but can you give us any kind of color in terms of expectations and impact from this?

It is early days, Jessica, but we are now, in all of our footprint x the FiOS market, jointly selling both our products and Verizon Wireless's products and vice versa. We're in, I think, somewhere in the order of 250 Verizon Wireless stores and then somewhere in the order of 650-or-so Verizon third-party agent stores. So we're certainly out there, and the results so far have been good. I -- we're still in the thousands of -- single-digit thousands of PSUs sold in Verizon Wireless's stores, but we feel very positive about the relationship. There's one development, up until now, we've really been operating on a manual system. And the good news is that come the end of the month, we'll be fully automated. In other words, a Verizon Wireless rep in a Verizon Wireless store will be able to enter an order and have it feed directly into our billing system. And I think that development will certainly facilitate more sales. So more to come, but we feel very good about the relationship.

Next question, Doug Mitchelson, Deutsche Bank.

Also trying to dodge Tom's rule, I have a follow-up for -- from Ben's video question and a question for Irene. The follow-up for Rob, I was interested in the breakout of video sub losses between Insight New York City and prior Time Warner Cable x New York City. So specifically, if you exclude New York City and exclude the Insight markets, it seems like the rest of your footprint might have actually improved year-over-year in video net losses. So that's that question. Then for Irene, you mentioned higher pension expense in 2013, a lack of political ad revenue, the fact that the rest of the Sprint cost savings predominantly hit in 2014. Should we take this commentary as negative messaging around potential 2013 EBITDA performance, or are the modem fee and the Insight cost synergies offsetting these pressures?

Yes, so, Doug, I always hesitate to get too granular in terms of specific PSU performance in specific markets. I think it's fair to say that the Insight story is pretty consistent with what we're seeing in the broader Midwest region, which is not terribly different from what we're seeing across the company. In Q3, I would tell you that, without getting into numbers, the Pac West, which is our L.A. market, as well as the Carolinas and the Northeast, did relatively better with the other 3 markets, meaning New York City, Texas and the Midwest doing somewhat less well. But that's about as specific as I think we ought to get.

And, Doug, on the comments around next year and our expenses, this really could be helpful as far as pointing out some things that are happening today that will have an impact for next year. So that as you and others are thinking about your models for next year, we're not overestimating some positive impacts and not taking into account these other headwinds. So we're just trying to give you a larger picture of how you might want to be thinking about 2013.

Okay. And so the point then, Irene, is that these sort of net out then is what you're saying?

Well, I can't say how they net out. But certainly, we'll be giving our guidance, as we normally do, in January for the full year.

Next question, Vijay Jayant, ISI Group.

Question for Rob. You talked about the business services growth, and that seems to be going very well. Can you sort of talk about as you go up the value chain and sort of attempt to connect the bigger enterprises, do you have the expertise with NaviSite and what you've built so far? Or do you need to potentially buy CLEC end market now that the FCC allows you to do that?

Yes, Vijay, I think we have in-house what we need in order to move meaningfully up market from where we are. The vast majority of our business services revenue still comes from smaller customers. So we haven't really meaningfully delved into the upmarket opportunity quite yet. The only thing I would point out is that as you move into national enterprises and even global enterprises to the extent that our footprint is currently limited to set markets within the U.S., there are limitations on our ability to serve those customers with our own network. So what that requires is that we, in a sense, partner with other network owners and offer services on what's known as a type 2 basis. That does change the profitability of providing those services, but it's something we can do, we just don't do it 100% by ourselves. So simple point here is that I think we have the capability to go upmarket without any -- doing anything inorganic.

Next question, Craig Moffett, Bernstein. Craig Moffett - Sanford C. Bernstein & Co., LLC., Research Division: Rob or Irene, maybe you could just update us a little bit on your latest thinking with usage-based pricing, what's been happening in Texas? And with the cable modem fee, which is obviously not a step in usage-based pricing, does that put off anything that you would otherwise do in moving toward usage-based pricing over the next couple of months? How should we think about that?

So we're now in Texas, the Carolinas and the Midwest with usage-based pricing. We've got on the docket New York City in the Northeast for the next month or so. And I think by year-end, we'll be 100% across the footprint with UVP available or Internet Essentials, as we call it. I think that although the customer uptake of Internet Essentials is still small, it's a very important principle that we've established, one that usage and price relate to one another. And secondly, we think it's very important that we give customers who use less a choice to pay less. And whether or not there's significant uptake of the service, we think those are very important principles to have established. So we're in no way reducing the emphasis on that product because the numbers are still relatively small.

And as far as the modem fee, we're looking at that as part of our overall pricing strategy on HSD. It's not -- we shouldn't think of it as separate and apart from what our customers are paying us for the overall service. We think it's -- makes sense given what the competitive set is charging.

Next question, Jason Bazinet, Citi.

I just have 2 questions on pension. How long do you have the flexibility to sort of maintain the $500 million of underfunding? And then what would rates have to do in terms of increased interest rates to sort of become fully funded?

Jason, it's Irene. The $500 million underfunding really comes from the fact that the interest rates are so low. It's historically very low, and we thought, how could they go any lower when they're 100 basis points lower this year? So we're comfortable that, given a more normalized interest rate over the next few years, we'll get back to a fully funded status. We can't give you specifics because there's so many things that go into the actuarial assumptions in our pension, but we're fully comfortable -- we're very comfortable with where we are based on what our expectations are for longer-term interest rates.

And just roughly, if you hold all of the other variables equal, what would rates have to do to sort of close the gap?

It's about 100 basis points.

Okay, all right. Not much. All right.

Next question, Bryan Kraft, Evercore Partners.

Just wanted to ask you just 2 real quick ones. One, the decline in transactional VOD revenue was pretty steep sequentially and year-over-year, and just wanted to understand what was behind that, if there was any change there? And then on the NFL Network, was there any discernible impact in September on your video subscriber trends from not having the NFL Network? I know that they improved the quality of the games that were on the NFL Network in September. And if so, is it reasonable to expect some improvement because of less churn coming off of you actually starting to carry that network?

So, Bryan, transactional VOD was down about $15 million or $16 million year-over-year, and that was pretty evenly split across the 3 big transactional VOD categories, meaning movies on demand, events and adult. We attribute some of that to the fact that Q3 had the Olympics, which distracted people from VOD. So and the other key piece in the event category was, on a year-over-year basis, the comparable was a little bit tough. We had a big fight last year. We didn't have a big boxing, that is, fight this year. So I think that's what's accounting for the transactional VOD reduction. On NFL, obviously, we wouldn't have made the investment in the NFL Network if we didn't think it would have a positive impact on both video subscribers, generally, and on the sports tier. It's very easy to ascertain whether or not the sports tier is improving, little bit more difficult to determine whether or not the NFL Network itself is having the desired impact on video. I will say that September was better than August, which was better than July, but that has as much to do with seasonality as anything else.

Next question, Tom Eagan, Canaccord.

Over the past 9 months, you've launched a lot of video enhancements, like the thing that we watch video live on your iPad and other services. Could you give us some sense of how that's either affected the connects or the churn?

Tom, I think the answer there is very similar to the answer I gave on the NFL Network. Very hard to ascertain what any individual enhancement's impact is on overall sub performance. But we try to stack these benefits up with the hope that we're increasing the value proposition, we think we are. The usage on our TWC TV apps has been very encouraging. I think we had something like 650,000-plus unique users in the month of September. They used it 3 million times. And the really interesting thing is the length of the sessions are actually increasing. We've seen people use it for 0.5 hour on average per session. So I think that the usage is probably the best proxy we have for the fact that people are valuing these enhancements. And if they're valuing them, we have to believe that they're having some impact on retention at least. And with word-of-mouth and marketing, they should have an important on marketing -- on acquisition as well.

Next question, Frank Louthan, Raymond James. Frank G. Louthan - Raymond James & Associates, Inc., Research Division: Back to the other -- the question on the CLEC or the type 2 business, to what extent are you incorporating that on a more regular basis with new contracts? And when should we start to see you more aggressively taking on customers that are outside of your footprint?

Yes, Frank, it's part of our BAU. It's certainly the case that most of our monthly recurring revenue comes from smaller customers. But we're out marketing to enterprise customers, and with NaviSite as a team that historically has marketed to enterprise, we're using that as a launchpad for selling connectivity to those larger customers as well. And to the extent that some of their needs are out of footprint, we're certainly providing them on a type 2 basis, which is, as you well now, sort of normal for the industry. Even the providers with the largest networks are not in every building and rent type 2 circuits to service some customers. So we're already doing it. Obviously, it's an area we want to continue to grow.

Next question, Mike McCormack, Nomura Securities.

Just if you would, a quick comment on the programming cost per sub looked a little bit low. I'm just trying to think how we should be thinking about that maybe not only in the fourth quarter, but as the next year progresses. And then just secondly, if I can, the voice costs, how far along are you on a per-sub basis on getting where you want to be on voice costs coming down?

Sure. On the programming costs, what really matters is when we sign new contracts and when we renew those contracts. It's a bit lumpy, and you've seen that in various quarters through this year, the percent change versus the prior year. And there's also a little bit of special adjustments in this quarter's number. And the pay-per-view being down, of course, will bring down the programming costs related to that. But as you think about Q4, you'll see the NFL contract kick in there, and then we've signed some other contracts, which will also have an increase in Q4. But we've reiterated guidance around that 6% to 7% range of increase and we're probably at the low end of the range for the full year. And sorry, on the voice side, we are at about $9 per sub right now, down from $12. And we don't expect that to change measurably given a lot of the contracts were up with Sprint in 2010 and 2011. So we benefited with savings in -- within 2012. But we really didn't have that many contracts coming up that we could convert within 2012, and we won't have a significant number of new contracts converting until the second half of 2013. So really, about -- only about 25% will be done by the end of the second quarter. The rest of it is in the second half of the year.

Just to add to that, I think we have 2.5 million voice customers left to migrate, give or take. And about 2.2 million of those will convert in the second half of 2013, just to give you a sense.

And there's a little bit left in early 2014.

Next question, Amy Yong, Macquarie.

Can you just talk a little bit about the RSNs? And I guess if there are any intangibles in terms of getting more market share in L.A., and then maybe the return on that investment?

I'll start and I'm sure others will chime in. Our objective in acquiring the rights to the Lakers directly really, first and foremost, was managing our overall programming costs. And from our perspective, to the extent that the revenues that we generate from ad sales and third-party affiliate fees, less the costs of licensing the product that's on that network, as well as the costs of running the network, to the extent that the net of that divided by the number of subs that we have in the Lakers footprint is less than what we think we would've paid the third party for the service that carried the Lakers, we think that's a net positive to us. Right now, we've signed up affiliation deals with 3 providers: AT&T, Charter and Verizon, and there are more that are in the hopper. But so long as Time Warner Cable is the only one in a particular footprint that has the product, it stands to reason that we might attract some additional subscribers as a result of having the service. Our objective, of course, is to get full distribution. In terms of other intangibles, certainly having the Time Warner Cable brand on Time Warner Cable SportsNet and on Time Warner Cable Deportes, we think that that's a net positive for Time Warner Cable in the Lakers markets.

And also, I'll just add to that, having the Pac-12, as well as these RSNs, and that we just got the NFL Network, having that bundle of sports availability to our clients, particularly in that market, has been very powerful.

Our last question is from Stefan Anninger, Crédit Suisse. Stefan Anninger - Crédit Suisse AG, Research Division: Can you talk a bit about your optimism about re-accelerating the video ARPU growth? It's clearly a challenging task, given the maturity of the category and the competition. But if you are optimistic about it, could you talk about where that might happen? Would it come from pushing more DVRs into homes, more premium sell-in, maybe more VOD, or is that just too tall an order at this point?

Stefan, we've said this before, but we tend not to manage the company for individual product line ARPUs. So what we really focus on is enhancing overall ARPU and, in fact, profitability per customer relationship. We're trying to drive penetration of all products into all homes, and then we're trying to maximize mix and price within those categories. So we've actually continued to improve video ARPU, but I would -- in spite of the fact that video bears a disproportionate brunt of our overall bundled and promotional discounting. It's just not the way we're driving the business though. And we really think about maximizing ARPU for the overall customer relationships. And we're going to continue to work to do that.

I think that's probably all we have time for this morning. Thanks to everyone, for joining us. And to give you a little bit of advance notice, our next quarterly earnings conference call, which will reflect fourth quarter and full year 2012 results, would be held on Thursday, January 31, 2013, at 8:30 a.m. Eastern Time. Thanks for joining us.

Thank you. That does conclude today's conference. You may disconnect at this time.