Good day, ladies and gentlemen, and welcome to the Q1 2012 Discovery Communications, Inc. Earnings Conference Call. My name is Corita, and I'll be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would like to turn the call over to Mr. Craig Felenstein, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Discovery Communications First Quarter 2012 Earnings Call. Joining me today is David Zaslav, our President and Chief Executive Officer; and Andy Warren, our Chief Financial Officer. Hopefully, you have all received our earnings release, but if not, feel free to access it on our website at www.discoverycommunications.com. On today's call, we will begin with some opening comments from David and Andy, after which, we will open the call up for your questions. We urge you to please keep to 1 or 2 questions, so we can accommodate as many folks as possible. Before we start, I would like to remind you that comments today regarding the company's future business plans, prospects and financial performance are forward-looking statements that we make pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are made based on management's current knowledge and assumptions about future events, and may involve risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, the company disclaims any intent or obligation to update them. For additional information on important factors that could affect these expectations, please see our Form 10-K for the year ended December 31, 2011, and our subsequent filings made with the U.S. Securities and Exchange Commission. And with that, I'll turn the call over to David.

Thanks, Craig. Good morning, everyone, and thank you for joining us. Discovery is off to a great start in 2012, delivering first quarter results that built upon the double-digit growth and strong operating momentum we generated throughout 2011. Importantly, our success continues to be well-balanced with growth spread across geographic boundaries and driven by diversified revenue streams, each of which are leveraging the strength of our content portfolio and robust distribution platform. On our year-end call, I highlighted some of the elements that contributed to our success a year ago, from a strengthened programming library that capitalized on a robust global ad market and a growing demand for content across emerging distribution platforms to the opportunities we are exploiting across our international asset base. As evidenced by our first quarter results, these drivers remain firmly in place. Andy will discuss the specifics behind our financial performance in a moment. But before he does, let me take a few minutes to highlight some of the opportunities we continue to take advantage of and also discuss some of the initiatives that we expect will contribute to sustained financial and operating momentum throughout the remainder of 2012. Once again, during the first quarter, Discovery's long-term strategy of investing in bigger, stronger brands and the highest quality nonfiction content continued to pay off with consumers watching more television in total than ever before across conventional and emerging distribution channels. Simply put, it is a great time to be in the content business. Even more so, if your programming resonates with diverse audiences and you own the rights for the majority of your content. Our sustained investment in programming is delivering market share growth worldwide, and given the continued strength in the advertising market, we were able to generate total company global ad growth of…

Thanks, David. And thank you, everyone, for joining us today. I'm really excited to be a part of Discovery. It is a company I've long admired, and I look forward to talking with each of you over the next several months. As David mentioned, Discovery delivered solid operating results during the first quarter as continued execution, the strength of our content and a favorable operating environment enabled the company to build upon the momentum that the team generated throughout 2011. First quarter revenue growth of 16% was broad-based with double-digit increases across the U.S. and International Networks and double-digit gains for both advertising and affiliate revenue streams. Note that the current quarter includes $50 million of additional revenues from the new licensing agreement with Amazon and the expanded licensing agreement with Netflix. Excluding these agreements, our total company revenue growth was 11%. Total operating expenses in the quarter were up 12% compared to the prior year, primarily due to higher content amortization, increased personnel and marketing costs as well as $8 million of additional expenses associated with the Amazon and Netflix licensing agreements. Excluding the additional costs related to licensing agreements and the impact of foreign exchange, the increase in operating expenses was 11% versus the first quarter a year ago. As is indicated on the year-end call, expense growth is expected to be weighted to the first half of the year with the full year increase in the low to mid-single digits. Discovery's continued ability to generate revenue growth in excess of expenses translated into a 19% increase in adjusted OIBDA during the first quarter. Excluding currency impact and the Amazon and Netflix licensing agreements, adjusted OIBDA increased 9%. Net income decreased to $222 million as the improved operating performance in the current year was offset by a $102…

[Operator Instructions] We got first question from line of Ben Swinburne from Morgan Stanley.

One for David and one for Andrew. David, I'd say most people would probably weigh in that Discovery has been very deliberate in thinking about licensing digitally, but we've had this debate during earnings so far between sort of Time Warner, Viacom and DISH calls, talking about how much content can move online before you start to impact potentially your value proposition to your distributors. I know you speak to your distributors on a regular basis and you've got some big renewals coming up as you enter 2013. So I'd hope you'd be willing to weigh in on how you're thinking about that balancing act to make sure you're maximizing your long-term value versus taking more of a short-term approach in how you gradually expanded your Netflix and Amazon relationships. And I just had a clarification for Andrew. The high-single digit ad growth sort of guidance or pacing for domestic, was that for the remainder of the year or for 2Q? I just wanted to make sure I heard it right.

Okay, thanks, Ben. Let me talk about the digital opportunity. This really is a great time to be in the content business because we've created essentially a new window. We worked very hard to figure out what works for us. And for us, this new window being 18 months and older is significant. Because we use our content domestically and around the world during that window, and so giving it to Netflix and to Amazon where they have 18 months, 2 years, 3 years, 4-year-old content and getting real value for it has been significant in terms of the value it provides to us. As we look at what impact that has on our viewership to date, we haven't seen any impact on the viewership on our traditional channels. And part of that may be that we're only 6 months in. It's very early days. But it's also interesting that a lot of the shows that are being consumed on those platforms are shows that were -- they're no longer on Discovery or TLC or Animal Planet. And so we did keep the deals short so that we have some flexibility. Our Netflix deal was 2 years with 1-year option for us to go for a third. And that dovetails with our deals that come up, Ben, so that if there was a real problem, we could pivot. But so far, we see it as a real opportunity, an additional window that's providing significant value to us. In addition, we have TV Everywhere out there, which provides another opportunity for us to monetize our content. It hasn’t materialized yet in a meaningful way, but it's an attractive platform that would be, if Netflix and Amazon and LOVEFiLM are -- if those platforms are 18 months and older from our perspective, then TV Everywhere would be more of a catch-up and provide some additional incremental value. And so, for us, we've been able to grow market share and take advantage of those platforms. So it's been a good experience so far.

Ben, regarding your question on ad sales, that's a 2Q number only. Given that's early May, we have good line of sight into 2Q, so that's a 2Q forecast only.

Okay, and I know you said that the favorable conditions continue in 2Q, but that is at least, I guess, technically speaking a little bit of deceleration. Is that sort of conservatism or anything else you're seeing? I just wanted to see if those 2 comments together.

Well, look, the high single digits it's still a very good number. It's coming off last year's 13%. You still have several weeks or months plus of scatter to book, and ratings mix certainly impact that as well. So we feel good about that number. It's a solid high single-digit, so -- and again, it's coming off a big number last year.

Next question is from Doug Mitchelson from Deutsche Bank.

So David, I think what stood out this quarter was international. I'm curious how much Western Europe and the U.K. might have been a drag on international ad growth. As strong as ad growth was, could it have been even stronger if those marketplaces were healthier? And separately, I think TLC has been pretty impactful on your growth at International this past year. Do you have enough new networks and feeds in the pipeline that you see new growth drivers stepping in as TLC's growth cycles out?

Thanks, Doug. The international business is really accelerating, and it's a number of things: one is the sub-growth that we're seeing and you see that on the affiliate side, but it also reflects itself in the overall reach, and therefore, viewership. So you see, Discovery's the #1 most distributed channel in the world and it grew 10% and our overall distribution grew 16%. So that's a helper. And just to give you a sense, Brazil grew 766,000 subscribers in the first quarter. That's more subscribers than the U.S. has added in -- between 3 and 4 years. So we're seeing real growth across Latin America, Russia, India and that's a helper. But more importantly is we've become a strong content company outside the U.S. and the strength of our brands are really resonating. So if you go into Latin America where we have, on average, 11 channels, we have 4 of the top 15 channels. We have Home & Health, which is essentially the Home and Garden of Latin America, and that's a top network for women. We have Discovery Kids, which is, in Brazil it's the #1 cable network in all of Brazil. It's the USA Network of Brazil, but it's strong throughout Latin America. Discovery, Animal Planet and we've launched TLC. And so you see us around the world building those channels. TLC now, all around the world, is a strong female network. Discovery getting stronger. Animal Planet getting stronger. And specifically, in Western Europe and the U.K., we've actually deployed -- it's specific to only a few markets, but in the U.K., we've been able to grow our overall market share by having a broadcast network there where we -- the cost to us is very low because we have our existing content. We also launched a broadcast network in Italy called Real Time, which is a female network, the equivalent of TLC, and that is now the #8 network in all of Italy, including the broadcasters. And so Western Europe and the U.K., for us, has not been a drag at all. We've been able to grow those markets because we've been able to significantly grow market share and take advantage of a robust advertising market. Although maybe not growing, we've gotten a bigger share. And when you look at India where we just launched our new Kids network or Latin America and Russia where we just launched an office and 2 more channels, we're finding that market share is probably 2/3 of our growth and 1/3 of it is the underlying jetstream of subscriber growth.

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

Couple of questions on OWN. My recollection was that the first 2 years you pretty much gave the channel away to the Pay TV operators, and you just made a comment that sub fees really kick in next year. Can you talk a little bit about that and what we should expect on the affiliate fee side for a moment?

Sure. Thanks, Jessica. First, I wanted to talk a little bit about what the real story is at OWN. There's been a lot of noise out there. And I wanted to give you my sense of the report card and where we are. When we started OWN, it had virtually no sub fees. We've added about 10 million subscribers, a number -- some of those subscribers will come on this year from Comcast. But the majority of the distributors have now signed up for substantial fees for OWN, and those will kick in on January 1. So what -- we've added 10 million subs, and we've put together a very strong subscriber fee structure. We have strong blue chip advertisers in place, supportive of what Oprah and I and Erik and Sheri are driving. The recipe of what we're doing there in terms of trying to find the right blend of content to nourish the audience is getting -- we're making real progress. We're, on average, about a top 30 network in March. We were the #27 network in America. Despite what you read, we're making real progress. We grew 14% in the first quarter. We're up 17% this quarter. And when you look at us from a standing start, 14 months, and I've launched a lot of networks, here we are 14 months later, we're beating 2/3 of the existing networks in the U.S. And we're ahead of a number of women's networks that have been out there for 5 or 10 years and have been pushed and driven to nourish an audience, and we've gone by them. We've got a long way to go. I feel better about where we are than I ever have. We've done a lot of good work to get the cost structure in position. We're listening to the audience. Oprah's having a lot of fun. She's working very hard. And we said today on the call that we -- we're convinced that by the end of 2013, this business will be cash flow-positive. And we'll spend less money this year funding the business than we did last year. We're committed to the business. We think this has an opportunity to generate significant asset appreciation for us and for Oprah over the long term. We are a long term-driven company. We're growing assets like TLC around the world long term that's now accretive. ID, which was not making a lot of money for a long time, we invested in, we believed in it, now a top 10 network in America, the #4 network during the day. What we do is we build brands, we grow brands and what we see gives us a lot of confidence that this will be a significant asset for us.

And along those lines -- my second question is really along the lines of what you just said. Given the growth you've seen in the last 5 or so, since you've gotten there, your channels are in a completely different place than they were. Can you help us think about, as your contracts come up over the next couple of years, what range we should be thinking about for affiliate fee growth? I mean you're kind of at the lower end now relative to your peers, what do you think the growth rate can get to over the next 1, 2, 3 years?

Thanks, Jessica. Well, look, our core job is to become a stronger content company, which really means that we want people spending more time with our brands, more time with our channels and to feel more connected to the shows that we have and the characters that we have. And we've been doing that. We've been growing market share year after year. Our overall share of the cable viewership pie has grown significantly. We also have meaningful affinity groups around Science, around ID, around Discovery, around TLC. So we feel that we have a very good story. We were investing about $550 million in content when I got here. Today, we're investing over $1 billion in content. And so we have a very good story. Our deals come up beginning at the end of this year and they feather in between the end of this year and 2015. As we've said before, you'll see a steady flow there. It's not particularly lumpy. We don't have a ton coming up at the end of this year. But our goal is going to be to sit down and talk about the fact that our channels are stronger, and we think that we have a good hand. We think it's recognized by the distributors who are making more money selling our channels. And with the exception of OWN where we've done almost all those deals already, our other 12 channels come up all at once, which we think is a value to us. So we think we're going to do well, and we'll see over the next couple of years how we do, do.

And Jessica, it's Andy. Just to elaborate on that for a minute. As David said, the affiliate deals roll in over time. There are 3 up end of this year, so there's no impact in 2012. It should be a relatively small impact next year. While we feel very good about our position and our stance today, relatively small impact next year. And again, these roll in over the next several years.

Primarily because the size of the distributors aren't the big ones this year.

One last thing. You made some SVOD deals in the U.S. What about International? How much of an opportunity is that?

Which deals, Jessica?

The SVOD, Amazon, Netflix, et cetera.

We've -- the U.S. is a mature market and carving out this window of 18 months and older has been -- we're very comfortable with at this point and we think it's working quite well for us. And so we're excited about having more and more players who want to play in that space in TV Everywhere. Outside the U.S. is really more of a country-by-country. It works -- it's much more effective in a mature market where you have viewers that have learned how to consume television in the traditional way and this becomes an add-on. So we're just going to see market-by-market. We own the content and we'll make the decision market-by-market.

We go to the next question. It's coming from Michael Nathanson from Nomura.

I have 2 for Andy. One question will be the $50 million loss you had this quarter from other net, which is OWN, Hub. What would the number be? I know you've had some restructuring at OWN and some program write-downs, so what's kind of an ongoing number of that $50 million? So how can we think about if this was a normal quarter for the $50 million?

Yes, Michael, we're not going to quantify OWN specifically. I did say that this accounting nuance of our now picking up 100% of the operating losses relative to what we expected was a $10 million after-tax impact, so about $0.03 per share. So it is important just to describe that accounting nuance for a minute to answer the questions that some of you have had. When OWN started with contributed equity, as they ramp up and incur losses, those losses deplete their equity. The accounting nuance is that once their equity is fully depleted like it was in the first quarter, we, as the funding partner, have to pick up 100% of those losses and we will continue to do so, pick up their losses and eventual profits, until they get back into a positive equity position. So we will continue to talk about 100% of losses and profits going forward based on this accounting nuance. But we did have $50 million of other income losses in the quarter. It was predominantly OWN, but we're not going to quantify it specifically.

Can you just help us with the run rate then for the year of where do you get to for the whole year for that line?

Yes, it certainly will be less going forward. I mean, there was a -- it was an usual first quarter in that there was the Rosie write-off. There was the lot of restructuring costs associated with rightsizing their cost structure. So those were unusual events in the first quarter that added to that loss profile, but there will definitely be less losses going forward.

Okay, and then one question for you is reprogramming costs within the U.S. I know it's lumpy because of your write-downs last year, but what's a good way to think about the online program expense growth for the year and maybe the seasonality of that for the rest of the way?

Okay. Well, it clearly is higher in the first half. Basically, it's amort catch-up of prior year investments. I think it's important to look at what our cash was on content for the first quarter, that was up high single digits, so that's probably a better indicator of what that will look like going forward. But clearly, there's a bit of an amort catch-up here in the first half that will abate in the second half as we catch up on prior year investments on content.

We go next question from David Bank from RBC Capital Markets.

Two questions. I guess the first, a little bit of a follow-up on Oprah, David. You gave us a target, I think, a free cash flow breakeven, I think for middle of next year. And I was wondering if you could kind of give a little bit more commentary around profitability of the channel, expectation of when it's no longer a drag on earnings. And maybe to put some context around it, if you took the ratings and cost structure as they are today, right, and you layered in the affiliate fee increases that you sort of have contracted, but maybe not recognizing yet, would that be enough to basically get you to profitability? And the second question, Andy, sorry to make you go back to a year ago. But a year ago, in the second quarter, you guys, I think, had an $8 million nonrecurring benefit on the advertising side. And is that part of what's causing a drag on the pacing or is that x that impact? Well, not a drag, but is that impacting the pacing comp?

Thanks, David. On OWN, I had said we're confident that in the second half of 2013 that it will turn cash flow positive. And I don't want to get into a lot of detail, but we have substantial fees, sub fees, coming in. We have good participation with advertisers. We have growing ratings. The channel right now is the #30 channel. We do not -- we're on plan, we're ahead of plan this past -- all throughout this year. And so the expectation here is not that the channel needs to morph into -- to find dramatic additional rating increases. We expect that it'll continue to improve based on the continued improvement that we'll be able to get to profitability when you count in the subscriber fees and the advertising, and we feel good about that. So I don't want to get into any more detail, but we're making a lot of progress. We're building an audience. On average, we have a weekly cume of about 15 million people coming into OWN. And based on the rating trends that we have right now, we're comfortable that we'll be -- that we'll make the turn in the second half.

And to answer your question on the $8 million. Yes, that does actually dilute our year-over-year growth rate. It is impactful to the second quarter last year. So yes, it impacts the growth rate.

The next question from the line of John Janedis from UBS.

David, you often talk about the opportunity at ID and the gap between the network and getting networks to similar ratings. With the ratings growth there that you're seeing, have you been able to close the gap, or is the network just growing so quickly that the gap's harder to close?

Thanks, John. ID, I love to talk about ID because in my 25-plus years in the business, I haven't seen anything like it. I mean, if you look over the last 10 years, ID is now from a standing start of 4 years ago, top 10 network in America and the #4 network in daytime. And to answer your question, no. And we -- Joe and the team have done a very good job of beginning that journey of growing the CPM to monetize the ratings growth within ID. But it's probably going to take us another 2 to 3 years to that. It is improving. There's no question that the advertising community is recognizing that if they want to reach women during the day that ID is a fantastic vehicle. It has the largest length of view of any cable channel in the U.S. And the other thing that's really interesting about the ID growth trajectory is of the people in America that have ID, and that's in about 80 million homes, only 50% of them know they have it. Now that's up from 30% about 1.5 years ago or a year ago. But you will see growth from ID by -- you're seeing it by word-of-mouth. Have you seen this channel? You got to watch it. So we think we're going to continue to grow the overall audience. But more importantly, even if the audience was flat, we would see substantial growth for the next 2 or 3 years as Joe and the sales team get through this catch-up process of getting real full value for a very strong female service.

And David, maybe on Destination America, can you talk a bit more about it? The content seems like it may have a lot broader appeal than maybe Planet Green. What kind of investments are you going to put in there? And is there an opportunity for broader distribution over time?

Yes, we're going to start off small. We -- the great thing about Destination America is it was really generated through talking with advertisers, about how do we create a service that's more friendly. And if you look at our core strategy, we're about all -- within the U.S., we're about all of America. So TLC has become a top network for women by really servicing women in America, but primarily -- not New York and L.A., America. And a lot of Discovery, although it's broader based, does come from servicing all of America. And so Destination America is, we think, is within the sweet spot. The great thing about it is we have this huge library of content that will work very well under Destination America. It already is. We're up 30% by just changing the mix of content that we already own. So the investment will be small, but we expect that we're going to be able to do a success-based growth strategy where over the next couple of years, as it grows, we'll invest more money. But it will be small, and we think the results should be pretty good to start.

Your next question comes from the line of Spencer Wang, Crédit Suisse.

Two questions. First, I just want to drill into the U.S. distribution revenue, I guess for Andy. So we take out the $50 million in the digital licensing revenues, the growth was about 4.7%. So we assume that there was a little bit of uplift from digital subscriber growth as the core affiliate rate growth per sub in the kind of 4% to 4.5% rate, so that's the first question. And then second on advertising in the upfront this year. Some of the online video providers like YouTube and Hulu and Vivo are making a more active push this year. Do you think online video for the upfront is incremental to the market, or do you think that marketers allocate some of what they spend from linear to online?

Let me take the second one in terms of online video. It's too early to tell. There's a lot going on there. We made an acquisition. It was a small in terms of the overall economics for us, not material. But we acquired Revision3. One of the reasons we did is they had about 100 million streams viewed last month. And 100 million streams in a month is significant. It's not highly produced content. It's a different approach that we take. But we think that there may be something there. We don't know. We love the management team and so when you take our entire library and a small asset like Revision3, it allows us to be contemporary and play in that space and build some competency there. There's no sign that economics are moving there in any meaningful way. But we have to watch it, and that's why we set up some -- a camp there where we can play in that space and get to know the whole crew there. On the distributions side, let me pass it over to Andy.

So the affiliate number, the 5% was a combination of both digital rate and subscriber growth, say, about 4% of the total 5% was rate growth, though, in total.

Next question comes from the line of Anthony DiClemente, Barclays.

I have 2. At the risk of putting too fine a point on your 25% constant currency international ad growth, you mentioned the subscriber growth of 10%. So I guess that leaves about 15% that's either coming from impressions per user or pricing. I'm wondering which of those 2 is a bigger driver.

I would say it's probably pretty balanced. One of the things that you see when you saw our cost structure go up a little bit is that 4 years ago we were selling Pan-European and Pan-Asian. So we set out on the strategy of doing local sales in each market. In many of those markets, we have boots on the ground. But in certain markets, we just had an agency representing us. And so one of the things you've seen in terms of costs is we've taken over some of that. So I would say in terms of our ability to monetize our content, it varies region-by-region. But we were probably a C or a C- minus 5 years ago. Today, we're probably a B. In some markets, maybe a little bit better than that. But we're doing a better job of dealing with our -- the power ratio and getting our fair share, and some of that is because we set up our own operations in Russia, in each of the markets in Latin America, taking back as we get more scale, our own sales team. And of course, you look at markets like Brazil, it's 24% penetrated, Mexico, 36% penetrated. If you can remember back to the U.S., that not only is that broad CPM differential, but viewership on cable tends to cascade. As you hit that 30% and 35% penetration, more and more people start spending time on the cable platforms, so viewership on cable grows and the advertisers becomes more palatable for -- starts with a direct response. But given the price differential, advertisers start to move over. And so in the emerging markets, whether it be India, throughout Latin American and Russia, you're starting to see that as an additional wind.

And Anthony, just to add to what David said, the 16% number also benefited from the lower launching amort in the quarter. So it was actually about 11% in absolute growth, 15% when you include the lower amort.

We go to next question from Alexia Quadrani from JPMorgan.

Can you give us any color, I guess, how you're thinking about how additive TV Everywhere may be to your affiliate revenues when you renew some of those deals or even before? And just following up on your earlier questions, I guess on content, your digital deals for content, are you hearing any pushback from MSOs about these deals? And do you think it becomes sort of a bigger issue or an issue at all in your upcoming affiliate negotiation?

Okay, thanks so much. On TV Everywhere, the good news is that we're in agreement with all of our distributors that in order to do TV Everywhere, we have to reach an agreement and at this point, we haven't reached a deal with anybody to provide TV Everywhere. We are supportive of TV Everywhere as a business model. It allows us -- pretty soon, we know that it's measured on the computer. It'll soon hopefully be measured on the iPad. And therefore, it becomes an advertising opportunity in order to maintain our overall viewership share. But we haven't reached a deal yet. And so we are supportive and the discussion now is about value, and we think the value is significant. And it will be over the next couple of months that we figure out between us and the distributors how to fairly parse that value and how that value could come to us, whether it be in terms of subscriber economics or additional distribution or -- there are a lot of different ways that we could exchange value for TV Everywhere. So we're encouraged by it. We hope that we can reach some deals over the next year. In terms of the content, we were pretty disciplined about the type of content that we put in and we carved out a very specific window, which is 18 months and older. Before we did the deal, we sat down with all of our distributors and talked about what we were doing. And so we didn't get a lot of pushback from providing this deal. I think part of it has to do with it may be different than others. Yet, we didn't put all of our best content on. We only put content that was 18 months and older. And if you look at it in the aggregate, most of the content is 2 and 3 years old. And so we don't think it'll have an impact. But having said that, given how fast the world changes and moves, we did keep the deals tight. So that if we find ourselves before our deals come up that, in some way, it does present a problem that we could -- we have an opportunity to readdress that issue. But at this point, we don't see that and we see the economics as incremental, which is a positive for us.

We got the next question from Richard Greenfield from BTIG.

When you look at the benefit you're getting from the digital revenues, curious if there's some way you could put it into context. Do you get a sense -- I know it's been a couple quarters now for Netflix, how much viewership of your content do you think you're actually getting on these new platforms, specifically Netflix? Really, it's probably too early for Amazon. And how do you think that relates to the price you're generating from that content? Does it -- is it actually too much? Is it too little? And what are you getting in terms of early data? And then just quickly, if you x out the digital deals in this quarter, you did have a little bit of margin contraction. Could you just give as any more color on when we should expect to see that turn because of the costs? Will you expect that to turn in the third quarter, does that make sense?

Thanks, Rich. First of all, the issue of -- Netflix and Amazon, we think, have created a great service to consumers where they can view content that they otherwise wouldn't be able to see and obviously because of the demand for it, consumers are enjoying it. From our perspective, and you won't be surprised by this, in the content business, I strongly believe that content drives all of those platforms. Whether it be -- I've talked about the deals that we did in the content business with Apple. As compelling as those platforms are or the devices, without the content, whether if it's a wire or a platform, I'm not going to say that it's a dumb pipe, but it is a device and without great content, it's just a device and the sexiness of it doesn't last. And so the value that we provide to Netflix, to Amazon or to TV Everywhere or to any of these or to Apple is to really, in the long term, drive the demand for those platforms. Because in the end, the way that you can manipulate whatever's on there is only fun if you want to consume the content that's on the platform. So we think that the value of our content is very high. It has been -- we have seen meaningful consumption. But it's been a surprise. Some of our best shows continue to be consumed primarily on traditional linear television and there are some older shows, some ones you would never expect where there's a lot of energy behind...

Can you give us some examples?

I don't want to get into detail, but there's a fair amount of viewership of shows that we're not even carrying and haven't carried for a while on our networks. And so I think it's very early days. Consumers are trying to decide how they want to use those platforms and different ways to consume. So for us, it's good. And we expect that over time, as long as there's competitive environment, that we'll be able to get good price for our content because our content is strong and it's demanded by consumers. On the margin piece, we've -- we did say all along that the first half would be -- we would spend more, whether it's on marketing for Frozen Planet or investing in TLC or ID and that it would -- the margins would grow in the second half, particularly in the fourth quarter, but let me pass it to Andy for a final.

That's right, Rich. The OIBDA margin was impacted by really 2 timing events: the catch-up on the content amort as well as what Dave said, the premiere of Frozen Planet and the marketing support of that. We definitely expect in the second half for the OIBDA margin to get back to normal levels.

But is there any way to look at what organically margins did this quarter if you x out kind of the onetime events?

Really flat.

And now I would like to turn the call over to Craig Felenstein for the closing remarks. Go ahead.

Sure. Thanks, everybody, for joining us. We appreciate your time. And If you have any follow-ups, please give us a holler in New York and we're happy to take care of you. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference call. This concludes the presentation. You may now disconnect, and have a good day.