We think there’s tremendous value in the Pay TV bundle for the consumer who wants to get it all at an affordable price. The big bundle is still the best way to get that programming and those brands. So we are confident that this product will be additive and will give us incremental subscribers and not affect significantly the traditional bundle. And the openness to add partners, that’s not something that we’re considering at this stage. We think that the 14 linear networks that this service offers gives people a tremendous amount of content between ABC affiliates, Fox affiliates, ESPN, ESPN2, ESPN News, the SEC Network, Fox affiliates, Fox Sports 1 and 2, the Big Ten Network, TNT, TBS and others. It’s a tremendous offering that covers the majority of the key sports in this country: NFL, NBA, WNBA, Major League Baseball, NHL, et cetera, college, obviously NASCAR and so on.
So we think it’s an incredibly strong offering and at this stage, we’re not contemplating adding partners to it. I think the third question, Jessica was on advertising revenues. And so advertising revenues will flow through this, so that the advertising that we have on our linear networks will flow into this service and will just give us increased reach to market that hasn’t seen those that advertiser engage with those clients before. So we think it’s a net positive. Thank you, Jessica.
Gabrielle Brown: Operator, we have time for one more question.
Operator: Very good. That will come from Michael Morris with Guggenheim. Please go ahead.
Michael Morris: Hi, good morning. Thank you, guys. So I wanted to ask about two areas of strength in the quarter. The first one on the sports sublicensing. Can you share a little more detail on what that was, how it impacted profitability, and how to think about whether or not that’s a recurring revenue and profit source? And then my second question is on the affiliate acceleration, which is great to see. We know that the rate of cord cutting is going to be impactful on that number. It’s very hard to predict. But on pricing alone and the precedent that you just set, should we look at this as the first quarter of a sustained stronger pricing dynamic? And how long do you think we should anticipate that you can continue to see this type of growth being fueled by those new contractual relationships? Thank you.
Lachlan Murdoch: I thought it was unfair that Steve would get the easy question and then you asked the second question. So anyway, good morning, Michael. I’ll let Steve address the sports sublicensing first.
Steve Tomsic: Hey, Mike. So our sports sublicensing revenue we have in the Cable segment. So we have — we earn sports sublicensing income in relation to various sort of college sports properties and international soccer rights. Some of these rights come with some variable based economics to them, which we saw in the quarter. I think you should see this as somewhat a one-off. It’s not going to repeat like this in future quarters, future years. And if you want to try and dimensionalize it, then the size of the increase in cable other revenues between this quarter and previous quarter last year is a pretty good guide to the net benefit to us from those sublicensing arrangements.
Lachlan Murdoch: So on the affiliate revenue acceleration, I think the — if you look at it in two, can we sustain that? We’ve now completed all of our distributions or renewals in this cycle that will affect the remainder of this fiscal year. So there’s no more renewals negotiated that will affect this fiscal year. And obviously then we’re rolling into renewals that will take effect after this fiscal. If you look at the underlying rate of decline around 8%, and this goes back to a little bit of what John’s question, if we look at that 8%, actually in September and October, it was better than 8%. It was a little bit better. And then — and this, we believe was the impact of football and sports viewing in the fall. But then after October, sort of as you get into November and December, the rate returned, decline returned to its sort of baseline at 8%.
So for the immediate future, we don’t see that changing. There’s some cyclicality within that. But I think the 8%, yes, number that we’re sort of baking into our assumptions. With that, we believe as we’ve achieved in over the last year, where we’ve renewed over a third of our distribution, we’ve been able to achieve rate increases that have made up for those declines. And that is because of the strength of our brands, the strength of our programming, and really where they sit, having sort of a focused strategy on a key number of very core brands that are essential for the — for distributors and for their customers that will be able to maintain similar rates of change going forward. Thanks, Mike.
Gabrielle Brown: At this point, we are out of time, but if you have any further questions, please give me or Dan Carey a call. Thank you again for joining today’s call.
Steve Tomsic: Thank you.
Lachlan Murdoch: Thanks, everyone. Have a good day.
Operator: Ladies and gentlemen, that does conclude your conference call for today. Thank you for using AT&T executive teleconference. You may now disconnect.
