Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from [Walter Rensley - Walrus Partners].
[Walter Rensley - Walrus Partners]
The payment going to Fox, is that on the balance sheet under accounts payable? Is that basically where that’s going to come out of and reduce the cash by the same amount in the fourth quarter or what’s the accounting going to be for that?
Bruce R. Foster
We’ve accrued for the amount that’s going to be owed. We’re only going to pay $6 million in the fourth quarter and then we have two $3 million payments which will be in the first quarter of 2009. And those two latter payments will be out of the fourth quarter collectibles but because it is collection period from advertising is that January to March timeframe. So we deliberately scheduled those payments to reflect when our cash receivables coming in will be substantial.
[Walter Rensley - Walrus Partners]
In general, you’re saving $15 million by not renewing the deal with Fox next year. How much do you think that’s actually going to save you? I mean, how much do you think you would have lost if you hadn’t done that?
Alfred R. Kahn
I think we could have lost anywhere between $6 million and $10 million in cash as well as actual EPS because we are seeing such a negative market in terms of ad sales. The first two quarters of the year for us because we’re in the toy and game area are certainly the least exciting in terms of ad sales in general. The best quarter is obviously the fourth quarter and under this Fox, it wasn’t a new option; it was part of our existing contract, we would have to have run the Fox block through September and therefore pay $15 million of the $21 million traditionally paid and not have any benefit of the fourth quarter which is traditionally 50% of the revenues.
So you can see that we could have lost $6 million to $10 million next year just on the Fox situation, and that doesn’t necessarily count the affect that the advertising business became much more difficult.
Bruce R. Foster
Just to give you a little bit of a benchmark. Last year fourth quarter of ’07 we had advertising sales of about $6 million with amortization of about $7.7 million so we lost $1.7 million in the fourth quarter on the Fox relationship. The first three quarters of ’08 we had about $8.7 million in sales and we had amortization of $11.5 million so we lost about $2.8 million. Collectively fourth quarter and the two three quarters we lost about $4.5 million.
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