Question-and-Answer Session
Operator
Thank you. (Operator instructions) Our first question will come from Ben Mogil from Thomas Weisel Partners. Please go ahead, sir.
Ben Mogil – Thomas Weisel Partners
Hi, guys, good morning. So, on the – one of the slides you spoke about the funding for the Ukraine, Bulgaria and Croatia being limited to $100 million. Is that to say sort of those are the cash losses, the maximum cash losses, which you would be willing to accept?
Wallace Macmillan
Yes, we had to look at the cost structures and what we expect the impact could be at the current market conditions. And we believe that that is the floor to which our funding could reach in 2009.
Ben Mogil – Thomas Weisel Partners
Okay. I mean, how flexible – or let me ask a different question. You’ve talked about a lot of your programming is local and obviously a lot of your operational costs were obviously local as well. How quickly can you gear them down for a revenue environment, which used to be double digits, which is no longer?
Wallace Macmillan
Is this a question about the developing markets or about the business generally?
Ben Mogil – Thomas Weisel Partners
Both actually.
Wallace Macmillan
With regard to developing markets, looking specifically at Ukraine and Bulgaria, and because of the markets conditions there and because Bulgaria is a very early stage developing market, our potential revenues are going to be quite small. So the potential losses are all about the degree of investment that we put into overheads. And as Adrian has explained, we are taking in those markets significant steps to constrain overhead growth if necessary. In our wider markets, in our established markets, which are cash flow generative, our intention is to cut cost as much as we can without damaging the brand power and the audience share power of those markets. Adrian has spoken to an intent across the business to try and cut up to 20% of our base costs using 2008 as a margin. When we go to that level, we will start carefully in our developed markets to see what additional savings could be incurred without damaging the key elements of the business, which gives us our leadership strength in those markets.
Ben Mogil – Thomas Weisel Partners
What’s your take on – I mean, obviously the balancing out between one of your cut costs, I want to make sure that your ratings in your market share maintain with the way that they are. What’s your take – it may just be from public documents of where some of your competitors like Modern Times and RTL are. Are they sort of still going in head force? Are they sort of adopting a similar cautious approach as you guys are?
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