Question-and-Answer Session
Operator
(Operator Instructions) Our first question is coming from Lisa Monaco of Morgan Stanley. Please go ahead.
Lisa Monaco - Morgan Stanley
Good morning. Wenda, I was wondering if you could just elaborate a little bit more on how and why you think that the Internet business at MSO can be a profitable business? The company I think has struggled over the last several years in making that business profitable so what specifically will be the revenue streams and how do you optimize the costs there? When do you think that business could be profitable? And then I have a follow-up. Thanks.
Wenda H. Millard
Any business that hopes to be profitable online first and foremost has to have a product that is engaging to a consumer and if you think about the multiple product here, whether it is the television show, the radio show and our gorgeous magazines, we have a running start.
I think from a profitability standpoint, being an advertising driven business, you have to be intimately familiar with what it is that marketers want and above all us, Marketers today want an engaged consumer.
I think one of the reasons that I am so excited about this opportunity for this company, I don’t know another media company that can boast the level of engagement across so many properties that this company has, so I have to be very optimistic about the opportunity that we have to offer marketers.
Lisa Monaco - Morgan Stanley
But does that mean that the primary revenue base online will be advertising base, is it e-commerce, or --
Wenda H. Millard
It will be advertising based. I think that if you look at the digital space and how many companies have tried to get the consumer to pay for content, I think that is over, with the exception of the wallstreetjournal.com, and then again, that may be over too. I would say that from a commerce standpoint, as you know we do have wonderful relationships in the flowers business and in the photography business, so there’s an opportunity certainly for e-commerce but I think that our focus and the lion’s share of our revenue will come from marketers.
Lisa Monaco - Morgan Stanley
And Howard or Susan, just on retail, if you can just flush out why you have increased confidence that you will be able to offset the loss from the K-Mart contract. And then Howard specifically, how should we think about the margins for that segment this year with the investment spending and then next year and perhaps ’09? Thanks.
- To read the full transcript on Seeking Alpha, click here »
