Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Ben Swinburne - Morgan Stanley.
Ben Swinburne - Morgan Stanley
My question centers around programming costs. You talk a lot about cost initiatives across the board in 2009. I don’t know if you can speak to what you expect your programming cost budget to grow roughly in 2009? I think you have a number of contracts like Fox News which will be up on a year-over-year basis and some re-trans payments. Then more strategically you have talked about the migration of content online by your suppliers. What can you do contractually as you start moving through more and more contract renewals to try and get some of these people to lease given the proliferation of content deployed on multiple devices? It seems like you have got maybe more leverage there than we are seeing in the model right now.
Robert Marcus
You will notice that programming cost increases in Q4 were actually notably low 5% up over Q4 of 2007. That is the product of a number of ins and outs but we had in addition to the lower basic sub numbers in the quarter we also had some one-time items that positively affected Q4 this year. As we look forward into 2009 I think implicit in your question is that programming costs are going to go up and I think that is a fair assumption. A bunch of things in there; one, we do have increased re-transmission consent costs that we are expecting in 2009 over 2008. In addition we have a bunch of new services. We have the full year of the big ten. We have the launch of the MLB network. In addition to that we have our usual contractual rate increases. Overall I would expect programming costs to increase more in 2009 than they did in 2008 and while there are still some moving pieces here I am thinking they might approach double digit growth is not unreasonable.
Glenn Britt
Just one more piece of programming costs, I may have done this last quarter but let’s talk about re-transmission consent for a minute. I think that re-transmission consent is a mechanism is broken. At least the way in which negotiations are conducted and the holding hostage of the public. If you go back to the origins of this law I think it goes back to the 1992 Telecom Act so it goes back a long time now. That was a very different environment. If my memory is right at that time more than half of the homes in the country still watched TV directly off air. Congress was very concerned about what looks like the gradual deterioration of the broadcast industry at that point in time.
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