Sumner Redstone - Founder and Executive Chairman Leslie Moonves - Chief Executive Officer, President and Director Adam Townsend - Executive Vice President of Investor Relations Joseph Ianniello - Chief Financial Officer and Executive Vice President

Michael Morris - Davenport & Company, LLC Jessica Cohen - BofA Merrill Lynch Anthony DiClemente - Barclays Capital Benjamin Swinburne - Morgan Stanley Laura Martin - Needham & Company, LLC Michael Nathanson - Nomura Securities Co. Ltd. Marci Ryvicker - Wells Fargo Securities, LLC David Miller - Caris & Company Douglas Mitchelson - Deutsche Bank AG John Janedis - UBS Investment Bank David Bank - RBC Capital Markets, LLC

Good day, everyone, and welcome to the CBS Corporation Second Quarter 2011 Earnings Release Teleconference. Today's call is being recorded. At this time, I'd like to turn the call over to the Executive Vice President of Investor Relations, Mr. Adam Townsend. Please go ahead, sir.

Good afternoon, everyone, and welcome to our Second Quarter 2011 Earnings Call. Joining me for today's discussion are Sumner Redstone, our Executive Chairman; Leslie Moonves, President and CEO; and Joe Ianniello, Executive Vice President and CFO. Sumner will have opening remarks, and we'll turn the call over to Les and Joe, who will discuss the strategic and financial results. We will then open your call to questions. Please note that during today's conference call, comparisons for the June year-to-date period are against adjusted 2010 results. Reconciliations for non-GAAP financial information related to this call can be found in our earnings release or on our website. In addition, statements in this conference call relating to matters, which are not historical facts, are forward-looking statements, which involve risks and uncertainties that could cause results to differ. Risks and uncertainties are disclosed in CBS Corporation's news releases and securities filings. A webcast of this call and the earnings release related to today's presentation can be found on the Investors section of our website at cbscorporation.com. With that, it's now my pleasure to turn the call over to Sumner.

Thank you, Adam. Good afternoon, everyone. I thank you for being with us today. CBS's second quarter performance was absolutely terrific. Our results, which follow up a remarkable first quarter, demonstrate one more time that our company is operating from a clear position of strength. Our world-class content is at the very top of its game. Most important, a continuous demand -- a premium across every distribution platform. Our success is the result of the long-term strategy we've been telling you about [indiscernible] to grow revenues in diverse ways, to manage our expenses with discipline, to deliver healthy profits and to create value by returning cash to shareholders. And in the second quarter, CBS achieved all of that and even more. But you know, strategy isn't enough. You need a management team to execute that strategy. We are fortunate to have an executive in charge of CBS that's about as great as they come and management teams to match. And as a result, CBS keeps just getting better and stronger. I have the utmost confidence that we are poised to achieve greater heights in the years to come. And with that, to tell you more about the extraordinary second quarter performance, I'll turn the call over to my friend and colleague, CBS President. But before I do, many of you would have heard me say that Leslie is a genius. Why? Because Leslie's performance in operating CBS is a performance of a genius. And with that, I'll turn it over to CBS's President and CEO, my very good friend, Les Moonves.

Thank you, Sumner. Thank you very much for those kind words. And good afternoon to everybody. We do indeed thank you for joining us once again today. Yes, it's been a very interesting day. It's been a very interesting week. There are certain things we can't control like what goes on in Washington, but we can control what we do at CBS. And nonetheless, despite what may have happened, we are very pleased to share our exceptional second quarter results with you today. Across every key financial metric, we turned in a stellar performance, and the numbers speak for themselves. Despite a lack of political dollars, tough comps and some challenging macroeconomic factors, revenue was up 8%, OIBDA was up 51%, and diluted EPS was up 164%. We achieved these results, thanks to strong performances from our business units across the board. National and local, content and distribution, our operations continue to produce solid growth and increasing profits. We also achieved these results by doing exactly what we said we were going to do at our Analyst Day earlier this year. At that event, we laid out some of the most exciting areas of growth for our company that you may not have even be aware of. Let's take a minute to look at how we're delivering on these opportunities since our last call. First, we said we would drive revenue and profit growth not just from traditional sources but increasingly from emerging platforms as well. So building on the Netflix deal we signed in the first quarter, we entered into a nonexclusive licensing agreement with Amazon a few weeks ago. This deal is another example of how we are capitalizing on the value of our content by selling it to new distributors without taking away from established revenue streams. New entrants are coming into the marketplace all the time, and we will look to negotiate additional prudent online distribution deals going forward. Next, we also emphasized that the demand for CBS content has never been stronger overseas. During the quarter, we screened our new shows to the international television buying community, leading to increased sales of our programming around the world. And just last week, we announced the new separate nonexclusive agreement with Netflix International to stream our programming in Latin America and Canada. International expansion is a key strategic growth area for our company, and this deal represents a significant step in that process. Please remember, neither the Amazon deal nor the Netflix International deal is reflected in this past quarter that was so excellent. We also walk you through a number of structural changes happening in the industry that are allowing us to derisk our business model and diversify our revenue base with additional non-advertising sources. These include growing retransmission fees, reverse compensation from our affiliates and the great upside we have in our local media businesses. We continue to move forward on all of these initiatives, generating increasing revenues from each of them all the time. As we discussed at the Analyst Day, these opportunities have significant room for long-term growth, and we're making solid headway on each of them right now. Due to our success, CBS is a fundamentally different company today than we were just a few years ago, and the benefits of these fundamental changes to our business model are clearly coming through in our results, and our investors have benefited, as well. So let me discuss our exceptional results now. Then I'll point out some highlights from our businesses before I turn it over to Joe for more details. After that, we'll be happy to take your questions. As I pointed out earlier, CBS's bottom line performance was extremely strong. Diluted EPS well more than doubled to $0.58 for the quarter. That's up from $0.22 a year ago and is just below record levels. OIBDA increased to $873 million, up 51%, as every single one of our operating segments turned in strong profit growth. Just like with EPS, our OIBDA performance was also near record levels for the quarter, just shy of the company's all-time high. Plus, our second quarter margin of 24% was up 7 points from last year's quarter. We continue to manage our expenses closely, and as a result, our revenue growth is translating into near-record profit levels across the board. Meanwhile, revenue grew solidly too, up 8% to $3.6 billion for the quarter. Once again, this was achieved despite difficult comparisons to last year, which included significant political dollars. We also generated very healthy levels of free cash flow of 32% for the quarter. Year-to-date, free cash flow of $1.5 billion is up 30% and represents a record for our company. Our strong free cash flow allowed us to continue to deliver on our commitment to create value for CBS shareholders. During the quarter, we repurchased 250 million of CBS stock and doubled our quarterly dividend payment to $0.10 per share. At the heart of all this success is great content. Our content is performing extremely well, and we are increasingly distributing it in the most profitable ways, with new possibilities opening up all the time. Let's take a closer look at our businesses starting with our largest operating segment, Entertainment. During the quarter, the CBS Television Network ended the 2010 11th season as America's most-watched network for the eighth time in the past 9 years. We had the #1 scripted series drama in NCIS, the #1 comedy in the Big Bang Theory and the #1 news magazine in 60 Minutes. We also had more time-period winning programs than any other network and the #1 scripted series every single night of the week. Looking ahead, we are confident that our primetime lineup is only getting stronger. We had only very few spots to fill, and we've added 5 new series the next fall that are the best of the best. We ended the season with scatter pricing up 40%, which carried us into this year's upfront marketplace with remarkable strength. In the upfront, we once again led the way in total dollars and rate increases, which were up in the mid-teens, setting us up for strong revenue growth in 2012. At the same time, we continue to benefit from big event broadcast television, including our new long-term agreements for the NCAA Men's Basketball Tournament, which paid off very well for us in the second quarter. In addition, during the quarter, we signed a new deal to broadcast the Grammys for another decade on more favorable financial terms. And we also have the Southeastern Conference, the SEC, considered by most to be the most valuable college football conference, locked up for 12 more years. These long-term deals will benefit for a long, long time. Events like these pull together audiences only found on broadcast television and also drive social media usage like nothing else can, making them all the more valuable. And needless to say, we're very pleased that the NFL has negotiated a new long-term agreement with its players. We remained optimistic throughout this process and are now getting ready for another terrific season of football and all that goes along with that. The teams and owners are happy. The players are happy. The network is happy. Our 7 AFC ONOs are happy. The affiliates are happy and, most of all, our audience is happy. So this is a very good thing. At CBS News, with our new management team, is making terrific progress as well. The Evening News with Scott Pelley is off to a very good start. We added more than 0.25 million viewers in the program's first 2 weeks on the air, and our focus is to continue this momentum as we work to showcase the very best in broadcast journalism across the organization. Moving to our Cable segment where we also continue to grow. Showtime, CBS Sports Network and Smithsonian all delivered increases in both rates and subscriptions. Showtime subs totaled $20.5 million at the end of the quarter, up 13% year-over-year. Showtime's steady stream of original series is fueling our success, and we expect to build on this with returning favorites like The Big C, Weeds and Dexter, as well as with some of our promising new shows coming in the fall, including House of Lies and Homeland. Showtime is also benefiting from higher international syndication and Home Entertainment revenues as the demand for hip programming continues to increase around the world. So just as we do with our network programming, we are generating incremental dollars in cable by selling our premium content over and over again. At our Publishing division, Simon & Schuster is embracing digital distribution as effectively as any of the businesses in our Content group. Digital sales more than doubled year-over-year, and given the improved profitability of e-books, our OIBDA results were very strong. Once again, it's about delivering great content. So far this year, we've had 126 books on the New York Times bestseller list including the recent success of The Greater Journey by David McCullough, and looking ahead, we're already seeing strong sales of Jaycee Dugard's A Stolen Life, which set a new Simon & Schuster record for one-day e-book sales on its debut and sold 240,000 digital copies in its first 2 weeks. Moving to our local group. As you know, TV stations face tremendous pressures in odd years due to comparisons with political years. 2010 was an extremely strong political year for us, and despite that, we were still up in our Local Broadcasting segment this quarter with growth at both our TV stations and at radio. Going forward, we expect political advertising will begin to pick up toward the end of the year, and as we've been seeing these past few weeks, the 2012 political season is already underway and next year, as we've seen just in the past few days, promises to be another big one in terms of political revenue. Also, TV stations were up despite a temporary slowdown in Japanese auto spending. As this spending comes back, we feel very good about this key category going forward. Because of these factors, we're confident that we will be able to successfully manage our Local Broadcasting businesses for continued growth just as we did in the second quarter. Finally, our outdoor-business is growing at a strong pace, too. This segment is increasingly benefiting from newly restructured contracts, and with capital costs going down, we're building out digital displays, which are a high-growth area. We're also benefiting from high occupancy levels and further pricing improvements, though outdoor has a very good story as well. As you can see across every segment of our company, CBS's second quarter performance was extraordinary. Our content continues to fuel new and growing revenue on every platform, proving that hit programming is more valuable than it has ever been. In capitalizing on this trend, we're delivering on our promise to diversify and derisk our business model, driving earnings to near-record levels. We're also managing our expenses closely in every one of our businesses to ensure that more and more revenues fall into the bottom line. Plus, our balance sheet has never been stronger, and we continue to reap the benefit of the debt actions we've taken to reduce interest costs. Finally, we are delivering on our promise to return free cash flow to shareholders through ongoing share repurchases and increased dividends. Enhancing shareholder value is a commitment that we will continue to fulfill quarter in and quarter out. So once again, it was a rough day, but our quarter was great with high single-digit revenue growth, 50-plus-percent OIBDA growth and 100-plus-percent EPS gross -- growth. Needless to say, I'm extremely pleased with our performance. We continue to command a very desirable competitive position that I have every reason to believe that we will deliver strong results throughout the rest of the year, into 2012 and beyond. With that, I'll turn it over to Joe. Joe?

Thanks, Les, and good afternoon, everyone. Today, I will provide some more detail on the results for the quarter, then update you on what we see ahead. Let's start with the total company results for the quarter. This was a very strong, clean and straightforward quarter. There were no adjustments made to reported results for the quarter. Revenue of $3.6 billion was up 8% from the prior year. Advertising revenue grew 3% despite the difficult comparisons for political advertising and the shared revenues with Turner on our new NCAA agreement. Content licensing and distribution revenue was up 21%, driven by the early benefit of our new domestic Netflix agreement. Affiliate and subscription fees were up 12%, benefiting from ongoing growth in cable and retransmission consent fees. OIBDA of $873 million was up 51% from the prior year as we continue to expand our margin. This significant improvement was driven by a number of factors including the performance of our base businesses, our continued focus on cost containment, the benefits of our new NCAA agreement and a strong mix of high-margin incremental revenue. Our overall OIBDA margin in the second quarter expanded 700 basis points to 24%. Operating income of $734 million was up 69%. And as Les said, reported diluted EPS came in at $0.58, up 164%, another quarter of demonstrating the strong operating leverage of our businesses. And on a year-to-date basis, revenue was up 3% despite the difficult comps of last year's Super Bowl and the political advertising as well as our new NCAA agreement that I just mentioned. Year-to-date OIBDA was up 55%. Year-to-date operating income was up 81%. And year-to-date diluted EPS was up 190%. Turning to our operating segments. Entertainment revenue for the quarter was $1.8 billion, up 10%, driven by higher advertising at the CBS Network, greater content licensing fees through the first phase of our domestic Netflix deal and a third cycle domestic syndication sale of Frasier to cable. OIBDA for the Entertainment segment came in at $440 million, up 97%, representing a 24% margin. The strength of our Entertainment margin reflects many of the benefits from the actions we've taken to derisk the business and generate new high-margin revenue. In our Cable segment, revenue for the quarter was $413 million, up 12%, primarily as a result of subscription and rate increases as well as increases in international licensing revenues and DVD sales from original series, once again demonstrating the value of owning content. Cable OIBDA of $176 million was up 36% to a 43% margin. We said on our first quarter call that we expected margin expansion at the Cable segment, and you're seeing that today. Publishing revenue of $183 million for the quarter was down 3% as the strong growth in the sale of more profitable digital content was offset by lower traditional print sales. Digital sales represented 15% of total Publishing revenues compared to 5% a year ago. Despite the slightly lower revenue, Publishing OIBDA grew 12% to $19 million, demonstrating the higher margin associated with digital sales. As the digital transition continues, we expect additional margin expansion at this segment. Local Broadcasting revenue of $691 million was up 2% for the quarter. Radio revenue was up 4%, and TV revenue was up slightly. This was another quarter of posting growth at TV stations even with the difficult political comps, the temporary Japanese auto production issues and one less television station. We want to point out that domestic auto was up in the high-teens for the quarter, demonstrating the underlying strength in this important category. Other categories leading the way were financial services, pharmaceutical and telecom. Local Broadcasting OIBDA was $230 million, up 7% for the quarter, representing a 33% margin. And finally, Outdoor revenue for the quarter was up 7% to $490 million, with the Americas also up 7% on a constant dollar basis. Revenue growth continues to come from increased pricing as occupancy levels remain high particularly in our large markets. Outdoor OIBDA of $86 million increased 9% over a year ago. We expect to see better OIBDA margins by the end of this year as we benefit from improved long-term contracts. Turning to cash flow and our balance sheet. As Les said, free cash flow came in at $646 million for the quarter, up 32%. Year-to-date, free cash flow of $1.5 billion was up 30% even with a difficult Super Bowl comparison from last year. On a year-to-date basis, cash interest was lower by over $50 million, and CapEx at the halfway mark was $95 million, well within our full year estimate of $250 million to $300 million. During the quarter, we retired 9.9 million shares of our stock and spent $250 million of our buyback program. For the first 6 months of 2011, we've spent $500 million of the $1.5 billion share repurchase program and retired early 22 million shares at an average price just over $23 per share. Our cash on hand at the end of the second quarter was $1.35 billion. After the quarter, we made a payment into the company's qualified pension plans in the amount of $200 million. Given the interest rate environment, our strong cash position and our cash status, this was a very efficient use of cash. Now let me take you through what we're seeing in the short and longer term. Starting with Q3, scatter pricing remains at plus 40% as we head into the new season and start to benefit from this year's strong upfront. Nonpolitical TV stations revenue is pacing up low-single digits. Radio stations are also pacing to be up low-single digits, and our Outdoor group is currently pacing to be up mid-single digits. On the longer-term side, we continue to focus on the initiatives we laid out at our Investor Day in February. We're making solid progress on derisking our business model and driving significant new high-margin, non-advertising revenue streams. We will update you as we continue to execute on these initiatives going forward. We also continue to manage our cost structure very effectively, and our primary use of excess free cash flow will be to return it to shareholders via a combination of share buyback and dividend. We believe this strategy will benefit us for many years to come. In summary, our results were very strong this quarter, and we continue to take strategic steps to ensure that this success continues for the rest of this year and many years ahead. With that, Jay, we can open the line for questions.

[Operator Instructions] We'll go first to Jessica Reif Cohen with Bank of America Merrill Lynch. Jessica Cohen - BofA Merrill Lynch: On Showtime, I guess it's the Showtime cost in the Cable Network division, how long will you have these favorable comparisons?

Well, Jessica, it's Joe. I think, again, the cost, I mean, because of original programming, there's a little bit of the timing of when shows premier and when they're expensive and when we have the promo. So but I think, when you look at the margin, we're comfortable on the 40% margin prospectively. Jessica Cohen - BofA Merrill Lynch: Okay. And then, I guess, 2 more questions. Frasier, if you could say how big that third cycle was. And then I know you gave really good color on kind of what you're seeing in the near-term in advertising. But with what's going on with the government is so unusual, I'm just wondering, if you were -- at what point, can you just remind everyone what point do you -- can advertisers back away? Do you have any sense in talking to your key advertisers if they plan on backing away over the next quarter or two?

Jessica, I'll answer the last question first, then I'll let Joe do it. Advertisers can back away a few weeks before, but we have seen absolutely none of that. As a matter of fact, with football coming back and the fall season coming ahead, we are seeing increased demand for our shows. And locally, as Joe mentioned, our pacing is fine. Japanese automakers are coming back. So we are not at all afraid, and frankly, we're looking forward to the fall.

And Jessica, we don't obviously break out the profitability on each particular show. All I would tell you, it's not significant to the overall margin expansion, but it was obviously very helpful to continue to have product that, again, the first, second and third cycle continue to sell very well.

Our next question comes from Laura Martin with Needham & Company. Laura Martin - Needham & Company, LLC: Les, for you, the number that blew everybody's estimates away was [indiscernible] EBITDA on Entertainment. You mentioned in your prepared remarks. Could you -- I'm wondering if you could give an update on other more granularity on the potential deal, like the Netflix and Amazon deals? And also on international, what markets specifically are so robust that it's really helping this profit number? And then, Joe, for you, if you wouldn't mind talking about -- I noticed we're building a big cash balance here, and I'm delighted that you spent $200 million after the close of the quarter through this early prepayment of pensions. But our debt is kind of flat, and I'm just thinking, through the use of proceeds here, you're really very constant in repurchasing shares. Could we see a step-up in share repurchases or prepayment of that pension plan rather than this cash build? Or there's some reason we want to build all this cash on the books?

Good. Regarding the content deals, what's exciting about it is there are, people have said, "Who else besides Netflix is getting into the ballgame?" And obviously, we did a significant deal with Amazon, which is becoming big, and DISH just announced today that they're going to spend a considerable amount of money buying content and buying libraries. So when you look at our current content, our ownership position, we have a pretty phenomenal library. And what we like to say about both Amazon and Netflix, none of the things we sold are currently shows that are on the air. So the world is getting bigger every day and expanding, and we hear about Apple wanting to buy content, and Google, et cetera, et cetera, and Microsoft. So we think having the content we have is going to get bigger and bigger. Internationally, obviously we're expanding into Latin America and South America. It's becoming fairly significant. As well as Eastern Europe and the Far East are also markets that weren't open before. And in the traditional markets like Europe, what's great is they're sort of like America was 15 or 20 years ago where it used to be a small number of channels. Now with cable blossoming, there's a lot more competition, and once again, the international numbers go up considerably every single year. Joe?

Sure. Laura, on the cash balance, yes. I think obviously, it's $1.35 billion, and look, we'll continue to focus on returning capital to shareholders. I think we're on track for 2011 share repurchases of $1 billion plus, plus you add to the dividend of that of a couple of $100 million, so you could see where we're returning our value to our shareholders. So we'll continue to do that. Obviously, opportunistically, we'll relook at the pension funding, and look and make another contribution if the environment is right. So this is obviously giving us a lot of tremendous flexibility, but our primary use, like I said in my remarks, will be to return it to shareholders.

We'll go next to Ben Swinburne with Morgan Stanley. Benjamin Swinburne - Morgan Stanley: Just a quick housekeeping, Joe. I don't know if you have this, but I was curious if you could give us the political ad number for the stations in Q3 and Q4 for the back half of last year, just so we can understand what the comp is. And then sort of more strategic, Les, when you look at your businesses over the next 3 to 5 years, at least in our view, the biggest area of growth and transformation of CBS is from retransmission fees, which does, in fact, tie back to the existing "cable, satellite, telco, pay TV" bundle. And so I was wondering if you could just spend a minute on how you think about selling library content to these new distribution platforms in the effort of maximizing the value of the library. So we hear 7% of your library to Netflix and try to think about what the real opportunity there is as more people come in and want more content? And in contrast, how do you think about making those shows available at what price points versus trying to make sure you're not creating some of that, eats up the sort of the big opportunity for you on the bundle.

Okay, Ben, it's Joe. I'll start. For political, I think, last year we said to arrive $200 million of political dollars for the segment, and I think we also said directionally about 50% of that comes in the fourth quarter. So hopefully, that's helpful for you.

Ben, as we look forward, we said 2012 in terms of retrans, we'll have our -- we are shooting for a goal of $250 million, and we feel very confident we will hit that, and that does not include any of the fees that we're going to get from our affiliates. So over the next 3 to 5 years, we think combined those numbers can be in the $600 million to $700 million range for those. And so that's something once again that drops right to the bottom line, and then it's going to be growing every single year from now. Knowing that we have a 10-year Comcast deal in place and a 5-year Time Warner deal in place, we sort of know we're sort of guaranteed those revenues coming in. And how we look at our library and our content, once again, we continue to replenish our library. Yes, we have a lot of old stuff and part of this -- part of the Netflix and Amazon deal go back to original episodes of Star Trek and I Love Lucy, but they also include a show like Medium, which just went off the air this past year. What we've been able to do successfully is continue to replenish our library. We have 3 CSIs that are now on the air that aren't part of these Netflix deals or the Amazon deals. One day, they will come off the air, and we will get a lot of money for those in those platforms. So the idea is our production companies, both at CBS as well as original production at Showtime, are going to continue to produce numerous revenue streams, and our library is astronomical. There's plenty and plenty of series going back. Remember, our library is comprised of the old Paramount library, the old Aaron Spelling library, the old CBS library and the old Teen World library. So we have a ton of content, and each one of these packages can just grow. Now in Netflix, that 7% does include a lot of our prime library stuff like Cheers and Frasier, but we have plenty more, and there'll be plenty more coming in.

We'll go next to Michael Nathanson with Nomura. Michael Nathanson - Nomura Securities Co. Ltd.: I have one for Les and one for Joe. Les, just take you back a couple of years ago, 3 years ago, in the recession. Clearly, the markets worry that we're headed back to a double dip, and I wonder, you talked about it a bit, but could you just relate to the tone of the market you're in now on the national side to what you saw 3 years ago? And what are -- in terms of the tone or the people coming in to buy, how does that feel versus 3 years ago? So can you correspond this point to where people were 3 years ago in terms of demand?

Yes, I mean, right now, once again 3 years ago, the scatter wasn't as high as it was nor was the upfront demand as high as it was. So we're not seeing anything like that like we felt 3 years ago. Obviously, its been a rough couple of days, but we haven't seen anything that reflects that the same tone as then, which was much more of doom and gloom, and we are not feeling that or seeing any of that. Once again, the recent NFL deal is a big shot in the arm to us and to our advertisers. As a matter of fact, once that deal got signed a week ago, they were streaming in. So that was fairly significant. As Joe pointed out, auto has been very strong, and we expect Japan to increase on that, so we are not feeling any of that sort of sentiment as we felt 3 years ago. Michael Nathanson - Nomura Securities Co. Ltd.: Okay. And then one for Joe, following up on the Japanese comments. How big is Japanese auto represent for your local stations? And what type of range was it down in the quarter?

It was down significantly, Michael. It's a big category now. All of the, kind of, countries were actually up, it wasn't just domestic, but domestic led the way. I mean, the key for us is the demand is there. And I think everyone is focused that the temporary productions are behind them, and they'll be at full speed by the end of this year. So we're seeing orders come back in, so again, but it is a -- auto was the #1 category, as you know, in Local Broadcasting, and Japan is a significant piece of that. Michael Nathanson - Nomura Securities Co. Ltd.: Would it be like teens of revenues?

In what, in terms of percentage? Michael Nathanson - Nomura Securities Co. Ltd.: Yes.

By itself, no, probably not teens, but close.

We'll go next to Anthony DiClemente with Barclays Capital. Anthony DiClemente - Barclays Capital: First question's for whoever has negotiated the streaming video deals. I suspect Joe. The question is, it seems like an early precedents being set in terms of the way those deals are being signed, those being on a fixed-fee basis, and I just wonder, as the digital distribution market develops and as you guys perhaps start selling some earlier window product, do you foresee that structure staying the same? Or do you think it's possible, as the market matures, you might at some point move to like a per-use or a per-subscriber model? And then I have a follow-up.

Okay, it's Joe, Anthony. So yes, Les and I are both involved in all of those negotiations, just to answer your question. I'll just let you know that, again, every deal is different. So just understand, we have an expectation of what fair market value is for our content. So if a deal is on a per-subscriber basis and somebody has the very few subscribers, that it clearly doesn't make sense. But you should assume that we anticipate to grow with these companies as they build their businesses, so we have to get our value one way or another. So you will see that, and we'll have a lot of flexibility built into those deals. So the answer is, the negotiations will evolve as the business evolves.

And Anthony, just to amplify on that a bit, the Netflix and the Amazons in the world are relatively new in terms of video content. So it's important that Amazon pay us upfront for that and give us a fixed amount for this content, and they will grow their business accordingly. But we'd rather take the money at this point. We think that's a much better business model, and let them grow their subs and go from there. Anthony DiClemente - Barclays Capital: Okay, Les. And do you think that the proliferation of these new platforms mitigates the need for you guys to go out and make a strategic acquisition in Cable Networks space? Or do you think that CBS could still or could benefit from a basic cable network as another means of revenue stream diversification?

Thanks, Anthony. You know what, it is not on our must-do list. We are bringing in so much money when we talk about our content food chain, starting with network advertising going into what we're selling in syndication then going into these new platforms. The need for a basic cable network to put our content on no longer becomes very important to us. So we're fine without it.

Our next question comes from John Janedis with UBS. John Janedis - UBS Investment Bank: Les, can you talk a little bit more about ratings, which, I guess, have been a little bit soft for CBS and peers and time shifted viewing evading ads. The penetration of DVR has increased to over 50%. Is there risks that help pressure ratings for repeats in longer term maybe impacts the rates you can get in syndication?

John, our ratings are always soft in June. We don't have original programming. It's all repeats. Until after July 4, we get Big Brother on the air. And it's always soft this time of the year, and it doesn't really matter because so little of the revenue comparably is involved then. And then frankly, our ratings, we've won the last 4 weeks in ratings. Once July began, we are back in the ballgame. DVR penetration, and it's been a subject for a number of years when it first came out. Once again, it was, could be the killer of primetime. It's actually increased primetime viewing. We've used this statistic many times before. Even our most loyal fan or any loyal fan of any television show, be it CSI or Modern Family only watches 2 out of 4 on the air, and they catch up with the other 2. And if they watch it in the first 72 hours, we get credit for it. So DVR for people who make hit programming is a plus, and we found it that way. John Janedis - UBS Investment Bank: Okay, so no impact. All right.

We'll go next to Michael Morris with Davenport. Michael Morris - Davenport & Company, LLC: A couple of questions. First of all, could you talk a little bit more, risk of delivering a point here, but it's about the national advertising environment. How did you actually pace in the second quarter? And that 40% number for scatter continues to be, I mean, it's huge especially in light of what the sentiment is right now. Can you just talk a bit about what that means? How big is that for you in terms of actually driving the revenue number? And how should we be thinking about the new season in terms of risk for year-over-year scatter pricing? How are you looking at that?

Yes, sure. Okay, Michael. Look our national advertising, obviously, in this time of the year, we're in repeats. So you got to have comparable issues, but the pricing clearly is still there. There's not a whole lot of inventory available to drive the absolute dollars. So again, we're really focused on the new upfront season starting, which doesn't kick off 'til the end of September. So you're really going to see the biggest impact of that in the fourth quarter, not the third quarter.

And frankly, about end-season risk, we sold around 80% because the rates were so high at the upfront. And as I said, with all this football money coming in right now, we're a very low risk. And frankly in addition, with only 5 new shows and they're very well located, knowing what we know about our schedule, you could bet the house that our ratings are going to be there and that our advertising revenue will be there. Michael Morris - Davenport & Company, LLC: And so NFL, I mean, ratings were incredible last year. Is that a situation similar to where if you sort of exceed your guarantees, you leave some money on the table. In the upfront processor, are there rating points that you can incrementally monetize this year if you hit the same levels? Or did you monetize it all last year?

By the way, we don't, we never sell floor below. We never undersell our stuff, so it's always utilized. The ratings were phenomenal in football. We see no reason to think that we won't do equally as well, if not better. And frankly, because of those phenomenal ratings, we were able to sell it at a much higher price right now. And there's such a scarcity that, in the inventory, it's a terrific thing.

We'll go next to Doug Mitchelson with Deutsche Bank. Douglas Mitchelson - Deutsche Bank AG: Just a couple of short ones. Les, any concerns about competing with X Factor? Could that be disruptive this fall?

I'm not concerned. I think X Factor is going to be a big hit, but the good thing about CBS is we were sort of idol-proof. Idol is still a monster. Idol's still a killer. I wish I had it. I hate that it's on Fox. And X Factor, I think, will be equally wonderful, but you know what? Our shows, we are much more sold in the scripted area. We're very -- we're the most competitive towards it. So I think it'll do very well, but it won't hurt us. Douglas Mitchelson - Deutsche Bank AG: On the scatter side, you talked about it a bit already. Some networks are seeing advertisers trying to topple up the upfront. We've seen that occasionally in prior years. Are you seeing that as well? And how are you balancing that against saying no and pushing those folks into the 4Q scatter market?

We haven't sold anything after the upfront. We're confident with our fall schedule so much that -- I mean, Jo Ann Ross and her terrific team did such a good job. And some guys who we negotiated and tried to get like a high single-digit rate, and she said, "Sorry, we're not going to sell it," came back after the fact, then she said, "Sorry, guys, too late. Too late, you want to come in at scatter time." And we're betting once again that scatter is going to be better than the upfront, and we're betting that our schedule's going to be better than our competitors'. Douglas Mitchelson - Deutsche Bank AG: I know it's a bit early, but we are seeing some peer networks starting to sell 4Q scatter. They're already sold out for 3Q already, maybe that's part of it. Are you starting to sell 4Q scatter at all?

No, no we're not. Once again, we have -- you have to remember that there's much more stability in our schedule than our competitors'. Fox is fairly stable. The other guys have a lot of new shows, a lot of shows that have moved around. They don't know what they're going to do. Some of them are very good shows. We have stability. I'm very confident in how we're going to do in the fall.

We'll go next to David Bank with RBC Capital Markets. David Bank - RBC Capital Markets, LLC: In keeping with the operator's request, I have 1 question, but it will be in 3 unrelated parts. The first one is, can you guys talk about what you think the greatest opportunities are on the margin side? Obviously, the core margins, as you sell more of this content business, is probably going to improve. But can you address it a little bit broader in terms of your views what the opportunities are? The second question is, a couple of months ago at the Investor Day, you gave a, I think, a $500 million target for international syndication over the next couple of years. And I think a lot of us were surprised with what we assume the magnitude is on the Netflix International deal. Did that number -- was that sort of a traditional media number and digital is kind of gravy, or was that all in there? And the last question is a little bit of a follow-up, I think, to the prior one and the one before, which is, can you give an apples-to-apples number on network advertising, adjusting for the difference in the NCAA stuff and whatever else you think makes sense in 2Q?

Let me -- David, it's Joe. Let me start with your first 1 or 1.5, and then we'll tag team it. The greatest opportunities for the margin, obviously, retransmission consent fees are 100 cent dollars. Those expand our margins vastly. So obviously, we've quantified that for you. We're talking hundreds of millions of dollars to benefit. Obviously -- so we feel pretty good about that. We see it, feel that ramping up in '12 and beyond. We're looking ahead and just staying with 2012. Clearly, the upfront is behind us. Advertising, all we pay is the commission on those revenues, so that feels pretty good. We know it's a presidential election year, so we know that's going to increase demand at the local marketplace. So advertising has got real high margin. Retransmission content fees, real high margin. And then these X VOD deals that we're doing with the Netflixes and Amazons of the world, are very high margin, kind of 50-plus , 60% margin. So when we're sitting her with a 24% margin, the 3 buckets that I just mentioned, that are hundreds of millions of dollars, are clearly accretive to our margin. So we're feeling pretty good about that. And on the $500 million number, that was really just meant for more traditional sources. So yes, the Netflix International is gravy. So we want to put gravy, want to put some cream, we want to put cherry on top of all that stuff, so stay tuned for more of that. Okay, what else did we miss?

Apples-to-apples on network advertising.

Oh, apples-to-apples. I think, again, it's in the mid-single-digit range. Just when you kind of strip out everything and try to put it on a level playing field. Partly do that, David, but that's directional.

We'll go next to David Miller with Caris & Company. David Miller - Caris & Company: Les, just hindsight being 20/20 on the upfront. And most of us were expecting you guys to be the market leader in terms of CPM growth, and indeed you were. But just the hindsight being 20/20, in your opinion, was upfront so strong on a CPM basis and on a volume basis for you guys, just because there were so many advertisers last year that sat out the upfront, they got burned by the scatter market and they had no choice but to come in no matter what the macroenvironment? Or are we looking at more of kind of a slow growth environment where, say for example, the technology industry, these guys are just going to beat each other up to try to take share, and obviously, network advertising is the best platform to do that?

Thank you, David. Look, it was a terrific market for all the networks. Even some of the other networks were doing high-singles after coming in fourth place. So they -- once you get scatter into the 35%, 40% range, it's really a great market for us. And everybody was there because, as I said in a previous earnings call, somebody who bought in May and -- or somebody who didn't buy in May, and then the following October, they had to pay 30% more for the same spot that they either got beaten up by their client or their advertising agent or their boss, and they came in. So we sort of set a number. We set the number fairly early that we wouldn't accept any lower then, and that was in the mid-teens area. And no matter what anybody else did, we stuck to our guns. We got what we wanted. We could've sold out 100% frankly at that amount. As I said, we kept it to 80%. So we were very pleased with how the upfront turned out. David Miller - Caris & Company: And if you just relate it to Jessica's question, if you have any cancellations or if folks are thinking about canceling, they want to be doing it now, correct? It's too early. They'd be doing it more like early September or so? Do I have that correct?

Well, they could do it. They could do it now, but they're not, and there are people who are buying scatter who would love to have those slots. So it's not a factor.

And our final question will come from Marci Ryvicker from Wells Fargo. Marci Ryvicker - Wells Fargo Securities, LLC: I have 2 quick ones. First of all, in the TV space, there've been a lot of stations for that are up for sale. And there's a thought that the affiliates are looking to get bigger in order to gain more leverage against the networks as they negotiate for reverse comp. So have you any thoughts on consolidation in TV and if that would have any impact on your negotiations? That's the first question. And then secondly in Outdoor. Joe, you said Q3 is pacing up mid-single digits. Can you break out Americas versus International and maybe comment specifically on the U.K. and France?

Marcy, I'll do the first question, and I'll let Joe at the second. We have seen no consolidation in terms of that to offset us. Frankly, we've had very productive conversations with our affiliates. We haven't seen them banding together to come against the networks. We've made a number of these affiliate deals for reverse comp without pulling down any signals anywhere. Some of them are tough negotiations, but we haven't seen guys band together or even acquire. There hasn't been a whole lot of station acquisitions. And we're in the process of getting some of our larger station groups done at very good rates, and everybody's happy.

And Marci, on your last part with Outdoor, both Europe and Americas are in that same range, so really no difference. And for us, Europe is really led by U.K. and France. Those are our larger countries that really move the needle. So I think, again overall, we're comfortable with that mid-single-digit range.

Thank you, Marci. And thanks, everyone, for joining us. Have a great evening tonight.

That does conclude today's conference. Thank you for your participation.