AMC Networks (AMCX) 5 Nov 212021 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the AMC Networks Third Quarter 2021 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode.

As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Nick Seibert. Please go ahead.

you. Thank welcome Networks and Earnings Quarter the Call. Conference to morning, Third AMC XXXX Good

morning Blank, we are Officer; this we'll us Joining Matt for call Spade, prepared and questions. Financial open with the and Interim Chief Officer. begin Today, will remarks, then Chris Executive Chief

it do not release, copy our on of a you available website If today's have is at amcnetworks.com.

filings risks forward-looking Reform the would like such are The of this risks of the call we'll call, definitions include The results cause refer certain today. to obligation to With discussion could over statements and that Private uncertainties. that, be Any to call of actual and forward-looking any I'd that reconciliations meaning like Litigation to a everyone measures. I differ. Please disclaims at press update statements remind begin, AMC forward-looking certain on the we Company to not this the SEC Act end future Before On turn for XXXX. guarantees made involve Securities within can required performance the results uncertainties may issued statements non-GAAP Matt. earnings financial and to of of release or call. Networks' any discuss today's and found

revenue I'm my I nearly and for and with Sapan. longtime Josh also in environment strong at in including alongside With here quarterly Networks. Nick, history. grateful and the years great Thanks, at each friend, AMC you grateful have results guidance $XXX friendship, some be Josh good my revenue Showtime. this back friends morning, working I'm its known It's highest other most the to leading quick in to terrific an thank from the quality his echoing two belt to core, team under third community. months be Networks many strong of nice on analyst million, by everyone. and And counsel. decades, had joined the AMC the my at call AMC Company's be Networks. for continued to a so It's And content quarter,

to that market around and a million finish much the so Shudder, the sustainable here news, streaming And we the Chris our low will streaming, updating on growth referenced track in XX million well single company on digits a the of digits. XXXX. financial an subscribers so all on We February deliver the paid and dominate how building Acorn guidance, AMC+, With increase that X expand that in the subscribers. targeted me to Sundance her to AOI strong to focus it's to of with on seems paid we're the in all total services streaming long-term in in business streaming and this way unique large approach to with our to year year we're TV, our this our clear With ALLBLK. full the growth we're revenue shortly. expect million have attention on company our our subscribers serving to streaming total in we're Now first projected remarks and that across mid-single profitable we're XX year, of portfolio

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have our specific the numbers purchases to from everyone. the as that to companions constructed offerings I benefit a larger of to something with subscribers offerings that approach beauty streamers carefully to very we and and targeted the like what complement First, for serving refer small and

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channels programming us our increasing with our Our channel upfront our AVOD the advertisers. and provides and expand help advanced from ad-supported to our to new our demand and available future. making a third on To terrific ad benefited we've robust linear revenue advantage commercial team. technologies a grow in advertising now by advertising across relationship platforms. be increases grow for and rich business taking business across had our within moment, we're to inventory also And continues of seen opportunity with aggressive streaming in of market price the digital continuing strong our commercial highest great revenue team free execution quarter some the a a with revenue We for

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good you, Thank Matt, morning, and everyone.

First, which just additional financial expectations, our I level. mentioned at some a updated will start providing Matt regarding high details XXXX by

XXXX. and sets year XXXX the for Our million a proven continued toward goals full XX outlook year-end our new execution for by the of subscriber of XXXX XX stage long-term to strong million

streaming end at the million our least aggregate are reinforcing grow plan to to We by X paid subscribers of XXXX.

momentum to growth Streaming achieve subscriber every subscriber track we strategic investments by year-end subscriber ongoing for driven aggregate investments. and programming our on be quarter, experienced have and We subscriber acquisition by our goal consistently curated marketing are supported and XXXX. growth continues to retention

We efficient original continue particularly platform enhancements. and acquisition future streaming in growth, drive to to programming, marketing invest subscriber new will

full which the the streaming As continue strongest expect heavily we discussed on our of be programming XXXX, year original our growth investments we toward weighted last to ever. more back half year call, and slate will in have into we

investments in anticipate quarter into heels accelerating streaming XXXX. of the we of XXXX streaming and third fourth the performance, our On quarter

combination by strong awareness is content coinciding to continue that supported growth see of marketing. the and streaming and performance We

for Going Call Dead, we three original AMC+, premieres series Saul into Killing The series including Eve. finales XX have XXXX, Walking and for Better will

in series ever. company our Today, XXXX for are raising XXXX total Our year-over-year comprised income slate offerings operating our outlook we growth. adjusted for full revenue strongest and year

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our single streaming of year performance to ongoing the operating the now date, I just investments low income, and growth management outlined. revenue full Regarding we digits, expect reflecting that strategic adjusted continuation strong expense XXXX in

to free cash breakeven. flow to be approximately expect continue full XXXX We year

slate previously cash onetime to prior contemplates the would continued flow $XXX this unchanged. of drive as well July XXXX with outlook our investments onetime associated content free outlook Our as payment strong payment, remained the mentioned cash million flow free cash our approximately have Absent settlement.

full to year track XXXX on to and our expect updated momentum. we with achieve are We enter goals,

robust of performance business in optimization our the will the include streaming of continued date, will digital to linear transformational most and our slate streaming driven our execution We year and anticipate growth content performance. by and investment strategy platforms. Next be continued

in is investment ROI-based be and and our by supports owned brands acquisition supported passionate continued meaningful Our retention that audiences to content will strategic and subscriber our controlled marketing.

quarter anticipated per earnings programming third Adjusted decline. and company affiliate and performance. $X.XX. million, was was revenue, by increase our $XXX $XXX offset year, revenues content marketing Total additional revenues, driven to from XXXX income representing operating were higher Moving XX% by a by the higher investments. prior offset streaming Adjusted share advertising XX% growth million, representing revenue from licensing,

our are businesses of and the and our Regarding streaming third subscribers date. year quarter. trajectory versus with respectively, third XX%, the streaming XX% Streaming performance, to increased we streaming prior quarter pleased revenue

and healthy rates improved subscriber We the our across service in engagement year. portfolio. services every third retention our are quarter, to metrics seeing across streaming rates the In prior compared all of retention

increase the quarter, increased pandemic-related of in Walking XX% increased others, driven revenue revenue the in World Fear quarter. growth streaming Dead, by Walking the distributed continued impacts as the licensing and low third Subscription universe Content attributable digital delays and the a number an revenue The we XX% reflected in normalize. XX% For Domestic income segments Dead, linear production affiliate increased in Licensing declines. as of partly million, adjusted growth of start originals original and reflects including streaming the operating the $XXX compared timing performance, $XXX revenue revenue compared result Operations XX% to programming increased the year. XX% continued representing million revenue was increased lower Operations growth The revenue revenue from higher quarter, subscription fueled increased revenues to licensing XX% prior advertising income the Streaming content to performance and quarter decrease Can single-digit of the momentum retention quarter for operating quarter. of of distribution million operating distribution quarter as year. an monetization Adjusted This and pricing revenue, prior quarter, benefited higher revenue a for Beyond the audience, $XXX revenue Himself, the $XXX of from to in the third acquisition in Domestic our Domestic Operations subscribers. to Domestic in in strategic to content, in offset well and of was original including quarter our as Advertising year. offset Witches, also Discovery Creepshow subscriber for by was Operations more. the a Dead, specifically subscriber Kevin growth healthy marketing. by investments partly increase F last by revenue strong million Walking primarily advertising and ratings. attributable

with due revenues Distribution an primarily to at XX% International. channel increased Networks management. in strong International increased to segment. revenue Adjusted continue revenue increased and $XXX by XX% to pricing $XX higher portfolio, XXX% as and quarter expense increased strong the International Other million, Media. income and across increase of recovery international third and to the to $XX operating increased at related result ratings increased largely demonstrate revenue million, million. Revenue continued and performance revenue in the as AMC subscription our Moving other to $XXX to to increase Networks a trends and continued as at Other XX/X reflecting Media performance International UK. Advertising million, an production revenue XX/X XX% well AMC in

onetime the paid cash programming of to and and $XXX third quarter previously reflecting XXXX represented primarily litigation-related which investments cash timing for of the outflow flow the the of free was increased sheet. in an Free payments, Turning of disclosed XXXX. balance million, July cash flow

billion were compared finance approximately leases period. prior debt the $X.X year and billion, the at end net the in quarter to of $X as Our third

AMC net end the in and current stock at remain leverage quarter, comfortable were Our ratio the Networks' repurchases consolidated the was our of of ratio. and There quarter. we common with X.Xx leverage sheet balance no

on We basis. an opportunistic evaluate repurchases will continue to share

to capital remain policy unchanged. allocation continues Our

to will streaming of attractive to First, returns This the organically shareholders. look our we investment in on return-based services. that projects our invest includes provide growth

is leverage maintain business will our Second, we outlook. for appropriate that

year fourth, to And achieve line subscriber With growth XXXX from Third, strong that, opportunistic full are year-to-date In shareholders. setting of and return into questions. a for as XXXX disciplined our goals, well positioned growth and for and capital operator, to extremely see point updated long-term creation. opportunistic summary, you our beyond can performance and stakeholder the momentum, starting strategic future our please value going M&A. we open

[Operator Instructions] John Our question Janedis Research. comes the line from of first with Wolfe

open. is line Your

forecast, Verizon can the us what legacy the cohort And streaming incremental how reach the relative on update like your subs? deal you engagement early, the distribution Verizon the agreements does Within to look to understanding targets? an the expansion, from give are it's important And then overseas like strategy?

call brands, Good of was is of and It sorry, reach place is that for goals, the Sure. can numbers we on your organizations, Obviously, beyond years. in or of great -- We're marketing them. any be that They're goals about for but what sub will over next coming the one it's talking in second Thanks, front to promotion in going us several develop and in the early growth question? us to I'm John. go your mean our help to years very be questions. those deal. part those terms engagements Verizon what marketing plan it's those us. really the excited to for associated with about great great the promotional getting

-- distribution. Overseas overseas

as are others We of a well not are. penetrated overseas as lot

all streaming advantage a we We those as roll look world. plan plans. for again, of And the over obviously, out We our that's just runway AMC's So runway. take huge brands. see we to

for John, the Chris. Thanks question. it's

important in other The growth. I add it says long-term to I is our what thing echo of also would strategy is that Verizon Matt

growth at build a to it's that areas come expand going we wide out we're As will AMC+, and of how from. look the variety

plus compared if other there. of out launched a our only early the recall, And services have into it, still that we core but recently are organic can AMC+ it's growth. to year So days still last year, some you it's so

services. see be Acorn, be we look opportunity ahead, in There for countries targeted more and AMC+ strong countries as more And for there also, Canada. launched recently AMC+ international launched do streaming come as our will And for come. So we've a and of to in have couple there. will well, we we to

distribution opportunity Thank for global a holds future you. that. what So is us, about the for big excited we're and

I Okay. could one. the Maybe sneak in separately second

You talked about and, your investment you the the the size growth opportunity? numbers. with of for the Does saturation content expectations larger about the are Matt, What think your market players talked enhanced that small pipeline programming in for investment about? that of beauty change you how or

model going mentioned of things is are playing. different. to Our the the strategy just change. that And we're is not others game And that one I going there cost to play is not

We own pedal are the background, confident program we here. on experience, we're on the that And but benefit step to ability my user to And future. about that's going services going aggressively. in also these frankly, just based to gas IP the the our very current not

play -- to going all games. as going franchises roll We're to we these that's here. not and important strategies. we're targeted the continue So in invest other's to out And

of the from Nollen with comes question next Macquarie. Our Tim line

open. now is line Your

I Could got some I remarks deals Hulu said that the and Netflix follow expiring. think up on you you've the International? prepared in

I out can platforms, well how on because in with had content decent Amazon. make own also you've know You to some that Europe Europe, think, your I plays that of DTC deals just put as sure content want your I in platforms. some

own and Wondering little few on a with would is ago your that. And question I you can the Magnite Trade weeks more second question partnership be, about about bit could if you on this announcement to what Desk The then the targeted a So speak programmatic platforms? content a linear advertising. saw put

new. completely not it's think I

already. been You've for while a little doing this

about Just partnership. on details more this curious Thanks.

Thanks, Tim.

first, deals are we we optimize for plan continuing us the not So deals. this performance relative in in to place. linear international we will have It's licensing licensing that to front, a long-term continue terms content on of these of our renew types period in to where

content that back ourselves where take distribution. significantly will with markets licensed for we time, over are in our some out of streaming we there So

we in we can actually strong Given internationally select have in countries. we place IP today standing have the the that outlined, IP Matt in that put that products do

will licensing future. in continue fuel of current enjoying we we through the have content. have exclusivity place growth we that our dance important But we So that long will revenue for really in optimizing to the the for feel this and it's go term, the

bringing board can wherever are putting those deals with significantly on and to very strong targeted be addressable linear in advanced and we're the advertisers, exciting expire selling innovation new And because our place exclusive. excited our market. streaming, a we focus advertising, way in will that the and advertising advertising. inventory, to They're we our are have that's viewing that our what nature frontier. we'll relative the the And And about come think so we're a countries that I of team investing to paving Kelleher Kim then the away advertising of programmatic product look to to in content we're it in across

with comes from the Our next Nathanson question MoffettNathanson. Michael line of

Your line is now open.

a Matt, I of couple have you.

that, or I given scale? wonder do the at need the want think the I you've before know they and distributors do you further even this of you eventually other even think though Showtime niche a for of what is, experience Lions -- get at How your and midstreaming economics Were is unit When with done ROI to do feel opportunities. consider you're all maybe adding there announced niche share look playing services gatekeepers? And First your business? customer last the is, to Starz the lifetime you know on anything any probably you this to you do and become game. night, benefits platforms, model comparable about stronger knew of to with value, second more of versus actually can even you relative unit that then economics and something you And before? us kind models this the

Good question. Sure.

to First of same with paid business one the for the other for were the that the a was No directly really directly all, businesses, AMC terms it premium that experience. before. have the Discovery into used in Showtime the Showtime paying of streaming world, streaming went consumer before. Most experience -- really the versus experience. When network. paid entered case. wasn't companies for ESPN has the of traditional has Consumers Nobody

So different totally it's model. a

at we Here, business continue plan great the incremental can a sustainable say, look this business and around and our where grow our we generate to world. strong margins model is business and

it's different a we So enterprise. feel here really only forward. the it about plan very, really good going and better very And about

conversations any to in long sustainable Lionsgate or been fits here. model. and it's company's the acquisition grow. work. time. go feel It's in see Starz scale The We We there's us to think In if form. the terms going continue a model model for We'll a We And of how marketplace future. These that they have by transactions, don't that really really way, for it's working. nothing necessary new anywhere. think that it's model a this is can shape it's we to define a

Our of Morris Guggenheim. next from with line question comes Michael the

line now Your open. is

questions. two have I

ever to see vision a your question First, trying question may the about is XX us reference for really Really be insight of like for sort number. premieres, impact sounds think content us And COVID Can sort year, a strategically we Chris. the to either more bit future pre-COVID or like give and I it change? big the in but 'XX, say, Company criticism compare like this of second but management pretty this or get slate you. changes. where is some not to, of a know than also the and the that? Thank maybe to for past, specificity next it been? production? season some can with my early, Is with of which of for how of frame meant you you've on of any -- changes Matt, bigger like additional kind help referenced you I'm I something peak the does Is of levels sort compares sort curious, how of operationally XXXX that you it's into

Nice be a again Mike. bunch years. Thanks, after to with you Great. of chatting

in the have to of an across to impressed group works, company of the means people quick, terms the things one of for in the a I company me. me around which board. smarts adjust how we the What my is this this -- AMC, of very And what strategy. out box being am First, strategy the of pace of getting my the is already of that here I'm incredible the fan right and it leaders here,

out they're great whether it's own, doing time it's a said sustainable of the we earlier too But in the we have acceleration it's think love call. in part see don't management the content think what we I whether that spend people It's much right want they're the I whether Company, in job. the strategy. targeted whether the to it's I plans, a there, the of IP the services tremendous think the keep to traditional places strength the still the us company. on keep And to our right we there's of opportunity this and growing business, we help strategy. I repeating

it's Chris. Mike,

haven't of as think franchises, how relative surprised. pipeline to content. now to our the historically, episode. Better in the haven't it side wait us. streaming monetize When back Call on even even actually. script strong is them a a the that and is and streaming hooked pandemic, question, slate been For look during Saul great more I But I Call fuel Better than great ever series at growth. and And shows it's they're 'XX, myself, the you consumer, our your of a streaming, success that ways has Saul place where linear because the content have people for some on helped have now we've watched ever. and coming I strong had found And we've to got I strongest franchise read want second can't to about question even our I example. we next And now our And be on we

even If where and think 'XX, really we about were have we 'XX in AMC+. you didn't

rights, service although So had we have place. we the in didn't

of can benefits line important So it looks to now can our -- at Because look I reap where didn't know 'XX, maximize in monetization that we're not at Mike? but went... come. and is our it that, Difficulty] you that, just a me, -- place said sorry, like hear really we we were Having the [Technical years where for we also

my you. I We side. about least XX at you can hear ago, from seconds lost

about talk to looking started You forward.

part? Okay. Did you Better that talk my you Saul? Or about me Call hear missed love of

-- part. no, -- got that We we got Yes

You can say it again.

The favorite taking should but talk because Saul I the my is way, the Better By I'm show, Call point. Saul for not about Walking Dead Better Call

So -- streaming, all platforms, cetera. but anyway, engine we really have et our across content as linear a monetization

more 'XX, into marketing the content in slate beyond. the and And decision that have to unfold we when next going and making we make really look year strategic end powerful our are to we so most our and year next years invest of a the at

question [Operator comes line Our next Morgan with Thomas Instructions] the from Stanley. Yeh of

Your line open. now is

cited other side, on Do see build kind offerings or have scale as focus. and marketing up the scale an us what you Michael's on in of see of that even on an fans that performance way? OTT question going so there suite super And Matt, the after then, time? brand subscriber think you're that area you genres Can the on can following as targeted on evolving Thanks that of over around Chris, opportunity color you mix how and of you acquisition expand ROI-based trends where to of seeing marketing are any much. you on organically? cohorts retention versus effectiveness now give you you the

organically, and And in that and we yes, Thank regularly can ready genre And us? we would expansion, pieces Thanks, to Thomas. of And targeted we wouldn't certainly, we move the chase saw appropriate aggressively. sense that it you. expand terms when our ways We're for evaluating to an strategy. lending that in front. we're constantly other marketplace, ideas themselves of we think the thought on audience and with make on so chase economics, target the business that why we approached and being target there's we're if

our price have in belief COVID-driven push And grown our on AMC+ And have said, in Chris. past value continue favorable we're with of to is the important lifetime consumers we're it's and with a the like to year I different initial that all benefit we're our that the our SAC seemingly -- streaming fans, we're to the did I costs subscriber we've also revenue for the particular, because healthy really pacing really the metrics of and subscriber. us of us and The with year points for the be of for for in all are we're today attractive regard you're the And relation across is view churn, other added because about place. subscribers. growth rates service, seeing we of past metrics. value along that services and in strong. marketing. is that targeted retention revenue that very significantly seeing performance relative investments, months, question. retention all are to and the launch expand services. as It's serving we given an our on including AMC+ but Thanks power the focus seeing initial of sticking our to consistent and streamers. But super focused that, to services, can a have for only to that a premium that metrics we our they're it course continues the XX plus lifetime in lifetime there And more each the us, us, that Thomas, we're seeing we what strong

will awareness satisfied on a along to look to retention and consumer. the we churn to specific increased momentum with try focus we're marketing this doing 'XX, content an marketing, performance to with So and targeted drive as lower and slate marketing continue strong and a more support all

Thank There call. are gentlemen, you Instructions] questions. conference no concludes and further [Operator today's participation. Ladies this for your

disconnect. now may You