AMC Networks (AMCX) 16 Feb 222021 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the AMC Networks’ Full Year and Fourth Quarter 2021 Earnings Call. [Operator Instructions] As a reminder, today’s call is being recorded. I would now like to turn the call over to your host, Nick Seibert.

You may begin.

Thank you. to earnings Networks’ conference welcome fourth year and XXXX quarter call. morning the full AMC and Good

Joining us Chief questions. this Today, then Executive Miquel Officer; we morning President we are Matt Spade, Penella, the prepared Operating Blank, will Chief will begin Officer remarks Streaming open and of Financial with and Chris Officer; Services. Interim and Chief for call

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

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

our exceeded of of a pivotal year year and all strong metrics for a and was We Thank XXXX Nick Networks. met everyone. results. you, or morning good and outstanding AMC full guidance delivered

XX% subscribers streaming. streaming year leader growth, ending a year on targeted and the our year $X.X our global in headlines. with year-over-year had across of increase more representing with the XXXX nearly company’s significant billion, than reinforcing a promised in we few services, start X% paid revenue full a milestone, We delivering let’s history and and position our the of representing So, million highest revenue as X subscriber goal the portfolio

our we expanded content, multiyear content. XXX% called by our The million across broad distribution company Dead, of our The of growth by disclosed end XXXX halfway global consistently and distinct streaming XX subscribers of strong, paid end several our revenue, availability the growth streaming notable IP, acquisition portfolio towards in and the our including our revenue, global led by that strong success XX our year year the we and streaming foundation of of it by distributor our international a remains delivered ad be fan-driven franchises a sales was Sentai, Comcast, of domestic agreement great space previously platforms Catalog year including brands Rice And services. fast reaching supported controlled the model. our We the in completed growing a a library. and big with demonstrating power full including of Agatha to of achievements. bases, target expect We a with We anime will And with Walking like subscription portfolio. and entered through Christie Anne for across of XXXX. global established anime library owned revenue robust of the the fan our capped We growth million for fourth quarter division, our advertising

to is targeted building ability the a in in fans very we each genre. of a economically portfolio services, and advantages different unique have playbook others. this had notable. As only our super from that field. Not context designed before, grow deliver apart us set continue business players with in the of marked to our meeting from end pursuing specific major particular subscriber of streaming something our to The and is other we said to By structural growth just guidance, have strategy year our but success

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our with we we our confidence have our unique Sentai As acquisition, targeted in deepen model. great leadership continue to position

of are We And value. a subscriber view are prudently business methodically of margin, highly this long-term and the growing we measured doing a including and business, sustainable acquisition with metrics per our lifetime fashion. the in cost

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So, lots ahead. of penetration market opportunities

eight of recently series. the mention back of Walking AMC As to third-party first welcome TURN: us we AMC+ highlights. Fire, I Dead several AMC+ are now and back for that episodes and hours of drama, that in making season an and deals, available final we flagship and content And Hell Washington’s which originals will active on had We our other subscribers. two Spies, of content, original we on streaming licensing Halt premiered following expiration come fourth acclaimed and representing the exclusively have Wheels, XXth now Rectify quarter Catch to including is follows acclaimed the the hundreds

year will original well the biggest content be fourth history. our for XXXX, set in Our us quarter company’s up which for

We rollout strong Rice controlled This first will the Witches, courtroom called a novels R.R. that on over Robert Rice’s help the our Three final Walking with addition and an the continue on Interview a Redford growing gritty anticipated will based AMC+ starting marquee seasons fans new year. Rice’s bring television franchise new Anne to and our of dramas in our of Demascus have history we list the a closing premium Winds, Mayfair Courtney George of IP. series, are Eve library just And Vampire character-driven Saul, expanding XXst build The other Native the XXXX. several a Killing launches newest American for the end Street, set series with drama Tony made of shows year to in B. the and best-selling owned Invitation based of Dark content us and millions Anne and the Dead. including broad Call promote and will viewers reservation all of And greenlit sampling We recently Hillerman Vance; will captivate of our the slate next pipeline development. to we a our Anne have and cop highly we already to series producing. out Martin remarkable drama with Bonfire for that two two Better episodes starring and of is and on Indian collection, first-of-its-kind

reiterating the we of over as a company, we opportunities. us and compelling detail full AVOD are more we With turn I capabilities, the on the growth are operational revenue traditional confident by XXXX the connected for Thanks of was our especially are feel we XXXX are ad-supported innovative setting TV close momentum pursuing original inventory, continues well more delivered to the and ad right financial for seeing in increase On includes advanced advantage beyond. year This and and our channels for to strategy program continue to we and evolve, ahead for a by well as the XXXX. XXXX to taking for ever outlook We and lots audiences our terrific optimizing serve, achievement via shareholders. significant digital for ad we year platforms. FAST of for as driven XX% commercial year up Chris revenue as our our we the TV new that marketplace than company leverage our that to I we where that, results ad content while our call business digital as look our will our will growth. front,

morning everyone. you, and Thank Matt good

targeted and strategy differentiated working. streaming Our is clearly

streaming paid exceeded have growth we year aggregate the goals or are With are to subscribers, previously momentum, with of subscriber we we all met goals. to representing X pleased this more streaming XXXX XX%. For deliver than ending including the outlined, well-positioned XXXX, million our

revenue For a generated share full earnings X% year billion, The $XXX highest XX% history Consolidated XXXX, company. the million, $X.X the $X.XX representing increased consolidated per year of the in adjusted record to growth. representing operating revenue year-over-year. and income was adjusted of increase X.X% company the

For and income quarter increased was year strong fourth share, year was and subscriptions $XXX affiliate XX% respectively. and $XXX million, XX% quarter X% robust growth was revenue, full fourth operating performance. revenue consolidated to the adjusted grew billion for XXXX, operations quarter. million $XXX fourth the Subscription This X% year and to includes and per million, revenue, which in revenues for streaming to grew and $X.X $X.XX. by earnings underpinned domestic Full the growth X% streaming full adjusted advertising

in year single-digits full share of $XXX subscription gross streaming the the full million XXXX, fees to with the compared XXXX. month For million, December’s was run-rate of growth low the paid declines based year Affiliate XXX% for full XXXX. were revenue on $XXX representing company’s year the of streaming We revenue revenue annualized. exited XXXX as of the

lower XXXX a subscription by both advertising partly for and streaming delivery. driven not million, decision services. which Full license our quarter revenue full the by X% the domestic quarter, growth exclusively year to continued fourth grew the by Robust operations The associated revenue growth, fourth $XXX healthy advertising content driven a X% third-parties digital was For pricing one-time year for distributor In by quarter, of the in offset and low keep excluding grew full X% offset to X% affiliate operations to year $XXX content $XXX for fourth the a decreased of decrease to stronger to partly decrease of and revenue is income was quarter, against in the year content the impact new owned payment million, in the million of year the reflecting declined single-digits. licensing revenue in lineup XXXX. the a comparison operating quarter. it revenue with adjusted original our prior timing XXXX. to Domestic our prior

quarter, growth, $XXX including as income growth operating fourth subscriber results strong fourth million the and Full revenue representing operations retention by continued million. reflect domestic offset AOI other for future partly for quarter For year International performance, adjusted XXXX, programming was was and marketing. of $XXX full acquisition XX%. revenue as well the investments and year

Media. impacts, Fourth growth footprint XX/X translation a three the X%, basis. revenue and performance revenue timing for the as the representing production XX/X FX of production return performance year of XX%. of majority $XXX channel Media. the AOI full Excluding million X% the at other across delays as reflecting year growth of $XX at was robust constant well first Full million, from in productions was the demonstrated as International XXXX to on a currency of was COVID-related delivered our advertising were quarter international quarters XXXX, decrease

impacts, translation a was FX basis. Excluding growth XX% constant currency on

the representing free I performance settlement previously revenue cash growth previously as XXXX just XX%. flow content well highlighted increased quarter, was and including the ongoing the investments, the performance delayed litigation million million, management. one-time $XX was impact production full by payment. For for expense driven AOI of the strong of and $XX Consolidated was disclosed of year fourth as reflected AOI

with million net have settlement year finance the for cash billion. leases litigation XXXX We $X impact been free and XXXX. the ended Excluding approximately flow of debt full the payment, $XXX of would

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

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

Our capital allocation unchanged. policy remains

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

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

such completed fourth opportunistic strategic M&A, fourth, Third, as the XXXX we quarter disciplined Sentai our to acquisition and capital of and opportunistic of in the return shareholders.

see in view beyond, we Looking the and and XXXX front numerous ahead remains in long-term us, unchanged. opportunities to advantages of our streaming

the Matt well by the XX tracking expect million year. streaming toward to subscribers our end are XX as about XXXX. there we by end million We of to mentioned, of this halfway goal be And of

expect be on largest revenue streaming to by our largest overall revenue reconstitute XXXX. XXXX our be business continue mix, As we we business to by our well way third to its revenue and

basis As by first streaming we larger a consolidated revenue our subscribers becomes percentage XXXX. revenue, a quarter streaming providing of will in the enhance quarterly disclosures of on beginning our

of which XXX,XXX additions, to strong streaming subscriber A the of first Walking quarter, expect encourage return our take are our XXX,XXX we the our streaming we Killing Discovery quarter driven first slate, the net first providing long-term by of opportunities, cadence we In a While today, view Eve. disclosures investors for and of quarter outlook by of XXXX. Witches, to the always includes Dead The our matching subscriber

revenue single affiliate will will our financial the be by to growth revenue driven growth, full revenue revenue digits. continued Subscription offset outlook, streaming company year by in low continued total growth XXXX trends. anticipate we Moving partly be

As is legacy do services. we anticipate expected roll some will related time year utilize across of our timing in content content licensing and revenue. XXXX, licensing driven the existing subscriber deliveries revenues long-term to our of the the to for of largely content licensing retention full prior licensing as the agreements. growth streaming content licensing revenue This drive by decline off, agreements decline over exclusive Notwithstanding growth we year-over-year

Our XXXX. remarkable demonstrated advertising business strength in

increased offerings, robust will well which stable digital trends. the as by expecting be offset growth viewership revenue, are macro continued driven addressable our we as XXXX, and partly pricing of by advertising For

Saul robust this content of anticipated Eve, have year Dead. of We highly and return programming, a with slate Call The Killing the pandemic-delayed Walking seasons the including Better

investments expected by European launch and toward In marketing in into in XXXX expanding AMC+ The required launches an the will growth. future addition targeted eye XXXX and prioritize initially international platforms evidenced targeted With streaming long-term when to new an was we followed to strength that current inherent in new largely and well with will model, streaming XXXX, to would also Spain, our of our plan launches our our return-based investments geographies. is growth AOI efficiently we initial XXXX. means beneficial This Zealand, support timing of acquisition retention we the XXXX be streaming while revenue strategy decline. of America other investment We our the economics This are content, unit as with streaming our New to we investment our XXXX end operating differentiated subscriber of digital in year much by countries. Latin small content, and today as weighted India, our the and of owned performance. services in optimizing continue in with the toward invest a of in portfolio growth

without XXXX strongly As AOI than lower an estimate year able to growth deliver in streaming and XX% are of XXXX, the of were impacting we X.X% necessary In that to see execute neighborhood similarly investments. investment XXXX. AOI growth lower we our we in progressed,

growth, margin XXXX. and to investment in continue a support marketing points of require in will We to streaming which content few will invest

focus margin and continue content we disciplined AOI anticipate revenue, longer-term we approach the streaming along XX% high with our margin XXXX to our our investments, meaningfully profile area. maximize economics our consistent grow value to to As that be on that will curated company intense subscriber toward maintain mid- total in the with lifetime

Moving to flow. free cash

For XXXX, of expect $XXX approximately cash year we flow free the full million.

as content well continued Our outlook investments. investments increased free as owned flow technology in cash reflects

strength This continued XXXX and efficiencies ongoing pleased to from the our revenue and mid-XX% for streaming call over area slate, turn more awareness the beyond was subscriber our well strong to over XXXX year XXXX earnings fuel expect growth. In to With that, content in discuss time. the growth long-term value in drive performance to and rate performance creation and am profitable be global we tax we I our XX%, Miquel will and drive substantial summary, in XXXX. marketing detail. will and with Our streaming of full positioned expansion, are effective to

followed than This And structurally said we building advantages start streaming at successful towards Thank clear and progress to which subscriber the a goals. major gives you, one call, other the attainable the being some a we’re and players as playbook, reasonable in different space. Chris. us of business make today with Matt unique the continue our is by very as

All of in our the significant year. streaming and growth last services saw steady

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As we huge significant other international Chris AMC and mentioned, Plus our services targeted have year, opportunity. a for planned this representing untapped launches

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Michael question with Guggenheim. first comes from Our Morris Instructions] [Operator

I Good opportunities but of your to or this more what for like combining some been Sentai makes can near-term, on the little a others. hear the and the morning. about what and – that’s with what But kind how surprised quickly one. just you that then some rollout, combined this get top you, was can the at the for the international talked first of maybe unique I market it given performance? format importantly, you list, when acquisition. that want India timing challenging of pretty Love you kind present in taking Thanks guys. a kind hear also ask a of about contribution the detail of to path more talk And maybe to studio IP you this to

Thanks. additional are there your list of of seeing you what makes curious it of am that I top So, from kind markets here?

of driven into Thanks, well my presented opportunity week on later, later, together. first pointed the much about.” been Journal reach was tremendous two know in September, discussions a sort two and Mike. by in our of I that microcosm their lot They HIDIVE, were that And it. are enhance in this there targeted the and it own There folks And as in and that service literally we traffic. We can transactions the couple terms don’t “Wow, and think, of I the said, Full a here can with & content following it more future. called content novels have place strategy. I we surprises interesting. I disclosure, valuable for weeks about their job of Street a have a I valuable was a but back putting think reach. earnings think Wall acquisition there Sentai in that about the Noble’s there a this we we article audiences out store can a I in never books. Barnes is is content. and And I was streaming view – graphic tremendously marketing weeks be efficiently. I category a And that Sentai out And service. of will story, fan, things, And of was that

quickly, offerings forward. long-term we exactly are fan subscriber, enhance in it’s how but And we message In programming that road that low of ramping IP, add great them an audiences. up of in can our terms the bit, our super will the churn we reach a us terms can I and are of offerings. important think probably what again, going all intend control little we and trying rates, to there part we of on Reach efficiently, and terms that’s very for it make our of down to to value costs

good a us. for that’s one So,

you let that Chris I a of are little up terms elaborate right, In India, on it’s but bit, soon. coming will

our standpoint differ we of lot the rollout, expand our from for we And may Amazon partners, offering, know, morning have direct-to-consumer plan, of offerings terms distribution to our from of our Good Thanks But a our footprint. is expansion of offering questions. Apple with as products direct-to-consumer international bigger and a in will with also. the standpoint and mainly you largely Relative our to our will country-by-country. others. in rollout of international And partnership it’s distributors. course, And Mike. our the excited with are

to you from on and also benefit the ability what know, out speak, just of then businesses use have local locally expansion, broader the relationships. we with regions we in but content, international a not because we dubbing, lot scale to a sort look we to we businesses. there our largely ground, India, with boots by international So, our level side do the On are have a international are out can organic for of so partnership trying regions will close local perfectly triangulate to there. what’s roll as a have roll lot at going the our linear we expansion, a corporate, of of But take we global these on driven to

about So, our we opportunities. feel good international expansion very

Great. Thank you.

Our Robert with next question comes from Fishman MoffettNathanson.

Good morning. Thank you.

balance marketing up you prepared the saw you subscriber during promotional expensive and your drive investment spot pay can for on just We Bowl. growth. expand AMC+ the upon ad streaming of needed Following the remarks, that’s to Super most

this discussed? one-off more So to acquisition that a you tailored compared was just the curious, special subscriber approach

to that one on services for the start let of is that history, am things I streaming our sorry, Let just lot as of see the the you a all to on as we that of the with to in me me think our addition doing us year the we that world. support marketing going backdrop content in subscribers streaming and do I see specialized the support of brands we pursuit best offer a aggressive directed that say are content marketing to to in are start – and you going begin

it. part of was So, one the Super Bowl spot

advantage content the more of out your and was on an content little more Miquel we bit I a of message think that that have point. opportunity our talk consumers. year, let broadly to other take that important with I get will kind type of to this

that Matt. specifically to ad, Saul, important for know final to seasons is the know, Thank let Dead, franchises you, AMC+. as for But what felt Bowl typically the Yes. Super we final that And an audiences Call of linear episodes, business, Eve The be it extension let we Walking to now like going not of premiered do our specific our the and the was customers. AMC+ a of a Killing cost Better a on manner, in a customers are with very based that and really per target And on do acquire targeting and understanding audience systematically for that’s acquired includes we the daily something to to do What disciplined it customer. consumers we creating basis. on that manage value our lifetime disciplined very we marketing acquire profiles campaigns follows approach consumers

It’s great that you saw right? the commercial. It’s all good man,

you. No, was it Yes. Thank a fun one.

third-party discussed So, and look before with streaming what more changed has your just new still limited new licensing for the expected you compared greenlighting you coming how pivot? wondering ROI streaming to just bigger picture, programming a like am I series have your that

mean ARPU the relative great side Sure. think we investment, the as highlighted, content linear It’s when return on and the can you lifetime of it in have our our focused our with to But that what flywheel on and are Miquel also our ecosystem question. investment, we about a generate. and of still value I streaming. streaming full

to it’s of invest it us that different we distribution that content away size, various our our monetize way we across in licensing billions a able revenue are we dollars pull not So, can because and for of from. and in fully billions areas

and licensing over with licensing we some the fuel our it. a offset to just that it revenue is we it. way balance content third-parties. to we that these But And to decline exclusivity grow the time revenue than the will come important series we that will feel long-term, in have over have feel more So, original streaming meaningfully paramount will strategically, of

lineup, we that. in didn’t best I delivered exceptional when we XXXX also a when just the And terrific probably lineup this in we moment think in in XXXX. really our performance is have a time have pretty history that

things look our our those take we you the advantage do streaming this ability investments, kind to important of affiliates do plan we piece from and So, of is if commercial This of that an to subscribers. to business, content platform to every traditional at time an to time year. with drive our us, revenue for important

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is to XXXX. all We and slate have beyond strength the in future And and our growth platforms. across will again, for XXXX driving key to monetizing continue content

everyone. you Thank

you. Thank

comes Fargo. next Cahall Steven [Operator question Wells Our Instructions] with from

just Thanks. talk trend wondering I was you about Maybe the if content spend. first, could of

and sizable. that have an You year. I fill series am of this on down three in working sure are year-on-year got the big to somewhat flow the some organic And free cash basis content step is you then hard

next like on couple you maybe for basis, year-on-year content the then year huge slate a just got of So, have go advertising, growth that just trending free wondering as And cash cycle? And year. a it kind years? the means in of cash – about seems this should what how on spend think have this content we for you big through flow you

hitting. just guiding So, have stable shows up. I was to lot a not you a you little I think that are surprised and more

help thoughts the head bit. me you. a that upfront you just the any So, little as And unpack season, into Thank spring? maybe

of been for Relative waiting XXXX spend, to patiently. the trend Steven. Thanks, have Sure. the we content

have volume we of services. content of all So, and offerings strong do across a our brands

new XXXX. enjoy. it, of an streaming feel important things that, the weeks five we engaged to offer in to we to content have We original keep So, three cadence the constantly And that’s every, volume and being weeks. subscriber given call level new like we can

series don’t the flow investment increase I because just do a think there, basis really per mature Relative basis. XXXX free that that free full a That with continue what So, to relative we to higher on and hand-in-hand flow on spend. XXXX, three to more trends the finales cash also will cash our have affects programming, goes there, said, cost in trend see I rapidly I in timing content episode. cash flow

free we And we outlook would corner So, I forward, that back that from we the to the year, grow, feel and long-term. able high-XX% we the cash over see continues to now. next turn and with the net we a should for ramp as flow get be margin an also margin would going But the we start gave, the goes hand-in-hand to that to going where expect be up would standpoint to year it’s from investment mid continues meaningfully long-term. to streaming that what

that’s we do traffic, this there. what of at strong We Even series not is are just focused, outlook finales. but obviously, more today. for point, Bowl streaming we buzz in stable our the Super the advertising more see front, advertising performance example, have terms with commercial, the On seeing

we there. see macro but in have that advertising a out forth So as on of awareness to still effect continue, trends on still platforms, putting the our on just talented what And are viewership strongly will and more team. early shows viewership it’s we But the very today I that innovation we focus for continue we think for upcoming the our that It’s upfront. of days. feel the our with for are we all but all across expect days leadership us to have that linear, halo we early horizon

the nearly strong to And was should of remember year. pricing coming extremely last past was terms we as we year, the across is upfront think offering through the that that in ‘XX are content as just again, also for board. out a year the going I not be is strong, of that that

So, of to and a lot front. is be there reason hopeful that excited on

Great. Thank you.

over our host would any I to not And questions this Instructions] time. turn call back I the further to like closing [Operator for any am showing at remarks.

Networks. interest AMC your for you Thank in

can now Thanks. disconnect. You

presentation. today’s conclude does this gentlemen, and Ladies

wonderful day. You may and a now disconnect, have