AMC Networks (AMCX) 9 May 222022 Q1 Earnings call transcript

Welcome to the AMC Networks’ First Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Nick Seibert, Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you. Good morning and welcome to the AMC Networks first quarter 2022 earnings conference call.

are Chief Interim Financial Operating morning and Executive Officer. this Spade, Chris Officer us Matt Chief Blank, Officer; Joining and Chief Today’s website available is amcnetworks.com. press on release at our

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

have portfolio AMC and on offering audiences total momentum differentiated to These build with significant targeted for everyone. our and always practical continue for space, Nick, and Networks’ about super-fan that can’t continued business shown and and strong strong And that to trying revenue focus, moved part. solid streaming of our forget subscribers headway months and revenue this Thanks been to appeal make brands. few it’s we business have affinities of Thanks, streaming weeks into specific gains a our to anyone passions. strategy services first slate anything, as we a considerations the growth, XXXX, joining morning, marked company us. quarter the by our across have good start highlighted last in content streaming

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Thank morning and you, Matt good everyone.

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the receipts million balance production and debt leases technology the tax $X reflecting and finance XXXX deliver certain ended investments. content primarily first and of Moving We outflow million, to cash on billion. flow for the We sheet. cash approximately $XXX Free XXXX. represented net the an quarter cash quarter planned and of track flow of of with investments, to credit $XX marketing flow approximately remain free timing of in first

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Our capital allocation unchanged. remains policy

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

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Third, repurchases quarter And capital common disciplined and return fourth, opportunistic of shareholders. in our AMC strategic of Networks of XXXX. were no There stock the opportunistic to M&A. first

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

of we the see we built differentiated and to the and As into beyond, potential unique strong profitable the from advantages of in look opportunities rest model us. streaming year value our this front

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our programming offerings. For the strong net second quarter of by driven XXXX, we expect XXX,XXX to XXX,XXX paid additions, streaming subscriber XQ

company of XXXX, anticipate growth outlook single full we financial continue our the total year revenue to low in for Regarding digits. the

licensing note growth to the fourth agreements, expect majority full recognized and deliveries licensing our is revenue. It content full quarters year drive affiliate as of streaming decline Content growth we revenue that in basic we utilize on exclusive and own in Continued services, licensing is revenue XXXX. revenue the universe content given our to content related episodic expected expect offset XXXX, time to our important subscriber by we that, third partly declines. be specific revenue year XXXX trends the ongoing some will subscription to of notwithstanding from expected licensing do streaming of timing growth is dynamics legacy over in

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streaming to in investing platform owned continue marketing our and in We invest by technology. content, efficient

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

open. now is line Your

Hi, thanks questions. my for

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on out Sure. I’ll But can what in. this Chris just confident there, start year. come on generally feel the to that, deliver advertising and delivering markets about we we plan

stream there types all is some those you our the of uncertainty generally in know, just FAST of supply do of that advanced in terms to things advertising in hangovers. channels chain in of of terms of out that But terms the our growing worldwide and we’re and with there partners. is also we’re part applications, the ways advertising certainly of As there trying revenue politics, of terms

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and shows really both but our feeling drive these – viewership to channels, launch them also have our user streaming of good connects. we’re So about ability

Hey, Chris. Thomas, it’s

the appreciate your on advertising up some questions. following question, Just more I

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the front, doing we’ve we’re advanced also pioneering proud very in there. On been of advertising what

the in to VOD addressable We are we’ve been national across TVs. addressable linear connected a leader first campaigns the and space, ad and market

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programming, Now really we in have like XXXX, that and we we strong content. cadence for a have

ARPU need So that side. we discount we to really feel as don’t the on much

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front So we that are doing excited about growth to really us get the opportunities for modeling we in about targets. and we’re the of feel to our strongly

from line Our Thank Morris question next Guggenheim. of Instructions] you. Michael [Operator the from comes

Your line open. now is

you. Good again. two questions have morning about guys. Thank streaming I

The pace puts you you your the I the XXX,XXX year. on I streaming the reach first one are growth certainly trajectory. to steady pace to think goals. ad sort subscriber track will, net you it for XXX,XXX you is year, beyond on, are on guess the At if contributors, of But the on don’t

the inputs services. second of is it And for advertising I a you – And driven there. ad-supported geographic question by expansion? your tier Do that about you for driven more do little kind content see is, on potential topic am do so an of – And tailwind? is my cycle? the curious see is the you expect bit the that by my there the when question streaming

your thought think a current point. point? also ad-free different are price layering on this is of at at in ad-supported tier Thanks. What an I possibly all your services

start will Mike. I out, Thank you.

an this no we have to monitor, we to ad But at. continue current obviously, plans continue look something for supported is First, tier.

some also the quickly. we be with If other we nimble to the to player see We and have making. are one of We monitor you necessarily are very market we we what adapt very is going sub when true, but we their ability sudden, It’s ad an that offerings funny all happy problems to don’t in the hear problems. think current think business growth all large happens. changes, and a the will tier have will solve that’s

we where goals we we where goals of we still think on are terms in up is There international front. ramped the opportunity and for our XXXX, tremendous we In absolutely achieving there out on haven’t are put schedule. the still

to have are out to like additions offerings beginning We new Sentai, just roll we services. where our

year. We have content and of coming year new this loads next

in are what we services. in targeted and I are of learning how these And refining the about We again, process we marketing. advantages we tremendous think market see

subscriber XXXX. of we our guidance are streaming make from schedule on So, the standpoint, right to

it’s Mike, Chris.

Your think pacing, the question is right on I on.

of analyst, organic million for we right quarter. looking if really have at good at the so our in fact, the target, how I with all XXX the preparation, and said looking I from long-term pacing what we and diligence and it’s question appreciate about an now was organic the our your But the the standpoint – feel million reconcile are everything. pacing, is, In the this. one we XXX have is pacing to I number visibility does I to would what it’s

Going will right that base forward, aren’t we now. international that be we will to our in markets relative in new have expansion

we improvements that in metric churn just pacing have have there then we for which growth opportunities seeing. also significant more we HIDIVE, purchased and the not have that’s also recently yet. We And that are improvements we really

more improvement, have it more as time. we and bundling, to annual seeing more we subscriptions So, and see metrics over are going we do are natural

other long, market thing really that The the is AMC+ hasn’t XX been say I will about so. it in it, months or call that

a out that it’s relative to service of So, some the are there. newer other services

this We content have strong, strong year.

together And We are to I way it’s but it’s the Call know me. all if now is are Saul. watching Better coming great you don’t Call really amazing a really Saul, Better excited show. about

episodes we franchise the power Rice that So, coming The of Matt this later early Dead said, stellar. into all of Walking looks got Anne IP year. end then have the And the up dovetails, as and it

exclusivity So, piece content. point will we other Anne the with that is have Rice out I the will

away more from we and term, strategy will licensing. that more our over So, the long is get

honor have to licensing own. are deals, for the get that to from going We our but we legacy away we IP

will side longer lot on be term place you this AMC+. And to a IP of only see the be so on the able will

Very helpful. Thank you both.

you. Thank

the of MoffettNathanson. from Fishman comes question Robert line next Our from

Your line is now open.

you. Thank

pretty So, on aware margins. alluded to, now focused and investors as you are acutely already are streaming

the are frame specific for that just target revenue by think XX% driver. be expecting linear? in is streaming us incremental streaming platforms? largest going not streaming willing can term are to your And the any we to for pivot you streaming if to numbers, declines you longer or profitability the just given share it offset maybe help be your to So, you the will profitability, help company margin – about should Will

Hi Robert, it’s Chris.

what looking But question. I focus and and profitability our at the lot for here really now really is are looking look A content the great we models we in grow we and the make it monetization like. how us, from the does think it’s of holistic at business a when a cycle. investment,

and are wherever and are making there it streaming that then linear an and monetize window, are position. all distribution across we a to in we is includes in content, distribute investment which we able our licensing So, streaming international platforms, not markets

are against side, So, we linear a to declines. going which go on and continue we continue the revenue headwinds are will build that basic help for we seeing in see as are place streaming, that to we the to build that our

about to We to a as are lot the COVID to on did ad revenue the of spoken streaming. delivery what lower side, going because Matt see continue acceleration think, I has

on we that. the to – pricing feel last piece that power. the engine high But cash we long-term back monetization of And and the And margin very is flow. in XX that a will we as future. to really good seeing that the will And we deliver a level that for linear get pre-pandemic it the of streaming the XX% mid momentum so out feel the we continues are have bullish settles and

serve is They we have they the content have time. that meaningful cadence with that over of what that our think communities that in we are super we I loyal the will right seeing the and more we fans us. like be are can and to streaming now, content, loyal

just follow-up. I could And if quick one Okay. add

or the X is the streaming, can around help you will decision, measure that moving something discuss that and growth? Films for how that profitability, profitability the ROI the the company window Like help specifically just Pay On accelerate will IFC you AMC+ just AMC+? subscriber overall to

Yes, sure. question. great It’s a

IFC on we gem side seeing is have with streaming that series what the to the Films are original view. in research And a both original fans the enjoying relative there the IFC Films, and we So, my are movies.

along So, is engagement. our and viewership with original that research movies the original we other have that content series proved the driving and

offer first we movie movie and which that for redistributed Clean window So, a in will X be able when and services first coming that or locked we to starting our week, AMC+ to Films, that either that benefit IFC from week needed be our at was we looked one Pay that we window this window and really that renewed is the felt Brody. so for stars it out important Adrien

future size for the scale driving it time, able growth to do profitability mix, it over portfolio – and support to under-serving significant to at feel subscriber growth is a offering get our movies our it that’s enough we powerful really will we but ROI, that from will be the that relative that or doesn’t So, streaming. in impact our a have doesn’t

users. is and doing what current to here. streaming one here front that, And of our number one objectives just compelling in reinforce of And our that’s are get the potential programming to audience proprietary we

Robert. you, Thank

you. Thank

Thank you.

David of Karnovsky line Our next question comes the from from JPMorgan.

open. now is line Your

can through to Matt, your you. you be Thank engagement. networks some Hi. streaming of drive linear domestic the leveraged walked ways

that well-established that aligns of kind think can you applying streaming with them? your launch as offerings you product awareness Where how is of wondering your Thanks. drive you internationally? and kind channel of dynamic footprint you do Just think about your

situation. Thanks. it’s that the markets, international quite I would that Good potential question. and I think go, just say every it’s – Without identifying different markets obvious year any about a

we have footprint. already So, territories have a where we

of some not for larger tremendous And a game platforms. territories as it’s decision makes we the where is is there part that has have developed our us. This business, There historically. We to of look a opportunity at time out with sense it market. partner the been heavily

on I for approach already, seeing is more we are advantage is forward, of it tremendous scale us see we It think And and to custom this we going there, opportunity and forward. a that real requires a and for really So, us is are a basis. it there to market-by-market going year there, priority and of it. there out lot a take going will opportunity

David. It’s a good question,

Latin Europe say The international know, that do and other much America. presence, you thing in as international will I is have presence, our we of

boots from relationships, helpful local – having partner So, to ground the have standpoint, content etcetera, have relationships. on that really already is the

support helps from international markets. So, standpoint, those and in that underpin our it expansion

Thank you.

[Operator of Fargo. question comes from next Wells Cahall line Our from the Steven Instructions]

is line open. Your now

Thanks.

lot. like So, your have you confident a to about content. needing your talk of an Matt outlier without the That’s up. and getting was Chris, wondering guidance necessarily affinity pretty for some it how your talked that get feel from sounds little long-term in a And I though definitely to increase content spend about peers. if that you could just bit ramping you see you you

what lot fans is a who of super cohort peers the is first that see I it and in come plateaus. we in think then there of a

is outlook, a be there this content tough get increasing like domestic it to seems it spend. would without So,

in that about the this, subs right side? that way to think come large on to of you is So, are have international going the percentage a those

again, me good question. It’s start there. a just Let very

spend on more And to it’s the of ever the to mentioned and side. We is new than are the be volume the content next rather can have efficient hard we Chris amount is think on things lot make again, more necessarily it we the of year. in great we spend, focus balancing offering. of efficient that the earlier deal spend new going is where spend that content produce we as content cost here to like balancing produced $XX is of over our seen delivering. a that most we And focus on know I content, spend, A are the main content series at because lifestyle. one on that we And on billion focus be that you business. we doesn’t you because a a have and measurement moment can better the

are end We coming to of spending series of of series an that episodic lot are a where end have we levels cost.

targeted So, in things and that a the efficient of produce there. networks of out than are the else there efficiencies lot targeted we there the we again, terms reinforce, at far level a streams, is on And more is doing. out particularly real anybody

we to our the this we very on. like plan. deliver performance So, we and the It’s area are an critical in is focused future,

level service, that service, add business we in our refresh we strategy the also a how have needs acquisition to cadence investments retention plans would of combined combination for for of each of I do what marketing. rate, look and deep be with long-term which the that for we marketing invest content, at the terms of each the in

refresh highly we rate. are user focused – the the So, what’s on focused experience,

of our lot refresh are when we a again, the point, be we at to streaming what a for and generating some of have becomes at have. and growth, boutique ARPU hits, is just constantly services the will so keep And mean model everybody hits, have point not that we we have approach run granted I work rate to subscriber high hit home right trying our the you to would targeted love that, content, to diminishing and money are everything it at within fortunate everybody. a throwing But of returns. closely XX look we

to are trying be to someone. everything We

to just getting of Thanks streaming of – I on the kind we quarter. about around ARPU, ARPU was for that. as And $X in then think

out ARPU be talked that’s blended it market. international? have expect just would I some mix to to a because few the think to As low we project is your You pretty kind try for a revenue of just years, ARPU to more should about going we India, headwind

mix headwind shift, to track some towards blended going the time is you So, just as probably that to create ARPU over guidance?

said the cadence in I It’s content of to now, sit before, think what right what great don’t From the that question where But at we a would really is it’s we level have get specifics I go be slate we the to again, wanted. didn’t I the ARPU. into about going for that, terms XXXX, want of back to say I we x.

have we So, content slate. right the now

have We in level of a healthy investment marketing.

now grow You a important. start international which more markets, important will focus to then we place the in we see growth. from retention, into will at we as will that to shift and marketing acquisition it’s our And to be continue where grow lean are

with look when subscriber can priority, we can highest meaningful about one get the for the long-term. a at have really we that I the for and board So, generating service, that. to And really working now, have you the streaming really unique profitability across it’s feel way growing really are what’s number ARPU that it’s but where the each playbook we in we momentum like with

one to focus the I with to to that try we really so and And with really away don’t we on tie But giving guidance that hands that did, say consistent metrics. of the want price fair from last on to year get resilience. want just discounting narrow

Thank you.

remarks. no Thank Seibert the turn I closing showing like over back am further call this to would time, you. Nick At to I for questions.

your a for This concludes in the Thank you interest everyone. Networks. day, call. have AMC And good

call. for conference today’s concludes Thank This you participating.

disconnect. now may You