AMC Networks (AMCX) 9 Aug 242024 Q2 Earnings call transcript

Good day, everyone, and thank you for standing by. Welcome to the AMC Networks Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

Now I will pass the call over to Nicholas Seibert, Vice President, Corporate Development and Investor Relations. Please go ahead.

you. Thank welcome Networks and earnings quarter the call. conference to morning, second AMC XXXX Good

morning Dolan, website Commercial are Patrick this is and us Joining Kristin press Today's Financial McDermott, of release Kim AMC Dan Studios. O'Connell, on Chief Officer; Kelleher, amcnetworks.com. and Chief our Officer; available President Entertainment at Chief Officer; Executive

Litigation and forward-looking any future will Reform to not the could cause questions. Today's AMC obligation forward-looking call statements for begin the open to call results uncertainties. of Any XXXX. with this discussion We actual of guarantees refer meaning include filings uncertainties Act SEC prepared and Please statements a update today. certain for any differ. risks such we'll Private involve on Networks are of the remarks Securities made performance and then statements and disclaims results within may call forward-looking company that or risks to of The

We found required will like the discuss certain Kristin. reconciliations call that, over today's to release. in can I'd turn to The With and definitions press non-GAAP financial measures. be

you, Thank everyone, and morning. joining Nick, this thanks, for

already million free and we're our full disciplined strategic prudent pleased for of achieving business. we I way halfway note year and the result our wherever am to As $XXX plan might profitability. navigate of around a of to in well important find partnerships significant a they priorities, report This watch. I'd strategic cash and of series we've creation the films to have just we celebrated progress available major complex to plan of dynamic generating viewers opportunities metric. choose through environment, them we is media and is management flow. flow, this financial on this our to Key our continue the the that curation year, made to programming, against the guidance cash built and and like making free one strong delivered and to

the XX Netflix strategic on Netflix overall #X in agreement This platform We're evident the new help core branded of streaming the distribution access partners. platforms stage partnership We series AMC interest in looking Years big will AMC. still most own licensing critically U.S. vast Bad awareness finding was be represented. to to brand shows seasons build industry. approach that this same believe our for demonstrated on is with current new acclaimed distribution world. company, AMC unencumbered with seeing our forward important win launching power of in ago, bigger for clearly and Netflix the non-exclusive that limited Breaking for content a and our expansion. Unique our the a give of subscribers that an shows options by into will and is Networks Our seasons facing to prior tap partnerships featuring high-quality, audience and in others audience shows innovative like our a existing and demonstrate engine franchises constraints this nimble powerful the our AMC

commitment continued sustainable freedom to anyone. wholesale by brands with We And a nurturing model. have quality to a supported storytelling have business the work predictable strong we and and

to our AMC+ skinny of distribution and through addition partnerships, In new networks we're content linear bundles. new Internet-delivered growing

from new consistent subscriber partnership version our their quarter, since with with and week-over-week tremendous has During in AMC+ package, launched June. in core the consumers we expanded the ad-supported gains launch response which the of been Philo, the

supplement XXX continues our and We FAST live active the TV increasingly networks, linear important package, of BBC to demonstrating XX Additionally, platforms, channels XX channels are totaling to continued Optimum's in now all reach. environment. Viewership grow. evolving News, the our of of categories new AVOD our branded linear this our entertainment on networks FAST including strength of feeds channel part have in

power of presence beyond distribution We agreement implementing top tier belief partnership footprint. wholesale recently effectively and we deliver licensing keeping in the more can making content to with desire distribution CTS Dead the with world. territories ITV's approach, through our high-quality Anne provider, several domestically Universe our to which Comcast's our ad-supported into for own through our an are as AVOD partners Walking for content recently Comcast arrangements service, economically offerings. In carries our best-in-class AMC's streaming Universe, viewers with most the with financial our Immortal Rice for and Technology brand strategy also our our back-end The Sky BBC U.K. With in our ITVX, entered around we our and our on the internationally, to in than content available partnerships of can We've we comprehensive branded expanded predictability, solutions and Solutions and technology and much leverage partnerships scale own. manage of

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advertising on We expand partners. tv particularly deepen industry, linear and our on Sundays across partner enabling examples underscore a These continue our sought and AMC put on our high-quality Fridays, affiliate us WE to alliances. distribution advertising creating after business the and television, desirable position and shows and to as value for

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We premiering see new with of families reality very excited of a the are founding series one to return the The also tonight. of Braxtons, television,

We've and branding, Solutions. and award-winning which with both Technology our into programming Room scheduling unit research our a our our new we've all marketing, to content operations. Under by Content brands optimized of we our leadership domestically Mitchko, consolidated in are our and the also Comcast and Granito, of our efforts. midst realize Kim and integrated to CMO, platforms. and global all reorganized Stephanie distribution profitability to the drive organization In EVP platforms, supporting a refining and of continue addition we modernize transformation content, Technology, functions internationally, we Global Under across great Media Operations through media, streamline across and agreement teams

it is dynamic a earlier, in media. and time noted complex As

Even AMC wherever are as is a support to our meet fragmented and shows are successfully to and that, strategy call built viewers much in over to great monetize ability the I'll content larger on find our a Networks to make world. With proven ways they to challenges, existential players new Patrick. facing pursuing turn

Kristin. you, Thank

in new and to financial As we remain landscape consistent strategic develop, our priorities. the media continues

remain the setting endemic made to year-over-year free industry and generated optimizing X% growth track to cumulative quarter on free XXXX, we $XXX free disciplined and employing investments, approximately our XXXX. On all outlook the than XXXX, XXXX our management driving achieve premium of decreased in significant financial by the strength to million our X to also of flow balance cash up financial we in cash as just outlook and leveraging of have of already billion of evolve. our progress $X.X did achieve strength second of first cash year. results. are flow end flow revenue the quarter. consolidated for sheet. We innovative the months for to We've the programmer free flow more Consolidated for in In an us We preserving as continues our our nimble the cash

period prior Excluding a AMCNI, XX/X flow income to was the X%. return the adjustment of operating one-time rights revenue XX% $XX revenue related at of free period and quarter. Hulu payment and generated million, current margin, million revenue representing in quarter Adjusted decreased and a from cash the $XXX from we second Media

level $XXX to revenue on financials. to our decreased X% Domestic operations segment million. Moving

decreased the by partially rate. X% streaming X%. Subscription services, by return related Acorn million which of targeted of decrease streaming revenue was subs, and of and prior Excluding was in to of was to quarter. linear and revenue subscribers revenue, which million, revenue end, $XXX operations licensing we the in and a the revenue decline decreased subscribers affiliate had domestic timing recent revenue X%, rights the a quarter the both see by flow primarily due year of at in are offset beginning HIDIVE we and XX% from was our period, the P&L. Content $XX driven At Hulu benefits driven driven to XX.X in increases availability by deliveries million price through growth

quarter As recall, last of you approximately we revenue. in certain return $XX second which pull-forward may Hulu, of of a negotiated resulted million in the with rights of year, the

licensing revenue increased this, year-over-year. Excluding XX%

programming driven was linear and million This largely XX%. improved first by was briefly sequentially premium due our ratings discipline. I'll offset The Kristin the quarter a seeing was operations AOI continued Our revenue is that growth. Domestic on digital evidenced are in by year-over-year now domestic after, declined activity International as a revenue year-over-year decline remains continued cost by with of for the the detailed million margin segment. versus and international touch the the by decrease partially licensing AOI in healthy partially revenue XX%. quarter, offset On in $XXX strength which was sought earlier. Advertising advertising $XXX quarter. lower and to basis, we primarily recent of

related Second payment. quarter included adjustment $XX of million revenue one-time advertising and was to revenue a international million $XX

basis, in payment, revenues and On including new revenues advertising grew to was due $XX AVOD quarter. on offerings million XX%, ITVX for apples-to-apples our Excluding XX/X X%. largely the the Media international U.K. International decreased new the streaming quarter offerings, an adjustment second AOI

$XX was margin a adjustment of the AOI million XX%. payment, international Excluding with

the to Moving sheet. balance

shape. our valuable fully of focus sheet flexibility evolution that ability as continue to new proactive of management on continues landscape as balance believe well video the the to affords and the We take as our business to the us prudent

to notes additional billion offering our the senior the liquidity We balance net to capitalize on $XXX completed with in June, addition refinancing second add significant in consolidated convertible net volatility leverage detail and sheet. that X.XX% an quarter our price and of of debt a stock ratio sought in approximately to of X.Xx. on activity call, ended as we last XXXX recently In discussed we $X.X more of due we the million our

quarter a total we to XXXX. We the more on our maturity sheet undrawn maturities our of with the $X and of bond reminder, million have liquidity, pushed cash $XXX extended As ended all revolver. million including than billion and balance meaningfully approximately profile out $XXX

We credit attractive opportunities cash position the due second principal the quarter, $XX accretive and of appreciate cash of optionality in the time. repurchased that XXXX present senior both We that continue to our an continue discount. and believe million affords note, notes to manner, for to deploy $XX benefiting capital structure in our equity amount flexibility $X approximately million, approximately for capturing million over On our us. X.XX% the will us we

philosophy opportunistic. capital our and remains prudent On of the topic allocation,

and profitability programming flow First, resonates the we healthy look to acquiring with compelling support generation. that audiences by maintaining while of creating our levels cash and business

by capital and balance debt reducing we sheet gross structure. to Second, improve our look optimizing our

and M&A further dividends remain or list. our share down repurchases priority Third, current

to our on outlook. Moving

pleased reiterate today. with Starting our flow. to free are outlook cash We

expect continue flow grow we cash of to generated to in approximately billion. XXXX, by to year-over-year We cash cumulative flow free XXXX, expect $X.X have and free

we we year, regarding as year full year. that of that, Notwithstanding Regarding in are revenue terms our total on our outlook, revenue for call some to composition the full full billion $X.X shifting continue revenue initial in seeing lines revenue. our discussed for of expectations fourth expect the the underpin full year our approximately of quarter the specific revenue,

to AOI. Moving

expect For XXXX, $XXX to continue of to AOI we $XXX consolidated million. million

continued as remain revenue focus in growth expense management as a advertising prudent business. the despite digital and headwinds streaming Continued well

content investments support cash at drive flow. Our our and free levels appropriate best to business are

related similar the XXXX, that a occurred comparably now that cash of amortization. XXXX and For of lower that XXXX, at nuances XXXX. spend to programming into dive full of In anticipate levels the year end be be strategic levels. I'll $X continue deeper little amortization reassessments approximately we billion to will programming to expense, programming we a result the to programming some amortization experience of

carryover programming amortization of investments the continue prior P&L. Additionally, year flow to through

the time, our prioritizes employ extremely opportunities. With continues I we allocate for we next sheet, our approach broad We'll a with programmer. innovative line AMC to a that monetization, wisely our against and balance increase this and capital disciplined dynamics, balance as for and impact next year, cumulative and and premium appropriate Networks our open on year. And levels please of a back-to-basics have emphasizes said as across operator, achieve ensure distribution these flow the unique to does of in programming we in content brands monetization of and anticipate across advantage of available remain near-term is same platforms maintain position highly continue Given at to XXXX remain takes a that, nimble to cash note healthy questions. $X.X investment expenses for the our and we free It confident what XXXX ability close flow approximately cash important in XXXX. that past. expense billion. I'll is free not to to expectation look programming non-cash amortization year-over-year

[Operator Morgan it's Yeh Stanley. Thomas Instructions] with And from

you're dig Kristin, I you're it little look let's the of past, you hoping does the in in hoping outline in for what what Netflix and the terms it terms you're out in Has deal. bit it to on of with evolved do to expecting of any AMC+ the Picks. wanted run see? in to way relative this experimentation HBO say, the a experiments get had example, what to that of to How

got this Netflix ago, decade how that break Thomas. Breaking into We're of so that or talk super the something now helped A that's the out a of do people series exposure deal. on morning, of Breaking kind really to effect culture. Bad about Good lot Sure. Bad and about our excited part

right? XXX prior so in control. on all button of to for distribution these themselves, Netflix putting seasons subscribers within U.S., million Netflix our very the but who not Netflix you deal, non-exclusively, distribution others the them a about bundles Netflix has we're a remote beneficial a big exposure partnerships ecosystem. their the U.S. their to will And And lot think Netflix stage partnerships have with Roku our in partners on only shows content, So as the and it's and have Comcast if get well,

did this drive, think us, exposure Max, these and new it people AMC seasons So XXXX for and having as we with of really XXXX that premiering franchises. back will are to for the AMC+ in

for exciting us. it's So

about I think excited Netflix equally it. is also

franchises, X, up newer haven't you seasons of shows premiers it so cases screen, encourage the early on if some to it get we anything of yet fall year then there's and for XX, we to next back everybody August and in into seasons watch when our all consumed So and seasons. the new to and on X -- check us roll into the out

sense. ask also Got the on Makes to increase in year-over-year programming about it. year. Understood. expected Patrick, next I amortization wanted your comment

You've running last $X programming of the driving expected I bump the think of kind investment $X you well. year business? year zone of terms for Are and that level at of right future the cash been as what's cadence? hold on this billion spend billion about for to the What's in in

for Thanks the question. Yes, Thomas.

So asking year. amortization cash to of clarify, is question, question cash the $X billion number, think programming what back and really you're that right? billion the here. flip So I is to kind which investment let me -- answer is what investing first of the is a But we're just your this $X currently to

So strategic make this and that obviously, programming in business. investment we largest our most is

XXXX, higher up years year. And the we past, that And billion. in continuously monetization size almost $X.X always up cash aware to steps took not remarks. it as programming the right our opportunities, the $X quantity. programming spending always billion, some we're $X.X about has calibrating in much billion available decisive against AMC levels. than so this floated you're has In quality, been to to my we're said Certainly I

I think market. the that's resonated of kind in

think we're to very a I approach taking basics much there. back

on well. of of the We services as also our reduced some level in XXXX programming

that has the a flow-through in terms obviously so the gets in And realized of income statement. effect that amortization

together, effect and our in of write-downs we is the that call the had the investment, across reality the to in steps, of XXXX XXXX. of years. volume kind programming levels at But and some those sort taken end over amortization X programming XXXX, amort services reducing in of So of reduction the carryover kind what X fully higher amortize X flows yet to kind of the the XXXX of have of we pre-XXXX through system

going So is XXXX effect to have from amortization into year-over-year the XXXX. of increasing this

Just of billion. $X programming of puts obviously, our and for the we recognized amount kind generate sort markets. of don't remains clear of between roughly is this next. free think roughly investment That's we flow important of here towards given it to year sight run We cash we'll line that the current our And that XXXX fully also was takes, call out. But aspect cash wanted and most the this the rate. billion have in $X.X

this confusion understand amortization there's of kind and So because of cash effort investment. sometimes sort of between some people the help moving an some was to just programming like pieces

doing just the we then Dixon, producing us or team we're field our to doing about of reduction way. Because value I've talked anybody in that and Daryl a doing with because continue to the quality asset in the watched really film the that? of him congratulate for was shot current what the we're and stellar. a value in be Vampire season franchises, it and right to the we're the stuff, the very X, acquisitions street on but build and add what the the his of need joined is little which the season with to putting I expense the script, company, the folks cost-conscious France, Interview it on content you've but in ourselves, the bit side, since great And that's watched quality -- Episode just -- -- of we're like continues if I even for I Dan's Can here, sitting

is if think, brands. across in we've in putting quality all out our the reduction the enhanced So expense I really, what important, products but sustained not of we're

kind the lifetime that to of in are assess Is of that that the Understood. to value using the amortization amortize continuing has terms life asset over you're multiyear changed? useful years, multiple life? of Or you

to pieces Two that.

an to no in visibility from one, we terms studio been next, the $XXX into changes a in certainly out feel for of the accounting million we perspective this asset Kristin's there's good policy or So have the there much that's that point, sort of of and the the building revenue accounting think value which tail. content guidance But no, in sort amortization about, it. licensing and of really I year, in and year around longer this terms has

almost And one, quality I value licensing studio current and of lot sort quality say, seeing sort continue there's the the build a to so as a the a as at of, programming, levels that at to Kristin been we're us, market, result there. asset the mentioned we would in in of strength return of volumes of of well,

we So the long that value. good tail feel on about

line Research Our of the question comes next David Partners. Joyce with from Seaport

A couple things.

to Or Comcast first and Solutions, before the is it just the provide that the any efficient streaming did question. even is on the Technology move makes you AOI? going were to back-end over more First, this already self-funding lift services to that those

our Patrick. are David, is business. across looking a reputation, Yes. from efficiencies perspective, one. I'll we it's financial take for as that first continuously Listen, the

be but costs of some onboarding just no sorry, a us ton kind long-term over arrangement so for this. maybe -- paybacks XXXX, going of XX made of XXXX. into a Services to and Technology XX be will There impact amount clear signed this a will infrastructure be scale, avail And There of duplicative some in architecture. and months. Comcast deal. with a to is modest view, allows just ourselves to timing we This From us as Solutions, it point of sense

deal think both and the cost I it's terms of noting this economics capital it's efficient. of worth Lastly, that in

we'll this, is So at the basis, CapEx, look on flow savings of and NPV both it an we positive, cash we think about get free buckets. less across AOI when clearly operating which so

we Kristin so certainty, but outlined also cost about I about Net-net, here. just good really this. which And feel not cost it's savings, think

think to of cost it capital more again, in terms here in But both about going and So come efficiency the future. forward.

That's good Okay. to hear.

the kind on at out deliver for your revenues when deal, it episodes Secondly, Netflix of of Are be content. recognized making or available would spread be going you everything to once, you is a while?

Yes.

So XX of first available August recognition. have the as XX of we series, then more be in far XXXX. XX shows XX, and as X will premiering XX quarter on revenue the of the And

in Yes, because recognition, recognized amount to actually, just the QX. going be is as full end ahead the availability date of of be will at revenue far the QX, as XXXX

this the The this but internationally So say Netflix market more with we're this broadly realized titles will deal David, And seeing would deal, kind be the with revenue on also domestically I of cut Sky. Walking with just, year. new both in strength Dead licensing, we content with

license quality. And is a Acorn, for that quality outside to quality continues to given little that about sorry, know the of we're being and to point shrink, of a continue cetera. And And my how content produce much the there this bit mentioned linear I so value we -- the demand -- being And we across commentary Kristin's and in universe uplift produce the not HIDIVE, flight content to as in or of also schedule, there. AMC to just et increase. content, revenue produce for continues earlier AMC+ AMC some we that of just I sort seeing a ecosystem there broader the program but our

et before, season capture in of we're what to is both terms of value, call we I back And hard sort of as AMC watch also ecosystem additional dollars. get ways dollars of current about to we've but into cetera. Kristin's the terms in the coming soft point kind This of in revenue, episodes, kind the people said so exploring licensing

both think soft the on hopefully we with and this with it's dollar licensing model, economics some with a meaningful upfront of in hard end. So constructs brand back some revenue new non-exclusive sort win-win, support dollar the cases,

way just we're financial programming of these kind is another sweat really as to some this net-net, models best exercising we So our can. assets of creative

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

your best revenue within licensing Patrick, the little to about My just is first, shifting guess I around and deal little wanted that means Netflix announcement wondering on the guidance revenue announcement. weaker. is your after year. little other maybe this Sky a revenue comment bit is if the that ask implies some deal I'm for that you a a stronger the

that's So I'd love you forward to amortization, follow the in the just on how helpful. very to revenue XXXX. And carrying understand think about to I mix don't that and we content up might then think that report amortization.

other some think expenses. mixed with in it's I

dynamics what XXXX, the how for we is if net strong XXXX vis-a-vis out running some So the AOI could about to in amortization as of dollar these a kind get impact from leverage. your to or at is us think give penciling generation least flow ballpark at in I big was you just a step-up cash wondering free of of perspective

Great.

Okay.

those I'll So order. take in

it's we're nimble, marketplace, we the creative, business I what and a state economic kind a of dynamic currently side. and really benefit whether I very AMC kind a between on nature First revenue characterize and disequilibrium on have just wholesale The bit that here. of good just forecasting we've composition of retail step of to small, We're It's and of the are mean, would or is kind of challenging. as at the of in listen, more in right? environment. changing take the making streaming a operating linear a kind back, sort the the on challenging got regimes, we value equation in

on to make, us gives point a of to deal that it. lot frankly, of So a creative avenues kind put

to And drive noted affiliate yield as And mentioned Others of depending sort on how like seeing on products. We've our there. frankly, pricing ways advertising or across that have we've positive as I side. before, cut. power some real they're well. so licensing may, we're got deals that additional got revenue the seeing streaming cut momentum We're

as scripted you've that there a the -- and deal, premium for programming really So robust to market we seen the continues Netflix with be produce.

-- So some it it I in in revenue, reading and maybe to earnings a think of pillars billion seeing sort there, together, of free creative of guidance, we're million $XXX some places million the you offsetting take cash $X.X year-over-year dealmaking of nimble $XXX the in other our of over X AOI and strength market, we movement and the still sort weakness the you're growth little all bit around this is roughly year as well buckets. the move or kind million between kind cash of free intact. up But The flow cumulative revenue and of that wind as pieces still other in are million the flow fully may the right time. -- may $XXX in next small, some dropping this that's of but some there's here because of licensing $XXX of

kind of it's in value ways and just our monetize creatively we content. of kind So our proposition reflection market unique net-net, a the of can

So that's on the revenue side.

the of hear in side, nature amortization there. disclosure the terms of of question terms your the In

then. will the of kind You when of cash sort I'll this should being that. number think further than $X give is won't sort content And we year with the what billion-ish. line amortization into revisit do guidance XXXX I we roughly I about spend, of think the as in go detail

to lot the not just sort show just So cost, cadence. growth obviously, et are statements going here, cetera, the of of gets in some aired volume expecting as to pieces moving a what into of well sort And say, dynamics we there's at get there. of I'm the terms of as all programming and when than other forward-looking outlined that I frankly, what given any

not had get to other I'm that So the out kind say going We wanted to kind their into call to year-over-year. details But just the grow that than people models. so in it for question. thanks of will of

of the expect had comp the just in be booked It XXXX, for licensing a amortized this then isn't strong nature to really maybe period, quick a licensing these Should you it's we follow-up. given tough in probably comp with And Yes. landmark like tough is I revenue will kind in of the stuff sounds going be XXXX. that because in and deals? a it XXXX. know

to seeing feels the We good see it the we're I to of right how tough market, the We'll from about honestly. good goes XXX. and mean, It's our it given going now. really of production that. north there. strength feel level in be probably say, current It's

Thank you.

in I for I the management back see queue, remarks. questions no As turn call will closing further to

joining Have weekend. a Thanks for today. good us

today's you thank participating conference. And for all in

You disconnect. may now