UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 1-35106

AMC Networks Inc.

(Exact name of registrant as specified in its charter)


Delaware		27-5403694
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

11 Penn Plaza,
New York,	NY	10001
(Address of principal executive offices)		(Zip Code)

(212) 324-8500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.01 per share

AMCX

The

NASDAQ

Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company (as defined in Exchange Act Rule 12b-2).


Large accelerated filer	þ	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of shares of common stock outstanding as of ~~October 23, 2020:~~April 30, 2021:


Class A Common Stock par value $0.01 per share			~~29,754,780~~30,731,275
Class B Common Stock par value $0.01 per share			11,484,408

AMC NETWORKS INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,071,860	$	816,170	Cash and cash equivalents	$	993,123	$	888,526
Accounts receivable, trade (less allowance for doubtful accounts of $9,345 and $5,733)		768,506		857,143
Accounts receivable, trade (less allowance for doubtful accounts of $8,780 and $11,234)						Accounts receivable, trade (less allowance for doubtful accounts of $8,780 and $11,234)	777,063		813,587
Current portion of program rights, net	Current portion of program rights, net	17,933		426,624		Current portion of program rights, net	15,833		13,480
Prepaid expenses and other current assets	Prepaid expenses and other current assets	174,682		230,360		Prepaid expenses and other current assets	170,199		223,173
Total current assets	Total current assets	2,032,981		2,330,297		Total current assets	1,956,218		1,938,766
Property and equipment, net of accumulated depreciation of $254,312 and $347,302		255,729		283,752
Property and equipment, net of accumulated depreciation of $268,770 and $261,082						Property and equipment, net of accumulated depreciation of $268,770 and $261,082	224,725		256,045
Program rights, net	Program rights, net	1,336,612		1,038,060		Program rights, net	1,381,884		1,269,131
Intangible assets, net	Intangible assets, net	417,778		524,531		Intangible assets, net	389,919		410,672
Goodwill	Goodwill	673,810		701,980		Goodwill	682,632		686,407
Deferred tax asset, net	Deferred tax asset, net	39,778		51,545		Deferred tax asset, net	22,363		25,046
Operating lease right-of-use asset	Operating lease right-of-use asset	151,801		170,056		Operating lease right-of-use asset	120,293		146,522
Other assets	Other assets	477,938		496,465		Other assets	467,648		513,749
Total assets	Total assets	$	5,386,427	$	5,596,686	Total assets	$	5,245,682	$	5,246,338
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable	Accounts payable	$	80,967	$	94,306	Accounts payable	$	116,668	$	120,530
Accrued liabilities	Accrued liabilities	281,023		251,214		Accrued liabilities	268,264		320,005
Current portion of program rights obligations	Current portion of program rights obligations	302,061		304,692		Current portion of program rights obligations	263,928		259,449
Deferred revenue	Deferred revenue	61,557		63,921		Deferred revenue	76,787		71,048
Current portion of long-term debt	Current portion of long-term debt	76,000		56,250		Current portion of long-term debt	8,438		75,000
Current portion of lease obligations	Current portion of lease obligations	33,519		33,959		Current portion of lease obligations	27,736		32,435
Total current liabilities	Total current liabilities	835,127		804,342		Total current liabilities	761,821		878,467
Program rights obligations	Program rights obligations	198,197		239,813		Program rights obligations	210,428		182,511
Long-term debt	Long-term debt	2,791,091		3,039,979		Long-term debt	2,825,104		2,774,307
Lease obligations	Lease obligations	209,549		211,047		Lease obligations	159,816		194,324
Deferred tax liability, net	Deferred tax liability, net	135,476		136,911		Deferred tax liability, net	134,630		132,009
Other liabilities	Other liabilities	130,244		163,638		Other liabilities	138,854		125,970
Total liabilities	Total liabilities	4,299,684		4,595,730		Total liabilities	4,230,653		4,287,588
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Redeemable noncontrolling interests	Redeemable noncontrolling interests	314,397		309,451		Redeemable noncontrolling interests	293,468		315,649
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Class A Common Stock, $0.01 par value, 360,000 shares authorized, 63,348 and 63,886 shares issued and 40,557 and 44,078 shares outstanding, respectively		643		639
Class A Common Stock, $0.01 par value, 360,000 shares authorized, 65,324 and 64,568 shares issued and 30,731 and 29,975 shares outstanding, respectively						Class A Common Stock, $0.01 par value, 360,000 shares authorized, 65,324 and 64,568 shares issued and 30,731 and 29,975 shares outstanding, respectively	653		646
Class B Common Stock, $0.01 par value, 90,000 shares authorized, 11,484 shares issued and outstanding	Class B Common Stock, $0.01 par value, 90,000 shares authorized, 11,484 shares issued and outstanding	115		115		Class B Common Stock, $0.01 par value, 90,000 shares authorized, 11,484 shares issued and outstanding	115		115
Preferred stock, $0.01 par value, 45,000 shares authorized; NaN issued	Preferred stock, $0.01 par value, 45,000 shares authorized; NaN issued	0		0		Preferred stock, $0.01 par value, 45,000 shares authorized; NaN issued	0		0
Paid-in capital	Paid-in capital	320,681		286,491		Paid-in capital	314,331		323,425
Accumulated earnings	Accumulated earnings	1,752,740		1,609,428		Accumulated earnings	1,934,472		1,847,451
Treasury stock, at cost (23,790 and 19,808 shares Class A Common Stock, respectively)		(1,166,119)		(1,063,181)
Treasury stock, at cost (34,593 and 34,593 shares Class A Common Stock, respectively)						Treasury stock, at cost (34,593 and 34,593 shares Class A Common Stock, respectively)	(1,419,882)		(1,419,882)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(160,457)		(167,711)		Accumulated other comprehensive loss	(156,237)		(134,950)
Total AMC Networks stockholders' equity	Total AMC Networks stockholders' equity	747,603		665,781		Total AMC Networks stockholders' equity	673,452		616,805
Non-redeemable noncontrolling interests	Non-redeemable noncontrolling interests	24,743		25,724		Non-redeemable noncontrolling interests	48,109		26,296
Total stockholders' equity	Total stockholders' equity	772,346		691,505		Total stockholders' equity	721,561		643,101
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	5,386,427	$	5,596,686	Total liabilities and stockholders' equity	$	5,245,682	$	5,246,338

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Revenues, net	Revenues, net	$	654,015	$	718,597	$	2,034,681	$	2,275,117	Revenues, net		$	691,741	$	734,375
Operating expenses:	Operating expenses:									Operating expenses:
Technical and operating (excluding depreciation and amortization)	Technical and operating (excluding depreciation and amortization)	333,816		354,992		960,379		1,080,763		Technical and operating (excluding depreciation and amortization)		280,572		344,060
Selling, general and administrative	Selling, general and administrative	148,769		159,357		488,581		505,233		Selling, general and administrative		191,535		184,649
Depreciation and amortization	Depreciation and amortization	27,547		25,619		80,182		75,568		Depreciation and amortization		25,246		26,730
Impairment charges		0		0		130,411		0
Impairment and other charges										Impairment and other charges		16,055		0
Restructuring and other related charges	Restructuring and other related charges	4,406		10,191		13,879		29,995		Restructuring and other related charges		8,625		5,966
Total operating expenses	Total operating expenses	514,538		550,159		1,673,432		1,691,559		Total operating expenses		522,033		561,405
Operating income	Operating income	139,477		168,438		361,249		583,558		Operating income		169,708		172,970
Other income (expense):	Other income (expense):									Other income (expense):
Interest expense	Interest expense	(33,418)		(39,621)		(105,283)		(118,982)		Interest expense		(34,742)		(37,564)
Interest income	Interest income	2,994		4,626		11,276		13,571		Interest income		2,342		4,555
Loss on extinguishment of debt	Loss on extinguishment of debt	0		0		(2,908)		0		Loss on extinguishment of debt		(22,074)		(2,908)
Miscellaneous, net	Miscellaneous, net	11,138		(1,490)		(10,088)		(16,972)		Miscellaneous, net		5,406		(29,939)
Total other (expense) income		(19,286)		(36,485)		(107,003)		(122,383)
Total other expense										Total other expense		(49,068)		(65,856)
Income from operations before income taxes	Income from operations before income taxes	120,191		131,953		254,246		461,175		Income from operations before income taxes		120,640		107,114
Income tax expense	Income tax expense	(52,195)		(8,727)		(95,490)		(53,807)		Income tax expense		(25,915)		(33,588)
Net income including noncontrolling interests	Net income including noncontrolling interests	67,996		123,226		158,756		407,368		Net income including noncontrolling interests		94,725		73,526
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(6,356)		(6,303)		(13,488)		(18,305)		Net income attributable to noncontrolling interests		(7,704)		(4,859)
Net income attributable to AMC Networks' stockholders	Net income attributable to AMC Networks' stockholders	$	61,640	$	116,923	$	145,268	$	389,063	Net income attributable to AMC Networks' stockholders		$	87,021	$	68,667
																Net income per share attributable to AMC Networks' stockholders:
Basic	Basic	$	1.18	$	2.09	$	2.72	$	6.91	Basic		$	2.08	$	1.24
Diluted	Diluted	$	1.17	$	2.07	$	2.69	$	6.80	Diluted		$	2.02	$	1.22

Weighted average common shares:	Weighted average common shares:									Weighted average common shares:
Basic	Basic	52,346		55,847		53,374		56,339		Basic		41,930		55,477
Diluted	Diluted	52,904		56,605		53,917		57,218		Diluted		43,171		56,061

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Net income including noncontrolling interests	Net income including noncontrolling interests	$	67,996	$	123,226	$	158,756	$	407,368	Net income including noncontrolling interests		$	94,725	$	73,526
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	21,475		(33,281)		7,383		(38,490)		Foreign currency translation adjustment		(22,024)		(27,121)
Unrealized gain (loss) on interest rate swaps	Unrealized gain (loss) on interest rate swaps	615		(187)		(1,041)		(2,076)		Unrealized gain (loss) on interest rate swaps		610		(1,997)
Other comprehensive income (loss), before income taxes		22,090		(33,468)		6,342		(40,566)
Other comprehensive loss, before income taxes										Other comprehensive loss, before income taxes		(21,414)		(29,118)
Income tax (expense) benefit	Income tax (expense) benefit	(144)		335		242		483		Income tax (expense) benefit		(143)		465
Other comprehensive income (loss), net of income taxes		21,946		(33,133)		6,584		(40,083)
Other comprehensive loss, net of income taxes										Other comprehensive loss, net of income taxes		(21,557)		(28,653)
Comprehensive income	Comprehensive income	89,942		90,093		165,340		367,285		Comprehensive income		73,168		44,873
Comprehensive income attributable to noncontrolling interests	Comprehensive income attributable to noncontrolling interests	(6,648)		(5,217)		(12,818)		(17,048)		Comprehensive income attributable to noncontrolling interests		(7,434)		(3,698)
Comprehensive income attributable to AMC Networks' stockholders	Comprehensive income attributable to AMC Networks' stockholders	$	83,294	$	84,876	$	152,522	$	350,237	Comprehensive income attributable to AMC Networks' stockholders		$	65,734	$	41,175

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(unaudited)

Class A
Common
Stock Class B
Common
Stock Paid-in
Capital Accumulated Earnings Treasury
Stock Accumulated
Other
Comprehensive
Loss AMC Networks Stockholders’
Equity Noncontrolling Interests Total Stockholders' Equity
Balance, June 30, 2020 $ 643 $ 115 $ 308,288 $ 1,691,100 $ (1,166,119) $ (182,111) $ 651,916 $ 23,229 $ 675,145
Net income attributable to AMC Networks’ stockholders — — — 61,640 — — 61,640 — 61,640
Net income attributable to non-redeemable noncontrolling interests — — — — — — — 1,785 1,785
Distributions to noncontrolling member — — — — — — — (563) (563)
Other comprehensive income — — — — — 21,654 21,654 292 21,946
Share-based compensation expense — — 12,393 — — — 12,393 — 12,393
Balance, September 30, 2020 $ 643 $ 115 $ 320,681 $ 1,752,740 $ (1,166,119) $ (160,457) $ 747,603 $ 24,743 $ 772,346

Class A
Common
Stock Class B
Common
Stock Paid-in
Capital Accumulated Earnings Treasury
Stock Accumulated
Other
Comprehensive
Loss AMC Networks Stockholders’
Equity Noncontrolling Interests Total Stockholders' Equity
Balance, December 31, 2019 $ 639 $ 115 $ 286,491 $ 1,609,428 $ (1,063,181) $ (167,711) $ 665,781 $ 25,724 $ 691,505
Net income attributable to AMC Networks’ stockholders — — — 145,268 — — 145,268 — 145,268
Net income attributable to non-redeemable noncontrolling interests — — — — — — — 700 700
Adoption of ASU 2016-13, credit losses
— — — (1,956) — — (1,956) — (1,956)
Distributions to noncontrolling member — — — — — — — (1,011) (1,011)
Other comprehensive income (loss) — — — — — 7,254 7,254 (670) 6,584
Share-based compensation expense — — 43,141 — — — 43,141 — 43,141
Treasury stock acquired — — — — (102,938) — (102,938) — (102,938)
Restricted stock units converted to shares 4 — (8,951) — — — (8,947) — (8,947)
Balance, September 30, 2020 $ 643 $ 115 $ 320,681 $ 1,752,740 $ (1,166,119) $ (160,457) $ 747,603 $ 24,743 $ 772,346


	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		AMC Networks Stockholders’ Equity		Noncontrolling Interests		Total Stockholders' Equity
Balance, December 31, 2020	$	646	$	115	$	323,425	$	1,847,451	$	(1,419,882)	$	(134,950)	$	616,805	$	26,296	$	643,101
Net income attributable to AMC Networks’ stockholders	—		—		—		87,021		—		—		87,021		—		87,021
Net income attributable to non-redeemable noncontrolling interests	—		—		—		—		—		—		—		1,134		1,134
Transfer from redeemable noncontrolling interests	—		—		—		—		—		—		—		18,367		18,367
Contribution from noncontrolling member	—		—		—		—		—		—		—		2,582		2,582


Other comprehensive income	—		—		—		—		—		(21,287)		(21,287)		(270)		(21,557)
Share-based compensation expense	—		—		13,446		—		—		—		13,446		—		13,446

Proceeds from the exercise of stock options	—		—		12,100		—		—		—		12,100		—		12,100

Restricted stock units converted to shares	7		—		(34,640)		—		—		—		(34,633)		—		(34,633)
Balance, March 31, 2021	$	653	$	115	$	314,331	$	1,934,472	$	(1,419,882)	$	(156,237)	$	673,452	$	48,109	$	721,561


	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		AMC Networks Stockholders’ Equity		Noncontrolling Interests		Total Stockholders' Equity
Balance, December 31, 2019	$	639	$	115	$	286,491	$	1,609,428	$	(1,063,181)	$	(167,711)	$	665,781	$	25,724	$	691,505
Net income attributable to AMC Networks’ stockholders	—		—		—		68,667		—		—		68,667		—		68,667
Net income attributable to non-redeemable noncontrolling interests	—		—		—		—		—		—		—		(267)		(267)
Distributions to noncontrolling member	—		—		—		—		—		—		—		(448)		(448)

Adoption of ASU 2016-13, credit losses	—		—		—		(1,956)		—		—		(1,956)		—		(1,956)

Settlement of treasury stock	—		—		(10,988)		—		—		—		(10,988)		—		(10,988)
Other comprehensive loss	—		—		—		—		—		(28,653)		(28,653)		(1,161)		(29,814)

Share-based compensation expense	—		—		15,512		—		—		—		15,512		—		15,512
Treasury stock acquired	—		—		—		—		(85,957)		—		(85,957)		—		(85,957)
Restricted stock units converted to shares	4		—		(8,862)		—		—		—		(8,858)		—		(8,858)
Balance, March 31, 2020	$	643	$	115	$	282,153	$	1,676,139	$	(1,149,138)	$	(196,364)	$	613,548	$	23,848	$	637,396

See accompanying notes to ~~consolidated financial statements.~~

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

~~(in thousands)~~

~~(unaudited)~~

Class A
Common
Stock Class B
Common
Stock Paid-in
Capital Accumulated Earnings Treasury
Stock Accumulated
Other
Comprehensive
Loss AMC Networks Stockholders’
Equity Noncontrolling Interests Total Stockholders' Equity
Balance, June 30, 2019 $ 639 $ 115 $ 258,150 $ 1,501,082 $ (1,051,022) $ (167,144) $ 541,820 $ 26,693 $ 568,513
Net income attributable to AMC Networks’ stockholders — — — 116,923 — — 116,923 — 116,923
Net income attributable to non-redeemable noncontrolling interests — — — — — — — 1,772 1,772
Distributions to noncontrolling member — — — — — — — (705) (705)
Settlement of treasury stock — — 832 — — — 832 — 832
Other comprehensive loss — — — — — (33,133) (33,133) (1,085) (34,218)
Share-based compensation expense — — 13,841 — — — 13,841 — 13,841
Treasury stock acquired — — — — (12,159) — (12,159) — (12,159)
Balance, September 30, 2019 $ 639 $ 115 $ 272,823 $ 1,618,005 $ (1,063,181) $ (200,277) $ 628,124 $ 26,675 $ 654,799

Class A
Common
Stock Class B
Common
Stock Paid-in
Capital Accumulated Earnings Treasury
Stock Accumulated
Other
Comprehensive
Loss AMC Networks Stockholders’
Equity Noncontrolling Interests Total Stockholders' Equity
Balance, December 31, 2018 $ 633 $ 115 $ 239,767 $ 1,228,942 $ (992,583) $ (160,194) $ 316,680 $ 28,528 $ 345,208
Net income attributable to AMC Networks’ stockholders — — — 389,063 — — 389,063 — 389,063
Net income attributable to non-redeemable noncontrolling interests — — — — — — — 2,842 2,842
Distributions to noncontrolling member — — — — — — — (3,439) (3,439)
Other comprehensive loss — — — — — (40,083) (40,083) (1,256) (41,339)
Share-based compensation expense — — 50,465 — — — 50,465 — 50,465
Proceeds from the exercise of stock options — — 4,630 — — — 4,630 — 4,630
Treasury stock acquired — — 985 — (70,598) — (69,613) — (69,613)
Restricted stock units converted to shares 6 — (23,024) — — — (23,018) — (23,018)
Balance, September 30, 2019 $ 639 $ 115 $ 272,823 $ 1,618,005 $ (1,063,181) $ (200,277) $ 628,124 $ 26,675 $ 654,799

~~See accompanying notes to~~condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended September 30,
2020 2019
Cash flows from operating activities:
Net income including noncontrolling interests $ 158,756 $ 407,368
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 80,182 75,568
Impairment charges 130,411 0
Share-based compensation expense related to equity classified awards 43,141 50,465
Non-cash restructuring and other related charges 6,126 14,026
Amortization and write-off of program rights 622,204 696,326
Amortization of deferred carriage fees 21,088 14,624
Unrealized foreign currency transaction loss 9,242 489
Amortization of deferred financing costs and discounts on indebtedness 6,039 5,970
Loss on extinguishment of debt 2,908 0
Bad debt expense 340 3,628
Deferred income taxes 12,403 (65,245)
Write-down of non-marketable equity securities and note receivable 5,103 20,206
Other, net (10,696) (8,481)
Changes in assets and liabilities:
Accounts receivable, trade (including amounts due from related parties, net) 92,328 6,993
Prepaid expenses and other assets 79,098 (121,375)
Program rights and obligations, net (565,267) (676,718)
Income taxes payable 17,265 3,101
Deferred revenue (2,234) 10,395
Deferred carriage fees, net (15,057) (14,409)
Accounts payable, accrued liabilities and other liabilities (49,293) (22,534)
Net cash provided by operating activities 644,087 400,397
Cash flows from investing activities:
Capital expenditures (34,990) (69,096)
Return of capital from investees 924 9,232
Acquisition of investment securities (4,111) 0
Principal payment received on loan to investee 3,750 0
Proceeds from sale of investments 10,000 0
Net cash used in investing activities (24,427) (59,864)
Cash flows from financing activities:
Proceeds from the issuance of long-term debt 6,000 1,521
Principal payments on long-term debt (242,500) (12,613)
Deemed repurchases of restricted stock units (8,947) (23,019)
Purchase of treasury stock (102,938) (70,598)
Proceeds from stock option exercises 0 4,630
Principal payments on finance lease obligations (2,404) (4,059)
Distributions to noncontrolling interests (13,955) (13,545)
Net cash used in financing activities (364,744) (117,683)
Net increase in cash and cash equivalents 254,916 222,850
Effect of exchange rate changes on cash and cash equivalents 774 (4,350)
Cash and cash equivalents at beginning of period 816,170 554,886
Cash and cash equivalents at end of period $ 1,071,860 $ 773,386


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net income including noncontrolling interests	$	94,725	$	73,526
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	25,246		26,730
Impairment and other charges	16,055		0
Share-based compensation expense related to equity classified awards	13,446		15,512
Non-cash restructuring and other related charges	4,329		3,928
Amortization and write-off of program rights	150,987		223,982
Amortization of deferred carriage fees	4,867		6,783
Unrealized foreign currency transaction (gain) loss	(13,758)		7,848
Amortization of deferred financing costs and discounts on indebtedness	2,048		1,918
Loss on extinguishment of debt	22,074		2,908
Bad debt expense	771		1,211
Deferred income taxes	4,646		15,900
Loss on investments	5,366		0
Write-down of non-marketable equity securities and note receivable	0		20,000
Other, net	(755)		1,044
Changes in assets and liabilities:
Accounts receivable, trade (including amounts due from related parties, net)	36,996		27,178
Prepaid expenses and other assets	29,383		17,532
Program rights and obligations, net	(237,951)		(221,627)
Income taxes payable	11,138		369
Deferred revenue	5,671		9,522
Deferred carriage fees, net	(57)		(15,484)
Accounts payable, accrued liabilities and other liabilities	(67,664)		(20,372)
Net cash provided by operating activities	107,563		198,408
Cash flows from investing activities:
Capital expenditures	(8,537)		(12,916)

Acquisition of investment securities	(25,694)		0
Cash paid on distribution of business	(7,052)		0
Principal payment received on loan to investee	1,875		1,250
Proceeds from sale of investments	95,370		10,000
Net cash provided by (used in) investing activities	55,962		(1,666)
Cash flows from financing activities:
Proceeds from the issuance of long-term debt	984,500		5,000
Principal payments on long-term debt	(1,015,000)		(209,375)
Deemed repurchases of restricted stock units	(34,633)		(8,858)
Purchase of treasury stock	0		(85,957)
Proceeds from stock option exercises	12,100		0
Principal payments on finance lease obligations	(1,095)		(781)
Contributions from noncontrolling interests	2,702		0
Distributions to noncontrolling interests	(2,464)		(3,081)
Net cash used in financing activities	(53,890)		(303,052)
Net increase in cash and cash equivalents	109,635		(106,310)
Effect of exchange rate changes on cash and cash equivalents	(5,038)		(5,731)
Cash and cash equivalents at beginning of period	888,526		816,170
Cash and cash equivalents at end of period	$	993,123	$	704,129

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

AMC Networks Inc. ("AMC Networks") and its subsidiaries (collectively referred to as the "Company") own and operate entertainment businesses and assets.

Segment Reporting Changes

In the first quarter of 2021, the Company changed its presentation of operating segments, reflecting a reorganized operating structure focused on a multi-platform distribution approach to content monetization. The ~~Company is comprised~~Company's streaming services and IFC Films, previously included in the International and Other segment, are now included within Domestic Operations (formerly referred to as the National Networks segment). In addition, certain corporate overhead costs will no longer be allocated to the operating segments. Operating segment information for the prior period has been recast to reflect these changes. The new reporting structure consists of the following 2 operating segments:

•~~National Networks:~~Domestic Operations: Includes activities of our 5 national programming networks, our streaming services, AMC Studios ~~operations~~operation, IFC Films and AMC Broadcasting & Technology. Our national programming networks are AMC, WE tv, BBC AMERICA, IFC, and ~~SundanceTV~~SundanceTV. Our streaming services consist of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, and ~~also include our AMC Premiere service.~~ALLBLK), AMC+ and other streaming initiatives. Our AMC Studios ~~operations~~operation produces original programming for our programming networks and also licenses such ~~program rights~~programming worldwide. IFC Films is our film distribution business and AMC Networks Broadcasting & Technology is our technical services business, which primarily services most of the national programming networks.

•International and Other: Includes AMC Networks International ("AMCNI"), our international programming businesses consisting of a portfolio of channels around the ~~world; AMC Networks SVOD, consisting of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, UMC), AMC+~~world and o~~ther subscription video on demand ("SVOD") initiatives; Levity,~~25/7 Media (formerly Levity), our production services ~~and~~business. See Note 4 relating to the spin-off of the Levity comedy venues ~~business; and IFC Films, our independent film distribution~~ business.

Basis of Presentation

Principles of Consolidation

The consolidated financial statements include the accounts of AMC Networks and its subsidiaries in which a controlling voting interest is maintained or variable interest entities ("VIEs") in which the Company has determined it is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

Investments in business entities in which the Company lacks control but does have the ability to exercise significant influence over operating and financial policies are accounted for using the equity method of accounting.

Unaudited Interim Financial Statements

These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and Article 10 of Regulation S-X of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the Company's consolidated financial statements and notes thereto for the year ended December 31, ~~2019~~2020 contained in the Company's Annual Report on Form 10-K ("~~2019~~2020 Form 10-K") filed with the SEC. The condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q are unaudited; however, in the opinion of management, such financial statements reflect all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented.

The results of operations for interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, ~~2020.~~2021.

Risks and Uncertainties

~~In March 2020, the World Health Organization characterized the novel coronavirus ("COVID-19") a~~The COVID-19 pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had a negative impact on the global economy.

~~The impact of COVID-19~~ and measures to prevent its spread ~~are affecting~~continue to affect our businesses in a number of ~~ways. Beginning in mid-March, the Company has experienced~~ways, including adverse advertising sales impacts ~~suspended content production, which has led to~~ and delays in the creation and availability of ~~substantially all of its programming, and the temporary closure of its comedy venues. In the third quarter of 2020, the Company commenced production activities, however substantially all Company employees continue to work remotely, and the Company continues to restrict business travel. If significant portions of~~ our workforce, including key personnel, are unable to work effectively because of illness, government actions or other restrictions in connection with the COVID-19 pandemic, the impact of the pandemic on our businesses could be exacerbated.

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~

continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of ~~a vaccine,~~vaccines, and global economic conditions. The Company does not expect the COVID-19 pandemic and its related economic impact to affect its liquidity position or its ongoing ability to meet the covenants in its debt instruments.

Use of Estimates

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates and judgments inherent in the preparation of the consolidated financial statements include the useful lives and methodologies used to amortize and assess recoverability of program rights, the estimated useful lives of intangible assets and the valuation and recoverability of goodwill and intangible assets.

Recently Adopted Accounting Standards

Effective January 1, ~~2020,~~2021, the Company adopted Financial Accounting Standard Board (“FASB”) Accounting Standards Update (“ASU”) ~~2016-13~~, ~~Measurement of Credit Losses on Financial Instruments~~, which changed the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking "expected loss" model that would generally result in the earlier recognition of allowances for losses. The Company adopted the standard using the modified retrospective approach and recorded a decrease to opening retained earnings of $2.0 million, after taxes, for the cumulative-effect of the adoption.

~~Effective January 1, 2020, the Company adopted FASB ASU No. 2018-13,~~ ~~Fair Value Measurement (Topic 820)~~. The standard changed the disclosure requirements related to transfers between Level I and II assets, as well as several aspects surrounding the valuation process and unrealized gains and losses related to Level III assets. The adoption of the standard did not have any effect on the Company's consolidated financial statements.

~~Effective January 1, 2020, the Company adopted FASB ASU No. 2018-15,~~ ~~Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract~~. The standard amended prior guidance to align the accounting for costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining internal-use software. Capitalized implementation costs must be expensed over the term of the hosting arrangement and presented in the same line item in the income statement as the fees associated with the hosting element (service) of the arrangement. The adoption of the standard did not have a material effect on the Company's consolidated financial statements.

~~Effective January 1, 2020, the Company adopted FASB ASU No. 2019-02,~~ ~~Improvements to Accounting for Costs of Films and License Agreements for Program Materials.~~ The standard aligns the accounting for production costs of episodic television series with the accounting for production costs of films. In addition, the standard modifies certain aspects of the capitalization, impairment, presentation and disclosure requirements in Accounting Standards Codification (“ASC”) 926-20 and the impairment, presentation and disclosure requirements in ASC 920-350. The Company adopted the standard on a prospective basis. See Note 5 for further information.

~~Recently Issued Accounting Pronouncements~~

~~In December 2019, the FASB issued ASU No.~~ 2019-12, Simplifying the Accounting for Income Taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 - Income Taxes. ~~These changes are effective for~~The adoption of the ~~first quarter of 2021, with early adoption permitted. The Company is currently evaluating the impact the adoption and does~~standard did not ~~expect it to~~ have a material ~~impact~~effect on its consolidated financial statements.

Note 2. Revenue Recognition

Transaction Price Allocated to Future Performance Obligations

As of ~~September 30, 2020,~~March 31, 2021, other than contracts for which the Company has applied the practical expedients, the aggregate amount of transaction price allocated to future performance obligations was not material to our consolidated revenues.

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~

Contract Balances from Contracts with Customers

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers.


(In thousands)	(In thousands)	September 30, 2020		December 31, 2019		(In thousands)	March 31, 2021		December 31, 2020
Balances from contracts with customers:	Balances from contracts with customers:					Balances from contracts with customers:
Accounts receivable (including long-term, included in Other assets)	Accounts receivable (including long-term, included in Other assets)	$	1,014,956	$	1,121,834	Accounts receivable (including long-term, included in Other assets)	$	1,019,853	$	1,081,070
Contract assets, short-term (included in Other current assets)	Contract assets, short-term (included in Other current assets)	4,373		7,283		Contract assets, short-term (included in Other current assets)	7,536		9,830
Contract assets, long-term (included in Other assets)	Contract assets, long-term (included in Other assets)	3,225		9,964		Contract assets, long-term (included in Other assets)	942		942
Contract liabilities (Deferred revenue)	Contract liabilities (Deferred revenue)	61,557		63,921		Contract liabilities (Deferred revenue)	76,787		71,048

Revenue recognized for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 relating to the contract liability at December 31, ~~2019~~2020 was ~~$37.0~~$7.7 million.

Note 3. Net Income per Share

The following is a reconciliation between basic and diluted weighted average shares outstanding:


(In thousands)	(In thousands)	Three Months Ended September 30,		Nine Months Ended September 30,		(In thousands)	Three Months Ended March 31,
		2020	2019	2020	2019			2021	2020
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	52,346	55,847	53,374	56,339	Basic weighted average common shares outstanding		41,930	55,477
Effect of dilution:	Effect of dilution:					Effect of dilution:
Stock options	Stock options	0	7	0	18	Stock options		12	0
Restricted stock units	Restricted stock units	558	751	543	861	Restricted stock units		1,229	584
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	52,904	56,605	53,917	57,218	Diluted weighted average common shares outstanding		43,171	56,061

Approximately ~~1.1~~0.5 million and ~~1.5~~1.3 million restricted stock units outstanding as of ~~September 30,~~March 31, 2021 and March 31, 2020, ~~and September 30, 2019,~~ respectively, have been excluded from diluted weighted average common shares outstanding since a performance condition for these awards had not been met in each of the respective periods. As of ~~September 30,~~March 31, 2021 and March 31, 2020, ~~and September 30, 2019,~~ ~~0.7~~0.4 million and ~~0.3~~0.4 million, respectively, of restricted stock units and stock options have been excluded from diluted weighted average common shares outstanding, as their impact would have been anti-dilutive.

Stock Repurchase Program

The Company's Board of Directors has authorized a program to repurchase up to $1.5 billion of its outstanding shares of common stock (the "Stock Repurchase Program"). The Stock Repurchase Program has no pre-established closing date and may be suspended or discontinued at any time. For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the Company ~~repurchased~~ ~~4.0 million~~did 0t repurchase any shares of its Class A Common ~~Stock at an average purchase price of approximately~~ ~~$25.85~~ ~~per share.~~Stock. As of ~~September 30, 2020,~~March 31, 2021, the Company had $~~385.9~~135.3 million of authorization remaining for repurchase under the Stock Repurchase Program.

~~On September 16, 2020,~~

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Note 4. Impairment and Other Charges

In March 2021, the Company ~~commenced~~completed a ~~modified "Dutch auction" tender offer (the "Tender Offer"~~spin-off of the live comedy venue and talent management businesses ("LiveCo") ~~to purchase up to $250 million in value~~ of ~~shares~~Levity Entertainment Group, LLC. In connection with the transaction, the Company effectively exchanged all of its ~~Class A Common Stock, plus up to an additional 2%~~rights and interests in LiveCo for the release of the ~~outstanding shares~~Company's obligations, principally related to leases. As a result of ~~Class A Common Stock, at a price not greater than $26.50 nor less than $22.50 per share. The Tender Offer expired on October 14, 2020. On October 21, 2020,~~this divestiture, the Company ~~accepted for purchase 10.8~~recognized a loss on the disposal of $16.1 million ~~shares~~reflecting the net assets transferred (consisting of property and equipment, lease right-of-use assets and intangibles, partially offset by lease and other obligations), which is included in Impairment and other charges. The Company retained its Class A Common Stock, at a price of $23.20 per share, for an aggregate cost of $250.6 million. The cost of these shares, and the fees relating to the Tender Offer, will be classified in Treasury stockinterest in the ~~consolidated balance sheet. The settlement~~production services business of Levity Entertainment Group, LLC, which was renamed 25/7 Media Holdings, LLC following the ~~Tender Offer reduced the availability under the Stock Repurchase Program to $135.3 million.~~

spin-off.

Note 4.5. Restructuring and Other Related Charges

Restructuring and other related charges of $8.6 million for the three months ended March 31, 2021, consisted of $4.1 million of severance costs associated with the restructuring plan announced in November 2020 and $4.5 million at AMCNI related to the termination of distribution in certain international territories.

Restructuring and other related charges of ~~$4.4 million and $13.9~~$6.0 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, ~~respectively,~~primarily related to restructuring costs associated with the termination of distribution in certain territories, as well as severance and other personnel related costs associated with previously announced restructuring activities.

~~Restructuring~~The following table summarizes the restructuring and other related charges recognized by operating segment:


(In thousands)	Three Months Ended March 31,
		2021		2020
Domestic Operations		$	2,427	$	1,482
International & Other		4,490		3,977
Corporate / Inter-segment eliminations		1,708		507
Total restructuring and other related charges		$	8,625	$	5,966

The following table summarizes the accrued restructuring costs:


(In thousands)	Severance and employee-related costs		Other exit costs		Total
December 31, 2020	$	25,571	$	31	$	25,602
Charges	4,168		4,457		8,625
Cash payments	(22,499)		0		(22,499)
Non-cash adjustments	0		(4,457)		(4,457)
Other	105		0		105

Balance, March 31, 2021	$	7,345	$	31	$	7,376

Accrued restructuring costs of ~~$10.2~~$7.4 million are included in accrued liabilities in the condensed consolidated balance sheet at March 31, 2021.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Note 6. Program Rights

Total capitalized produced and ~~$30.0 million for the three~~licensed content by predominant monetization strategy is as follows:


	March 31, 2021
(In thousands)	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Owned original program rights, net:
Completed	$	252,306	$	23,015	$	275,321
In-production and in-development	263,912		13,197		277,109
Total owned original program rights, net	$	516,218	$	36,212	$	552,430

Licensed program rights, net:
Licensed film and acquired series	$	8,694	$	560,787	$	569,481
Licensed originals	195,814		0		195,814
Advances and content versioning costs	0		79,992		79,992
Total licensed program rights, net	204,508		640,779		845,287
Program rights, net	$	720,726	$	676,991	$	1,397,717

Current portion of program rights, net					$	15,833
Program rights, net (long-term)					1,381,884
					$	1,397,717

Amortization, including write-offs, of owned and ~~nine months ended September 30, 2019, respectively, primarily related to the AMC Networks SVOD re-organization~~licensed program rights is as ~~well as severance and other personnel related costs incurred at AMCNI associated with the termination of distribution in certain territories.~~follows:


	Three Months Ended March 31, 2021
(In thousands)		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total

Owned original program rights		$	33,906	$	4,566	$	38,472
Licensed program rights		25,020		87,495		112,515
Program rights amortization		$	58,926	$	92,061	$	150,987

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

~~The following table summarizes the restructuring and other related charges recognized by operating segment:~~

(In thousands) Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
National Networks $ 5,991 $ 6,199 $ 8,714 $ 6,776
International & Other (1,585) 3,992 5,165 23,915
Inter-segment eliminations 0 0 0 (696)
Total restructuring and other related charges $ 4,406 $ 10,191 $ 13,879 $ 29,995


	Three Months Ended March 31, 2020
(In thousands)		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total

Owned original program rights		$	105,561	$	0	$	105,561
Licensed program rights		21,352		97,069		118,421
Program rights amortization		$	126,913	$	97,069	$	223,982

~~The following table summarizes the accrued restructuring costs:~~

(In thousands) Severance and employee-related costs Other exit costs Total
December 31, 2019 $ 27,407 $ 221 $ 27,628
Charges 9,563 4,316 13,879
Cash payments (26,763) (191) (26,954)
Non-cash adjustments (1,810) (4,316) (6,126)
Currency translation 1 0 1
Balance, September 30, 2020 $ 8,398 $ 30 $ 8,428

~~Accrued restructuring costs of $8.4 million are included in accrued liabilities in the condensed consolidated balance sheet at September 30, 2020.~~

~~Note 5. Program Rights~~

~~Effective January 1, 2020, the Company adopted FASB ASU No. 2019-02,~~ ~~Improvements to Accounting for Costs of Films and License Agreements for Program Materials. The new guidance impacts the Company as follows:~~

•Allows for the classification of acquired/licensed program rights as long-term assets. Previously, the Company reported a portion of these rights in current assets. Advances for live programming rights made prior to the live event and acquired/licensed program rights with license terms of less than one year continue to be reported in current assets.

•Aligns the capitalization of production costs for episodic television programs with the capitalization of production costs for theatrical content. Previously, theatrical content production costs could be fully capitalized while episodic television production costs were generally limited to the amount of contracted revenues.

•~~Introduces the concept of “predominant monetization strategy” to classify capitalized program rights for purposes of amortization and impairment as follows:~~

◦Individual program rights - programming value is predominantly derived from third-party revenues that are directly attributable to the specific film or television title (e.g., theatrical revenues, significant in-show advertising on the Company’s programming networks or specific content licensing revenues).

◦Group program rights - programming value is predominantly derived from third-party revenues that are not directly attributable to a specific film or television title (e.g., library of program rights for purpose of the Company’s programming networks or subscription revenue for AMC Networks SVOD).

The determination of the predominant monetization strategy is made at commencement of production and is based on the means by which we derive third-party revenues from use of the programming. The classification of program rights as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment.

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~

~~Total capitalized produced and licensed content by predominant monetization strategy is as follows:~~

September 30, 2020
(In thousands) Predominantly Monetized Individually Predominantly Monetized as a Group Total
Owned original program rights, net:
Completed $ 288,705 $ 33,288 $ 321,993
In-production and in-development 145,228 14,209 159,437
Total owned original program rights, net $ 433,933 $ 47,497 $ 481,430
Licensed program rights, net:
Licensed film and acquired series $ 8,080 $ 581,253 $ 589,333
Licensed originals 235,149 0 235,149
Advances and content versioning costs 0 48,633 48,633
Total licensed program rights, net 243,229 629,886 873,115
Program rights, net $ 677,162 $ 677,383 $ 1,354,545
Current portion of program rights, net $ 17,933
Program rights, net (long-term) 1,336,612
$ 1,354,545

~~Amortization, including write-offs, of owned and licensed program rights is as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) Predominantly Monetized Individually Predominantly Monetized as a Group Total Predominantly Monetized Individually Predominantly Monetized as a Group Total
Owned original program rights $ 74,597 $ 11,854 $ 86,451 $ 235,868 $ 27,831 $ 263,699
Licensed program rights 20,479 100,019 120,498 61,741 296,764 358,505
Program rights amortization $ 95,076 $ 111,873 $ 206,949 $ 297,609 $ 324,595 $ 622,204

Rights to programming, including feature films and episodic series, acquired under license agreements are stated at the lower of unamortized cost or fair value. Such licensed rights along with the related obligations are recorded at the contract value when a license agreement is executed, unless there is uncertainty with respect to either cost, acceptability or availability. If such uncertainty exists, those rights and obligations are recorded at the earlier of when the uncertainty is resolved or the license period begins. Costs are amortized to technical and operating expense on a straight-line or accelerated basis, based on the expected exploitation strategy of the rights, over a period not to exceed the respective license periods.

Owned original programming costs, including estimated participation and residual costs, qualifying for capitalization as program rights are amortized to technical and operating expense over their estimated useful lives, commencing upon the first airing, based on attributable revenue for airings to date as a percentage of total projected attributable revenue, or ultimate revenue (individual-film-forecast-computation method). Projected attributable revenue is based on previously generated revenues for similar content in established markets, primarily consisting of distribution and advertising revenues, and projected program usage. Projected program usage is based on the Company's current expectation of future exhibitions taking into

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~

account historical usage of similar content. Projected attributable revenue can change based upon programming market acceptance, levels of distribution and advertising revenue and decisions regarding planned program usage. These calculations require management to make assumptions and to apply judgment regarding revenue and planned usage. Accordingly, the Company periodically reviews revenue estimates and planned usage and revises its assumptions if necessary, which could impact the timing of amortization expense or result in a write-down to fair value. Any capitalized development costs for programs that the Company determines will not be produced are written off.

The Company periodically reviews the programming usefulness of its licensed and owned original program rights based on several factors, including expected future revenue generation from airings on the Company's networks and other exploitation opportunities, ratings, type and quality of program material, standards and practices, and fitness for exhibition through various forms of distribution. If it is determined that film or other program rights have limited, or no, future programming usefulness, the useful life is updated, which generally results in a write-off of the unamortized cost to technical and operating expense in the consolidated statements of income. ~~Program~~There were 0 program rights write-offs included in technical and operating expense ~~were $24.8 million and $36.9 million~~ for the three ~~and nine~~ months ended ~~September 30, 2020, respectively,~~March 31, 2021 and ~~$1.6 million and $15.2 million for the three and nine months ended September 30, 2019, respectively.~~ 2020.

Note 6.7. Investments

The Company holds several investments and loans in non-consolidated entities which are included in Other assets in the condensed consolidated balance sheet. Equity method investments were ~~$69.6~~$95.3 million at ~~September 30, 2020~~March 31, 2021 and ~~$69.1~~$69.5 million at December 31, ~~2019.~~2020. In February 2021, the Company invested $25.5 million for an interest in a Toronto-based production company and studio, which is accounted for as an equity method investment.

Marketable Equity Securities

The Company classifies publicly traded investments with readily determinable fair values that are not accounted for under the equity method as marketable equity securities. Marketable equity securities are recorded at cost and adjusted to fair value at each reporting period. The changes in fair value between measurement dates are recorded in miscellaneous, net in the condensed consolidated statement of income. In April 2020, one of our investments with a cost of $25.0 million, previously classified as a non-marketable equity security, became a publicly traded company. Accordingly, the investment is now classified within marketable equity securities. Investments in marketable equity securities were ~~$39.7~~$11.2 million at ~~September 30, 2020~~March 31, 2021 and ~~$4.4~~$62.4 million at December 31, ~~2019.~~2020. In January 2021, the Company sold the remaining portion of one of its marketable securities with a carrying value of $51.0 million as of December 31, 2020, resulting in a realized loss of $5.4 million. There were 0 unrealized gains or losses on marketable equity securities for the three months ended March 31, 2021. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, unrealized ~~gains and~~ losses on marketable equity securities were ~~a loss of $3.7~~$1.1 million, ~~and a gain of $10.3 million, respectively,~~ included in miscellaneous, net in the condensed consolidated statement of income.

Non-marketable Equity Securities

The Company classifies investments without readily determinable fair values that are not accounted for under the equity method as non-marketable equity securities. The accounting guidance requires non-marketable equity securities to be recorded at cost and adjusted to fair value at each reporting period. However, the guidance allows for a measurement alternative, which is to record the investments at cost, less impairment, if any, and subsequently adjust for observable price changes of identical or similar investments of the same issuer. The Company applies this measurement alternative to its non-marketable equity securities. When an observable event occurs, the Company estimates the fair values of its non-marketable equity securities based on Level 2 inputs that are derived from observable price changes of similar securities adjusted for insignificant differences in rights and obligations. The changes in value are recorded in miscellaneous, net in the condensed consolidated statement of income.

Investments in non-marketable equity securities were $~~34.5~~36.0 million at ~~September 30, 2020~~March 31, 2021 and ~~$61.8~~$35.8 million at December 31, ~~2019.~~2020. For the ~~nine~~three months ended ~~September 30,~~March 31, 2020, ~~and September 30, 2019,~~ the Company recognized impairment charges of $20.0 million ~~and $20.2 million, respectively,~~ related to the write-down of certain non-marketable equity securities, ~~and a note receivable,~~ included in miscellaneous, net in the condensed consolidated statements of income. Additionally, in September 2020, an observable price change occurred with respect to one of the Company's non-marketable equity securities, resulting in an unrealized gain of $14.9 million, included in miscellaneous, net in the condensed consolidated statement of income.

1210

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Note 7.8. Goodwill and Other Intangible Assets

The carrying amount of goodwill, by operating segment is as follows:


(In thousands)	(In thousands)	National Networks		International and Other		Total		(In thousands)	Domestic Operations		International and Other		Total
December 31, 2019		$	237,103	$	464,877	$	701,980
Impairment charge		0		(25,062)		(25,062)
December 31, 2020								December 31, 2020	$	333,502	$	352,905	$	686,407
Goodwill written off related to spin-off of a business unit								Goodwill written off related to spin-off of a business unit	0		(476)		(476)
Amortization of "second component" goodwill	Amortization of "second component" goodwill	(996)		0		(996)		Amortization of "second component" goodwill	(336)		0		(336)
Foreign currency translation	Foreign currency translation	0		(2,112)		(2,112)		Foreign currency translation	0		(2,963)		(2,963)
September 30, 2020		$	236,107	$	437,703	$	673,810
March 31, 2021								March 31, 2021	$	333,166	$	349,466	$	682,632

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, accumulated impairment charges in the International and Other segment totaled $123.1 million~~and $98.0 million, respectively.~~.

The reduction of ~~$1.0~~$0.3 million in the carrying amount of goodwill for ~~National Networks~~Domestic Operations is due to the realization of a tax benefit for the amortization of "second component" goodwill at SundanceTV. Second component goodwill is the amount of tax deductible goodwill in excess of goodwill for financial reporting purposes. In accordance with the authoritative guidance at the time of the SundanceTV acquisition, the tax benefits associated with this excess are applied to first reduce the amount of goodwill, and then other intangible assets for financial reporting purposes, if and when such tax benefits are realized in the Company's tax returns.

The Company performs its annual goodwill impairment test as of December 1 each year. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require an interim impairment test. As a result of the continuing impact of the COVID-19 pandemic, the Company qualitatively assessed whether it was more likely than not that goodwill and long-lived assets were impaired as of June 30, 2020. The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and its impact on each of its reporting units. Further, the Company assessed the current forecasts (including significant assumptions about revenue growth rates, long-term growth rates and enterprise specific discount rates) and the amount of excess fair value over carrying value for each of its reporting units in the 2019 impairment test. In connection with the preparation of the second quarter financial information, the Company determined that a triggering event had occurred with respect to its AMCNI reporting unit, which required an interim impairment test to be performed as of June 30, 2020. As such, the Company performed a quantitative assessment for its AMCNI reporting unit. The fair value was determined using a combination of an income approach, using a discounted cash flow (DCF) model, and a market comparables approach. The DCF model includes significant assumptions about revenue growth rates, long-term growth rates and enterprise specific discount rates. Additionally, the market comparables approach is determined using guideline company financial multiples. Given the uncertainty in determining assumptions underlying the DCF approach, actual results may differ from those used in the valuations.

Based on the valuations performed, in response to current and expected trends across the International television broadcasting markets, the fair value of the Company's AMCNI reporting unit declined below its carrying amount. As a result, in June 2020, the Company recognized an impairment charge of $25.1 million related to the AMCNI reporting unit, included in impairment charges in the condensed consolidated income statement.

~~No impairment charge was required for any of the Company's other reporting units.~~

The determination of fair value of the Company's AMCNI reporting unit represents a Level 3 fair value measurement in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs. Changes in significant judgments and estimates could significantly impact the concluded fair value of the reporting unit or the valuation of intangible assets. Changes to assumptions that would decrease the fair value of the reporting unit would result in corresponding increases to the impairment of goodwill at the reporting unit.

We are unable to predict how long the COVID-19 pandemic conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on our business. If these estimates or related assumptions change in the future, we may be required to record additional impairment charges related to goodwill.

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~

~~The~~ following tables summarize information relating to the Company's identifiable intangible assets:


(In thousands)	(In thousands)	September 30, 2020							(In thousands)	March 31, 2021
		Gross		Accumulated Amortization		Net		Estimated Useful Lives		Gross		Accumulated Amortization		Net		Estimated Useful Lives
Amortizable intangible assets:	Amortizable intangible assets:								Amortizable intangible assets:
Affiliate and customer relationships	Affiliate and customer relationships	$	617,178	$	(317,770)	$	299,408	6 to 25 years	Affiliate and customer relationships	$	621,136	$	(335,631)	$	285,505	6 to 25 years
Advertiser relationships	Advertiser relationships	46,282		(24,976)		21,306		11 years	Advertiser relationships	46,282		(27,080)		19,202		11 years
Trade names and other amortizable intangible assets	Trade names and other amortizable intangible assets	114,869		(37,705)		77,164		3 to 20 years	Trade names and other amortizable intangible assets	104,902		(39,590)		65,312		3 to 20 years

Total amortizable intangible assets	Total amortizable intangible assets	778,329		(380,451)		397,878			Total amortizable intangible assets	772,320		(402,301)		370,019
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:								Indefinite-lived intangible assets:
Trademarks	Trademarks	19,900		—		19,900			Trademarks	19,900		—		19,900
Total intangible assets	Total intangible assets	$	798,229	$	(380,451)	$	417,778		Total intangible assets	$	792,220	$	(402,301)	$	389,919
(In thousands)	(In thousands)	December 31, 2019							(In thousands)	December 31, 2020
		Gross		Accumulated Amortization		Net				Gross		Accumulated Amortization		Net
Amortizable intangible assets:	Amortizable intangible assets:								Amortizable intangible assets:
Affiliate and customer relationships	Affiliate and customer relationships	$	616,197	$	(232,193)	$	384,004		Affiliate and customer relationships	$	624,699	$	(330,350)	$	294,349
Advertiser relationships	Advertiser relationships	46,282		(21,820)		24,462			Advertiser relationships	46,282		(26,028)		20,254
Trade names and other amortizable intangible assets	Trade names and other amortizable intangible assets	115,873		(19,708)		96,165			Trade names and other amortizable intangible assets	116,526		(40,357)		76,169

Total amortizable intangible assets	Total amortizable intangible assets	778,352		(273,721)		504,631			Total amortizable intangible assets	787,507		(396,735)		390,772
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:								Indefinite-lived intangible assets:
Trademarks	Trademarks	19,900		—		19,900			Trademarks	19,900		—		19,900
Total intangible assets	Total intangible assets	$	798,252	$	(273,721)	$	524,531		Total intangible assets	$	807,407	$	(396,735)	$	410,672

Aggregate amortization expense for amortizable intangible assets for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was $~~32.6~~9.5 million and ~~$34.2~~$12.1 million, respectively. Estimated aggregate amortization expense for intangible assets subject to amortization for each of the following five years is:

(In thousands)
Years Ending December 31,
2020 $ 42,325
2021 37,808
2022 37,763
2023 37,687
2024 37,618

~~Impairment Test of Long-Lived Assets~~

In June 2020, given the continuing and expected future economic and market conditions surrounding the COVID-19 pandemic and its impact, the Company revised its outlook for the AMCNI business, resulting in lower expected future cash flows. As a result, the Company determined that sufficient indicators of potential impairment of long-lived assets existed and the Company performed a recoverability test of the long-lived asset groups within the AMCNI business. Based on the recoverability tests performed, the Company determined that certain long-lived assets were not recoverable and recognized an impairment charge of $105.3 million related primarily to certain identifiable intangible assets, as well as property and equipment, and operating lease right-of-use assets, which is included in impairment charges in the condensed consolidated statement of income.

1411

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)


(In thousands)
Years Ending December 31,
2021	$	37,433
2022	37,161
2023	37,073
2024	37,004
2025	35,203

Note 8.9. Accrued Liabilities

Accrued liabilities consist of the following:


(In thousands)	(In thousands)	September 30, 2020		December 31, 2019		(In thousands)	March 31, 2021		December 31, 2020
Employee related costs	Employee related costs	81,830		$	89,753	Employee related costs	71,636		$	98,661
Participations and residuals	Participations and residuals	91,411		70,682		Participations and residuals	87,839		106,785
Interest	Interest	37,089		29,767		Interest	22,817		29,345
Other accrued expenses	Other accrued expenses	70,693		61,012		Other accrued expenses	85,972		85,214
Total accrued liabilities	Total accrued liabilities	$	281,023	$	251,214	Total accrued liabilities	$	268,264	$	320,005

Note 9.10. Long-term Debt

The Company's long-term debt consists of the following:


(In thousands)	(In thousands)	September 30, 2020		December 31, 2019		(In thousands)	March 31, 2021		December 31, 2020
Senior Secured Credit Facility: (a)	Senior Secured Credit Facility: (a)					Senior Secured Credit Facility: (a)
Term Loan A Facility	Term Loan A Facility	$	693,750	$	731,250	Term Loan A Facility	$	675,000	$	675,000
Senior Notes:	Senior Notes:					Senior Notes:
4.75% Notes due December 2022						4.75% Notes due December 2022	0		400,000
5.00% Notes due April 2024						5.00% Notes due April 2024	400,000		1,000,000
4.75% Notes due August 2025	4.75% Notes due August 2025	800,000		800,000		4.75% Notes due August 2025	800,000		800,000
5.00% Notes due April 2024		1,000,000		1,000,000
4.75% Notes due December 2022		400,000		600,000
Other debt (b)		1,000		0
4.25% Notes due February 2029						4.25% Notes due February 2029	1,000,000		0

Total long-term debt	Total long-term debt	2,894,750		3,131,250		Total long-term debt	2,875,000		2,875,000
Unamortized discount	Unamortized discount	(19,527)		(24,351)		Unamortized discount	(26,379)		(18,337)
Unamortized deferred financing costs	Unamortized deferred financing costs	(8,132)		(10,670)		Unamortized deferred financing costs	(15,079)		(7,356)
Long-term debt, net	Long-term debt, net	2,867,091		3,096,229		Long-term debt, net	2,833,542		2,849,307
Current portion of long-term debt	Current portion of long-term debt	76,000		56,250		Current portion of long-term debt	8,438		75,000
Noncurrent portion of long-term debt	Noncurrent portion of long-term debt	$	2,791,091	$	3,039,979	Noncurrent portion of long-term debt	$	2,825,104	$	2,774,307

(a)The Company's $500 million revolving credit facility remains undrawn at ~~September 30, 2020.~~March 31, 2021. Total undrawn revolver commitments are available to be drawn for general corporate purposes of the Company.

~~(b)A majority owned~~Amendment to Amended and Restated Credit Agreement

On February 8, 2021, AMC Networks entered into Amendment No. 1 (“Amendment No. 1”) to the Second Amended and Restated Credit Agreement, dated as of July 28, 2017 (as amended by Amendment No. 1, the "Credit Agreement"), among AMC Networks and its subsidiary, AMC Network Entertainment LLC, as the Initial Borrowers, certain of AMC Networks' subsidiaries, as restricted subsidiaries, JPMorgan Chase Bank, N.A., as Administrative Agent, Collateral Agent and L/C Issuer, Bank of America, as an L/C Issuer, and the lenders party thereto. Amendment No. 1 extends the maturity dates of the ~~Company has~~$675 million term loan A facility and $500 million revolving credit ~~facilities totaling $7.0 million, which bear interest at~~facility under the ~~greater of 3.5% or~~Credit Agreement to February 8, 2026, and makes certain other amendments to the ~~prime rate plus 1%~~covenants and ~~mature on November 23, 2020. As of September 30, 2020, there was $1.0 million of outstanding borrowings on the credit facilities.~~

~~4.75% Notes due December 2022~~

~~In March 2020, the Company redeemed $200 million principal amount~~other provisions of the ~~outstanding $600 million principal amount of its 4.75%~~Credit Agreement.

Senior Notes due December 2022. In connection with the redemption, the Company incurred a loss on extinguishment of debt for the nine months ended September 30, 2020 of $2.9 million representing the redemption premium and the write-off of a portion of the unamortized discount and deferred financing costs.

1512

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

On February 8, 2021, AMC Networks issued, and certain of AMC Networks’ subsidiaries (hereinafter, the “Guarantors”) guaranteed, $1.0 billion aggregate principal amount of 4.25% senior notes due February 15, 2029 (the “4.25% Notes due 2029”) in a registered public offering and received net proceeds of $982.3 million, after deducting underwriting discounts and commissions and expenses. The Company used such proceeds to redeem (i) the remaining $400 million principal amount of the Company’s 4.75% senior notes due 2022 and (ii) $600 million principal amount of the Company’s 5.00% senior notes due 2024 on February 26, 2021 (the "Redemption Date"). The 4.75% senior notes due 2022 were redeemed at a redemption price of 100.000% of the principal amount of such notes and the 5.00% senior notes due 2024 were redeemed at a redemption price of 102.500% of the principal amount of such notes, in each case, plus accrued and unpaid interest to, but excluding, the Redemption Date. In connection with the redemptions, the Company incurred a loss on extinguishment of debt for the quarter ended March 31, 2021 of $22.1 million representing the redemption premium on the 5.00% senior notes due 2024, and the write-off of a portion of the unamortized discount and deferred financing costs related to both issuances.

Note ~~10.~~11. Leases

The following table summarizes the leases included in the condensed consolidated balance sheets as follows:

(In thousands) Balance Sheet Location September 30, 2020 December 31, 2019
Assets
Operating Operating lease right-of-use asset $ 151,801 $ 170,056
Finance Property and equipment, net 13,453 15,713
Total lease assets $ 165,254 $ 185,769
Liabilities
Current:
Operating Current portion of lease obligations $ 30,011 $ 30,171
Finance Current portion of lease obligations 3,508 3,788
$ 33,519 33,959
Noncurrent:
Operating Lease obligations $ 181,032 193,570
Finance Lease obligations 28,517 17,477
209,549 211,047
Total lease liabilities $ 243,068 $ 245,006

For the nine months ended September 30, 2020, impairment charges were recorded related to certain operating lease right-of-use assets at the AMCNI business. See Note 7 for additional details regarding the impairment test of long-lived assets.


(In thousands)	Balance Sheet Location	March 31, 2021		December 31, 2020
Assets
Operating	Operating lease right-of-use asset	$	120,293	$	146,522
Finance	Property and equipment, net	12,904		13,179
Total lease assets		$	133,197	$	159,701
Liabilities
Current:
Operating	Current portion of lease obligations	$	24,305	$	28,813
Finance	Current portion of lease obligations	3,431		3,622
		$	27,736	$	32,435
Noncurrent:
Operating	Lease obligations	$	133,154	166,452
Finance	Lease obligations	26,662		27,872
		159,816		$	194,324

Total lease liabilities		$	187,552	$	226,759

Note ~~11.~~12. Fair Value Measurement

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:

•Level I - Quoted prices for identical instruments in active markets.

•Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level III - Instruments whose significant value drivers are unobservable.

1613

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

The following table presents for each of these hierarchy levels, the Company's financial assets and liabilities that are measured at fair value on a recurring basis at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


(In thousands)	(In thousands)	Level I		Level II		Level III		Total		(In thousands)	Level I		Level II		Level III		Total
At September 30, 2020:
At March 31, 2021:										At March 31, 2021:
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	295,051	$	0	$	0	$	295,051	Cash equivalents	$	147,523	$	0	$	0	$	147,523
Marketable securities	Marketable securities	39,699		0		0		39,699		Marketable securities	11,193		0		0		11,193

Foreign currency derivatives	Foreign currency derivatives	0		1,366		0		1,366		Foreign currency derivatives	0		407		0		407

Liabilities	Liabilities									Liabilities
Interest rate swap contracts	Interest rate swap contracts	$	0	$	3,007	$	0	$	3,007	Interest rate swap contracts	$	0	$	1,793	$	0	$	1,793
Foreign currency derivatives	Foreign currency derivatives	0		3,568		0		3,568		Foreign currency derivatives	0		2,917		0		2,917

At December 31, 2019:
At December 31, 2020:										At December 31, 2020:
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	191,214	$	0	$	0	$	191,214	Cash equivalents	$	107,494	$	0	$	0	$	107,494
Marketable securities	Marketable securities	4,448		0		0		4,448		Marketable securities	62,442		0		0		62,442

Foreign currency derivatives	Foreign currency derivatives	0		1,884		0		1,884		Foreign currency derivatives	0		667		—		667

Liabilities	Liabilities									Liabilities
Interest rate swap contracts	Interest rate swap contracts	$	0	$	1,966	$	0	$	1,966	Interest rate swap contracts	$	0	$	2,403	$	0	$	2,403
Foreign currency derivatives	Foreign currency derivatives	0		1,888		0		1,888		Foreign currency derivatives	0		3,515		0		3,515

The Company's cash equivalents and marketable securities are classified within Level I of the fair value hierarchy because they are valued using quoted market prices.

The Company's interest rate swap contracts and foreign currency derivatives are classified within Level II of the fair value hierarchy as their fair values are determined based on a market approach valuation technique that uses readily observable market parameters and the consideration of counterparty risk.

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company did not have any assets or liabilities measured at fair value on a recurring basis that would be considered Level III.

Fair value measurements are also used in nonrecurring valuations performed in connection with acquisition accounting and impairment testing. These nonrecurring valuations primarily include the valuation of intangible assets and property and equipment. All of our nonrecurring valuations use significant unobservable inputs and therefore fall under Level III of the fair value hierarchy.

Credit Facility Debt and Senior Notes

The fair values of each of the Company's debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities.

The carrying values and estimated fair values of the Company's financial instruments, excluding those that are carried at fair value in the condensed consolidated balance sheets, are summarized as follows:


(In thousands)	(In thousands)	September 30, 2020				(In thousands)	March 31, 2021
		Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value
Debt instruments:	Debt instruments:					Debt instruments:
Term loan A facility	Term loan A facility	$	687,991	$	679,875	Term loan A facility	$	662,584	$	670,363
5.00% Notes due April 2024						5.00% Notes due April 2024	396,976		406,620
4.75% Notes due August 2025	4.75% Notes due August 2025	789,648		828,160		4.75% Notes due August 2025	790,605		818,864
5.00% Notes due April 2024		990,436		1,019,700
4.75% Notes due December 2022		398,016		400,000
Other debt		1,000		1,000
4.25% Notes due February 2029						4.25% Notes due February 2029	983,377		972,500
		$	2,867,091	$	2,928,735
							$	2,833,542	$	2,868,347

1714

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)


(In thousands)	(In thousands)	December 31, 2019				(In thousands)	December 31, 2020
		Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value
Debt instruments:	Debt instruments:					Debt instruments:
Term loan A facility	Term loan A facility	$	723,560	$	724,303	Term loan A facility	$	669,878	$	665,719
4.75% Notes due December 2022						4.75% Notes due December 2022	398,230		400,500
5.00% Notes due April 2024						5.00% Notes due April 2024	991,074		1,015,000
4.75% Notes due August 2025	4.75% Notes due August 2025	788,247		803,000		4.75% Notes due August 2025	790,125		826,160
5.00% Notes due April 2024		988,609		1,020,000
4.75% Notes due December 2022		595,813		605,250

		$	3,096,229	$	3,152,553		$	2,849,307	$	2,907,379

Fair value estimates related to the Company's debt instruments presented above are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Note ~~12.~~13. Derivative Financial Instruments

Interest Rate Risk

To manage interest rate risk, the Company enters into interest rate swap contracts to adjust the amount of total debt that is subject to variable interest rates.

As of ~~September 30, 2020,~~March 31, 2021, the Company had interest rate swap contracts outstanding with notional amounts aggregating $100.0 million that are designated as hedging instruments. The Company's outstanding interest rate swap contracts mature in December 2021.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency risk to the extent that we enter into transactions denominated in currencies other than our or our subsidiaries' respective functional currencies (non-functional currency risk), such as affiliation agreements, programming contracts, certain accounts payable and trade receivables (including intercompany amounts) that are denominated in a currency other than the applicable functional currency.

The fair values of the Company's derivative financial instruments included in the condensed consolidated balance sheets are as follows:

(In thousands)

Balance Sheet
Location

September 30, 2020

December 31, 2019

(In thousands)

Balance Sheet
Location

March 31, 2021

December 31, 2020

Derivatives designated as hedging instruments:

Liabilities:

Interest rate swap contracts

Accrued liabilities

3,007

1,966

Interest rate swap contracts

Accrued liabilities

1,793

2,403

Derivatives not designated as hedging instruments:

Assets:

Foreign currency derivatives

Prepaid expenses and other current assets

775

891

Foreign currency derivatives

Prepaid expenses and other current assets

180

300

Foreign currency derivatives

Other assets

591

993

Foreign currency derivatives

Other assets

227

367

Liabilities:

Foreign currency derivatives

Accrued liabilities

906

687

Foreign currency derivatives

Accrued liabilities

954

1,084

Foreign currency derivatives

Other liabilities

2,662

1,202

Foreign currency derivatives

Other liabilities

1,962

2,431

1815

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

The amounts of gains and losses related to the Company's derivative financial instruments designated as hedging instruments are as follows:

(In thousands) Gain or (Loss) on Derivatives
Recognized in OCI Location of Gain or (Loss) in Earnings Gain or (Loss) Reclassified
from Accumulated OCI
into Earnings
Three Months Ended September 30, Three Months Ended September 30,
2020 2019 2020 2019
Derivatives in cash flow hedging relationships:
Interest rate swap contracts $ 9 $ (265) Interest expense $ 606 $ 78


(In thousands)	(In thousands)	Gain or (Loss) on Derivatives Recognized in OCI				Location of Gain or (Loss) in Earnings	Gain or (Loss) Reclassified from Accumulated OCI into Earnings				(In thousands)	Gain or (Loss) on Derivatives Recognized in OCI				Location of Gain or (Loss) in Earnings	Gain or (Loss) Reclassified from Accumulated OCI into Earnings
		Nine Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,					Three Months Ended March 31,
		2020		2019			2020		2019			2021		2020			2021		2020
Derivatives in cash flow hedging relationships:	Derivatives in cash flow hedging relationships:										Derivatives in cash flow hedging relationships:
Interest rate swap contracts	Interest rate swap contracts	$	(2,401)	$	(2,190)	Interest expense	$	1,360	$	113	Interest rate swap contracts	$	4	$	(2,234)	Interest expense	$	606	$	237

The amounts of gains and losses related to the Company's derivative financial instruments not designated as hedging instruments are as follows:


(In thousands)	(In thousands)	Location of Gain or (Loss) Recognized in Earnings on Derivatives	Amount of Gain or (Loss) Recognized in Earnings on Derivatives								(In thousands)	Location of Gain or (Loss) Recognized in Earnings on Derivatives		Amount of Gain or (Loss) Recognized in Earnings on Derivatives
			Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended March 31,
			2020		2019		2020		2019					2021		2020

Foreign currency derivatives	Foreign currency derivatives	Miscellaneous, net	$	(1,300)	$	510	$	(2,018)	$	556	Foreign currency derivatives	Miscellaneous, net		$	54	$	408

Note ~~13.~~14. Income Taxes

For the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, income tax expense was ~~$52.2~~$25.9 million, ~~and $95.5 million, respectively,~~ representing an effective tax rate of ~~43% and 38%, respectively, as compared to~~21%. The items resulting in variances from the federal statutory rate primarily consist of ~~21%.~~ state income tax expense of $3.4 million, tax expense of $2.5 million from nondeductible executive compensation, and tax expense from foreign operations of $1.4 million, partially offset by tax benefit of $1.3 million from foreign derived intangible income and $5.4 million for excess tax benefits related to stock compensation.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, ~~the~~income tax expense was $33.6 million, representing an effective tax rate of 31%. The effective tax rate differs from the federal statutory rate of 21% due primarily to tax expense of ~~$20.0~~$4.6 million for excess tax deficiencies related to stock compensation, tax expense from foreign operations of $4.0 million, state income tax expense of $3.0 million and ~~$25.6~~$2.7 million ~~resulting from~~for an increase in valuation allowances for foreign taxes and U.S. foreign tax credits, tax expense from foreign operations of $0.4 million and $9.8 million, state and local income tax expense of $3.5 million and $9.1 million, tax expense of $1.7 million and $4.7 million related to non-deductible compensation and tax expense of $2.7 million andpartially offset by tax benefit of ~~$6.0~~$2.8 million relating to uncertain tax positions (including accrued interest), respectively. The tax benefit relating to uncertain tax positions for the nine months ended September 30, 2020 is primarily due to audit settlements and the filing of state income tax returns under voluntary disclosure agreements. The increase in valuation allowance is primarily due to a change in judgement about the realizability of foreign net operating losses and other deferred tax assets. Management considers the scheduled reversal of deferred tax liabilities (including the effect in available carryback and carryforward periods), projected taxable income, and tax-planning strategies in making this assessment.

For the three and nine months ended September 30, 2019, income tax expense was $8.7 million and $53.8 million, respectively, representing an effective tax rate of 7% and 12%, respectively, as compared to the federal statutory rate of 21%. For the three months ended September 30, 2019, the effective tax rate differs from the federal statutory rate due primarily to a tax benefit of $13.6 million from foreign operations and a tax benefit of $11.5 million from a deferred tax adjustment to record the impact of an investment tax credit under the deferral method of accounting, partially offset by state and local income tax expense of $4.3 million and tax expense of $2.0 million resulting from a net increase in valuation allowances for foreign tax assets. For the nine months ended September 30, 2019, the effective tax rate differs from the federal statutory rate primarily due to a tax benefit of $21.5 million resulting from a net decrease in valuation allowances for foreign tax assets, a tax benefit of

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~

$15.6 million from foreign operations, a tax benefit of $11.5 million from a deferred tax adjustment to record the impact of an investment tax credit under the deferral method of accounting, and a tax benefit of $5.6 million relating to uncertain tax positions (including accrued interest), partially offset by state and local income tax expense of $11.6 million. The decrease in the valuation allowance is primarily due to the expected utilization of foreign net operating loss carryforwards and the benefit of foreign operations is due to a deferred tax benefit resulting from the reorganization of intellectual property amongst the Company's international subsidiaries in the nine months ended September 30, 2019. The tax benefit relating to uncertain tax positions is primarily due to an audit ~~settlement and the filing of state income tax returns under a voluntary disclosure agreement.~~settlement.

At ~~September 30, 2020,~~March 31, 2021, the Company had foreign tax credit carry forwards of approximately ~~$33.2~~$32.4 million, expiring on various dates from ~~2022~~2021 through ~~2030.~~2031. These carryforwards have been reduced by a valuation allowance of ~~$31.8~~$32.4 million as it is more likely than not that these carry forwards will not be realized. For the ~~nine~~three months ended ~~September 30, 2020, $1.0~~March 31, 2021, $0.3 million relating to amortization of tax deductible second component goodwill was realized as a reduction in tax liability (as determined on a 'with-and-without' approach).

Note ~~14.~~15. Commitments and Contingencies

Commitments

As of ~~September 30, 2020,~~March 31, 2021, the Company's contractual obligations not reflected on the Company's condensed consolidated balance sheet increased ~~$129.1~~ $30.6 million, as compared to December 31, ~~2019,~~2020, to $~~1,063.0~~1,042.5 million. The increase primarily relates to additional commitments for program rights and marketing commitments.

Legal Matters

On December 17, 2013, Frank Darabont ("Darabont"), Ferenc, Inc., Darkwoods Productions, Inc., and Creative Artists Agency, LLC (together, the ~~"2013 Plaintiffs"~~"Plaintiffs"), filed a complaint in New York Supreme Court in connection with Darabont's rendering services as a writer, director and producer of the television series entitled The Walking Dead and the agreement between the parties related thereto. ~~The~~ Plaintiffs asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, for an accounting and for declaratory relief. On August 19, 2015, Plaintiffs filed their First Amended Complaint (the "Amended Complaint"), in which they retracted their claims for wrongful termination and failure to apply production tax credits in calculating Plaintiffs' contingent compensation. Plaintiffs also added a claim that Darabont is entitled to a larger share,

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

on a percentage basis, of contingent compensation than he is currently being accorded. On September 26, 2016, Plaintiffs filed their note of issue and certificate of readiness for trial, which included a claim for damages of no less than $280 million. The parties each filed motions for summary judgment. Oral arguments of the summary judgment motions took place on September 15, 2017. On April 19, 2018, the Court granted the Company’s motion for leave to submit supplemental summary judgment briefing. A hearing on the supplemental summary judgment submissions was held on June 13, 2018. On December 10, 2018, the Court denied Plaintiffs' motion for partial summary judgment and granted in part Defendants' motion for summary judgment, dismissing four of Plaintiffs' causes of action. The Company believes that the remaining claims are without merit, denies the allegations and continues to defend the case vigorously. At this time, no determination can be made as to the ultimate outcome of this litigation or the potential liability, if any, on the part of the Company.

On January 18, 2018, ~~the 2013~~ Plaintiffs filed a second action in New York Supreme Court in connection with Darabont’s services on The Walking Dead television series and agreements between the parties related thereto. The claims in the action allegedly arise from Plaintiffs' audit of their participation statements covering the accounting period from inception of The Walking Dead through September 30, 2014. Plaintiffs seek no less than $20 million in damages on claims for breach of contract, breach of the covenant of good faith and fair dealing, and declaratory relief. ~~The Company filed an Answer to the Complaint on April 16, 2018.~~ On August 30, 2018, ~~Plaintiff's~~Plaintiffs filed an Amended ~~Complaint, and on September 19, 2018, the Company answered.~~Complaint. The parties have agreed to consolidate this action for a joint trial with the action Plaintiffs filed in the New York Supreme Court on December 17, 2013. Following the conclusion of discovery, the Company filed a motion for summary judgment seeking the dismissal of the second action, which was denied on April 13, 2020. On December 31, 2020, the court granted the Company’s motion for re-argument and issued a revised summary judgment decision that granted in part and denied in part the Company’s motion for summary judgment. Following an appeal by the Company and oral argument, on April 13, 2021, The New York Appellate Division, First Department dismissed Plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing.

Due to the continued impact of the ~~Coronavirus~~COVID-19 pandemic on the New York State courts, the joint trial, originally scheduled to begin on June 1, 2020, ~~has been further~~was delayed and ~~is currently~~was scheduled to begin on April 26, 2021. On March 23, 2021 the trial court entered a stipulation and order adjourning the trial to April 4, 2022, with the understanding that the parties will use their best efforts to hold the trial earlier if the court’s and the parties’ calendars and health and safety conditions permit. The Company believes that the remaining asserted claims are without merit, denies the allegations and will continue to defend the case vigorously. At this time, no determination can be made as to the ultimate outcome of this litigation or the potential liability, if any, on the part of the Company.

On August 14, 2017, Robert Kirkman, Robert Kirkman, LLC, Glen Mazzara, 44 Strong Productions, Inc., David Alpert, Circle of Confusion Productions, LLC, New Circle of Confusion Productions, Inc., Gale Anne Hurd, and Valhalla Entertainment, Inc. f/k/a Valhalla Motion Pictures, Inc. (together, the "California Plaintiffs") filed a complaint in California Superior Court in connection with California Plaintiffs’ rendering of services as writers and producers of the television series entitled The Walking Dead,, as well as Fear the Walking Dead and/or Talking Dead,, and the agreements between the parties

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~

related thereto (the "California Action"). The California Plaintiffs asserted that the Company has been improperly underpaying the California Plaintiffs under their contracts with the Company and they assert claims for breach of contract, breach of the covenant of good faith and fair dealing, inducing breach of contract, and liability for violation of Cal. Bus. & Prof. Code § 17200. On August 15, 2017, two of the California Plaintiffs, Gale Anne Hurd and David Alpert (and their associated loan-out companies), along with Charles Eglee and his loan-out company, United Bongo Drum, Inc., filed a complaint in New York Supreme Court alleging nearly identical claims as the California Action (the "New York Action"). Hurd, Alpert, and Eglee filed the New York Action in connection with their contract claims involving ~~The Walking Dead~~ because their agreements contained exclusive New York jurisdiction provisions. On October 23, 2017, the parties stipulated to discontinuing the New York Action without prejudice and consolidating all of the claims in the California Action. The California Plaintiffs seek compensatory and punitive damages and restitution. ~~The Company filed an Answer on April 30, 2018 and believes that the asserted claims are without merit and will vigorously defend against them.~~ On August 8, 2019, the judge in the California Action ordered a trial to resolve certain issues of contract interpretation ~~only. The trial commenced on February 10, 2020 and concluded on March 10, 2020 after~~only. Following eight days of ~~trial. On~~trial in February and March 2020, on July 22, 2020, the judge ~~in the California Action~~ issued a Statement of Decision finding in the Company's favor on all ~~seven~~7 matters of contract interpretation before the court in this first phase trial. On October 30, 2020, the judge in the California Action set a tentative trial date of September 8, 2021 with regard to claims not addressed in the first phase trial. On January 20, 2021, the California Plaintiffs filed a second amended complaint, eliminating 8 named defendants and their claims under Cal. Bus. & Prof. Code § 17200. On May 5, 2021, the California Plaintiffs filed a third amended complaint, repleading in part their claims for alleged breach of the covenant of good faith and fair dealing, inducing breach of contract, and certain breach of contract claims. The parties have resumed discovery in preparation for the September 2021 trial. The Company believes that the remaining asserted claims are without merit and will vigorously defend against them. At this time, no determination can be made as to the ultimate outcome of this litigation or the potential liability, if any, on the part of the Company.

The Company is party to various lawsuits and claims in the ordinary course of business, including the matters described above. Although the outcome of these matters cannot be predicted with certainty and while the impact of these matters on the Company's results of operations in any particular subsequent reporting period could be material, management does not believe that the resolution of these matters will have a material adverse effect on the financial position of the Company or the ability of the Company to meet its financial obligations as they become due.

Note ~~15.~~16. Equity Plans

In ~~June 2020,~~March 2021, AMC Networks granted ~~54,535~~535,278 restricted stock units ~~("RSUs") under the 2011 Stock Plan for Non-Employee Directors to non-employee directors that vested on the date of grant.~~

~~In March 2020, AMC Networks granted 1,171,956 RSUs~~(RSUs) to certain executive officers and employees under the AMC Networks Inc. Amended and Restated 2016 Employee Stock Plan. The RSUs vest ratably over a ~~three-year~~three-year period and the vesting criteria for ~~380,142~~178,764 RSUs include the achievement of certain performance targets by the Company.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, ~~477,764~~617,051 RSUs and ~~325,836 PRSUs~~368,296 performance restricted stock units (PRSUs) of AMC Networks Class A Common Stock previously issued to employees of the Company vested. On the vesting date, ~~199,377~~263,671 RSUs and ~~142,882~~168,712 PRSUs were surrendered to the Company to cover the required statutory tax withholding obligations and ~~278,387~~353,380 RSU and ~~182,954~~199,584 PRSU new shares of AMC Networks Class A Common Stock were issued. The units surrendered to satisfy the employees' statutory minimum tax withholding obligations for the applicable income and other employment tax had an aggregate value of ~~$8.9~~$34.6 million, which has been reflected as a financing activity in the condensed consolidated statement of cash flows for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

Share-based compensation expense included in selling, general and administrative expense was ~~$12.4~~$13.4 million and ~~$43.1~~$15.5 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and March 31, 2020, ~~respectively, and $13.8 million and $50.5 million the for three and nine months ended September 30, 2019,~~ respectively.

As of ~~September 30, 2020,~~March 31, 2021, there was $~~47.4~~58.8 million of total unrecognized share-based compensation cost related to outstanding unvested share-based awards. The unrecognized compensation cost is expected to be recognized over a weighted-average remaining period of approximately ~~1.7~~2.0 years.

Note ~~16.~~17. Redeemable Noncontrolling Interests

The following table summarizes activity related to redeemable noncontrolling interest for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.


(In thousands)	~~Nine~~Three Months Ended ~~September 30, 2020~~March 31, 2021
December 31, ~~2019~~2020	$	~~309,451~~315,649
Net earnings	~~12,788~~6,570
Distributions	~~(12,945)~~(2,344)
~~Other~~Distribution related to spin-off transaction	~~5,103~~ (8,040)
~~September 30, 2020~~Transfer to noncontrolling interest	(18,367)
March 31, 2021	$	~~314,397~~293,468

In connection with the spin-off of the live comedy venue and talent management businesses of Levity Entertainment Group, LLC (see Note 4), $8.0 million of redeemable noncontrolling interests was distributed to the noncontrolling partners. In addition, as part of the transaction, the preexisting put rights of the noncontrolling interest holders were terminated. Accordingly, the remaining $18.4 million of noncontrolling interests was transferred from Redeemable noncontrolling interests to Noncontrolling interests in the condensed consolidated balance sheet.

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~

Note ~~17.~~18. Related Party Transactions

The Company and its related parties routinely enter into transactions with each other in the ordinary course of business. Revenues, net from related parties amounted to $1.2 million and $1.2 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $3.6 million and $3.5 million for the nine months ended September 30, 2020 and 2019,~~ respectively. Amounts charged to the Company, included in selling, general and administrative expenses, pursuant to transactions with its related parties amounted to $0.5 million and ~~$0.2~~$0.1 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $0.6 million and $1.0 million for the nine months ended September 30, 2020 and 2019,~~ respectively.

Note ~~18.~~19. Cash Flows

The Company's non-cash investing and financing activities and other supplemental data are as follows:


(In thousands)	(In thousands)	Nine Months Ended September 30,				(In thousands)	Three Months Ended March 31,
		2020		2019			2021		2020
Non-Cash Investing and Financing Activities:	Non-Cash Investing and Financing Activities:					Non-Cash Investing and Financing Activities:

Treasury stock not yet settled						Treasury stock not yet settled	$	0	$	10,988
Finance lease additions	Finance lease additions	$	14,260	$	0	Finance lease additions	0		14,271
Capital expenditures incurred but not yet paid	Capital expenditures incurred but not yet paid	2,105		1,659		Capital expenditures incurred but not yet paid	2,314		2,501
Supplemental Data:	Supplemental Data:					Supplemental Data:
Cash interest paid	Cash interest paid	91,940		104,698		Cash interest paid	39,614		27,873
Income taxes paid, net	Income taxes paid, net	60,335		121,110		Income taxes paid, net	2,314		4,069

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Note ~~19.~~20. Segment Information

The Company classifies its operations into 2 operating segments: ~~National Networks~~Domestic Operations and International and Other. These operating segments represent strategic business units that are managed separately.

The Company generally allocates all corporate overhead costs within operating expenses to the Company's 2 operating segments based upon their proportionate estimated usage of services, including such costs as executive salaries and benefits, costs of maintaining corporate headquarters, facilities and common support functions (such as human resources, legal, finance, strategic planning and information technology) as well as sales support functions and creative and production services.

The Company evaluates segment performance based on several factors, of which the primary financial measure is operating segment adjusted operating income ("AOI"), a non-GAAP measure. The Company defines AOI as operating income (loss) before depreciation and amortization, cloud computing amortization, share-based compensation expense or benefit, impairment and other charges (including gains or losses on sales or dispositions of businesses), restructuring and other related charges and including the Company’s proportionate share of adjusted operating income (loss) from majority-owned equity method investees. The Company has presented the components that reconcile adjusted operating income to operating income, an accepted GAAP measure, and other information as to the continuing operations of the Company's operating segments below.


(In thousands)	(In thousands)	Three Months Ended September 30, 2020								(In thousands)	Three Months Ended March 31, 2021
		National Networks		International and Other		Inter-segment eliminations		Consolidated			Domestic Operations		International and Other		Corporate / Inter-segment Eliminations		Consolidated
Revenues, net	Revenues, net									Revenues, net
Advertising	Advertising	$	164,216	$	18,923	$	(37)	$	183,102	Advertising	$	199,142	$	21,571	$	0	$	220,713
Distribution		297,933		180,369		(7,389)		470,913
Distribution and other										Distribution and other	374,827		99,596		(3,395)		471,028
Consolidated revenues, net	Consolidated revenues, net	$	462,149	$	199,292	$	(7,426)	$	654,015	Consolidated revenues, net	$	573,969	$	121,167	$	(3,395)	$	691,741
Operating income (loss)	Operating income (loss)	$	129,842	$	11,198	$	(1,563)	$	139,477	Operating income (loss)	$	216,459	$	(3,162)	$	(43,589)	$	169,708
Share-based compensation expense	Share-based compensation expense	9,922		2,472		0		12,394		Share-based compensation expense	5,639		1,231		6,576		13,446
Depreciation and amortization	Depreciation and amortization	13,422		14,125		0		27,547		Depreciation and amortization	13,373		4,949		6,924		25,246

Impairment and other charges										Impairment and other charges	0		16,055		0		16,055
Restructuring and other related charges	Restructuring and other related charges	5,991		(1,585)		0		4,406		Restructuring and other related charges	2,427		4,490		1,708		8,625
Cloud computing amortization										Cloud computing amortization	0		0		264		264
Majority-owned equity investees AOI	Majority-owned equity investees AOI	0		1,667		0		1,667		Majority-owned equity investees AOI	4,635		0		0		4,635
Adjusted operating income	Adjusted operating income	$	159,177	$	27,877	$	(1,563)	$	185,491	Adjusted operating income	$	242,533	$	23,563	$	(28,117)	$	237,979


(In thousands)	Three Months Ended March 31, 2020
	Domestic Operations		International and Other		Corporate / Inter-segment Eliminations		Consolidated
Revenues, net
Advertising	$	213,226	$	19,364	$	0	232,590
Distribution and other	398,667		105,464		(2,346)		501,785
Consolidated revenues, net	$	611,893	$	124,828	$	(2,346)	$	734,375
Operating income (loss)	$	224,600	$	4,361	$	(55,991)	172,970
Share-based compensation expense	2,724		609		12,179		15,512
Depreciation and amortization	10,951		8,896		6,883		26,730
Restructuring and other related charges	1,482		3,977		507		5,966

Majority-owned equity investees AOI	1,276		0		0		1,276
Adjusted operating income	$	241,033	$	17,843	$	(36,422)	$	222,454

Corporate overhead costs include such costs as executive salaries and benefits, costs of maintaining corporate headquarters, facilities and common support functions (such as human resources, legal, finance, strategic planning and information technology).

Inter-segment eliminations are primarily licensing revenues recognized between the Domestic Operations and International and Other segments.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

(In thousands) Three Months Ended September 30, 2019
National
Networks International
and Other Inter-segment
eliminations Consolidated
Revenues, net
Advertising $ 194,452 $ 18,872 $ (24) 213,300
Distribution 364,540 163,967 (23,210) 505,297
Consolidated revenues, net $ 558,992 $ 182,839 $ (23,234) $ 718,597
Operating income (loss) $ 182,479 $ (11,501) $ (2,540) 168,438
Share-based compensation expense 11,684 2,157 0 13,841
Depreciation and amortization 8,048 17,571 0 25,619
Restructuring and other related charges 6,199 3,992 0 10,191
Majority-owned equity investees AOI 0 1,246 0 1,246
Adjusted operating income $ 208,410 $ 13,465 $ (2,540) $ 219,335

(In thousands) Nine Months Ended September 30, 2020
National
Networks International
and Other Inter-segment
eliminations Consolidated
Revenues, net
Advertising $ 564,876 $ 53,097 $ (38) $ 617,935
Distribution 960,062 477,668 (20,984) 1,416,746
Consolidated revenues, net $ 1,524,938 $ 530,765 $ (21,022) $ 2,034,681
Operating income (loss) $ 512,598 $ (147,226) $ (4,123) $ 361,249
Share-based compensation expense 34,754 8,387 0 43,141
Depreciation and amortization 30,633 49,549 0 80,182
Impairment charges 0 130,411 0 130,411
Restructuring and other related charges 8,714 5,165 0 13,879
Majority-owned equity investees AOI 0 4,361 0 4,361
Adjusted operating income $ 586,699 $ 50,647 $ (4,123) $ 633,223

(In thousands) Nine Months Ended September 30, 2019
National
Networks International
and Other Inter-segment
eliminations Consolidated
Revenues, net
Advertising $ 653,031 $ 63,613 $ (75) $ 716,569
Distribution 1,126,819 469,841 (38,112) 1,558,548
Consolidated revenues, net $ 1,779,850 $ 533,454 $ (38,187) $ 2,275,117
Operating income (loss) $ 648,180 $ (52,532) $ (12,090) $ 583,558
Share-based compensation expense 41,774 8,691 0 50,465
Depreciation and amortization 24,839 50,729 0 75,568
Restructuring and other related charges 6,776 23,915 (696) 29,995
Majority-owned equity investees AOI 0 4,434 0 4,434
Adjusted operating income $ 721,569 $ 35,237 $ (12,786) $ 744,020

Inter-segment eliminations are primarily licensing revenues recognized between the National Networks and International and Other segments as well as revenues recognized by AMC Networks Broadcasting & Technology for transmission revenues recognized from the International and Other operating segment.

~~AMC NETWORKS INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(unaudited)~~


(In thousands)	(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,				(In thousands)	Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Inter-segment revenues	Inter-segment revenues									Inter-segment revenues
National Networks		$	(7,166)	$	(18,140)	$	(17,346)	$	(29,790)
Domestic Operations										Domestic Operations		$	(670)	$	(1,361)
International and Other	International and Other	(260)		(5,094)		(3,676)		(8,397)		International and Other		(2,725)		(985)
		$	(7,426)	$	(23,234)	$	(21,022)	$	(38,187)			$	(3,395)	$	(2,346)

The table below summarizes revenues based on customer location:


(In thousands)	(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,				(In thousands)	Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Revenues	Revenues									Revenues
United States	United States	$	497,677	$	579,913	$	1,646,065	$	1,847,491	United States		$	577,148	$	624,993
Europe	Europe	110,448		108,365		274,763		299,782		Europe		82,036		72,479
Other	Other	45,890		30,319		113,853		127,844		Other		32,557		36,903
		$	654,015	$	718,597	$	2,034,681	$	2,275,117			$	691,741	$	734,375

The table below summarizes property and equipment based on asset location:


(In thousands)	(In thousands)	September 30, 2020		December 31, 2019		(In thousands)	March 31, 2021		December 31, 2020
Property and equipment, net	Property and equipment, net					Property and equipment, net
United States	United States	$	241,541	$	244,175	United States	$	209,374	$	239,387
Europe	Europe	13,985		25,925		Europe	14,641		15,938
Other	Other	203		13,652		Other	710		720
		$	255,729	$	283,752		$	224,725	$	256,045

For the nine months ended September 30, 2020, impairment charges were recorded related to certain property and equipment in Europe and Other. See Note 7 for additional details regarding the impairment test of long-lived assets.

2420

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements that constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. In this Management's Discussion and Analysis of Financial Condition and Results of Operations there are statements concerning our future operating results and future financial performance. Words such as "expects," "anticipates," "believes," "estimates," "may," "will," "should," "could," "potential," "continue," "intends," "plans" and similar words and terms used in the discussion of future operating results and future financial performance identify forward-looking statements. You are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:

•the impact of COVID-19 on the economy and our business, including the measures taken by governmental authorities to address the pandemic, which may precipitate or exacerbate other risks and/or uncertainties;

•~~the~~ level of our revenues;

•market demand, including changes in viewer consumption patterns, for our programming networks, our subscription streaming services, our programming, and our production services;

•demand for advertising inventory and our ability to deliver guaranteed viewer ratings;

•the highly competitive nature of the cable, telecommunications, ~~SVOD~~streaming and programming industries;

•~~our ability to maintain and renew distribution or affiliation agreements with distributors;~~

•the cost of, and our ability to obtain or produce, desirable programming content for our networks, other forms of distribution, including digital and licensing in international markets, as well as our ~~independent~~ film distribution businesses;

•market demand for our owned original programming and our ~~independent~~ film content;

•~~changes in consumer demand for~~the impact of COVID-19 on the economy and our ~~comedy venues;~~business, including the measures taken by governmental authorities to address the pandemic, which may precipitate or exacerbate other risks and/or uncertainties;

•the security of our program rights and other electronic data;

•our ability to maintain and renew distribution or affiliation agreements with distributors;

•the loss of any of our key personnel and artistic talent;

•changes in domestic and foreign laws or regulations under which we operate;

•economic and business conditions and industry trends in the countries in which we operate;

•fluctuations in currency exchange rates and interest rates;

•changes in laws or treaties relating to taxation, or the interpretation thereof, in the U.S. or in the countries in which we ~~operate, including the impact of the Tax Cuts and Jobs Act and the Bipartisan Budget Act of 2018;~~operate;

•the impact of ~~new~~existing and proposed federal, state and international laws and regulations relating to data protection, privacy and security, including the ~~E.U.~~European Union's General Data Protection ~~Regulation;~~Regulation ("GDPR");

•the impact of ~~Brexit, particularly in the event of the U.K.'s departure from the E.U. without an agreement on terms;~~Brexit;

•our substantial debt and high leverage;

•reduced access to capital markets or significant increases in costs to borrow;

•the level of our expenses;

•the level of our capital expenditures;

•future acquisitions and dispositions of assets;

•our ability to successfully acquire new businesses and, if acquired, to integrate, and implement our plan with respect to businesses we acquire;

•problems we may discover post-closing with the operations, including the internal controls and financial reporting process, of businesses we acquire;

•uncertainties regarding the financial results of equity method investees, issuers of our investments in marketable equity securities and non-marketable equity securities and changes in the nature of key strategic relationships with partners and joint ventures;

•the outcome of litigation and other proceedings;

•whether pending uncompleted transactions, if any, are completed on the terms and at the times set forth (if at all);

•other risks and uncertainties inherent in our programming and streaming businesses;

•financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate;

•events that are outside our control, such as political unrest in international markets, terrorist attacks, natural disasters and other similar events; and

•the factors described under Item 1A, "Risk Factors" in our ~~2019~~2020 Annual Report on Form 10-K (the ~~"2019~~"2020 Form 10-K"), as filed with the Securities and Exchange Commission ("SEC") ~~and under 1A, "Risk Factors" in this Quarterly Report on Form 10-Q.~~.

We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.

Introduction

Management's discussion and analysis, or MD&A, of our results of operations and financial condition is provided as a supplement to, and should be read in conjunction with, the unaudited condensed consolidated financial statements and notes thereto included elsewhere herein and our ~~2019~~2020 Form 10-K to enhance the understanding of our financial condition, changes in financial condition and results of our operations. Unless the context otherwise requires, all references to "we," "us," "our," "AMC Networks" or the "Company" refer to AMC Networks Inc., together with its subsidiaries. MD&A is organized as follows:

Business Overview. This section provides a general description of our business and our operating segments, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.

Consolidated Results of Operations. This section provides an analysis of our results of operations for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 compared to the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020. Our discussion is presented on both a consolidated and operating segment basis. Our two operating segments are: (i) ~~National Networks~~Domestic Operations and (ii) International and Other.

Liquidity and Capital Resources. This section provides a discussion of our financial condition as of ~~September 30, 2020,~~March 31, 2021, as well as an analysis of our cash flows for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020. The discussion of our financial condition and liquidity includes summaries of (i) our primary sources of liquidity and (ii) our contractual obligations that existed at ~~September 30, 2020~~March 31, 2021 as compared to December 31, ~~2019.~~2020.

Critical Accounting Policies and Estimates. This section provides an update, if any, to our significant accounting policies or critical accounting estimates since December 31, ~~2019.~~2020.

Business Overview

~~We manage~~Segment Reporting Changes

In the first quarter of 2021, we changed our ~~business through~~presentation of operating segments, reflecting a reorganized operating structure focused on a multi-platform distribution approach to content monetization. Our streaming services and IFC Films, previously included in the International and Other segment, are now included within Domestic Operations (formerly referred to as the National Networks segment). In addition, certain corporate overhead costs will no longer be allocated to the operating segments. Operating segment information for the prior period has been recast to reflect these changes. The new reporting structure consists of the following two operating segments:

•~~National Networks:~~Domestic Operations: Includes activities of our five national programming networks, our streaming services, AMC Studios ~~operations~~operation, IFC Films and AMC Broadcasting & Technology. Our national programming networks are AMC, WE tv, BBC AMERICA, IFC, and ~~SundanceTV~~SundanceTV. Our streaming services consist of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, and ~~also include our AMC Premiere service.~~ALLBLK), AMC+ and other streaming initiatives. Our AMC Studios operation produces original programming for our programming networks and also licenses such programming worldwide. IFC Films is our film distribution business and AMC Networks Broadcasting & Technology is our technical services business, which primarily services most of the national programming networks.

•International and Other: Includes AMC Networks International ("AMCNI"), our international programming businesses consisting of a portfolio of channels around the ~~world; AMC Networks SVOD, consisting of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, UMC), AMC+~~world and ~~other subscription video on demand ("SVOD") initiatives; Levity,~~25/7 Media (formerly Levity), our production services ~~and~~business. See Note 4 to the unaudited condensed consolidated financial statements for additional information relating to the spin-off of the Levity comedy venues ~~business; and IFC Films, our independent film distribution~~ business.

2622

Financial Results Overview

The tables presented below set forth our consolidated revenues, net, operating income (loss) and adjusted operating income ("AOI"), defined below, for the periods indicated.


(In thousands)	(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,				(In thousands)	Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Revenues, net	Revenues, net									Revenues, net
National Networks		$	462,149	$	558,992	$	1,524,938	$	1,779,850
Domestic Operations										Domestic Operations		$	573,969	$	611,893
International and Other	International and Other	199,292		182,839		530,765		533,454		International and Other		121,167		124,828
Inter-segment eliminations		(7,426)		(23,234)		(21,022)		(38,187)
Inter-segment Eliminations										Inter-segment Eliminations		(3,395)		(2,346)
Consolidated revenues, net	Consolidated revenues, net	$	654,015	$	718,597	$	2,034,681	$	2,275,117	Consolidated revenues, net		$	691,741	$	734,375
Operating income (loss)	Operating income (loss)									Operating income (loss)
National Networks		$	129,842	$	182,479	$	512,598	$	648,180
Domestic Operations										Domestic Operations		$	216,459	$	224,600
International and Other	International and Other	11,198		(11,501)		(147,226)		(52,532)		International and Other		(3,162)		4,361
Inter-segment eliminations		(1,563)		(2,540)		(4,123)		(12,090)
Corporate / Inter-segment Eliminations										Corporate / Inter-segment Eliminations		(43,589)		(55,991)
Consolidated operating income	Consolidated operating income	$	139,477	$	168,438	$	361,249	$	583,558	Consolidated operating income		$	169,708	$	172,970
AOI	AOI									AOI
National Networks		$	159,177	$	208,410	$	586,699	$	721,569
Domestic Operations										Domestic Operations		$	242,533	$	241,033
International and Other	International and Other	27,877		13,465		50,647		35,237		International and Other		23,563		17,843
Inter-segment eliminations		(1,563)		(2,540)		(4,123)		(12,786)
Corporate / Inter-segment Eliminations										Corporate / Inter-segment Eliminations		(28,117)		(36,422)
Consolidated AOI	Consolidated AOI	$	185,491	$	219,335	$	633,223	$	744,020	Consolidated AOI		$	237,979	$	222,454

We evaluate segment performance based on several factors, of which the primary financial measure is operating segment AOI. We define AOI, which is a financial measure that is not calculated in accordance with generally accepted accounting principles ("GAAP"), as operating income (loss) before depreciation and amortization, cloud computing amortization, share-based compensation expense or benefit, impairment and other charges (including gains or losses on sales or dispositions of businesses), restructuring and other related charges and including the Company’s proportionate share of adjusted operating income (loss) from majority-owned equity method investees. From time to time, we may exclude the impact of certain events, gains, losses or other charges (such as significant legal settlements) from AOI that affect our operating performance.

We believe that AOI is an appropriate measure for evaluating the operating performance on both an operating segment and consolidated basis. AOI and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in the industry.

Internally, we use revenues, net and AOI measures as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators. AOI should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities and other measures of performance and/or liquidity presented in accordance with GAAP. Since AOI is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.

The following is a reconciliation of consolidated operating income to AOI for the periods indicated:


(In thousands)	(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,				(In thousands)	Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Operating income	Operating income	$	139,477	$	168,438	$	361,249	$	583,558	Operating income		$	169,708	$	172,970
Share-based compensation expense	Share-based compensation expense	12,394		13,841		43,141		50,465		Share-based compensation expense		13,446		15,512
Depreciation and amortization	Depreciation and amortization	27,547		25,619		80,182		75,568		Depreciation and amortization		25,246		26,730
Restructuring and other related charges	Restructuring and other related charges	4,406		10,191		13,879		29,995		Restructuring and other related charges		8,625		5,966
Impairment charges		—		—		130,411		—
Impairment and other charges										Impairment and other charges		16,055		—
Cloud computing amortization										Cloud computing amortization		264		—
Majority-owned equity investees AOI	Majority-owned equity investees AOI	1,667		1,246		4,361		4,434		Majority-owned equity investees AOI		4,635		1,276
AOI	AOI	$	185,491	$	219,335	$	633,223	$	744,020	AOI		$	237,979	$	222,454

2723

~~Impact of COVID-19 on Our Business~~

In March 2020, the World Health Organization characterized the novel coronavirus ("COVID-19") a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had a negative impact on the global economy.

The impact of COVID-19 and measures to prevent its spread are affecting our businesses in a number of ways. Beginning in mid-March, we have experienced adverse advertising sales impacts, suspended content production, which has led to delays in the creation and availability of substantially all of our programming, and the temporary closure of our comedy venues. ~~In the third quarter of 2020, t~~he Company commenced production activities, however substantially all Company employees continue to work remotely, and the Company continues to restrict business travel. If significant portions of our workforce, including key personnel, are unable to work effectively because of illness, government actions or other restrictions in connection with the COVID-19 pandemic, the impact of the pandemic on our businesses could be exacerbated.

The Company has evaluated and continues to evaluate the potential impact of the COVID-19 pandemic on its consolidated financial statements, including the impairment of goodwill (see Note 7) and indefinite-lived intangible assets and the fair value and collectability of receivables. The COVID-19 pandemic has had a material impact on the Company's operations since mid-March 2020. The Company cannot reasonably predict the ultimate impact of the COVID-19 pandemic, including the extent of any adverse impact on our business, results of operations and financial condition, which will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of a vaccine, and global economic conditions. The Company does not expect the COVID-19 pandemic and its related economic impact to affect its liquidity position or its ongoing ability to meet the covenants in its debt instruments.

~~National Networks~~Domestic Operations

In our ~~National Networks~~Domestic Operations segment, we earn revenue principally ~~from~~from: (i) the distribution of our programming, through our programming networks and owned subscription streaming services, (ii) the sale of ~~advertising.~~advertising, and (iii) the licensing of our original programming to distributors, including the distribution of programming of IFC Films. Distribution revenue primarily includes subscription fees paid by distributors to carry our programming networks and streaming services, and content licensing revenue from the licensing of original programming for digital, foreign and home video distribution. Subscription fees paid by distributors represent the largest component of distribution revenue. Our subscription fee revenues for our programming networks are based on a per subscriber fee, and, to a lesser extent, fixed fees under multi-year contracts, commonly referred to as "affiliation agreements," which generally provide for annual rate increases. The specific subscription fee revenues we earn vary from period to period, distributor to distributor and also vary among our ~~networks,~~programming services, but are generally based upon the number of each distributor's subscribers who receive our programming, referred to as viewing subscribers. Subscription fees for our streaming services are paid on a monthly basis. Content licensing revenue from the licensing of original programming for digital and foreign distribution is recognized upon availability or distribution by the licensee.

Under affiliation agreements with our distributors, we have the right to sell a specified amount of national advertising time on our programming networks. Our advertising revenues are more variable than subscription fee revenues because the majority of our advertising is sold on a short-term basis, not under long-term contracts. Our arrangements with advertisers provide for a set number of advertising units to air over a specific period of time at a negotiated price per unit. Additionally, in these advertising sales arrangements, our programming networks generally guarantee specified viewer ratings for their programming.

On August 5, 2020, the Company filed a program carriage complaint with the Federal Communications Commission (the "FCC") alleging that, in connection with the negotiation of a new affiliation agreement between AT&T and the Company, AT&T has been engaging in discriminatory conduct that violates Section 616 of the Communications Act of 1934, as amended, and the FCC’s program carriage rules. On September 14, 2020, the FCC granted the Company's request to withdraw its complaint.

Programming expense, included in technical and operating expense, represents the largest expense of the ~~National Networks~~Domestic Operations segment and primarily consists of amortization and write-offs of programming rights, such as those for original programming, feature films and licensed series, as well as participation and residual costs. The other components of technical and operating expense primarily include distribution and production related costs and program operating costs including cost of delivery, such as origination, transmission, uplinking and encryption.

~~To an increasing extent, the~~The success of our business depends on original programming, both scripted and unscripted, across all of our ~~networks. In recent years, we have introduced a number of scripted~~programming services. These original ~~series. These~~ series generally result in higher ratings for our networks. Among other things, higher audience ratings drive increased revenues through higher advertising revenues. The timing of exhibition and distribution of original programming varies from period to period, which results in greater variability in our revenues, earnings and cash flows from operating activities. We will continue to increase our investment in programming across all of our networks. There may be significant changes in the level of our technical and

operating expenses due to the amortization of content acquisition and/or original programming costs and/or the impact of management's periodic assessment of programming usefulness. Such costs will also fluctuate with the level of revenues derived from owned original programming in each period as these costs are amortized based on the individual-film-forecast-computation method.

Most original series require us to make up-front investments, which are often significant amounts. Not all of our programming efforts are commercially successful, which could result in a write-off of program rights. If it is determined that programming rights have limited, or no, future programming usefulness based on actual demand or market conditions, a write-off of the unamortized cost is recorded in technical and operating expense. ~~Program rights write-offs, included in technical and operating expense, were $31.2 million and $14.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.~~

International and Other

Our International and Other segment primarily includes the operations of AMCNI ~~AMC Networks SVOD, Levity,~~ and ~~IFC Films.~~25/7 Media (formerly Levity).

In our International and Other segment, we earn revenue principally from the international distribution of programming and, to a lesser extent, the sale of advertising from our AMCNI programming networks. We also earn revenue ~~from; (i)~~through production services from Levity, (ii) our subscription streaming services Acorn TV, Shudder, Sundance Now, UMC (Urban Movie Channel), and AMC+ from our AMC Networks SVOD business, (iii) the distribution of content of IFC Films and RLJE, and (iv) Levity's operation of comedy venues (all of which are temporarily closed as a result of the COVID-19 pandemic).25/7 Media. For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, distribution revenues represented ~~90%~~82% of the revenues of the International and Other segment. Distribution revenue primarily includes subscription fees paid by distributors or consumers to carry our programming networks ~~or subscription-based streaming services~~ and production services revenue generated from ~~Levity.~~25/7 Media. Our subscription revenues are generally based on either a per-subscriber fee or a fixed contractual annual fee, under multi-year affiliation agreements, which may provide for annual rate ~~increases, and a monthly fee paid by consumers for our subscription-based streaming services.~~increases. Our production services revenues are based on master production agreements whereby a third-party engages us to produce content on its behalf. Production services revenues are recognized based on the percentage of cost incurred to total estimated cost of the contract. Distribution revenues are derived from the distribution of our programming networks primarily in Europe and to a lesser extent, Latin ~~America as well as from our owned subscription streaming services available in the United States, Canada, Latin America, parts of Europe, India, Australia and New Zealand.~~America.

Programming expense, program operating costs and production costs incurred to produce content for third parties are included in technical and operating expense, and represent the largest expense of the International and Other segment. Programming expense primarily consist of amortization of acquired content, costs of dubbing and sub-titling of programs, production costs, participation and residual costs. Program operating costs include costs such as origination, transmission, uplinking and encryption of our linear AMCNI channels as well as content hosting and delivery costs at our various on-line

content distribution initiatives. Not all of our programming efforts are commercially successful, which could result in a write-off of program rights. If it is determined that programming rights have limited, or no, future programming usefulness based on actual demand or market conditions, a write-off of the unamortized cost is recorded in technical and operating expense.

We view our investments in international expansion and our various developing on-line content distribution initiatives as important long-term strategies. We may experience an adverse impact to the International and Other segment's operating results and cash flows in periods of increased investment by the Company in these aforementioned initiatives.Corporate / Inter-segment Eliminations

Corporate ~~Expenses~~

~~We allocate~~operations primarily consist of executive management and administrative support services, such as executive salaries and benefits costs, costs of maintaining corporate ~~overhead within operating expenses to each segment based upon its proportionate estimated usage of services.~~headquarters, facilities and common support functions (such as human resources, legal, finance, strategic planning and information technology). The segment financial information set forth below, including the discussion related to individual line items, does not reflect inter-segment eliminations unless specifically indicated.

Impact of COVID-19 on Our Business

The COVID-19 pandemic and measures to prevent its spread continue to affect our businesses in a number of ways, including adverse advertising sales impacts and delays in the creation and availability of our programming. The Company cannot reasonably predict the ultimate impact of the COVID-19 pandemic, including the extent of any adverse impact on our business, results of operations and financial condition, which will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of vaccines, and global economic conditions. The Company does not expect the COVID-19 pandemic and its related economic impact to affect its liquidity position or its ongoing ability to meet the covenants in its debt instruments.

Impact of Economic Conditions

Our future performance is dependent, to a large extent, on general economic conditions including the impact of direct competition, our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers.

Capital and credit market disruptions, as well as other events such as the COVID-19 pandemic, could cause economic downturns, which may lead to lower demand for our products, such as lower demand for television advertising and a decrease in the number of subscribers receiving our programming ~~networks~~services from our distributors. Events such as these may adversely impact our results of operations, cash flows and financial position.

2925

~~Consolidated Results of Operations~~

The amounts presented and discussed below represent 100% of each operating segment's revenues, net and expenses. Where we have management control of an entity, we consolidate 100% of such entity in our consolidated statements of operations notwithstanding that a third-party owns a significant interest in such entity. The noncontrolling owner's interest in the operating results of majority-owned or controlled subsidiaries are reflected in net income attributable to noncontrolling interests in our consolidated statements of operations.

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared to Three Months Ended ~~September 30, 2019~~March 31, 2020

The following table sets forth our consolidated results of operations for the periods indicated.


		Three Months Ended September 30,													Three Months Ended March 31,
		2020				2019									2021				2020
(In thousands)	(In thousands)	Amount		% of Revenues, net		Amount		% of Revenues, net		$ change		% change		(In thousands)	Amount		% of Revenues, net		Amount		% of Revenues, net		$ change		% change
Revenues, net	Revenues, net	$	654,015	100.0	%	$	718,597	100.0	%	$	(64,582)	(9.0)	%	Revenues, net	$	691,741	100.0	%	$	734,375	100.0	%	$	(42,634)	(5.8)	%
Operating expenses:	Operating expenses:													Operating expenses:
Technical and operating (excluding depreciation and amortization)	Technical and operating (excluding depreciation and amortization)	333,816		51.0		354,992		49.4		(21,176)		(6.0)		Technical and operating (excluding depreciation and amortization)	280,572		40.6		344,060		46.9		(63,488)		(18.5)
Selling, general and administrative	Selling, general and administrative	148,769		22.7		159,357		22.2		(10,588)		(6.6)		Selling, general and administrative	191,535		27.7		184,649		25.1		6,886		3.7
Depreciation and amortization	Depreciation and amortization	27,547		4.2		25,619		3.6		1,928		7.5		Depreciation and amortization	25,246		3.6		26,730		3.6		(1,484)		(5.6)
Impairment charges		—		—		—		—		—		n/m
Impairment and other charges														Impairment and other charges	16,055		2.3		—		—		16,055		n/m
Restructuring and other related charges	Restructuring and other related charges	4,406		0.7		10,191		1.4		(5,785)		(56.8)		Restructuring and other related charges	8,625		1.2		5,966		0.8		2,659		44.6
Total operating expenses	Total operating expenses	514,538		78.7		550,159		76.6		(35,621)		(6.5)		Total operating expenses	522,033		75.5		561,405		76.4		(39,372)		(7.0)
Operating income	Operating income	139,477		21.3		168,438		23.4		(28,961)		(17.2)		Operating income	169,708		24.5		172,970		23.6		(3,262)		(1.9)
Other income (expense):	Other income (expense):													Other income (expense):
Interest expense, net	Interest expense, net	(30,424)		(4.7)		(34,995)		(4.9)		4,571		(13.1)		Interest expense, net	(32,400)		(4.7)		(33,009)		(4.5)		609		(1.8)

Loss on extinguishment of debt														Loss on extinguishment of debt	(22,074)		(3.2)		(2,908)		(0.4)		(19,166)		n/m
Miscellaneous, net	Miscellaneous, net	11,138		1.7		(1,490)		(0.2)		12,628		n/m		Miscellaneous, net	5,406		0.8		(29,939)		(4.1)		35,345		(118.1)
Total other income (expense)	Total other income (expense)	(19,286)		(2.9)		(36,485)		(5.1)		17,199		(47.1)		Total other income (expense)	(49,068)		(7.1)		(65,856)		(9.0)		16,788		(25.5)
Net income from operations before income taxes	Net income from operations before income taxes	120,191		18.4		131,953		18.4		(11,762)		(8.9)		Net income from operations before income taxes	120,640		17.4		107,114		14.6		13,526		12.6
Income tax expense	Income tax expense	(52,195)		(8.0)		(8,727)		(1.2)		(43,468)		n/m		Income tax expense	(25,915)		(3.7)		(33,588)		(4.6)		7,673		(22.8)
Net income including noncontrolling interests	Net income including noncontrolling interests	67,996		10.4		123,226		17.1		(55,230)		(44.8)		Net income including noncontrolling interests	94,725		13.7		73,526		10.0		21,199		28.8
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(6,356)		(1.0)		(6,303)		(0.9)		(53)		0.8	%	Net income attributable to noncontrolling interests	(7,704)		(1.1)		(4,859)		(0.7)		(2,845)		58.6
Net income attributable to AMC Networks' stockholders	Net income attributable to AMC Networks' stockholders	$	61,640	9.4	%	$	116,923	16.3	%	$	(55,283)	(47.3)	%	Net income attributable to AMC Networks' stockholders	$	87,021	12.6	%	$	68,667	9.4	%	$	18,354	26.7	%

3026

~~National Networks~~Domestic Operations Segment Results

The following table sets forth our ~~National Networks~~Domestic Operations segment results for the periods indicated.

Three Months Ended September 30,
2020 2019
(In thousands) Amount % of
Revenues,
net Amount % of
Revenues,
net $ change % change
Revenues, net $ 462,149 100.0 % $ 558,992 100.0 % $ (96,843) (17.3) %
Operating expenses:
Technical and operating (excluding depreciation and amortization) 222,589 48.2 260,400 46.6 (37,811) (14.5)
Selling, general and administrative 90,305 19.5 101,866 18.2 (11,561) (11.3)
Depreciation and amortization 13,422 2.9 8,048 1.4 5,374 66.8
Restructuring and other related charges 5,991 1.3 6,199 1.1 (208) n/m
Operating income $ 129,842 28.1 % $ 182,479 32.6 % $ (52,637) (28.8) %
Share-based compensation expense 9,922 2.1 11,684 2.1 (1,762) (15.1)
Depreciation and amortization 13,422 2.9 8,048 1.4 5,374 66.8
Restructuring and other related charges 5,991 1.3 6,199 1.1 % $ (208) n/m
AOI $ 159,177 34.4 % $ 208,410 37.3 % $ (49,233) (23.6) %


	Three Months Ended March 31,
	2021				2020
(In thousands)	Amount		% of Revenues, net		Amount		% of Revenues, net		$ change		% change
Revenues, net	$	573,969	100.0	%	$	611,893	100.0	%	$	(37,924)	(6.2)	%
Operating expenses:
Technical and operating (excluding depreciation and amortization)	211,961		36.9		263,348		43.0		(51,387)		(19.5)
Selling, general and administrative	129,749		22.6		111,512		18.2		18,237		16.4
Depreciation and amortization	13,373		2.3		10,951		1.8		2,422		22.1
Restructuring and other related charges	2,427		0.4		1,482		0.2		945		n/m
Operating income	$	216,459	37.7	%	$	224,600	36.7	%	$	(8,141)	(3.6)	%
Share-based compensation expense	5,639		1.0		2,724		0.4		2,915		107.0
Depreciation and amortization	13,373		2.3		10,951		1.8		2,422		22.1
Restructuring and other related charges	2,427		0.4		1,482		0.2		945		n/m
Majority-owned equity investees AOI	4,635		0.8		1,276		0.2		3,359		263.2
AOI	$	242,533	42.3	%	$	241,033	39.4	%	$	1,500	0.6	%

International and Other Segment Results

The following table sets forth our International ~~Networks~~and Other segment results for the periods indicated.


		Three Months Ended September 30,													Three Months Ended March 31,
		2020				2019									2021				2020
(In thousands)	(In thousands)	Amount		% of Revenues, net		Amount		% of Revenues, net		$ change		% change		(In thousands)	Amount		% of Revenues, net		Amount		% of Revenues, net		$ change		% change
Revenues, net	Revenues, net	$	199,292	100.0	%	$	182,839	100.0	%	$	16,453	9.0	%	Revenues, net	$	121,167	100.0	%	$	124,828	100.0	%	$	(3,661)	(2.9)	%
Operating expenses:	Operating expenses:													Operating expenses:
Technical and operating (excluding depreciation and amortization)	Technical and operating (excluding depreciation and amortization)	117,041		58.7		115,250		63.0		1,791		1.6		Technical and operating (excluding depreciation and amortization)	76,309		63.0		80,136		64.2		(3,827)		(4.8)
Selling, general and administrative	Selling, general and administrative	58,513		29.4		57,527		31.5		986		1.7		Selling, general and administrative	22,526		18.6		27,458		22.0		(4,932)		(18.0)
Depreciation and amortization	Depreciation and amortization	14,125		7.1		17,571		9.6		(3,446)		(19.6)		Depreciation and amortization	4,949		4.1		8,896		7.1		(3,947)		(44.4)

Impairment charges														Impairment charges	16,055		13.3		—		—		16,055		n/m
Restructuring and other related charges	Restructuring and other related charges	(1,585)		(0.8)		3,992		2.2		(5,577)		n/m		Restructuring and other related charges	4,490		3.7		3,977		3.2		513		12.9
Operating loss	Operating loss	$	11,198	5.6	%	$	(11,501)	(6.3)	%	$	22,699	n/m		Operating loss	$	(3,162)	(2.6)	%	$	4,361	3.5	%	$	(7,523)	n/m
Share-based compensation expense	Share-based compensation expense	2,472		1.2		2,157		1.2		315		14.6		Share-based compensation expense	1,231		1.0		609		0.5		622		102.1
Depreciation and amortization	Depreciation and amortization	14,125		7.1		17,571		9.6		(3,446)		(19.6)		Depreciation and amortization	4,949		4.1		8,896		7.1		(3,947)		(44.4)
Impairment and other charges														Impairment and other charges	16,055		13.3		—		—		16,055		n/m
Restructuring and other related charges	Restructuring and other related charges	(1,585)		(0.8)		3,992		2.2		(5,577)		n/m		Restructuring and other related charges	4,490		3.7		3,977		3.2		513		12.9
Majority-owned equity investees AOI		1,667		0.8		1,246		0.7		421		33.8

AOI	AOI	$	27,877	14.0	%	$	13,465	7.4	%	$	14,412	107.0	%	AOI	$	23,563	19.4	%	$	17,843	14.3	%	$	5,720	32.1	%

3127

Revenues, net

Revenues, net decreased ~~$64.6~~$42.6 million to ~~$654.0~~$691.7 million for the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the three months ended ~~September 30, 2019.~~March 31, 2020. The net change by segment was as follows:


		Three Months Ended September 30,													Three Months Ended March 31,
(In thousands)	(In thousands)	2020		% of total		2019		% of total		$ change		% change		(In thousands)	2021		% of total		2020		% of total		$ change		% change
National Networks		$	462,149	70.7	%	$	558,992	77.8	%	$	(96,843)	(17.3)	%
Domestic Operations														Domestic Operations	$	573,969	83.1	%	$	611,893	83.4	%	$	(37,924)	(6.2)	%
International and Other	International and Other	199,292		30.5		182,839		25.4		16,453		9.0		International and Other	121,167		17.5		124,828		17.0		(3,661)		(2.9)
Inter-segment eliminations		(7,426)		(1.1)		(23,234)		(3.2)		15,808		(68.0)
Inter-segment Eliminations														Inter-segment Eliminations	(3,395)		(0.5)		(2,346)		(0.3)		(1,049)		44.7
Consolidated revenues, net	Consolidated revenues, net	$	654,015	100.0	%	$	718,597	100.0	%	$	(64,582)	(9.0)	%	Consolidated revenues, net	$	691,741	100.1	%	$	734,375	100.1	%	$	(42,634)	(5.8)	%

~~National Networks~~Domestic Operations

The decrease in ~~National Networks~~Domestic Operations revenues, net was attributable to the following:


		Three Months Ended September 30,													Three Months Ended March 31,
(In thousands)	(In thousands)	2020		% of total		2019		% of total		$ change		% change		(In thousands)	2021		% of total		2020		% of total		$ change		% change
Advertising	Advertising	$	164,216	35.5	%	$	194,452	34.8	%	$	(30,236)	(15.5)	%	Advertising	$	199,142	34.7	%	$	213,226	34.8	%	$	(14,084)	(6.6)	%
Distribution		297,933		64.5		364,540		65.2		(66,607)		(18.3)
Distribution and other														Distribution and other	374,827		65.3		398,667		65.2		(23,840)		(6.0)
		$	462,149	100.0	%	$	558,992	100.0	%	$	(96,843)	(17.3)	%		$	573,969	100.0	%	$	611,893	100.0	%	$	(37,924)	(6.2)	%

•The decrease of ~~$30.2~~$14.1 million in advertising revenues was primarily attributable to a reduction in the number of episodes of our original programming ~~primarily related to the impact of the COVID-19 pandemic,~~ and lower ~~ratings.~~ratings, partially offset by higher pricing. Most of our advertising revenues vary based on the timing of our original programming series and the popularity of our programming as measured by Nielsen. Due to these factors, we expect advertising revenues to vary from quarter to quarter.

•Distribution revenues decreased ~~$66.6~~$23.8 million due to a 54% decrease ~~of $41.1 million~~ in content licensing revenues ~~due~~related to ~~a decrease in~~the timing and availability of the number of original programs we ~~distributed. Subscription~~distributed as compared to the prior comparable period as a result of COVID-19 pandemic production delays, partially offset by a 14% increase in subscription revenues ~~decreased $25.5 million primarily~~ due to ~~lower subscribers. Distribution~~an increase in subscribers to our streaming services. Subscription revenues may vary based on the impact of renewals of affiliation agreements and streaming service subscription trends, and content licensing revenues vary based on the timing of availability of our programming to distributors. Because of these factors, we expect distribution revenues to vary from quarter to quarter.

International and Other

The ~~increase~~decrease in International and Other revenues, net was attributable to the following:


		Three Months Ended September 30,													Three Months Ended March 31,
(In thousands)	(In thousands)	2020		% of total		2019		% of total		$ change		% change		(In thousands)	2021		% of total		2020		% of total		$ change		% change
Advertising	Advertising	$	18,923	9.5	%	$	18,872	10.3	%	$	51	0.3	%	Advertising	$	21,571	17.8	%	$	19,364	15.5	%	$	2,207	11.4	%
Distribution		180,369		90.5		163,967		89.7		16,402		10.0
Distribution and other														Distribution and other	99,596		82.2		105,464		84.5		(5,868)		(5.6)
		$	199,292	100.0	%	$	182,839	100.0	%	$	16,453	9.0	%		$	121,167	100.0	%	$	124,828	100.0	%	$	(3,661)	(2.9)	%

~~Advertising~~The increase in advertising revenues ~~were consistent with the prior comparable period.~~is primarily related to a favorable impact of foreign currency translation. Distribution revenues ~~increased $23.7 million~~decreased at ~~AMC Networks SVOD driven by additional subscribers~~25/7 Media related to the temporary closure of comedy venues (until the spin-off in March 2021) as a result of the COVID-19 pandemic, and ~~$6.4 million~~a decrease at ~~IFC Films. These increases were~~AMCNI, partially offset by a ~~decrease of $11.7 million at Levity, due to the~~favorable impact of ~~the COVID-19 pandemic on its operations, which resulted in a temporary halt in production activities and closure of comedy venues, as well as a decrease of $5.4 million at AMCNI.~~foreign currency fluctuations.

Technical and operating expense (excluding depreciation and amortization)

The components of technical and operating expense primarily include the amortization and ~~impairments or~~ write-offs of program rights, such as those for original programming, feature films and licensed series, participation and residual costs, distribution and production related costs and program ~~operating~~delivery costs, such as ~~origination,~~ transmission, ~~uplinking~~encryption, hosting, and ~~encryption.~~formatting.

Technical and operating expense (excluding depreciation and amortization) decreased ~~$21.2~~$63.5 million to ~~$333.8~~$280.6 million for the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the three months ended ~~September 30, 2019.~~March 31, 2020. The net change by segment was as follows:

3228


		Three Months Ended September 30,											Three Months Ended March 31,
(In thousands)	(In thousands)	2020			2019			$ change		% change		(In thousands)	2021			2020			$ change		% change
National Networks		$	222,589		$	260,400		$	(37,811)	(14.5)	%
Domestic Operations												Domestic Operations	$	211,961		$	263,348		$	(51,387)	(19.5)	%
International and Other	International and Other	117,041			115,250			1,791		1.6	%	International and Other	76,309			80,136			(3,827)		(4.8)
Inter-segment eliminations		(5,814)			(20,658)			14,844		n/m
Inter-segment Eliminations												Inter-segment Eliminations	(7,698)			576			(8,274)		n/m
Total	Total	$	333,816		$	354,992		$	(21,176)	(6.0)	%	Total	$	280,572		$	344,060		$	(63,488)	(18.5)	%
Percentage of revenues, net	Percentage of revenues, net	51.0		%	49.4		%					Percentage of revenues, net	40.6		%	46.9		%

~~National Networks~~Domestic Operations

The decrease in technical and operating expense of ~~$37.8~~$51.4 million was due to a decrease in program ~~rights~~ amortization~~of $25.2 million~~ primarily attributable to the mix of original programming as compared to the prior comparable period, which was impacted by the production stoppages resulting from the COVID-19 pandemic. In addition, other direct programming costs decreased $12.6 million. Program rights amortization expense includesperiod. There were no significant program write-offs ~~of $19.6 million and $1.3 million for the three months ended September 30, 2020 and September 30, 2019, respectively. Program rights~~in either period. Programming write-offs are based on management's periodic assessment of programming usefulness.

There may be significant changes in the level of our technical and operating expenses due to content acquisition and/or original programming costs and/or the impact of management's periodic assessment of programming usefulness. Such costs will also fluctuate with the level of revenues derived from owned original programming in each period as these costs are amortized based on the film-forecast-computation method. As additional competition for programming increases and alternate distribution technologies continue to develop in the industry, costs for content acquisition and original programming may increase.

International and Other

~~Technical~~The decrease in technical and operating expense ~~increased $1.8~~of $3.8 million million was primarily ~~related~~due to ~~$3.5 million increase in program amortization at IFC Films. This increase was partially offset by~~ a decrease at ~~Levity of $2.4 million due~~25/7 Media related to the ~~impact~~timing of ~~the COVID-19 pandemic on its operations, which resulted in productions stoppages and closure of comedy venues.~~productions.

Selling, general and administrative expense

The components of selling, general and administrative expense primarily include sales, marketing and advertising expenses, administrative costs and costs of non-production facilities.

Selling, general and administrative expense ~~decreased $10.6~~increased $6.9 million to ~~$148.8~~$191.5 million for the three months ended ~~September 30, 2020,~~March 31, 2021, as compared to the three months ended ~~September 30, 2019.~~March 31, 2020. The net change by segment was as follows:


		Three Months Ended September 30,											Three Months Ended March 31,
(In thousands)	(In thousands)	2020			2019			$ change		% change		(In thousands)	2021			2020			$ change		% change
National Networks		$	90,305		$	101,866		$	(11,561)	(11.3)	%
Domestic Operations												Domestic Operations	$	129,749		$	111,512		$	18,237	16.4	%
International and Other	International and Other	58,513			57,527			986		1.7		International and Other	22,526			27,458			(4,932)		(18.0)
Inter-segment eliminations		(49)			(36)			(13)		36.1
Corporate / Inter-segment Eliminations												Corporate / Inter-segment Eliminations	39,260			45,679			(6,419)		(14.1)
Total	Total	$	148,769		$	159,357		$	(10,588)	(6.6)	%	Total	$	191,535		$	184,649		$	6,886	3.7	%
Percentage of revenues, net	Percentage of revenues, net	22.7		%	22.2		%					Percentage of revenues, net	27.7		%	25.1		%

~~National Networks~~Domestic Operations

Selling, general and administrative expense ~~decreased $11.6~~increased $18.2 million principally due to ~~a decrease in~~higher advertising and ~~marketing~~subscriber acquisition expenses ~~of $5.9 million~~ related to ~~the mix of original programming, which was impacted by the COVID-19 pandemic, as well as an overall decrease in corporate related expenses.~~our streaming services.

There may be significant changes in the level of our selling, general and administrative expense from quarter to quarter and year to year due to the timing of ~~promotion~~promotions and marketing of original programming series and subscriber retention marketing efforts.

International and Other

Selling, general and administrative expense ~~increased $1.0~~decreased $4.9 million ~~resulting from an increase of $7.8 million at AMC Networks SVOD~~ primarily ~~related~~due to ~~advertising and marketing expenses, partially offset by~~ a decrease ~~of $5.2 million~~in administrative expense at ~~Levity primarily~~25/7 Media related to the ~~impact~~temporary closure of comedy venues (until the spin-off in March 2021) as a result of the COVID-19 pandemic.

Corporate / Inter-segment eliminations

The decrease in corporate charges is due primarily to lower stock-based compensation expense.

Depreciation and amortization

Depreciation and amortization expense ~~increased $1.9~~decreased $1.5 million to ~~$27.5~~$25.2 million for the three months ended ~~September 30, 2020~~March 31, 2021, as compared to the three months ended ~~September 30, 2019.~~March 31, 2020. The net change by segment was as follows:


		Three Months Ended September 30,									Three Months Ended March 31,
(In thousands)	(In thousands)	2020		2019		$ change		% change		(In thousands)	2021		2020		$ change		% change
National Networks		$	13,422	$	8,048	$	5,374	66.8	%
Domestic Operations										Domestic Operations	$	13,373	$	10,951	$	2,422	22.1	%
International and Other	International and Other	14,125		17,571		(3,446)		(19.6)		International and Other	4,949		8,896		(3,947)		(44.4)
Corporate / Inter-segment Eliminations										Corporate / Inter-segment Eliminations	6,924		6,883		41		0.6
		$	27,547	$	25,619	$	1,928	7.5	%		$	25,246	$	26,730	$	(1,484)	(5.6)	%

The increase in depreciation and amortization expense in the National Networks segment was primarily due to depreciation of equipment at our AMC Networks Broadcasting and Technology facilities. The decrease in depreciation and amortization expense in the International and Other segment was primarily due to the lower carrying values of long-lived assets resulting from the impairment charges recognized in June 2020.

~~Restructuring and other related charges~~

~~Restructuring and other related charges of $4.4 million for the three months ended September 30, 2020 primarily related to severance associated with restructuring activities.~~

Restructuring and other related charges of $10.2 million for the three months ended September 30, 2019 related to the management reorganization commenced in September 2019. In connection with this reorganization, a number of roles were eliminated to improve the effectiveness of management while reducing the cost structure of the Company. As a result, we incurred restructuring charges of $10.2 million, of which $6.2 million was attributable to the National Networks segment and $4.0 million was attributable to the International and Other segment.

~~Operating Income (Loss)~~

Three Months Ended September 30,
(In thousands) 2020 2019 $ change % change
National Networks $ 129,842 $ 182,479 $ (52,637) (28.8) %
International and Other 11,198 (11,501) 22,699 n/m
Inter-segment Eliminations (1,563) (2,540) 977 n/m
$ 139,477 $ 168,438 $ (28,961) (17.2) %

The decrease in operating income at the National Networks segment was primarily attributable to a decrease in revenue of $96.8 million, partially offset by a decrease in technical and operating expense of $37.8 million and a decrease in selling, general and administrative expense of $11.6 million.

The increase in operating income at the International and Other segment was primarily attributable an increase in revenues of $16.5 million, a decrease in restructuring and other related charges of $5.6 million, and a decrease in depreciation and amortization of $3.4 million.

~~AOI~~

~~The following is a reconciliation of our consolidated operating income to AOI:~~

Three Months Ended September 30,
(In thousands) 2020 2019 $ change % change
Operating income $ 139,477 $ 168,438 $ (28,961) (17.2) %
Share-based compensation expense 12,394 13,841 (1,447) (10.5)
Depreciation and amortization 27,547 25,619 1,928 7.5
Restructuring and other related charges 4,406 10,191 (5,785) (56.8)
Majority-owned equity investees AOI 1,667 1,246 421 33.8
AOI $ 185,491 $ 219,335 $ (33,844) (15.4) %

~~AOI decreased $33.8 million for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. The net change by segment was as follows:~~

Three Months Ended September 30,
(In thousands) 2020 2019 $ change % change
National Networks $ 159,177 $ 208,410 $ (49,233) (23.6) %
International and Other 27,877 13,465 14,412 107.0
Inter-segment eliminations (1,563) (2,540) 977 n/m
AOI $ 185,491 $ 219,335 $ (33,844) (15.4) %

~~The change in AOI at both the National Networks and International and Other segments is principally due to the change in operating income.~~

~~As a result of the factors discussed above impacting the variability in revenues and operating expenses, we expect AOI to vary from quarter to quarter.~~

~~Interest expense, net~~

~~The decrease in interest expense, net of $4.6 million is primarily due to lower average outstanding balances.~~

~~Miscellaneous, net~~

Miscellaneous, net was income of $11.1 million for the three months ended September 30, 2020 as compared to expense of $1.5 million for the three months ended September 30, 2019. The increase in miscellaneous, net income of $12.6 million was primarily related to net unrealized gains of $6.0 mill~~ion from~~ certain marketable equity securities and investments, and a favorable variance of $7.0 million in the foreign currency remeasurement of monetary assets and liabilities (principally intercompany loans) that are denominated in currencies other than the underlying functional currency of the applicable entity.

~~Income tax expense~~

For the three months ended September 30, 2020, income tax expense was $52.2 million representing an effective tax rate of 43%. The effective tax rate differs from the federal statutory rate of 21% primarily due to tax expense of $20.0 million resulting from an increase in valuation allowances for foreign taxes and U.S. foreign tax credits, tax expense from foreign operations of $0.4 million, state and local income tax expense of $3.5 million, tax expense of $1.7 million related to non-deductible compensation and tax expense of $2.7 million relating to uncertain tax positions (including accrued interest). The increase in valuation allowance is primarily due to a change in judgement about the realizability of foreign net operating losses and other deferred tax assets. Management considers the scheduled reversal of deferred tax liabilities (including the effect in available carryback and carryforward periods), projected taxable income, and tax-planning strategies in making this assessment.

For the three months ended September 30, 2019, income tax expense was $8.7 million representing an effective tax rate of 7%. The effective tax rate differs from the federal statutory rate of 21% primarily due to a tax benefit of $13.6 million from foreign operations and a tax benefit of $11.5 million from a deferred tax adjustment to record the impact of an investment tax credit under the deferral method of accounting, partially offset by state and local income tax expense of $4.3 million and tax expense of $2.0 million resulting from a net increase in valuation allowances for foreign tax assets. The decrease in foreign operations is primarily due to a deferred tax benefit resulting from the reorganization of intellectual property amongst the Company's international subsidiaries.

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019~~

~~The following table sets forth our consolidated results of operations for the periods indicated.~~

Nine Months Ended September 30,
2020 2019
(In thousands) Amount % of
Revenues,
net Amount % of
Revenues,
net $ change % change
Revenues, net $ 2,034,681 100.0 % $ 2,275,117 100.0 % $ (240,436) (10.6) %
Operating expenses:
Technical and operating (excluding depreciation and amortization) 960,379 47.2 1,080,763 47.5 (120,384) (11.1)
Selling, general and administrative 488,581 24.0 505,233 22.2 (16,652) (3.3)
Depreciation and amortization 80,182 3.9 75,568 3.3 4,614 6.1
Impairment charges 130,411 6.4 — — 130,411 n/m
Restructuring and other related charges 13,879 0.7 29,995 1.3 (16,116) (53.7)
Total operating expenses 1,673,432 82.2 1,691,559 74.4 (18,127) (1.1)
Operating income 361,249 17.8 583,558 25.6 (222,309) (38.1)
Other income (expense):
Interest expense, net (94,007) (4.6) (105,411) (4.6) 11,404 (10.8)
Loss on extinguishment of debt (2,908) (0.1) — — (2,908) n/m
Miscellaneous, net (10,088) (0.5) (16,972) (0.7) 6,884 (40.6)
Total other income (expense) (107,003) (5.3) (122,383) (5.4) 15,380 (12.6)
Net income from operations before income taxes 254,246 12.5 461,175 20.3 (206,929) (44.9)
Income tax expense (95,490) (4.7) (53,807) (2.4) (41,683) 77.5
Net income including noncontrolling interests 158,756 7.8 407,368 17.9 (248,612) (61.0)
Net income attributable to noncontrolling interests (13,488) (0.7) (18,305) (0.8) 4,817 (26.3)
Net income attributable to AMC Networks' stockholders $ 145,268 7.1 % $ 389,063 17.1 % $ (243,795) (62.7) %

~~National Networks Segment Results~~

~~The following table sets forth our National Networks segment results for the periods indicated.~~

Nine Months Ended September 30,
2020 2019
(In thousands) Amount % of
Revenues,
net Amount % of
Revenues,
net $ change % change
Revenues, net $ 1,524,938 100.0 % $ 1,779,850 100.0 % $ (254,912) (14.3) %
Operating expenses:
Technical and operating (excluding depreciation and amortization) 663,334 43.5 770,807 43.3 (107,473) (13.9)
Selling, general and administrative 309,659 20.3 329,248 18.5 (19,589) (5.9)
Depreciation and amortization 30,633 2.0 24,839 1.4 5,794 23.3
Restructuring and other related charges 8,714 0.6 6,776 0.4 1,938 n/m
Operating income $ 512,598 33.6 % $ 648,180 36.4 % $ (135,582) (20.9) %
Share-based compensation expense 34,754 2.3 41,774 2.3 (7,020) (16.8)
Depreciation and amortization 30,633 2.0 24,839 1.4 5,794 23.3
Restructuring and other related charges 8,714 0.6 6,776 0.4 1,938 n/m
AOI $ 586,699 38.5 % $ 721,569 40.5 % $ (134,870) (18.7) %

~~International and Other Segment Results~~

~~The following table sets forth our International and Other segment results for the periods indicated.~~

Nine Months Ended September 30,
2020 2019
(In thousands) Amount % of
Revenues,
net Amount % of
Revenues,
net $ change % change
Revenues, net $ 530,765 100.0 % $ 533,454 100.0 % $ (2,689) (0.5) %
Operating expenses:
Technical and operating (excluding depreciation and amortization) 313,867 59.1 335,244 62.8 (21,377) (6.4)
Selling, general and administrative 178,999 33.7 176,098 33.0 2,901 1.6
Depreciation and amortization 49,549 9.3 50,729 9.5 (1,180) (2.3)
Impairment charges 130,411 24.6 — — 130,411 n/m
Restructuring and other related charges 5,165 1.0 23,915 4.5 (18,750) (78.4)
Operating loss $ (147,226) (27.7) % $ (52,532) (9.8) % $ (94,694) n/m
Share-based compensation expense 8,387 1.6 8,691 1.6 (304) (3.5)
Depreciation and amortization 49,549 9.3 50,729 9.5 (1,180) (2.3)
Impairment charges 130,411 24.6 — — 130,411 n/m
Restructuring and other related charges 5,165 1.0 23,915 4.5 (18,750) (78.4)
Majority-owned equity investees AOI 4,361 0.8 4,434 0.8 (73) (1.6)
AOI $ 50,647 9.5 % $ 35,237 6.6 % $ 15,410 43.7 %

~~Revenues, net~~

Revenues, net decreased $240.4 million to $2,034.7 million for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019. The net change by segment was as follows:

Nine Months Ended September 30,
(In thousands) 2020 % of total 2019 % of total $ change % change
National Networks $ 1,524,938 75.0 % $ 1,779,850 78.3 % $ (254,912) (14.3) %
International and Other 530,765 26.1 533,454 23.4 (2,689) (0.5)
Inter-segment eliminations (21,022) (1.0) (38,187) (1.7) 17,165 (44.9)
Consolidated revenues, net $ 2,034,681 100.1 % $ 2,275,117 100.0 % $ (240,436) (10.6) %

~~National Networks~~

~~The decrease in National Networks revenues, net was attributable to the following:~~

Nine Months Ended September 30,
(In thousands) 2020 % of total 2019 % of total $ change % change
Advertising $ 564,876 37.0 % $ 653,031 36.7 % $ (88,155) (13.5) %
Distribution 960,062 63.0 1,126,819 63.3 (166,757) (14.8)
$ 1,524,938 100.0 % $ 1,779,850 100.0 % $ (254,912) (14.3) %

•The decrease of $88.2 million in advertising revenues was primarily attributable to a reduction in the number of episodes of our original programming primarily related to the impact of the COVID-19 pandemic, and lower ratings. Most of our advertising revenues vary based on the timing of our original programming series and the popularity of our programming as measured by Nielsen. Due to these factors, we expect advertising revenues to vary from quarter to quarter.

•Distribution revenues decreased $166.8 million due to a decrease in content licensing revenues of $91.3 million due to a decrease in the number of original programs we distributed and a decrease of $75.4 million in subscription revenues as compared to the prior comparable period primarily due to lower subscribers. Subscription revenues may vary based on the impact of renewals of affiliation agreements and content licensing revenues vary based on the timing of availability of our programming to distributors. Because of these factors, we expect distribution revenues to vary from quarter to quarter.

~~International and Other~~

~~The decrease in International and Other revenues, net was attributable to the following:~~

Nine Months Ended September 30,
(In thousands) 2020 % of total 2019 % of total $ change % change
Advertising $ 53,097 10.0 % $ 63,613 11.9 % $ (10,516) (16.5) %
Distribution 477,668 90.0 469,841 88.1 7,827 1.7
$ 530,765 100.0 % $ 533,454 100.0 % $ (2,689) (0.5) %

Advertising revenues decreased $9.5 million at AMCNI, excluding the impact of foreign currency fluctuations, primarily related to lower demand resulting from the impact of the COVID-19 pandemic. Foreign currency translation had an unfavorable impact to advertising revenues of $1.0 million. Distribution revenues increased $54.8 million at AMC Networks SVOD. This increase was partially offset by a decrease of $39.0 million at Levity, due to the impact of the COVID-19 pandemic on its operations, which resulted in a temporary halt in production activities and closure of comedy venues, as well as a decrease of $11.3 million at AMCNI, excluding the impact of foreign currency fluctuations. Foreign currency translation had an unfavorable impact to distribution revenues of $2.8 million.

~~Technical and operating expense (excluding depreciation and amortization)~~

The components of technical and operating expense primarily include the amortization and write-offs of program rights, such as those for original programming, feature films and licensed series, participation and residual costs, distribution and production related costs and program delivery costs, such as transmission, encryption, hosting, and formatting.

Technical and operating expense (excluding depreciation and amortization) decreased $120.4 million to $960.4 million for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019. The net change by segment was as follows:

Nine Months Ended September 30,
(In thousands) 2020 2019 $ change % change
National Networks $ 663,334 $ 770,807 $ (107,473) (13.9) %
International and Other 313,867 335,244 (21,377) (6.4)
Inter-segment eliminations (16,822) (25,288) 8,466 (33.5)
Total $ 960,379 $ 1,080,763 $ (120,384) (11.1) %
Percentage of revenues, net 47.2 % 47.5 %

~~National Networks~~

The decrease in technical and operating expense of $107.5 million was due to a decrease in program amortization of $92.2 million primarily attributable to the mix of original programming as compared to the prior comparable period, which was impacted by the production stoppages resulting from the COVID-19 pandemic. In addition, other direct programming costs decreased $15.2 million. Program rights amortization expense includes write-offs of $31.2 million for the nine months ended September 30, 2020 as compared to program rights write-offs of ~~$14.7 million for~~ ~~the nine months ended September 30, 2019. Programming write-offs are based on management's periodic assessment of programming usefulness.~~

~~International and Other~~

Technical and operating expense decreased $18.3 million related to Levity, $7.3 million at AMCNI and $1.3 million at IFC Films. The decrease at Levity is due to the impact of the COVID-19 pandemic on its operations, which resulted in production stoppages and temporary closure of comedy venues. These decreases were partially offset by an increase of $7.0 million at AMC Networks SVOD. Foreign currency translation had a favorable impact to the change in technical and operating expense of $2.7 million.

~~Selling, general and administrative expense~~

~~The components of selling, general and administrative expense primarily include sales, marketing and advertising expenses, administrative costs and costs of non-production facilities.~~

Selling, general and administrative expense decreased $16.7 million to $488.6 million for the nine months ended September 30, 2020, as compared to the nine months ended September 30, 2019. The net change by segment was as follows:

Nine Months Ended September 30,
(In thousands) 2020 2019 $ change % change
National Networks $ 309,659 $ 329,248 $ (19,589) (5.9) %
International and Other 178,999 176,098 2,901 1.6
Inter-segment eliminations (77) (113) 36 (31.9)
Total $ 488,581 $ 505,233 $ (16,652) (3.3) %
Percentage of revenues, net 24.0 % 22.2 %

~~National Networks~~

Selling, general and administrative expense decreased $19.6 million principally due to a decrease in advertising and marketing expenses of $18.7 million related to the mix of original programming, which was impacted by the COVID-19 pandemic.

There may be significant changes in the level of our selling, general and administrative expense from quarter to quarter and year to year due to the timing of promotion and marketing of original programming series and subscriber retention marketing efforts.

~~International and Other~~

Selling, general and administrative expense increased $2.9 million. The increase in selling, general and administrative expense related to $25.2 million at AMC Networks SVOD primarily related to advertising and marketing expenses, which was partially offset by decreases of $11.6 million at Levity primarily related to the impact of the COVID-19 pandemic and $7.7

million at AMCNI primarily related to advertising and marketing expenses. Foreign currency translation had a favorable impact to the change in selling, general and administrative expense of $2.1 million.

~~Depreciation and amortization~~

Depreciation and amortization expense increased $4.6 million to $80.2 million for the nine months ended September 30, 2020, as compared to the nine months ended September 30, 2019. The net change by segment was as follows:

Nine Months Ended September 30,
(In thousands) 2020 2019 $ change % change
National Networks $ 30,633 $ 24,839 $ 5,794 23.3 %
International and Other 49,549 50,729 (1,180) (2.3)
$ 80,182 $ 75,568 $ 4,614 6.1 %

~~The increase in depreciation and amortization expense in the National Networks~~Domestic Operations segment was primarily due to depreciation of equipment at our AMC Networks Broadcasting and Technology facilities. The decrease in depreciation and amortization expense in the International and Other segment was primarily due to the lower carrying values of long-lived assets resulting from the impairment charge recognized in June 2020.

Impairment and other charges

In ~~June 2020, as~~March 2021, the Company completed a spin-off of the live comedy venue and talent management businesses ("LiveCo") of Levity Entertainment Group, LLC. In connection with the transaction, the Company effectively exchanged all of its rights and interests in LiveCo for the release of our obligations, principally related to leases. As a result of the continuing impact of the COVID-19 pandemic, we qualitatively assessed whether it was more likely than not that goodwill and long-lived assets were impaired. Based on our current projections and updated forecasts, we determined that sufficient indicators of potential impairment of long-lived assets existed and, in connection with the preparation of the Company's second quarter financial information,this divestiture, the Company ~~performed~~recognized a ~~recoverability test~~loss on the disposal of ~~certain long-lived asset groups within~~$16.1 million reflecting the ~~AMCNI reporting unit. This resulted in an impairment charge~~net assets transferred (consisting of ~~$105.3 million primarily related to certain identifiable intangible assets, as well as~~ property and equipment, ~~and operating~~ lease right-of-use ~~assets.~~assets and intangibles, partially offset by lease and other obligations), which is included in Impairment and other charges. The Company ~~then performed a goodwill impairment test and determined that~~retained its interest in the ~~carrying value~~production services business of Levity Entertainment Group, LLC, which was renamed 25/7 Media Holdings LLC following the ~~AMCNI reporting unit exceeded its fair value, resulting in an impairment charge of $25.1 million.~~spin-off.

Restructuring and other related charges

Restructuring and other related charges of $8.6 million for the three months ended March 31, 2021 consisted of $4.1 million of severance costs associated with the restructuring plan announced in November 2020 and $4.5 million at AMCNI related to the termination of distribution in certain international territories.

Restructuring and other related charges of ~~$13.9~~$6.0 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 primarily consisted of charges at AMCNI of ~~$6.2~~$4.0 million related to costs associated with termination of distribution in certain territories, ~~and charges of $7.6~~as well as $2.0 million related to ~~severance associated with restructuring activities.~~

Restructuring expense of $30.0 million for the nine months ended September 30, 2019 primarily related to the management re-organization commenced in September 2019. In connection with this re-organization, a number of roles were eliminated to improve the effectiveness of management while reducing the cost structure of the Company. As a result, we incurred restructuring charges of $10.2 million. In addition, charges associated with the AMC Networks SVOD re-organization consisted of severance and other personnel related costs of $1.3 million and programming write-offs of $13.0 million related to a change in programming strategy. In connection with restructuring activities announced in 2018, we incurred additional severance and personnel related costs of $5.5 million for the nine months ended September 30, 2019.costs.

Operating Income (Loss)


		Nine Months Ended September 30,									Three Months Ended March 31,
(In thousands)	(In thousands)	2020		2019		$ change		% change		(In thousands)	2021		2020		$ change		% change
National Networks		$	512,598	$	648,180	$	(135,582)	(20.9)	%
Domestic Operations										Domestic Operations	$	216,459	$	224,600	$	(8,141)	(3.6)	%
International and Other	International and Other	(147,226)		(52,532)		(94,694)		n/m		International and Other	(3,162)		4,361		(7,523)		n/m
Inter-segment Eliminations		(4,123)		(12,090)		7,967		n/m
Corporate / Inter-segment Eliminations										Corporate / Inter-segment Eliminations	(43,589)		(55,991)		12,402		n/m
		$	361,249	$	583,558	$	(222,309)	(38.1)	%		$	169,708	$	172,970	$	(3,262)	(1.9)	%

The decrease in operating income at the ~~National Networks~~Domestic Operations segment was primarily attributable to a decrease in revenue of ~~$254.9~~$37.9 million and an increase in ~~restructuring~~selling, general and ~~other related charges~~administrative expense of ~~1.9~~$18.2 million, partially offset by a decrease in technical and operating expense of ~~107.5 million and a~~$51.4 million.

The decrease in ~~selling, general and administrative expense of $19.6 million.~~

~~The increase in~~ operating ~~losses~~income at the International and Other segment was primarily attributable to ~~the~~ impairment and other charges of ~~$130.4 million and a decrease in revenues of $2.7~~$16.1 million, partially offset by ~~a decrease~~decreases in technical and operating expense of ~~$21.4~~$3.8 million, and ~~a decrease in restructuring~~selling, general and ~~other related charges~~administrative expense of ~~$18.8~~$4.9 million.

4030

AOI

The following is a reconciliation of our consolidated operating income to AOI:


		Nine Months Ended September 30,									Three Months Ended March 31,
(In thousands)	(In thousands)	2020		2019		$ change		% change		(In thousands)	2021		2020		$ change		% change
Operating income	Operating income	$	361,249	$	583,558	$	(222,309)	(38.1)	%	Operating income	$	169,708	$	172,970	$	(3,262)	(1.9)	%
Share-based compensation expense	Share-based compensation expense	43,141		50,465		(7,324)		(14.5)		Share-based compensation expense	13,446		15,512		(2,066)		(13.3)
Depreciation and amortization	Depreciation and amortization	80,182		75,568		4,614		6.1		Depreciation and amortization	25,246		26,730		(1,484)		(5.6)
Impairment charges		130,411		—		130,411		n/m
Impairment and other charges										Impairment and other charges	16,055		—		16,055		n/m
Restructuring and other related charges	Restructuring and other related charges	13,879		29,995		(16,116)		(53.7)		Restructuring and other related charges	8,625		5,966		2,659		44.6
Majority-owned equity investees AOI	Majority-owned equity investees AOI	4,361		4,434		(73)		(1.6)		Majority-owned equity investees AOI	4,635		1,276		3,359		263.2
Cloud computing amortization										Cloud computing amortization	264		—		264		n/m
AOI	AOI	$	633,223	$	744,020	$	(110,797)	(14.9)	%	AOI	$	237,979	$	222,454	$	15,525	7.0	%

AOI ~~decreased $110.8~~increased $15.5 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 as compared to the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The net change by segment was as follows:


		Nine Months Ended September 30,									Three Months Ended March 31,
(In thousands)	(In thousands)	2020		2019		$ change		% change		(In thousands)	2021		2020		$ change		% change
National Networks		$	586,699	$	721,569	$	(134,870)	(18.7)	%
Domestic Operations										Domestic Operations	$	242,533	$	241,033	$	1,500	0.6	%
International and Other	International and Other	50,647		35,237		15,410		43.7		International and Other	23,563		17,843		5,720		32.1
Inter-segment eliminations		(4,123)		(12,786)		8,663		n/m
Corporate / Inter-segment Eliminations										Corporate / Inter-segment Eliminations	(28,117)		(36,422)		8,305		n/m
AOI	AOI	$	633,223	$	744,020	$	(110,797)	(14.9)	%	AOI	$	237,979	$	222,454	$	15,525	7.0	%

AOI ~~decreased~~ at the ~~National Networks~~Domestic Operations segment ~~principally due to a~~was consistent with the prior comparable period as the decrease in operating ~~income.~~income was offset by decreases in stock-based compensation and depreciation and amortization. The increase in AOI at the International and Other segment ~~principally due to~~reflects the decrease in ~~operating income, offset by adjustments for the change in impairment charges~~selling, general and ~~restructuring and other charges.~~administrative expenses.

As a result of the factors discussed above impacting the variability in revenues and operating expenses, we expect AOI to vary from quarter to quarter.

Interest expense, net

The decrease in interest expense, net of ~~$11.4~~$0.6 million is primarily due to lower average interest rates on our outstanding ~~balances.~~senior notes.

Loss on extinguishment of debt

In February 2021, we redeemed (i) the remaining $400 million principal amount of our 4.75% senior notes due December 2022 and (ii) $600 million principal amount of our 5.00% senior notes due April 2024. In connection with the redemptions, we incurred a loss on extinguishment of debt for the quarter ended March 31, 2021 of $22.1 million representing a redemption premium on the 5.00% senior notes due 2024, and the write-off of a portion of the unamortized discount and deferred financing costs related to both issuances.

In March 2020, we redeemed $200 million principal amount of the outstanding $600 million principal amount of our 4.75% Notes due December 2022. The loss on extinguishment of debt for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 of $2.9 million represents the redemption premium, the write-off of a portion of the unamortized discount and deferred financing costs.

Miscellaneous, net

The decrease in miscellaneous expense, net of ~~$6.9~~$35.3 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 as compared to the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was primarily related to ~~net unrealized gains of~~ ~~$19.6 million from~~ ~~certain marketable~~an impairment charge in 2020 related to a non-marketable equity ~~securities~~security, and ~~investments, partially offset by an unfavorable~~favorable variance ~~of $11.1 million~~ in the foreign currency remeasurement of monetary assets and liabilities (principally intercompany loans) that are denominated in currencies other than the underlying functional currency of the applicable entity.

Income tax expense

For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, income tax expense was ~~$95.5~~$25.9 million, representing an effective tax rate of ~~38%~~21%. The items resulting in variances from the federal statutory rate of 21% primarily consist of state income tax expense, tax expense from nondeductible executive compensation, and tax expense from foreign operations partially offset by a tax benefit from foreign derived intangible income and excess tax benefits related to stock compensation.

For the three months ended March 31, 2020, income tax expense was $33.6 million, representing an effective tax rate of 31%. The effective tax rate differs from the federal statutory rate of 21% due primarily ~~due~~ to tax expense ~~of $25.6 million resulting~~for excess tax deficiencies related to stock compensation, tax expense from foreign operations, state income tax expense and an increase in valuation allowances for foreign taxes and U.S. foreign tax credits, ~~tax expense from foreign operations of $9.8 million, state and local income tax expense $9.1 million, tax expense of $4.7 million related to non-deductible compensation,~~ partially offset by a tax benefit ~~of $6.0 million~~ relating to uncertain tax positions (including accrued interest). The tax benefit relating to uncertain tax positions is primarily due to audit settlements and the filing of state income tax returns under voluntary disclosure agreements. The increase in valuation allowance is primarily due to a change in judgement about the realizability of foreign net operating losses and other deferred tax assets. Management considers the scheduled reversal of deferred tax liabilities (including the effect in available carryback and carryforward periods), projected taxable income, and tax-planning strategies in making this assessment.

For the nine months ended September 30, 2019, income tax expense was $53.8 million representing an effective tax rate of 12%. The effective tax rate differs from the federal statutory rate of 21% primarily due to a tax benefit of $21.5 million

resulting from a net decrease in valuation allowances for foreign tax assets, a tax benefit of $15.6 million from foreign operations, a tax benefit of $11.5 million from a deferred tax adjustment to record the impact of an investment tax credit under the deferral method of accounting, and a tax benefit of $5.6 million relating to uncertain tax positions (including accrued interest), partially offset by state and local income tax expense of $11.6 million. The decrease in the valuation allowance is primarily due to the expected utilization of foreign net operating loss carryforwards and the benefit of foreign operations is due to a deferred tax benefit resulting from the reorganization of intellectual property amongst the Company's international subsidiaries. The tax benefit relating to uncertain tax positions is primarily due to an audit ~~settlement and the filing of state income tax returns under a voluntary disclosure agreement.~~settlement.

Liquidity and Capital Resources

Our operations have historically generated positive net cash flow from operating activities. However, each of our programming businesses has substantial programming acquisition and production expenditure requirements.

Sources of cash primarily include cash flow from operations, amounts available under our revolving credit facility and access to capital markets. Although we currently believe that amounts available under our revolving credit facility will be available when and if needed, we can provide no assurance that access to such funds will not be impacted by adverse conditions in the financial markets. The obligations of the financial institutions under our revolving credit facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others. As a public company, we may have access to capital and credit markets.

On February 8, 2021, the Company issued $1.0 billion in aggregate principal amount of 4.25% senior notes due February 2029 (the “4.25% Notes due 2029”) and received net proceeds of $982.3 million, after deducting underwriting discounts and commissions and expenses. The Company used such proceeds to redeem (i) the remaining $400 million principal amount of the Company’s 4.75% senior notes due December 2022 and (ii) $600 million principal amount of the Company’s 5.00% senior notes due April 2024 on February 26, 2021 (the "Redemption Date"). The 4.75% senior notes due December 2022 were redeemed at a redemption price of 100.000% of the principal amount of such notes and the 5.00% senior notes due April 2024 were redeemed at a redemption price of 102.500% of the principal amount of such notes, in each case, plus accrued and unpaid interest to, but excluding, the Redemption Date.

On February 8, 2021, the Company entered into Amendment No. 1 (“Amendment No. 1”) to its existing credit agreement (the "Credit Agreement"). Amendment No. 1 extends the maturity dates of the $675 million term loan A facility and $500 million revolving credit facility under the Credit Agreement to February 8, 2026, and makes certain other ~~sources~~amendments to the covenants and other provisions of ~~capital such as~~ the ~~public bond markets.~~Credit Agreement.

Our Board of Directors has authorized a program to repurchase up to $1.5 billion of our outstanding shares of common stock (the "Stock Repurchase Program"). The Stock Repurchase Program has no pre-established closing date and may be suspended or discontinued at any time. For the three months ended ~~September 30, 2020,~~March 31, 2021, we did not repurchase any of our Class A common stock. As of ~~September 30, 2020,~~March 31, 2021, we had $~~385.9~~135.3 million of authorization remaining for repurchase under the Stock Repurchase Program.

On September 16, 2020, we commenced a modified "Dutch auction" tender offer (the "Tender Offer") to purchase up to $250 million in value of shares of our Class A Common Stock, plus up to an additional 2% of the outstanding shares of Class A Common Stock, at a pric~~e not greater than $26.50 nor less than $22.50 per share. The Tender Offer expired on October 14, 2020. On October 21, 2020, we accepted for purchase 10.8 million shares of our Class A Common Stock, a~~t a price of $23.20 per share, for an aggregate cost of $250.6 million. The cost of these shares, and the fees relating to the Tender Offer, will be classified in Treasury stock in the consolidated balance sheet. The settlement of the Tender Offer reduced the availability under the Stock Repurchase Program to $135.3 million.

Our principal uses of cash include the acquisition and production of programming, investments and acquisitions, repurchases of outstanding debt and common stock, debt service, and payments for income taxes. Although impacted by the COVID-19 pandemic, we continue to increase our investment in original programming, the funding of which generally occurs six to nine months in advance of a program's airing. ~~In March 2020, we redeemed $200 million principal amount of the outstanding $600 million principal amount of our 4.75% Notes due 2022.~~

As of ~~September 30, 2020,~~March 31, 2021, our consolidated cash and cash equivalents balance includes approximately ~~$182.3~~$231.0 million held by foreign subsidiaries. Most or all of the earnings of our foreign subsidiaries will continue to be permanently reinvested in foreign operations and we do not expect to incur any significant, additional taxes related to such amounts, nor have any been provided for in the current period.

We believe that a combination of cash-on-hand, cash generated from operating activities and availability under our revolving credit facility will provide sufficient liquidity to service the principal and interest payments on our indebtedness, along with our other funding and investment requirements over the next twelve months and over the longer term. However, we do not expect to generate sufficient cash from operations to repay at maturity the entirety of the then outstanding balances of our debt. As a result, we will then be dependent upon our ability to access the capital and credit markets in order to repay or refinance the outstanding balances of our indebtedness. Failure to raise significant amounts of funding to repay these obligations at maturity would adversely affect our business. In such a circumstance, we would need to take other actions including selling assets, seeking strategic investments from third parties or reducing other discretionary uses of cash.

Our level of debt could have important consequences on our business including, but not limited to, increasing our vulnerability to general adverse economic and industry conditions, limiting the availability of our cash flow to fund future programming investments, capital expenditures, working capital, business activities and other general corporate requirements and limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate. For information relating to our outstanding debt obligations, refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Debt Financing Agreements" of our ~~2019~~2020 Form 10-K.

In addition, economic or market disruptions could lead to lower demand for our services, such as lower levels of advertising. These events would adversely impact our results of operations, cash flows and financial position.

The revolving credit facility was not drawn upon at ~~September 30, 2020.~~March 31, 2021. The total undrawn revolver commitment is available to be drawn for our general corporate purposes.

AMC Networks was in compliance with all of its debt covenants as of ~~September 30, 2020.~~March 31, 2021.

Cash Flow Discussion

The following table is a summary of cash flows provided by (used in) operating, investing and financing activities for the ~~nine~~three months ended ~~September 30,~~March 31,:


(In thousands)	(In thousands)	Nine Months Ended September 30,				(In thousands)	Three Months Ended March 31,
		2020		2019			2021		2020
Cash provided by operating activities	Cash provided by operating activities	$	644,087	$	400,397	Cash provided by operating activities	$	107,563	$	198,408
Cash used in investing activities		(24,427)		(59,864)
Cash provided by (used in) investing activities						Cash provided by (used in) investing activities	55,962		(1,666)
Cash used in financing activities	Cash used in financing activities	(364,744)		(117,683)		Cash used in financing activities	(53,890)		(303,052)
Net increase in cash and cash equivalents		254,916		222,850
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	$	109,635	$	(106,310)

Operating Activities

Net cash provided by operating activities amounted to ~~$644.1~~$107.6 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 as compared to ~~$400.4~~$198.4 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. Net cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 primarily resulted from ~~$1,087.2~~$330.0 million of net income before amortization of program rights, depreciation and amortization, and other non-cash items, which was partially offset by payments for program rights of ~~$565.3~~$238.0 million and a decrease in accounts payable, accrued expenses and other liabilities of ~~$49.3~~$67.7 million primarily related to lower employee related ~~liabilities~~ and ~~an increase in deferred carriage fees payable of $15.1 million.~~participations and residuals liabilities. In addition, net cash provided by operating activities increased as a result of a decrease in accounts receivable of ~~$92.3~~$37.0 million, a decrease in prepaid expense and other assets of ~~$79.1~~$29.4 million primarily related to a decrease in long-term receivables and an increase of ~~$17.3~~$11.1 million in income taxes payable. Changes in all other assets and liabilities resulted in a ~~decrease~~increase of ~~$2.2~~$5.7 million.

Net cash provided by operating activities ~~amounted to $400.4 million~~ for the ~~nine~~three months ended ~~September 30, 2019. Net cash provided by operating activities for the nine months ended September 30, 2019~~March 31, 2020 primarily resulted from ~~$1,214.9~~$401.3 million of net income before amortization of program rights, depreciation and amortization, and other non-cash items, which was partially offset by payments for program rights of ~~$676.7~~$221.6 million, ~~an increase in prepaid expense and other assets of $121.4 million primarily related to an increase in long-term receivables and~~ a decrease in accounts payable, accrued expenses and other liabilities of ~~$22.5~~$20.4 million primarily related to lower employee related ~~liabilities.~~liabilities and an increase in deferred carriage fees payable of $15.5 million. In addition, net cash provided by operating activities increased as a result of a decrease in prepaid expense and other assets of $17.5 million primarily related to a decrease in long-term receivables. Changes in all other assets and liabilities resulted in ~~a decrease~~an increase of ~~$8.5~~$9.9 million.

Investing Activities

Net cash ~~used in~~provided by (used in) investing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was ~~$24.4~~$56.0 million and ~~$59.9~~$(1.7) million, respectively. For the ~~nine~~three months ended ~~September 30,~~March 31, 2021, cash provided by investing activities included proceeds received from the sale of an investment of $95.4 million, partially offset by the acquisition of equity securities of $25.7 million and capital expenditures of $8.5 million. All other changes in investing activities resulted in an decrease of $5.2 million. For the three months ended March 31, 2020, cash used in investing activities included capital expenditures of ~~$35.0~~$12.9 million, partially offset by partial proceeds received from the sale of an investment of $10.0 ~~million. All other changes in investing activities resulted in~~million and a principal payment received from a loan to an increase of $0.6 million. For the nine months ended September 30, 2019, cash used in investing activities included capital expenditures of $69.1 million, partially offset by a return of capital from investees of $9.2 million.investee.

Financing Activities

Net cash used in financing activities amounted to ~~$364.7~~$53.9 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and primarily consisted of principal payments, net of proceeds, on long-term debt (including the redemption of $400 million of 4.75% Notes due December 2022 and $600 million of 5.00% Notes due April 2024) of $30.5 million, taxes paid in lieu of shares issued for equity-based compensation of $34.6 million, distributions to noncontrolling interests of $2.5 million, and payments on finance leases of $1.1 million, partially offset by proceeds from the exercise of stock options of $12.1 million and contributions from noncontrolling interests of $2.7 million.

Net cash used in financing activities amounted to $303.1 million for the three months ended March 31, 2020 and primarily consisted of principal payments, net of proceeds, on long-term debt (including the redemption of $200 million of 4.75% Notes due 2022), of ~~$236.5~~$204.4 million, purchases of our common stock of ~~$102.9~~$86.0 million, taxes paid in lieu of shares issued for equity-based compensation of $8.9 million and distributions to noncontrolling interests of ~~$14.0 million, and payments on finance leases of $2.4 million.~~

Net cash used in financing activities amounted to $117.7 million for the nine months ended September 30, 2019 and primarily consisted of purchases of our common stock of $70.6 million, taxes paid in lieu of shares issued for equity-based compensation of $23.0 million, distributions to noncontrolling interests of $13.5 million, and net payments on debt and finance leases of $15.2 million, partially offset by proceeds from stock option exercises of $4.6$3.1 million.

4333

Contractual Obligations

As of ~~September 30, 2020,~~March 31, 2021, our contractual obligations not reflected on the condensed consolidated balance sheet increased ~~$129.1~~$30.6 million, as compared to December 31, ~~2019,~~2020, to ~~$1,063.0~~$1,042.5 million. The increase primarily relates to additional commitments for program rights and marketing commitments.

Supplemental Guarantor Financial Information

The following is a description of the terms and conditions of the guarantees with respect to the outstanding notes for which AMC Networks is the issuer.

Note Guarantees

Debt of AMC Networks as of ~~September 30, 2020 includes $400.0~~March 31, 2021 included $400 million ~~of 4.75% Notes due December 2022, $1.0 billion~~ of 5.00% Notes due April 2024, ~~and~~ $800.0 million of 4.75% Notes due August 2025, and $1.0 billion of 4.25% Notes due February 2029 (collectively, the “notes”). The notes were issued by AMC Networks and are unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of AMC Networks’ existing and future domestic restricted subsidiaries, subject to certain exceptions (each, a “Guarantor Subsidiary,” and collectively, the “Guarantor Subsidiaries”). The obligations of each Guarantor Subsidiary under its note guarantee are limited as necessary to prevent such note guarantee from constituting a fraudulent conveyance under applicable law. A guarantee of the notes by a Guarantor Subsidiary is subject to release in the following circumstances: (i) any sale or other disposition of all of the capital stock of a Guarantor Subsidiary to a person that is not (either before or after giving effect to such transaction) a restricted subsidiary, in compliance with the terms of the applicable indenture; (ii) the designation of a restricted subsidiary as an “Unrestricted Subsidiary” under the applicable indenture; or (iii) the release or discharge of the guarantee (including the guarantee under the AMC Networks’ credit agreement) which resulted in the creation of the note guarantee (provided that such Guarantor Subsidiary does not have any preferred stock outstanding at such time that is not held by AMC Networks or another Guarantor Subsidiary).

Foreign subsidiaries of AMC Networks do not and will not guarantee the notes.

The following tables present the summarized financial information specified in Rule 1-02(bb)(1) of Regulation S-X for AMC Networks and each Guarantor Subsidiary. The summarized financial information has been prepared in accordance with Rule 13-01 of Regulation S-X.

4434

Summarized Financial Information


Income Statement	Income Statement					Income Statement
(In thousands)	(In thousands)	Nine Months Ended September 30, 2020				(In thousands)	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
		Parent Company		Guarantor Subsidiaries			Parent Company		Guarantor Subsidiaries		Parent Company		Guarantor Subsidiaries
Revenues	Revenues	$	—	$	1,403,731	Revenues	$	—	$	481,516	$	—	$	531,300
Operating expenses	Operating expenses	—		976,117		Operating expenses	—		316,637		—		367,014
Operating income	Operating income	—		427,614		Operating income	—		164,879		$	—	$	164,286
Income before income taxes	Income before income taxes	228,499		341,365		Income before income taxes	$	108,267	$	167,422	$	98,338	$	140,519
Net income	Net income	$	145,268	$	334,838	Net income	87,021		165,212		68,667		138,203


Balance Sheet	Balance Sheet	September 30, 2020				December 31, 2019				Balance Sheet	March 31, 2021				December 31, 2020
(In thousands)	(In thousands)	Parent Company		Guarantor Subsidiaries		Parent Company		Guarantor Subsidiaries		(In thousands)	Parent Company		Guarantor Subsidiaries		Parent Company		Guarantor Subsidiaries
Assets	Assets									Assets
Amounts due from subsidiaries	Amounts due from subsidiaries	$	5	$	70.977	$	1,760	$	100,485	Amounts due from subsidiaries	$	9,669	$	409	$	25,749	$	74,649
Current assets	Current assets	7,329		1,478,636		28,768		1,590,932		Current assets	16,281		1,267,170		35,424		1,291,630
Non-current assets	Non-current assets	3,937,137		3,117,403		4,050,648		3,044,865		Non-current assets	3,799,020		3,257,847		3,729,996		3,151,581

Liabilities and equity:	Liabilities and equity:									Liabilities and equity:
Amounts due to subsidiaries	Amounts due to subsidiaries	2,038		1,370		—		—		Amounts due to subsidiaries	$	—	$	33,048	$	—	$	27,091
Current liabilities	Current liabilities	148,025		461,012		100,081		470,027		Current liabilities	140,092		518,178		124,886		545,105
Non-current liabilities	Non-current liabilities	3,048,838		332,106		3,315,314		361,324		Non-current liabilities	3,001,757		336,473		3,023,726		300,449

4535

Critical Accounting Policies and Estimates

We describe our significant accounting policies in Note 2 to the Company's Consolidated Financial Statements included in our ~~2019~~2020 Form 10-K. ~~Other than the adoption of ASU 2019-02 described in Note 5 to the accompanying condensed consolidated financial statements of the Company included herein, there~~There have been no significant changes in our significant accounting policies since December 31, ~~2019.~~2020.

We discuss our critical accounting estimates in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in ~~the same 2019~~our 2020 Form 10-K. There have been no significant changes in our critical accounting estimates since December 31, ~~2019.~~

The Company performs its annual goodwill impairment test as of December 1 each year. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require an interim impairment test. The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and its impact on each of its reporting units. Further, the Company assessed the current forecasts (including significant assumptions about revenue growth rates, long-term growth rates and enterprise specific discount rates) and the amount of excess fair value over carrying value for each of its reporting units in the 2019 impairment test. In connection with the preparation of the second quarter financial information, the Company determined that a triggering event had occurred with respect to its AMCNI reporting unit, which required an interim impairment test to be performed as of June 30, 2020. As such, the Company performed a quantitative assessment for its AMCNI reporting unit. The fair value was determined using a combination of an income approach, using a discounted cash flow (DCF) model, and a market comparables approach. The DCF model includes significant assumptions about revenue growth rates, long-term growth rates and enterprise specific discount rates. Additionally, the market comparables approach is determined using guideline company financial multiples. Given the uncertainty in determining assumptions underlying the DCF approach, actual results may differ from those used in the valuations.

~~No impairment charge was required for any of the Company's other reporting units.~~

As we are unable to predict how long the COVID-19 pandemic conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on our business. If these estimates or related assumptions change in the future, we may be required to record additional impairment charges related to goodwill.

~~Recently Issued Accounting Pronouncements~~

~~See Note 1 to the accompanying Condensed Consolidated Financial Statements of the Company for a discussion of recently issued accounting pronouncements.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Fair Value of Debt

Based on the level of interest rates prevailing at ~~September 30, 2020,~~March 31, 2021, the carrying value of our fixed rate debt of ~~$2.18~~$2.17 billion was less than its fair value of ~~$2.25~~$2.20 billion by approximately ~~$69.8~~$27.0 million. The fair value of these financial instruments is estimated based on reference to quoted market prices for these or comparable securities. A hypothetical 100 basis point decrease in interest rates prevailing at ~~September 30, 2020~~March 31, 2021 would ~~decrease~~increase the estimated fair value of our fixed rate debt by approximately ~~$17.9~~$89.0 million to approximately ~~$2.23~~$2.30 billion.

Managing our Interest Rate Risk

To manage interest rate risk, we enter into interest rate swap contracts from time to time to adjust the amount of total debt that is subject to variable interest rates. Such contracts effectively fix the borrowing rates on floating rate debt to limit the exposure against the risk of rising rates. We do not enter into interest rate swap contracts for speculative or trading purposes and we only enter into interest rate swap contracts with financial institutions that we believe are credit worthy counterparties. We monitor the financial institutions that are counterparties to our interest rate swap contracts and to the extent possible diversify our swap contracts among various counterparties to mitigate exposure to any single financial institution.

As of ~~September 30, 2020,~~March 31, 2021, we had ~~$2.9~~$2.8 billion of debt outstanding (excluding finance leases), of which $0.7 billion is outstanding under our loan facility and is subject to variable interest rates (before consideration of the interest rate swaps contracts described below).

As of ~~September 30, 2020,~~March 31, 2021, we had interest rate swap contracts outstanding with notional amounts aggregating $100 million. The aggregate fair value of interest rate swap contracts at ~~September 30, 2020~~March 31, 2021 was a net liability of ~~$3.0~~$1.8 million. As a result of these transactions, the interest rate paid on approximately ~~79%~~80% of our debt (excluding finance leases) as of ~~September 30, 2020~~March 31, 2021 is effectively fixed (76% being fixed rate obligations and 3%4% effectively fixed through utilization of these interest rate swap contracts).

A hypothetical 100 basis point increase in interest rates prevailing at ~~September 30, 2020~~March 31, 2021 would not have a material impact on our annual interest expense.

Managing our Foreign Currency Exchange Rate Risk

We are exposed to foreign currency risk to the extent that we enter into transactions denominated in currencies other than our subsidiaries' respective functional currencies (non-functional currency risk), such as affiliation agreements, programming contracts, certain trade receivables and accounts payable (including intercompany amounts) that are denominated in a currency other than the applicable functional currency. Changes in exchange rates with respect to amounts recorded in our consolidated balance sheets related to these items will result in unrealized (based upon period-end exchange rates) or realized foreign currency transaction gains and losses upon settlement of the transactions. Moreover, to the extent that our revenue, costs and expenses are denominated in currencies other than our respective functional currencies, we will experience fluctuations in our revenue, costs and expenses solely as a result of changes in foreign currency exchange rates. The Company recognized a ~~$5.8~~$9.5 million gain ~~and $10.6 million loss~~ ~~net,~~ for the three ~~and nine~~ months ended ~~September 30, 2020, respectively,~~March 31, 2021 related to foreign currency transactions. Such amounts are included in miscellaneous, net in the condensed consolidated statement of income.

To manage foreign currency exchange rate risk, we may enter into foreign currency contracts from time to time with financial institutions to limit our exposure to fluctuations in foreign currency exchange rates. We do not enter into foreign currency contracts for speculative or trading purposes.

We also are exposed to fluctuations of the U.S. dollar (our reporting currency) against the currencies of our operating subsidiaries when their respective financial statements are translated into U.S. dollars for inclusion in our condensed consolidated financial statements. Cumulative translation adjustments are recorded in accumulated other comprehensive income (loss) as a separate component of equity. Any increase (decrease) in the value of the U.S. dollar against any foreign currency that is the functional currency of one of our operating subsidiaries will cause us to experience unrealized foreign currency translation losses (gains) with respect to amounts already invested in such foreign currencies. Accordingly, we may experience

a negative impact on our comprehensive income (loss) and equity with respect to our holdings solely as a result of changes in foreign currency exchange rates.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation as of ~~September 30, 2020,~~March 31, 2021, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

During the three months ended ~~September 30, 2020,~~March 31, 2021, there were no changes in the Company's internal control over financial reporting, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

4737

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

~~Since our 2019 Form 10-K, there have been no material developments in legal proceedings in which we are involved.~~ See Note ~~14,~~15, Commitments and Contingencies to the condensed consolidated financial statements included in this Quarterly Report on Form ~~10-Q.~~

~~Item 1A. Risk Factors~~

~~In addition to the other information set forth in this Form~~ 10-Q ~~you should carefully consider the risk factors disclosed under the caption “Risk Factors” in our 2019 Form 10-K, as well as the following additional risk factor.~~

~~General Risks~~

~~The COVID-19 pandemic has significantly impacted worldwide economic conditions and could have~~for a ~~material adverse effect on our operations and business~~

The impact of COVID-19 and measures to prevent its spread are affecting our businesses in a number of ways. To date, we have experienced adverse advertising sales impacts, suspended content production, which has led to delays in the creation and availability of somedescription of our ~~television programming, and the temporary closure of our comedy venues.~~ ~~In the third quarter of 2020, t~~he Company recommenced production activities on most of its programming. However, there is no assurance that the Company will be able to continue its production activities uninterrupted, and the Company could be subject to temporary or longer-term shutdowns in production if there were to be an outbreak among cast members or crew.

Operationally, substantially all of our employees continue to work remotely, and we continue to restrict business travel. If significant portions of our workforce, including key personnel, are unable to work effectively because of illness, government actions or other restrictions in connection with the COVID-19 pandemic, the impact of the pandemic on our businesses could be exacerbated. In addition, the remote work environment has placed additional strain on our resources and the effects of the COVID-19 pandemic will heighten the other risks described in the section entitled “Risk Factors” in our 2019 Form 10-K, including evolving cybersecurity risks, which could result in the disclosure, theft or destruction of confidential information, disruption of our programming, damage to our brands and reputation, legal ~~exposure and financial losses.~~

The Company has evaluated and continues to evaluate the potential impact of the COVID-19 pandemic on its consolidated financial statements, including the impairment of goodwill (see Note 7) and indefinite-lived intangible assets and the fair value and collectability of receivables. The COVID-19 pandemic has had a material impact on the Company's operations since mid-March 2020. The Company cannot reasonably predict the ultimate impact of the COVID-19 pandemic, including the extent of any adverse impact on our business, results of operations and financial condition, which will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of a vaccine, and global economic conditions. The COVID-19 pandemic may also affect our business, operations or financial condition in a manner that is not presently known to us or that we currently do not consider to present significant risks. In addition, the COVID-19 pandemic may also exacerbate other risks described in Item 1A, "Risk Factors" in our 2019 Form 10-K.proceedings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company's Board of Directors has authorized a program to repurchase up to $1.5 billion of its outstanding shares of common stock (the "Stock Repurchase Program"). The authorization of up to $500 million was announced on March 7, 2016, an additional authorization of $500 million was announced on June 7, 2017, and an additional authorization of $500 million was announced on June 13, 2018. The Stock Repurchase Program has no pre-established closing date and may be suspended or discontinued at any time.

For the three months ended ~~September 30, 2020,~~March 31, 2021, the Company did not repurchase any of its Class A common stock. As of ~~September 30, 2020,~~March 31, 2021, the Company had $~~385.9~~135.3 million of authorization remaining for repurchase under the Stock Repurchase Program.

~~Table of Contents~~

On September 16, 2020, the Company commenced a modified "Dutch auction" tender offer (the "Tender Offer") to purchase up to $250 million in value of shares of its Class A Common Stock, plus up to an additional 2% of the outstanding shares of Class A Common Stock, at a price not greater than $26.50 nor less than $22.50 per share. The Tender Offer expired on October 14, 2020. On October 21, 2020~~, the Company accepted for purchase 10.8 million shares of its Class A Common Stock~~, at a price of $23.20 per share, for an aggregate cost of $250.6 million. The cost of these shares, and the fees relating to the Tender Offer, will be classified in Treasury stock in the consolidated balance sheet. The settlement of the Tender Offer reduced the availability under the Stock Repurchase Program to $135.3 million.

Item 6. Exhibits.

(a)Index to Exhibits.


~~10.1~~4.9			~~Amendment to Employment Agreement,~~Third Supplemental Indenture, dated as of ~~September 15, 2020, by and between~~February 8, 2021, to the Indenture, dated as of March 30, 2016, among AMC Networks, ~~Inc.~~as issuer, the Guarantors and ~~Charles F. Dolan~~U.S. Bank National Association, as Trustee, and Form of Notes (incorporated by reference to Exhibit ~~10.1~~4.2 to the Company's Current Report on Form 8-K filed on ~~September 15, 2020)~~February 8, 2021)

10.1			Employment Agreement dated January 12, 2021, between AMC Networks Inc. and Christina Spade (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K filed on February 26, 2021)

10.2			Amendment No. 1, dated as of February 8, 2021, to the Second Amended and Restated Credit Agreement, dated as of July 28, 2017, in each case, among AMC Networks and its subsidiary, AMC Network Entertainment LLC, as the initial borrowers, certain of AMC Networks’ subsidiaries, as restricted subsidiaries, Bank of America, N.A., as an L/C Issuer, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, Collateral Agent and an L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 8, 2021)

22			Guarantor Subsidiaries of the Registrant

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within Inline XBRL document.

101.SCH			XBRL Taxonomy Extension Schema Document.

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF			XBRL Taxonomy Extension Definition Linkbase.

101.LAB			XBRL Taxonomy Extension Label Linkbase Document.

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.

104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

4938

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMC Networks Inc.

Date:

~~November 2, 2020~~May 7, 2021

By:

/s/ ~~Christian Wymbs~~Christina Spade

~~Christian Wymbs~~Christina Spade

Executive Vice President and Chief ~~Accounting~~Financial Officer

5039


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Income			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statements of Stockholders' Equity			4
Condensed Consolidated Statements of Cash Flows			65
Notes to Condensed Consolidated Financial Statements			76
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2521
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4636
Item 4. Controls and Procedures			4737
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			48
~~Item 1A. Risk Factors~~			4838
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4838
Item 6. Exhibits			4938
SIGNATURES			5039


(In thousands)	Three Months Ended September 30, 2019
	National Networks		International and Other		Inter-segment eliminations		Consolidated
Revenues, net
Advertising	$	194,452	$	18,872	$	(24)	213,300
Distribution	364,540		163,967		(23,210)		505,297
Consolidated revenues, net	$	558,992	$	182,839	$	(23,234)	$	718,597
Operating income (loss)	$	182,479	$	(11,501)	$	(2,540)	168,438
Share-based compensation expense	11,684		2,157		0		13,841
Depreciation and amortization	8,048		17,571		0		25,619
Restructuring and other related charges	6,199		3,992		0		10,191

Majority-owned equity investees AOI	0		1,246		0		1,246
Adjusted operating income	$	208,410	$	13,465	$	(2,540)	$	219,335


(In thousands)	Nine Months Ended September 30, 2019
	National Networks		International and Other		Inter-segment eliminations		Consolidated
Revenues, net
Advertising	$	653,031	$	63,613	$	(75)	$	716,569
Distribution	1,126,819		469,841		(38,112)		1,558,548
Consolidated revenues, net	$	1,779,850	$	533,454	$	(38,187)	$	2,275,117
Operating income (loss)	$	648,180	$	(52,532)	$	(12,090)	$	583,558
Share-based compensation expense	41,774		8,691		0		50,465
Depreciation and amortization	24,839		50,729		0		75,568
Restructuring and other related charges	6,776		23,915		(696)		29,995
Majority-owned equity investees AOI	0		4,434		0		4,434

Adjusted operating income	$	721,569	$	35,237	$	(12,786)	$	744,020