- Earnings call transcript Q3 2022

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Operator

Good day and thank you for standing by. Welcome to the AMC Networks Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. to Seibert, conference and Vice like speaker to Investor now Nick today, President, would hand over the your Relations. I Corporate Development ahead. go Please

Nick Seibert

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

us our Officer; O’Connell, Executive website Kelleher, Commercial at Chief Spade, release press Kim Patrick Officer. and amcnetworks.com. this Today’s morning Officer; is Joining Christina Chief Chief are Financial available on

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

Christina Spade

everyone morning, and Good thank you for us. joining

what review and XX% exciting in added seeing paid future XX% of Patrick Today, third will new in most and AMC streaming and creation company am fronts. goals total strategies a in in proud I discuss the our Networks, in we to on subscribers my are landscape. on year-over-year In we streaming quarter, the the of company subscribers, increase value operating then joined CFO, XXX,XXX As quarter XX.X CEO begin representing today’s the at have as million for increase performance who financial our will based I one role new subscribers detail. more our performance and our now August, third we I lead XXXX O’Connell, many moments our revenue. in a history

we with approximately subscribers. the We XX continue end million streaming to expect total year will

strong meaningful has with have Our this marketing year. coupled by strategic our been our growth streaming which slate, efforts significantly been content driven and evolving consistent

Our impacts. deliveries, the several third a impacted and quarter results by and including direct factors, market streaming were and response scatter content of foreign strong advertising exchange licensing softer unfavorable growth, availability timing

timing expect XXXX million visibility a $XX growth As better result we year these production between be Due items, free we anticipate to also to indicators, of market of the revenue full and year flow flat-to-low breakeven certain single-digits. of be XXXX. to cash for full

XXXX for review midst momentum distribution new global in digital our AMC which Our AMC that is AMC+, mix a create With brand. streams. adults, profitability. cornerstone very discerning operating mix content reflects two offering shortly. a AMC+ transformation specific guidance distribution. new to content is on our proposition opportunities October will company year-to-date content we our premium are we the consumer-focused a income to Networks compelling premium an In of for ability are margin a strategic and important our for to which value consistent centered with is and with multi-platform Patrick transition offerings offering, of of detail grown streaming revenue the us viewers, investments strong subscription significantly our manage growth the since to streaming proven have the enabling adjusted greater in launch years strategically XX%, premium of

executing HIDIVE, with a are passionate strategy, highly content services, targeted effectively Shudder, With we and Acorn, audiences offerings. the curated super success of AMC+ streaming and differentiated our ALLBLK serving

we as platforms our utilizing our linear content are content across streaming broad and investment array of platforms. expanding our We – a showcase digital fully to monetize window our and

content we we leading of is the keenly Ongoing are that juncture, also the fast-changing operating growth deployment on advertising goals. particularly revenue key revenue. and a that ability Underlying driven this we I in excellent new At the future, months our can’t of to and with, programmatic secular digital of that of in our path trends, in addressable and optimizing from witnessed X marketplace for our offering. all forge successfully is success. hest. opportunities, are brand as driven over love past diverse our without. execution take we and fall three ever-evolving seeing buying – strength advantage advanced this clear consumer in to by advertising viewers our in behaviors. within shape curation, of marketplace of will with what a strong they as competitive We the iterate drive learn to the months taking advertising navigating a consumers by strategically and marketplace XX linear nimbly digital are ongoing be have firsthand slate success are backdrop, particularly is engage focused the Star while live This storytelling this Against of will our North

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linear our networks channel strength networks demonstrating portfolio. other a the Our by margin, of outpacing wide are cable

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Patrick O’Connell

you, Chris coupled occupies deep and a and business, great morning, and Networks’ AMC It’s clear position AMC and everyone. at the to taken differentiated a culture-defining us in streaming with programming with us assets strategic above our position consumer evolve. ecosystem, studio capabilities, media look it’s apart. working good as strong to approach that unique punching our of nimble Having unique our that entertainment the couple Chris a spent a powerhouse Thank me with be to months succeed again. weight class original model landscape and shifts behaviors a Networks, sets business

both serve upon and are we’re discerning secular world-class the mentioned, Nevertheless, taking shifts programming regarding keenly a the passionate path faces prudent we platforms profitability. management. the audiences. As super our we Strategically, our programming others, Financially, AMC as financial and we investment our levels for of foundation Studio’s carefully calibrate Chris to on IP rests macro disciplined target to curated owned continue see expense and strategic investments our headwinds will audiences. and approach and where maintain and continue on and aware monetize industry opportunities will we and

the of XX% largely financial XX% was foreign lower million, will cost revenue I of deliveries, decreased of strong $XXX review XX%. earnings by Consolidated share and advertising results. timing by content streaming revenue, our our XXXX availability lower and partly third offset Now marketing timing income affiliate by and and operating margin adjusted and and SG&A, licensing Consolidated $XXX operating by currency offset quarter revenues decreased revenue by management Adjusted to driven by expenses growth unfavorable translation, million, a per the reflecting XX%, driven disciplined investments. $X.XX. lower with content to of partly

delivery XX% content quarter. deliveries licensing. due driven million operations timing revenue licensing XX% and decreased content domestic decreased to million related fewer to our $XX to third Domestic by mainly in segments, the operations $XXX For revenue to

timing the fourth the subscription continued quarter. As to titles licensing subscribers strong fourth content by of of streaming growth prior performance. Walking to we million have the in revenues X% In of previously stated, full are streaming episodes year-over-year revenue was of driven weighted delivered licensing the at the grew Domestic revenue third of these The content year quarter. in Dead XX% the fewer $XX.X XXXX, quarter. Paid delivered In quarter. operations end the were strong both which remains Walking we contributors and quarter, Fear Dead, the year heavily

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of foreign revenues For translation. advertising our international and quarter lower other decreased third distribution and million, the to result unfavorable $XX revenue currency and results, XX%

Excluding the revenue unfavorable decreased XX%. XX/X impact FX, and of FX. production million, of $XX due primarily to timing International and Media XX% the revenue distribution of to decreased other

translation, Excluding primarily the XX% due of channels in XX%. the International other and distribution impact to the unfavorable revenues $XX currency impact UK. and in decreased the advertising foreign decreased planned of impact revenues wind-down softer UK, of and the two other to of the million FX ratings

Excluding the reflecting in revenues XX% currency and impact operating advertising decreased $XX revenue foreign XX%. FX. to International and quarter, of adjusted decreased decreased income impact unfavorable the of million other translation,

Excluding adjusted XX%. translation, the of impact operating currency decreased income foreign

our $X.X and debt consolidated third ended $X to for with quarter balance content of Free quarter moving was billion. the XXXX leases free third Next, We for million the the and of flow timing net productions slates. sheet. finance cash XXXX and current cash reflecting XXXX the approximately of flow

our and current Our net and consolidated times X leverage at sheet we ratio remain ratio. was leverage quarter with comfortable balance end,

Our capital allocation policy remains unchanged.

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

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

Third, capital disciplined will shareholders. M&A. opportunistic be fourth, consider strategic we And we to will returning in

XXXX. for outlook Moving to subscriber our

approximate driven strength quarter expect of fourth programming. subscribers our to million, $XX by will the yearend our that continue We total

in company the and outlook by XX% to XXXX, than driven headwinds. expect to strategic continue foreign will licensing with anticipate year-over-year full approximately subscription growth be content consistent our income financial And year and lower flat-to-low XXXX, total growth exchange investments current for both Adjusted marketing. programming the be and our guidance due in operating single-digits, revenues. ad prior to we we market revenue Regarding

Moving to our free cash flow outlook.

expect levels. the targeted to of world-class, not vary, year note we the believe for revenue we’ll our served We will growth timing strong do curated carefully full production operator, programming current and super cash material current capital investment outlook year line in value On certain spending, be items. questions. content and and maintenance focus our increases of the In free and to deliver XXXX, we of for full million our to stewards that, breakeven programming important $XX quarter-to-quarter reflecting and is we flow anticipate timing that while open continue it of investments between that the of as summary, please With in on balancing our profitability. audiences thoughtful careful the to

Operator

question first from from And you. Tim Nollen comes Instructions] our [Operator thank And Macquarie.

now is open. line Your

Tim Nollen

had with Good remind ask this just you? of launching what you And XX Interesting morning. us there. I’ll new Thanks just deal has think, Could services? for with to I to question about part channels, one, dropping. it. another you question. FAST maybe incremental have Roku. may is, with revenues Roku for might but ad your then how parts have some be taking see issues FAST the I the lately And couple its deal to Roku then a It’s other

due to its orders. insertion that of is on some think reliance I

you those? programmatic I wonder deal And a underway. know by bit doing might You, developed with think efforts to in pretty Thanks. contrast, if you be interesting I could advanced speak advertising you Roku little this has what some

Kim Kelleher

question. Hi, Kim for Kelleher. Tim, Thanks your this is

we yesterday. partnership We’re excited about this that with Roku and announced

constantly TV, important an the than do the thing does channels optimal Samsung that and partnership a channels, XXth scheduling XX TV currently very and one think, channels. the Plex our tweaking, We Sales that our experience part overall it’s and Vizio back – really our Sling AMC go constantly sure with with out SmartCast, we’re and our of right, in November. Comcast distribute strategy. in TV, like And is programming regularly others Pluto Xumo. differently, brands. creating We partners on, partnership making all that Plus, platforms rates performance are work mentioned, channel that platforms the going we our we’re that way. start absolutely very does concerted will X I optimizing on round to Chris of as is representative This of Networks a You’re live viewer these of

channels As Chris to mentioned, younger very or audience new drawing these are also a viewers fast-growing our content.

that I opportunity the we continue thing your see, our drive continue out, different the answer is, would this for that know part You programming of to a question to say verticals strategies to we as and growth. of roll see we lot one second

a opportunity. have we segments to we this other big and know yet genres that have to we You in, and see launch continuing be

Tim Nollen

Thanks.

Operator

question And [Operator from Instructions] Yeh our thank you. And Morgan Stanley. from comes Thomas next

line now open. is Your

Thomas Yeh

international night the how new space Chris, in see you about the success It news and Thanks target AMC+ in. opportunity for trying follow-up. to and between now more you you I markets? franchise mean, a bit a exiting of the Is the a last so talk see then existing starts subscribers. growth like are Walking seems of about tough it’s AMC+, the much. TAMs to of And how the Anne distribution economics bigger and some overlap some your that for of light the build we international subscriber Rice for Or audiences from thinking across unit you the spheres? scale about mentioned or Stars about different a both know talk Can Vampire? retention-based? Dead TAM you on of you Can incrementality

profitability So, abroad be color on really much. would Thank you helpful. any so

Christina Spade

your you, Thank I Thomas. appreciate questions.

and the how Dead. overlaps IP Walking question Anne Your it the first part about Rice with

out and want taking really to our important you with brands, designed everyone watch time did are and an we offering that up precious is that AMC beyond and to the new content content, relative AMC+ you’re show specifically streaming streaming tagline that our above and we So to who’s escape. there testing consuming

that’s going a world. take something to to you different want You

being really in trying in consumer’s know we’re entertained that interest to so play way. you that into And

and Immortal so And play Anne Walking the franchise into really Dead franchise Rice Universe the that.

So overlap fans is, we’re a in already lot across there the seeing have the space. what we is that Dead franchise that but of iconic franchises, vested some Walking where there’s

iconic, spend season it because enjoy what XXth. in are it series, people lot we that, honestly I’ve Some know everything XX. is season, the and the going season no And way to Universe the is never are in will flagship with episode heard XXth thing around season watching we’re on X, this to of saying going the And will be people know finale they’re X And is for truly and time thing you but then still up XX pick so in able get it. of to of really on has you November not is designed up into not watching watched X we’re you a even other to I’m Season I’ve that just Dead and been And Season long, seeing XXth may it. could the the understand the you episode know a who’s Walking you getting you interesting X, pretty with quickly who. addicted to so so

Interview that close younger audience. with the captivate now know that the will series Vampire, fans in new ones. so as captivating And additional seeing we seeing hopefully are pivoting that we universe a series have to and to we’re you engage the there, And flagship comes existing we’re are

the IP have the all read that of the We’re levers also books. captivating all

and of them. with the I college, When You I done know was loved I’m it. with IP, Vampire. high one what we’ve Interview school And in I’m I that read all of so proud and

as is Rice, we’ve done proud soul, think I well. what god Anne hopefully, rest her of

So looking really our at expanding TAM. we’re

investing You know way define long to continues strategy will to know distribution, a money answer TAM beginning. and Relative to not to the that’s that we the it. international of you narrowly not I international, our are that – guess lot spend we expand really a your in be looking question

with with partners and been then there, launch us, out a partners in a it partners Apple has and will Orange good good our to example are that. investment of of know requires bigger in the We Spain approach and each local Amazon that because you launch bigger is low it even the regions, for

we we selectively those good as approach the economics be make launching what work that and strategy in markets shape, are does for everywhere at so that But And cost. see our how value a there. it our direct-to-consumer to generate in is and there. what that we profitability. about not lifetime take apps will see And are It’s we trying then any regions to have expand we doing expand already, out, and us play be us will to we’re that will way will there that maximizes longer-term and it like think continue for sense I a really

Operator

Securities. And from Morris Michael Instructions] comes our thank [Operator question you. from Guggenheim And next

now is open. line Your

Michael Morris

monetization, very content, have – for first one, questions. guess, right is are is morning guys. maybe decisions the of ever ever. I that’s the industry need and like this as you know Chris, you feels know it’s complex I of two thank and decisions you your distribution can. make to your Good sort maximizing much. Hi, if you as the It as complex as My about multi-platform I

you to monetize cash order you which And or is think making content through? on second shifted, can maybe destinations just of the prioritization prioritizing flow. So you interested update want if know things you this in it us where the my of then the that to free decide most how about you’re perhaps you it you how that whether expect question are I’m really go? terms shift? how for has And You Patrick in know on you deciding?

relatively the compared to for free your guidance trend. the cash low is know conversion You full year historical flow a

whether And So or know free think Thank you. historical that of a conversion, longer-term this you with achievable talk could you normal metric? year? you just how think I’m respect cash are you to about curious flows why there’s kind if levels lower about whether new

Christina Spade

in including up streams. you Relative way Thanks, of with decisions our the questions. operations, the for segments domestic our our distribution distribution all to content, appreciate power of set Mike. deliberately our the revenue know are I they are

seasons You own significant we across Interview rights. original windows as make we where we’re of content the the we become the as the well. each that on series for know to return of and it global that Vampire important that a as the especially I’ll evergreen of can use future we out which get more window And cycle investment with with in show, investment look an that Rice to it’s carefully Anne over going life go of coming optimize will the we IP, have together, the to it, platforms the the show, example then as it

you we original the where for make IFC in we example, we then as look have investment window. the for even films about each rights, at original and think So an windowing, films or long-term series

now, monetize chain, elsewhere. in. way we international the linear AMC+ use will doing and AMC and we that’s for can. – basis we in that know markets on You AMC+ have windowing right selectively the any series, it then But as we will we, then approach we’re look where that it we our and to AMC then also put and in And it US. AMC+ first is on it through And we’re a that launched moves in megaphone

any in have that to also going AMC+, and Interview those if license example, the we rights don’t with we’re to optimize anytime for So market an will be soon. look as we Vampire not that place

that. and and constantly we’re looking all so of our optimization looking our at more the for But And long-term windowing the short-term. we’re at

get We’re not some quickly the we quarter. really like, can kind for hey, sell this money looking at and of more

then We’re it long-term the can that be that for most there of we our really the us how also sure benefit in is the And future. for library make it we and will it do this looking at make for from shifting.

You our going marketplace, long-term where right we’re I how know that in what’s constantly way most what make looking at can the is strategy. that in the it of possibly with happening stays true continue is and nimbleness on the very we a on. to And will your shift, point think it It shift. to continues I in our important and think sense is to that’s

Michael Morris

Chris. Thanks,

Patrick O’Connell

Michael, for couple there. bit. guidance we cash a factors on year. I this your took point, a flow the down it of If know free unpack There’s in you obviously little

the it years. flow side. don’t a from bit revenue weaker on noise over we advertising on Some you through, just know side. of is production productions obviously a There’s time quarters the or We the of see

And so a always there’s frankly, a of credit bit cetera. of there’s receipts, we bit that. don’t timing capital working control certain tax And where of the of little et kind

cash a reason year. taking free bit this guidance that’s we’re So the the little flow down

very our certainly content disciplined we’ve terms to forward, decision will we investment. made that programming In the of We going will – and the in be case. continue think to obviously be

see that. efficiency. sort We we I are to to continue and disciplined also taking to platforms, that’s these as see think a super-served evolve these channels approach programming the channel focused that of across And the benefits and efficiency we sort our programming of individual think – and products of is of sort we’ll attached

we’re monetization say, us model. as forward much very you’ve heard focused multi-platform on going a know You

business so driving and And going as focused cash the and possible. driving very on flow margin as much much out of free margins we’re forward

Operator

Instructions] you. Research. And [Operator from our next Nathanson question thank comes And Michael from MN

Michael Nathanson

Good three streaming. for thanks. you on I Great, morning everyone. have

in heard you new it a post still pad we’ve launch outlook on you streaming? FAST Secondly, launches spring. price lastly, one wondering, helps you linchpin update on to on to markets what is the increase ‘XX The international you any what be update or on price come that noted in internationally streaming any of is, pictures that, going have a increase? subscribers. for for launching What And for to the I’m And QX? markets you’re took first seen? churn the have an

seen you’ve other what a and FAST your conversion you’ve launched what the been as platforms about So talk can paid in you FAST subscribers? has from bit rate to

Christina Spade

Good that for that was we stable. $X, morning, and it really took stick I last increases thinking ALLBLK, been said significant price I have any Michael. was for stable. call because see Thanks that Relative we by it really churn. questions. Acorn It to increased the fairly on your we maybe what should to the has I didn’t

also I And we have our obviously best think a the to pricing the how our our to performance. pricing but We we good for value for continue want we maximize line so proposition at was to And move want subscribers. subscribers, relates can that and look to us. top

key be. And as we’re the looking price of point that. part when what is churn think factor is a And should our it you key about so to indicate, at

know and On for FAST then the the as international we pike. more there front, it future. partners we what out put turn as Kim you for to don’t I’ll really look over to to markets, But our have question. any additional be news explore the will to different there for announce coming are the what’s we doing And down

Kim Kelleher

Chris. question. Thanks, a It’s great

watch to we’re distribution and platforms we’re push certain services to top know the funnel channels viewership younger, channels You other same with can able our and through OEMs the Samsung savvy actually, our being in where seeing on into those closed-loop funnel subscribe partnership seeing and you more of TV of and or directly services, benefits And the the real it’s in supported AVOD them closed-loop digitally the like FAST systems. – targeted the then to, ecosystem, coming really platform AMC+. within through promotion Plus

we the are subscriptions within environment. driving are the starting So FAST channels see to platform

Michael Nathanson

– Patrick question you Okay. for Patrick. go a question flow. can free to just cash back a on And On

to may opportunity managing the flow? to have growing you know looking do most given question we to be grow. the know have we on you of, You cash used the decision the last you business my cash is, opportunity this free optimize not is way psychology I actually an have keep the in to look, question, the are strategic Or

cash which deliver that flow opportunity you for flow the to today? kind do in growth, need see how versus for of cash balance sharing you’re you the reinvesting So us

Patrick O’Connell

Thanks, clearly we’re Yeah, continue however. would allocation are we sure. you from Listen, know capital – I that in titrating Michael. standpoint, a business. the investment, say we invest to

got side across we’ve You works largely that is a a that that And [technical difficulty]. ecosystem ecosystem know, got we’ve digital difficulty] [technical programming shrinking. linear is obviously

Christina Spade

good And a runway still have we for streaming growth come. to

we’re be meaningful, know revenue more it’s we lean about to and and very we at a stronger But thoughtful into. prioritize diligent going already streaming And the and even so becomes level. you as digital how very healthy what

where very the are drop the in we’re But at. see continues that it flow. back going cash and to to and have we to as it’s to grow and about proud know so is cash strengthen down optimizing long-term it look come And you you know

Michael Nathanson

Thanks.

Operator

And our thank Instructions] next And you. Cahall question Fargo. comes from [Operator from Wells Steven

now line is Your open.

Steven Cahall

your some revenue of just us ad of and in how bit little market. first much that be in of And great splits some would Maybe you. thoughts linear able market. you your peers the hear terms heard it Could then on Netflix. in advertising is We’ve there, like Thank on the how or to macro sell you’re whether remind due that’s from the scatter sell to scatter latest how there market? some upfront context to AVOD a much softness the you launches

up to would free it So flow. going Stocks tend they big cash love get I can a how when then, there’s there update Patrick, next investors XXXX And not year? free trending trending or as negative. line to then down like guiding cash that I flow emotional and reverts, follow. know that seems get And your you we It go again. to see for into you’re when is

you So still year trough direct-to-consumer I’m Thank invest pivot could to AMC? the is and as you if make the you. be think cash curious this flow for come? to free to Or just continue that

Kim Kelleher

networks is more uncertainty and The same the marketing of you Thanks, Steven. broadly, the been our partners marketing with experiencing like economic It’s in ad-supported spend. space. resulted environment scatter soft. have their in markets The as said, climate are partners everyone’s Kim. really our has others conservative This being

factors, that to lot been subject really I the stay to we’re a focused that think while industry of ways on. critical leading are going the we’ve in myopically outside prevailing conditions

and We’re initiatives of television our trying linear advertising efforts, our strength business to advanced potential through build-outs. maximize existing the and

a tools seeing of We’re of from partnerships, technologies advertisers and earlier we’re and year us business impact into with build our this programmatic barrier also we what larger need capture automated enables talked the to which we building positive about our digital And future. amounts on now the lower automatic to entry. our – really real

work from seeing we are actually we’re networks. cable So that in marketers of going continue I very ad the were first increases, We going sense through environment. with from regards the in traditional the ‘XX-’XX saw from we outlook upfront high our to past. is truly year. macroeconomic quarters remain That forward and would say CPM what said, to for the end around growing – of see going the and attentive in linear that strong And pool of we the the upfront, the three of kind next to cautious the current our being revenue broader we’re market. at the reflects market several of that

Patrick O’Connell

we’re as I say, to cautious speaking. listen, Patrick being your it’s our before, cash relates – you additional your said on know And investment in titrating programming. I cash flow, would flow On into it very obviously, free question, as

monitor the significantly driving to not negative we that investment And forward, on And push for increase results, you of in flow. when carefully. going the going but invest in expense going sand cash at to – we’re to that’s that, will we know we see so not a materially. very We’ve growth, drawn free a line continue

see it. near-term want focused where it absolutely of to we’re I’ll on in invest of So see and sort opportunity growth we sort profits, there. we We and leave

Steven Cahall

you. Thank

Operator

I the thank I like showing remarks. no And for am you. questions. further turn to over call now back And Nick to closing would

Nick Seibert

good for today you concludes Thank us AMC thank you for Networks. very the a Have call. much, everyone day. and This in joining interest the

Operator

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

You may now disconnect.

AMC Networks (AMCX) 4 Nov 222022 Q3 Earnings call transcript