AMC Networks Inc. (AMCX) on Q1 2021 Results - Earnings Call Transcript

Operator: Good day and thank you for standing by. Welcome to the AMC Networks First Quarter 2021 Earnings Call. At this time, all participant lines are in a listen-only mode. After the presentation, there will be a question-and-answer session. Please be advised that today's conference maybe recorded. I'd now like to hand the conference over to your host today, Mr. Nick Seibert, Head of Investor Relations. Nick Seibert: Thank you. Good morning, and welcome to the AMC Networks first quarter 2021 earnings conference call. Joining us this morning are Josh Sapan, President and Chief Executive Officer; Ed Carroll, Chief Operating Officer; and Chris Spade, Chief Financial Officer. Josh Sapan: Good morning and thank you for joining us. Today, you'll hear prepared remarks from me, from our COO, Ed Carroll, and our CFO, Chris Spade, before we open up the call to questions. I'll spend a few minutes talking about the pivot we continue to make in our fundamental business. Ed will discuss several of our operational highlights, and Chris will review our financial performance, including discussion of our new operating segments, which we noted in the earnings press release we issued earlier this morning. With regard to our new operating segments, I'll briefly say that we've made this change in order to best reflect our ongoing business transformation. This includes taking a multiplatform distribution approach to maximizing the value with our compelling content, particularly as we retain more ownership rights to that content. This multiplatform approach today includes monetizing our content across our vibrant and growing streaming platforms, our linear and international channels, as well as through selective content licensing. And we think this new segmentation best represents our operational approach. Our earnings release noted revenue impacts for the first quarter related to content licensing primarily due to timing of Fear the Walking Dead, and one less episode The Walking Dead. Excluding this impact, total revenue grew low to mid-single digits for the first quarter largely driven by streaming revenue growth. Chris will discuss this in greater detail in her remarks. In the first quarter, overall, AMC Networks had solid performance, driven by continued momentum from our streaming services supported by our strong content. We continue to maintain a strong financial profile, with a solid balance sheet with $1 billion in cash and net leverage of 2.4 times. We have returned to shareholders almost $1.4 billion over the past several years. Our buyback program has retired almost 46% of the shares outstanding since inception. And even with our streaming investments we expect continued healthy levels of free cash flow. Ed Carroll: Thanks, Josh. As Josh mentioned, we are continuing to see success with our targeted streaming strategy which is focused on specific areas of interest and programming genres as opposed to broader something for everyone approach that is becoming the norm. More than just acquiring subscribers, we are building communities around our unique services, an important distinction and one that we are finding potent as we acquire and retain customers. This targeted approach allows to us to apply performance marketing tactics targeting specific audiences based on their areas of interest and consumption. Also valuable to us has been the use of our linear networks to reach potential subscribers which remains one of the most powerful and efficient marketing channels available. Josh walked through individual services. Let me just offer a few operational and content highlights. Christina Spade: Thank you, Ed and Josh, and good morning everyone. Before I review and discuss our financial performance for Q1 2021. I will review new changes to the presentation of our operating segments. Beginning with the first quarter of 2021, career reporting under new operating segments structure, this new structure best reflects AMC Networks focused multi-platform distribution approach to content monetization and our business operations. It also provides the best alignment of revenue and expenses in relation to how we will monetize content investments across linear, streaming and selective licensing platforms. Today's discussion of our financial results will refer to our new operating segment structure, which includes our two operating segments, domestic operations, and international and other. Domestic operation includes what was formerly known as the national network segment, AMC Networks streaming services and our film distribution businesses. International and other includes AMC Networks' international businesses and the production services business formerly known as Levity and now named 25/7 Media. Prior to this new segmenting, the streaming services including AMC+ resided in the international and other segments. Additionally, we are now separately reporting corporate expenses as a distinct reporting component, including corporate management, accounting, tax, treasury, HR facilities, legal and technology. This will improve operating segments margin disclosures by excluding corporate expense allocations from the operating segments. Going forward in 2021, as we did for year-end and full-year 2020, we plan to provide supplemental revenue and operational performance information at the end of the year, which will include streaming subscribers and streaming revenue for year end and the full-year of 2021. Now let's turn to the first quarter performance for 2021. I would like to first summarize a few singular items reflected in our quarterly results. These include first in March 2021, we divested the live business of Levity from prize of the Comedy Club and talent management operations, and the associated lease commitments while retaining the production services business, which is now named 25/7 Media. This transaction generated a non-cash loss of $16.1 million recorded in the consolidated statement of income within impairment and other charges. Having divested the non-core components, 25/7 Media is now more aligned with our core business strategy. Second, we had approximately $9 million of restructuring expenses, including $4.1 million related to severance costs associated with our 2020 restructuring plan and $4.5 million associated with our international business. Lastly, we had $22 million loss on extinguishment of debt as related to the refinancing that we had previously disclosed. Moving to our first quarter 2021 financial performance, total company revenues were $692 million representing a 6% decrease from the prior year. Adjusted operating income was $238 million, representing 7% growth from the prior year. Adjusted earnings per share was $2.98. In Q1, the timing of content licensing revenue contributed to an overall consolidated revenue decrease of 6%. Excluding the timing impact to content licensing revenue in Q1, total consolidated revenue grew low to mid single digits. This growth is largely driven by streaming revenue growth. We remain firmly on track with previously disclosed targets for the full-year of 2021. We saw strong growth in the first quarter from both AMC+ and the targeted streaming services. First quarter streaming subscribers and revenue increased 156% and 131% respectively versus the prior year first quarter. In April, we continued to expand distribution of AMC+ as evidenced by the launch of AMC+ on YouTube TV. Distribution revenue declines primarily reflected the delayed content licensing from the delay of Fear the Walking Dead to Q3 for 2021 and we also had one fewer episode of The Walking Dead in the quarter. The decrease from content licensing was partly offset by strong streaming revenue growth and better performance at RLJ and IFC Films. Lower advertising revenues reflected lower ratings and COVID related timing impacts, including the absence of Better Call Saul and certain BBC American nature programming, and one last episode of The Walking Dead in Q1 2021 versus Q1 2020. This was partly offset by strong scatter pricing and growing ad supported streaming revenue. As Josh and Ed have already noted, the ad market is very strong to date for 2021. Consolidated AOI improved as a result of lower program amortization from the absence of some original programming delayed till later in 2021, partly offset by increased investment in marketing to drive the growth of AMC+ and the targeted streaming services. Regarding the performance of our operating segments, domestic operations revenues of $574 million decreased 6% from the prior year. Adjusted operating income was $243 million for the quarter, representing 1% growth as compared to the prior year. Domestic operations advertising revenue of $199 million decreased 7% from last year. This is due to a few key drivers. We experienced a decrease from COVID related delays and the timing of some original programming as previously noted. The decrease was partly offset by a strong pricing performance for scatter and direct response advertising and robust digital growth. We continue to strategically manage our advertising inventory across linear and digital. We are still seeing a lot of strength in the advertising marketplace in April and now into May. Pandemic influence spending is very strong. We are seeing substantial continued demand and multiple stay at home categories, including home entertainment, pet, household fitness, apparel, renovation and home furnishing. Domestic operations distribution revenue, which includes affiliate subscription, streaming and content licensing revenues decreased 6% to $375 million. The decrease was primarily the result of delayed content licensing revenue, which decreased 54% compared to the prior year, due to the timing and availability of our scripted programming. The impact of delayed content licensing revenues was offset by 14% subscription revenue growth driven by strong streaming revenue growth. Domestic operations adjusted operating income performance for the quarter reflects the discipline of continued expense management, in particular, the strategic reallocation of marketing investments to emphasize streaming growth. Moving to the international and other segments, revenues decreased by $4 million to $121 million, international and other first quarter revenue trends demonstrate the continued recovery at AMC Networks International and at 25/7 Media. Adjusted operating income increased 32% to $24 million, reflecting the impact of favorable exchange rates and the recovery of some bad debt. Turning to free cash flow and the balance sheet, free cash flow for the first quarter of 2021 was $97 million, primarily reflecting the increased programming investment in Q1 2021 due to the welcome return to production from the COVID related delays we had in 2020. Our net debt and finance leases as of the end of the first quarter were approximately $1.9 billion as compared to $2.3 billion in the prior year period. Our consolidated net leverage ratio was 2.4 times at the end of the quarter as compared to 2.6 times a year ago. We remain comfortable with our current leverage ratio. In the first quarter as previously disclosed, we completed a series of leverage neutral financing transactions. We secured lower fixed rate and lengthened our maturity profile, with no significant maturities now view until 2024. There were no repurchases of AMC Networks common stock in the quarter. We will continue to evaluate share buybacks on an opportunistic basis. Our capital allocation policy remains unchanged. First, we will look to invest organically in projects that provide attractive returns to our shareholders this includes return-based investment and the growth of our streaming services. Second, we will maintain leverage that is appropriate for a business outlook. Third, disciplined and opportunistic strategic M&A and fourth opportunistic return of capital to our shareholders. As we look ahead to the reminder of 2021, and based on our current 2021 monthly streaming subscriber growth trends to-date, we see ongoing momentum in the growth of our streaming services. We remain confident in our plan for growth to at least 9 million aggregate streaming subscribers by the end of 2021. It is important to note that subscriber growth will be driven by our strong programming slate in 2021, supported by strategic marketing investments. We are reiterating our outlook of total company revenue growth in the low single-digits for full-year 2021, driven by streaming revenue growth and offset by linear market dynamics. To drive the growth of the streaming platform, we will continue to invest in programming, marketing and platform enhancements for AMC+ and our targeted streaming services. We continue to expect adjusted operating income to decrease by mid-single digits in 2021. Our free cash flow expectation remains the same. We expect to generate approximately $200 million of free cash flow in 2021. As Ed noted, delayed productions from 2020 are now in full swing, in 2021, and we will continue to strategically invest in the growth of our streaming services. As a final note on the first quarter of 2021, it is encouraging to be in this strong and resilient financial position a year after the pandemic began. As we continue to turn the corner from the pandemic-related impacts to our business, we are extremely well-positioned for long-term growth; growth that will be driven by our differentiated targeted streaming strategy and our ongoing ability to monetize content investments across traditional and growing global distribution platforms. With that, Operator, please open the line for questions. Operator: Our first question comes from Kutgun Maral with RBC Capital Markets. Kutgun Maral: Good morning, and thanks for taking the questions. Two topics, if I could. First, on SVOD, I apologize if I missed it, but can you provide any more color on SVOD subscribers existing the first quarter or maybe trends into Q2. And now that it's been about six months or so since you've rolled out AMC+, are you seeing its growth outpace the growth from your other streaming services? I'm just trying to understand how much of nine million subscribers you expect for year-end might represent AMC+ since I assume that continued mix shift would be accretive to ARPU given it's a higher retail price point. And then I have a follow-up, please. Ed Carroll: So, and this is Ed, on SVOD, I would say most directly to your question, we're seeing a strong and steady growth throughout, both on AMC+ and on the targeted SVODs. The other color I would give you is that, in terms of engagement, we're seeing number of streams at an all-time high, very healthy completion rate for our original series. And I would say, particularly the targeted SVODs are exceeding our initial expectations. The model is proving to be even more efficient as we scale. The services are representing not only a destination, but they're forming a community around the content. And that's helping us with both churn and SAC. And so as those communities build, we believe the pricing power in front of us only increases. So, I would sum up by saying we're proceeding along the model. We're feeling good about the results. And we feel we're gaining momentum, both on AMC+ and the targeted SVODs. Kutgun Maral: Got it, and thanks, Ed. And then maybe just to advertising. Digital is becoming a more meaningful contributor especially across AVOD and the vast channel space. Some of your peers include digital ad sales in their BTC or streaming revenue disclosure. So, I'm just trying to make sure we compare your growth appropriately with them, and in that vein is there any chance you could help us think about the magnitude of the digital advertising you're generating or maybe its growth outlook? Ed Carroll: Yes, well, the digital advertising is the fastest growing segment of our advertising. It's included in the advertising numbers. Our strategy, just to back up, is to be on really all of the major AVOD platforms. So we feel, in doing that, we have visibility over a large part of the market by virtue on being all the platforms. And we program our own FAST channels with a library of content, so we're able to adjust relatively quickly based upon the number of impressions. So, that continues to grow for us. It's growing at the fastest rate. The impressions continue to grow at a steady pace, and it is included in the total ad sales number. Kutgun Maral: Got it, thank you. Operator: Our next question comes from Tim Nollen with Macquarie. Tim Nollen: Great, thanks. Couple of questions on streaming, please, obviously topic of great interest, firstly, is it possible to breakout the subscriber numbers between a direct-to-consumer subscriber, some of the times that's just for Shudder, Acorn, or whatever, versus the broadband apps, like AMC+, if you care to provide that kind of detail. And then secondly, I'm just curious, you mentioned, Ed, about the growth of your streaming services internationally. I'm not that familiar with how well known or popular your content is internationally. If you could just help us understand what is the growth profile for your international streaming services, i.e., is it even better than the U.S. growth potentially because there is demand, and it's not very well penetrated, or is it maybe a tougher hill to climb internationally? Thanks. Josh Sapan: Right. So, Tim, starting with the first question on the DTC, I remind you that AMC+ is only offered through partners right now through DISH, through Comcast, through the Roku, Amazon, Apple, et cetera. So, at this point, we don't have a DTC in the market for AMC+ that does not mean that will always be the case. For the targeted SVODs, we do have a DTC in the marketplace, and they make up a very significant part of the total subscriber distribution. On international, we're just starting to expand internationally. Acorn and Sundance now have been available outside the U.S. for about a year. Shudder a bit longer, and mainly in the U.K., Canada, and Australia. So, that represents roughly 10% of the subscribers. And we do see a lot of upside as you would imagine the content that we're making for the targeted SVODs and certainly AMC's track record has broad appeal across the world. And another advantage we think we have is our strong relationships with the platform due to our linear nets across the world. We think that gives us a leg up strategically, and we'll be able to enjoy synergies with our MVPD platforms, similar to what we've done in the U.S. Operator: Our next question comes from Michael Nathanson with MoffettNathanson. Michael Nathanson: Thanks. Good morning. I have a couple. This has been my recent set of questions, which is just the volatility in U.S. affiliate revenues, they bounce around. So, could somebody help me get like level set, how do we think of the right way to think long-term about just the affiliate feed number that you guys posted been bouncing pretty severely? So, Josh and Chris, help me think about the next couple of years on the right way to think about the inputs to the number? Then I have another one. Josh Sapan: Sure, Michael. It's Josh. No, I think we renewed -- I think we mentioned renewed eight affiliate agreements over the past two years. Now there is actually a ninth that occurred since the last quarter. The rates that we are getting rate increases on those linear affiliate agreements. And of course, we're working against a universe that is in decline by call it 6% to 7% a year in the U.S. So, the position we're in is strong, stable, and our services are attractive. In any given 90-day period, you get some different contractual things moving around. But I guess I'd remind you, I think it's important to note that we really do have a high value collection of a limited number of channels. That's very different than 10, 15 channels, broadcast networks that are carrying sports fees. And I think that MVPDs as we go forward are seeing that the price value relationships of the AMC Networks put us pretty closely to the first place in value for what they're putting on linear. What's occurring now is that we're selling them streaming services. They're retailing that. And so, they're getting margin on that. So, we find ourselves actually in a nicer new position of harmony with our MVPDs. So, I would say from a horizon point of view, Michael, I think this situation for us gets better and better, as MVPDs are price sensitive, number one; value sensitive, and we have the harmony opportunity of margin for them on the premium services with an attractive price for linear. Michael Nathanson: Josh, cash you want to maybe, and Ed wants to jump in. I remember when you guys bought those international channels, and there was a lot of hope at that time that you'd be able to make a really big business out of international. I wonder stepping back, how does AMC+ fit into the international roll out? And do you see that as potentially the next opportunity and maybe the channel business taking a backseat going forward? So I know as talked about the other SI products, but where's AMC fit into your overtop strategy? And what markets would you think are next for you guys to move into? Josh Sapan: Sure, sure. So, a few things if I might, if I can expand the answer, we did several acquisitions over the past four years. The International channels 49.9% controlling interest in BBC America. We did the deal for our RLJE, which brought us Acorn and what's now called all black. The thought if you will and I'll get to this specific of your question about AMC plus internationally, was to be a global company, was to be a global content company that produced material that was an appeal around the world. And that was delivered in the most opportune manner. At the time that was linear, and it's now becoming streaming. So just to emphasize what Ed said, we are just beginning to deploy our streaming services overseas. The happy news there is that your partners, the distribution partners Michael that we have in Spain and Latin America and Eastern Europe are going to become if they're not already the retailers for the streaming services. And we've begun with the targeted services, as I mentioned, and we definitely see AMC plus as next. In terms of market opportunity, I don't want to get ahead of myself, but I would say that the shows on AMC the linear channel have proven worldwide appeal. Just for instance, The Walking Dead, Fear the Walking Dead, that a whole franchise are among the biggest shows frankly on the planet. When we begin to deploy our streaming services around the planet, we're going to have what we've already seen in streaming, which is market appetite. And then we're going to have an accelerator of interest in the content that's historically been on our linear channels that will come to our streaming channels. And we'll do it in harmony and in part on the infrastructure of what we've done with our linear channel partners. So I think and I would say, the most exciting time for this company is going to be coming in the next 6, 12, 18, 24 months and beyond. Michael Nathanson: Okay. Thanks, Josh. Operator: Our next question comes from Thomas Yeh with Morgan Stanley. Thomas Yeh: Hi, thanks for taking my questions. Given the new segment reporting, which I think also reduces elimination accounting, I was hoping you could give us an update on the path of content licensing monetization, in particular with the world beyond landing on AMC plus Ed mentioned some strong engagement there. Can you comment on how you assess the returns relative to the tradeoffs? And do these early findings increase your appetite to push content more exclusively into your services? And then I have a follow up. Josh Sapan: Sure. In general, our world as we described is changing as our streaming platforms grow. The nice news is that we have our hands on the dial. So as we produce new material that we own, it's up to us whether to keep it for our streaming platforms domestically and internationally, or well - or whether to sell it or license it. It's perhaps worth mentioning that one can license for a short period of time, one can license for a long period of time, if you choose to do it, one can license domestically or internationally or in subsets of the international market. I think it's the case that we will have a bias to keep material for ourselves in order to accelerate the growth of our streaming services. But it's not to say that we won't make a decision depending upon the development of our international streaming deployment, to create a license for a limited period of time in certain geographies, if we think that there's a smart return on that. So, we'll make an economic assessment that involves the strategic and momentum benefit of putting in our own services against selective licensing on third parties taking into account and judging how long we want to do it for and what geographies we might want to do it. Thomas Yeh: It makes sense. And then Josh, you talked about a less event driven path of growth acquisitions for the OTT services. And I think Ed talked about performance marketing tactics as well. Does that mean we should expect top of funnel growth is less tied to the timing of some of the high-profile original content releases? Or should we be thinking about brand versus performance marketing differently than general entertainment services? Thank you. Josh Sapan: I think the answer is yes. I think what we are seeing and we've seen it in Sundance Now, which we've operated for years and we've seen it in Acorn, which we've operated now for years and proceeded before as we came through acquisition. It is that as against whole house services, people identify with and liked to have a steady deep stream of British content or suspense and horror or all black or immersive dramas and documentaries on Sundance Now. They are somewhat less sensitive to what's on this week, what's on this month, where is the show of the moment. So what we find is that for instance on Shudder, which is experiencing very nice growth, shows the hits on Shudder or Creepshow, a movie that we did called Nest, a movie that's up for a Peabody Award in entertainment called . And it's up against Euphoria and all this other stuff that's somewhat better known. And so, we have the nature of our subscribers is they come for a depth of content, a steady stream of content, and they are less absolutely sensitive to this week or this month where is the show that is in the headlines. Thomas Yeh: Okay. Thank you so much. Operator: Our next question comes from Michael Morris with Guggenheim. Michael Morris: Thank you. Good morning, guys. I have two questions, one on advertising and one on streaming profitability. My first question is on the national linear addressable campaigns that that you referenced. And the question there is around what the ultimate opportunity is and sort of the incremental contribution of that approach. So as you look at the success that you had there on those two, how big can that be if this continues to work and how much sort of incremental value is there in that linear inventory? My second question on streaming profitability, Josh, you mentioned strong margin potential for the streaming businesses over time. Most of your peers site margin contraction as a result of their streaming services, whether it's content spend or marketing. So, can you put a little more context around what constitutes strong? Is it as strong as what you've been able to enjoy on the linear side historically? Or what's the frame of reference for the strength there? Thank you. Ed Carroll: Great. So, Michael, this is Ed, on your advertising question. I think there is great potential for increased ramp-up. And this has certainly been the addressability conversations have certainly been a centerpiece of the upfront. We have fun conversations that we're having now. Just to put it in plain speak, what it allows us to do with the help of the consortium that includes Comcast, Charter and Cox, and Vizio, for example, is when we're serving one spot we're able to target that at a specific demographic work and we can do that down to the household or device level. So, another household might see another spot and another household might see another spot again. So, it is a way for us to increase our inventory in effect and enjoy higher pricing from each of these advertisers in the process. Now, it does take more work for reasons that are obvious. It does take active cooperation with our MVPD partners, which we see as a strength of ours, but the biggest part of the answer to your question is really the speed at which advertisers want to prioritize this and work with us to deploy this. And I think you will see this scale up in a significant manner in this upfront, based on the conversations we're now having. Josh Sapan: Michael, on the subject of, I think, you're talking about margin and investment, if I'm not mistaken on streaming, and here's what I think what's true of our services and it's just a fundamental structural almost genetic difference. We are not looking for moon shots on these streaming services. As we mentioned, we reaffirmed our $9 million year end. We're looking to be between $20 million and $25 million in a few years. And we have the targeted services and AMC+. We've seen growth as Ed mentioned during the last period on both AMC+, and the targeted services. So, the playbook we're running is pretty different than home health services, who, frankly, God bless them have ambition for a quarter of a billion subscribers and more in global share. And they all operate in different systems, some are owned by the sell companies, some have shopping infrastructure, some have many other different characteristics. We have our characteristics, and what we need to do to achieve our objectives is to provide content that the fans, constituents, subscribers, members of our services like. That's frankly cost less. Ed will tell you that of 20 shows that we've had on the air recently, the vast number, it's something like 18 or so. We're under a million under seven figures. So that means we're in a different stratosphere, then what other people are doing as we service those very different subscriber basis. And there was an earlier question about performance marketing. We're of course engaged in deeply metric based performance marketing, it's the nature of the bps. So when you combine that which Acorn frankly, has been doing very well for a period of seven years with the inherently lowered necessity or a sort of monster hit on our services to end up with a different set of economics. And there's a very healthy margin opportunity in that. Michael Morris: And so, Josh, if I could. If we think about that business, and the streaming part of your business becoming the largest source of revenue over time, as we referenced. Is it your view that you will kind of go through that changed and this evolution with the consistent margin performance, or I don't mean quarter-to-quarter like, I understand that, but I'm just saying, from a big picture perspective, the profitability on the next generation business compared to the sort of legacy business? Josh Sapan: I wouldn't want to promise a number as we go forward. I think it's, we're new or to it, as you know, and it's evolving with some speed. We are very mindful of costs. And I mentioned the nature of the services. So I think I'm going to ask Chris Spade to just comment for a moment, she may be able to elaborate a little bit. Christina Spade: Thanks, Josh. Thanks, Mike. Thanks for the question. It's actually a great question, given the landscape we're in and all the evolution of streaming. From where I sit, I would point back to the guidance where we were very laser focused on not just quarter-by-quarter, but what we're seeing for the full-year, given the strength of our pivot. So, relative to what we're projecting for the P&L. We are going to have growth on the top-line, which is going to be driven by stream growth. So from that standpoint, we said we're going to be up low single-digits. On the AOI growth, we're going to be down mid single-digits on a percentage basis. And it's not really because if we just look at this year, that's the best we could do. We're making conscious deliberate choice to reinvest in marketing, and increase or programming content spent. On the cash flow, we're seeing that. So what I can tell you is that our goal is not to just spend away. Our goal is to really look at all the expenses we have in total, and then optimize the performance of what's going to drive from a marketing tactic standpoint, from what type of content. Our research tells us, we need to continue to put up for the streaming services. And we're very happy with what we're seeing so far. So we are confident to reiterate our guidance. And I think that honestly, it's going to be the ongoing question not just for us, but for the industry. So thank you for the question. Michael Morris: Thank you. I Appreciate it. Operator: Our next question comes from Steven Cahill with Wells Fargo. Steven Cahill: Thanks. So I think now all of your peers are giving quarterly streaming subscriber numbers. Just wondering with the new reporting segmentation if that's something that we might expect going forward and just kind of thinking about the net ads or the streaming sub - sorry, commentary, I think you were just said over $6 million at year end. It sounds like you're pretty confident being above $9 million by the end of this year. But the slate is pretty kind of weighted to the second-half of the year. So is that how we should kind of think about the case of the streaming subscriber growth? And then just the last one, it sounds like you're leaning into subscriber acquisition this year? So any just updates on profitability of the streaming business for the medium term? Thank you. Josh Sapan: Yes, so we are -- I think what we've done is we thought that the most important thing for us to do was to provide a full-year look. I don't know exactly what our peers did, but we several months ago, identified where we'd be at the end of the year. I don't know if they've done that. So we thought that we would give you as much transparency. And Chris just reiterated the key financial metrics associated with that 9 million subscribers. And we thought that was frankly, the best way to keep you appraised of where our minds are on the performance of the business and what the key critical points of achievement are. So we think that that's frankly most sensible, as opposed to frankly opportunistically popping up with a number here and there, that that would be less helpful to you, and absolutely understanding where we were headed. So, I'm actually -- I'll turn it over to Chris, because I think she has a little bit of application on that subject. Christina Spade: Yes, thanks for the question. I do think when we look at our performance for the year you hit on a few key things, which is how the content plays out over the year. And as we know we're turning the corner from COVID. So our production strength is only going to improve, it's not going to weaken. But relative to as we look at the timing of our slate, Q1, Q2, Q3 Q4, we do all in have a strong slate for this year, and we're going to invest in marketing to really drive the growth. But we are laser focused on whole year and to get to at least the 9 million subs. We're definitely on track for that. We feel good about where we are. And you know, I think, as we looked at what we did in 2020, streaming was growing fairly significantly. So it had been an international and other. We moved it over to segment to be inclusive in the flywheel of AMC and AMC+ in terms of monetizing all different ways in terms of linear, streaming and selective licensing. And then as we look to the future, As Josh said, our streaming revenue is going to become even more significant. So our reporting will evolve. But in terms of where we are in 2021, I think it sets the table very nicely, which is why we made the segment changes. Operator: I'm sure there are no further questions in the queue at this time. Operator: Ladies the gentleman, this concludes today's conference call. Thank you for participating. You may now disconnect.
AMCX Ratings Summary
AMCX Quant Ranking
Related Analysis

AMC Networks Inc. Faces Financial Challenges Despite Strong Brand Presence

  • AMC Networks Inc. (NASDAQ:AMCX) was downgraded by Morgan Stanley to "Underweight" due to concerns about its future financial performance.
  • The company reported an EPS of $0.91 for Q3 2024, surpassing estimates but showing a significant decline from the previous year.
  • Despite a slight increase in stock price, analysts predict a decline in future earnings, reflecting challenges in sustaining growth.

AMC Networks Inc. (NASDAQ:AMCX) is a prominent player in the entertainment industry, known for its popular television channels and original programming. Despite its strong brand presence, the company faces challenges in maintaining its financial performance. On November 11, 2024, Morgan Stanley downgraded AMCX to "Underweight," with the stock priced at $8.45, indicating concerns about its future prospects.

During AMC Networks' Q3 2024 earnings call on November 8, 2024, key executives, including CEO Kristin Dolan and CFO Patrick O'Connell, discussed the company's financial results. The earnings per share (EPS) for the quarter were $0.91, surpassing the Zacks Consensus Estimate of $0.86. However, this figure represents a significant decline from the $1.85 EPS reported in the same quarter the previous year.

The earnings call, attended by analysts from firms like Morgan Stanley and Wells Fargo, highlighted concerns about AMC Networks' future earnings. Analysts predict a decline in earnings in upcoming reports, suggesting that the company may not meet expectations. This outlook aligns with Morgan Stanley's decision to downgrade the stock to "Underweight."

Despite the downgrade, AMCX's stock price has seen a slight increase, currently trading at $8.65, up by approximately 1.05%. The stock has fluctuated between $8.55 and $8.75 today, with a market capitalization of around $381.4 million. Over the past year, AMCX has experienced significant volatility, with a high of $20.97 and a low of $7.08.

AMC Networks' trading volume on the NASDAQ exchange is 133,774 shares, reflecting investor interest amid the company's financial challenges. As the company navigates these difficulties, stakeholders remain cautious about its ability to improve earnings and sustain growth in the competitive entertainment industry.

AMC Networks Plunge 28% After Announcing $125 Million Convertible Notes Offering

Shares of AMC Networks (NASDAQ:AMCX) fell over 28% intra-day today after the company announced plans to offer $125 million in convertible senior notes due 2029 through a private placement.

The company mentioned that it might grant the initial buyers an option to purchase up to an additional $18.75 million in notes. The proceeds from this offering are expected to be used for general corporate purposes, which could include debt repayment.

In May, Morgan Stanley analysts maintained an Underweight rating on both Paramount Global and AMC Networks, citing ongoing challenges in traditional media. They highlighted concerns such as declining linear network revenues, the migration of sports rights to streaming platforms, and diminishing pricing power with multi-channel video programming distributors (MVPDs).

AMC Networks Inc. (NASDAQ:AMCX) Faces Challenges in Q1 2024

  • AMC Networks Inc. (NASDAQ:AMCX) reported earnings per share (EPS) of $1.16, missing the anticipated $1.79, and revenue of approximately $596.46 million, slightly below the forecast of $602.6 million.
  • The company highlighted its commitment to maintaining healthy free cash flow and producing compelling content despite lower-than-expected financial results.

AMC Networks Inc. (NASDAQ:AMCX), a prominent player in the entertainment industry, faced a challenging first quarter in 2024. The company, known for producing and distributing content across various media platforms, reported earnings per share (EPS) of $1.16, falling short of the anticipated $1.79. Additionally, its revenue for the quarter was approximately $596.46 million, slightly missing the forecast of $602.6 million. This performance indicates a notable deviation from expectations set by analysts and investors alike.

During the earnings call, as highlighted by Seeking Alpha, AMC Networks' executives, including CEO Kristin Dolan and CFO Patrick O'Connell, discussed the company's strategic initiatives and financial outcomes. Despite the lower-than-expected financial results, the company emphasized its commitment to maintaining healthy free cash flow and producing compelling content. This approach is crucial as AMC Networks navigates the evolving media consumption landscape, aiming to adapt to consumer-driven changes in the industry.

The company's operational highlights included the debut of "The Walking Dead: The Ones Who Live" on AMC and AMC+, which has become one of AMC’s best-performing series. This success underscores AMC Networks' ability to continue delivering popular content that resonates with its audience, a key factor in its strategy to strengthen its financial position and enhance flexibility.

However, the financial metrics reveal a significant decline compared to the previous year, with a 16.9% decrease in revenue and a sharp decrease in EPS from $2.62 a year ago. These figures, reported by Zacks Investment Research, indicate that AMC Networks underperformed compared to Wall Street expectations, delivering an EPS surprise of -35.20% and missing the Zacks Consensus Estimate for revenue.

Despite these challenges, AMC Networks is focusing on strategic priorities, including the completion of financing transactions that extend debt maturities. This move is part of the company's efforts to adapt to the industry's consumer-driven changes, highlighting its proactive approach to navigating the competitive entertainment landscape.