Q4 2020 AMC Networks Inc Earnings Call

Importantly our relationships with our Distributors are very strong Now supported by these screening efforts over the past two years. We've renewed eight of our major affiliate agreements with several over noodles and 2020 including AT&T DirecTV, which we mentioned on our third quarter call.

I renewals now Encompass our streaming services as well as our linear Channel portfolio underscoring that the linear side of the business is stable and remains very valuable to our affiliate partners and to us

we continue to create and selectively to a highly desirable content that is allowing us to feed the content pipeline of our commercial free streaming and linear life forms, and we've successfully built the foundation to monetize this great content across those platforms and across a variety of digital ad platforms, including our newer Avon and free ad-supported streaming or fast channels as they're called.

Hours of our strategy commercial free streaming Affiliates trained digital advertising opportunities and our strong underlying content are not only contributing to our strong results today. They are the foundational elements our growth strategy as we continue to reconstitute the company over the next year and over the next several years.

As a reminder are streaming strategy has been to identify highly distinct editorial areas that we can thrive in and grow.

Is targeted approach includes British Focus dramas and Mysteries with Acorn TV horror and suspense with shutter drama documentaries and crime with Sundance now and all black our services our service targeting black audiences formerly known as Urban Movie Channel or um, see which we rebranded back to old black last month.

By targeting audiences who are particularly passionate about these content areas. We don't compete with larger General entertainment streaming offerings rather be complement our subscribers relate to in value of services. Not on the basis of one specific show or film but rather because we provide a level of depth and quality in these highly specific content areas that they can't get anywhere else and better price that allows them to purchase our offerings in addition to several of the general entertainment services as a consequence our services. Enjoy High engagement with relatively lower churn and that translates into attractive economics.

This premium and specialized content strategy enables us to be quite selective and focused in developing and acquiring content providing us with a uniquely for Thursday actually attract the streaming model that really does fundamentally set us apart from the general entertainment s father services that are engaged in the much-talked-about screaming wage and which do require massive content pipelines in order to satisfy each member of a household our approach very much plays to a historical strength have as a selective content curator. I think it's fair to say that we have a long and successful track record identifying and developing shows and films that are definitive and authoritative in these particular content areas in which can become quite popular and drive cultural conversation though. They may begin with a rep.

Please specific editorial Focus.

Speeding is now a growing component of total company Revenue domestically and internationally, we will accelerate our International streaming expansion something we've only just begun to tap into over the last year.

Yes.

Economics for a company will continue to evolve with the growth of streaming platform and we believe we can grow in a manner that is very very meaningful for a company of our size.

Happily AMC plus and its first several months has done quite well out of the gate. It allows us to expand the reach of the AMC Brandon from the roughly $85 million. So US Cable video subscribers to a universe that in the US includes every Broadband home available now and in the future and by expanding our overall total addressable Market AMC plus allows us to not only economically mitigate the impact of cord-cutting to be a growth business as we inhabit them a linear and streaming areas of the media landscape with our distribution partners.

An AMC plus is strengthening our relationship with those Partners following summer launches with our mvpd partners at Comcast dish and sling. We substantially expanded availability of a m c plus in the fourth quarter with Distribution on Apple TV channels Amazon Prime channels as well as Roku in addition to AT&T DirecTV with additional plan launches to come later this year.

By making our Affiliates key Partners in our streaming Ambitions while maintaining the most cost-effective wholesale rate for our basic cable channels. We are alive, they're mvpds. I work with them to deliver multiple options for their customers.

Touching on Advertising for a moment. If I may be held back inventory in The Upfront for an anticipated strong scatter Market that did materialize in life and continues in q1 and this is helping to offset losses tied to production delays due to COVID-19 as for digital advertising. We have several initiatives that our key priorities for our future. We are reaching new viewers and fans by deploying our library content that we own. Only on Commercial you screaming and linear but also on a bod and fast channels Pluto TV Amazon's IMDb TV sling TV Samsung TV, plus and Vizio smartcast among others.

In addition on our linear channels, we continue to innovate around Advanced advertising having just completed two first-to-market national wage addressable ad campaigns on t v allowing us to maximize our yield and deliver increasingly effective and targeted advertising across our linear networks as well as in our on on demand video inventory. Please represent two key elements for digital strategy and are areas in which we are seeing increasing opportunity.

Turning to our content if I made our ability to curate and be successful in the content ecosystem has allowed us to expand on our reputation as a home too high quality scripts linear content particular in these Epic World and Prestige drama editorial areas that I mentioned earlier and that now in food streaming delivery. We bought a disability is key to winning in the way. We need to win as the media ecosystem continues to evolve.

are very strong program development team continues to extend not only are currently own intellectual property, but it's Adept at discovering new content that captures the attention of our targeted base providing a steady stream of material that is helping to power Our Brands and to power our growth

Most recently this includes a serious called gangs of London that debuted on AMC Plus in the fourth quarter and was a sleeper hit for us that built each day and each week. I'm also a very popular show called the discovery of witches that is extraordinarily strong with the second season streaming on Sundance now and AMC plus and which will come to a GMC linear later this year enabling us to maximize the impact of our content spend across multiple platforms.

And of course the Walking Dead Universe with the flagship series returning this weekend as a continuation of its tenth season, but these new episodes of The Walking Dead because of our ability to keep Fear The Walking Dead production on track as well last fall. We now look ahead to a 2021 that will include more than 40 new episodes from the full size with Walking Dead Fear The Walking Dead and the second season of the newest series in The Walking Dead Universe Walking Dead World beyond all on Sunday nights on a GMC with Early Access on AMC plus so for fans of the franchise, it is a bonanza of Epic and wonderful proportion.

We also continue to be opportunistic when it comes to making Investments. Give us long-term sustainable content Advantage One recent example, we entered into a strategic partnership that involves Equity with a company called chasteberry. It's a Canadian production house that's behind several of acorn TV's biggest shows this investment enables us to secure some of acorns most viewed and valuable titles and to expand on them and develop more in the US and around the globe owning underlying intellectual property.

So in summary the strategy the company is pursuing is working very well the last six to twelve months were very important period of time for us off giving us a Tailwind as we moved significantly into the areas that I mentioned.

We believe twenty one is going to be a critical year as we continue to reconstitute our company and engage in multiple means of monetization for our strong content against the vet disciplined and focused editorial areas in which we operate

A big part of our success has been the people who make up our company. We have an absolutely outstanding team who seamlessly adjusted to the challenges posed during the last year and worked together to invent and drive our business constantly and decisively forward during this disruptive time.

Our senior management team now includes and we're very fortunate to have her spayed. We recently welcomed as our new Chief Financial Officer many of you may know Chris long time but showtime and CBS building successful streaming businesses as well as transforming those companies and adapting to the environment that we are operating in I'll now turn the call to Chris for a more detailed. Look at our financial results.

Thank you, Josh, and good morning everyone. I am delighted to join you today for my first AMC networks earnings call before I review our financial performance for 2020 and expectations for 21. I would like to take a moment to say that I am pleased to join AMC networks. The current entertainment environment is thriving and it is energizing to be able to be a part of the continued growth Evolution. Especially the pivot the streaming platforms with AMC networks. I am honored to be a part of the team driving the company forward with a Clear Vision for the future and for long-term growth as a consumer AMC networks has been my go-to place for many of my favorite premium shows like The Walking Dead Breaking Bad and Better Call Saul.

I believe I am seeing networks has the right asset mix to flourish in the evolving media ecosystem and to continue its Legacy of creating sought-after world-class original programming and original life.

Now, let's turn to the fourth quarter and full-year 2020 results.

AMC networks had a strong full year 2020 performance while facing pandemic related uncertainty and the global Marketplace liquidity is healthy for the company evidenced by the generation of six hundred eighty six million dollars of free cash flow and twenty twenty and a strong balance sheet.

Full-year results were supported by significant streaming revenue and subscriber growth strong scatter market performance in Q4 offset by continued subscriber Universe decline in inventory pressures for linear advertising as I go through my remarks today. I'd like to summarize a few singular items that are reflected in our 2020 results which issued $122 of impairment charges related to AMC networks International which we recognize in the second quarter.

86 million dollars of programming expense write-downs of which fifty four million dollars occurred in the fourth quarter and $35 of restructuring charges related to the streamlining of our operations, which occurred mostly in the fourth quarter.

The full year twenty-twenty total company revenues declined 8% 2.8 billion dollars total company adjusted operating income was $767 for cash flow was $686 million dollars while the year was impacted by uncertainty. We ended the fourth quarter with momentum the successful launch of a m c plus in October 2012 along with the growth from our targeted streaming services positions as well to realize additional and growing streaming platform revenue and twenty Twenty-One and Beyond

For the fourth quarter of 2020 total company Revenue was seven hundred and eighty million dollars representing a decline of 1% Total company adjusted operating income was $133,000 in the fourth quarter. We ramped up our marketing Investments to support the launch of a m c plus and that investment contributed to a substantial portion of a decline off fourth-quarter Revenue exhibited stability primarily due to favorable top-line performance from accelerating streaming growth and improved subscription revenues strong scatter benefiting from a special programming events such as best Christmas ever and the Doctor Who take over

and higher content licensing

adjusted operating income exhibited similar stability from strategic expense management before the impact of increased growth marketing investment.

With respect to the performance of our operating segments for the full year National networks revenues, which includes subscription revenues licensing and add Revenue decreased 12% off point 1 billion dollars.

Content licensing declined 22% caused by production delays related to the pandemic. This decline has a timing component to it. So the licensing Revenue will be recognized when they took actions are in 2021 and Beyond.

Subscription Revenue declined 7% primarily due to subscriber Universe declined.

Turning to advertising for the full-year advertising Revenue decreased 11% to 802 million dollars. This was largely due to shifts in the timing of original programming as a result of delays caused by the pandemic resulting in lower inventory partly offset by increased cpm's

for the quarter National networks Revenue decreased 3% This reflects a 1% decrease in distribution Revenue primarily due to subscriber University climbs with content licensing at a more normal level than prior quarters due to International licensing revenue from World Beyond and Fear The Walking Dead.

Advertising revenues decreased 5% to $237 from the same full year Dynamics again this largely reflects shifts and the timing of original packaging and lower inventory partly offset by increased CPM driven by healthy scatter pricing in the fourth quarter the rate of decline moderated significantly on a sequential basis compared to Prior quarters.

Moving to profitability metrics for the full year National networks adjusted operating income with down 16% the $760 this largely reflects the impact of lower revenues partly offset by strategically lower operating expenses 2020 results reflect decreases in programming expenses marketing expenses and Personnel costs from ization. As I already mentioned. We also identified and wrote down eighty five point five million dollars programming that no longer fits with our future programming strategy for AMC networks off of which fifty four million dollars is reflected in the fourth quarter.

For the fourth quarter National networks adjusted operating income decreased 5% Largely from the revenue Trends. I just discussed along with higher programming expenses. By lower sg&a expenses from cost control.

moving on to International and other for the full-year international and other revenues grew 2% to $747 streaming Revenue increased 85% Off streaming Revenue increased from $125 at the end of 2019 to approximately $300 at the end of 2020 based on the company's took care of the month of December's growth paid subscription fees annualized

Streaming subscriber additions continued to build throughout 20/20 offsetting the strong streaming Revenue growth in the segment pandemic related venue closures at levity pack subscription and add revenues at AMC networks International contributed to a somewhat muted Revenue growth rate compared to what we would expect under normal conditions.

Excluding the impact of levity the segments pro. Forma. Revenue growth rate would have been approximately 11%

For the quarter International and other Revenue grew 8% to $216. This growth was primarily driven by accelerating subscription streaming Revenue wage compared to the full year growth rate of 2% It shows the strength of the growth. We are experiencing as streaming revenues become a larger component of our total company revenues streaming Revenue grew 96% from the prior-year in the quarter on profitability metrics for international and other for the full year. The adjusted operating loss was four million dollars impacted by a ninja and marketing Investments the support the growth of our streaming business a decrease in adjusted operating income at AMC networks International and pandemic related Comedy Club closures at levity month for the quarter adjusted operating loss was fifty-five million dollars which reflects primarily the impact of our marketing Investments to drive the growth of a m c plus.

Moving on to Consolidated EPs and cash flow metrics adjusted EPS was $7.76 for the full year and $2.72 for the quarter.

income

Tax expense was $145 for the full-year representing an effective tax rate of 36%

The increase in our effective tax rate was primarily related to an increase in valuation allowances for foreign deferred tax assets going forward. We expect to be in the mid 20% area with cash taxes for the year were approximately a hundred million dollars.

The full year as mentioned already. We had impairment charges of $122 primarily related to AMC networks International impairment charges, which we recognize in the second quarter of 2012 or we had restructuring and other related charges of $35 million dollars primarily related to the streamlining of our operations most of which were recognized in the fourth quarter of 2012.

Free cash flow for the full year twenty-twenty with $686 free cash flow primarily reflected higher net cash provided by operating activities from reduced program Productions do to COVID-19 is lower Capital expenditures and strategic cost management.

Working capital strength is reflected in our 2020 free cash flow result looking at the balance sheet. We ended the year with net debt and finance leases of approximately two billion dollars as compared to 2.3 billion dollars in the prior-year are Consolidated net leverage ratio was 2.6 times at the end of the year as compared to two point five times a year ago.

In February of 2021 we completed a series of Leverage neutral financing transactions. We secured lower fixed rates and lengthened our maturity profile with it significant maturity is now due until 2024. We remain comfortable with our current leverage ratio.

In twenty-twenty we repurchased 14.8 million shares of our common stock for $354. This includes the $250 modified Dutch auction tender them completed in the fall for the full year of 2020. Our average repurchase price was $23.91 per share.

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

We fully monetized our stake in fubotv and realized gross cash proceeds of $96 in January of 2021 representing an approximate four times cash-on-cash return home.

Our Capital allocation policy remains unchanged first. We will look to invest organically on projects that provide an attractive returns to our shareholders in both our core and new businesses off. This includes return based investment in the growth of our streaming services second. We will maintain leverage that is appropriate for our business Outlook third disciplined and opportunity that strategic m&a and forth opportunistic return of capital to shareholders.

Looking ahead.

The 2021 we already have strong proof points from 20 20 of the success of our pivot into streaming distributions for streaming subscribers. We expect to end 20 21 and over nine million aggregate streaming subscribers. It is important to note that the subscriber growth will be driven by our strong programming slate and twenty Twenty-One supported by targeted marketing Investments.

Streaming Revenue growth offset by linear market dynamics will support total company Revenue growth in the low single-digits in 2021 from 2020.

To drive the growth of the streaming platforms. We will invest incrementally and programming and marketing and platform enhancements for AMC plus and the targeted streaming services as such wage adjusted operating income to decrease by mid single-digits in 2021.

For free cash flow and twenty Twenty-One the delayed production from 20 20 will occur as content Investments and twenty Twenty-One and consideration of this along with incremental Investments to support streaming Revenue growth. We expect free cash flow for 20 21 to approximate $200.

With our compelling content Pipeline and the ability to maximize the monetization of our programming Investments across streaming linear and international platforms. We are extremely well positioned to grow and further create stakeholder value for years to come but that operator, please open the line for questions.

Ladies and gentlemen, if you'd like to ask a question at this time, please press the star. Then the number one key on your touch-tone telephone to withdraw your question, press the pound key. If you'd like to ask a question at this time.

Our first question comes from a line of Thomas with Morgan Stanley. Hi. Thanks for taking the questions and congrats Chris on the new role. Can you expand a bit on the sequential Improvement in the quarter for affiliate revenues at the national networks? And what were the major drivers of that given the recent major renewals is there increased visibility that barring any major changes in subscriber erosion Trends that's kind of the right level to think about in 2021 and then second. I was hoping you could share any updated views just about the streaming profitability has wider range of these Services changed your view on the appropriate levels of investment either marketing or more exclusive content which informs you on the path towards greater profitability. I know you got it to 20 21 expensive increasing jobs, maybe more color on on the Investments there and the the thoughts around profitability over time. Thank you.

Oh sure Thomas. This is Josh. You know, I think if I may I think the most important thing to focus on in Dynamics with our affiliate with our affiliate base wage or the changing nature of our relationship with them very fundamentally. Whereas in the past, you're aware. We had a linear only relationship. We now have a great New Year and streaming relationship. So when we sit down at the table with our mvpd partners and now our new growing array of digital Partners, do you have multiple things to discuss and consider and engage on with them together and they include linear and streaming so we're now in frankly a wonderful form of harmony with them. We developed our streaming services some of them with the input of these very mvpds and we have multiple products that go on their shelves so we have explained

fairly well-read lower

Call you very strong linear cable channels. And now they're carrying are streaming services as a retailer that gives them a marginal and we managed the contents to make each of them have propriety linear and streaming which provides multiple strength. So it allows allows RMV to engage in two forms of ID with us and to reach their Broadband only subscribers as a retailer our student services. So I think you'll see that in our history and you'll see that as a critical as we go forward and that is really the most important thing that's occurring in our affiliate World. I'll just comment if I may have broadly on your second area question of of screaming profitable in general and this is really quite important and it was in my prepared remarks the streaming services that we operate are quite different than dead.

Something for everyone general-interest streaming services. We have discrete areas of editorial interest in each of them. As I mentioned wage that really makes them appeal to and be chosen by individuals who associate with and want to find either British oriented comment and a quarter or a horror oriented comment content and shudder or epic epic worlds and Prestige content on the AMC part of AMC plus as a consequence of that off. Our content costs are being leveraged across multiple products significantly and that gives us a fundamentally different economic profile and might be having to spend and spend and spend into a gargantuan raised for some sub number and a worldwide market share. So we're really dead.

The different world and in a business model an economic model that's really quite attractive.

That makes sense. Thank you so much.

Our next question comes from Michael Morris with hooking Haim.

Thank you. Good morning guys, and and thanks for all the information. I have two two questions or two topics. The first is on content and the windowing Joshi referenced home, you know, the availability of the discovery of which is in particular in AMC plus first and then later in the year on the linear Channel and so my question is can you provide some more detail on how you were thinking about windowing content when you think about that content investment and how are you making the decisions? What goes where and what time frame and then also can talk a little bit about that content licensing Revenue Source at the at the national networks. And and how much of of that is. We look forward. Do you expect to be sort of internal sales to your streaming businesses? And then also just if I could on the streaming side the long-term guidance that you provided for subscribers, very helpful you reference the international program birth.

As well. Can you share any more about what that path looks like in terms of whether it's

You know Market rollouts or or or the size of an international contribution to the total. That would be great. Thanks a lot. Sure. My so on your first of your first question on a windowing I would say that it is really not a one pattern fits all at all. We have are multiple projects as you now. Well no linear and streaming. So in some instances we will go streaming first and linear second window in other instances will be absolute propriety between linear and streaming and there will not be overlap. And in other instances will go linear first instead of life. So there is really not a one-size-fits-all my approach to what we're doing in screaming. We are Guided by value and streaming sort of consumer.

Fair price for something that they like a lot and they feel is valuable value and utilization on our linear channels to maximize our value to the PDS were paying us affiliate fees and and Associated advertising that we get from it and will marry the combination of these different play patterns. Am frankly. It will be increasingly important part of our business as we go forward as it relates to your second part of your question, which is the content licensing Revenue. The nice news is that I have our hands on the dials of what goes where so we have our incumbent position of Arrangements. We've made with third parties which in some cases are for Life Series. So we have commitments to them of course that we will honor and they will have that material as as we entered into contracts with them some time ago.

As to new product we will make determinations Mike about where and how it fits our business model best. But there's a couple of variables that will go back to that. How strong is the material who are streaming service and what geographies will you want it for and we don't want it for so for instance. We might say Gyro Shack in the US. Let's keep that new show for the United States, but we're not well developed in this part of the globe. Let's go arrange a license to the third party for x amount of time. It could be a limited license in that part of the globe because we're not we're going any opportunity and that really segues to the third part of your I think your question which has to do with how much International is a part of what we talked about and I'll just give you a quick recap of where we are. We have just dead.

done to mine in

International opportunity so we have deployed certain of our student services in several countries over the past twelve months. They're performing quite well, and we're very encouraged by it. And we now see the rest of the world as an increasingly larger opportunity based on the proof points that we've seen in these countries and I'll just mention a thing if I made Mike, which is that as we make the content increasingly for all these platforms and of course comes back to our library, so we are in a circumstance in which we are young building and building and building material that we can make new to lose subscribers on screen. So we think we have a fairly smart and well structured disciplined system.

Thank you, Josh.

Our next question comes from Michael Nathanson with moffettnathanson.

Thanks, good morning, and congratulations Chris. So Josh couple of you and one for Chris, I think to Tom's his first question. We're trying to figure out the quarterly volatility a description of pages, right? It's bounced around a lot the past 4 quarters. We just trying to figure out look if we think it's mid single-digits to clients and pay TV. How should we then translate that into a subscription Revenue growth, That's one too is on the Paramount plus yesterday. I thought it was really clever that they're going to use a valid and fast to promote maybe click to buy for Paramount. Plus. I wonder if you're thinking about do you have the opportunity within your fast deals and how you how you structure and maybe you're a box best platforms to to connect to maybe click to buy and then just bought a new crisp. I'm working capital and 21 how much of that Delta in cash flow and twenty Twenty-One you simply working capital catching up from what happened in in 2020 so Thursday,

If I may I'll try and address your first question and turned over to Ed on on how we're looking at linear and sort of selling opportunities. If I may know I just if I may I'm going to Echo what I said before Michael, you know, we we we've renewed eight of our significant affiliate agreements over the past couple of years. We did a significant number in the last year as you know, they all have different characteristics. They they have terms and general between a few years and many years there now increasingly had streaming in them and I would say that what's most important if I can convey it may not exact answer. Your granular questions is that we now have New Harmony with our mvpd partners. So they have of course pressures on linear video dead.

And they have an increasing Broadband on.

Footprint, we are now able to inhabit their basic cable world at a spectacular price. If I may who is the value of our renew your channels? I think it is frankly the single best price in the industry for the value that is on Linear by far and now we have material for them and only subscribers that they're very interested in carrying and deploying and they are carrying and deploying it. So so I think that's the most important thing. I can convey thoughts about how and what is occurring in our distribution relationships. If I may I'll turn it over to Ed to talk about the manner in which were marketing selling and am using all of our Outlets. Hey Michael, so yes, we're we're happy with our our a valid fast channel strategy of being on all the major platforms and we do control wage.

Question of that inventory and it is certainly part of our strategy to to upsell to RS5 Services. Now we do that in the sink with our linear channels and it's interesting. I talked a bit about when doing before we have returning successful series coming back to the S5 platforms. For example, what up to the third season of Riviera, which has been a very successful show for Sundance own now and discovery of which is is in its second season driving to both shudder and Sundays now and we've already ordered ordered a third season and what we find is by running festivals of the fire season on linear and throwing to RS5 that is becoming a compelling way of of building new sampling on RS5 platforms. So we like the strategy and we're going to continue getting into it.

Michael this is Chris. Thank you also for your question and thank you for the good wishes create to talk to you this morning. So for the working capital, and we gave deliberate guidance about a hundred million for free cash flow cuz we did want to give visibility into cash flow dynamics that we expect to see this year based on what we know today. A lot of it is the working capital catching up. If you look back to where we were in 2019 or free cash flow was about $377 million dollars. So when you average twenty and Twenty-One, you're above that zone. And again, we will connect you to manage according to what we see in terms of investment return, but we will we also have a strong commitment to working capital strength. Thank you God. Thank you all.

Our next question comes from gun barrel with RBC Capital Market great. Thanks for taking the questions. Just first a quick one another follow-up Encore affiliate friends. I don't want to factor eyes twenty-twenty but it seems like there was an elevated level of renewal activity. Would it be fair to assume there's a fair bit of slowdown in deals coming up in 2021 and twenty twenty-two years. Then I have a follow-up sure, you know, we had uh, I guess it's fair to say that the last year was a fairly Rich here in terms of renewals. And the last two years were fairly Rich, you know, the Cadence of these things is fairly constant as as you know, it can it can be and and frankly we met in part design it that way so that we have stability and even this in our Horizon of affluent rules in part because of the changing nature of the business to wit what we've now.

Streaming services and linear, so it works quite well to have a calendar.

That is sensible and I would say somewhat smoothly with that said there are some variations year by year. We have renewals coming up all the time and always will so I think we had a sort of richer year a little bit in the past 12 months, but there will always be renewals and that's what our Horizon looks like. God understood. Thank you. And just on I'm just thinking about the three hundred million in run rate Revenue you had exiting 20/20 if I just assumed RP remains largely stable, you're twenty five subscriber targets kind of imply that that Revenue stream could go well over 1 billion dollars, you know, fairly substantial and encouraging. So I guess the question is our first house you expect arpu maybe on a blended basis to Trend overtime second. Sorry if I missed it, but again, if you could help us think about the US versus International mix and just log

Phle I know you talked about profitability, but is there anything more you can share with us in terms of the past Break Even or even a longer-term margin potential of that business as you look to that great $20,000 million figure. Thank you. So this is let me try and give some color on what we're thinking about the model. I'm going to start first with the targeted businesses that have really met your expectations. The model were findings a lot more efficient than we than we originally thought and the efficiency is holding as we scale. So we're very pleased with the momentum service represent not only a destination for the viewers, but they tend we're we're seeing to form a community around the content and so as you would imagine that's helpful on and Sack we we think we continue to gain share in the space because no one has the depth or the library or the community that we've built in these targeted areas and we just continue to expand it. I would also point out on yep.

Question about our pool leavers, we we don't feel we've really begun to tap that and we feel quite confident about the stickiness of the subscriber. So that that we think is is optimistic and a sort of all ahead on on the International Peace of it. And there was a question about this before I would just give a little more color and say we're just beginning to expand internationally a corner and Sundance now have been available outside the about a year maybe a little less and outside the US represents roughly 10% of their subscribers mainly in the UK Canada and Australia, so it's early days, but we do see significant opportunity outside the US and and we think we're making good progress.

Thank you both.

Our next question comes from Tim Nolan with Macquarie. Good morning. Thanks. I'd like to ask about your efforts and addressable advertising. I saw your announcement a few days ago about the campaigns that you just managed to do. I guess my question is this is such an obvious natural progression in the industry. Maybe could you fill us in a little bit more on kind of what it takes to make this a more standard procedure wage? Because it seems like such a good opportunity for all parties involved. Thanks Thanksgiving. So I think it takes strong relationships and Partnerships and and and we have them just to fill wage when we we announced this week with Omnicom that that in November and December we completed the first of a couple of national linear addressable campaigns and one of the campaigns was with Volkswagen but to your question we did that really was driven by our partnership with canoe which has as you probably know addressable spots running on Comcast and Charter Club.

covering about 25 million

Homes. So in in this case Volkswagen was specifically targeting viewers who had shown recent interest in SUVs, and the campaign was able to achieve higher reach and frequency than a table advertising. So it's interesting. If a household within the addressable footprint matches the advertiser Target, they're served a specific piece of creative if the household does not match then they don't see an ad from that client and and we can run something else. So so the results of this where we're encouraging I think Omnicom and Volkswagen were pleased with it. Certainly canoe or Partners at at Charter and Comcast. We're pleased with it. So that's what it takes to do more. I mean it it it it takes a bit of work and coordination, but the upside Zara pack and this was a good test for us to do as we're going into the to the pre upfront season and we're having more conversations now with with advertisers.

Thanks, and I just wanted to follow up on that actually is is to make it a more standard procedure. Is it becoming more of a discussion point in The Upfront? Can it become a meaningful proportion of your total add add business over time? I think it will I think it will it will ramp up slowly. Okay. Thank you.

Our next question comes from Doug creutz would Cohen.

Hey, thanks. Just wanted to line up a couple of numbers. I think you said that streaming revenues grew 97% in Q4. You also indicated that the run-rate at the end of the quarter went from 125 Million last year to three hundred million this year, which is obviously a lot more than 100% growth rate. Is it is it Delta? They're just a reflection of you having a lot of ads in December. Thanks.

Sorry having a lot of ads is that a lot of subscriber ads you say I think of it very differently. We're we're all sort of looking at each other. Sorry, so so yes, we did have a a strong December on on the platform on the on the S bot platforms. And as you know, we surpassed our our expectations. We're also off to a strong start now with the first quarter and it's being aided right now by the new episodes of The Walking Dead coming on to the platform. We're also seeing continued strength throughout the the targeted wage portfolio that's being driven in no small part by discovery of witches in a program called Creepshow on on shutter. If if I have an exactly address your question ma'am, you can ask it again, but that's no that's I think the spirit of the of the number of growth

I agree that it is it is a factor of that. Thank you.

As a reminder ladies and gentlemen, if you'd like to ask a question at this time, please press the star then the number one key.

Our next question comes from the line of Stephen King with Wells Fargo.

Thanks. I'm going to probably beat a couple of dead horses here, but I'll give it a shot anyway, so I'm the third quarter call. I think you talked about Q4 National networks subscription Trends being a similar to Q3 Q3 was down 10% to 4 was down 1% So, is there anything one time in the Q4 number or is that really just Improvement of of Trends wage then on direct-to-consumer You Know Jack she talked a lot about how you have a structurally much more profitable business today than a lot of the big streaming more competitors. So, you know at the level, can you give us any thoughts to what that profitability looks like? You know, are you are you near Breakeven or when you get to your long-term targets? Are you going to be substantially better than break-even? Thank you. Sure. So look, I think it just on the distribution side. I think I may just leave it where we were which is that we have this new.

New Harmony and we're engaged and we're engaged in renewals with a range of Distributors. As you know, anyone deal can move things up or down a bit. When you divide the numbers into quarters, they get somewhat small so they move around with it. I think the most important point is as we go forward is the harmony that we have with our mvpd partners and that we're engaging with them with a slightly different or substantially different point of view on our part and on their part, you know on the on the structural side and on the economic on the profile of our streaming services it is it is developing but fundamentally as we've said in our prepared remarks remarks and as we've talked to emphasize we are you know, we have a Golden Globe nominee movie on shutter for those who are fans Golden Globes are upon us while aronia we have Creepshow dead.

Which is I wouldn't say it's the most expensive show on television and it's killing it on shuttle. It's a central show on shutter. We have Joe Bob Briggs Drive-In. Which is he is he's he developed. He has a monstrous fan base for the shutter base. I say those anecdotes and I'm sure you're not familiar with them off of what meaningful is on a targeted business. And and so they have different economics than doing a show that costs many many many many thousands of dollars per hour and attempting to follow a different plot and pattern. So as we created a plan for our next five years that was taken into account and we had economics and we like we know where we come from. We know what our margin profile was in the past and we think we're dead.

applying and Mining and area

The S5 landscape that is different than what is generally pursued by others and it's characterized by frankly inherently somewhat lower costs for Content because we're engaged with people who are fans of British drama. And so when they see Murdoch Mysteries or Foyle's War there, it's just ordinarily pleased and that's sort of a hit for them on Acorn, etc. Etc. So that's the nature of our business. It's a substantially different business. It has a different cost structure. It has frankly better sustainability, and we think it's the perfect adjunct for AMC Networks.

Thanks, and if I can maybe ask one follow-up, you didn't mention killing Eve or Better Call Saul in your press release of resume production. Those are those are pretty big shows for six years. So just wondering if those might be back on as well. Thanks a lot. Right? So we still have some some shifting around do to cope with production delays for for our shows as as we mentioned in our prepared remarks. We have a Full Slate of The Walking Dead Universe shows and we've had in some time with The Walking Dead back a fear of The Walking Dead at full strength and the second season of world beyond for Better Call Saul. It does look likely at this point. That better call soul will move into the first quarter of 2022 Dodge. That's the way we're seeing it right now and other shows we're really, uh, you know, we're on a on a production. So at a timing schedule will have a clear review, I think next quarter.

Thanks.

That concludes today's question-and-answer session. I'd like to turn the call back to mister sieber closing remarks.

Thank you, which now in the call?

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect dead dead.