Q1 2022 AMC Networks Inc Earnings Call
Speaker 1: Called dark W.
Speaker 1: Also on the way is the premiere of a new Utopian drama, Moon having, starring Joe mangenelo and Dominic monahhaan, and will have the return of the dark comedy Kevin kenath, himself starring Annie Murphy of <expletive> Creek fang.
Speaker 1: Later this year we'll bring fans the final eight episodes of the Walking Dead and then we'll butw the first two series in our emerging and rice universe, which will be our next big franchise, and rice's interview with the Vampire and an rice' mayfair Witches.
Speaker 1: By the way, I seen an early cut of the first episode of interview with the vamphire and couldn't be more excited. We think it's going to blow people away, with mayfair which is close behind.
Speaker 1: These are franchises we expect will pay off for years to come.
Speaker 1: And our pipeline is just as robust going forward into 2023, including a fhaastic lineup of new shows and universe expansions.
Speaker 1: We have two new series set within the Walking Dead universe. Focus on the popular and fad favorite Darryl, negan and maggie characters.
Speaker 1: A new series bring viewers into the widely popular, engrossing and award winning world of horp and glass, as well as two new dramas: a psychological theorater triller called invitation to a spotifier and a dramatic comeddy, damascus.
Speaker 1: Also next year we have two new series, starting two names already beloved by AMC viewers: Bo boencur and John Carlo ES dis ZO, who both established their iconic characters in breaking bag and continued, of course, in better co Saul.
Speaker 1: We recently greenlit and new drama comedy from starring boa odinkirk called straight Man, adapted from a Richard rousso valvel.
Speaker 1: And John Carlo's pizto will start in a new drama call the driver. We couldn't be more thrilled to be keeping these two remarkable talents with AMC for their next big projectswe're also taking advantage of our film labels- IFC films, IFC Midnight, our lj films, as well as shutter, to reinvent the so-called pay one window for our movie businesses.
Speaker 1: And make new films exclusively available to AMC plus subscribers each Friday, 52 weeks a year.
Speaker 1: This initiative kicks off tomorrow with the streaming premiieer of a loby cold clean from issc films and starring Oscar winter, atrian brodie.
Speaker 1: We piloted this strategy late last year and saw notable results of both viewership and subscriber acquisition.
Speaker 1: Of a weekly lineup of exclusive new films, coupled with our biggest year of original programming, provides an incredible array of entertainment.
Speaker 1: We continue to expand our amcplus offering with owned and controls, exclusive and carefully curated content as we serve and grow our audiences.
Speaker 1: Earlier I touched on how we continue to optimize our streaming digital and linear platforms. I wanted to expand on that for a moment. Streaming and linear can and should strongly complement each other, and I'll point to our all-black streaming service and our vtv linear network as examples.
Speaker 1: We TV has long been than one number one cable network with black women on Thursday nights.
Speaker 1: And we recently rebranded Thursday nights as all Black on wetv.
Speaker 1: We'll increasingly share content across these two platforms and we're seeing strengthening on both platforms as a result.
Speaker 1: For example, after aing three prior seasons of the hit all Black series, a house divided on wetv, the four of season premiered on all black in January and streaming viewership increased 84%, with much of the growth coming from wev viewers who were new to all Black.
Speaker 2: We saw similar growth with the most recent season of another all-black series called double cross, after prior seasons aired on wetv.
Speaker 2: We've also seen churn decline to a start lows for all Black, while at the same time, wev on thursdays and Fridays is delivering double-digit rating gains from the previous year.
Speaker 2: So overall, a demonstration of power, leveraging incremental content monees monetization opportunities.
Speaker 2: And driving audience engagement across our streaming as well as our lineer platforms.
Speaker 2: This is also the time of year for some of our most important conversations with our advertising partners.
Speaker 2: And we've never before entered an upfront with such a mix of meaningful strengths across our lineup of original content. The afabilities to offer advanced technology solutions that matter most to advertisers.
Speaker 2: And expanding reach across a variety of platforms.
Speaker 2: To supplement advertising opportunities on our own linear and digital platforms. We continue to take advantage of our deep library of targeted content by redeploying it across our fast channelswhen we first entered the abod and fast-based some two years ago, we did So with a very clear and a very deliberate platform agnostic strategy of making our content available in as many places as possible So we could meet viewers wherever they were.
Speaker 2: That strategy is opened up a world of monetization opportunities for us. We currently have eight fast channels carried on six leading third-party platforms and are developing six new channelsincluding the high divevanoni channel I mentioned earlier.
Speaker 2: This has become an increasingly important element, or our add support, the content business, and we see tremendous potential for us going forward in a very hot and growing space.
Speaker 2: We've also made distinct progress, growing our advanced advertising business.
Speaker 2: And demonstrated our continued advertising innovation through our commitment to selling addressable adspots in every hour of original programming this year on our AMC and wetv networks. With an addressable footprint of nearly four million homes, this is the most significant national addressable deployment in the history of television and we're thrilled Amazon was our first partner to jump on board with this opportunity.
Speaker 2: And this is just the beginning, as we work with our ad partners to ussure in a new age of highly relevant and targeted advertising on television.
Speaker 2: With brand safety, with control, with transparency and with enhanced returns for our advertising partners and AMC networks.
Speaker 2: So across our company. Amc is operating from a position of great strength. Our strong execution of our strategy produced solid results in the first quarter and is expected to lead to another strong year of revenue and subscriber growth right through our 2022 targets and beyond.
Speaker 2: Our differentiated streaming approach continues to provide us with meaningful advantage.
Speaker 2: We're growing subscribers, we're expanding internationally and, most importantly, we continue to create and trying premium content and monetize it on a level we never have before, which is fueling growth across our company.
Speaker 2: We remain laser-focused on profitability and the economics of our streaming businesses and are already beginning to see the positive differentiation of our targeted approach.
Speaker 2: We see so much opportunity ahead to win subscriptions, entertain viewers and create meaningful long-term value.
Speaker 2: With that that, I'll turn the call over to Chris for more detail on our financial results. Thank you.
Speaker 3: Thank you Matt, and good morning everyone.
Speaker 3: Our year is off to a strong start with the continued growth of our streaming subscribers across all services and with growing monthly streaming subscribers and revenue, with our strongest programming slates still to come in the remainder of the year.
Speaker 3: We are focused on the growth of high-quality, revenue-generating subscribers that have favorable lifetime profitability across all our services.
Speaker 3: Our first quarter performance is tracking strongly against our 2022 and long-term outlooks. As of such, today we are reiterating our 2022 and long-term financial outlooks.
Speaker 3: We continue to execute against our strategy of owning more IP, engaging our global audiences with strong content curation, growing profitable global streaming and digital businesses and optimizing our highly cash-generated linear business, supported by our strong mbpd partnerships and leading advanced advertising initiatives.
Speaker 3: The targeted nature of our streaming offerings requres a lower level of content spend across our services than the requirements of a general entertainment service.
Speaker 3: In our experience, our continued success depends on the right balance and mix of content and marketing investments.
Speaker 3: Along with an efficient and high-quality technology stack to support stellar customer service for all of our superfans.
Speaker 3: We believe our communities are desirable, sustainable and offer tremendous value to subscribers, which is resonating and breaking through in our current crowded streaming market.
Speaker 3: Across our portfolio of streaming services. Our cost per subscriber acquisition is significantly less than the expected lifetime revenue of the subscriber and is improving an efficiency over time.
Speaker 3: Combined with the lower cost of programming of our services, this ultimately results in a very profitable business.
Speaker 3: With subscriber engagement that is driven by our content depth, curation and sense ive community. We believe our subscribers are less price sensitive than others.
Speaker 3: We see this in our overall improving churn profile.
Speaker 3: Given these favorable dynamics, we believe that we have long-term strategic pricing power. As of such, we have announced plans to launch $1 price increases on both Acorn and all Black beginning this month.
Speaker 3: We are executing against our global growth opportunities in a disciplined and thoughtful manner. While it is still early days, we have launched certain of our streaming services in several countries over the past year, including the U? K, Canada and Australia.
Speaker 3: Our experience to date. Deep marketing expertise and existing international distribution and content relationships, combined with our unique ability to distinctly tailor our services to superserve our subscribers in specific individual markets, allow us to deliver our subscribers of fulfilling and satisfying experience.
Speaker 3: All while achieving efficient subscriber acquisition and retention, thereby driving subscriber lifetime value and long-term profitability.
Speaker 3: While every new international launch will be different, we will generally partner with a local distributor during the initial launch base. This strategy allows us to activate local markets quickly and thoughtfully, while leveraging our local partner scale, minimizing our investment risk and generating the greatest return to our shareholders.
Speaker 3: A timely example of this is our launch of AMC plus in India on Apple TV channels in March. Our product road maps include launches of AMC plus and Spain, New Zealand, Latin America and other European countries.
Speaker 3: All occurring mainly in the latter half of 2022 and into thousand and 23. additionally, we plan to continue expanding Acorn TV across Latin America in 2022 and two thousand and 23.
Speaker 3: With our Multiplatform content monetization approach, we can prioritize investment in our streaming growth, extend our linear business and continue to innovate in advertising.
Speaker 3: As met mentioned, we recently announced the development of six new ffact channels, further expanding the audiences that our content and brands connect with.
Speaker 3: And we led a meaningful step forward in national addressable advertising, as we now offerred three addressable adloatts for every hour of original programming on our AMC and wetv networks.
Speaker 4: Our innovations and addressable advertising allow us to maximize the yield of our available inventory by delivering effective data-targeted campaigns across our linear, voodd and digital distribution.
Speaker 3: The expansion of additional channels and distribution partners offers more scale and provides us with additional high-value digital inventory.
Speaker 3: When combined with our seamless, programmatic first go-to-market approach, these leading advancements in advertising are helping to offset traditional rating headwinds and position us well into the future.
Speaker 3: Now let's discuss our first quarter 2022 financial performance.
Speaker 3: Consolidated revenue increased 3% to $712 million, driven by streaming and advertising revenue growth.
Speaker 3: Consolidated adjusted operating income was $211 million, reflecting a 30% margin and our anticipated higher investments in content and marketing to drive subscriber and revenue growth. Adjusted earnings per share with 2054 cents.
Speaker 3: Domestic operations revenue increased 6% to six hundred and six million dollars as compared to the prior year. Distribution revenue and subscription revenue each grew 8%, driven by continued streaming growth.
Speaker 3: Streaming subscribers and streaming revenue increased 37% and 43% respectively versus the prior year.
Speaker 3: We ended the first quarter with approximately nine point five million paid streaming subscribers, representing first quarter net streaming subscriber additions of four hundred and thirty-one thousand.
Speaker 3: We are just beginning to see the benefits of our robust 2022 content slate materialize, partly in the form of beneficial subscriber retention performance, as we have experienced an improvement in churn rates across our entire portfolio of streaming services as compared to the prior year.
Speaker 3: Affiliate revenue declined in the low single digits, driven by subscriber universe declines and partly offset by contractual rate increases.
Speaker 3: Content licensing revenue of $61 million grew 9% as more original programs were distributed in the first quarter of 2022 as compared to 2021.
Speaker 3: Domestic operations advertising revenue of $201 million grew 1%, driven by continued pricing and digital growth, partly offset by lower delivery.
Speaker 3: Domestic operations. Adjusted operating income decreased 10% to $219 million for the first quarter of 2000 and twenty-twoadjusted operating income performance was driven by continued investments in future top line revenue growth, including programming and subscriber acquisition and retention marketing.
Speaker 3: International and other revenue for the first quarter of 2022 decreased 9% to $1 million.
Speaker 3: Excluding the impact of foreign currency, translation revenue would have decreased 7% and.
Speaker 3: Distribution and other revenue decreased 12% to $87 million, reflecting a 5% impact due to variability of timing of productions at 25: seven media, as well as a 3% impact from unfavorable foreign exchange translation.
Speaker 3: Advertising revenue grew 4% on a year-on-year basis, driven by continued solid performance in the U K and partly offset by currency unfavorability.
Speaker 3: Excluding the impact of foreign exchange translation, advertising revenue grew 7%.
Speaker 3: International and other adjusted operating income was $23 million, representing a decrease of 2%. Adjusted operating income performance reflects the revenue dynamics I just discussed, partly offset by ongoing favorable expense management.
Speaker 3: Moving to cash flow and the balance sheet, free cash flow for the first quarter of 2022 represented an outflow of $37 million, primarily reflecting planned content and marketing investments.
Speaker 3: The timing of certain production tax credit receipts.
Speaker 3: And technology investments.
Speaker 3: We remain on track to deliver approximately $1 million of free cash flow in 2020 -two.
Speaker 3: We ended the first quarter with net debt and finance leases of approximately $2 billion. Our consolidated net leverage ratio was two point six X and we remain comfortable with our balance sheet and current leverage ratio.
Speaker 3: Our capital allocation policy remains unchanged. First, we will look to invest organically on projects that provide attractive returns to our shareholders. This includes return-based investments in the profitable growth of our streaming services and digital businesses.
Speaker 3: Second we will maintain leverage that is appropriate for our business outlook. Third, disciplined an opportunistic strategic mna. And fourth, opportunistic return of capital to our shareholders.
Speaker 3: There were no repurchases of AMC network's common stock in the first quarter of 2022. We will continue to evaluate share repurchases on an opportunistic basis.
Speaker 3: As we look to the rest of this year and beyond, we see strong value potential from the unique advantages built into our differentiated model and the profitable streaming opportunities in front of us. We are highly focused on continuing to unlock this value as we reconstitute our revenue mix for long-term growth.
Speaker 3: We remain on track to achieve our goals- 20 to 25 million streaming subscribers by the end of 2025, and we continue to expect to be about halfway there by the end of this year.
Speaker 3: For the second quarter of 2022, we expect 400 to five thousand net paid streaming subscriber additions.
Speaker 3: Driven by our strong Q programming offerings.
Speaker 3: Regarding our financial outlook for the full year of 2022, we continued to anticipate total company revenue growth in the low single digits. Continued streaming subscriber growth is expected to drive subscription revenue growth, partly offset by ongoing affiliate revenue trends from basic universe declines.
Speaker 3: Content licensing revenue is expected to decline over time as we utilize our exclusive content on our own streaming servicesnotwithstanding that, in 2022 we do expect some full year growth in content licensing revenue. It is important to note.
Speaker 3: That given the timing of epiodic deliveries and specific dynamics related to legacy licensing agreements, we expect the majority of our full year 2022 content licensing revenue will be recognized in the third and fourth quarters of 2022.
Speaker 3: For 2022, we continued to expect stable advertising revenue driven by continued pricing and robust digital growth in innovation, partly offset by continued macro viewership trends.
Speaker 3: Full year 2022. operating expenses reflect the return of pandemic-related programming and concluding seasons of some of our more mature series, which typically cost more on an episodic basis.
Speaker 3: Once these shows conclude this year, it frees up additional programming capital that will be redeployed into new content or otherwise recaptured.
Speaker 3: Also productions are still generally subject to COVID-19 protocols. Over time, as protocols are no longer necessary, we will see these pandemic-related production costs come out and we expect to recapture or repurpose these costs as well.
Speaker 3: We continue to invest in our streaming platforms by investing in owned content, efficient marketing and technology.
Speaker 3: Additionally, we are investing in our international growth as we launch our streaming services in new markets, and we have included certain nonrecurring start-up costs associated with entering these new markets in the outlook.
Speaker 3: In consideration of our global growth-driven investments. As previously guided, we expect full year 2022 adjusted operating income to be about 10% lower than 2021.
Speaker 3: We are pleased with our current level of content investments across our services and our networks, representing the right content refresh cadence to continue to add new subscribers and keep the existing subscribers engaged, providing them with a healthy mix of new and library content to enjoy.
Speaker 3: We do not see the need to increase our content investment level from here dramatically and we expect that future investment levels will be about the same as in 2000 and twenty-twoas. We continue to maintain our disciplined, incurated approach toward content investments and our intense focus on unit economics and subscriber lifetime value optimization. We anticipate that the total longer-term company-adjusted operating income margins.
Speaker 3: Will be in the mid- to high 20% area. We expect our long-term free cash flow to return closer to prepandemic levels, which will drive additional meaningful shareholder value creation over time.
Speaker 3: Our solid first quarter performance positions us well to achieve our full year 2022 goals and our long-termgoals 2000 to 25 million subscribers by 2000 and twenty-fivewith much of our robust new original content flate still to come in 2022. We are excited by the future growth opportunities we are seeing for our streaming and our digital businessesvalue creation remains at the forefront of everything that we do as we will continue to build on our momentum with our targeted premium content curation strategy to superserve and engage our passionate fans and attract many more new fans along the wayoperator. Please open the line for questions.
Speaker 5: As a reminder to ask a question, and you want to press Star one on your telephone to withdraw your question, press the boun key, please down by. We compile the QA roster.
Speaker 6: Our first question comes to the line of Thomas CA from Morgan Stanley . Airline has now been.
Speaker 7: Hi thanks for taking my questions first can you provide some additional color on the incremental kind of advertising environment what you're seeing in terms of any broader impact from macro uncertainty or any verticals where you're seeing strength or weakness that holds your view of stable revenues this year and then as a follow up as you transition from some really high profile. Final seasons of major shows to new IP like and right stuff I was hoping you could dig into how you've been a approaching your marketing efforts in a credit landscape. Matt you spoke about efficiencies on content costs and Chris I think you talked. Also about attractive subscriber acquisition costs how does the marketing approach differ relative to general entertainment. How do you think about you the right level of investment there and how that shift as you approach new shows relative to established ones. Thank yousure I'll all start of that Chris come in but.
Speaker 8: Just generally on the advertising markets out there, we feel confident about delivering what we plan to deliver this year. As you know, there's certainly uncertainty out there in terms of worldwide politics, supply chain and all of those hanvers, but there's also a ways that we're we're growing that part of our revenue stream in terms some of some of the advanced advertising applications, in terms of the fast panels and just in terms generally of the types of things we're trying to do with our advertising partners. So you know we remain confident there. Good question on the marketing front. There, I think, if anything, we have tremendous advantages in terms of the target nature of our services and what we are learning about our users over time and our ability to.
Speaker 8: Market these shows more efficiently, spend more time building the brand marketing and specifically marketing behind the content, along with the performance marketing that we've been doing in the streaming space. So I think it's a work in progress for everybody as consumers become more embedded in streaming services. But again, I think it's one of the benefits of having targeted services: knowing our consumers well.
Speaker 8: Marketing to a really curated slate of content is a lot easier than throwing a lot of marketing against the lawall for a wide range of genres of content. So we're feeling really good about our ability to launch these shows and have them drive both user viewership of our our channels, but also streaming connects.
Speaker 3: Y Thomas Chris is following up some more on the advertising question. Appreciate your questions. On the ad front, we're really incredibly pleased with our solid adrevenue performance that we're seeing this year, both domestically and internationally. Early on last year, in the upfront that we're in right now for the year, we did make the strategic decision to take on more upfront sales than usual because we're seeing incredibly strong pricing, had a high demand for our offerings and that decision was incredibly successful in that we have less scatter inventory than we usually would right now and from that standpoint we've been able to leverage the strength of the advanced advertising marketplace to shift some dollars into digital and advanced advertising relative to categories that we're seeing strength in its health technology ance financial retail, entertainment areason the advanced advertising front, we're also very proud of what we've been doing in pioneering there. We are a leader in the addressable space.
Speaker 3: And we've been the first to market national addressable ad campaigns across linear, vood and connected TVs. So we're really excited about what we're doing there and with Amazon, specifically the three addressable ad slots that we're putting out. They will run in the footprints served by Comcast Charter, Cox and vo and they will reach more than 35 million homes.
Speaker 7: Great Thank you, and if I could just squeeze one more on streaming, ARPU revenueu grew a little bit slower than subscribers in the quarter. I know arpu'is a mixed bag with a lot under the head and you just talk about some price increases at Acorn and all Black, but can you share any details on kind of the mix of wholesale retail adoption, any promotional discounting that might be happening there? Thank you so much. Yes, the great question and I think if the question that really gets to the heart of the business is streing in terms of what are we seeing with ARPU trends, what our key metrics with lifetime value and our cost acquisition et ce. So, relative to ARPU, you know there is still- there is still going to be- a lag between the revenue and the subs coming on with the submonth effect. But if you think about our our cadence last year, because in 2020 one we had less of a contents late than what we would normally like, driven by COVID-19 delays. Now in 2022, we have a cadence that we like for programing in and we really have strong content. So we really don't feel that we need to discount as much on the ARPU side. So our goal really is to drive future streaming profitability across all our services.
Speaker 3: Lean into wherever we feel we do have pricing resilience, and it's not necessarily about putting buckets of millions and millions of subs on. For us, it's really about making sure that we are connecting with that high revenue generating subscriber that is going to be loyal to us and keep our churn rates in check. So we're excited about the modeling that we're doing and we really feel strong, strongly about the opportunities in front of us for growth to get to our targetsthank you. As a reminder to ask a question you wanted need todepress Star one on your telephone to withdraw your question. Press the B key.
Speaker 6: Our next question comes from the line of Michael Morris from guenheim. Your line is now, and thank you. Good morning guys. I have a two question, questions about streaming again. The first one is on the contributors, if you will, I guess, to streaming subscriber growthup trajectory at the sort of studady 400 to five thousand net ad pace. You're on, you're on track for the year, but but certainly beyond the year I don't think it puts to on pace to reachard your goals. And so my question is there is kind of when do you expect a little bit more tailwind? And is that, do you see that driven by the content cycle? Do you see it driven by the geographic expansion? I'm curious to inputs there. And my second question, on the top of advertising, is about the potential for.
Speaker 9: And add supported Tier for your streaming services. I think all of your services are ad free at this point. What is your current thought? Possibly also layering in an ad supported Tier at a different price point? I'll start out, Mike. Thank you first.
Speaker 8: We have no current plans for and as's supported tihere, but obviously this is something we continue to monitor, continue to look at.
Speaker 1: We are very happy with the current offerings that we're making. If the business changes, we also think we have the ability to be very nimble and to adapt quickly.
Speaker 1: It's. You know it's funny when you hear one other large player have some problems in their subgrowth all of a sudden and ad here is going to solve all problems. We don't necessarily think that's that's true, but you know, we'll monitor the market and we'll see what happens. In terms of of where we are in achieving our goals and the goals we put out there for 2025, we think we're absolutely still on schedule. There's still tremendous opportunity where we haven't ramped up. On the international front, we have new additions to our offerings, like centi. We're're just beginning to roll out services. We have loads of new content coming this year and next year. We are in the process of refining how we market and what we're learning about marketing and again, I think we see tremendous advantages in these targeted services. So from our standpoint, we are right on schedule to.
Speaker 8: To make the subscriber streaming. What guidance of 2025? Mike, it?'s chr.is, your question on the pacing, I think, is right on. In fact, in our preparation we're looking all at all this. I said if I was an Analyst, the number one question I would have is how of the organic pacing reconcile with the long term target. So I appreciate your diligence and looking at everything, But from the standpoint of the pacing, it's really the 400 to 500 is our organic pacing right now and it's what we have visibility to and what we feel good about for the quarter going forward. We will have international expansion relative to new markets that will be in, that are in our base right now. We also have high dive, which we recently just purchase that we have significant opportunities for more growth there. That's really not in the pacing yet. And then we also have churn improvements and metric improvements that we're seeing. So as we more and more have annual subscriptions.
Speaker 3: Do more bundling. We're going to see natural metrics improvement and we're see we are seeing it over time. The other thing I'll say about AMC plus is that it really hasn't been in the market that long- call it 20 months or so- So it's a newer service relative to some of the other services that are out there. We have strong, strong content. This year we're really excited about better call calli. Don't know if you all are watching better call all, but it's really a great show and the way it's coming together now is amazing to me. So we've got the end of the Walking Dead coming up later this year and then it all doesves tailes, as Matt said, into the and rice franchise power and the early episodes of that IP looks stellar. So the other piece that I will point out is we will have exclusivity with the an rice content. So more and more over the long term, our strategy is that we will get away from licensing.
Speaker 3: We have to honor our legacy deals, but we're going to get away from the licensing for IP that we own, and so the only place you'll be able to see a lot of this IP on the longer term buy will be on AMC plus.
Speaker 8: Very helpful. Thank you both. Thank you. Our next question comes from the line of Robert Fishman from mft nice, and then your line is now open.
Speaker 7: Thank you. So, as you are acutely aware and already alluded to that, investors are now pretty focused on streaming margins. So can you just help us frame the longer term margins target for your streaming platforms? And maybe, if you're not willing to share any specific numbers, should we think about the streaming pivot for your company profitability by 25. given that stream is going to be- you're expecting that- the largest revenue driver. What will it be? Incremental to profit, ability or will streaming just help offset the declines in linear Hi? Robert, it's Chris, you know. I think it's the great question. A lot of the focus now in our business is really looking at the models and the profitability and how, how we grow from here and what does it look like. But for us, when we make a content investment, we're really looking at the whole listic monetization cycle. So we're making an investment in content and then we're able to monetize and distributed across all our platforms, which include includes streaming window.
Speaker 3: Linear international distribution, licensing and wherever there's markets that we're not in a streaming position. So we're at a place that as we build our revenue for streaming, that will continue to build and helpped go against the headwinds that we're seeing on the linear side, which we're going to continue to see basic declines. We're going to continue to see lower delivery on the ad revenue side because I think is Matt has spoken a lot about the acceleration of what COVID-19 did- the streaming- And so we are seeing that. But we feel very bullish on the future and we feel that as the streaming momentum continues and the linear settles out, that we have a good monetization engine that will deliver 20 and in the mid to high 20% margin for the long term and that will get back to level of prepandemic cash flow. And the last piece of it really is the pricing power. I think what we're seeing in our streaming communities is that we have loyal fans.
Speaker 3: And the more that we can superserve with the cadence of content that we have right now. They're loyal to us, they like the content and that will. That will be meaningful over time. And if I can just add one quick follow-up on the profitability of streaming, can you just discuss how you measure the ROI specifically around the IFC film decision moving the pay one window to MC plus like is that something that will help overall company?
Speaker 7: ahprofitability, or will that just help accelerate the AMC plus subscriber growth?
Speaker 3: Yes sure, it's a great question. So, relative D fc films? We have a gem there with fc films in my view, and what we're seeing on the streaming research side is that the fans are enjoying both the original series and the original movies. So our research- that original movie and original series, along with other content that we have, is driving the viewershippp in the engagement. So when we looked at our our window that needed to either be renewed or redistributed for F? C films, we felt that it was really important that we locked in that first pay one window and so we will be able to benefit from that window for am C plus in our services and offer one movie a week starting this week which clean, is the first movie coming out that stars Adrian brodie. So over time it doesn't relative to our profitability mix. You know that's a a size scale that it really doesn't have a significant impact to driving or under serving our ROI.
Speaker 3: But we do feel that the subscriber growth we will be able to get from offering the movies in our portfolio is powerful enough that it'll support future growth for streaming. And just to reinforce that, one of the number one objectives here is to get compelling proprietary programming in front of our streaming potential audience and our current users, and that's what we're doing here.
Speaker 4: Thank you, rotthank you. Our next question comes from the line of David cararmonsky, from JP Morgan, your line is now open.
Speaker 8: Thank you, Matt. You'd walk through some of the ways your domestic linear networks can be leveraged to drive streaming engagement. Just wondering how you think about that dynamic applying internationally. Where do you think your channel footprint? It's kind of well established and aligns with your streaming offerings so that you can drive kind of awareness your products as you launched them.
Speaker 1: Thanks good question. Without you know, identifying any potential markets, I think would. I would just say that that- and you know it's quite obvious about the international, international market that every year ago it's a different situation. So we have we have territories where we already have a footprint. We have territories where it makes sense to partner with some of the larger platforms and you know it's it's it's a game time decision as we, as we look look at a market. There's tremendous opportunity out there for us. This is not a part of our business, has been heavily developed historically, So there's tremendous opportunity to scale there and it requires a really custom approach on a market by market basis and I think we're seeing that already and we will see it more going forward. Is it is a real priority for us this year and going forward? There's a lot of opportunity for us out there.
Speaker 1: And we're going to take advantage of it. It's a good question, Dav. The other thing I, is that our international presence. We do. We do have international presence, as you know, in much of Europe and Latin America. So from that standpoint, having the boots on the ground is really helpful to have already have partner relationships, et cetera, local content relationships. So from that standpoint it helps support and underpin our international expansion in those markets. Thank you.
Speaker 6: Thank you. As a reminder to ask a question, you wanted to press Star one on your telephone to withdraw your question. Press the B tain.
Speaker 6: Our next question comes in the line of Steve and cohol for Wells Fargo. Your line has now been.
Speaker 10: Thank So mattand Chris, it sounds like you feel pretty confident in getting to your long term guidance without necessarily needing to increase your content spend a lot. That's definitely an outlier from your peers, and you know you've talked about some of the affinity that you get for content. I was wondering though, if you could just talk a little bit about how you see that ramping up. I think what we see in a lot of peers is that there's the first cohort of superfans to come in and then at plateauus, So it seems like, if this is a domestic outlook, it would be tough to get there without increasing content spend.so is the right way to think about this that you're going to have a large percentage of those subs that come in on the international side?
Speaker 2: Let me just start there. Thank again. A very good question, I think. Rather than focus on spend, we like to focus on volume and new content that we're delivering. We know we can be more efficient on the spend side- and you know it's a hard measurement at the moment because we've seen that you can spend $18 billion on content and that doesn't necessarily make you a better business- and our main focus here is on balancing the spend, balancing the amount of content where we're offering. And again, one of the things that Chris mentioned earlier is, as we produce a great deal of the most new content we for produced over the next year, a lot of that content is going to be more cost efficient to spend because where it is in the series lifestyle, we have a lot of series that are coming to an end where we are spending- end of series episic, episodic levels of of cost.
Speaker 11: 10 hits.
Speaker 3: We have a lot of hits we're fortunate to have, but we constantly and closely look at what is the right refresh rate that we will hit the home run for the subscriber growth, have a high-generating ARPU and work within our model of our boutique and targeted streaming services approach. That again, we're not trying to be everything to everybody, we're trying to be everything to someone.
Speaker 10: Thanks for that. And then just on, as we think about ARPU, I would kind of getting into around $4 of streaming ARPU in the quarter as we kind of try to project out revenue for a few years. Should we expect just the blended ARPU to have some headwind? Do it just because your mix is going to be more international? You talked about India. I would think that's a pretty low ARPU market. So just mix shift is that going to probably create some headwind to blended ARPU over time as you track towards the guidance? It's a great question. In terms of the cadence into the ARPU, from where we sit now, I don't really want to get into specifics about we think it's going to be x, But what I would say is that again I go back to what I said before for 2021, we didn't have the contents late at the right level that we wanted. So now we have the right contents late. We have a healthy level of investment in marketing. You'll see our marketing focus will start to shift more from acquisition to retention, which will be important.
Speaker 3: And then, as we grow, an international markets, you know we're at a place now where it's important that we continue to grow and lean into the growth. So when you really look at what's the number one priority, it's really about growing where we can in a meaningful way to get the highest ARPU generating subscriber that we can and really have profitability across the Board for the long term. And the playbook that we're working with now it's unique for each streaming service, but I really feel like we have momentum with that and so I don't really want to tie hands with giving, you know, narrow guidance on just one of the metrics. But it's fair to say that last year, with the, the consistent discounting that we did, we want to try to get away from that and really focus on price resilience. Thank you.
Speaker 12: Thank you. At this time I M showing no further questions. I would like to turn the call back over to Nick ceieber for closing remarks.
Speaker 10: Thank you for your interest and I am seeing networks and have a good day everyone. This concludes the call. This concludes today's conference call. Thanks you for participating. You may now disconnect.