Q4 2023 AMC Networks Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the AMC Networks fourth quarter and full year 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised.

Yeah.

Yeah.

Good day, and thank you for standing by welcome to the AMC networks fourth quarter and full year 2023 earnings call.

At this time all participants are in a listen only mode.

The speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.

We'll then hear an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nick Siebert, Vice President of Corporate Development and Investor Relations. Please go ahead.

Draw. Your question. Please press star one again.

Please be advised that today's conference is being recorded.

I would now like to hand, the conference over to your speaker today, Nick Siebert.

Nick Siebert: President of corporate development and Investor Relations. Please go ahead.

Nick Siebert: Thank you. Good morning, and welcome to the AMC Networks fourth quarter and full year 2023 earnings conference call. Joining us this morning are Kristen Dolan, Chief Executive Officer, Patrick O'Connell, Chief Financial Officer, Kim Kelleher, Chief Commercial Officer, and Dan McDermott, President of Entertainment and AMC Studios. We will begin with prepared remarks, and then we'll open the call for questions.

Nick Siebert: Thank you.

Nick Siebert: And welcome to the AMC networks fourth quarter and full year 2023 earnings conference call.

Nick Siebert: Joining us this morning are Christian Dawn, Chief Executive Officer, Patrick O'connell, Chief Financial Officer, Kim Callahan, Our Chief commercial Officer, and Dan Mcdermott President of Entertainment and AMC Studios.

Nick Siebert: Today's press release is available on our website at AMC networks Dot com.

Nick Siebert: We will begin with prepared remarks, and then we'll open the call for questions.

Nick Siebert: Today's call may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. However, any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to AMC Networks' SEC filing for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements made on this call. Today, we will discuss certain non-GAAP financial measures. The required definitions and reconciliations can be found in today's press. With that, I'd like to turn the call over to Chris.

Nick Siebert: Today's call May include certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Nick Siebert: Any such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ.

Nick Siebert: Please refer to AMC networks S E SEC filings for a discussion of risks and uncertainties.

Nick Siebert: The company disclaims any obligation to update any forward looking statements made on this call.

Nick Siebert: Today, we will discuss certain non-GAAP financial measures.

Nick Siebert: The required definitions and reconciliations can be found in today's press release.

Nick Siebert: I'd like to turn the call over to Kristin.

Kristen Dolan: Thanks, Nick, and good morning, everyone. It's been nearly a year since I joined AMC Networks as CEO, and I'm proud of the progress we've made in a fast-changing and challenging environment, both internally and in the way we engage with viewers and our commercial and creative partners. In the fourth quarter and across 2023, we continue to see success in the areas that will drive this company forward, programming, partnerships, and profitability. I'm encouraged that we were able to grow streaming revenue, strengthen our subscriber base, and expand our consolidated AOI margin to 25% while meaningfully growing our free cash flow. In a moment, Patrick will provide a detailed look at our financial results for the most recent quarter and the full year, including our enthusiasm for the free cash flow potential of this business going forward.

Kristin: Thanks, Nick and good morning, everyone. It's been nearly a year since I joined AMC networks as CEO and I'm proud of the progress we've made in a fast changing and challenging environment. Both internally and then the way, we engage with viewers and our commercial and creative partners in the fourth quarter and across 2023, we continue to see success.

Kristin: That's in the areas that will drive this company forward programming partnerships and profitability.

Kristin: I'm encouraged that we were able to grow our streaming revenue strengthen our subscriber base and expand our consolidated ally margin to 25%, while meaningfully growing our free cash flow.

Kristin: In a moment Patrick will provide a detailed look at our financial results for the most recent quarter and the full year, including our enthusiasm for the free cash flow potential of this business going forward.

Kristen Dolan: There has long been a saying in this industry that content is king. We believe that if content is king, cash is queen, and we are on a path that prioritizes both. In discussions around media and content companies these days, it's hard to miss the fascination with scale. From our perspective, we see strength in being nimble and independent and value the flexibility this provides us in the market. We have opportunities that are frankly not possible for non-vertically integrated programmers who are tied to broadcast networks or large distribution businesses. We truly can dance with anyone and are enthusiastic about using the structural advantage that comes with this independence to better serve viewers and our commercial partners. With the introduction late last year of an ad-supported version of AMC+, we now have a fully ad-supported distribution ecosystem that includes our five linear networks, several targeted streaming services, and programming carriage of approximately 100 channel feeds on partner fast and CTV platforms. Our presence in all of these places is important for several reasons.

Kristin: There has long been a thing in this industry that content is king we believe that if content is king cashes Queen and we are on a path to prioritize this Paul.

Kristin: In discussions around media and content companies. These days, it's hard to Miss the fascination with scale from our perspective, we see strength and being nimble and independent and value. The flexibility. This provides us in the marketplace.

Kristin: We have opportunities that are frankly, not possible for non vertically integrated programmers who are tied to broadcast networks. Our large distribution businesses, we truly can dance with anyone and are enthusiastic about using the structural advantage that comes with this independence to better serve viewers and our commercial partners.

Kristin: With the introduction late last year of an AD supported version of AMC plus we now have a fully AD supported distribution ecosystem that includes our five linear networks.

Kristin: A real targeted streaming services and programming carriage of approximately 100 channel feeds on partner fast in CTV platforms. Our presence in all of these places is important for several reasons.

Kristen Dolan: Number one, we're able to reach viewers and make our content available wherever and however they might choose to watch. Secondly, and very much in line with that first objective, we use viewership insights and library management to window our shows and films across these brands and unique audiences to expand viewership and engagement in a cost-effective and responsible way. And third, we seamlessly work with our commercial partners across all of these platforms, which delivers value and functional benefits that wouldn't be possible if our presence was limited either to just linear or just digital. We continue to be very bullish on new offerings like Zumo from Comcast and Charter that can purge linear and streaming consumption at scale with dedicated customer service and technical support for viewers.

Kristin: Number one we're able to reach viewers and make our content available wherever and however, they might choose to watch that.

Kristin: Currently and very much in line with that first objective, we use viewership insights and library management to window, our shows and films across these brands and unique audience is to expand viewership and engagement in a cost effective and responsible way.

Kristin: And third we seamlessly work with our commercial partners across all of these platforms, which delivers value and functional benefits that wouldn't be possible. If our presence with limited either to just linear or just straightening.

Kristin: We continue to be very bullish on new offerings like zoom out from Comcast and charter that converged linear and streaming consumption at scale with dedicated customer service and technical support for viewers. The companies behind this new offering our some of our most important and longstanding commercial partners. We're pleased to have them with them on zuma from it.

Kristen Dolan: The companies behind this new offering are some of our most important and long-standing commercial partners. We're pleased to have been with them on Zuma from the beginning and see great opportunity as they continue to roll out this new offering. In other affiliate news, we recently completed an agreement with Philo that will launch early this year. It will make the ad-supported version of AMC Plus part of Philo's base video offering.

Kristin: Beginning and see great opportunity as they continue to rollout this new offering.

Kristin: In other affiliate news, we recently completed an agreement with silo that will launch early this year.

Kristin: It will make the AD supported version of AMC, plus part of filers based video offering.

Kristen Dolan: Just another example of how the ad-supported tier gives customers additional flexibility but also boosts our commercial revenue partnerships and potential for bundling, while getting our shows and films in front of more viewers. It's early days, but we are very pleased with the response to the ad-supported version of AMC+, and we have an established runway for growth as more partners add the option this year. We still put high-quality original shows on AMC every Sunday night of the year, an increasingly rare approach that drives value for our traditional affiliate partners. But importantly, this is not the only place we put these shows or the only way we work with our partners. Yes, we ended the year with 5 of the top 20 dramas on cable and 3 of the top 6 new cable dramas.

Kristin: Another example of how the AD supported tier gives customers additional flexibility, but also boosts our commercial revenue partnerships and potential for bundling well getting our shows and films in front of our viewers. It's early days, but we are very pleased with the response to the AD supported version of the AMC plus and we have an established runway for growth as more.

Kristin: Partners Abbvie option this year.

Kristin: We still put high quality original shows on AMC every Sunday night of the year and increasingly rare approach that drives value for our traditional affiliate partners.

Kristin: Lee This is not the only place we put these shows or the only way we work with our partners. Yes. We ended the year with five of the top 20 dramas on cable and three of the top six new cable dramas.

Kristen Dolan: But just as importantly, the cable companies that are seeing the benefits of that linear performance also carry AMC Plus on their own systems as an integrated offering to their customers. We drive viewership in both places. We were happy with the results of our content partnership with Maxlate last year. Our shows performed well on their platform, and we saw associated viewership increases on AMC Plus as well. We remain in discussions with a wide variety of potential partners and believe we will see additional bundling activity in the future. Across the industry, we really do need to make things easier and more cost-effective for our customers. The current environment is confusing, expensive, and essentially forces consumers to recreate the cable bundle on their own at twice the price.

Kristin: But just as importantly, the cable companies that are seeing the benefits of that linear performance also carry AMC plus in their own systems as an integrated offering to their customers we drive viewership in both places.

Kristin: We were happy with the results of our content partnership with Max late last year, our shows performed well on their platform and we saw associated viewership increases on AMC plus as well.

Kristin: We remain in discussions with a wide variety of potential partners and believe we will see additional bundling activity in the future.

Kristin: Across the industry, we really do need to make things easier and more cost effective for our customers.

Kristin: Current environment is confusing expenses and essentially forces consumers to recreate the cable bundle on their own at twice the price.

Kristen Dolan: We saw an example of new thinking on bundling and partnerships just this week with the announcement from major industry players on a new sports bundle. I believe this industry will continue to find new approaches that will better serve consumers, distributors, and content companies. Turning to advertising, we've been very focused on driving new technology and capabilities that both benefit us and change how the industry does business. In the fourth quarter, we became the first platform to enable programmatic ad buying on linear networks. This followed our first-of-its-kind deployment of fully addressable spots in our national linear programming feed. These advances make our linear and digital inventory much more valuable and effective.

Kristin: We saw an example of new thinking on bundling and partnerships just this week with the announcement from major industry players on a new sports bundle I believe this industry will continue to find new approaches that will better serve consumers distributors and content companies.

Kristin: Turning to advertising, we've been very focused on driving new technology and capabilities that both benefit us and change how the industry does business in the fourth quarter, we became the first program or to enable programmatic AD buying on linear networks. This followed our first of its kind deployment of fully addressable spots in our national law.

Kristin: Air programming fees.

Kristin: These advances make our linear and digital inventory much more valuable and effective going to market with a programmatic first approach and a fully converged linear and digital offering lets us enter into broader and more meaningful advertising partnerships. Some of the early advertisers using our programmatic linear capabilities are seeing conversion rates there.

Kristen Dolan: Going to market with a programmatic first approach and a fully converged linear and digital offering lets us enter into broader and more meaningful advertising partnerships. Some of the early advertisers using our programmatic linear capabilities are seeing conversion rates that are four or five times that of linear traditional campaigns, with significant boosts in incremental, unduplicated reach from their conventional ad bots. For the first time on linear television, advertisers can buy audience segments instead of broad demos tied to time slots, with custom attribution results delivered post-campaign.

Kristin: Four or five times that of linear traditional campaigns with significant boost in incremental and duplicated reach from their conventional AD buys for.

Kristin: For the first time on linear TV advertisers can buy audience segments. Instead of broad demos types of time slots with custom attributions results delivered post campaign.

Kristen Dolan: This is real differentiation we can bring to this year's upfront and beyond. Another area of focus for us is a technological overhaul and consolidation of our back-end systems and a shift to one platform supporting all of our streaming services. This development work will carry forward in 2024 and will improve our service to customers and maximize efficiency. Leading this effort is Stephanie Michko, who recently joined the company as our head of global media operations and technology. Stephanie and I worked together at Cablevision, where she did award-winning work around content discovery and helped develop and deploy the industry's first cloud-based EBR. She then went on to become CTO and COO of Cadent, where she was immersed in the world of ad tech, and most recently served as CTO of Charter. We're thrilled she is here with us and leading this important evolution.

Kristin: This is real differentiation, we can bring to this year's upfront and beyond.

Kristin: Another area of focus for us as a technological overhaul and consolidation of our back end systems and shifts to one platform supporting all of our streaming services. This development work will carry forward into 2024 and will improve our service to customers and maximize efficiencies leading this effort is Stephanie michiko, who.

Stephanie Michiko: Recently joined the company as our head of global media operations and technology.

Stephanie Michiko: Stephanie and I worked together at Cablevision, where she did award winning work around content discovery and help develop and deploy the industry's first cloud based DVR. She then went on to become CTO and CLO, a cadence where she was immersed in the world of AD Tech and most recently served as CTO of charter. We're thrilled she is here with us and leading this.

Stephanie Michiko: Porton evolution.

Kristen Dolan: As always at AMC Networks, everything we do ties back to the shows and films we're able to make and put in front of viewers. I want to close my remarks today with some results from 2023 that demonstrate our strong audience momentum and also provide a look ahead at 2024. The fourth quarter of last year was our most-watched quarter ever across our streaming portfolio, which, as you know, is designed to super-serve fans of specific genres and content categories. AMC Plus and Hi-Di achieved their highest number one quarters ever in terms of viewership, and Shutter and Acorn TV also showed significant strength to close the year. Programming achievements included the first season of The Walking Dead, Daryl Dixon, which is now the most watched season in the history of AMC plus, and that includes the final season of The Walking Dead itself. VHS 85 is Shutter's most watched film ever.

Stephanie Michiko: As always at AMC networks, everything we do ties back to the shows and films were able to make and put in front of viewers I want to close my remarks today with some results from 2023 that demonstrate our strong audience momentum and also provide a look ahead at 2024.

Stephanie Michiko: The fourth quarter of last year was our most watched quarter ever across our streaming portfolio, which as you know is designed to super serve fans of specific genres and content categories, AMC, plus and high tide achieved their number one quarters ever in terms of viewership and shattering Acorn TV also showed significant strength to close.

Stephanie Michiko: The year programming.

Programming achievements included first season of the walking dead Darryl Dixon, which is now the most watched season in the history of AMC plus and that includes the final season of the walking dead itself.

Stephanie Michiko: The Hs 85, its shutters most watched film ever.

Kristen Dolan: The Eminence in Shadow Season 2 is High Dive's most-watched season ever, and Toya and Reginae is All Black's number one new series of all time in both viewership and customer acquisition. We had a lot of success with our shows and films last year, and the year ahead looks just as exciting. Earlier this week, we brought a slate of new shows to the twice-annual meeting of the Television Critics Association, or TCA. Even in the wake of two strikes that shut down production for six months, I don't believe we've ever presented a more compelling and eclectic collection of shows than we did this week. These shows included Monster Spade, a critically-acclaimed series starring Clive Owen as the immortal detective Sam Spade, Parish, which is premiering at the end of March, with Breaking Bad and Better Call Saul's Giancarlo Exposito in a leading role, and the second season of the popular Anne Rice's Interview with the Vampire, which returns to AMC and AMC Plus on May 12th. The latest addition to our expanding universe around The Walking Dead, The Ones Who Live, premieres on February 25th and is focused on fan-favorite characters Rick and Michonne.

Stephanie Michiko: Emanates in Shadow season, two is high dive as the most watched season ever and soya and resume is all blacks number one new series of all time in both viewership and customer acquisition.

Stephanie Michiko: We had a lot of success with our shows and films last year and the year ahead looks just as exciting.

Stephanie Michiko: Earlier this week, we brought a slate of new shows to the twice annual meeting of the TV Critics Association or TCA.

Stephanie Michiko: Even in the wake of two strikes that shut down production for six months I don't believe we've ever presented a more compelling and eclectic collection of shows than we did this week. These.

Stephanie Michiko: These shows included Monster speed, our critically acclaimed series starring Clive Owen as the immortal Detective Sam Spade parish, which is premiering at the end of March with breaking bad and better call Saul Giancarlo Exposito in a leading role.

Stephanie Michiko: And the second season of the popular and Rice's interview with the vampire, which returns to AMC and AMC plus on Maxwell.

Stephanie Michiko: The latest addition to our expanding universe around the walking dead the walking dead the ones, who live premieres on February 25th and it's focused on fan favorite characters, Rick and Michelle.

Kristen Dolan: As we enter the final weeks of our promotional campaign, we're seeing enormous fan interest and anticipation for this continuing story. The final trailer for the series just dropped and generated 16 million plays in its first 24 hours and nearly 33 million plays in a single week. We're also bringing Rick and Michonne into Activision's blockbuster video game franchise, Call of Duty, proving the enduring allure of these beloved characters across the media landscape.

Stephanie Michiko: As we enter the final weeks of our promotional campaign, we're seeing enormous fan interest in anticipation and this continuing story the.

Stephanie Michiko: The final trailer for the series just dropped and generated $16 million plays in its first 24 hours and nearly 33 million plays in a single week.

We're also bringing brick and MS shown into act divisions blockbuster video game franchise call of duty proving the enduring allure of these beloved characters across the media landscape.

Kristen Dolan: This is a meaningful indication of the continued fan interest in this universe, which is important to us given that we have the second seasons of the two other character-driven spin-offs, Dead City and Daryl Dixon, on the way. In a world in which a premiere is when a viewer first decides to watch something, as opposed to when a network first decides to show it, we see a very long story and incredible value in this beloved and expanding franchise. As I look back on 2023, I'm proud of the progress our internal teams have made in transforming the company to adapt and thrive as this competitive and fast changing environment continues to take shape. We enter 2024 very much focused on programming, partnerships, and profitability as our three principal drivers of the company and its continued success. And I'm energized by this work, our people, and the road ahead. And now, I'll turn the call over to Pat.

Stephanie Michiko: This is meaningful indication of the continued fans' interest for this universe, which is important to us given that we have a second seasons of the two other character driven spinoffs density and Darrell Jackson on the way in.

Stephanie Michiko: In a world in which a premier is one of your first decides to watch something as opposed to on a network first decides to show it we see a very long tail and incredible value in this beloved and expanding franchise.

Stephanie Michiko: As I look back on 2023, I'm proud of the progress our internal teams have made in transforming the company to adapt and thrive as this competitive and fast changing environment continues to take shape.

Stephanie Michiko: We enter 2024 very much focused on programming partnerships and profitability as our three principal drivers of the company and its continued success and I'm energized by this work our people and the road ahead and now I will turn the call over to Patrick.

Patrick O'connell: Thank you, Kristen. I'll start by providing a high-level review of our financial results, and then I'll discuss our outlook for the year, and then we'll open the call for Q&A. For 2023, we are pleased to report that we achieved our full year of guidance, including consolidated revenue of $2.7 billion, consolidated adjusted operating income of $670 million, and most importantly, free cash flow of $169 million. Excluding the impact of the $113 million one-time cash restructuring, as well as the $50 million tailwind related to the unwind of our Hulu licensing agreement, our normalized free cash flow would have been $231 million, Looking back over the year, we are very pleased with the progress we've made in quickly reorienting the business around free cash flow generation while balancing critical investments and programs.

Patrick O'connell: Thank you Christian.

Patrick O'connell: I'll start by providing a high level review of our financial results and then I'll discuss our outlook for the year and then we'll open the call for Q&A.

Patrick O'connell: For 2023, we are pleased to report that we achieved our full year guidance, including consolidated revenue of $2 7 billion.

Patrick O'connell: Consolidated adjusted operating income of $670 million and most importantly, free cash flow of $169 million.

Patrick O'connell: Excluding the impact of the $113 million onetime cash restructuring payments as well as the $50 million tailwind related to the unwind of our Hulu licensing agreement, our normalized free cash flow would have been $231 million.

Patrick O'connell: <unk>, which we believe we can grow in 2024.

Patrick O'connell: Looking back over the year, we are very pleased with the progress we've made and quickly reorienting the business around free cash flow generation, while balancing critical investments in programming will.

Patrick O'connell: We'll have more to say on this when we get to our guidance for 2024. Before I jump into our financial results, I would like to quickly address one piece of housekeeping. In December, we sold our interest in 25.7 Media, which in 2023 generated $91 million in revenue and $4 million in AOI within our international and other segments. Beginning in the first quarter of this year, this segment will be solely comprised of AMC Networks International, including visibility into this important business.

Patrick O'connell: We'll have more to say on this when we get to our guidance for 2024.

Speaker Change: Before I jump into our financial results I would like to quickly address one housekeeping item.

Speaker Change: In December we sold our interest in $25 seven media, which in 2023 generated $91 million in revenue and $4 million and NOI within our international and other segment.

Speaker Change: Beginning in the first quarter of this year. This segment will be solely comprised of AMC networks international improving visibility into this important business.

Patrick O'connell: In addition, going forward, our consolidated content licensing revenues will clearly reflect the traditional core licensing revenues generated by AMC Studios, as well as our film distribution business. Without the lower margin production revenue, we divest. Prior to the completion of this sale, you will be charged a non-cash impairment charge of $20 million. Moving to our results, for the fourth quarter, consolidated revenue was $679 million.

Speaker Change: In addition, going forward, our consolidated content licensing revenues will clearly reflect the traditional core licensing revenues generated by AMC studios as well as our film distribution businesses.

Speaker Change: Without the lower margin production revenue we divested.

Speaker Change: Prior to the completion of the sale with recorded a noncash impairment charge of $20 million.

Speaker Change: Okay.

Speaker Change: Moving to our results.

Speaker Change: For the fourth quarter consolidated revenue was $679 million.

Patrick O'connell: Adjusted operating income was $100 million, and we generated $66 million of free cash flow. I'll now briefly touch on our segment funding. Domestic operations revenues decreased 13% to $2.3 billion for the full year and decreased 32% to $582 million for the fourth quarter.

Speaker Change: Adjusted operating income was $100 million and.

Speaker Change: And we generated $66 million of free cash flow.

Speaker Change: I will now briefly touch on our segment financials.

Speaker Change: Domestic operations revenues decreased 13% to $2 3 billion for the full year and decreased 32%.

Speaker Change: The $582 million and for the fourth quarter.

Patrick O'connell: The decrease in revenues for the full year was attributable to lower advertising, content licensing, and affiliate revenues, partly offset by streaming revenue growth. Next, I'll break down the individual components of revenue. Full year spending revenue increased 13% to $566 million.

Speaker Change: The decrease in revenues for the full year was attributable to lower advertising content licensing and affiliate revenues.

Speaker Change: Partly offset by streaming revenue growth.

Speaker Change: Next I'll break down the individual components of revenue.

Speaker Change: Full year screening revenue increased 13% to $566 million for.

Patrick O'connell: For the quarter, streaming revenue increased 4%. We continue to remain disciplined in our marketing spend, and we are pleased with the results of our efforts to acquire and retain higher lifetime value subscribers. Advertising revenues declined 20% for the full year and 23% in the fourth quarter and reflect difficult year-over-year comparisons with Q4 2022 when we aired the incredible finale of The Walking Dead, as well as lower linear ratings.

Speaker Change: For the quarter streaming revenue increased 4%.

Speaker Change: We continue to remain disciplined in our marketing spend and we are pleased with the results of our efforts to acquire and retain higher lifetime value subscribers.

Speaker Change: Advertising revenues declined 20% for the full year and 23% in the fourth quarter and reflect difficult year over year comparisons with Q4 2022, when we had the incredible finale of the walking dead as well as lower linear ratings.

Patrick O'connell: Our advertising revenues also reflect actions we took to reduce volumes of original programming, the net result of which drives higher levels of profitability. Digital growth remains robust and continues to partially offset these headwinds. That said, like our peers, we continue to experience a challenging advertising environment, particularly for scatter and direct. Content licensing revenue was $343 million for the full year and $96 million for the fourth quarter versus $300 million in the fourth quarter last year, when we recognized $126 million of revenue related to silo and the acclaimed AMC Studio Series we produce for Apple TV, as well as significant revenues associated with the delivery of certain The Walking Dead universe titles. Affiliate revenue performance in the quarter was driven by continued declines in the basic subscriber universe and the 4% impact from the non-renewal of FUBO.

Speaker Change: Our advertising revenues also reflect actions we took to reduce volumes of original programming. The net result of which drives higher levels of profitability.

Speaker Change: Digital growth remains robust and continues to partially offset these headwinds.

Speaker Change: That said like our peers, we continued to experience a challenging advertising environment, particularly for scatter and direct response.

Speaker Change: Yeah.

Speaker Change: Content licensing revenue was $343 million for the full year.

Speaker Change: <unk> $96 million for the fourth quarter versus $300 million in the fourth quarter last year.

Speaker Change: When we recognized $126 million of revenue related to silo Declaimed AMC studio series, we produced for Apple TV as.

Speaker Change: As well as significant revenues associated with the delivery of certain the walking dead universe titles.

Speaker Change: Okay.

Affiliate revenue performance in the quarter was driven by continued declines in the basic subscriber universe.

And the 4% impact from the non renewal of <unk>.

Patrick O'connell: At the end of the fourth quarter, we fully lapped this impact, and FUBA will not be a headwind to our year-over-year comparisons going forward. Domestic operations adjusted operating income was $713 million for the full year and $124 million for the quarter. Continued expense management yielded margin improvements for both the full year and the fourth quarter, with margins of 31% and 21%, respectively. The year-over-year decrease in AOI was largely attributable to lower revenues, which were partly offset by lower programming and marketing expenses. The results of continued cost discipline across Looking at our international and other segments, revenue decreased 9% to $404 million, excluding 25-7 media. Adjusted operating income was $61 million for the full year.

Speaker Change: At the end of the fourth quarter, we fully lap this impact therefore, <unk> will not be a headwind to our year over year comparisons going forward.

Speaker Change: Okay.

Speaker Change: Domestic operations adjusted operating income was $713 million for the full year and $124 million for the quarter.

Speaker Change: Continued expense management yielded margin improvements for both the full year and the fourth quarter with margins of 31% and 21% respectively.

Speaker Change: The year over year decrease in NOI was largely attributable to lower revenues, which were partly offset by lower programming and marketing expenses the.

Speaker Change: As a result of continued cost discipline across the business.

Speaker Change: Looking at our international and other segment for the full year revenue decreased 9% to $404 million <unk>.

Speaker Change: Excluding $25 seven media revenues declined 2%.

Speaker Change: Adjusted operating income was $61 million for the full year.

Patrick O'connell: Moving to the ballot, we ended the year with net debt of approximately $1.8 billion and a consolidated net leverage ratio of 2.7 times. We have substantial financial flexibility with approximately $1 billion of available liquidity, including $571 million of cash on the balance sheet and our undrawn $400 million revolving credit facility. In the fourth quarter, we redeemed all of our 2024 senior notes outstanding, and we also purchased $25 million principal amount of our 2025 senior notes in the open market. We continue to remain focused on maintaining the health and flexibility of our balance sheet or reducing gross debt over time. Regarding capital allocation, our philosophy remains unchanged.

Speaker Change: Moving to the balance sheet.

Speaker Change: We ended the year with net debt of approximately $1 8 billion and our consolidated net leverage ratio of two seven times.

Speaker Change: We have substantial financial flexibility with approximately $1 billion of available liquidity, including $571 million of cash on the balance sheet, and our undrawn $400 million revolving credit facility.

Speaker Change: In the fourth quarter, we redeemed all of our 2024 senior notes outstanding and also repurchased $25 million principal amount of our 2025 senior notes in the open market.

Speaker Change: Continue to remain focused on maintaining the health and flexibility of our balance sheet or reducing gross debt over time.

Speaker Change: Regarding capital allocation, our philosophy remains unchanged.

Patrick O'connell: First, we look to support the business by creating and acquiring compelling programming that resonates with our audience, while maintaining healthy levels of profitability and cash flow generation. Second, we look to improve our balance sheet by reducing gross debt and proactively addressing upcoming maturities. Third, strategic M&A and returning capital to shareholders remain further down our current priority list.

Speaker Change: We look to support the business by creating and acquiring compelling programming that resonates with our audiences, while maintaining healthy levels of profitability and cash flow generation.

Speaker Change: Second we look to improve our balance sheet by reducing gross debt and proactively addressing upcoming maturities.

Speaker Change: Third strategic M&A and returning capital to shareholders remain further down our current priority list.

Patrick O'connell: Our 2023 results, including a healthy 34% normalized free cash flow conversion ratio and a reduction of gross debt of approximately $460 million, are reflections of these priorities which we're carrying into 2024. Moving on to our Outlook for 2020. We are pleased to say that we expect to grow our free cash flow year over year over the normalized $231 million we generated in 2023. And over the next two years, we expect to generate cumulative free cash flow of approximately half a billion dollars.

Speaker Change: Our 2023 results, including a healthy 34% normalized free cash flow conversion ratio and a reduction of gross debt of approximately $460 million.

Speaker Change: Our reflections of these priorities, which were carrying into 2024.

Speaker Change: Moving to our outlook for 2024.

Speaker Change: We are pleased to say do we expect to grow our free cash flow year over year over the normalized $231 million, we generated in 2023.

Speaker Change: And over the next two years, we expect to generate cumulative free cash flow of approximately half a $1 billion.

Patrick O'connell: In 2023, we will reap the benefits of the difficult decisions we undertook to right-size our expense base at the end of 2022. This gives us additional confidence in our ability to manage the business in a fiscally prudent manner going forward. Moving on to revenue, excluding $91 million of 2023 revenue from 25.7 Media and $56 million of revenue related to siloed deliveries in 2023, we expect 2024 consolidated revenue to decline approximately 6% as compared to the prior year, implying total revenue of approximately $2.4 billion.

Speaker Change: In 2023, we reaped the benefits of the difficult decisions, we undertook to rightsize our expense base at the end of 'twenty two.

Speaker Change: This gives us additional confidence in our ability to manage the business in a fiscally prudent manner going forward.

Speaker Change: Moving on to revenue.

Speaker Change: Excluding $91 million in 2023 revenue from $25, seven media and $56 million of revenue related to silo deliveries in 2023.

Speaker Change: We expect 2024 consolidated revenue to decline approximately 6% as compared to the prior year, implying total revenue of approximately $2 4 billion.

Patrick O'connell: Now I'll unpack the details that underpin our revenue outcome. Prudent streaming growth will continue to be a focus in 2024. And we expect year-over-year streaming revenue growth in the high single-digit to low double-digit range, driven by broader distribution of our offerings, selected price increases, as well as disciplined acquisition marketing. With respect to advertising revenue, while the linear environment continues to be challenging, the programming schedule and volume headwinds evident in 2023 will subside. We expect year-over-year domestic advertising revenue declines in the high single-digit area for 2024.

Speaker Change: Now I'll unpack the details that underpin our revenue outlook.

Speaker Change: Prudent streaming growth will continue to be a focus in 2024, and we expect year over year streaming revenue growth in the high single digit to low double digit range.

Speaker Change: Driven by broader distribution of our offerings selected price increases as well as disciplined acquisition marketing efforts.

Speaker Change: With respect to advertising revenue for the linear environment continues to be challenging the programming schedule and volume headwinds evident in 2023 will subside.

Speaker Change: We expect year over year domestic advertising revenue declines in the high single digit area for 2024.

Speaker Change: Yes.

Patrick O'connell: With respect to affiliate revenue, the traditional video ecosystem continues to evolve rapidly, and we're leaning into efforts by traditional distributors and customer-centric solutions such as Charter and Comcast Zumo. With that said, our near-term expectation regarding linear subscriber trends for this year remains unchanged, and we expect full year domestic affiliate revenue to decline approximately 10% compared to 2020. Content licensing remains a priority for us, and we continue to be innovative, aggressive, and disciplined regarding this crucial revenue stream. In 2024, we don't expect shows like The Walking Dead and Fear the Walking Dead to contribute as much as they have in the past to our content licensing revenue. Nor do we expect material production revenue from projects like Silo for Apple TV.

Speaker Change: With respect to affiliate revenue the traditional video ecosystem continues to evolve rapidly and we're leaning into efforts by traditional distributors customer centric solutions, such as charter and Comcast Zummo.

Speaker Change: With that said, our near term expectation regarding linear subscriber trends for this year remains unchanged and we expect full year domestic affiliate revenue to decline approximately 10% compared to 2023.

Speaker Change: Content licensing remains a priority for us and we continue to be innovative aggressive and disciplined regarding this crucial revenue stream.

Speaker Change: In 2024, we don't expect shows like the walking dead and fear the walking dead.

Speaker Change: To contribute as much as they have in the past to a content licensing revenues.

Speaker Change: Nor do we expect material production revenue from projects like silo for Apple TV.

Speaker Change: Taking account of these year over year dynamics, we expect domestic licensing revenue to be in the $225 million area for 2024.

Patrick O'connell: Taking account of these year-over-year dynamics, we expect domestic licensing revenue to be in the $225 million area for 2024. However, content licensing revenues are notoriously lumpy and often impacted by shifting delivery schedules. This level of revenue reflects our current level of production and, as such, is a good baseline going forward. Owning the content we produce comes with significant optionality, and we look forward to the opportunity around the return of international rights to shows like The Walking Dead. Moving on to our international segment, as we have divested our 25-7 media business, this segment will consist solely of our AMC Networks International.

Speaker Change: And while content licensing revenues are notoriously lumpy and often impacted by shifting delivery schedules.

Speaker Change: This level of revenue reflects our current level of production and as such a good baseline going forward.

Speaker Change: Owning the content, we produce comes with significant Optionality and we look forward to the opportunity around the return of international rights to shows like the walking dead and 2025.

Speaker Change: Moving onto our international segment as.

As we have divested $25 seven media business. This segment will consist solely of our AMC networks International business.

Speaker Change: For AMC networks International excluding $25 seven media, we anticipate declines in distribution revenue to be partly offset by advertising revenue growth, yielding approximately $300 million in revenue.

Patrick O'connell: For AMC Networks International, excluding 25.7 Media, we anticipate declines in distribution revenue to be partly offset by advertising revenue growth, yielding approximately $300 million in revenue for our international segment for 2020. While our guiding metric remains free cash flow, adjusted operating income is still a very important measure of profitability, and we continue to focus on maintaining healthy AOI markets. Despite the revenue headwinds, in 2023, we actually increased our AOI margin to 25%, the first year-over-year increase in margins since 2017. For 2024, despite the expected decline in revenue, our continued cost measures and prudent investments lead us to expect only a slight decline in margins to 2022 levels of 23 to 24 percent, implying consolidated adjusted operating income of $550 million to $575 million. Driving our 2024 AOI expectations are revenue headwinds in our linear businesses offset by continued growth in streaming and digital advertising, as well as Disciplined Expense Management. We also expect programming amortization to be similar to 2023 levels, despite a reduction of cash programming spend from $1.1 billion in 2023 to approximately $1 billion in 2024.

Speaker Change: International segment for 2024.

Speaker Change: While our guiding metric remains free cash flow adjusted operating income is still a very important measure of profitability and we continue to focus on maintaining healthy margins.

Speaker Change: Despite the revenue headwinds in 2023, we actually increased our margin to 25% the first year over year increase in margins since 2017.

Speaker Change: For 2024, despite the expected decline in revenue our continued cost measures and prudent investments lead us to expect only a slight decline in margins to 2022 levels of 23% to 24%.

Speaker Change: Implying consolidated adjusted operating income of $550 million to 500.

Speaker Change: $75 million.

Speaker Change: Driving our 2024, our expectations for the revenue headwinds in our linear businesses offset by continued growth in streaming and digital advertising as well as disciplined expense management.

Speaker Change: We also expect programming amortization to be similar to 2023 levels. Despite a reduction of cash programming spend from $1 1 billion in 2023 to approximately $1 billion in 2024.

Speaker Change: We will continue to be extremely disciplined on expenses.

Speaker Change: Including the calibration of marketing spend to drive prudent streaming growth.

Speaker Change: Okay.

Speaker Change: Before we open it up for Q&A I would like to reiterate what I said in the past regarding our overarching financial approach and managing through this rapidly evolving media environment.

Patrick O'connell: We will continue to be extremely disciplined on expenses, including the calibration of marketing spend to drive prudent streaming. Before we open it up for Q&A, I would like to reiterate what I said in the past regarding our overarching financial approach to managing through this rapidly evolving media environment. AMC Networks is employing a back-to-basics approach that emphasizes broad distribution of our content across available platforms and prioritizes near-term monetization while at the same time taking advantage of our unique position as a nimble and innovative premium programmer.

Speaker Change: AMC networks is employing a back to basics approach that emphasizes broad distribution of our content across available platforms and prioritizes near term monetization while at the same time, taking advantage of our unique position as a nimble and innovative premium programmer.

Speaker Change: Along the way will preserve capital to ensure we maintain a healthy balance sheet remained extremely disciplined on expenses and balanced appropriate levels of programming investment against the available monetization opportunities.

Patrick O'connell: Along the way, we'll preserve capital to ensure we maintain a healthy balance sheet, remain extremely disciplined on expenses, and balance appropriate levels of programming investment against the available monetization opportunities. We remain pleased with the progress we've made on these fronts and look forward to delivering the strongest content slate AMC Networks has had in years in 2024. Operator, please open the line for questions. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: We remain pleased with the progress we've made on these fronts and look forward to delivering the strongest content slate AMC networks has had in years and 2024.

Speaker Change: Operator, please open the line for questions.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again, please standby will compile the Q&A roster.

Speaker Change: Our first question comes from the line of David Joyce with Seaport Research Partners. Your line is now open.

David Joyce: Thank you I appreciate your commentary for.

David Joyce: The outlook. This year. We're also interested in digging more into your advertising offering could you. Please help to differentiate.

Operator: Please stand by while we compile the Q&A roster. Our first question comes from the line of David Joyce with Seaport Research Partners. Your line is now open.

David Joyce: Thank you. I appreciate your commentary for the outlook this year and am also interested in digging more into your advertising offering. Could you please help to differentiate how your programmatic approach compares and contrasts with other linear networks efforts that have been moving digital? And also, if you could add on to the digging into the fourth quarter, which was one that saw an acceleration of advertisers applying some of their budgets to the streamers' ad tiers? How are you also going to market yourself with that backdrop? Thank you. Hi David. It's Kim Kelleher.

David Joyce: How your programmatic approach compares and contrasts with other linear networks efforts that have been moving digital and also if you could layer on to digging into the fourth quarter, which was one that saw an acceleration of advertisers.

David Joyce: Playing in some of their budgets to the streamers Ed tiers, how are you.

David Joyce: You also going to market with.

Speaker Change: That backdrop. Thank you.

Speaker Change: Hi, David It's Tim Kelleher, Thanks for your question.

Kim Kelleher: Thanks for your question. I think as an industry, we continue to be an absolute leader in national linear addressable advertising. Excuse me, but we were taking this difficult time and really leaning into innovation and investments in our technologies to serve better solutions to our partners. We believe this upfront is going to be heavily leaning towards data-targeted audience solutions and buys, and we couldn't be more well-positioned to take full advantage of that. On your specific question regarding programmatic, we successfully developed and enabled the first biddable programmatic buying capabilities within our linear inventory.

Tim Kelleher: I think as an industry, we continue to be an absolute leader in national linear.

Tim Kelleher: Our addressable advertising excuse me we.

Tim Kelleher: We're taking this difficult time, and really leaning into innovation and investments in our technologies to serve better solutions to our partners.

Tim Kelleher: We believe this upfront is going to be heavily leaning towards data targeted audience solutions and buys and we couldnt be more well positioned to take full advantage of that.

Tim Kelleher: On your specific question regarding programmatic, we successfully developed and enabled the first biddable programmatic buying capabilities within our linear inventory. This is the first time in the industry. A company has been able to successfully do this so as Christian mentioned, we had a number of partners debut this product with us in the fourth quarter and the <unk>.

Kim Kelleher: This is the first time in the industry a company has been able to successfully do this. So, as Kristen mentioned, we had a number of partners debut this product with us in the fourth quarter, and the results were beyond promising. In particular, L'Oreal has quoted that they saw increases of over 10% from expected performance.

Tim Kelleher: We're beyond promising.

Tim Kelleher: In particular l'oreal has quoted but there they saw increases of over 10%.

Tim Kelleher: From expected performance.

Kim Kelleher: So also last year, we launched AudiencePlus at our Upfront event. AudiencePlus combines all of the development we've done for the last three years to Get Ready for This Moment, which brings our partners the most advanced targeting capabilities seamlessly. It really simplifies the transaction and offers true cross-platform targeting with all of our inventories, LiveLinear, VOD, and CTV all together. So we see a huge opportunity to automate the sale of addressable going forward and think this will be an area of great growth and yield. On Q4 specifically, it was a difficult quarter, but I think you're seeing the same headwinds most of our competitors are reporting.

Tim Kelleher: So also last year, we launched audience plus at our upfront of that audience plus combines all of the development. We've done for the last three years to ready for this moment.

Tim Kelleher: That brings our partners the most advanced targeting capabilities seamlessly it really simplifies the transaction and offers a true cross platform targeting.

Tim Kelleher: With all of our inventories live linear Vod and CTV altogether.

Tim Kelleher: We see a huge opportunity to automate the sale of addressable going forward and think this will be an area of large growth and yield on Q4, specifically.

Tim Kelleher: It was a difficult quarter, but I think youre seeing the same headwinds most of our competitors are.

Kim Kelleher: Yes, we're seeing revenue move into streaming categories, and we launched AMC Plus ad-supported right at the right time. So we launched in late September, and that product is up and running on one large partner platform. And we are adding platforms every single month.

Tim Kelleher: Our reporting yes.

Tim Kelleher: Seeing revenue move into streaming categories, and we launched AMC plus AD supported right at the right time, So we launched in late.

Tim Kelleher: In late September and that product is up and running on one large partner platform and we are adding platforms. Every single month, so we anticipate to be able to pace with those trends.

Kim Kelleher: So we anticipate being able to pace with those trends. I would just add, David, it's Kristin, on your question about programmatic on linear, like essentially what it means is that, you know, traditional digital advertisers, people that have solely bought digital or, you know, dabble in traditional television, they can now purchase our national linear inventory programmatically. So they're basically using the buying platforms that they always used for digital to buy linear television, which for us, and I think for most people in the business, is a huge opportunity to finally swing the pendulum back from digital first to, you know, shared purchase of traditional television, as well as digital to support the advertiser's effort. Great, thank you very much.

Tim Kelleher: I would just add David it's Chris on your question about programmatic on linear like essentially what it means is that the traditional digital advertisers people that are solely bought digital or dabble in traditional TV. They can now purchase our national linear inventory programmatically, so they're basically using the buying platforms.

Tim Kelleher: That they always used on digital to buy linear television, which for us and I think for most people in the business is a huge opportunity to finally swing the pendulum back from digital first two shared purchase of traditional TV as well as digital to support the advertisers efforts.

Speaker Change: Great. Thank you very much.

Kristen Dolan: Thank you. Our next question comes from the line of David Karnovsky with J.P. Morgan. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of David Karnofsky with J P. Morgan. Your line is now open.

David Karnovsky: Thank you, Patrick. Thanks for the two-year view on free cash flow. I wanted to see if you could walk through some of the puts and takes of the guide for the outyear and any assumptions that are built into that around programming span or anything else we should be aware of. Yeah, sure. Great.

David Karnofsky: Thank you Patrick Thanks for the two year view on free cash flow I wanted to see if you could walk through some of the puts and takes of the guide for the out year and any assumptions that are built into that around programming spend or anything else, we should be aware of.

Patrick O'connell: Yes sure great. Thanks for the question David.

Patrick O'connell: Thanks for the question, David. You know, listen, we took some tough medicine at the end of 22 to the right size our expense base. And obviously, you know, we're in the business of forward planning our production slate, that being by far our largest. And so, the pain that we took in 22 paid dividends in 23, you know; we were able to essentially, you know, kind of double reported cash flow for about $140 million to $280 million this year. And as we look forward to planning in 24 and 25 with the slates we have for the 25 and 26 years, this gives us We're going to be nimble and creative in terms of how those slates come together.

Speaker Change: Listen we took we took some tough medicine at the end of 'twenty two to rightsize, our expense base and obviously, we're in the business of forward planning our production slate that being by far our largest expense and so the pain that we took in 'twenty to pay dividends in 'twenty three we were able to essentially.

Speaker Change: You know kind of double reported cash flow from about $140 million $280 million. This year and as we look forward to planning in 'twenty, four and 25 with the slates. We have for the 25 and 26 years. This gives us really good line of sight into into our ability to generate this free cash flow.

Speaker Change: We're going to be nimble and creative in terms of how those slates come together you will have noticed lately.

Patrick O'connell: You will have noticed late last year, we announced a deal to buy some IP from Disney in the context of a show called Nautilus, which is really neat. That being said, we continue to like our position as having ownership economics over our slate. So you'll know that, for the most part, we own most of the shows on AMC.

Speaker Change: Late last year, we announced the deal to buy some IP from Disney.

Speaker Change: The context of a show called Nautilus, which is which is really neat that being said, we continue to like our position as having ownership economics over our slate.

Speaker Change: So you will know that for.

Speaker Change: For the most part we own.

Speaker Change: Most of the shows on AMC and so that means we've got really strong optionality and success and so we like that model, we can be flexible, but given the medicine, we've taken to drive free cash flow. This year. We've got good line of sight in terms of our programming plan going forward and the rest of the expense base as well. So we feel really good about growing free cash.

Patrick O'connell: And so that means we've got really strong optionality in success. And so we like that model; we can be flexible, but given the medicine we've taken to drive free cash flow this year, we've got a good line of sight in terms of our programming plan going forward and the rest of the expense base as well. So we feel really good about growing free cash flow year over year for 24. And that's why we feel confident in giving you the two-year guide to generating approximately half a billion over the next two years. Thank you. Our next question comes from the line of Robert Fishman with Muffet Nathanson. Your line is now open. Hi, this is Luke Landis on behalf of Robert.

Speaker Change: So year over year to 24, and that's why we feel confident in giving you the to your guide and generating.

Speaker Change: Approximately half of 1 billion over the next two years.

Speaker Change: Okay. Thank you.

Thank you.

Speaker Change: Our next question comes from the line of Robert Fishman with Moffett Nathan Your line is now open.

Speaker Change: Hi, This is <unk> on for Robert Thanks for taking my question I want to know if you had any r-color share on the experiments worth putting certain titles on Max and flex of our future and offer them. Furthermore.

Luke Landis: Thanks for taking our questions. I want to know if you had any other color to share on the experiment with putting turn titles on Macs and if we can expect some more moves in the future. And also, more generally, how you guys are thinking about growing licensing revenues, balancing building a roster of exclusives, exclusives for AMC plus versus, you know, renting out to third parties. Hey, it's Kristen.

Speaker Change: More generally how are you guys are thinking about.

Speaker Change: Growing licensing revenues.

Speaker Change: Balancing building a roster.

Speaker Change: Exclusive for AMC plus versus renting.

Speaker Change: Printing out to third parties.

Kristen Dolan: I'm going to let Dan take the second question and then we'll go back to the Max partnership. Your second question about content was about sharing content between AMC Plus and AMC. That's the question I'm answering.

Speaker Change: Hey, it's Christian I'm going to let Dan take the second question and then we'll go back to the partnership.

Dan Mcdermott: Your second question around content was around sharing content between AMC and AMC.

Robert S. Fishman: AMC Plus versus licensing out. Yeah. I'll take, I'll start with the second question, Robert.

Dan Mcdermott: Ask the question, sorry, and licensed NFC plug firstly licensing out.

Dan Mcdermott: Yes.

Dan Mcdermott: Okay I'll take I'll start with the second question, Robert So with respect to licensing now look we're focused on this is Dan by the way we're focused on generating the best possible return from our content investments and we appreciate the strategic advantages and Optionality that our studio model has for US obviously, our owned IP and beloved franchises.

Dan Mcdermott: So with respect to licensing, you know, look, we're focused on, this is Dan, by the way, generating the best possible return on our content investments. We, you know, and we appreciate the strategic advantages and optionality that our studio model has for us. Obviously, our owned IP and beloved franchises are very desirable and sought after. So, you know, we seek to monetize them as efficiently as possible. You know, we have five linear platforms and seven streaming platforms. So we window through our ecosystem in the interest of maximum revenue and profit generation. As far as whether or not we'll produce for third parties like we did with Silo for Apple, you know, we look at ourselves as being very opportunistic and highly selective and tactical when we take on those opportunities. We'll do it when the risk-reward makes sense, and we typically develop a lot of content that maybe not all of it is suitable for AMC Networks.

Dan Mcdermott: Our very desirable and sought after so.

Dan Mcdermott: We seek to.

Dan Mcdermott: Monetize them as efficiently as possible, we have five linear platform seven streaming platform. So we window through our ecosystem in.

Dan Mcdermott: In the interest of maximum revenue and profit generation.

Dan Mcdermott: As far as whether or not we will produce for third parties like we did with silo for Apple.

Dan Mcdermott: We look at ourselves as being very opportunistic and highly selective in tactical when we take on those those opportunities we'll do it when the risk reward makes sense.

Dan Mcdermott: And we typically develop a lot of content that maybe not all of it is suitable for AMC networks. So.

Dan Mcdermott: So we, and we do have deep and long relationships with all other platforms. So we will be out in the market, and we will sell to third parties when appropriate. It's not our primary business, though, so we're not in a situation where we have to chase, you know, other platforms and are dependent upon that. And just to follow up on the MAX partnership, I think it was a learning experience for both. We were thrilled with the increases in viewership that our content received, both on MAX but also the associated lift in the more current seasons for the series that we shared with MAX when we had more current seasons on AMC+. So we, you know, we shared a lot of information in a privacy-compliant way between the two companies.

Dan Mcdermott: And we do have deep and long relationships with all other platforms. So we will be out in the market and we will sell to third parties when appropriate.

Dan Mcdermott: It's not our primary business, though so we're not we're not in a situation where we have to chase.

Dan Mcdermott: Other platforms and are dependent upon that.

Dan Mcdermott: And just to follow up on the Max partnership I think it was a learning experience for both we were thrilled with the increases in viewership that our content received bolt on Max but then also the associated lift in the more current seasons for the series that we shared with Max when we have more current seasons on AMC plus so.

Dan Mcdermott: We shared a lot of information in a privacy compliant way we between the two companies.

Kristen Dolan: And I think they were pleased with hopefully some, you know, positive retention and engagement on the MAX side. And we were certainly pleased with the learnings and the increased viewership that we got on AMC+ for those series. Yeah, I'll just add one thing, you know, which is that, um, what that experiment showed us was that when we get on to a larger distribution platform and a bigger ecosystem, our content scales significantly, and is as appealing and more so than even in our own in our own ecosystem. Thank you. Our next question comes from the line of Thomas Yeh with Morgan Stanley. Your line is now open. Thanks.

Dan Mcdermott: I think they were pleased with hopefully some positive retention and engagement on the Max side, and we were certainly pleased with the learnings and the increased viewership that we got on AMC plus for those series, Yes, I'll just add one thing which is that.

Dan Mcdermott: What that what that experiment showed us was that when we get onto a larger distribution platform and a bigger ecosystem our content scale scales.

Dan Mcdermott: Significantly.

Dan Mcdermott: And is as appealing and more so.

Dan Mcdermott: Then even.

And our own and our own.

Dan Mcdermott: Ecosystem.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Thomas <unk> with Morgan Stanley. Your line is now open.

Thomas Yeh: I wanted to ask about the domestic linear affiliate revenue trends. I think adjusting out the Fubo headwind, it did look like core revenue declines kind of accelerated sequentially. Was that maybe some noise?

Thomas: Thanks, I wanted to ask about the.

Thomas: Domestic linear affiliate revenue trends I think adjusting out thats about a headwind it looks like core revenue declines kind of accelerated sequentially was that maybe some noise I think on a going forward basis. It sounded like you still expect the subscriber trends to.

Patrick O'connell: I think on a going forward basis, it sounded like you still expect the subscriber trends to remain similar to what you were seeing this quarter. But any color on rate versus volume and some of the components there would be helpful. Hey Thomas, it's Patrick. Thanks for the question. Yeah, I would point out Q4 as being something of an anomaly, you know, domestic ability revenue declined 16%. If you look at the full year, the revenue decline was, you know, kind of 13%. But recall, we had sort of the 3% impact from FUBO. So going forward, you know, stripping out that 3% impact, that informs our 10% guide on domestic ability revenue going into 2024. Obviously, you know, the vast majority of that is just the universe. But there's a little bit of price in there as well. But we hold surf most of the time.

It remains similar to what you are seeing this quarter.

Thomas: But any color on kind of rate versus volume and some of the components there would be helpful.

Thomas: Hey, Thomas it's Patrick Thanks for the question yes.

Patrick O'connell: Yes, I would point at Q4 as being something of an anomaly domestic affiliate revenue declined 16%. If you look at the full year.

Patrick O'connell: Revenue decline was kind of 13%, but recall, we had sort of a 3% impact from flu Boe, so going forward stripping out that 3% impact that informs our 10% guide on domestic affiliate revenue.

Patrick O'connell: Into 2024, obviously.

Patrick O'connell: The vast majority of that is is just the universe, there's a little bit of price in there as well, but we hold serve most of the time.

Patrick O'connell: I would just add, it's also worth noting that in the past 12 months, we renewed more than half of our affiliate subscriber footprint. And there were some big ones in there, DISH, Sling, Charter, Altice, MediaCom, WOW, Philo, Bell, we did a Roger Short deal in Canada, amongst others. And then, you know, also, obviously, we partnered with Comcast on the Now TV offering. And then we launched AMC Plus with Charter, as you know, plus the aforementioned Philo deal. So we're feeling really positive about our relationships with distributors. And as Patrick said, you know, pretty comfortable with how we're moving forward on the partnership side. Great.

Patrick O'connell: And it's also worth noting that in the past 12 months, we renewed more than half of our affiliate subscriber footprint and there was some big ones in there displaying charter Altice media Com Wow Phyllo Bell, we did a Roger Shaw deal in Canada amongst others and then also obviously with partnered with Comcast on the now TV offering.

Patrick O'connell: And then we launched AMC plus with charter as you know plus and the aforementioned silo deal. So we're feeling really positive about our relationships with distributors and as Patrick said pretty comfortable.

Patrick O'connell: With how we're moving forward on the partnership side.

Patrick O'connell: And then just a second one with the sale of the 25 cent media. Patrick, you mentioned, I think, shedding a little bit more light on the international core. Can you maybe talk a little bit about the future of where you see that business going? I think there were some expectations that you might have some selective avenues of OTT launches internationally. How do you think about the balance of that relative to maintaining the core international network?

Patrick O'connell: Great and then just a second one with the sale of the 25 media Patrick you mentioned I think shedding a little bit more light on the international core can you maybe talk a little bit about the future of where you see that business I think there were some.

Patrick O'connell: Expectations that you maybe have some selective avenues of OTT launches internationally how.

Patrick O'connell: How do you think about the balance of that relative to maintaining at.

Patrick O'connell: The core International network.

Patrick O'connell: Yeah, we've got a great international footprint with particularly strong market positions in both Southern Europe and Eastern Europe, Eastern and Central Europe. You know, these are our businesses with deep roots in these markets, maybe not as well understood here stateside, but these are, you know, beloved bouquets of channels with, you know, thousands of hours of original programming, you know, really kind of part of the fabric of many of these communities. So we really like this business. We like the idea that we'll be able to shine a brighter spotlight on it, excluding some of the work for higher revenue that we recently divested. A couple years ago, we were able to use this as a really great platform from which to launch a number of streaming initiatives internationally.

Patrick O'connell: Yes, we've got a great international footprint with particularly strong.

Patrick O'connell: Kind of market positions in both southern Europe and <unk>.

Patrick O'connell: Eastern Europe, Eastern and Central Europe.

Patrick O'connell: These are businesses with deep roots in these markets, maybe not as well understood here state side, but these are.

Patrick O'connell: Beloved bouquets of channels with.

Patrick O'connell: <unk> of hours of original programming.

Really kind of part of the fabric of many of these community. So we really like this business, we like the idea that we'll be able to shine a brighter spotlight on it excluding some of the work for higher revenue that we recently divested.

Patrick O'connell: A couple of years ago, we were able to use this as a really great platform of which to launch a number of upstream initiatives internationally.

Patrick O'connell: We still think it makes sense in select markets where we have particularly strong relationships and where we're, you know, doing similar things that we do here in the US, which is leaning into those legacy relationships, driving our linear business, but also buttressing that with digital products. That, you know, still makes sense in certain select markets. For the markets where we don't have a really strong presence, we've really kind of leaned into the content licensing side. I would just add, sorry, Kim. It's Kristen again.

Patrick O'connell: We still think it makes sense in select markets, where we have particularly strong relationships and where we're doing similar things that we're doing here in the U S, which is leaning into those legacy relationships driving our linear business, but also buttressing that with with digital product.

Patrick O'connell: That still make sense in certain select markets for the markets, where we don't have a really strong presence, we've really kind of leaned into the content licensing side.

Patrick O'connell: Thank you Dan sorry, Kim It's Christian again. This is part of the technical reworking that we're doing in order to have a consolidated backend that we can turn on streaming wherever you want globally, that's sort of the beauty of delivering over IP as opposed to.

Kristen Dolan: You know, this is part of the technical reworking that we're doing in order to have a consolidated back end that we can turn on streaming wherever we want globally. That's sort of the beauty of delivering over IP as opposed to, you know, traditional transmission. But particularly in Spain, I just wanted to mention that we just expanded the distribution of AMC Plus with Vodafone this summer, and then we've made a lot of progress with our linear networks in Spain and in Portugal with AMC Select, so we partnered digitally through Amazon there. So we actually feel like there are a lot of opportunities around AVOD in certain select European markets. So you couple that opportunity with the work that we're doing technologically, and we think the goal here would be, you know, an investment-light model that maximizes the overall returns of the consolidated business. So international, while a small piece of our overall business, is one that we feel very positive about. Okay, super helpful.

Christian Dawn: Trent traditional transmission, but particularly in Spain I just wanted to mention that we just expanded distribution of AMC plus with Vodafone. This summer and then we've made a lot of progress with our linear networks in Spain and in Portugal with AMC select so we partner with digitally with through Amazon there. So.

Christian Dawn: We actually feel like Theres, a lot of opportunities around Avon in certain select European markets. So you couple that opportunity with the work that we're doing technologically and we think the goal here would be an investment light model that maximizes. The overall returns of the consolidated business. So international while a small piece of <unk>.

For all business is one that we feel very positive about.

Stephen Cahal: Thank you. Thank you. As a reminder, to ask a question at this time, please press star 11 on your touchtone telephone.

Speaker Change: Okay Super helpful. Thank you so much.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question at this time. Please press star one one are you touched on telephone.

Operator: Our next question comes from the line of Stephen Cahal with Wells Fargo. Your line is now open. Thank you. Maybe first, just kind of stepping back from it all, you know, Chris, and you all are managing the business very, very tightly on the cost side, and things are certainly improving. But I think investors are also just curious if you think you can get back to a level of growth, either on the top line or on the AOI line, in the next couple of years. So I'd just love to get your comments on kind of the bigger picture as to when you see the business maybe starting to flatten out or even grow again. And then just one on advertising with high single-digit declines in guidance for 2024 at domestic. Could you help us think about what your expectation is for kind of volume delivery versus pricing? And what I'm trying to get at is, you know, it's just been such a couple of tough years for comps, and then you have the new Walking Dead seasons this year.

Speaker Change: Our next question comes from the line of Steven Cahall with Wells Fargo. Your line is now open.

Steven Cahall: Thank you maybe first just kind of stepping back from it all.

Steven Cahall: Chris and you all are managing the business very very tightly on the cost side.

Steven Cahall: Things are certainly improving but I think investors are also just curious if you think you can get back to a level of growth either at the top line or at the <unk> line in the next couple of years. So I just wanted to get your comments of kind of the bigger picture as to when you see the business, maybe starting to flatten out or even grow again.

Steven Cahall: Then just one on advertising with high single digit declines in guidance for 2024 domestic could you help us think about what your expectation is for kind of volume delivery versus pricing and what I'm trying to get out is it's just been such a couple of tough years for.

Steven Cahall: Comps and then you have the new walking dead season. This year. So is that high single digit really a reflection of just the weaker marketplace that you talked about.

Steven Cahall: Or our impression is still down on a year on year basis, even as you cycle into some new programming.

Kristen Dolan: So is that high single-digit really a reflection of just the weaker marketplace that you talked about, or are impressions still down on a year-on-year basis, even as you cycle into some new programming? Thank you. Great. I'll take your first question, Stephen, on cost management and the top line. Look, we've been really clear for the last year and going forward about how we're managing the business, streamlining it, making it as efficient as possible, and Patrick mentioned our target, where we feel we can make a half a billion dollars in pre-cash flow in the next few years. But on the top line, we're really waiting out what's going on in the industry, and what I'm happy about is that we continue to produce, through Dan and the team, really high-quality content. At the TCA event this week, we were so proud and so enthusiastic about the slate that we're putting out right now.

Speaker Change: Great I'll take your first question Stephen on the cost management in the topline look we've been really clear for the last year and going forward about how we're managing the business streamlining it making it making it as efficient as possible and Patrick mentioned, you know our target where we feel we can do and have $1 billion in free cash flow and the net.

Speaker Change: Two years.

Speaker Change: But on the top line you know, we're really waiting out what's going on in the industry and what what I'm happy about is that we continue to produce through Dan and the team really high quality content. The TCA event. This week was that we were so proud and so enthusiastic about the slate that we're putting out right now and this is part of our ongoing strategy to own and Matt.

Speaker Change: <unk> franchises that we can monetize overtime, so as the marketplace sorts itself out.

Speaker Change: On the.

Kristen Dolan: And this is part of our ongoing strategy to own and manage franchises that we can monetize over time. So as the marketplace sorts itself out, the opportunity to grow top line in the coming years continues to be there. I think it's just got to settle.

Speaker Change: The opportunity to grow top line in the out years continues to be there I think it's just got to settle so we're sort of sticking to our knitting. As you said you know tight cost management, but effective utilization of the resources that we have and we're going to stick to the plan and we're optimistic over the next year.

Kristen Dolan: So we're sticking to our knitting, as you said, tight cost management but effective utilization of the resources that we have. And we're going to stick to the plan. And we're optimistic that in the next year to two years, the ship will right itself in our industry, and things will open up again. But we're confident that we're doing what we've always done best, which is creating great content for very select but very passionate audiences. Hi Stephen.

Speaker Change: Year to two years that the ship will right itself in our industry and things will open up again, but we're confident that we're doing what we've always done best which is create great content for various select but very passionate audiences.

Speaker Change: Hi, Steven on your second question on volume delivery versus pricing as we look at 'twenty four I would actually call it impression shifting.

Steven Cahall: We are very thoughtfully.

Kim Kelleher: On your second question on volume delivery versus pricing, as we look at 24, I would actually call it impression shifting. We are very thoughtfully working towards increasing our digital inventory through the addition of AMC Plus, an ad-supported tier. Our growing CTV distribution through, as Kristen mentioned, we have 100 fast feeds right now in the market across 11 platforms. We see a large ABOT opportunity in 2024. As we convert that inventory, as those impressions shift to digital, we're able to get better yield and pricing out of those impressions. While our estimate is not great for 24, we do actually believe that this is moving in the right direction for the future, and we'll continue to just be very, very thoughtful about how we expand our viewership. Thank you. Our next question comes from the line of Charles Wilber with Guggenheim Securities. Your line is now open. Hi, good morning. This is Charlie on for Michael Morris.

Steven Cahall: Working towards increasing our digital inventory through the addition of the ANC plus AD supported tier our seeds are growing CTV distributions through as Christian mentioned, we have 100 fast speeds right now in market across 11 platforms, we see a large <unk> opportunity in 2024.

Steven Cahall: As we convert that inventory is that.

Steven Cahall: Those impressions shift to digital we're able to get better yield and pricing.

Steven Cahall: Out of those impressions so.

Steven Cahall: While our estimate is not great for 'twenty four we do actually believe.

Steven Cahall: But this is moving in the right direction.

Steven Cahall: For the future and we'll continue to just be very very thoughtful about how we expand our viewership.

Steven Cahall: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Charles <unk> with Guggenheim Securities. Your line is now open.

Charles: Hi, Good morning. This is Charlie on for Michael Morris.

Kim Kelleher: You guys mentioned and highlighted the FAST expansion. I just wanted to dive in on that a little bit and see if you could help us understand the contribution from these and provide any color on how these work. Is it primarily an inventory share, revenue share approach? And then, you know, if there is any impact or lift on the viewership and engagement you may have seen across the portfolio, the linear and subscription services. And then, secondly, you just mentioned the potential international AVOT opportunity. I just wanted to get your thoughts on how that may extend to the fast channels businesses as well. Sure. Hi Charlie.

Charlie: You guys mentioned and highlighted the fast expansion.

Wanted to dive in on that a little bit and see if you could help us understand the contribution from <unk> and provide any color on how the economics of these work is it primarily inventory share revenue share approach.

Charlie: And then any impact or lift on the viewership and engagement you may have seen across the portfolio the linear and subscription services and then secondly, you just mentioned the potential international Avon opportunity just wanted to get your thoughts on how that may extend to the fast channels businesses as well.

Speaker Change: Thank you.

Speaker Change: Sure Hi, Charlie on the first part of your question.

Kim Kelleher: On the first part of your question, I would say it's extremely important to our strategy that we have the first sales position for selling our shows. And that has been, that has been key to all of our distributions and all of our platform partners. And that has been very lucrative for us and the partners. We don't break out specific contributions from this particular line of business, but it is, and it is growing. We are seeing continued growth quarter over quarter and expect that to continue through 24 and into the future. On international, the only thing I'd lead with is we see a huge opportunity in Avon and fast. And it's obviously a more nascent market. But if partners like Pluto and Samsung and other global partners start looking at their continued rollout by territory, and it overlaps with the regions that we are strong players in, as Patrick mentioned before, we know we will be at the forefront of those growing goods. And Charlie, it goes without saying, but I'll say it anyway.

Charlie: I would I would say is an extremely important to our strategy that we are we have first sales position on selling our shows.

Speaker Change: And that has been.

Speaker Change: And that has been key to all of our distributions and all of our platform partners and that has been very lucrative for us and the partners.

Speaker Change: We don't break out specific contribution of this particular line of business, but it is it is growing we are seeing continued growth quarter over quarter and expect that to continue through 'twenty four and into the future.

Speaker Change: On international the only thing I'd add lead with is we see huge opportunity in Nevada, and fast and it's obviously, a more nascent market, but as partners like <unk> and Samsung and other global partners start looking at their continued rollout by territory and it overlaps with the regions that we are.

Speaker Change: Strong players and as Patrick mentioned before we know we will be at the forefront of those growing businesses in China, and probably it goes without saying, but I'll say it anyway.

Kristen Dolan: You know, the advances we've made in advertising, our ability to sell segments, then it's up to the internal teams to deliver that segment across all the platforms on which we insert advertising. So whether it's fast or AVOD or linear or, you know, linear national addressable or programmatic, we just, Kim's team sells the segment, and then they place it as needed. So we're getting really sophisticated at really optimizing every single impression that we have and the CPMs associated with it. So that's part of the reason we don't break it out, because it would be nearly impossible to do that math.

Speaker Change: The advances we've made in advertising in our ability to sell segments. Then it's up to the internal teams to deliver that segment across all the platforms on which we insert advertising, so whether it's fast or avon or linear or linear.

Speaker Change: National addressable or programmatic, we just kim's team sells the segment and then they place as needed. So we're getting really sophisticated and really optimizing every single impression that we have and the <unk> associated with it. So that's part of the reason we don't break it out because it would be nearly impossible to do that math, we just we.

Kristen Dolan: We just put together the best construct to deliver the segment. And then, as we mentioned before, we're very proud of our opportunities and our ability beyond that to deliver attribution reporting and prove to clients like L'Oreal that they've done really well in placing their money with us and letting us distribute it in the way that best reaches their target audience. So more to come on that front, but the ability to do that beyond the U.S. is really exciting to us.

Speaker Change: Put together the best construct to deliver the segment and then as we mentioned before we're very proud of our opportunities and our ability beyond that since.

Speaker Change: Deliver attribution reporting and prove out to clients like l'oreal that they've done really well in placing their money with us and letting us distributed in a way that best reaches their target audience. So more to come on that front, but the ability to do that beyond the U S is really exciting to us.

Speaker Change: Okay.

Nick Siebert: Great, thank you, and thank you, and I'm showing no further questions at this time. I'd like to hand the call back over to Nick Siebert for closing remarks. Thank you for joining us today, and we appreciate the interest in AMC Networks. Have a good day. This concludes today's conference call. Thank you for your participation. You may now disconnect, www.amc.com

Speaker Change: Great. Thank you.

Speaker Change: Thank you and I'm showing no further questions at this time I'd like to hand, the call back over to Nick Siebert for closing remarks.

Nick Siebert: Thank you for joining us today and we appreciate the interest in AMC networks have a good day.

Nick Siebert: This concludes today's conference call. Thank you for your participation you may now disconnect.

Nick Siebert: Okay.

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