Q2 2025 AMC Networks Inc Earnings Call
<unk> 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 one on your telephone you will then hear an automated message advised them that your hand is raised to withdraw. 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 you.
Speaker #1: This reinforces not only the value of our own IP, but also the versatility and breadth of AMC Studios' assets and capabilities, as we continue to develop premium content for our own platform and opportunistically for other buyers.
Speaker today, Nick Seaberg, SVP corporate development and Investor Relations. Please go ahead.
Thank you good morning, and welcome to the AMC networks second quarter 2025 earnings conference call joining.
Speaker #1: AI has become significant focus generally and in media. We recently entered into a partnership with a company called Runway, a leader the use of generative AI in entertainment, to leverage AI in our marketing and programming development.
Joining us this morning are Christian Dawn, Chief Executive Officer, Patrick O'connell, Chief Financial Officer, Tim Kelleher, Chief Commercial Officer, and Dan Mcdermott, President of Entertainment and AMC Studios.
Speaker #1: Good
Speaker #1: day, and thank you for
Speaker #1: standing by. Welcome to
Speaker #1: the AMC Networks
Speaker #1: We've already begun using these tools to iciently and quickly profile around certain stories or locations, expanding the volume of opportunity in these important areas.
Speaker #1: Inc second
Speaker #1: quarter 2025 earnings
Speaker #1: call. At this
Speaker #1: time, all participants are in
Speaker #1: a listen-only
Speaker #1: mode. After the speaker's
Speaker #1: presentation, there will be a question and
Today's press release is available on our website at AMC networks Dot com.
Speaker #1: We'll have more to say on this and how we're using this new technology across marketing and programming development in the coming months. The word of mouth technology solutions to standardize and streamline our business functions continues, and across several important performance milestones in the last quarter.
Speaker #1: answer session. To
Speaker #1: ask a question during the session, you
We will begin with prepared remarks, and then we'll open the call for questions.
Speaker #1: need to press star 11 on your telephone. You
Speaker #1: will then hear an automated
Today's call May include certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Speaker #1: message advising that your hand is.
Speaker #1: raised. To withdraw
Speaker #1: your question, please press
Speaker #1: star 11 again.
Speaker #1: Please be advised that
Speaker #1: today's conference is being
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.
Speaker #1: Just recently, we worked with ETF to expand the delivery our content to an ever-increasing number of digital distribution partners. On the ar side, we fully transitioned our vision for our last-hand channels, as well as disaster recovery services for our North American channels.
Speaker #1: recorded. I would now like to
Speaker #1: Hand the conference over to your.
Speaker #1: speaker today, Nick
Speaker #1: Seibert, SVP,
Speaker #1: Corporate Development and Investor
Speaker #1: Relations, please go
Please refer to AMC networks SEC filings 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 release and with that I'd like to turn the call over to Kristin.
Speaker #1: head.
Speaker #1: This meaningful product position us well for the technical challenges associated with the idly evolving media distribution landscape. We're looking forward to a third season of The Walking Dead: Daryl Dixon, which will premiere September, and the arrival of a third or fifth season of The Walking Dead: Chambers, telling us about the DC order later this fall.
Speaker #2: Thank you. Good
Speaker #2: Morning and welcome to the AMC Networks second quarter 2025 earnings call.
Speaker #2: quarter 2025 earnings conference call. Joining
Speaker #2: us this morning are Kristin Dolan, Chief Executive
Speaker #2: Officer, Patrick
Speaker #2: OConnell, Chief Financial
Speaker #2: Officer, Kim
Speaker #2: Kelleher, Chief Commercial
Speaker #2: Officer, and Dan
Speaker #2: McDermott, President of
Thanks, Nick and good morning, everyone. We continue to execute our clear strategic plan focused on programming partnerships and profitability as we manage AMC networks through this period of change in our industry I.
Speaker #2: Entertainment and AMC
Speaker #2: Studios. Today's
Speaker #1: Our independent and unified organizational structure of our company and our ners and, of course, our audience is extremely well in this changing time. Media.
Speaker #2: press release is available on our
Speaker #2: website at
Speaker #2: amcnetworks.com. We will
Speaker #2: begin with prepared remarks, and
Speaker #2: we'll open the call for
Speaker #2: questions. Today's
Speaker #2: call may include certain
Speaker #2: forward-looking statements within the meaning
I am pleased with the progress we've made in the first half of the year in the second quarter streaming revenue growth accelerated we saw strong licensing performance and generated $96 million of free cash flow in.
Speaker #2: the private securities
Speaker #2: litigation reform Act
Speaker #2: of 1995.
Speaker #2: Any such forward-looking
Speaker #2: statements are not guarantees of
Speaker #2: future performance or
Speaker #2: results and involve risks and
Speaker #2: uncertainties that could cause
Speaker #2: actual results to differ. Please refer to
In light of these positive results, we are raising our free cash flow outlook to approximately $250 million for the full year.
Speaker #2: AMC Networks SEC
Speaker #2: filings for a discussion of
Speaker #2: risks and
Speaker #2: uncertainties. The company disclaims
Speaker #2: any obligation to update
In addition, we recently completed important financing transactions, which Patrick will discuss in more detail. We expect that the retirement of our debt at a significant discount will create meaningful shareholder value.
Speaker #2: any forward-looking statements made
Speaker #2: on this call
Speaker #2: today; we will discuss certain
Speaker #2: non-GAAP financial
Speaker #2: measures the required definitions and
Speaker #2: reconciliations can be found
Speaker #2: in today's press
Speaker #2: release. And with that, I'd like to
Speaker #2: turn the call over to
Speaker #2: Kristin.
I'd like to spend a moment discussing our core competency that differentiates AMC networks, which is our ability to build and grow fan communities around our high quality content. This is the goal of every company and media and our success in this regard spans our linear networks programming franchises targeted streaming services and film business.
Speaker #3: Thanks, Nick,
Speaker #3: and good morning,
Speaker #3: everyone. We continue to
Speaker #3: execute our clear
Speaker #3: strategic plan focused
Speaker #3: programming,
Speaker #3: partnerships, and profitability as
Speaker #3: we manage AMC
Speaker #3: Networks through this period of
Speaker #3: change in our
Speaker #3: industry. I'm pleased with the
Speaker #3: Progress we've made in the first half.
Speaker #3: of the year. In
Speaker #3: the second quarter,
Speaker #3: streaming revenue growth
Speaker #3: accelerated. We saw strong
Two weeks ago, we were at San Diego comic Con the biggest fan event in the world and a major annual priority for our company, our walking dead and Anne Rice universes and for the first time, our shutter streaming service, we're well represented active fan relationships drive our company and also deliver meaningful value to our distribution and advertising partners.
Speaker #3: licensing performance
Speaker #3: and generated $96
Speaker #3: million of free cash
Speaker #3: flow. In light of these
Speaker #3: positive results, we are
Speaker #3: raising our free cash
Speaker #3: flow outlook to
Speaker #3: approximately
Speaker #3: $250 million for the full
Speaker #3: year. In
Speaker #3: addition, we recently
Speaker #3: completed important
Speaker #3: financing transactions which
Speaker #3: Patrick will discuss in more
Speaker #3: detail. We expect that
Speaker #3: the retirement of our debt
It was powerful and affirming to see people lined up for hours to be terrified at our shutter activation to watch Norman <unk>, Melissa Mcbride preview a new season of the walking dead, Darryl Dixon and hall H or experienced the cast of interview with the vampire entering ballroom 'twenty to deafening applause.
Speaker #3: at a significant
Speaker #3: discount will create meaningful
Speaker #3: shareholder value. I'd like to spend
Speaker #3: moment discussing a core
Speaker #3: competency that
Speaker #3: differentiates AMC
Speaker #3: Networks, which is our ability to
Speaker #3: build and grow fan
Speaker #3: communities around our high-quality
Speaker #3: content. This is
Speaker #3: the goal of every company
Speaker #3: in media, and our
Speaker #3: success in this regard spans
We have also approached streaming and a unique and fan forward way building a suite of targeted services that allow us to efficiently serve passionate spans of specific genres, while achieving very high levels of engagement and loyalty when a horror fan find shutter or someone who loves cozy mysteries discovers acorn TV something very powerful happens.
Speaker #3: our linear networks,
Speaker #3: programming franchises,
Speaker #3: targeted streaming
Speaker #3: services, and film
Speaker #3: business. Two weeks
Speaker #3: ago, we were at San Diego.
Speaker #3: Comic-Con, the biggest
Speaker #3: fan event in the world and a
Speaker #3: major annual priority for
Speaker #3: our company. Our
Speaker #3: walking dead in Anne
Speaker #3: Rice universes and, for the
Speaker #3: first time, our shutter
Speaker #3: streaming service were
Speaker #3: well
Speaker #3: represented. Active fan
They don't just add another platform to the pile they subscribe to a service that quickly becomes their favorite.
Speaker #3: relationships drive our company, and
Speaker #3: also deliver meaningful
Speaker #3: value to our distribution
Speaker #3: and advertising
Speaker #3: partners. It was
Our viewers first strategy is designed to meet viewers wherever they are on every possible platform. The benefits of this approach are cascading across our business and allowing us to expand audiences by finding new viewers across linear streaming and CTV fast we have more than 20 domestic fast channels today, which do more than just grow our digital ad busy.
Speaker #3: powerful and affirming to see
Speaker #3: people lined up for hours
Speaker #3: to be terrified at our
Speaker #3: shutter
Speaker #3: activation, to watch Norman
Speaker #3: Reedus and Melissa McBride
Speaker #3: preview a new season of The
Speaker #3: Walking Dead: Daryl
Speaker #3: Dixon in Hall
Speaker #3: H, or experience the cast
Speaker #3: of Interview with the
Speaker #3: Vampire entering Ballroom
Speaker #3: 20 to deafening
Speaker #3: applause. We've
Speaker #3: also approached streaming in a
They promote sampling and raise awareness and interest in our brands and franchises. They drive viewership on our linear networks and subscriptions on our streaming services.
Speaker #3: unique and fan-forward way,
Speaker #3: building a suite of targeted
Speaker #3: services that allow us to
Speaker #3: efficiently serve
Speaker #3: passionate fans of specific
Speaker #3: genres while
Speaker #3: achieving very high levels
We're also adapting our success in fast internationally, we're already seeing a great response to the three fast channels, we've launched in the U K and are adding three more. This month later this year, we will launch channels and markets across central and Northern Europe, Iberia and Latin America.
Speaker #3: of engagement and
Speaker #3: loyalty. When a horror
Speaker #3: fan finds shutter,
Speaker #3: or someone who loves cozy
Speaker #3: mysteries discovers a corn
Speaker #3: TV, something
Speaker #3: very powerful
Speaker #3: happens. They don't just add another
Speaker #3: platform to the pile; they
Speaker #3: subscribe to a service
Speaker #3: that quickly becomes their
Speaker #3: favorite.
Speaker #3: Our viewers' first strategy is
We've been focused on expanding awareness and subscriber interest in the Acorn service and brand one of the world's first targeted streaming services in the quarter. We celebrated our first murder mystery may a new event that delivered the biggest month for Acorn for ship ever and achieved a multiyear high in subscriber acquisition. In addition to that effort.
Speaker #3: designed to meet viewers wherever
Speaker #3: they are on every
Speaker #3: possible platform.
Speaker #3: The benefits of this approach
Speaker #3: are cascading across our
Speaker #3: business, and allowing
Speaker #3: us to expand
Speaker #3: audiences by finding new viewers
Speaker #3: across linear,
Speaker #3: streaming, and CTV
Speaker #3: Fast. We have more
Speaker #3: than 20 domestic Fast
Speaker #3: channels today, which do
Speaker #3: more than just grow our digital
Speaker #3: ad business. They
We developed a custom plan with a partner that successfully drove higher subscriber acquisition for the service a new mystery series called Art detectives starring Stephen Moyer Premier during the quarter and is now the number one new series and Acorn history Irish blood, starring and executive produced by Alicia Silverstone premieres next week.
Speaker #3: promote sampling and raise
Speaker #3: awareness and interest in our brands
Speaker #3: and franchises.
Speaker #3: They drive viewership on our linear networks and
Speaker #3: subscriptions on our streaming
Speaker #3: services. We're
Speaker #3: also adapting our success
Speaker #3: in Fast
Speaker #3: internationally. We're already
Speaker #3: Seeing a great response to the
Speaker #3: three Fast channels we've launched
Speaker #3: the UK, and
Speaker #3: are adding three more this
Speaker #3: month. Later this
Speaker #3: year, we'll launch channels in
And a new Brooke Shields mystery goes into production next month.
Speaker #3: markets across Central and
Speaker #3: Northern Europe, Iberia,
Speaker #3: and Latin
Shutter continues to cement its status as the Premier brand for <unk> and the supernatural with the breakout success of cloud in a cornfield. The film opened to critical acclaim in May and set a company record for opening weekend box office, we're looking forward to extending the film's momentum with its streaming debut today on AMC plus and shutter.
Speaker #3: America. We've been
Speaker #3: focused on expanding
Speaker #3: the Acorn service and brand, one of the world's first targeted
It's worth noting that during the quarter, we implemented rate events at both the Acorn shudder and still saw year over year and sequential improvements in both our rate of churn and engagement across our streaming portfolio. All of our streaming services are still priced below $10 a month, which is increasingly rare today I'd also like to call out the <unk>.
Strong growth of our high dive streaming service <unk>.
<unk> is a popular genre with it passionate and highly engaged fan base, we see a lot of potential for continued growth at high dive.
In terms of operational updates, we're very pleased with our performance in the current advertising upfront negotiations and the continued expansion of our digital AD business as more of our advertising partners embrace the power of reaching our viewers by buying across multiple platforms.
We're tracking toward the same overall volume as last year, while driving a 25% plus increase in digital commitments capitalizing on the innovation we've invested in over the last few years, our commercial team leads the industry in key areas of innovation and attribution and we see momentum as new currency opportunities are embraced by the marketplace.
We're in advanced discussions with Netflix to extend and expand the innovative branded AMC collection content relationship we launched a year ago, we expect to provide a more specific update in the coming weeks. Let me just say both companies have been very happy with the results that came from making prior seasons of many of our shows including our bigger.
Speaker #2: Good day and thank you for standing by. Welcome to the AMC Networks Inc second quarter 2025 earnings call. At this time, all participants are in a listen-only mode.
Speaker #2: After the speaker's presentation, there will be a estion and answer session. To ask a question during the session, you will need to press star 11 on your telephone.
Franchises available to this enormous base of subscribers in the U S.
In terms of content licensing in general we're seeing interest in our shows and franchises around the world. We saw strong performance in this category during the quarter, including continued demand for our content the sale of our music catalog as well as additional fees related to our development of Apple TV Pluses hit series silo.
Speaker #2: You will then hear
Speaker #2: automated message advising
Speaker #2: that your hand is
Speaker #2: raised. To withdraw your question,
Speaker #2: please press star 11
Speaker #2: again. Please be
Speaker #2: advised that today's conference
Speaker #2: is being recorded. I
Speaker #2: I would now like to hand the
Speaker #2: conference over to your speaker
Speaker #2: today, Nick Seibert,
Speaker #2: SVP, Corporate Development
Speaker #2: and Investor Relations,
Speaker #2: please go
Speaker #2: head.
This reinforces not only the value of our owned IP, but also the versatility and breath of AMC studios assets and capabilities as we continue to develop premium content for our own platforms and opportunistically for other buyers.
Speaker #3: Thank
Speaker #3: you. Good morning and
Speaker #3: welcome to the AMC Networks
Speaker #3: second quarter
Speaker #3: 2025 earnings conference
Speaker #3: call. Joining us this morning
Speaker #3: are Kristin Dolan, Chief
Speaker #3: Executive
Speaker #3: Officer, Patrick OConnell, Chief
Speaker #3: Financial
Speaker #3: Officer, Kim Kelleher, Chief
AI has become a significant focus generally and in media. We recently entered into a partnership with a company called runway a leader in the use of generative AI and entertainment to leverage AI in our marketing and programming development. We've already begun using these tools to efficiently and quickly explore possibilities around certain story.
Speaker #3: Commercial Officer,
Speaker #3: and Dan McDermott, President
Speaker #3: of Entertainment and
Speaker #3: AMC Studios. Today's press release is
Speaker #3: ailable on our website at
Speaker #3: amcnetworks.com. We will begin with prepared remarks and then we'll open the
Speaker #3: call for questions. Today's call may
Speaker #3: include certain forward-looking statements
Speaker #3: within the meaning of the private
Speaker #3: securities litigation reform
Speaker #3: act of
Speaker #3: 1995. Any such
Our locations expanding the quality and volume of opportunity in these important areas. We will have more to say on this and how we're using this new technology across marketing and programming development in the coming months.
Speaker #3: forward-looking statements are not
Speaker #3: guarantees of future
Speaker #3: performance or results and involve
Speaker #3: risks and uncertainties that
Speaker #3: could cause actual results to
Speaker #3: differ.
Speaker #3: Please refer to AMC
Speaker #3: Networks SEC filings for
Speaker #3: a discussion of risks and
Our work with Comcast technology solutions to standardize and streamline our back office functions continues and cross several important performance milestones in the last quarter.
Speaker #3: uncertainties. The
Speaker #3: company disclaims any
Speaker #3: obligation to update any
Speaker #3: forward-looking statements made on this call
Speaker #3: today; we will
Speaker #3: discuss certain non-GAAP
Speaker #3: financial measures the required
Speaker #3: definitions and
Speaker #3: reconciliations can be found in today's
Just recently, we worked with Cts to expand the delivery of our content to an ever increasing number of digital distribution partners.
Speaker #3: press release. And with
Speaker #3: that, I'd like to turn the call over to
Speaker #3: Kristin.
Speaker #4: Thanks, Nick, and good morning,
Speaker #4: everyone. We
On the linear side, we fully transitioned origination for our Latam channels as well as disaster recovery services for our North American channels. This meaningful progress positions us well for the technical challenges associated with the rapidly evolving media distribution landscape.
Speaker #4: continue to execute
Speaker #4: our clear strategic
Speaker #4: plan focused on
Speaker #4: programming, partnerships, and
Speaker #4: profitability as we manage
Speaker #4: AMC Networks through this
Speaker #4: period of change in our
Speaker #4: industry. I'm
Speaker #4: ased with the progress we've made in
Speaker #4: first half of the
Speaker #4: year. In the second
Speaker #4: quarter, streaming revenue
Speaker #4: growth accelerated. We
We're looking forward to a third season of the walking dead, Darryl Dixon, which will premiere in September and the arrival of a third series and our Anne Rice Universe <unk>. The secret order later this fall.
Speaker #4: saw strong
Speaker #4: licensing performance and
Speaker #4: generated $96 million of free
Speaker #4: cash flow.
Speaker #4: In light of these positive
Speaker #4: results, we are raising our
Speaker #4: free cash flow outlook
Speaker #4: to approximately
Speaker #4: $250 million for
Our size independents and unified organizational structure serve our company our partners and of course, our viewers extremely well in this changing time in media. We've done the hard internal work to ensure that our employees are empowered focused and clear on our strategy, which gives us the ability to move quickly intelligently and decisively to seize.
Speaker #4: the full
Speaker #4: year. In addition, we
Speaker #4: recently completed
Speaker #4: important financing
Speaker #4: transactions which Patrick will discuss
Speaker #4: in more
Speaker #4: detail. We expect that the retirement
Speaker #4: of our debt at a
Speaker #4: ant discount will
Speaker #4: create meaningful shareholder
Speaker #4: value.
Speaker #4: I'd like to spend a moment
Speaker #4: discussing a core competency
Speaker #4: that differentiates
Speaker #4: AMC Networks, which is
Speaker #4: our ability to build and
New opportunities we are managing this business in a thoughtful and strategic way as we continue to build franchises and entertain fans.
Speaker #4: grow fan communities around
Speaker #4: our high-quality
Speaker #4: content. This is the goal of
Speaker #4: every company in media,
Speaker #4: and our success in this
Speaker #4: regard spans our linear
Speaker #4: networks, programming
And now I'll turn the call over to Patrick.
Speaker #4: franchises, targeted
Speaker #4: streaming services, and film
Thank you Kristen we are pleased to report another quarter of healthy free cash flow generation with second quarter free cash flow totaling $96 million.
Speaker #4: business. Two weeks ago, we were
Speaker #4: at San Diego
Speaker #4: Comic-Con, the biggest fan event in the
Speaker #1: We've done our internal work to ensure that our employees are empowered, focused, and clear on strategy. Which gives us the ability to ove quickly, intelligently, and decisively to seize new opportunities.
Speaker #4: world and a major
Speaker #4: annual priority for our
Speaker #4: company. Our walking
On the heels of the strong cash flow generation in the first half of the year, we've increased our outlook and now anticipate approximately $250 million of free cash flow for 2025.
Speaker #4: dead in Anne Rice
Speaker #4: universes and, for the first
Speaker #4: time, our shutter streaming
Speaker #4: service were well
Speaker #4: represented. Active
Speaker #4: fan relationships drive
Speaker #1: We are managing this business in a thoughtful and strategic way as we continue to build franchises and entertain fans. And turn the call over to Patrick.
Speaker #4: our company, and also
Speaker #4: deliver meaningful value to our
I'll have more to share on this one I reiterate the rest of our full year outlook later in my remarks.
Speaker #4: distribution and
Speaker #4: advertising partners. It
Speaker #4: was powerful and
Speaker #4: affirming to see people lined
Onto our consolidated results.
Speaker #4: up for hours to be
Speaker #4: terrified at our shutter
Speaker #2: Thank you, Kristin. With this report, we have generated another quarter of helpful cash flow, with second quarter free cash flow totaling $96 million. Given our cash flow generation in the first half of this year, we've raised our outlook and anticipate approximately $200 million of free cash flow for 2025.
Second quarter consolidated net revenue declined 4% year over year to $600 million favorability.
Speaker #4: activation, to
Speaker #4: watch Norman Reedus and
Speaker #4: Melissa McBride preview a
Speaker #4: new season of The Walking Dead:
Speaker #4: yl Dixon in Hall
Bill what again foreign exchange rates resulted in an approximately 60 basis point tailwind to our consolidated revenue growth rate.
Speaker #4: H, or
Speaker #4: experience the cast of Interview with
Speaker #4: the Vampire entering
Speaker #4: Ballroom 20 to
Speaker #4: deafening
Speaker #4: applause. We've also approached
Consolidated <unk> declined 28% to $109 million with an 18% margin adjusted EPS was <unk> 69 per share.
Speaker #4: streaming in a unique and
Speaker #4: fan-forward way, building a suite
Speaker #4: targeted services that
Speaker #2: We'll have more to share. I reiterate the rest of our full year outlook regarding my remarks. On to our consolidated results: second quarter consolidated net revenue climbed 4% year over year to $6 million.
Speaker #4: allow us to efficiently
Speaker #4: serve passionate fans
Speaker #4: of specific
Speaker #4: genres while achieving
I will now review our segment results.
Speaker #4: very high levels of
Speaker #4: engagement and loyalty.
Domestic operations revenue decreased 2% to $527 million.
Speaker #4: When a horror fan finds
Speaker #4: shutter, or someone who
Speaker #4: loves cozy mysteries
Speaker #4: discovers acorn
Subscription revenue decreased 1% due to a 12% decline in affiliate revenue, partly offset by streaming revenue growth of 12%.
Speaker #4: TV, something very powerful
Speaker #2: Capability in foreign change rates resulted in nearly 60 basis point tailwinds for our olidated revenue growth rate. Consolidated AOI declined to 20% to $109 million with an 18% margin and adjusted EPS was $0.99 per share.
Speaker #4: happens. They don't
Speaker #4: just add another platform to
Speaker #4: the pile; they subscribe
Speaker #4: to a service that quickly
Speaker #4: becomes their
Speaker #4: favorite. Our viewers'
Streaming subscribers grew 2% year over year and sequentially and we ended the second quarter with $10 4 million streaming subs.
Speaker #4: strategy is designed to
Speaker #4: meet viewers wherever they are
Speaker #4: on every possible
Speaker #4: platform. The benefits
Speaker #4: of this approach are
Speaker #4: cascading across our
Speaker #4: business, and allowing us to
Speaker #2: And I'll review our segment results. Domestic operations increased 2% to $527 million. Subscription revenue decreased 1% to 12%, which was a decline in affiliate revenue, partly offset by streaming revenue growth of 12%.
Streaming revenue growth in the quarter benefited from the implementation of recent rating initiatives. Despite.
Speaker #4: expand audiences by finding
Speaker #4: new viewers across
Speaker #4: linear, streaming, and
Speaker #4: CTV Fast.
Despite two price increases in the second quarter, we still saw year over year and sequential improvement in retention and engagement across our portfolio of streaming services.
Speaker #4: We have more than 20
Speaker #4: domestic Fast channels
Speaker #4: today, which do more than just grow
Speaker #4: ur digital ad
Speaker #4: business. They promote
Speaker #4: sampling and raise awareness and
Speaker #4: interest in our brands and
In July we implemented a $1 rate event at high die and performance to date at the surface is encouraging with retention tracking in line with our expectations.
Speaker #4: franchises. They drive
Speaker #2: Streaming subscribers grew 2% year over year and sequentially, and we ended the second quarter with 10.1 million streaming subs. Streaming revenue growth in the quarter preceded from the implementation of recent rate increases.
Speaker #4: viewership on our linear networks
Speaker #4: and subscriptions on our
Speaker #4: streaming
Speaker #4: services. We're also adapting
Speaker #4: our success in
Speaker #4: Fast internationally.
Speaker #4: We're already seeing a great
With all planned rate of events for the year now in flight, we anticipate an acceleration in quarterly streaming revenue growth as the year progresses, and we continue to expect our full year streaming revenue growth rate will be in the low to mid teens.
Speaker #4: response to the three Fast
Speaker #4: channels we've launched in the
Speaker #4: UK, and are adding three
Speaker #4: more this month.
Speaker #2: Despite two rising rates in the second quarter, we still saw year over year and sequential improvement in retention and engagement across our portfolio of streaming services.
Speaker #4: Later this year, we'll launch
Speaker #4: channels in markets across
Speaker #4: Central and Northern
Speaker #4: Europe, Iberia, and Latin
Speaker #4: America. We've been focused on
For the second quarter domestic operations advertising revenue decreased 18% year over year due to linear ratings declines and lower marketplace pricing, including lower digital CPM.
Speaker #4: expanding awareness and
Speaker #4: subscriber interest in the acorn
Speaker #2: In July, we implemented a $1 rate event at high dive, and performance to date at this service is encouraging, with retention tracking in line with ur ectations.
Speaker #4: service and brand, one of
Speaker #4: the world's first targeted
Speaker #4: streaming
Speaker #4: services. In the quarter, we
Speaker #4: celebrated our first murder
Speaker #4: mystery May, a new
Speaker #4: event that delivered the biggest
Speaker #2: With all planned rate events for the year now, we anticipate an acceleration quarterly streaming revenue growth as the year progresses and continue to expect our full year streaming revenue growth rate will be in the low to mid-teens.
Market remained challenging for everyone, but we remain encouraged by our upfront performance the strength of our programming and our significant advanced digital advertising capabilities.
Speaker #4: month for acorn
Speaker #4: viewership ever, and achieved
Speaker #4: a multi-year high in
Speaker #4: subscriber
Speaker #4: acquisition. In addition to that
Speaker #4: effort, we developed a
Speaker #4: custom plan with a partner
Speaker #4: that successfully drove awareness and subscriber interest in higher subscriber acquisition for the service. A
Content licensing revenue was $84 million for the quarter, reflecting the timing and availability of deliveries in the period.
Speaker #2: For the second quarter, domestic operations advertising decreased 18% year over year, due to linear rating declines and lower marketplace pricing including lower digital CPMs.
Our second quarter results reflected continued healthy demand for our high quality content, including the sale of our music catalog and executive producer fees related to the Apple TV pluses silo.
Speaker #2: The ad market remained challenging for everyone, but we remain encouraged by our front performance, the strength of our program, and our significant advanced and digital advertising capabilities.
As you know licensing revenues often vary quarter to quarter due to the timing of agreements and delivery schedules.
Speaker #2: Content licensing revenue was $84 million for the quarter, reaching the timing and availability of delivery services in the . Our second quarter results reflected continued helpful demand for our high-quality content in the center of our music catalog, executive producer fees related to the Apple V Plus's Silo.
Regarding the quarterly cadence of licensing revenue, we anticipate that the third quarter will represent the lowest licensing revenue quarter for the year and that revenue will pick back up in the fourth quarter.
This is typical timing variability driven by the cadence of our delivery schedule. We continue to anticipate approximately $250 million of domestic operations content licensing revenue for the year.
Speaker #2: As you know, licensing venue is often varied quarter to quarter due to the timing of reements and delivery schedules. Regarding the quarterly case of licensing revenue, we anticipate that the third quarter will represent the lowest licensing revenue quarter for the year.
Domestic operations was $126 million for the quarter, representing a decrease of 19%.
The decrease in NOI was largely driven by continued linear revenue headwinds streams.
Speaker #2: And that revenue will pick back up in the fourth quarter. This is typical timing variability driven by the cadence of our delivery schedule. We continue to anticipate approximately $250 million domestic operations content licensing revenue for the year.
Streaming and content licensing revenue strength provided a partial offset in the second quarter.
Moving to our international segment.
Second quarter International revenues were $76 million.
Speaker #2: Domestic operations AOI was $126 million for the quarter. Representing a decreased fee of 18%. Decreased AOI was largely driven by continued linear revenue headwinds.
Excluding prior period advertising revenues related to a retroactive adjustment and the favorable impact of foreign exchange in the current period international revenues decreased 6%.
Speaker #2: Streaming content licensing revenue strength provided part offset in the second quarter. Moving to our internet segment. The second quarter international revenues were $73 million.
Subscription revenue, excluding FX decreased 9% due to the non renewal with Movistar in Spain, which occurred in the fourth quarter of 2024.
Advertising revenue, excluding the prior period retroactive adjustment and a favorable FX impact in the current period increased 2%.
Speaker #2: Including prior period advertising revenues related to a retroactive adjustment and favorable impact of foreign exchange in the second period, international revenues decreased 6%. Subscription revenue excluding ads decreased 9% due to the non-renewal with Movistar in Spain, which occurred in the fourth quarter of 2024.
International AOE for the second quarter was $15 million with a 20% margin.
Excluding the prior period adjustment and the beneficial FX impact in the current period International AOR decreased 15%.
Speaker #2: Advertising revenue, excluding prior period retroactive adjustment and the favorable impact in the current period, increased 2%. Internal AOI for the second quarter was $50 million, with a 20% margin.
Moving to the balance sheet.
The strength of our balance sheet remains a focus as we reduced gross debt and extend maturities.
Proactive and prudent management of our balance sheet provides improved flexibility today and in the future, while allowing us to focus on the continued evolution of our business.
Speaker #2: Excluding the prior period adjustment and the beneficial effects impact in the period, international AOI decreased 15%. Moving to the balance sheet. The strength of our balance sheet remains in focus as we reduce gross debt and maturities.
We believe that our security software attractive opportunities to deploy cash opportunistically across the capital structure to create meaningful equity value.
So far this year total debt reduction has exceeded $400 million. This.
Speaker #2: Proactive improvement agement of our balance sheet provides improved flexibility today and in the future. While allowing us to focus on the continued evolution of our business.
This includes the retirement of $699 million of our unsecured senior notes due 2029, and a significant discount to par and the early prepayment of $90 million of our term loan a.
Speaker #2: We believe that our securities for attractive opportunities to deploy cash opportunistically across the capital structure to create meaningful equity value. So far this year, total debt uction has exceeded $400 million dollars.
Through July we have captured approximately $138 million of debt discount.
Adjusting for transactions that closed in July we ended the quarter with pro forma net debt of approximately $1 3 billion.
Speaker #2: This includes the retirement of over 699 million dollars of our 100 senior notes due in 2029, a significant discount of our in the early prepayment of $90 million of our terminal A.
And our consolidated net leverage ratio of two seven times.
The reduction from two nine times in the previous quarter.
We have $875 million of total liquidity, including approximately $700 million of pro forma cash on the balance sheet and our undrawn $175 million revolver.
Speaker #2: We've captured approximately $138 million of debt discount now. Adjusting for transactions that losed in July, we entered the quarter pro forma net debt of approximately $1.3 billion and consolidated net leverage ratio of 2% at times.
During the second quarter, we repurchased one 6 million shares of our class a common stock for approximately $10 million.
Speaker #2: If reduction from 2.9 times in the previous quarter. We have 875 million dollars of total liquidity including approximately $700 million in pro forma cash on the ance sheet and undrawn $175 million per quarter.
As of June 30, we had $125 million remaining on our current authorization.
On the topic of capital allocation philosophy remains consistent.
First we look to support the business by creating and acquiring compelling programming that resonates with our audiences, while maintaining healthy levels of cash flow generation.
Speaker #2: During the second quarter, where we reached this $1.6 million shares of our Class A common stock for approximately $10 million. As of June 30th, we had $125 million on our current authorization.
Second we remain focused on reducing gross debt and extending debt maturities.
Speaker #2: On the topic of capital allocation, our ilosophy remains consistent. First, we look to support the business by creating and acquiring programming that resonates with our iences while maintaining healthy levels of free cash flow generation.
Lastly, M&A share repurchases and dividends will be opportunistic and measured and remained further down our priority list.
Moving towards 2025 outlook.
We remain confident in our ability to drive free cash flow.
As I mentioned earlier, we've raised our free cash flow outlook, and now anticipate approximately $250 million of free cash flow for the year.
Speaker #2: Second, we remain focused on reducing gross debt and extending debt maturities. Lastly, M&A purchases and dividends will be opportunistic and measured and remain further priority list.
Our increased outlook contemplates our strong year to date cash flow performance efficiency, and our programming investments and cash tax savings margin related to full interest deductibility from the one big beautiful Bill.
Speaker #2: Moving to our 2025 outlook. We remain confident in our ability to provide free cash ow. As I mentioned earlier, we've raised our free cash flow outlook and now anticipate approximately $250 million of free cash flow for the ar.
We continue to expect consolidated revenue of approximately $2 3 billion.
Reflecting continued linear headwinds, partially offset by increasingly meaningful streaming growth and continue to expect consolidated OE in the range of $400 million.
Speaker #2: Our increased advertising plates are strong year to date cash flow performance. Efficiency in our program investments and cash tax savings largely related to full interest stability from the one big deal.
$120 million.
We continue to anticipate year over year increases in technical and operating expenses as well as increased SG&A expenses, largely driven by streaming related marketing.
Speaker #2: We continue to expect consolidated revenue of approximately $2.3 billion reflecting continued linear headwinds partially offset by increasing meaningful streaming growth and expect consolidated AOI of $400 million to $420 million.
Regarding the quarterly cadence of the remainder of the year due to the timing of revenue, including content licensing we anticipate the OE in the third quarter represent the low point for the year.
Speaker #2: We continue to anticipate year-over-year increases in technical and operating expenses as well as increased SG&A expenses largely driven by streaming-related markets. Regarding the quarterly cadence of AOI for the media, due to the timing revenue including content licensing, which we anticipate AOI in the third quarter were lower over the year.
The fourth quarter will be the first full quarter, reflecting all of 2025 price increases that are streaming services.
We expect fourth quarter, NOI will benefit from accelerating streaming revenue growth and the timing of content licensing revenues.
As such in absolute dollar terms, we expect fourth quarter to be consistent with second quarter AOS.
Speaker #2: The fourth quarter will be the first full quarter reflecting all 2025 increases that ur streaming service is. We expect fourth quarter AOI benefit from accelerating streaming revenue growth and the timing content licensing revenue.
While the operating environment remains ever changing we remain highly focused on the variables within our control.
We continued to execute our consistent strategy of making great content distributing that content broadly generating meaningful free cash flow and being prudent with how we allocate our capital.
Speaker #2: As such, in advertising terms, we expect fourth quarter AOI to be consistent with second quarter AOI. The operating environment remains ever-changing; we remain highly focused on the tools within our control.
We are well capitalized with a large cash balance a long term view of the business and a clear strategic plan.
Speaker #2: We continue to execute our consistent strategy in great content, distributing content broadly, generating meaningful free cash flow, and being proven how we ocate our capital.
At the same time, we are nimble and opportunistic as we create and curate the high quality content that engages fans and build valuable franchises.
With that I'll hand, the call back to Nick.
Speaker #2: We are well capitalized with a lot of cash balance, a long-term view within this, and a lear strategic plan. At the same time, we are an portunistic as we create and create the high-quality content that engages fans and builds value in our .
Thanks, Patrick Operator, we'll now move to the Q&A portion of the call.
Certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for our first question, which will come from Thomas you have Morgan Stanley Thomas Your line is open.
Speaker #2: With that, I'll hand the call back to Nick.
Speaker #3: Thanks, Patrick. Operator will now move to the Q&A portion of the call.
Speaker #1: So first, as a reminder to ask a question, please press *11 on your telephone for your name to be announced. To answer your question, please press *1 again.
Thanks, so much good morning.
Can you dig into the source of the free cash flow upside a little bit more relative to the reiteration of revenue and EBITDA. It sounds like Patrick mentioned cash tax savings as a driver any changes to cash spending in the roughly $1 billion down in working capital to help us bridge the gap.
Speaker #1: One moment for ur first question. Which will come from Thomas Baker of Morgan Stanley. Thomas, you're on your mind open.
Speaker #4: Thanks so much. Good morning. Can you dig into the source of the retail upside a little bit more relative to the reiteration of revenue and EBITDA?
Sure Hey, Thomas Thanks for the question.
Speaker #4: It sounded like Patrick, you mentioned cash tax savings. The driver, any changes to the spending in the roughly $8 billion zone and working capital to help us bridge the gap?
Yes, just unpacking the kind of increase in the free cash flow guide a couple of factors I would say the largest factors as to cash taxes.
And offset to that was we did have some incremental.
Speaker #3: Sure. Hey, Thomas. Yeah, just unpacking the kind of the cash flow guide, kind of the factors, I would say the largest factor persisted offset that was an incremental cancellation that has become what we pay cash on.
Cancellation of indebtedness income on which we paid tax on but on a net basis cash taxes is the largest component of.
The guidance increase.
I'd say second to that would be savings across some of our programming.
Were modest in relation to the cash tax savings, but still important and sort of even more important than either of those two is the fact that the.
Speaker #3: This is the largest component of the guidance increase. I would say that a back into that would be savings from some of our programming. Those are more modest in relation to the cash tax savings, but still important.
The cash tax savings will sort of compound into 'twenty six 'twenty seven as we get sort of full interest deductibility going forward, obviously, given the capital structure.
Speaker #3: And sort of even more important than either those persisted the fact that the cash tax savings will sort of compound in '26 and '27 as we get sort of a full interest deductible going forward.
That was an important component of that legislation for us.
So not meaningful changes to the prior guidance in terms of.
Cash programming spend.
But in ranked order, it's the cash taxes first in the programming second.
Speaker #3: Obviously, given our capital structure that was an important component of that legislation for us. So not meaningful changes to the prior guidance in terms of cash programming spend.
Okay. That's super helpful and if we benchmark relative to the original guidance across the revenue buckets at the beginning of the year you reiterated.
Speaker #3: But in ranked order, those cash taxes first in the programming second.
Content licensing and streaming it seems like advertising is tracking a little worse in affiliate may be a little bit better as we think about the back half for those two can you maybe just help us think about the trends on a year over year comparison basis.
Speaker #4: Okay. That's super helpful. And if we mention that relative to the original guidance across the revenue bucket at the beginning of the year, you reiterated content licensing and streaming.
<unk> been seeing recently continues.
Speaker #4: It seems like advertising is tracking a little worse. More specifically, it may be a little bit better. As we think about the back half for those two, can you maybe just help us think about the trends on a year-over-year comparison base and whether what would have been seen recently continues?
Yes, I mean, we continue to feel good about the $2 3 billion total revenue guide.
I think the story remains much the same as it has been for the last couple of quarters and that content licensing revenue continues to be strong. The market is strong obviously, our content performs well on our services performs extraordinarily well on other platforms. In addition, and so we continue to see strength in that and that sort of in those markets.
Speaker #3: Well, yeah. I mean, we continue to talk about the $2.3 billion total revenue guide. I think the story is sort of much the same as it has been for the last couple of quarters in that content licensing revenue continues to be fixed from market to strong.
Places, both domestically and internationally so yes.
Speaker #3: Obviously, the objective performs well on our services. It's extraordinarily well on other platforms. In addition, so we continue to see strength in that sort of places, both domestically and internationally.
Yes on the margin I would say incremental strength on content licensing a little bit of weakness on the advertising side.
We continue to feel really good about our relationships with our partners in.
Speaker #3: So yeah, on the margin, I would say incremental content licensing, a little bit of akness on the advertising side with affiliate. We continue to feel kind of really good about our relationships with our partners.
And those deals continue to get signed as a matter of course and so.
Don't expect any sort of material change from our initial guidance for the year.
I would caution however, we don't typically give kind of quarter by quarter kind of re frames on kind of a revenue line item basis. So there are multiple ways up the mountain.
Speaker #3: And those deals continue to be signed as a matter of course. And so that, you know, typical activity sort of material change from our all five a year. I would caution that we don't sort of typically get kind of quarter by quarter kind of reframes on kind of a revenue line item basis.
So we feel good about the $2 three and there's obviously a number of ways to get there but.
In terms of broad brush strokes.
Thank the trends you've seen in the past are going to kind of carry through for the balance of the year.
Speaker #3: So there are multiple ways to mountain. So we feel good about the 2.3 and there's a couple of ays to get there. But as a in terms of broad brush strokes, I ink the trends you've seen in the past have been kind of carried through for the balance of the year.
Understood and if I can squeeze one more in just on the runway partnership and the puts and takes there.
Is it right to assume that youre, allowing them to train off your content library and in return you can leverage these tools exclusively for yourself.
Speaker #4: Understood. And technically, is one more in just on the runway partnership and the puts and takes there. Is it right to assume that you're allowing them to train off your content library and then in return, you can then release tools exclusively for yourself empower your, you ow, do a more efficient post-production and pre-production of maybe help us to frame through what the give and take is there?
Empower.
More efficient postproduction and pre production, maybe help us frame through what the give and take is there.
Hey, Thomas this is Kristen so runway is just the facilitation for us it's a tool that allows us to ideate, but if the content is ours.
Essentially our goal is to put the best tools in the hands of our creative so our teams are using runway for visualization of IV is whether it's design or.
Speaker #5: Hey, Thomas, this Kristin. So the way just to facilitate for us tool that allows us to ideate, but if the content is ours and, you ow, essentially our goal is to put the best tools in the hands of our targets.
Interestingly shops that we wouldn't be necessarily be able to afford on our budget, so things like using an oil rig or an aerial shot of it.
Speaker #5: So, you know, our teams are using Runway for visualization of ideas, whether it's set design or, you ow, shots that we wouldn't necessarily be able to afford on our budget.
The ship Brett.
But the relationship there is really to help facilitate.
Our opportunities to expand our scope ensure creative alignment visualized more quickly and so we've had some wins actually Dan could probably give you. An example, or two but runway is really jess.
Speaker #5: So it's like shooting an oil rig or an aerial shot of a, you know, of a ship. But, you know, the realization there is really to help facilitate our opportunity to extend our scope, ensure creative alignment, and visualize more quickly.
They're great partners, but we use them to facilitate our creative work its a technology play it's not a integrated IP.
Speaker #5: And so we've had some someone actually Dan could probably give you an example too, but, you know, Runway is really just it's a they're a great partner.
It kind of play with any of our content or anything that we've created.
Speaker #5: So we use them to facilitate our quarterly work. It's a technology but not a integrated, IP kind of play with any content or anything that we create.
Yes, Hi, Steve.
I will just add to that Thomas I mean, I'd, just say look the business has been integrating emerging technologies into the development and production of shows and films since the advent of the talkies and.
Speaker #4: Yeah, I'll just add to that. I mean, I just say, okay, the business has been integrating emerging technologies into the development and production of shows and films since the advent of the talkies.
As Christian has mentioned and driven us over the last couple of years.
An early adapter in the fast moving space of deploying AI in the service of generative visualization. So.
Speaker #4: And, you ow, Kristin has mentioned and driven us over the last couple of years we are early adapter in the fast-moving space of deploying AI in the service of generative visualization.
We are using them to help us.
<unk> come up with concepts ideas help our show runners visualize what they want to do where they wanted to do it and then in the realm of post production.
Speaker #4: So, we are using them to help us create, come up with concepts, ideas, help our showrunners, what they want to do, where they want to do it, and then in the realm of post-production, we're able to say a considerable amount of money across 30 to 50 episodes of television a year.
We're able to save a considerable amount of money across our 30 to 50 episodes of TV a year.
Because generative AI is so good right now it delivers four K imagery price at anywhere from 20% to 40% of what traditional via FX is and were not displacing any of these people either I wanted to be really clear that all of our efforts look clearly and cleanly within the parameters.
Speaker #4: because, generative AI is is so good right , it delivers 4K imagery, at anywhere from 20 to 40 percent of what traditional VFX is.
Amateurs established by all the Guild's, we're committed to the principle that everything we do is in support of the people that make these great shows possible and we're literally just giving them tools that will enhance their ability to do the great work they do.
Speaker #4: And we're not replacing any of these people either. I want to be, you know, really clear that all of our efforts live clearly and cleanly within the parameters established by all the deals.
Speaker #4: We're committed to the principle that everything we do is in support of the people that make these great shows possible. And literally just giving them tools to enhance their ability to do the great work that they do.
Understood. Thank you.
Thanks, Thomas will go to the next question. Please our next question will be coming from John Hodulik of UBS. Your line is open John.
Speaker #4: Understood. Thank ou so much.
Alright, thank you.
Speaker #3: Thanks, Thomas. We'll go to the xt question, please.
So a couple of more details on the topline first given the strength you've seen in streaming do you think subscription revenue growth can grow sustainably from here and then any more details you can tell us on those sort of AD trends or the AD market specifically what are you seeing in terms of pricing.
Speaker #1: Our next question will be coming from John Link of UBS. Your line is open, John.
Speaker #6: All right. Thank you. Just a couple of details on the top line. First, the strength you've seen in streaming. Do you think subscription revenue growth can grow sustainably from here?
On the linear side and the CTV side, we've heard about some pressure in January entertainment advertising in both sides and just any color that you are seeing and what you expect for the second part of the second half of the year it would be great. Thanks.
Speaker #6: And then any details you can tell us on the subscribe trends or the ad market. What you're seeing in terms of pricing on the linear side and the side.
Speaker #6: You know, we've heard about the pressure on generator payment advertising on both sides. And just anything that you're seeing and what you expect from the second half of the year would be coming.
Great Hey, John It's Patrick I'll take the streaming and Kim will take the advertising.
Listen we feel really good about the acceleration on the streaming side, both in terms of price and unit rate.
Speaker #6: Thanks.
Speaker #3: Great. Hey, John, it's Patrick. I'll take the streaming and Kim will take the vertising. Listen, we feel really od about the acceleration on the streaming side.
And so we.
We've had some amazing success with some of the recent programming both on an Acorn and on high does that really resonate with audiences and so we are seeing.
Speaker #3: You know, in terms of price and units, right? And so we've had some amazing success with some the recent programming both on Acorn and on High Dive.
Kind of attractive upticks in and kind of.
Subscribers, there can always do better.
Speaker #3: That's resonated with audiences. And so we're eing kind of attractive upticks. And kind subscribers there could always do better. But we like what we see.
Will we see a particularly the last couple of quarters on those two those two.
Platforms.
In terms of the economics of the business.
Really important to note that we've done a handful of price increases across our platform with.
Speaker #3: The last couple of arters on those who those two platforms in terms of the economics of the , you know, really important to note that, you ow, we've done a handful of price increases across platform with, you know, really attractive sort of net results.
Really attractive sort of net results.
And we're seeing sort of.
Very very modest impact.
Just sort of gross adds churn et cetera. So the metrics continue to hold up really well, we've got some nice pricing power here, you're going to see that compound through the balance of the year.
Speaker #3: We're seeing sort of very, y modest impact to sort of gross ads, churn, etc. So the rics continue to work really well. We've got some nice pricing power here.
Into Q3, and Q4, obviously beyond so we feel really good about that and we expect that that.
Speaker #3: You're going to see that compound through the balance of the year into Q3 and Q4. Obviously beyond that. So we feel really good about it and expect that revenue will continue to accelerate in the back half of the year.
<unk> revenue will continue to accelerate into the back half of the year.
John just to note I think it was in our remarks, but just to reiterate that streaming revenue will be our largest single revenue component this year.
So its go in where we needed to go.
Speaker #5: Just to note, I think it was in our remarks, but just to reiterate that streaming revenue is our largest single revenue component this year. So it's going where we need it to go.
And then Kim on the advertising.
Sure I think I think that it would be helpful. Just reiterate.
Chris in his comments about the strength of our upfront this year, which is probably the most leading indicator you've heard from others and us on where advertising is going to see nearly flat year over year volume, while driving over 25% increase in our digital revenue.
Speaker #5: And then Kim on the vertising.
Speaker #1: Sure. I think I think that it would be pful just reiterating Kristen's comments about the length of our upfront this year. Which is probably the most leading indicator we've heard from others and and us on where advertising is going.
Speaker #1: To see, you know, flat year-over-year volume while driving over a 25% increase in our digital revenue. It's all lines pointing in the right direction as we move forward.
It's all signs pointing in the right direction as we look forward obviously that.
Alright, Brian begins in October of this year and fourth quarter and flows through next year. So thats, leading I would also add that we continue to be our teams are leaders in the national linear addressable space and what that really does John is that increases the value of our inventory by increasing the <unk>.
Speaker #1: Obviously that, upfront begins in October of this year and fourth quarter. And flows most of this year. So that's leading. I would also add that we continue to be our teams are archers in the national linear addressable tools.
It delivers to our advertisers through best in class targeting and we continue to push.
Speaker #1: And what that really does on is that increases the value of those inventory by increasing the value it delivers to our advertisers through class targeting.
As much of our inventory directionally, whether thats from the virtual mvpds to traditional.
Speaker #1: And we continue to push, as much of our inventory directionally whether that's from the virtual MVPDs to traditional, VPDs and obviously the C space.
Mvpds and obviously the CTV space, we sell cross platform to our partners and that value increases with the layered targeting enhancements in the audience plus programming excuse me the audience plus.
Speaker #1: We sell to product form to our partners. That value increases with the layered targeting enhancements and the audience in the programming. Excuse me for the open plus I'm blanking on the word.
The audience plus tool we introduced actually.
Almost two years ago.
Great. Thank you all.
Speaker #1: Yeah. Plus tool we introduced at almost two years ago.
And our next question will be coming from Charles <unk> of Guggenheim Securities. Your line is open.
Speaker #3: Thank you all.
Hi, Good morning, Thank you for the question.
Speaker #1: And our next question will be coming from Charles Wilber of Guggenheim Securities. Your line is open.
I appreciate the detail on the Upfronts. There just wanted to ask could you share any kind of incremental color on particular areas of success, whether verticals or particular shows or content style or platforms or audience segments that are kind of working best for you and then secondly on the international fast expansion.
Speaker #7: Hi, good ning. Thank you for the question. I reciate the detail on the upfront there. just wanted to k to share any kind of incremental color on particular areas of success with verticals or particular content style or, platforms or audience segments that are kind of working best for ou.
Any cost or limitations on how quickly you can roll these out and then how youre thinking about the return profiles and the contribution timing from these thank you.
Speaker #7: And then it sounds like on the, international fast, it seems any sort of limitations on how quickly you roll these out. And then you're thinking about the return profile of, the contribution timing concerns.
I would just it's Kim again I'd just throw in we saw real health and our <unk> and fast casual category financial as a food and retail is up so those all those all bounced up and in Q2 of this year and we'll continue to watch the categories go.
Speaker #7: Thank you.
Speaker #5: I would just, Kim, again, and just throw in, you know, we saw real health in our QSR and fast casual story. Financials in retail are up.
Speaker #5: So those all, those all bounced up. And in Q2 of this year, and we'll continue to watch the categories going forward. On the downside, you know, automotive has been a tough one for for consecutive years for many.
Going forward on the downside automotive has been a tough one for four consecutive quarters for many so we continue to actually work hard in that space in the in the areas of of opportunity. We continue to expand that digital inventory like I talked about.
Speaker #5: So we're going to continue to actually work hard in that space. In the in the area of of opportunity, we continue to expand digital inventory, like I talked about.
And my last response, and we see that as the future.
The nature of its targeting abilities in that space, which do lend to higher CPM.
Speaker #5: In my last report, and we see that as the future. because of the nature the targetabilities in that space. We do lend to higher CPMs.
So where we're setting ourselves up for the future.
Great and then on the on the first front.
Speaker #5: So we're we're selling all that for future. On the on the fast front, we said it before, but now we're up to 20 fast channels on 21 calls around the world.
We've said it before but now we're up to 28 five channels on 'twenty one platforms around the world. So that's a 190 global vies of SaaS.
And we've been doing more and more partnership both with the Oems now with the CTV folks as well as with our other distribution partners still like with Tcl.
Speaker #5: So that's 190 fees of FAST. And we've been doing more and more partnerships with the OEMs, you know, with the CTB firms, as well as with our other distributing partners.
We launched 11 best channels. There in May we domestically introduced two new channels in the marketplace Acorn TV ministries, and love after lockup with select partners and more to come and then internationally one of the big ones as we launch the walking dead by AMC channel in Latam, including Brazil, which is helpful.
Speaker #5: So like with TCL, we launched 11 fast channels today. We domestically introduced two new channels in marketplace, Acorn TV, Mysteries. After lockup with select partners and more to come.
Speaker #5: And then internationally, one of the big ones is we launched The Walking Dead by AMC Fast Channel in last hand, including Brazil, which is the world's largest third largest fast market.
The world's largest third largest fast market. So we see a lot of opportunity here, particularly because as <unk> pointed out we retain the sales rates and so our digital inventory stack gets bigger and broader as we want as we launch more fast channels on the tech side, what I live without this is as we've continued the migration over to <unk>.
Speaker #5: So you know we see a of opportunity here, particularly because Kim always points out we retain the sales and so our digital inventory stack gets bigger and broader as we have much more fast channels.
Speaker #5: On the tech side, what I love about this is as we continue the ration over BTS, we now have all of our assets sitting on servers in one place with obviously with a backup in another area.
Yes, we now have all of our assets sitting.
On on servers in one place with it obviously with the backup.
In another area, but Q2 sets of cloud storage, one primary and one for disaster recovery, but everything can be set from the same place. So as we ideate different channels. All of the files are there and then our teams can put them together into a SaaS channel that could either be a pop up of persistent channel if it's something super effective.
Speaker #5: But two cloud storage, one primary and one for, you know, disaster recovery. But everything can be fed from the same place. So as we ideate different channels, all of the files are there and our teams can put them together into a fast channel that could either be a pop-up or persistent channel if it's something more effective like The Walking Dead.
The walking dead seasonal opportunities regional opportunities and so.
First is just a great embodiment of.
Speaker #5: Seasonal opportunities, regional opportunities, and so the fast is just a great embodiment of, you ow, sort of digital platform being so facile and for us the opportunity to continue to mine the library of everything that we have across all of our IP to make some really interesting and hopefully compelling content across the world.
Digital platform being so faisel and then for US the opportunity to continue to mine our library of everything that we have across all of our IP to create some really interesting and hopefully compelling content across the world.
Thank you and our next question will be coming from David Joyce of Seaport Research partner, David Your line is open.
Speaker #1: Thank you. And our next question will be coming from David Joyce of Seaport Research. David, your line is open.
Thank you little bit more detail. Please on the contribution to the streaming subs in advertising from.
Speaker #8: Thank you. A little bit more detail, please, on the contribution to streaming subs and advertising from, I guess, from the renewals that you linked with your distributors over the past year, where they're kind of making your service, your streaming services more available.
From the.
Renewals that you inked with your distributors in the past year.
We're kind of making your.
Your streaming services more available what splits that you had been for those subscriber and advertising trends.
Speaker #8: What's that done for those subscriber and advertising trends?
David I'm, sorry did you mean advertising revenue or are you just asking about <unk>.
Speaker #5: David, I'm sorry. Did you mean advertising revenue or just asking about success so far with the silos and the spectrum contracts?
Success, so far with the silos.
Second construct.
Yes, both.
What those are.
New relationships have done for the advertising.
Speaker #8: Yeah. What does new relationships have done for, you know, the advertising trajectory? What 're doing for advertising for you and how they supported your subscribers.
Trajectory, what they're what they're doing for advertising for you and will help supported your subscriber growth.
Okay. So just on the subscription side.
We've always loved the charter model the spectrum model.
Speaker #5: So just on the subscription side, we've always loved the charter model, the spectrum model. We've been really closely with the team there on making sure that subscribers who are entitled to AMC Plus as a part of their TV Plus package are activating and we're seeing, you know, we're definitely in keeping with not outperforming some of the other folks that are available to spectrum subscribers.
We've worked really closely with the team there on making sure that subscribers, who are entitled to AMC plus as part of their TV select package are activating and we're seeing.
Definitely and keeping it is not outperforming some of the other folks that are available to two spectrum subscribers. So working very closely.
Charter has done an excellent job on the subscriber I get a lot of information reminding me what I have what my entitlements are.
Speaker #5: So working very closely and Charter Sun, an excellent job on the subscriber. I get a lot information reminding me what I have, you know, what my entitlements are.
So we've been very very pleased with the volume and take rate and engagement of those of subscribers as well as with fire level. What were also embedded AMC plus wins.
Speaker #5: So we've been very, very pleased with the volume and rate and engagement of those subscribers. As well as with the silo where we're investing in C Plus with, you know, with our core linear channels.
With our core linear channels and then on the advertising front. These are AD supported versions of AMC, plus but it's still pretty early.
Speaker #5: And then on the advertising front, these are ad-supported versions of AMC Plus, but it's pretty early. As far as like the total footprint for these bundled subscribers, on the advertising front, but I don't know if you want to anything to that.
As far as like the total footprint or these bundled subscribers on the advertising front, but Tim I don't know if you want to add anything to that.
Yeah.
I think I think that we will see it.
Speaker #5: I think that I think that we'll see it's it's it's a cruise over time. Absolutely. In an additive way, but it is multi-revenue opportunity for growth.
Is it crews over overtime, absolutely in an additive way, but it is a multi revenue opportunity for growth.
Alright, thank you.
And operator I think.
Speaker #8: All right. Thank ou.
We'll go to our last question. Please.
Speaker #1: And our next quarter, I ink. We'll go to the last question, please. Our last question will be from Stephen Cahill of Wells Fargo. Stephen, your line is open.
Our last question will be coming from Steven Cahall of Wells Fargo. Stephen Your line is open.
Yeah. Thanks, Good morning, So I'm sure you all have noticed that some of the media peers have been looking to split up their cable distribution assets from their content assets.
Speaker #9: Yeah. Thanks. Good morning. So, I’m sure you all have noticed that some of the media peers have been looking to split up their cable distribution assets from their content assets. I imagine this is a question that you all have taken internally as well.
I imagine this is a question that you all have taken internally as well you have a very successful studio as we see from your licensing revenue and then Theres a lot of pressure on your revenue and NOI from the linear distribution part. So I guess, how are you thinking about that opportunity you've been active in the debt market as well so just love any color there.
Speaker #9: You have a very successful, as we see from your revenue. And then there's a lot of pressure on revenue and AOI from the local distribution part.
Speaker #9: So I guess are you thinking that opportunity? You know, you've been active in the debt market as well. So we just love love any color there.
And then maybe just back to capital allocation. So you bought back some stock in the quarter. Patrick I think you said that your priorities havent changed which is still content or buybacks.
Speaker #9: and then maybe just back to capital allocation. So you bought back some stock in the quarter. Patrick, I think you said that you're, priorities haven't changed, which is still over buybacks.
So there's always scope to invest in more content to drive future value how should we think about when buybacks come into the picture.
Speaker #9: so even if 's always scope to invest in more content, to drive future value, how should we think about when buybacks come into the picture?
Great Hey, Steven it's Patrick I'll take them in reverse order. So first on capital allocation as you mentioned.
Speaker #9: Thank ou.
Speaker #3: Great. Hey, thank you, Patrick. I'll take them in reverse order. So for on capital allocation, as you mentioned, the philosophy remains unchanged. you know, I would look at the very modest $10 million buyback in the context of the other kind capital markets activity we've been choked over the se of the last couple of arters.
The philosophy remains unchanged.
I would look at this.
Very modest $10 million buyback in the context of the other kind of capital markets activity, we undertook over the course of the last couple of quarters, including reducing net leverage by a quarter turn given the discount that we captured in the <unk>.
Speaker #3: You know, including reducing net leverage by a quarter term. You know, given the discount that we captured in the, in the activity, more importantly, obviously still we're extending duration of our balance sheet, including the new $400 million in a kind of secure issue due 2030.
And the recent activity.
More importantly, obviously store, we're extending duration of our balance sheet, including the new $400 million kind of secured issue due to 2032.
So we feel really good about the work we've done to set the company up for.
Speaker #3: So we feel really good about the work we've done to set the company up for, you know, a long-term sort of financial success here via the balance sheet.
A long term sort of financial success here via the balance sheet. So.
I would use the capital allocation in the context of those recent activities, but when you look up and you see that the free cash flow yield of the stock is 90%.
Speaker #3: So I would view the capital allocation in the context of those recent activities. But, you know, when you look up and you see that the free ash flow yield of the stock is 90%, you know, it looks screamingly cheap.
It does look screamingly cheap, we also see potential opportunities across the capital structure, we've taken advantage of some of them as I mentioned.
Speaker #3: We all see potential opportunities across the capital structure. We've taken vantage of some of them as I mentioned by capturing discount. And there may be more opportunities in the future and we will be mindful of those.
Some discounts.
And there may be more opportunities in the future and we will be mindful of those.
On your first question in terms of kind of the asset composition of the business I think it's worth highlighting because I don't think it's sort of as well sort of understood.
Speaker #3: On your first question in terms of kind of the asset composition of the business, you know, I think it's it's worth highlighting because I don't think it's sort of as well sort of understood given the fact that we've got a number of other kind of spin toes kind of coming out which are kind of cable develops businesses, ethical core, AMC is very different.
Given the fact that we've got a number of other kind of spin those kind of coming out which are.
You know kind of cable networks businesses. After our core AMC is very different we have a we have a studio we have a big streaming business streaming revenue is going to be our largest.
Speaker #3: We have a we have a big streaming business, streaming revenue is going to be our largest revenue source in 2025. There's lot of ideals in this company.
Revenue source in 2025, there's a lot of IP house within this company.
And so we've also got an amazing portfolio of streaming products that work really hard alone and then work even harder together.
Speaker #3: And so we've also got an amazing portfolio of streaming products that work really hard alone and they work even further together. And I think that's sort of thematically how we think the business as a whole.
And I think thats sort of thematic we how we think about the business as a whole.
All the pieces work together.
Speaker #3: You know, all the pieces kind of work together sort of strength compound strength. So I think we see continued opportunity to sell across our platform as Kim has mentioned.
And it's sort of strength compounds strength. So I think we see continued opportunity.
To sell across our platform as Kim has mentioned.
And to use the IP to drive our business.
Speaker #3: And to use the IP to drive, you know, our business and also, you know, assistance to monetize it, you ow, around the world. So at this point, without him, we think we got a bit of assets.
And also assist others and monetize it.
The world So.
At this point, we'd like to hint where do we think we've got a great set of assets and we think they're really working hard together.
Speaker #3: And we think that we're really working hard together. Thank ou.
Thank you.
Okay, and I am showing no further questions I would now like to turn the call back to Kristin for closing remarks.
Speaker #1: Okay. And I'll join for the questions. I would now like to turn the call back to Kristen for closing remarks.
Great. Thank you operator, I'd like to close by saying, it's a changing and sometimes challenging time in media, but as we discussed this morning, we're finding strength and opportunity and a clear strategic plan focused on programming partnerships and profitability I am pleased with our results this quarter and our prospects for the remainder of the year, including a higher re forecast for <unk>.
Speaker #5: Great. Thank you, operator. I'd like to close by saying it's a changing and sometimes challenging time in media. But as we discussed this morning, we're finding strength and opportunity in the strategic plan focused on programming partnerships and profitability.
Speaker #5: I'm pleased with our results this quarter and our prospects for the remainder of the year. Including a reforecast for free cash flow, which is, as everyone knows, one of our major ongoing priorities.
Free cash flow, which is as everyone knows one of our major ongoing priorities so between that and the return of the walking dead Gerald <unk> in next months the expansion of our Anne Rice Universe. Later this year and our continued strong activity at Acorn Shudder high dive in across the portfolio of targeted streaming services. We think we're in pretty good shape. So we want to thank.
Speaker #5: So between that and the return of the Walking Daryl Dixon next month, the expansion of our Anne Rice universe later this year, our continued strong activity at Acorn, Shutter, High Dive, and across the portfolio of targeted streaming services, we think we're in pretty good shape.
Speaker #5: So I want to thank everybody again for joining us and for continued interest in AMC Networks. And with that, we'll end the call. Thank you.
Everybody again for joining us and for your continued interest in AMC networks and with that we'll end the call. Thank you.
And this concludes today's conference call. Thank you for participating you may now disconnect.
Speaker #1: disconnect. Good day and thank you for standing by. Welcome to the AMC Networks Inc second quarter 2025 earnings call. At this time, all participants are on a listen-only mode.
Okay.
Speaker #1: After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will ed to press star 11 on our telephone.
Speaker #1: You will then hear an automated message advising that your hand is raised. Afterwards, draw your question, please press star 11 again. Please be advised that today's conference is being recorded.
Speaker #1: I would now like to hand the conference over to your speaker today, Nick Siebert, SVP, Corporate elopment and Investor Relations. Please go ahead.
Speaker #10: Thank ou. Good morning and welcome to the AMC Network second quarter 2025 earnings conference call. Joining us this morning are Kristen Dolan, Chief Executive Officer, Patrick O'Connell, Chief Financial Officer, Kim Callaher, Chief Commercial Officer, and Dan McDermott, President of Entertainment and AMC Studios.
Speaker #10: Today's press release is available on ur website at amcnetwork.com. We will begin with prepared remarks and then we'll open the call for questions. Today's call may include certain forward-looking statements within the meaning the project securities litigation format of 1998.
Speaker #10: 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 Network's SEC filings for a discussion of risks and uncertainties.
Speaker #10: The company disclaims any obligation to update forward-looking statements made on this call today we will discuss certain non-GAAP financial measures the required definitions, differentiations can be found in today's press release.
Speaker #10: And with that, I'd like to turn the call to Kristen.
Speaker #1: Thanks, Patrick. And good morning, everyone. We continue to execute our clear strategic plan focused on programming partnerships and profitability as we manage AMC Networks through this period of change in our industry.
Speaker #1: I'm proud of progress we've made in the first half of the year. In the second quarter, streaming revenue growth accelerated. A strong licensing performance generated $96 million of free cash flow.