Trends

AMC Networks Inc. (AMCX) Q4 2022 Earnings Call Transcript

Trending 1 year ago
beritaja.com

AMC Networks Inc. (NASDAQ:AMCX) Q4 2022 Earnings Conference Call February 17, 2023 11:00 AM ET

Company Participants

Nick Seibert - Vice President, Corporate Development & Investor Relations

James Dolan - Interim Executive Chairman

Patrick O'Connell - Chief Financial Officer

Conference Call Participants

Thomas Yeh - Morgan Stanley

Robert Fishman - MoffettNathanson

Brett Feldman - Goldman Sachs

Douglas Creutz - Cowen

David Karnovsky - JPMorgan

John Hodulik - UBS

Operator

Good day, and convey you for opinionated by. Welcome to nan AMC Networks Fourth Quarter 2022 Earnings Conference Call. At this time, each participants are successful a listen-only mode. After nan speaker's presentation, location will beryllium a question-and-answer session. [Operator Instructions] Please beryllium advised that today's convention is being recorded.

I would now for illustration to manus nan convention complete to your speaker today, Nick Seibert, Vice President, Corporate Development and Investor Relations. Please spell ahead.

Nick Seibert

Thank you. Good morning, and invited to nan AMC Networks Fourth Quarter and Full Year 2022 Earnings Conference Call. Joining america this greeting are James Dolan, Interim Executive Chairman; and Patrick O’Connell, Chief Financial Officer.

Today’s property merchandise is disposable connected our website astatine amcnetworks.com. We will statesman pinch prepared remarks, and past we’ll unfastened nan telephone for questions. Today’s telephone whitethorn see definite forward-looking statements wrong nan meaning of nan Private Securities Litigation Reform Act of 1995. Any specified forward-looking statements are not guarantees of early capacity aliases results and impact risks and uncertainties that could origin existent results to differ.

Please mention to AMC Networks’ SEC filings for a chat of risks and uncertainties. The institution disclaims immoderate responsibility to update immoderate forward-looking statements made connected this call. Today, we will talk definite non-GAAP financial measures. Required definitions and reconciliations tin beryllium recovered successful today's property release.

With that, I'd for illustration to turn nan telephone complete to Jim.

James Dolan

Good morning, and convey you for joining us. Before we start, I want to return a infinitesimal to opportunity that aft a thorough hunt by nan Board of Directors, we were very pleased to denote earlier this week that Kristin Dolan will beryllium taking complete as CEO of AMC Networks. Based upon Kristin's sizeable executive and operational acquisition for 30 positive years moving successful media and entertainment, including her anterior history managing subscription based businesses, nan Board concluded she is nan champion campaigner for nan role.

As Founder and CEO of nan Audience Measurement and that information analytics institution 605. Kristin has been connected nan frontlines of nan improvement of precocious advertizing and assemblage targeting. She besides has a beardown grounds driving organizational change. These are areas of captious value arsenic we toggle shape AMC Networks, and further monetize our precocious value contented during this pivotal play successful our industry.

Before turning nan telephone complete to Patrick, I'd for illustration to concisely supply my position connected nan manufacture and nan company, and really we spot nan business evolving. Across nan board, nan contented manufacture is being disrupted by cord cutting successful nan accepted linear sector, aliases MVPDs, and besides successful nan streaming sector, besides being disrupted by changing viewership habits, a situation advertisement marketplace and rising contented costs.

As I've said successful nan past, nan existent mechanisms for monetizing contented are not working. The contented manufacture needs to reorganize itself. We're seeing this now pinch astir media companies opening to people correct to amended monetize content, and amended nan economics of their business. We judge ample distributors and programmers will lead nan way. AMC will follow.

Streaming is simply a unit business. That's what DTC means. For now, arsenic nan manufacture continues to evolve, AMC Networks will attraction connected streamlining our organization, operating much for illustration retailers than wholesalers, driving rate travel and maintaining our beardown equilibrium sheet.

At nan aforesaid time, we will proceed to do what we do best, which is making awesome content. We judge this strategy will position AMC Networks wealthiness to navigate existent manufacture dynamics and make semipermanent shareholder worth arsenic an moreover stronger company.

With that, I will now move nan telephone complete to Patrick.

Patrick O'Connell

Thank you, Jim. As Jim highlighted, AMC Networks unsocial assets and capabilities positioned america good to win astatine nan scenery shifts and user behaviors proceed to evolve. We took steps successful nan 4th fourth to recalibrate our business. We streamline nan statement to create a much nimble operating squad and trim costs to thrust accrued free rate flow.

We are optimizing our contented monetization done nan array of options disposable to us. This includes our Linear and Genie platforms arsenic good arsenic opportunistic contented licensing. We will further leverage our 15 FAST channels arsenic we proceed to grow our innovative precocious advertizing capabilities and utilize information to heighten nan worth of our inventory.

In addition, we are extending our partnerships pinch caller and existing distributors pinch six caller renewals, including Charter, Altice and Bell Canada. We are now opening to spot activity towards caller pricing and packaging models, including streaming bundles. One illustration is Verizon, which precocious tested an AMC+ and Netflix connection arsenic portion of their Verizon’s +play offering, and we expect much to travel connected this front.

We are staying existent to our ngo of ace serving our passionate audiences by creating highly compelling contented that breaks done successful a crowded marketplace. We had a beardown slate successful nan 4th quarter, including nan bid finale of The Walking Dead and nan first bid successful our caller Anne Rice, The Immortal Universe, Anne Rice's Interview With nan Vampire.

Last month, we followed up pinch our debut of nan 2nd bid successful that Universe, Anne Rice's Mayfair, which is starring nan Emmy nominated character Alexandra Daddario. Based connected nan first 30 days of viewership, Mayfair, which is now nan astir viewed play of immoderate bid ever connected AMC+ up of Interview and nan last play of The Walking Dead.

On Linear, Mayfair is disconnected to a beardown commencement pinch ratings continuing to build arsenic nan play progresses, and is already a apical 10 cablegram play for nan 2020 to 2023 tv play and cardinal demos. Based connected a beardown debut performances we've greenish ray some question and reply and Mayfair for 2nd seasons.

After The Walking Dead, that world continues to resonate pinch advertisers and captivate viewers. The last play of The Walking Dead commanded nan highest pricing nan bid has ever seen complete nan people of its 11 seasons, beardown grounds of nan continued powerfulness and relevance of this franchise.

Also connected that point, pursuing its successful tally connected AMC and AMC+, nan 11th play of The Walking Dead, launched connected Netflix earlier this month. In nan first afloat week it was available, Netflix user streamed 1.43 cardinal minutes of nan series. It was nan number 1 astir watched acquired bid successful nan level and nan number 2 bid overall.

We are thrilled to person 2 highly anticipated Walking Dead spin-off bid scheme for 2023, The Walking Dead: Dead City and nan Walking Dead: Darryl Dixon, and a 3rd accumulation -- and a 3rd successful accumulation correct now, and slated for 2024, starring Andy Lincoln and Danai Gurira who viewers cognize arsenic Rick and Michonne.

Next month, we will premiere Lucky Hank starring Bob Odenkirk successful his travel up series, nan Better Call Saul connected AMC and AMC+, and later this year, we will person nan 2nd play of nan celebrated and critically acclaimed Dark Winds. This is conscionable a sampling of nan caller contented we will beryllium bringing viewers connected AMC, AMC+ and crossed our different linear networks successful streaming services.

BBC America is presently featuring its latest Natural History tentpole bid successful nan BBC, and nan remarkable, Sir David Attenborough Frozen Planet II. Next year, we will person Planet Earth III arsenic we widen our activity position successful bringing viewers nan very champion franchise titles successful this very celebrated programming category.

This spring, BBC America, Acorn TV and AMC+ will bring viewers nan 3rd play of nan British crime play Happy Valley. A play that conscionable includes successful nan UK, and became must watch assignment tv successful that country. Acorn TV will besides premiere a caller play of nan deed bid Harry Wild, starring Jane Seymour later this year, successful summation to a afloat slate of it’s celebrated International dramas and mysteries.

We besides proceed to spot singular spot and liking successful nan franchise sets connected our WE TV reality network. All 3 bid successful nan emotion aft lockup beingness pull ample and dedicated audiences, arsenic does our increasing up Hip Hop franchise, which is slated to grow to see a caller bid later this year.

Before I position our 2022 financial capacity and 2023 outlook, I'd for illustration to summarize a fewer of nan 1 clip items that are reflected successful nan '22 results. First, successful nan 4th quarter, we realized restructuring and different charges of $449 million, comprised of $404 cardinal of strategical programming constitute offs, and $45 cardinal of organizational restructuring costs.

While nan mostly of nan restructuring and different charges are non cash, we accrued for nan rate information successful nan 4th quarter, including $73 cardinal of strategical programming constitute offs and $41 cardinal of severance and worker related costs, which will lend to a rate outflow of astir $115 cardinal successful 2023. Second, we took a abstracted goodwill impairment complaint related to AMC Networks International.

Moving connected to our afloat twelvemonth 2022 financial performance. Consolidated gross accrued 1% to $3.1 billion. Consolidated adjusted operating income was $738 million, representing a separator of 24%. Adjusted net per stock was $9.21, and we generated free rate travel of $103 cardinal successful 2022.

For nan 4th fourth of 2022, consolidated gross accrued 20% to $965 million. Adjusted operating income grew 34% to $137 cardinal and adjusted net per stock was $2.52. In our home operations segment, afloat twelvemonth and 4th fourth gross grew 4% to $2.7 cardinal and 26% to $861 million, respectively. We ended nan twelvemonth pinch 11.8 cardinal paid streaming subscribers, representing year-over-year maturation of 31%.

Subscription gross grew 6% for nan afloat twelvemonth and 7% successful nan 4th quarter. Full twelvemonth streaming gross was $502 million, representing 35% maturation year-over-year. Fourth 4th streaming gross grew 41%.

Affiliate gross declined 5.8% for nan afloat year, and 7.5% for nan 4th quarter. Affiliate gross capacity was driven by declines successful nan basal subscriber universe, partially offset by contractual complaint increases.

Content licensing gross grew 18% for nan afloat year, and 152% for nan 4th quarter. The summation successful contented licensing gross was driven by nan timing and readiness of deliveries, including Wool, which is simply a bid produced by AMC studios for Apple TV.

Deliveries of Wool represented astir $126 cardinal of contented licensing gross for america successful nan 4th fourth of 2022. While we typically nutrient contented for ourselves, we are partial to ownership economics, Wool is an illustration of really we utilize our assets crossed nan company, including our workplace opportunistically.

It's worthy noting that mostly accumulation for 3rd parties person little margins arsenic compared to nan remainder of our business. Typically, third-party accumulation margins are successful nan 10% area. Also successful nan 4th quarter, we delivered definite titles successful The Walking Dead Universe that we had antecedently planned to present successful 2023. The early transportation of these titles contributed to our 4th fourth licensing gross growth.

Full twelvemonth home operations advertizing gross decreased 7% to $788 million. Fourth 4th advertizing gross declined 12% to $206 million. The diminution of advertizing gross is chiefly owed to little linear ratings, and softness successful nan advertisement market, arsenic good arsenic less episodes of original programming, partially offset by integer and precocious advertizing gross growth.

Broadly speaking, our advertisement supported networks and integer platforms are experiencing nan aforesaid situation arsenic others successful our space. The scatter markets person been soft arsenic nan ambiance of economical uncertainty has resulted successful our advertizing partners being much blimpish pinch their spending.

Domestic operations adjusted operating income was $789 cardinal for nan afloat twelvemonth 2022. AOI capacity for nan afloat twelvemonth was mostly attributable to little advertizing and connection revenues, accrued programming investments and accrued SG&A expense.

For nan 4th quarter, AOI accrued 27% to $154 million. The summation successful 4th fourth AOI was mostly attributable to an summation successful contented licensing revenue, and a alteration successful subscriber acquisition marketing, which was partially offset by an summation successful programming investments.

Moving to world and other. Revenue decreased 14% to $443 cardinal for nan afloat twelvemonth 2022 aliases 7% connected a changeless rate basis. Fourth 4th gross was $108 million, a alteration of 12% aliases a alteration of 4% connected a changeless rate basis.

Full twelvemonth world and different revenues bespeak little distribution revenues owed to nan timing of accumulation astatine 25/7 Media, little advertizing revenues owed to nan effect of nan planned wind-down of 2 channels successful nan UK and package ratings successful nan UK.

Fourth 4th revenues reflected akin trends pinch nan objection of contented licensing revenues, which accrued successful nan 4th fourth owed to nan timing of productions astatine 25/7 Media.

International and different AOI decreased 17% to $69 cardinal for nan afloat twelvemonth 2022 aliases a alteration of 15% connected a changeless rate basis. For nan 4th fourth AOI was $13 cardinal representing maturation of 8% aliases 4%, excluding nan beneficial effect of FX translation. Full twelvemonth and 4th fourth AOI capacity was driven by gross performance, little method and operating expenses, and little SG&A expenses.

Consolidated free rate travel for 2022 was $103 cardinal and reflected nan beneficial timing of definite accumulation related payments, a simplification successful trading spend, nan timing of taxation in installments payments and little rate taxes. We ended 2022 pinch nett indebtedness and finance leases of astir $1.9 cardinal and a consolidated nett leverage ratio of 2.6 times. We person important financial elasticity and full liquidity of $1.43 billion, including $930 cardinal of rate connected nan equilibrium expanse and our undrawn $500 cardinal revolving in installments facility.

We proceed to show nan markets and will beryllium opportunistic successful addressing aliases upcoming maturities. There were nary repurchases of AMC Networks communal banal successful 2022. Our superior allocation accuracy is some disciplined and opportunistic. First, we will look to support nan business pinch a peculiar attraction towards creating compelling contented that resonates pinch our audiences while balancing wide profitability and rate travel generation. Second, we stay focused connected nan equilibrium expanse and addressing aliases upcoming maturities. Further down our privilege database astatine nan infinitesimal is nan pursuit of strategical M&A and returning superior to shareholders.

Moving toward outlook for 2023. Starting pinch nan apical line, we expect 2023 consolidated nett gross to beryllium astir $2.9 billion, mostly owed to nan manufacture wide dynamics Jim mentioned. Regarding streaming revenue, we expect maturation for nan afloat twelvemonth astatine a moderated gait arsenic compared to 2022 driven by little gross additions owed to a simplification successful subscriber acquisition marketing.

Streaming is important portion of our early and represents a meaningful opportunity for us. We will proceed to attraction connected delivering highly curated contented to our passionate and engaged audiences. But arsenic we are focused connected optimizing monetization crossed our full business, we are nary longer providing streaming subscriber targets astatine this time.

Regarding connection revenue, we expect that existing cord cutting trends will proceed and our twelvemonth complete twelvemonth comparison will beryllium incrementally impacted by strategical non-renewal pinch a virtual MVPD that occurred astatine nan extremity of 2022.

On contented licensing, we anticipated alteration successful licensing revenues arsenic our twelvemonth complete twelvemonth comparison is affected by nan 2022 deliveries of War [ph] and definite Walking Dead beingness titles, which we partially offset by caller world licensing revenues.

Moving to advertising, we expect 2022 trends to proceed done 2023 including little linear ratings and a soft wide advertisement market, partially offset by integer and precocious advertizing gross growth. We person a beardown contented slate for 2023. And we are optimistic astir our upfront strategy.

In position of adjusted operating income, we are opening to recognize nan benefits of our strategical costs measures, including worldly year-over-year reductions successful programming, marketing, unit and different costs. As specified for nan afloat twelvemonth of 2023, we expect that consolidated AOI will beryllium successful nan scope of $650 cardinal to $675 million.

Beginning pinch nan first 4th of 2023, we'll beryllium adjusting our free rate travel meaning to exclude distributions to non-controlling interests which are discretionary successful nature. This will amended bespeak nan net powerfulness of nan business successful our reporting, and will much intimately align our meaning pinch those of our peers. Additionally, we will supply supplemental rate travel schedules that will see specifications regarding onetime items that whitethorn impact comparability.

For 2023, we expect to make reported free rate travel utilizing our updated meaning successful nan scope of $70 cardinal to $90 million, which nary longer reflects nan inclusion of astir $35 cardinal of expected distributions to non-controlling interests successful 2023. The $70 cardinal to $90 cardinal scope represents free rate travel connected a reported ground and includes nan antagonistic effect of astir $115 cardinal of onetime rate costs associated pinch our restructuring plan.

Our 2023 reported free rate travel guidance implies $185 cardinal to $205 cardinal of free rate travel excluding these onetime items, which represents nan level of rate travel that we consciousness we tin support and turn complete time. However, owed to nan timing and cadence of productions, we expect nett rate outflows during nan first half of 2023 and expect to make nan mostly of our afloat twelvemonth free rate travel person to your end, akin to nan shape successful 2022.

In position of our contented finance strategy, we proceed to attraction connected making businesslike and highly curated contented decisions, arsenic we ace service our chopped audiences. 2022 represented our highest contented finance year, we proceed to refine and amended our attack towards contented investments, thing complete which we person a precocious grade of control. For 2023, we expect rate contented finance to beryllium astir $1.1 cardinal arsenic compared to $1.35 cardinal successful 2022. Looking up past 2023, we expect that our rate contented finance will beryllium successful nan $1 cardinal area accordant pinch our historical pre-pandemic levels.

2023 will beryllium a cardinal twelvemonth for AMC Networks, arsenic we execute our differentiated strategy of being everything to someone, alternatively than offering thing for everyone. We are thrilled to beryllium nurturing and increasing our newest franchise nan Anne Rice Immortal Universe, while extending and expanding our astir storied franchise The Walking Dead Universe. We are streamlining our statement and optimizing our monetization connected meaningfully increasing our free rate travel year-over-year.

With that operator, please unfastened nan statement for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first mobility comes from nan statement of Thomas Yeh pinch Morgan Stanley. Your statement is open. Please spell ahead.

Thomas Yeh

Thank you truthful much. Jim, I wanted to excavation into your remark astir operating much for illustration retailers versus wholesalers going forward. What do you spot arsenic nan awesome incremental steps that AMC needs to return to move towards that direction? Do you guys person benignant of been successful nan streaming marketplace for immoderate time, is it a different trading attack aliases partnerships aliases thing else? And past Patrick, connected nan $1.1 cardinal of programming, walk cash. Can you talk a small spot astir arsenic benignant of nan write-down travel done and you refocused nan spending? How we look to nan wide operation of attraction astir high-end scripted original programming comparative to targeted programming and sewage nan equilibrium of that looks for illustration complete time? Thank you truthful overmuch both.

James Dolan

Got a agelong group of questions. Okay. Well, look nan AMC has been a wholesaler, right, arsenic astir of nan programming companies person been. And nan successful wholesaling, personification other takes attraction of nan customer, personification other watches nan customer and personification other really ends-up pricing to nan customer.

When you spell to DTC each those things go your work and for an statement to move from wholesaler to retailer is to really importantly alteration its focus. Things they are paying attraction to, things for illustration nan customer travel and churn, they are each portion of becoming a bully retailer.

The pricing is becomes very important and wherever you use your manpower, you don't -- it is not connection relations, not that you're stopping connection relations, but connection relations is simply a overmuch smaller task now, compared to knowing nan customer and serving them well. And that is simply a taste alteration for AMC, arsenic it will beryllium for a batch of different companies.

Thomas Yeh

Okay. Thanks, Jim. Thanks for nan question.

Patrick O'Connell

Thomas, connected programming walk listen, I deliberation it's important to contextualize our simplification successful programming spend, DTC are humanities levels. Between 2017 and 2019, AMC spent connected mean of astir a cardinal dollars successful rate and in installments share. And during this period, we evidently had amazingly powerful programming that you each benignant of cognize erstwhile low. It was really only during 2021 and 2022 wherever programming bumped up to nan $1.35 cardinal level.

And truthful we're conscionable taking rate spending down to $1.1 cardinal this year. That's evidently a meaningful simplification of astir $250 cardinal astir 20%. This still leaves america pinch plentifulness of firepower to proceed our humanities programming cadence. And I would opportunity connected that beforehand they screen this full. We've sewage an astonishing group of shows, I mentioned successful my successful nan comments astatine nan apical of nan telephone here.

I deliberation it's besides worthy noting that, nan numbers I'm giving you evidently benignant of rate numbers, right. This is chopped from programming amortization that runs done our P&L which evidently has a small spot of a lag to it versus rate fixed that it's attempting to lucifer earned gross pinch expenses. It's an arsenic valid metric. It conscionable has to do pinch differences successful timing.

We are very overmuch focused connected rate here, arsenic you've heard from maine before. I deliberation nan punchline present is that, we're trying to onslaught nan correct equilibrium betwixt continued finance successful nan business and generating capable benignant of profits and rate travel successful nan near-term.

In position of wherever nan cuts are coming from, specifically, we took a harder look astatine each of our platforms and are trying to support arsenic overmuch programming ratio arsenic imaginable crossed each of them. But we took a look astatine shows this were -- which erstwhile we took a look astatine our covered.

We person to benignant of propulsion retired things that weren't possibly arsenic connected marque aliases connected strategy arsenic immoderate others, and this happened some crossed linear and streaming and crossed channels arsenic well. So it was really, we looked crossed nan full portfolio. We besides reduce, immoderate of our, walk connected nan world broadside arsenic well.

In position of skew linear versus streaming, I would say, we've fixed nan truth that we've sewage immoderate of these smaller streaming platforms that we tin still put superior into and turn nicely. We protected those to a degree. So we'd for illustration those businesses will proceed to put location for growth, profitable growth.

And we liked our programming level astatine AMC and AMC+. It's adjacent to opportunity that possibly a flimsy skew towards ensuring that nan monetization of nan programming is beforehand and center, and truthful possibly a tinge little exclusive programming connected AMC+, arsenic we recalibrate nan business for profitability.

But that being said, each we're trying to do is beryllium arsenic thoughtful arsenic imaginable astir nan winning of nan contented and really benignant of sweating nan assets that we have. And that's benignant of nan crippled plan.

Thomas Yeh

It's very helpful. Thank you both.

Operator

Thank you. [Operator Instructions] And 1 infinitesimal for our adjacent question. And our adjacent mobility comes from a statement of Robert Fishman pinch MoffettNathanson. Your statement is open. Please spell ahead.

Robert Fishman

Hi. Good morning. Jim, tin you thief america deliberation astir really you spot nan early of this company? There's evidently been a batch of property reports astir imaginable M&A scenarios complete nan past mates of years. Do you for illustration to spot AMC Networks arsenic a standalone entity successful a fewer years aliases alternatively mixed pinch different strategical partner? And I person a follow-up. Thank you

James Dolan

That -- well, look, I deliberation that our first interest is ever going to beryllium creating worth for our shareholders. So what shape that comes successful is, it could beryllium enactment nan course, it could beryllium an M&A a strategical transaction, that nan very honestly we're overmuch unfastened to each those ideas. But correct now, we person nan institution that we person and we're trying to guideline it done arsenic if it was -- it's going to stay a standalone that nan -- but that doesn't mean that we won't see M&A and spot if we tin amended nan shareholder worth that way. So I deliberation that benignant of answers it.

Robert Fishman

Yes. Thank you. And for Patrick, you guys talked astir these caller MVPD renewals. I'm conscionable wondering successful nan discourse of shifting to this retailer mentality, really should we deliberation astir nan effect of these renewals connected early connection interest gross maturation and fixed nan accelerated level of cord cutting? Can we expect pricing to offset immoderate of nan cord cutting, aliases are location different revenues arsenic portion of nan negotiations pinch these renewals that tin offset accepted connection interest decline?

Patrick O'Connell

Thanks, Robert. Look, we person very agelong opinionated narration pinch our connection partners. They've been profitable partnerships for some parties for decades now. As I mentioned earlier, we proceed to put heavy successful premium content. We deliberation we punch measurement supra our weight, not conscionable successful position of nan relevance of nan contented itself, but frankly, nan worth for money that our contented delivers to our distributors.

So obviously, you've taken statement of nan truth that, we've had half a twelve renewals here. We consciousness really bully astir these relationships. These relationships proceed to grow and turn arsenic galore of nan larger distributors are now distributing our AMC+ apps, different apps connected their platforms. We deliberation this is simply a win, triumph for us, for them, for consumers. So, there's evidently further advertizing relationship's pinch immoderate of nan larger ones arsenic well. And truthful we're leaning benignant of heavy into that. So, we spot these relationships arsenic critically important, we proceed to put successful contented to support our viewers, and successful nan exertion to support nan transportation of our products, vis-à-vis these distributors, successful whichever shape aliases manner consumers would like.

James Dolan

Let maine adhd – fto maine conscionable adhd into that, nan MVPDs peculiarly nan cablegram companies right, are besides successful evidently successful a authorities of turmoil there. There is cord cutting, and possibly moreover much important than cord cutting is changing successful viewership habits. These companies you cognize nan likes of Comcast, Charter and Cox et cetera. They've been successful this business a agelong time. And they are adept nan – astatine creating products for their customers, et cetera. Our extremity pinch them should beryllium and is nan – to activity pinch them arsenic they create, caller platforms and caller environments for their consumers. We expect that, peculiarly owed to our agelong relationship, and our support to them that – that we will do those things together, that they – and that should accrue good to AMC arsenic a company.

Robert Fishman

Great. Thank you very overmuch some of you.

Operator

Thank you. [Operator Instructions] And our adjacent question. One moment, please. Our adjacent mobility is from Brett Feldman pinch Goldman Sachs. Your statement is open. Please spell ahead.

Brett Feldman

Yeah. Thanks for return nan question. It was absorbing to perceive you talk astir reasoning much astir being a retailer, if we deliberation astir unit business models. They thin to person higher costs structures and wholesale business models. But they besides typically get higher pricing successful a unit transmission than they get successful their wholesale channel. A mobility we get a batch from investors, they opportunity it seemed for illustration successful your accepted linear wholesale model, you had a batch of pricing power. And truthful arsenic you deliberation astir being much unit focus, pinch your contented distribution successful future. How are you reasoning astir nan pricing powerfulness that you're going to person successful that benignant of exemplary to make judge that to nan grade your costs are higher your pricing is higher arsenic well? Thank you.

James Dolan

Brett, I deliberation that's portion you cognize that, that is portion of nan wide strategy of nan company. But nan – what we're saying correct now is that, those pricing models and those monetization models don't work. I mean, look fundamentally – you spell backmost to two, 2 and a half years, location was a batch of optimism astir streaming, and nan thought process was astatine that clip that a streaming customer was worthy $400 aliases $500 per customer and that was based connected nan thought that location were a batch for illustration cablegram customers, right, because they're going to beryllium pinch you a agelong time. The truth is, is that – nan exemplary for nan user is very different. When nan cablegram business, right, if you wanted to – if you wanted to cancel your subscription, I mean, you really had to activity astatine it. And nan aforesaid point honestly was existent pinch signing up a batch of times, but now successful nan streaming model, it's 1 click of your mouse, that nan -- truthful that's nan that's nan caller situation and nan pricing structures that you cognize -- that nan manufacture has had, but I don't really bespeak that reality. They don't bespeak nan reality that a customer tin motion up, bins your merchandise for a period and past review. And truthful what does that make that customer worth? Certainly not $500, that they -- so, if location needs to beryllium an accommodation what AMC is doing is fundamentally maintaining its gross streams, make stabilizing itself, not doing that benignant of finance that values streaming customers of $500, but alternatively laying back, watching nan marketplace, moving pinch retailers for illustration MVPDs, and waiting for our opportunity to return our awesome contented and put it into a conveyance that genuinely monetizes it. That mightiness return a small while.

Brett Feldman

Thank you.

Operator

Thank you. And 1 infinitesimal for our adjacent question. Our adjacent mobility comes from nan statement of Douglas Creutz pinch Cowen. Your statement is open. Please spell ahead.

Douglas Creutz

Thanks. This is simply a spot of a travel up to your past answer. You know, everybody decided to put successful streaming very heavily, others much truthful than you and it hasn't worked arsenic you benignant of identified your cutting costs and to bespeak that, but obviously, if you can't turn revenue, past it's still going to beryllium unit connected your business. So, do you deliberation your expertise to turn gross is thing that's wholly successful your hands aliases is it going to return immoderate changes to nan marketplace building to make it a much patient environment? And if so, what are they?

James Dolan

Well, that's an absorbing question. I mean, successful immoderate ways, I do deliberation it's successful our hands, right, because we person awesome content. We person a merchandise that nan customer wants, right. So from that constituent of view, you do get to benignant of guideline your destiny, but connected nan different side, I mean, I really deliberation that what we're going to -- we person to look for is, is simply a oversea alteration crossed nan industry. That is thing that AMC is not going to beryllium astatine nan forefront of because we're conscionable playing, we're not large enough. We can't thrust that benignant of change.

But nan marketplace will germinate and what we request to do arsenic a institution is we request to beryllium really successful tune pinch it. We person to watch what nan customers are doing, really they're behaving pinch their subscriptions, what benignant of contented they like, et cetera, but we, arsenic I said, we're not going to lead nan way. I deliberation nan remainder of nan industry, for illustration nan larger players successful nan manufacture will person a overmuch greater effect than we do that they will proceed to watch them, will proceed to watch nan customers will get overmuch much adept astatine things for illustration nan investigation and knowing viewership patterns and each that, truthful we tin support customizing and making our products into a merchandise that consumers will want and will watch nan pricing. But I do deliberation that pricing, right, is going to change. How it's going to alteration exactly? I return a walk connected being that prescient, but I do deliberation we're going to spot change.

Douglas Creutz

Great. Thank you.

Operator

Thank you. One infinitesimal for our adjacent question. Next mobility comes from nan statement of David Karnovsky pinch JPMorgan. Your statement is open. Please spell ahead.

David Karnovsky

Hi. Thank you. Just connected nan benignant of wide displacement towards driving much rate flow. I mean, wondering if there's been information towards changing nan operation of contented toward little value programming for illustration non-scripted still drives a ample assemblage aliases doing little originals.

And past Patrick wants you to conscionable travel connected your advertisement commentary. We've heard from immoderate of your peers astir a stabilizing aliases improving market. Want to spot if there's an update aliases possibly you could opportunity what's assumed successful your guideline for nan twelvemonth pinch advertising.

James Dolan

Well, connected nan contented piece, fundamentally what we did successful nan past fewer months is we took and hung connected to immoderate of our champion programming, nan contented that performs really well. And I mean that's what we're bully at. So no, I don't deliberation that we're going to alteration that strategy. We're conscionable going to effort and support it much businesslike and activity connected nan monetization models.

Patrick O'Connell

Yes. Hey, connected nan advertisement market, I don't person overmuch incremental to add, different than what you've already heard from others, which is obviously, it’s sewage -- it was very, very anemic successful nan 4th quarter. You saw that successful our numbers. Over nan past mates of weeks, we person seen nan marketplace commencement to benignant of benignant of firm-up a small bit. We're not prognosticating benignant of into nan early successful position of what nan backmost half of this twelvemonth looks like, et cetera. So implicit successful our guidance is conscionable continued position quo. So, not overmuch to adhd there, but that's what's embedded successful our guidance.

Operator

Thank you. [Operator instructions] Our adjacent mobility comes from nan statement of John Hodulik pinch UBS. Your statement is open. Please spell ahead.

John Hodulik

Great. Thank you. Maybe conscionable keeping pinch nan DTC theme, Jim, you talked astir your gathering a oversea alteration for things to really amended connected nan -- from a streaming economical standpoint. I mean, I conjecture you guys person already adjusted, but conscionable what's your position connected nan conscionable consolidation of nan manufacture from here, possibly involving AMC, possibly not? But conscionable really do you spot -- do you deliberation we're astatine nan cusp of successful benignant of different activity of consolidation benignant of driven by what's happening successful streaming, fixed nan benignant of changes successful strategy we've seen from a number of nan carriers?

And then, is location immoderate chance -- we often perceive astir benignant of bundling streaming services, has location been immoderate existent inaugural that you've seen that could benignant of bring immoderate of these services together extracurricular of consolidation aliases thing other you could show america about? What do you mean successful position of that oversea alteration to alteration nan economics of this business?

James Dolan

On consolidation, I deliberation you person to watch nan customer, nan consumer. It would beryllium difficult correct astatine this infinitesimal to -- I don't deliberation you'll spot nan manufacture prosecute a beardown consolidation movement, because nan manufacture doesn't yet cognize really to monetize nan contented that nan erstwhile they, you know, erstwhile they reorganize themselves, nan et cetera and commencement to get, you know, a amended grip connected that and a amended strategy pinch that then, you know, past you could spot consolidation nan -- because it'll beryllium consolidation astir building stronger products and stronger offerings to nan customers and building business.

Right now, I beryllium -- successful my -- it's conscionable my opinion, I don't spot anybody who has nan reply to this, yet. The -- and you know, without that answer, I don't get nan rationale for pursuing a consolidation strategy.

Patrick O'Connell

And connected nan streaming bundles question, perceive there's been evidently a batch of chatter precocious successful nan marketplace connected this topic. And I deliberation for bully reason, you know, obviously, if done decently it's a win, win, triumph for programmers for distributors, and astir importantly, for consumers.

We for illustration nan thought of bundled streaming services. You know, we're -- you know, we spot immoderate activity towards that. Obviously, you saw successful our release, we've had immoderate absorbing beta tests pinch Verizon astir a bundle of, AMC+ pinch Netflix. We deliberation that holds promise. We're holding aggregate conversations pinch different imaginable aggregators successful nan market, on these aforesaid lines.

We deliberation you person to beryllium successful there. Obviously, you request to person a precocious grade of complementarity, if that's nan word. We really want to make judge that, arsenic a programmer, you're adding thing to nan bundle. And we deliberation successful our case, fixed really well-defined our brands are, fixed a estimation for nan premium programming that we person and fixed our charismatic value constituent pinch -- we're very charismatic partner successful this regard. So nan early tests person been affirmative and we're leaning successful and we're – dream to study much successful nan coming quarters.

John Hodulik

Got it. Thanks, guys.

Operator

Thank you. And this does reason today's mobility and reply convention for today's conference. Ladies and gentlemen, this besides does reason today's conference. Thank you for participating you whitethorn each disconnect. Everyone person a awesome day.

Editor: Naga



Read other contents from Beritaja.com at
More Source
close