Good morning. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to the AMC Networks Fourth Quarter and Full Year 2014 Earnings Call. [Operator Instructions] Thank you. And I will now turn the call over to Seth Zaslow, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to the AMC Networks Full Year and Fourth Quarter 2014 Earnings Conference Call. Joining us this morning are members of our executive team: Josh Sapan, President and Chief Executive Officer; Ed Carroll, Chief Operating Officer; and Sean Sullivan, Chief Financial Officer. Following a discussion of the company's full year and fourth quarter 2014 results, we will open the call for questions. If you don't have a copy of today's earnings release, it is available on our website at amcnetworks.com. This call can also be accessed via our website. Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to the company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update the forward-looking statements that may be discussed during this call. Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP results provides you with useful supplemental information concerning the company's ongoing operations and is appropriate in your evaluation of the company's performance. Please refer to the press release and related footnotes for GAAP information and a reconciliation of GAAP to non-GAAP information, which we'll refer to on this call. With that, I would now like to turn the call over to Josh.

Good morning, and thank you for joining us today. I'll start by providing an overview of our business during the past year before getting into more detail by segment. Overall, 2014 was a successful year for AMC Networks. We had strong financial results, industry-leading ad revenue growth. We expanded our business in 2 significant ways: globally through the acquisition of Chellomedia; and domestically by adding BBC AMERICA to our portfolio, a channel with a powerful brand and strong content. The impact of Chellomedia and BBC AMERICA are reflected in our financial results. We were able to increase audience delivery at our National Networks, making 2014 one of the most successful years for our channels in terms of viewership. And we received critical praise and industry honors for our television content as well as our films. Our financial results continue to be driven by the performance of our National Networks, especially AMC. Our results, we think, are testament to the success of our core strategy of investing in engaging original content that creates advertiser and distributor demand for our National Networks and, increasingly, for our global channels as well. We believe that our long-term focus on having high-quality content has positioned us well for current trends affecting programmers. At a time when people are watching more video on more platforms, we have content that people are consuming at increasing levels, and it's the kind that seems to be more resilient in an on-demand world. Recently, we reached a new carriage agreement with DirecTV for our National Networks that we believe is good for Direct and good for us. We also reached an agreement with DISH Network, renewing carriage for BBC AMERICA and including our channels on their new Sling TV platform. Now if I may, I'd like to provide some detail…

Thanks, and good morning. As Josh highlighted, 2014 was a successful and productive year for the company, delivering strong revenue, AOCF and free cash flow growth. We're optimistic about the outlook for 2015. I will touch on that after reviewing the 2014 results. In summary, the financial results for the fourth quarter delivered total company revenue growth of 40% and AOCF growth of 97%. For the full year, total company revenues grew 37%, and AOCF grew 26%. As a reminder, these results include Chellomedia from the acquisition date, January 31, and 100% of the results of BBC AMERICA from the acquisition date of October 23. Turning to our operating segments -- to our reporting segments, excuse me. National Networks revenues for the full year increased 13.5% or $208 million. National Networks AOCF for the full year increased 9.8% or $57 million versus the prior year period to a total of $634 million. In the fourth quarter, National Networks revenues increased 19.7% or $82 million. Advertising revenues increased 24.3% to a total of $255 million. A portion of this increase related to the inclusion of BBC AMERICA. Excluding the BBC AMERICA impact, advertising growth was in the mid-teens over the prior year period. We saw strength across all of our domestic networks, as AMC, WE, IFC and Sundance each had double digit advertising growth in the quarter. AMC led the growth in terms of absolute dollars, as it benefited from the performance of its original programming, most notably, The Walking Dead. For the full year, advertising revenue grew 15.4% on a reported basis. Normalizing for BBC AMERICA, we delivered comfortable double-digit growth, an accomplishment we're quite proud of, given the performance of the overall ad market. Distribution revenues of the National Networks in the fourth quarter increased 15.3% or $33 million…

[Operator Instructions] Your next question comes from Michael Morris with Guggenheim.

Two questions quickly. BBC AMERICA, I know we've asked this before, but now that you have a quarter under your belt, can you talk a little more about the digital opportunity there and how we should think about what your rights are, and how the financial impact of the shows that are -- legacy shows that were there before the acquisition, and then also shows that come on now that you own it? And then, second of all, maybe a bit more broadly, there's a lot more investment in scripted programming by your peers. And one of the things that subscription video-on-demand guys can do is stack the programs and serve them back-to-back. You guys have that on a 1-year like basis, but on your new stuff, we have to wait a week for the new show. When you think about that, what do you think is the evolution there? How long can you continue with this method? Or how should we think about how you will approach things going forward?

Sure, Michael. This is Josh. So on your first question, our BBC joint venture does allow us to participate economically in shows that are sold to digital platforms in the U.S. that air on BBC AMERICA. So we are participants in that revenue stream and not at -- I'm not at Liberty to provide the details of what it is, but we are -- we do enjoy the benefits of the sale of shows that air on BBC AMERICA to digital platforms that's part of the overall arrangement that we reached with BBC that was both economically motivated and also motivated by, frankly, a desire to have us be fully in with the BBC on everything that occurs in North America, so that we are always aligned. So we like that, and we think they like that, too. We reached that agreement for those reasons. On the subject of scripted future SVOD and stack, it's obviously an evolving issue and question because it's a new form of consumption. SVOD before, a few years ago, didn't exist, and you couldn't watch all the shows at any one point in time. So it's undergoing an evolution. So I'll make a couple of comments, if I may, but they won't be definitive. We think that what we are doing on linear and with MVPD on-demand, in conjunction with a subsequent window on SVOD, which has been historically, for us, Netflix, about a year later, is -- has worked out to be a very good arrangement for consumers and for the health of our shows. And evidence of that, most notably and most recently, is The Walking Dead where we're in Season 5, people have an opportunity to catch up on Netflix, get current, and then when the new season occurs, we're seeing, obviously, abundant viewership live, not only to Walking Dead, but to the companion series, Talking Dead, in which people talk about it afterwards. So it is different for every TV show, but in the shows that we are directing our energy to, we like to describe them as having urgency and great interest for the people who like them. And our linear viewership is urgent and, we hope, as much event-like as possible. And people like it, watch it, and we monetize the advertising and it's supported by the availability of prior seasons on SVOD. So that's the way we think of it. Much to be seen about how all that evolves in the future.

Your next question comes from Michael Nathanson of MoffettNathanson.

I have one for Josh and one for Sean. Josh, you talked a bit about the differences in CPMs between the AMC originals and the BBC originals. I know you won't give me the actual CPMs, but the magnitude of the differences between original CPMs. And then, how do you plan to monetize the BBC originals in this upfront? Are you going to bundle it with the AMC originals?

Right. So Michael, this is Ed. A couple of things. On the BBC originals, I should say that we're in an integration process and the ad sales group is now consolidated under Arlene Manos, who's the President of Ad Sales for AMC Networks. And so right now, we are coordinating, so BBC A will move together with AMC, with IFC, Sundance and WE into this upfront. One of the things I think we do well historically, and hope to do well again in this upfront, is our inventory management and our planning and pricing. So without being too specific, Michael, I would say we enjoy a multiple CPM on our originals. We enjoy it on AMC, we enjoy it on IFC, and we anticipate we will enjoy it and improve it on BBC AMERICA. That is the strategy.

Can you -- any sense of scale of that magnitude?

I think we've said in the past, for AMC, the CPM multiple could be in the range of 3x to 5x the average for -- against movies. That's a range and it moves broadly depending on the show and depending on the anticipated delivery.

Right. And AMC is closer to the acquired -- sorry, BBC is closer to the lower end of that range?

I'm not going to comment on the range on BBC. We're just in the integration process now.

Okay. And then, Sean, thanks for giving us the delta between the amortization in '14 and the cash spending in '14, the $60 million or so. What is your expectations for '15 to grow the relationship between what's amortized and what's expense in cash?

Yes, Michael. I think that I said what I'm going to say about 2015, I think that the macro and specific comments are we're still in very much a growth mode. We're still very much in investment mode across all the networks. We're increasing programming, as we highlighted, probably most notably today on AMC. So I wouldn't give you the exact relationship. We're certainly still in an investment mode by giving you some sense of at least what our plans are in terms of managing to a margin for the National Networks. So I think, at this point, that's probably the best of what we can do for you, sorry.

Your next question comes from Ryan Fiftal with Morgan Stanley.

I have one for Sean and one for Josh, if I can. Sean, I guess, post-DirecTV and DISH, is there any upward or downward pressure to the general guidance in your outlook, just given on affiliate fees in mid- to high single-digit growth?

I don't know if there's pressure. I think we've given you a consistent articulation about what our expectations are. I think we've completed a significant number of deals over the last 3 or 4 years, many of which I think we've either disclosed or known to the public. As I said in my prepared remarks, we have a high visibility to our affiliate revenue streams. So I think that you should conclude from that.

Okay. And then, Josh, I guess, a question on Sling and then Over the Top, more broadly. I'm curious, the negotiations over Sling, were those very different than your typical MVPD-type negotiation? I'm just thinking, Charlie is assembling a smaller bundle, so he can more credibly walk away from any content groups. So I'm wondering if you felt the position that you came in into those negotiations were very different? And then maybe more broadly on Over the Top. There's a lot going on in the ecosystem. HBO talking about going Over the Top. And then even some of the linear cable nets, Discovery, Viacom are starting to make comments about going Over the Top. So any thoughts on the evolution of the ecosystem and whether AMC could ever start to go down that path?

Sure. We were, on DISH, pleased to support and be engaged with the Sling extension, if you want to call it, or initiative of DISH. We joined, as you know, Time Warner Scripps, Disney and A&E, each of whom have channels that will be part of it. Specifically, I think we disclosed that we also extended the BBC AMERICA affiliate agreement on the satellite part of the platform. So the negotiation wasn't extraordinary. We were pleased to support it. We think that we received fair value and delivered fair value. And it's obviously a work in progress, and we'll see how it performs. Much to be learned about how Sling performs at its price, what it offers, whether it really reaches broadband only, whether it has an incurring effect or not. On the subject of OTT more broadly, there's little to see in terms of actual market deployment and much to think about and anticipate that people have talked about. So it is a -- I would first say it's a speculative conversation. We know what's been announced. There's been little that's actually hit the market from any incumbent suppliers on the MVPD side or the incumbent programmer side. So it's mostly speculative. What we, of course, know is that there's an appetite on consumers' behalf to buy Netflix at its price and Hulu Plus, Amazon Prime, in the manners that they're offered. And there's much to learn. Our general point of view today is that we think that the ecosystem, as everyone calls it, that we're part of is a vital one. It appears that it may undergo some changes in shape. We don't know if they'll be modest or more radical over time. I would note, of interest, that there's been remarkable stability in the United States paid subscriber count over the past 5 years, while the SVOD services have grown, in the case of Netflix, to inhabit 1 of every 3 television homes. And it appears that consumers are buying lots of stuff from lots of people and have significant appetites. So our first priority is the support of the ecosystem, the support of the on-demand and TV E initiatives of our MVPD suppliers and the support of things like Sling that are related to our MVPD customers and we'll take it from there.

Your next question comes from Doug Mitchelson of UBS.

It's Brian Russo for Doug. Two questions. So I guess, first, for Josh. We've heard from several cable management teams this quarter lament the number and the growth of original programming in the industry. And I'd like to get your thoughts on the matter. Have you changed, at all, the way you develop new programming based on the increased level of competition for consumers' time? And then, also, kind of as you think about maybe in 5 years’ time, do you think we'll still be at the same level of original programming? Or could it be more? Or less? And then, just a quick follow-up on the affiliate growth outlook. Are there any major renewals in 2015 that we should be aware of or that's kind of baked into your thinking process?

So I'll respond, if I may, to your last question first. We don't -- I think, as Sean mentioned, we have a fairly stable circumstance on our distribution agreement -- on the distribution agreement side of our business. We don't disclose specifics about expiring contracts or contract renewals. So if you don't mind, I'll just leave it and say that we think we have a broadly stable circumstance. On the subject of program competition, it's really an interesting question. There has been a move on behalf of programmers to do more dramatic scripted programming than in the past. We were earlier to it on the basic cable side with Mad Men 8 years ago or so and Breaking Bad, and it's been joined by others who found degrees of success in it. I think for all sorts of reasons, a lot of it having to do with changes in technology that were -- we talked about it earlier, when you have a complicated drama, they're fun to watch on-demand and stay with and talk about. They're fun to co-view. They're fun to talk about with friends. And you can endure more nuance. So there's a little more heat in that market and interest as people develop and buy. It's obviously not a limited commodity. It's not a sporting event that you have to bid on. You can find a good show here or there. We can have a very successful show in Better Call Saul. Amazon can do Mozart in the Jungle or Transparent. HBO can do what it does. Showtime, Hulu, FX. And the impact of that is, at the moment, fine for us. As long as our shows are good, frankly, that's the big variable, we find significant audiences, and we find appetite in ancillary markets. There appears to have been a macro shift to that material. So I think we're enjoying the benefits of the macro shift. Where that sits in 5 years is a little hard to project. We'll obviously monitor it. We'll be mindful of costs. We're careful about time and horizons. And it's the daily business of our work, so we're also intrigued by it. I'd probably hesitate and stop short of trying to prophesize what the whole thing would look like in 5 years.

Your next question comes from Alexia Quadrani of JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: My question is on the -- I guess, also on the changes to the ecosystem and the ongoing fragmentation in the audiences. I guess, given that, capturing a real outside audience like you were able to do with The Walking Dead seems becoming harder and harder to accomplish. I guess, can you comment on how pricing continues to reflect bigger ability to reach those really, really large audiences and how you're continuing to see those, I guess, wider premiums in CPMs on The Walking Dead and how much you can leverage maybe that demand onto your other programs?

Right. So if I follow your question, in the first quarter, it just happens that AMC had 3 of the top 5 shows in terms of audience size among adults 18 to 49. So we're off to a good start. And we think our development process is good. And we think our selection process is good. And most notably, and you can see, hopefully, with the launch of Better Call Saul, with the right shows and the right scheduling and marketing mix, you really can bring a good-sized audience to it, a healthy audience to it. We're also, in terms of our development screen, we do tend to look for, across several of our networks, smarter shows that have -- that tells slightly complicated stories and have outsize appeal to an upscale audience. So it's probably worth noting that right in the past 12 months, 6 of the top 10 most upscale shows on cable TV can be found on AMC, BBC AMERICA or Sundance. And we think that's something audiences notice, at least our target audience notices, and certainly, advertisers notice. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: So would you say that -- I guess, is that a sort of a ramp-up way of saying yes that CPMs continue to see premium pricing? And I guess that the logic would dictate that, given what you're saying?

Yes. We do receive premium pricing for those shows in success. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: And just a follow-up on The Walking Dead itself. The companion show, which you all have announced, I guess, any more color you can provide about how different it might be from the existing show?

I think we've said we sort of go back to the beginning of the story when the zombie apocalypse began. And we said it will be located in a different part of the U.S. And right now, we're in production on the pilot.

Your next question comes from Vasily Karasyov of Sterne Agee. Vasily Karasyov - Sterne Agee & Leach Inc., Research Division: My question is about SVOD pricing. So Josh and Ed, probably, can you tell us how pricing evolved, how it started and how you're pricing your product now? And given how important scripted originals are for SVOD players, how do you make sure that you're pricing the product correctly? How do I get comfortable with not leaving money on the table there?

Right. I think we -- the nice news is that there has been a growing market in terms of SVOD entrants. Netflix has grown, Hulu Plus, Amazon Prime, and then there are smaller ones on the edges that are moving up. So it's been a growing market. And as you point out, it does absolutely appear to be the case that scripted originals, both that are made by those entities or licensed are strong performers and highly desirable. So we price with care is the first thing I'll say, knowing that it's a strong market and that, of course, we want to maximize it but also be in service of a client who we have an ongoing relationship with. So I'm really not at liberty to talk the details of the pricing, except to say we think we've reached formulations with them that provide degrees of stability for them and us that are nice; appropriate reward for us, which is nice; fair value for them that -- for shows that really perform; and reasonable degrees of adjustments as we go forward. I'm sorry I can't really say more than that. Vasily Karasyov - Sterne Agee & Leach Inc., Research Division: Are you happy with the pricing? Sounds like you are.

I would say yes. In general, yes. We think we do fair deals.

Your next question comes from Ben Mogil of Stifel. Benjamin E. Mogil - Stifel, Nicolaus & Company, Incorporated, Research Division: So one for Josh and one for Sean. I'll start with the one for Josh first. You talked a lot about the focus on upscale audiences in terms of where the AMC and BBC America shows are doing. And obviously, from an advertising perspective, that's a very valuable and targeted demographic, which is one part of the equation. In terms of the consumption trends, do you see upscale audiences consuming media any different than other audiences? Do you see them as more C+3 ratings? Are they more likely to use the MVPD, VOD system or even more likely to make an EST purchase? I'm kind of curious if on the non-ad side, the upscale audience has something that you can sort of leverage from a monetization perspective?

Right, Ben. So this is Ed. I think on the consumption pattern, we would say it varies by show. I don't want to give a roundabout answer, but it does. We're sort of -- we attend to -- Josh mentioned urgency before. And as we roll out these shows, we do like the fact that a community of audience builds. And that audience wants to hopefully experience the show in real-time or close to it because they're water cooler shows. They speak specifically about The Walking Dead. We've demonstrated that any character might be killed off any week for any reason. So that makes people reluctant to wait and to risk spoilers. And I think we saw, as Breaking Bad kicked off toward its final episodes, and hopefully, we'll see that build with Mad Men, there's sort of a community that arises around it. So at the crux of your question, upscale audiences, do they tend to have more access to technology? And do they have the ability to be selective in how they consume media? If they do, then we counterbalance that against the ingredients of the show. So there's unfortunately not one specific answer to give there. Benjamin E. Mogil - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay. And that's fair enough. And then, Sean, just on your perspective. When you're talking about guidance, rough guidance that you think '15 National margins would be relatively similar to those in '14. Are you sort of stripping out the write-off, the program write-offs of $44 million in '14 or are you sort of including them in there in the base level of operations?

Yes. I'm commenting on a reported basis, so I wouldn't be stripping them out. Benjamin E. Mogil - Stifel, Nicolaus & Company, Incorporated, Research Division: Got it. And then sort of, do you anticipate over time that the BBC margins sort of eventually get back toward the AMC legacy margins? Or maybe can you talk a little bit about margin differential between the channels?

Yes. I'm not going to -- as you know, we don't specifically talk about each channel and its margin profile, et cetera. I guess what I will reiterate, we said it on, I think, on the prior call, obviously, we were attracted to BBC AMERICA for its content, its programming, the complementary nature to our existing business, but clearly, there were opportunities whether it's in the advertising market as we move together in the upfront, the strength that we have and the strength that they have, in certain instances, in our affiliate negotiations, obviously, hopefully, there's operating leverage as we look at our infrastructure and theirs. So we would buy it with the expectation that there was a meaningful amount of upside to what they were doing on their own. But that's probably not surprising but as much as I'll say. Benjamin E. Mogil - Stifel, Nicolaus & Company, Incorporated, Research Division: Was there much cost rationalization in the 4Q numbers to speak of?

No. I mean it's still early. I mean we're still integrating the business across all lines. Physically, they've moved into our building. So it will take some more time. But I think we called out some transaction fees but I don't think we specifically called out anything specific to integration.

Your next question comes from Todd Juenger of Sanford Bernstein. Todd Juenger - Sanford C. Bernstein & Co., LLC., Research Division: I know there've been several questions about CPMs and advertising. And so I really hope this isn't redundant, I don't feel it is. I guess I just love to sort of tie it together. I'm still trying to figure out mechanically how you can translate what I think was delivery declines in primetime across your network portfolio, somewhere in the negative mid-single digits year-over-year, and turn that into mid-teen advertising revenue growth, especially in an environment where other companies are talking about scatter pricing being down year-over-year and just an overall tepidness in the market. You gained massive share. So clearly, you have the #1 show on TV, that helps, but it's really not that many hours. So any further commentary you can give as to how does negative mid-single ratings turn into mid-teens advertising growth? Would love any further thoughts on that. And I have a quick follow-up.

Yes, Todd. So I do think the demand for shows is the short answer that I would give you. Demand for the shows, not only on AMC, Portlandia on IFC for example, Dr. Who and Orphan Black on BBC AMERICA, that is really what is driving -- the specifics of the content is what has been driving the ad sales market in the past upfront, the scatter market and what we anticipate with the future upfront. And I do think our group does an exceptionally good job of inventory management and of driving that pricing. So I think that's the essence of it. And then we touched on it before. The upscale nature of our shows has appeal. And The Walking Dead, the sheer size of the audience, and an elusive audience, it has a high concentration of young men, and so that's noted by categories of advertisers, particularly in the gaming, in the entertainment, movie advertising segments. Todd Juenger - Sanford C. Bernstein & Co., LLC., Research Division: Okay. Fair enough. A quick follow-up. Sort of along those lines, there's been a couple of questions about SVOD and your Netflix relationship. I just want to explore that a little further, when you think about -- you've cited that it's a positive impact for, obviously, some of your really big hit franchises and the catch-up viewership. How do you think about the tradeoff of the potential negative impacts of SVOD on the many hours on your networks, for instance, that might be license programming, and substitution of viewing and when you think about the tradeoffs to the good guys and the bad buys of SVOD, how do you handicap those different elements?

Look, Todd, I guess I would say that, to state the obvious, SVOD, a bit [ph] large, is an alternative viewing platform for video content. So they are, by definition, a competitor in that regard. However, anyone who has video content is a competitor. The more focused, I think, a narrow -- an important part of our relationship to SVOD is where our shows go and when they go. And there, we believe we've seen a lot more sympathy than competition. And we've seen that because of the phenomenon, not with every show, but with many of season-over-season increases, and that is not a standard phenomenon in television. Usually, shows decline year-over-year, they don't grow year-over-year. And we have seen growth year-over-year while we've had this reservoir of past multiple years material on SVOD. So in the case of particularly scripted dramas, I think it applies to comedy as well, while it's inherently competitive because you can be there or here, the specific effect on our channels has really been sympathetic. And it's helped us. And we do think it's because people are familiarizing themselves, finding stuff, being referred by friends, finding a show. How many times have someone said, "Hey, you ought to watch this thing. Check it out." You do, and then if you like it enough, you may find your way to watch it on linear. And we think we've seen that phenomenon. So we don't think it applies to everybody, but it has applied to us and seems to continue to apply.

Your final question is coming from David Joyce with Evercore ISI.

I was just wondering, with the coming changes in the Nielsen ratings, including new tablets and other viewing, I was wondering what your sense is of the rollout timeframe for better delayed viewing measurements since a lot of your shows are viewed in delayed environments? And then, secondly, if we could just get some color on what the differential on international revenue and EBITDA growth is on a currency adjusted basis, that'd be appreciated.

Yes. This is Ed, David. I'm not sure I have any visibility into Nielsen's timeline for rolling out better than they've disclosed.

And have you done any...

And then -- sorry. David, in terms of the revenue AOCF, I think it was about a 1% impact that we had in the -- for '14.

And have you done any back-testing on what these new ratings could do on, say, your fourth quarter ratings results?

No. We have not. All right. Well, thank you, everyone, for joining us on today's call. We appreciate your interest in AMC Networks. Operator, you can now conclude the phone call.

Thank you. This does conclude today's conference call. You may now disconnect.