Good morning. My name is Christy, and I will be your conference operator today. At this time, I would like to welcome everyone to the AMC Networks' Second Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I will now turn the call over to Seth Zaslow, Senior Vice President, Investor Relations. Please go ahead, sir.

Thank you. Good morning, and welcome to the AMC Networks' second quarter 2016 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 second quarter 2016 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. Joshua W. Sapan - President & Chief Executive Officer: Thank you, all, for joining us this morning. AMC Networks' strong start to the year continued in the second quarter with double-digit growth in net revenues, ad revenue, and AOCF. Our financial results were driven by…

Sure. And your first question comes from Michael Morris of Guggenheim Securities.

Thank you. Good morning, guys. Two questions for you. The first one is on Hulu. Josh, you mentioned that you expect to be part of new opportunities and I'm curious if you'll comment on your expectation for being included in the Hulu virtual MVPD service and whether your relationship on the SVOD side has any impact on a relationship on a linear product with them? And then – well, let's just start with that and then I'll ask my follow up. Joshua W. Sapan - President & Chief Executive Officer: Oh. Sure, Mike. So just by way of background, as you know, we are part of Sling. We thought that was a good initiative on behalf of DISH and so were participants in it. We are a part of Sony Vue, so we do think in general that being able to access our brand and contents on reconfigured platforms that come from conventional and less conventional aggregators and retailers is a good thing. Hulu, as you know, we do have an SVOD relationship with Hulu, so we enjoy proximity and ongoing commerce with them and I think it's been a fluid and very healthy and happy relationship. As you might imagine, we're in regular conversation with them. I think their business and their plans are being formulated, we read of something just a couple of days ago that included Time Warner. So I wouldn't want to comment specifically, I would just say that we're close to the company. We believe in and support what they're doing and we look forward to a future sort of with them if it all works out.

Great. Thank you for that. And then my second question is on your mix of owned versus licensed shows, a topic we speak about frequently. It feels that you're moving more toward owned, however the two most recent series on AMC, Preacher and Feed the Beast were licensed. I guess my question is twofold. How are you thinking – how should we think about going into next year what your mix of owned versus licensed programming will look like? And maybe more broadly, are there things that you are doing or need to do behind the scenes that maybe we don't appreciate but that better position you over time to own more of your slate? Thanks. Joshua W. Sapan - President & Chief Executive Officer: Sure. I think you've pretty much got the picture. What guides us and has guided us over the past several years has been a bias, as we call it, to own. And the bias to own is because in success, the rewards are – they're greater, like, so Walking Dead, Fear the Walking Dead and other shows that we own, we're able to control the rights to exploit and enjoy revenues from a growing series of opportunities both domestically and internationally. What we have said to ourselves very clearly and what we've done is we have, I wouldn't call, it made exceptions, but we have gone with non-owned, licensed or co-produced. There is a spectrum of ownership. It is not binary. It's not like you own it or you rent it. You can, to use real estate parlance be a co-owner and you can sort of do all sorts of variations in which you share in ancillary rights. And what occurs, perhaps very obviously, is that your cash upfront moves with those spectrum of rights.…

That's helpful. Thanks, guys.

Thank you. Our next question comes from Anthony DiClemente with Nomura.

Great. Thanks and good morning. First, for Sean or maybe Ed. On the expectation for flat domestic ads in the third quarter, I'm just wondering to what extent is it the tough comps year-over-year as compared to ratings underperformance versus your internal expectations for the new shows? To what extent is strong pricing making up for some of that potential underperformance? And then to what extent is the Olympics a factor in your third quarter expectation? And then a follow-up for – a question for Josh. I think you did something creative with Preacher where AMC made the first five minutes available to watch on Snapchat before it aired on the network. Do you expect to do more of that? You know, how did it go? And then more broadly when you look at some of these technology platforms, like Snapchat, like Apple. Apple is buying content for the first time. Like Amazon. Amazon is doubling its spend on content in the second half of the year. Josh, are you surprised that there haven't been more business partnerships with the big tech platforms or even acquisitions of media companies by those big technology players. Thank you. Joshua W. Sapan - President & Chief Executive Officer: Maybe I'll take your second question first if you don't mind. We have a long-held view – have had a long-held view, Anthony, that platforms that one can think of as competitive are often better thought of as companions and opportunities. And so we are really always on the lookout for how we can find an emerging or established platform or exhibition enterprise to partner with. And I can list a whole range of things we've done that at the time were sort of novel. The first company to put movies on cable, VOD, and…

Right. So, Anthony, it's Ed. Right. On the second half of the year – well, at third quarter, we have some unfavorable comps in terms of the number of original scripted hours. We also, as you know, there are macro influences that are making ratings more difficult to achieve across pay TV and broadcast TV. In the fourth quarter, we really see the benefit of this upfront where we're able to drive favorable pricing, double-digit price increases on AMC and we think that will offset some of the headwinds on delivery so that's really the outlook for the second half.

Okay. And then I guess the other questions were can you concede, I mean, have ratings fallen short of your internal expectations for some of those originals? And then also the question about the Olympics. I mean is that, that's just something that people have called out for the third quarter as a competitive headwind. Is that relevant for AMC?

Not particularly. I mean the Olympics, we certainly know they're there. We know they're happening and we anticipated them. The scatter market continues to be healthy. Our internal estimate, I think we do a good job estimating. We certainly gauge the performance of our original series. We look at their track records. I think we're realistic and that gives us the best ability to monetize the impressions aggressively. We have – I think the theme with advertisers is AMC has what is increasingly a rare commodity, which is a large audience of 18 to 49 year-olds, particularly with a male concentration which outside of sports you don't see in abundance on pay cable. That gives us the ability to be very aggressive with advertisers on pricing because the market demands. In this upfront, the demand for our original content was as high as we've ever seen it. So we feel good about the overall.

Good. Thanks a lot.

Thank you. Your next question is coming from Michael Nathanson of MoffettNathanson.

Thanks. I have one for Josh and one for Sean. Josh, I'm going to start with you. Many of your competitors, like, Fox, Turner, Viacom, have said they're going to cut commercial loads this year. And given that your commercial loads are lower at AMC than any of its peers, could you talk a bit about your view on commercial clutter and the willingness to increase commercials if ratings falter in the next couple quarters. Joshua W. Sapan - President & Chief Executive Officer: Yeah. I think you probably said it, Michael. We are substantially lower than some of the entities that indicated that they were going to decrease their loads. So we think we've been mindful, I hope, from the start about what commercials do and don't do to the type of content that we put forward. And I think we have and we do study it as well as we can, I think we've hit at right levels. And we monitor it pretty carefully for the consumer experience and, of course, to maximize revenue and, of course, to have promos as well because it's a good platform for our own promotion of shows. So we think we're at the right level. Anything that we adjust or move, we move with extraordinary care because we think that the consumer experience is primary to what we do, we are asking for the allegiance of consumers to come back to us and have a good experience, and we're also, frankly, mindful of commercial-free competitive alternatives today. When people go home they can flip much more easily than they used to streaming SVOD services that are commercial-free or commercial-light. So we think we got it right. We move it around only teeny bits and with great care and we think we, sort of at least today for the foreseeable future, are at the right load.

Okay. And then for Sean. There was a press report of buyouts offered for about 200 of your employees. Could you talk a bit about whether or not that was true and what the cost savings would be if that actually happened. Joshua W. Sapan - President & Chief Executive Officer: Sure, Michael. This is Josh. Yeah. So we are, that is occurring in the company, and we're in the midst of it. And we think it's an opportunity to reward people who may be at a point in their careers with us when it's time for them to – when it's a good time with a reward to depart. And we're actually in the middle of it, as we speak. We think it's a good undertaking. We hope that it would be, and is being, well received by the people who are here. And we think that we – we hope we accomplish a few objectives. One is that we are able to be more efficient and be financially better structured. Along with it, we'll undertake some – we'll look at some modest structural changes that set us up for the fact that our world is today more digital than it was in the past. And we'll have a better organized company. We haven't done that, but we've done cost examinations. And we've had some changes in each of the past, you may note, couple of years. And we've reported some restructuring charges. So I think it's part of the evolution of a media company in today's world.

Okay. Thanks.

Thank you. Your next question comes from Todd Juenger of Sanford Bernstein. Todd Juenger - Sanford C. Bernstein & Co. LLC: Oh, hi. Thanks. I've got one for Sean and one, I suspect, for Ed. Sean, a couple of your peer companies have made changes to their program amortization recently. Actually going in different directions. So at least one company we know has accelerated their program amortization saying that program has a shorter useful life than it used to. And then we learned yesterday somebody else is going the other way and saying program's longer life. So I just wondered. You have your own very specific way of amortizing owned and acquired programming. Are you exploring that? Do you think there's any changes to the useful life generally for your programming? Anything we should think upon that? And then, Ed, probably for you. You've talked about a rare commodity that you have the liberty of taking to the marketplace which is sizable audiences of people inside original programming. One thing that's less rare is original programming generally. So if you think about, I'm just curious the discussions with advertisers and the pricing you agree upon for your inventory. Part of that I think you used to get a pretty good premium just because of the premium environment that originals provide for advertisers. And part of it is the size of the audience. Is it fair to say that with all of the investment across the industry in originals, it's not so rare anymore? Is the discussion changing? Is it harder to get premiums associated with originals because that's a less rare thing and is it turning more and more to just to the size of the audience or anything you'd share on that would be very helpful. Thank you, both. Sean S. Sullivan - Chief Financial Officer & Executive Vice President: So, Todd, on your first question, just as a blanket statement, we evaluate the vitality, utility, useful life of our programming on a quarterly basis so that's something that we have done and will continue to do. As it relates to play patterns, that certainly factors into repeatability and audience factors into our evaluation. As you know, we use an ultimate method of accounting in terms of revenue attribution for our owned originals. So, as some of these ancillary revenue streams have emerged, evolved, and increased, and whether that's SVOD or international distribution of the show, we're attributing the expense against those in the play pattern of the shows. So I don't think that you're going to see a dramatic change in it. I can't comment specifically. I'm familiar with the two references you've made about our peer companies but we think what we're doing is very appropriate. And at the same time, we'll continue to evaluate it on a quarterly basis.

So, Todd, this is Ed. On your question about getting premiums, a couple of things to think about. One, in this upfront, we saw our money flowing into the upfront and we saw many marketers who had allocated large portions of their budget to digital in prior upfronts moving back to television because they felt that they could track the success of those advertising dollars. So we just saw a robust demand generally in the marketplace. Then I would say specifically keep in mind with hit shows or shows that are perceived as hits, those that appear on some of the SVOD platforms are outside the advertising ecosystem. So there are no impressions there to be sold. So then you go to television and that's where a show like The Walking Dead really stands out because it's the number one show on TV among 18 to 49 and it has about – its nearest competitor has about 40% less viewers in the demo. So a hit like that stands out. And then Josh talked about in his remarks AMC enjoying roughly a third of the 18 to 49 impressions against dramatic series. We have five of the 10 top dramatic series. So that's a long windup to the short answer, which is, broadcast replacement premiums and the ability to raise pricing certainly present in this upfront and AMC and the other networks were able to enjoy it. Also demand for originals like Orphan Black and Doctor Who as well saw very healthy increases. Todd Juenger - Sanford C. Bernstein & Co. LLC: Okay. Thank you.

Thank you. Your next question comes from Vasily Karasyov of CLSA.

Thank you. I have a two-part question. I think it's for Ed and Sean. So if we look at your first quarter results in National Networks and do the math on apples-to-apples terms, I think your advertising revenue growth was much better than the reported 1%, right? And that's because of the inventory management, and that was despite the average decline for The Walking Dead ratings of 15%. So if we take into account what we know now about the upfront and about expected ratings, is your ability to grow advertising revenue on apples-to-apples terms enhanced since Q1 given the advertising market conditions now? And then I have a quick follow-up.

I think we're just going to say what we've already said. I'll restate what we said about the outlook. We feel good about the second half of the year. We feel good about the upfront. We feel good about our pricing. I think we have good estimates that really take into account the recent performances of all our shows, the new ones that are among the top shows in cable as long as the ones that have been around for a number of years. I don't think we'll go much beyond that.

Okay. And then a quick along the same lines. The pricing between The Walking Dead and Fear the Walking Dead, Hulu and Netflix. Is that predicated on ratings at all? And could you give us an idea of how comparable per unit prices are for the two shows? Joshua W. Sapan - President & Chief Executive Officer: This is Josh, Vasily. We're not really at liberty to get into the details of our SVOD arrangements. So if you don't mind, I'm sorry. We can't sort of tell you how they're all priced. They're private commercial contracts. So I don't have – I can't answer your question directly. I can, I guess, say that they're probably, in general, broader and less specific. And the companies have long-term relationships, meaning we do with Hulu, and multi-show, multi-year relationships. So just want to give you a flavor for how we engage with our SVOD partner and past partner.

That helps. Thank you.

Thank you. Your next question comes from Ben Mogil with Stifel. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: Hi. Good morning. Thanks for taking the question. So two questions. First one. In terms of the TV environment, clearly there is a lot more competition than there was just a few years ago in terms of number of original scripted and that's been well discussed. Maybe talk a little bit about when you're sort of launching programming more on the marketing and promotion of it, how your approach of this change, say, since you launched Mad Men or Breaking Bad which were kind of the dawn of this new era, if you will? Joshua W. Sapan - President & Chief Executive Officer: Sure. I think maybe I can answer and Ed might want to chime in. I think it is a more, as people would like to say, cluttered environment. There are more options. And there are particularly more scripted drama options. So the world has changed since Mad Men. What I think is interesting is that an issue that has undergoing evolution, I'll just start with this, is the importance of brands, which is not a specific question about whether one is spending $3 million, $5 million, $8 million or $10 million to launch a show. It really has to do with something that we're beginning to see more of, and that is that consumers who have new interfaces in their homes, and we know what the interfaces look like on SVOD, but the interfaces from the MVPDs are becoming better and better by the day. So if you're on X1 or if you're on Spectrum, you really have something that looks, now, enhanced. And it has great facility. It didn't used to have that sort of facility. And…

Operator? Why don't we take one last question please?

Sure. Your final question is coming from Ryan Fiftal with Morgan Stanley. Ryan Fiftal - Morgan Stanley & Co. LLC: Great. Thank you and good morning. I have one on the affiliate revs side and then one on the cost side. So, first, Sean, maybe clarification on your 3Q guide. I think you mentioned strong double-digit growth. Was that for distribution revenues in its entirety? Or was that just the content licensing piece of that? Sean S. Sullivan - Chief Financial Officer & Executive Vice President: That was primarily the content licensing. Ryan Fiftal - Morgan Stanley & Co. LLC: Okay. And then can you help us, since affiliate revs are part of that, can you help us think about, again, the impact of the MVPD consolidation in the back half or next year? Are we already seeing some pressure from contract resets now? Or are they still to come? And should we think about those as like 2017, 2018 events? How should we think about that? Joshua W. Sapan - President & Chief Executive Officer: Yeah. So I think I would say a couple things, if I may. This is Josh. I think consolidation has been part of our lives now for not a year or two, but probably five years or eight years. But it increases. And with it comes what we've seen over our renewals over the past several years, which is there's some increased pressure in the system. And we, I think, over the last several years have had probably a pretty good time operating in an increasingly consolidated world. I think you're well aware of what our rate of increases has been against that backdrop. And I think it's because, if I may, I think while size matters on the supplier side, meaning us, I…

All right, well, thank you, everyone, for joining us on today's call and for your interest in AMC Networks. Operator, you can now conclude the call.

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