Ladies and gentlemen, thank you for standing by, and welcome to the AMC Networks Third Quarter Earnings Release Conference Call. At this time, all participant lines have been placed in a listen-only mode, and the floor will be open for your questions after the prepared remarks. Thank you. It is now my pleasure to turn the call over to Seth Zaslow, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good morning, and welcome to the AMC Networks third quarter 2017 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 third quarter 2017 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. For further details, 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.

Thank you, Seth. And good morning, everyone. AMC Networks delivered strong financial performance in the third quarter, and we're pleased to say we are on track to meet our 2017 full year financial targets of total company revenue and adjusted operating income growth. Our CFO, Sean Sullivan, will address our financial results in more detail later on in the call. Our solid third quarter results reflect the consistent execution of our long-term strategy of investing in high quality immersive content. Our results highlight growing demand for our content among traditional distributors, virtual MVPDs, advertisers and consumers, and our ability to monetize demand for our content through new revenue streams. AMC Networks is we think better positioned than we've ever been to successfully navigate evolving changes in consumer viewing habits, and we see several indicators of the strength and vitality of our long term approach. One of our biggest strengths relates to what we think is a preferred position we hold within the evolving and diversifying cable ecosystem. This position is made possible by the combination of our commitment to creating top tier content and being at the right size at a very attractive price. It's become evident in recent months that having a sprawling portfolio of channels may not be the best approach to the new world we're facing. We resisted that temptation years ago to expand in size to 10, 15 or 20 networks, instead we focused on investing in great content and a very limited number of strong brands. Today, we enjoy a stable affiliate revenue outlook and our relationship with our traditional distribution partners has in many respects never been stronger or more expansive. We're very pleased with the recent debut of AMC Premiere, our new commercial free upgrade option that we launched for Comcast Xfinity TV…

Thanks and good morning. As Josh highlighted, we're quite pleased with our results in the third quarter and our performance through the first nine months of the year. We remain on track to meet our targets for the full year. And I'll touch on the outlook for Q4 in more detail after reviewing the third quarter results. In the third quarter, total company revenue grew 2%, and AOI grew 19%. Adjusted EPS was $1.68. For the nine months, total company revenue grew 3% and adjusted operating income increased 5%. Adjusted EPS was $5.68. Year-to-date, we've generated $196 million in free cash flow. With respect to the performance of our operating segments at the national networks in the third quarter, revenues increased 3% to $541 million. AOI was $200 million, an increase of 23% as compared to the prior-year period. Advertising revenues increased 5% to a total of $198 million. Strong pricing and the timing of our originals more than offset lower delivery. Distribution revenues at the national networks increased 2%, to a total of $344 million. As expected, affiliate fee growth in the quarter was in the mid-single digits. As Josh highlighted, we believe that we have unique strength and positioning with our distribution partners, and this will serve us well as the pay TV ecosystem continues to evolve. As for the non-affiliate revenue component of distribution revenue, we saw a year-over-year decline, due principally to the timing of licensing of our scripted original programs in various ancillary windows, most notably the SVOD availability of Rectify at SundanceTV. Our results were lower than anticipated. We continue to expect the licensing of our content to be a significant contributor to top-line growth, and anticipate that non-affiliate revenue growth will accelerate significantly on a sequential basis in the fourth quarter of this…

Thank you. Our first question comes from the line of John Janedis of Jefferies.

Thank you. Maybe just one from me, you talked about high quality programming, Josh, and as you know ratings have been a theme across the industry, so can you talk about your longer-term programming strategy? Do you think any more original hours across your entire group, and based on your comment about being the right size, does that suggest you're going to continue to invest across all the networks, or do you pull back and focus on just two or three networks?

Right. You had a lot of important questions. I think just to restate, we do think that, the core of what we do is based in quality programming that really does have high demand and is not casually experienced by people, and that is just a pause on it, fairly different than a lot of other cable channels across the spectrum. We think that, I'll answer broadly, if I may, that our ability to sustain that as our ecosystem evolves calls for a number of things, some of which we've moved well ahead on, some of which we have areas to go forward in, and that includes having number one international channels that we can distribute our content on. We now have an AMC channel around the globe and the AMC channel as a home for the content that we produce, so that helps with scale, number one. Number two, we've set ourselves up as a "studio" and what that means is that we're increasingly owning the shows we make. That's an important distinction versus licensing the shows from another owner, because what it means is when we make our show, we have a sales plan for that show that has United States distribution so-called syndication revenue and worldwide distribution syndication revenue and that all goes into supporting the manufacturing or the production of the material that we do. So, those two changes in our so called architecture are very important to make increased and growing investment in content, something that provides a return. I think in terms of the size, we think that in the U.S. where we have five channels, we are the right size. We think we're programming at roughly the right level for in terms of film and original programming and other television programming for each channel which we of course look at every day in a certain sense every moment, that's the bread and butter of our business. So, we think we are balancing it all the time and rebalancing it and tweaking it and we're optimizing it. I guess, it's good to point out if I may that the ratings at a couple of other channels, not AMC, have been up, BBC America and Sundance over the last year. So, we're seeing that both the content that we're putting on and the manner in which it's being scheduled is providing a return and is working in an environment in which there have been some headwinds. So, I think that I will try and sum up so I don't go too long, I think that that's the system. I think we've got the right number of channels. We'll keep tweaking the amount of content that we invest in and make as consumption alters and as our various methods of monetization evolve and that's our plan.

All right. Thank you very much.

Our next question comes from the line of Michael Morris of Guggenheim.

Hi. Thanks, guys. Two questions if I could. One, can you talk a little bit more about the importance of providing consumers with an ad-free option as you've started with Premiere? Based on what you're seeing now, would you expect to expand the content on the service, as well as the relationship that you have with current or maybe new distributors? And then second, if I could on The Walking Dead franchise, Josh, I think you've spoken in the past about the lifetime value of the franchise, something that expands just beyond, perhaps letting the show run its course. How do you think about – and obviously the ratings are the still strong on a relative basis, but how do you think about managing it creatively? We've seen other franchises kind of go off the air for a while, then come back again renewed. How are you thinking about that as you look at the show now? Thanks.

Sure. So I'll answer if I may, Mike, the second question first. The use of the word franchise, we don't take lightly. It's not a sloppy casual word. And the difference between franchise and a TV show is very meaningful by degree. So I think we all know what successful franchises are in the genre world. One can point to them easily. They oftentimes live for a very long time. They have incarnations and reincarnations, they come back, they take pauses, characters move from one editorial line to the other. They jump around, they create intrigue, and they really do become a bit of the part of the social fabric of life that is more than a TV show. I'll resist pointing to the most notorious ones we all know what they are, because they are indeed iconic and I'm not necessarily suggesting that The Walking Dead will be that or that. But after eight years and after 100 episodes, with the fan zealotry that we have, we do truly believe in two shows on the air that we really have a franchise that needs to be managed as a franchise. And we'll point just one no doubt to you that's to my mind illustrative. Two weeks ago, we were at the Greek Theatre in Los Angeles for the 100th episode, when I don't know if you ever watched the show, when some of the dead people who were killed off series came back. There were 6,000 people sitting, and most importantly 6,000 people sitting at the live Greek Theatre. Most importantly, there was about 2 million to 3 million people who watched that live show for two hours. That is a number that if you look at live television is a big, big number. It's a demonstration of interest…

Thank you, Josh.

Our next question comes from the line of Michael Nathanson of MoffettNathanson.

Thanks. I have one for Josh and one for Sean. So Josh, a question I wanted to (31:49) ask you about is margins, and I know the pride in which both you and Sean take in managing the business to large and consistent margins year-over-year. But I wonder like, given what looks like a cutting of marketing expenses year-to-date and the rising intensity of dramas, if that strategy of basically trying to manage to neutral change in margins is something that can hurt long-term competitiveness, I wonder, how do you think about that? I know you don't have unlimited – the ability to keep driving investments like you know, higher and higher, I guess, you have to be gated by something, but how do you think about the need to hit margin targets versus the marketing spending and programming spending? And that's one. And for two, Sean, I guess I was surprised this quarter by the cash flow generation, so if you could talk a little bit about what happened on the amortization versus cash expense line this quarter versus previous quarters, because expenses were definitely better than we thought, but cash flow was a little bit worse? So, that's my question to Sean.

Sure. Hey, Michael. Yeah. So I think, we – I think we're guided by making the best product, and bringing the best product to market in the most captivating and efficient way, I mean it. So that means that we want to make the best shows, of course we pay a lot of attention to what they cost, and partners can help bring down that net effective cost, tax advantages can help bring that – down that net effective cost. I was just in Atlanta, where I was able to visit, as it turns out, five shows that we had in active production. And we're in Georgia in part because – no small part because the tax-friendly environment for making television, so The Walking Dead, Hap and Leonard, Lodge 49, our new show, Growing Up Hip Hop, and Brockmire, were all in production at the same time. I point that out because we're managing costs and we're getting, I think, better at managing cost through partnerships, through taking advantage of tax opportunities, where they are. And then in the last subject, and it won't be definitive, not a definitive comment and that is the manner in which we market, and it is a bit of a different game today to bring a new show to a screen. There are more options, there are more screens, there are more devices, it is not like it used to be. Now that can argue for, oh, you have to spend more, or it can argue for you have to spend differently, more wisely, and more creatively. We put a lot of weight on the latter. We think that referral is probably the new strongest form of sort of television show introduction, meaning I'll say it enigmatically a friend told you to watch it. And we think that data and analytics can guide us, because they're available like never before to actually target people at the right moment of decision in their sort of life to bring them to the television screen, when we want them or to bring them back, when we want them. So, there's some efficiencies that we can gain, if we pay attention to all this and manage it more effectively. Where that lands on margin is not a specific answer, it's just to say that that as the world gets more competitive, which it is and as some television shows get more expensive and some of them are indeed, although new dramas are not necessarily because no one knows it will succeed, there are some efficiencies that you can find as you navigate and do things differently, and that just allows us to be mindful and embracing of where (36:00).

Okay.

And Michael just on the free cash flow generation, again I think we feel very good about what we've generated year-to-date. I think, the key drivers to your question are primarily income taxes which I talked about what our cumulative payments have been to-date versus last year. So, that's an unfavorable comp, some of that is 2016 taxes that were deferred and paid in 2017. As you know, quarter-to-quarter with the timing and delivery of shows, we continue to invest and I don't think we've ever been accused of under investing in programming and programming rights, and we'll continue to do that. So, changes in programming rights and changes in working capital is why you're seeing some variability in the cash flow quarter-to-quarter. But at the end of the day, we continue to generate strong free cash flow conversion against the AOI and we think the free cash flow yield here is one of our great attributes.

Okay. Thanks, Sean. Thanks, Josh.

Our next question comes from the line of Marci Ryvicker of Wells Fargo.

Thanks. The guidance you gave for full year 2017, you gave a range of low-single-digits to mid-single-digits for revenue and AOI growth, but you're so close to the end of the year. So, I guess what would cause you to comment at the low end versus the high end? And then a quick follow-up, I don't know if I missed it, but do you have any comment on subscriber trends? Thanks.

Yeah. Thanks, Marci. In terms of the range, I think again we're 30 days into the quarter. I think, we would prefer to leave it at what we said. I think I've given you fairly decent information as it relates to the fourth quarter. Obviously, we have some big programming activities occurring most notably The Walking Dead, we have two weeks. We don't have any C3 data yet, as it relates to The Walking Dead and the two episodes that have run. So, that obviously is the biggest variable in the quarter that will cause me to resist giving you anything more specific to what I already said.

Okay.

And Marci, I'll – if I may, I'll try and answer your questions on subscriber trends. I don't know how broadly you intended it to be asked, but the things that certainly command our attention are the summer in the overall pay TV United States system. The erosion of so-called basic cable subscribers, which has been occurring. I don't know, if you're describing this gradually, but it's certainly been occurring, in its peak, it has been and someone could probably answer this more authoritatively than me, it would be a better student. But it's about somewhere around half of it has been offset by the growth in internet delivered television offerings from the likes of Sling, (39:01) Vue, DIRECTV Now, YouTube, Hulu, et cetera. So, that's a sort of macro phenomenon going on. It's hard to predict where that will all go. It's probably a subject for almost a different category of businesses that you follow. And someone might be as I said more authoritative than me. I'm somewhat encouraged just on that macro trend about these so-called virtual MVPDs or Internet delivered television opportunities, because I do think in aggregate they're offered at a much lower price than one initially experiences in conventional cable. And, so we think that that advantages our company because we have five strong channels and we perhaps have the best price not insubstantially relative to what other packages of channels are offered for. So if you're the person who has to actually make one of those things succeed and you're counting subscribers day by day, I think, you'll like AMC Networks a lot because you get points of passion in the content and you get the best price available anywhere, which means that you can find margin, if you are offering not a $90 package at retail, but $50, $40, $30 or less. So we think we're structured and organized well for that trend. A second thing, if I may, just unique to us which is not macro is that we've had the opportunity to work with our MVPD partners to get our channels more widely distributed through the arrangements that we've made. And so I think, in last year AMC Networks added about 15 million subscribers, now that's, I would say, perhaps unique or radical in today's basic cable world, radical. And those 15 million subscribers didn't come by accident, they came by plan, and they came by work, and they came by agreement with our MVPD partners. And so that to me, you asked the trend that's the trend we've had a lot of growth in the last 12 months.

All right. That was perfect. Thank you.

Our next question comes from the line of Todd Juenger of Sanford Bernstein. Todd Michael Juenger - Sanford C. Bernstein & Co. LLC: Well. Hi, thanks for taking the question. Sean, probably I'll keep it to one, and it's somewhat mathematically heavy. I apologize, and that's at the risk of making a horribly embarrassing math mistake here live on the air. So, I'm going to do it anyway. So, here it goes. If I think about your Q4 revenue guide for National Networks, I think, the distribution side probably gets to a mid high single-digit growth rate year-over-year. I think you said flattish overall. So, that probably means advertising down mid to high single-digits if that math were to hold. You can correct me if I did anything horribly wrong there. My question – and that's in a quarter where we have a new season of The Walking Dead on air. So, I guess my question is, well, A, if I made a horrible mistake, please correct. But B, as we think about 2018, and I know you're not prepared to really talk about 2018, but we have to model it. I'm sure you'd like to get back to an advertising growth number next year. But how could that – what are some things that would make that possible either on an audience front or demand front, given that Q4 math. Would just love to hear you talk about the ups and downs in that. Thanks.

Yeah. Thanks, Todd. Again, I won't give you a direct response. We're not going to provide any new numbers, I unfortunately won't participate in the mathematical exercise here on the phone with you. I think what we said is what we said. So, we feel very good about how 2017 is shaping up. We feel great about where we're positioned in the ecosystem and beyond. We feel very good about the ability of AMC Networks to continue to drive revenue and AOI growth. But we're going to resist talking about 2018 until the next time we're together in February, and I think, we'll leave it at that. Todd Michael Juenger - Sanford C. Bernstein & Co. LLC: Okay. Fair enough. I don't want to be a (43:46), but since I got pretty quickly shutdown on that. Let me try another one that you probably won't answer. Is there any directional commentary you're willing to provide on just how ad revenue is apportioned across your various networks? I know you won't tell us specifically, but we have audience information, so is the right way to think about the proportion of ad revenue is relatively the same as the proportion of audience contribution per network, one might think AMC Network might command premium CPM, so it would be higher, if you'll engage on that one would love it, and that I leave it to that? Thanks.

Hey, Todd, it's Ed. So, I would say in quoting your question, you could use that as a rough guide. We certainly do enjoy pricing premiums on our scripted originals, and it's worth noting that the audience, the 18 to 49, and the audience of scale that we're attracting on AMC Networks as Josh mentioned, we have four of the top rated seven dramas on ad-supported cable, that is increasingly a rare commodity. Outside of sports, you don't find it, so marketers know this, people who are in charge of growing their brands, who are selling their products know it and so it does put us in a special place in the market. The other thing probably, we're talking about with BBC AMERICA, for example. We have been able to integrate that ad sales, so we go out together. So, we're not only selling the scripted content on AMC when we go to an upfront marketplace, we're also selling the high quality scripted drama on BBCA and on IFC and on Sundance at the same time. So, I think that has offered us both in theory and in practice a strategic advantage if that helps. Todd Michael Juenger - Sanford C. Bernstein & Co. LLC: That does. Thanks, Ed. I appreciate it. Thanks everybody.

Our next question comes from the line of Ben Swinburne of Morgan Stanley. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Thanks. Good morning. Josh, I wanted to just come back to your point about thriving on both sides of the fence or cohabitating, however you've phrased it, OTT and traditional. In two aspects, one around licensing your product and second about some of these showrunner deals we're seeing happen on the digital side. You guys have a big licensing business, I think it's hundreds of millions a year at this point. But there's definitely growing nervousness around syndication and demand for content in a second window. So, I'm just curious if you could address what you guys are seeing in the market. I know you have output deals, but just broadly and globally how you see that developing over time if you're bullish there? And then on showrunner deals, you look at what happened with Shonda Rhimes in Netflix, Amazon's done some, you can imagine Apple and Facebook with their cash flows doing similar type deal to lockup top showrunner talent, you know, as someone who lives in and thrives in the high-end scripted drama market. Is this a trend that is good to add for the industry or AMC Networks or you're indifferent too. What do you think the ramifications of all those are?

Sure. So, I'll try and answer that second one first. You know, I think that there is certainly more interest on behalf of the ever-expanding, you can now call it video-interested industry, in getting content that captures the attention, imagination, and attachment of people. I think – I'll pat us on the back a bit and say that we've had a fairly good run at commanding that attention, relative to the number of hours that we put out. I think we've been a pretty good participant in that. I think the variable of – this occurred – this has been occurring for some time, the phenomenon of deals with creative people, that they perhaps came more to light in a couple of news items that occurred recently. You mentioned Shonda Rhimes and perhaps one or two others, but it is the case that television studios, for the longest time, have had what are often referred to as housekeeping deals, overall deals, and/or development deals, each of which is different, with creative people. And sometimes they're absolutely exclusive, sometimes they're defined in their exclusivity. It is actually not a new phenomenon, so it's not taking us by any surprise, and we work with a number of creative people on an ongoing basis whose work we like, and who we think can contribute to us – and we do that both people who write and develop and actually people who run shows, and they're sometimes two different things. So we have those relationships. We're not in particularly the business of publicizing them and carrying on about them, it's just part of the fabric of our everyday activity. I think, and I'll just make one comment about it. And so I think – I hope we have appropriate reverence for people whose creative…

Operator I think we have time for one last question please.

Our final question will come from the line of Alexia Quadrani of JPMorgan.

Hi. Thank you. Just a quick question on the advertising. I think you're doing some 6-second ads, 6-second spots on The Walking Dead. I guess, any commentary on how that's going? Is there demand from advertisers kind of the opportunities for maybe other places you can do the same sort of thing? And I know, one of your peers earlier this morning mentioned that scatter was down year-over-year, any color, I guess, you can give on the scatter market will be appreciated? Thank you.

Sure. Generally, I would say, we see the scatter market as stable and we continue to see we are getting increases in pricing. On your question about the 6-second, yes, our sales team looks for innovative opportunities, and to sort of punch through in the marketplace with our marketing partners. I think Josh mentioned in his remarks that Microsoft was one of the participants. There are others queued up. And so, yeah, where we can be creative and opportunistic, we will do it, and we want to be very respectful of the content, we don't want to be intrusive on the content. So, we'll continue to walk that balance, but I would say on the whole, the idea has been received very warmly.

Thank you.

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

Thank you, ladies and gentlemen. This does conclude today's third quarter 2017 earnings conference call. You may now disconnect and have a wonderful day.