Good day ladies and gentlemen. Thank you for standing by and welcome to AMC Networks’ Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference may be recorded. I would now like to hand the conference over to your speaker host, Nick Seibert, Vice President of Corporate Development and Investor Relations.

Today’s call may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to AMC Networks SEC filings for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements made on this call. Today, we will discuss certain non-GAAP financial measures. The required definitions and reconciliations can be found at the end of today’s press release. With that, I’d like to turn the call over to Matt. Matt?

Today’s call may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to AMC Networks SEC filings for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements made on this call. Today, we will discuss certain non-GAAP financial measures. The required definitions and reconciliations can be found at the end of today’s press release. With that, I’d like to turn the call over to Matt. Matt?

Thank you, Nick. Good morning, everyone and thanks for joining us. Before we discuss our second quarter results, I'm delighted to share the news we announced earlier this morning. Our COO and CFO, Chris Spade has been named AMC Networks CEO effective next month, at which point as planned I'll step down from my interim role as CEO, which I've held for the past year. I've known and worked closely with Chris for more than 20 years and I had the pleasure of working with her again when I arrived here last September. She has done a tremendous job leading the company's transformation in every respect, driving our strong streaming subscriber growth, jump starting our global expansion efforts, optimizing our performance marketing, and ensuring we're leveraging our strong linear business. Her focus, her drive, and her passion for this company can’t be overstated and with her leadership skills and strong financial background, I know she'll make even more significant contributions to our success as she leads AMC into its next chapter. For my part, it's been a pleasure to lead this company for the past 12 months, helping guide the strong pipeline of great programming and building on its IP and helping to develop and refine our differentiated streaming strategy. With this company's unique collection of assets, content strengths, powerful brands, and financial discipline, as well as its talented people and strong culture, I know there's an incredibly bright future ahead. This is a wonderful moment for AMC and for my longtime friend and colleague Chris. So congratulations, Chris. And now let's get to our second quarter results. While operating what is a challenging and uncertain macroeconomic environment, AMC Networks delivered a solid second quarter with a consolidated adjusted operating income margin of 26%. In the face of inflation and…

Last month's Emmy nominations saw the show end coveted nominations in major award categories, including Outstanding Drama, Outstanding Lead Actor for Bob Odenkirk and a long overdue Outstanding Supporting Actress nomination for Rhea Seehorn. And we couldn't be prouder of this incredible show that’s become a landmark piece of TV history. And how exciting is it that AMC’s favorite, Bob Odenkirk will be joining us again in a fabulous new series, Straight Man that starts filming this fall, and our own Giancarlo Esposito will star in our upcoming series Parish, which goes into production this month. So lots of new ways to keep that Better Call Saul audience engaged in the future. Back to the quarter, the second eight episodes of the final season of The Walking Dead finished in the quarter as the most watch season on AMC+ to date. And as I just mentioned, even at its 11th season, The Walking Dead ranks as the second most watched cable show of the broadcast season. The series concludes this fall with the final eight episodes, bringing to a close one of the most successful and groundbreaking shows in television history. But there's a lot more ahead for The Dead franchise. We have a number of spinoffs featuring popular and fan favorite characters coming next year. More on that in a moment.

Our Western noir crime thriller, Dark Winds produced by AMC Studios and from Executive Producers, Robert Redford and George R. R. Martin, ranks as the number two new cable drama of the season, having averaged nearly 2 million linear viewers per week. And it's the number one new series launch in AMC+ history in terms of both subscriber acquisition and viewership. The series was met with glowing reviews and has maintained a 100 point score in Rotten Tomatoes, demonstrating critical as well as commercial success and we recently renewed it for season two. Two other standing, two other standouts, new AMC+ plus exclusive series, This Is Going to Hurt, starring Emmy winner, Ben Whishaw and Moonhaven with Joe Manganiello and Dominic Monaghan are among the best reviewed new shows of the year and both are driving meaningful subscriber acquisition and audience engagement for AMC+. And we’ve already renewed Moonhaven for a second season. The performance of these freshman series reinforces AMC's reputation as a hit maker and is a testament to our ability to continue to bring audience content that ignites the pop culture conversation and commands attention in a very crowded and competitive landscape. We're also seeing great success with the launch of our AMC+ film slate, which includes a new movie each week from our film labels, direct from theaters and allows us to further maximize the value of our film content. Our Friday Night Exclusive movies are driving acquisition, engagement, and retention, and many already have become among our top film titles for the year.

The combination of our high quality content and strong brands continues to be a very potent calling card with advertisers, enabling us to maintain high value for our linear business. Beyond linear pricing gains we’re seeing demand for our advanced advertising initiatives, as well as our expanding portfolio of AVOD and FAST channels. We're pleased to be joined today by Kim Kelleher, who leads our commercial revenue and partnership team and who will talk in greater detail about our digital innovations, how the momentum we're seeing in the upfront is reflecting our strong position in the marketplace. International expansion of our streaming portfolio remains a top priority for us, and we're encouraged by the demand we're seeing for our differentiated offerings from consumers, as well as distributors. We've talked about the progress we're making in terms of beginning to scale our services overseas. We have plans to expand with new partners and into new territories through the end of the year. This is an opportunity we're just beginning to mine and represent an exciting area of growth for us going forward. Before handing the call over to Chris, I did want to mention we're thrilled that we've added Len Fogge as our new President of Marketing, someone Chris and I worked with for many years at Showtime. Len is a great executive and is already beginning to evolve our efforts to accelerate subscriber acquisition and boost retention while focusing on maximizing and elevating our distinct brands and content. So looking ahead to the second half of the year, we recognize there are great opportunities and we remain excited about where our business is today and where we're headed. We're building our differentiated streaming businesses and optimizing our strong linear business in a steady, disciplined, and sustainable fashion as we position ourselves for future growth and shareholder value creation. With that, I'll turn the call over to Chris for more details on our results.

Thank you, Matt and good morning everyone. I am so honored by my appointment to CEO. I am truly passionate about all things AMC Networks. As a consumer I just love our content and brands, professionally the people and the culture here are second to none I have experienced during my career. In every department, people care greatly about our content, distribution and promotional success. We all work hard and we have fun working together to deliver a great entertainment experience for our fans. I'd like to thank Jim Dolan and our Board of Directors for their support and vision as we drive long-term growth for our streaming and digital offerings with premium content curation. I want to sincerely thank Matt for his leadership and support over this past year and throughout my entire career. His knowledge of the business and his good council have benefited us greatly and Matt, we appreciate your expert leadership this past year. I'm also thrilled to welcome Patrick O'Connell as our new CFO starting on Monday. Patrick and I worked closely together to support the financial success at CBS Corporation a few years ago. He is a proven, highly skilled finance leader and I look forward to his partnership as we grow and evolve our businesses. AMC Networks occupies a unique space in the media landscape. We are carving out a very specific strategy that plays to our content curation strengths and is enabling us to transform and grow in this dynamic environment, not to just survive, but to flourish. Now turning to our second quarter financial results. Amidst macroeconomic uncertainties in the first half of the year, we are successfully continuing to reconstitute our revenue mix towards streaming and digital platforms to pave the way for ongoing long-term revenue growth and profitability. As…

Thank you, Chris and congratulations on a very meaningful day. Good morning, everyone. It's a pleasure to be on the call. Let me start by first discussing our own commercial revenue performance relative to the macro environment. Broadly, our ad supported networks and digital platforms are experiencing the same environment as others in our space. The scatter market has been soft the first half of the year as a climate of economic uncertainty has resulted in our marketing partners being more conservative with their spend. And while the prevailing conditions are subject to outside factors, our commercial revenue team is leading the industry in many critical ways that maximize the strength and potential of our existing linear television business, and at the same time, building out the tools and technologies necessary for a very successful digital business now and into the future. While we have been focused as a company on growing and developing our portfolio of targeted streaming platforms like AMC+, our ad supported television networks continue to leverage our strong linear presence. Our offerings have become even more compelling as other programmers have moved away from the cable television platform. We are optimizing the delivery of premium content in a linear environment while offering traditional and advanced ad placements in shows Better Call Saul, The Walking Dead, Dark Winds, and Anne Rice’s Interview with the Vampire, just to name a few. So we have a beachhead in the linear world that we're not only holding, but expanding, a competitive advantage as other programmers fall away and shift their best content to ad-free or ad-lite streaming services. Working with partners like Canoe [ph], FreeWheel, The Trade Desk, 605 and others, we continue to combine the best and most coveted content in the high-end scripted space with the most advanced…

[Operator Instructions] Our first question is coming from the line of Thomas Yeh with Morgan Stanley. Your line is open.

Thanks so much and Congrats Chris, on the new role. The subscriber net ads came in really nicely for the quarter. Can you maybe help us frame how to think about the international component and how that fits within the long-term $20 million to $25 million guidance given the lower ARPU, the lower cost to achieve that you talked about, how does that kind of net out in terms of return relative to your U.S. net ads? And then thank you for all the additional details on the linear advertising evolution. That was really insightful. AMC has been a big supporter of providing content to the fast channels, which contrasts a little bit, I think, with pulling back on the traditional syndication and content licensing. Why is the philosophy on supplying AVOD different than SVOD peers? Is it viewed as less cannibalistic? Maybe you can flesh that out a little bit. And then maybe just to squeeze in the last one. Matt, you referred to some programming that will keep the Better Call Saul audience around personally watch anything, Bob Odenkirk in. But wondering if you can talk about the churn behavior for joiners that are coming in on flagship content compared to the efficient programming you've been leveraging on targeted services AMC+ can naturally a higher churn product? How should we think about that? Thank you so much all.

Thanks, Thomas. I appreciate your kind words. I'm excited to take over as CEO. Relative to your first question about international expansion, we're rated with the foothold that we've now secured in Spain. We already have a strong brand presence there with our linear presence, but our ability to partner with Orange, Vodafone and Amazon video channels has paved the way. I mean, especially the Orange skinny bundle offering, how that works, it's packaged with as the Orange – as part of the Orange skinny bundle which is offered to their pay TV broadband customers and certain mobile customers. So again, this is a great example for Spain that we're looking to build our streaming business with certain partners. And then as we see it grow, also have our card offerings as well, if it makes sense. Kim, do you want to take the FAST channel question?

Sure. The AVOD fast environment, it's really key to driving our digital growth overall. The core of it is our quality content. And it's our quality library content, and these curated examples of channels that we are building that are reaching these new younger audiences through these platforms, and we're really using that as a closed loop, especially on the OEMs to drive awareness for subscriber service -- our subscription services. And really kind of a pipeline across the six partners we have now to drive awareness for the AMC properties and brands. So it's really that closed loop piece that is our focus in this environment while also being able to monetize this with advertisers as a brand-safe environment for their messaging.

The other thing I would add to that, Thomas, because it is an important question is the windowing. So we look at the windowing of our content and AVOD Fast is another unique window. And as we think about owning our series and owning original movies as we look at premiering the content and then how it moves through the windowing cycle, we want to make sure we're monetizing and maximizing the revenue output as much as possible, and there's a lot of power for us also to have exclusivity with the ownership of that content.

On your question, it's a good question. And the way we look at this is, first of all, as we mentioned and we've talked about before, this is the biggest original programming here in our history, both in terms of returning and some great finalities and new things. But as we look at our content going forward, we focus on genre, we focus on specific talent. And strategically, we want to make sure we are always bridging audiences for various genres of programming and always have something to give them. And that's key to maintaining subscribers and giving them what they want in the future. And when you see things like Interview with a Vampire, we have reason to believe that that will really be attractive to a lot of the audiences that we've seen for much of our content in recent years. So that's a good example. We're all dealing with a constantly increasing refresh rate in this business. And for us, it's all about making sure that refresh rate is consistent with our financial goals for the company. So we feel pretty confident that we can deliver for our audiences going forward. Thanks.

Thank you.

Thank you. [Operator Instructions] And our next question is coming from the line of Michael Morris with Guggenheim. Your line is open.

Hi, thank you. Good morning and congratulations Chris, on the new role. I want to ask one about international, one about margins. On international, you gave us more details about Spain, which is great and helpful. You named a few new markets you're looking at this year as well. Maybe you could talk about how to think about the success that you had in Spain and the template that you used in Spain for what that might look like in other markets. for us to try to forecast how robust this international expansion can be it's helpful to know if there are a number of other markets that you can follow the same sort of game plan in or if we should be thinking of each one differently that would be great to hear about. And then on margin, I appreciate the view of the long-term kind of high 20s – mid- to high 20s AOI margin. Can you talk about the margin on the streaming product in particular? I feel like what we're hearing across the industry is more like a low 20s sort of level of resistance or even 20s. When you think about that long-term margin, how much of that is mix of sort of linear and the streaming business or how much of it is the opportunity that you see on the streaming side where you can be a higher-margin product just by nature of the sort of structure you have there? Thank you.

Thanks, Mike. Relative to the first question on international, the Spain example is actually a good bellwether and a template for how we are approaching everything on a country-by-country basis. Amazon continues to be a strong partner and Apple internationally for us. So those are our two primary partners when we look to each market. But then as you probably already know, we do have strong footholds in our linear business globally. So the Orange opportunity in Vodafone, et cetera, really came out of our relationships we've already established in Spain. So in the countries where we are fully established on a linear basis, we will continue to pursue our strong partnerships there. So, that we really are starting from the standpoint of maximizing the results from our distribution partnerships. And then we have the tech stack in place that we can, we can pretty quickly and rapidly copy it and obviously, certain rights requirements, et cetera, have to be unique to each country. But the tech stack is transferable so that for our a la carte direct-to-consumer offering. We can also pretty quickly get that up and running. So we're excited about the future. It is going to be important for us to look at it country by country with the value proposition and what the profitability can be. All countries are not created equal. And -- but we do think, having said that, that we can have significant meaningful global growth long-term. On the margin front, we really do look at it holistically. When we look at a show and we look at what we're going to do with it, we -- again, what I said earlier, we look at the content production process, the development process what titles can we make that we feel our super premium content that will work along all windowing lines to maximize the result and monetization of our revenue impact. So as things progress though, the other thing I can say about that is as we learn more and as AMC+ for example, scales and grows even more and gets to be a much more meaningful subscriber number. Our strategy there will evolve also. We're already talking about, how we now window things where we would just have it exclusively on AMC+ first. And then as a second window, it would be on linear. Moonhaven is actually a good example of that, where for Moonhaven, which had a strong freshman showing for its first season. It's only available exclusively on AMC+. But then we're looking to put it on linear next year right before the second season would come out. So we've had early success with doing things like that on a one-off basis with The Walking Dead and Dark Winds where we made the next available episode that night. And that, as Kim had mentioned, had healthy success with what we were seeing as subscriber additions.

Great. Thank you, Chris. I appreciate it.

Thank you.

Thank you. And our next question is coming from the line of Michael Nathanson with MaffettNathanson. Your line is open.

Thanks, Chris, again, congrats on the move. And Matt I'll miss your quotes because I don't know how we'll use for headline going forward so I’m sorry, and for good coffee Matt. You’re welcome. I have three for you. You talk – I appreciate the color on Spain this quarter. Can you talk a bit about the effective ARPU that you're getting in Spain and maybe your expectations for the first tranche of launches on the ARPU side? And then more generally, if you look at how others have launched internationally, they've all picked these wealthier English language fluent, broadband and rich countries to after? Like why aren't you following that path versus going the path now and more Latin and South America. And then yesterday, Paramount, your former company, made some mention of trading the economics of linear distribution to get a foothold in digital outside the U.S., so there looks like they're basically trading linear economics to get on carriage for the digital here. Are you seeing any of that? Is that something that you've come up against then? And how prevalent do you think that will be going forward? Or if you can make some trade-offs to get faster adoption of these digital services? Thanks.

Thanks, Michael. I appreciate the kind words. And we will still get some one-liners for Matt. Have no fear. He calls me all the time. I'm sure, I'll have to give him attribution than when we come up with the one liners. Relative to your first question about our ARPU, so I think as we think about the evolution of our mix of subscribers and where the distribution comes from, we had a healthy strong start with AMC+ with Amazon and Apple as our key partners in the U.S. and our direct-to-consumer offering is performing strongly and continues to grow significantly. So as we think about the future, it's going to come from then further global expansion, further growth in the U.S. And our ARPU strategy, depending on, obviously, if it's an a la carte offering, whether it's through our direct-to-consumer service or Amazon or Apple partnerships, it's still a customer decision on a daily basis, am I going to stay subscribed to AMC+, for example, or Acorn or ALLBLK. And so we manage those dynamics very closely and that ARPU structure obviously is different than a package structure. And we think that both are going to have to work very closely in combination. We're not going to put our – put subs out on a package basis where we don't feel strongly that we're not going to have a strong market foothold and have strong value proposition for the future of profitability. Your second question about why not be on the path of the English-speaking language countries more so. We actually are on that path. But again, it's tied to where our partners are going to launch, and then we ride that wave. We don't want to be out there on our own just offering our a la carte…

Thanks.

Thank you.

[Operator Instructions] And our next question is coming from the line of David Karnovsky with JPMorgan. Your line is open.

Question and I'll add on to the congratulations for Chris. You noted price increases at some of your services recently and an opportunity to do more going forward. So I would be interested to know about any impact to churn and then how you think about economic risk as a potentially limiting factor to price raises at least for the near term? And then I was hoping to get your updated thoughts on the potential for advertising across your streaming services. We're seeing real momentum now from some of the larger streamers in this direction. And as the industry reaches critical mass on this, just wondering if that changes your view on introducing ad tiers? Thank you.

Thank you, David. On the price increase question, it's an interesting question because when we raise the price by $1 for Acorn and ALLBLK, we had minimal churn. It was almost like a nonevent and almost made me wonder if we should raise it $2, but we don't want to do that to consumers. So the value proposition there is real. And the other thing we're seeing is that when you super serve fans and it's a targeted base, obviously, it's a smaller subscriber base, but there's much more stickiness because you're super serving the fan. So the refresh rate that Matt talked about is critical to make sure that continues. But I think from a pricing standpoint, having seen that the dollar increase had minimal effect. We will continue to price test going forward because it's also not just about trying to see where the ceiling is. We have to manage all the dynamics. But again, the targeted services specificity helps with some price resilience there. And then I'll turn it over to Kim for the ad supported question.

Thanks Chris. We have significant existing infrastructure when it comes to advertising. I see that because when you look at the -- we really like the types of varied streaming offerings we have today. So AVOD Fast in the CTV space, our innovations and advanced advertising and addressable I think as our offerings continue to evolve, we're going to continue to be very thoughtful about considering all types of offerings, including ad-supported ones on our SVOD services. But that's going to be something we watch and make measured decisions around.

Thank you.

Thank you. [Operator Instructions] And our next question is coming from the line of Steven Cahall with Wells Fargo. Your line is open.

Yes, thanks. I'll maybe start by asking a prior question in a slightly different way. The Walking Dead and Better Call Saul are great shows. What we've seen with a lot of your peers is sometimes those great shows when they get to their finales they have kind of big churn sign-ups. So I'm just wondering, as we think about the journey from here to $20 million to $25 million subs, is it reasonable to think that you could have kind of this mini peak this year driven by these big finales? And then as you cycle into new content, it sort of flattens out and then it grows again, or with a lot of the international launches, is it going to be more of kind of a linear progression to that target? And then, Chris, so congratulations, you've taken over the role, I think the big question that investors are going to wonder about is, how do you kind of get the company back to AOI growth. Costs have to run hot for content. There's pressures going on as you make the pivot on the revenue side. So how do you kind of see that trajectory of getting AMC back to the nice compounding of AOI that it was at when maybe media was a bit more stable place? Thank you.

I'll start and let Chris answer some on this specifically. But again, back to these big shows. The way I think of them strategically is their beginnings not ends. And that has been true consistently with The Walking Dead season to season as we look for ways to bring that audiences into various new shows in that franchise, and we continue to do that and we'll continue to do that for the next couple of years. We can also do that with talent, as I said before, and we're doing that with the Saul franchise. As well, is the fact that we have a few shows that are coming that we believe can continue this tradition of really being shows that are in the culture, changed the culture and play off of the type of audience that we've been successful in the past. So there's no other option than to think of what we're doing in the content areas and continuation of what we've done in the past and even enhancing our ability to serve those audiences in the streaming universe.

To your second question, Steven, how do we get back to AOI growth? I mean right now, we're in an important period of investment. AMC Networks is at a crossroads from the standpoint of driving and growing meaningful new revenue platform growth in our streaming services, in our digital initiatives, global expansion. So from the standpoint of as you think about our AOI trajectory of growth. We're in an important building moment right now, and we'll continue to monitor the cadence of that. The other thing is we're not going to re havoc with our margin in general. So we're going to do it in a thoughtful way, where our margin will still start with a two. And from that standpoint, we're looking to thoughtfully and deliberately invest as we need to, to make sure our tech stack is in the right place to make sure we have the refresh rate of the content that we need to succeed and that our marketing strategy is done in a way that is targeted, but also focused on both retention and acquisition and then global expansion.

Great, thank you.

Thank you.

Thanks.

Thank you. And I'm showing no further questions at this time. I would now like to turn the call back over to Nick Seibert for any closing remarks.

Thank you for the time today. This concludes the call.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.