AMC Networks(US:AMCX)2019-07-31 18:08Financial Data and Key Metrics Changes - Total company revenues for Q2 2019 were $772 million, with adjusted operating income (AOI) at $232 million and adjusted EPS at $2.60, reflecting a strong performance [26][30] - Free cash flow for the quarter was $85 million, totaling $229 million for the first six months of 2019, indicating healthy cash generation [31] - GAAP EPS was $2.25, compared to $1.82 in the prior year, while adjusted EPS increased from $1.93 to $2.60 year-over-year [29][30] Business Line Data and Key Metrics Changes - National Networks Q2 revenues decreased by 4% to $605 million, while AOI increased by 1% to $236 million [26] - Advertising revenue decreased by 11% due to fewer episodes of key shows compared to the prior year, but growth was seen in other networks like BBC America and WE TV [26][28] - International and other revenues grew by 22% to $180 million, primarily due to acquisitions [29] Market Data and Key Metrics Changes - The company controls approximately one-third of all total drama impressions on basic cable, maintaining strong advertiser interest despite macro headwinds [15][16] - The advertising market is evolving with enhanced monetization through new data and planning tools, leading to significant investments in advanced advertising technologies [17] Company Strategy and Development Direction - AMC Networks aims to create great content, maximize the value of its traditional linear business, and diversify revenue through direct-to-consumer (D2C) initiatives [8][24] - The company is focusing on owning more of its content, with nearly 500 episodes from various series and plans to increase original series over time [14][13] - The strategic partnership with Universal Studios for a theatrical movie in The Walking Dead Universe highlights the company's commitment to expanding its franchises [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting financial targets for the full year, despite challenges in specific areas of the business [7][34] - The company anticipates continued quarterly variability in performance due to the timing of content investments and airing schedules [35] - Management remains optimistic about the growth of D2C services and the potential for profitability within 18 months [31][25] Other Important Information - The company has repurchased approximately 25% of its outstanding shares, with $495 million available under its existing authorization program [33] - The restructuring of D2C businesses aims to enhance operational efficiency and effectiveness [30] Q&A Session Summary Question: Can you provide details on the affiliate revenue line and the impact of the contract dispute? - Management indicated ongoing discussions with an MVPD regarding contractual interpretations, affecting subscriber growth and revenue [38] Question: What is the economic interest in the film partnership with Universal Studios? - Management noted the partnership as a significant affirmation of the franchise's strength but withheld specific financial details [41] Question: What are the subscriber trends and the impact on SVOD services? - Management confirmed that the recent subscriber uptick of 400,000 is primarily U.S.-based, with international operations still in early stages [47] Question: How does the company plan to handle series returning from mainstream SVOD? - Management stated that decisions will be made on a series-by-series basis to optimize value, balancing internal use and external sales [49] Question: What is the outlook for content licensing revenue growth? - Management adjusted expectations for content licensing growth to be consistent with the prior year, citing timing as a factor [62]