AMC Networks Inc. Q4 FY2025 earnings call

• AMC Networks had a successful 2025 with streaming becoming the largest single source of domestic revenue. - Generated $272,000,000 in free cash flow, well ahead of forecast. - Anticipates at least $200,000,000 in free cash flow for 2026. - Launched AllReality in November 2025 and relaunched Sundance Now at the Sundance Film Festival. - HIDIVE has achieved strong growth since acquisition. - Acorn TV had a successful 2025 with shows like 'You’re Killing Me' and upcoming events. - Advertisement business reoriented with growth in streaming, FAST, and AVOD. - Completed acquisition of full ownership of RLJ Entertainment. - Showcased strong content slate including 'Rise of the 49ers', 'Dark Winds' renewed for season 5, and new drama 'The Audacity'. - Renewed affiliate footprint in the US and Canada on favorable terms with many agreements including bundling ad-supported AMC+. - Patrick O’Connell to step down next month

Consolidated revenue for 2025 was $2,300,000,000. Consolidated adjusted operating income was $412,000,000 with a margin of 18% and full-year free cash flow was $272,000,000. Domestic Operations revenues decreased 5% to $2,000,000,000 for the full year and 1% to $515,000,000 for the fourth quarter. Streaming revenue became the largest single source of revenue in the Domestic Operations segment. Subscription revenue stabilized with a decrease of less than 1% for the full year and was flat in the fourth quarter. Content licensing revenue was $272,000,000 for the full year and $75,000,000 for the fourth quarter. Domestic Operations advertising revenue decreased 15% for the year and 10% for the fourth quarter. For the International segment, excluding retroactive adjustments and favorable foreign exchange, revenue decreased 4% for both the year and the quarter. Advertising revenues grew 6% for the full year and 4% for the fourth quarter. Subscription revenues, excluding foreign exchange, declined 8% for the full year and 6% for the quarter. International adjusted operating income was $43,000,000 for the full year and $7,000,000 for the fourth quarter

• Expect 2026 free cash flow of at least $200,000,000. - Consolidated revenue expected to be approximately $2,250,000,000. - Domestic Operations subscription revenue expected to be stable compared to 2025. - Anticipates approximately $260,000,000 of Domestic Operations content licensing revenue for 2026. - Anticipates Domestic advertising revenue to decrease in the low double-digit percent area compared to 2025. - Expect total International segment revenue for 2026 to be between $290,000,000 and $300,000,000. - Anticipates consolidated adjusted operating income for 2026 to be approximately $350,000,000, weighted towards the back half of the year

• Market shifts away from traditional reporting metrics and age-based demos. - Linear ratings declines and lower marketplace pricing impacting advertising revenue. - Non-renewal affecting international subscription revenue. - Competition and market dynamics impacting content licensing and distribution

Q: Wanted to kick off with an advertising question. It was a little worse in 2025 than it was in 2024. It came in a little below your expectations. So can you just help us think a little more about what is within the low double-digit guidance for 2026, the puts and takes. I know you have done a lot of work on the dynamic side of things, so would love to frame your confidence in that outlook. And then The Walking Dead rights coming back is pretty exciting for the company. Just wondering when you start to think about having conversations in the market about what that could be worth and kind of what those bids look like. When we look at this, it could be a $150,000,000 opportunity. It could be two times that or even bigger. So just trying to sort of frame expectations for what can happen to those rights as we get towards the end of the year.

A: Hi, Steven. It is Kristin. We will miss Patrick too. I am going to answer The Walking Dead, then I will let Kim speak to advertising. We have had a great relationship with Netflix for well over a decade since 2011 in carriage of The Walking Dead. The rights come back to us as we said. It is a consistent top performer on streaming. And as you noted, the rights are very valuable. I cannot say a lot right now, but we are in conversation now preparing for the rights coming back and for finding a home for them in the future. There is more to report. We are just not ready to speak about it now, but we are in conversations, and we are very optimistic about the value of the content and our opportunity to monetize it going forward.

Q: Another kind of advertising question. Granted you still have the linear challenges there, but how should we think about the ad contribution from the streaming side and from FAST channels? Just wondering, are advertisers buying across all those platforms, or are they kind of picking and choosing?

A: David, it is Patrick. I will take a first crack at it, and Kim can add some color commentary. Listen, digital advertising is a meaningful portion of our business. It was a big part of the strength in the fourth quarter. Obviously, we are subject to some of the vicissitudes in the marketplace, which we saw top half of 2025. But as Kim mentioned, tactically, we are able to move quickly. Scatter was pretty strong in Q4. We demonstrated that we could build brand sponsorships around certain events, including Best Christmas Ever, etcetera. Frankly, the industry broadly was challenged in 2025. So we are really nimble. We are really fast. The digital business has now reversed fields. That is a nice growth area for us. It is not a majority of the revenue, but it is a substantial portion of our revenue. And so we feel good about continuing to grow that to offset the obvious linear headwinds.

Q: Thanks so much. Patrick, you mentioned subscriber universe decline seeing an encouraging trend. I think there is also a slew of new skinny bundles that are getting launched that might possibly cause some fragmentation as well in terms of which networks get carried or not. Can you maybe just talk about your positioning there and how you see that shaking out relative to your view about the broader affiliate revenue outlook that you laid out? And then on cash spend on content, noticed it declined a decent amount this year, possibly due to timing. Within the framework of your guide for EBITDA and free cash flow for next year, can you maybe just help us think through what you are thinking there from a cash spend perspective?

A: Sure. Hey, Thomas. So on the first, in terms of affiliate revenue, obviously, we are encouraged by some of the green shoots that we see across the broader landscape. It plays very well into AMC’s partner-centric model, whereby we are cutting deals with Charter and, frankly, others on innovative ways to avail a broader universe of broadband subscribers to either pay TV on the traditional format or via apps of our ad-supported AMC+. And it is nice to see other large MSOs, MVPD providers, seemingly following in Charter’s footsteps. We think that is an encouraging sign. As it relates to skinny bundles and whatnot, we have been extraordinarily successful in continuing to renew our affiliate agreements with full carriage across all of our channels. We continue to represent an incredibly strong value proposition for those distributors and, by extension, their viewers as well. So I think in that regard, the proof is in the pudding, and obviously we are hopeful that these trends will continue. And so we feel very good about those affiliate relationships. Secondly, in terms of cash content spend, it was down slightly from 2024 levels. But we continue to invest extraordinarily heavily in premium programming. That is our signature. That is our focus. And that is the mandate that we have from the Board and our Chairman to continue to invest in that manner and at those levels, and at the same time produce healthy levels of free cash flow. So we think we are doing both of those things at the same time. As we roll forward into 2026, I would expect that from both a P&L perspective and a cash perspective, those levels are going to remain fairly constant, meaning we are going to continue to invest heavily in that programming. I do not know, Dan, if you want to comment any further.