AMC Global Media Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Acknowledged support for LA firefighters and the passing of founder Charles Dolan.
• Achieved full-year 2024 guidance with consolidated revenue $2.4 billion, AOI $563 million, and free cash flow $331 million; increased free cash flow outlook to ~$550 million over 2024-2025 period.
• Partnerships and bundling activities: Launched content exchange with MGM Plus, expanded AMC Plus and STARS bundle via VIZIO, Verizon, and Philo; renewed US linear footprint agreements, including Charter deal making AMC Plus available to Spectrum customers at no extra cost.
• Programming highlights: Fourth quarter included Fear Fest and Best Christmas Ever on AMC; targeted streaming services like Shudder, Acorn TV, IFC Films had strong performances; upcoming shows include Dark Winds, The Walking Dead: Dead City, etc.
• Advertising: Unveiled AMCN Outcomes attribution product; launching ad-supported Shudder later in 2025.

Segment Performance

• Domestic Operations: Full-year revenue decreased 9% to $2.1 billion; Q4 revenue decreased 11% to $520 million. Subscription revenue decreased 5% full year and 4% Q4, primarily due to linear subscriber declines, offset by 7% year-over-year streaming revenue growth full year and 8% Q4. Advertising revenue decreased 11% full year and 12% Q4. Content licensing revenue was $277 million full year and $67 million Q4; excluding one-time items in 2023, full-year licensing revenue increased 4%. Domestic operations AOI was $620 million full year (29% margin) and $152 million Q4 (29% margin).
• International Segment: International revenue, excluding certain adjustments, decreased 3% full year and increased 2% Q4. Advertising revenue grew 16% full year and 12% Q4. Subscription revenue decreased 11% full year (due to non-renewal in UK) and 5% Q4 (unfavorable FX). Full-year AOI excluding advertising adjustments was $45 million (15% margin); Q4 AOI was $1 million.

Guidance

• Expect cumulative free cash flow of approximately $550 million by end of 2025, implying ~$220 million for 2025.
• 2025 consolidated revenue expected to decrease ~5% to ~$2.3 billion.
• Domestic operations subscription revenue expected to be flat; streaming revenue growth in low to mid-teens percent. Domestic content licensing revenue expected ~$250 million.
• International revenue expected $290-300 million; international advertising revenue expected to grow year-over-year, but subscription revenue to decrease due to Movistar non-renewal ($15 million headwind).
• Expenses: Consolidated technical and operating expenses to increase; SG&A to increase due to streaming marketing investments; consolidated adjusted operating income expected $400-420 million.

Risks

• Uncertainties in the linear media environment impacting revenue.
• Foreign exchange fluctuations affecting international results.
• Non-renewal of distribution agreements in international markets, as seen with Movistar in Spain.

Question and Answer

• Q: About free cash flow outlook and cash spending A: Patrick O'Connell noted strategy balances programming investments and profitability, efficiency in production led to lower cash programming spend in 2024, with slight reductions in 2025 due to volume and tax credit receivables lags.
• Q: Streaming subscriber growth and Charter deal A: Kristin Dolan and Patrick O'Connell mentioned bundled partnerships and Charter deal (AMC Plus available to Spectrum customers) contribute to streaming growth, with Charter deal baked into revenue guides.
• Q: Licensing to Netflix and ad revenue A: Kim Kelleher clarified Netflix partnership is non-ad-supported, but licensing leads to increased AMC Plus acquisition. Kim also discussed efforts to align digital ad growth with linear decline through inventory packaging and AMCN Outcomes product.
• Q: Content licensing projects **A: Dan McDermott stated studio produces primarily for AMC-owned platforms but will be strategic with third-party opportunities; Patrick O'Connell noted content licensing run-rate increased from $225 million in 2023 guidance to $250 million in 2024.