AMC Networks Inc. (NASDAQ:AMCX) Q1 2018 Earnings Conference Call - Final Transcript

May 10, 2018 • 08:30 am ET


AMC Networks Inc. (NASDAQ:AMCX) Q1 2018 Earnings Conference Call - Final Transcript


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Q & A

(Operator Instructions)

Our first question is from Michael Morris with the Guggenheim Securities.

Michael Morris

Thank you. Good morning, guys. One strategic question and one operating question, if I can. Josh, it appears that you're running a couple of parallel strategies right now.

That's not a criticism, just an observation. On the one hand, obviously, the licensing of your content is very important. It's your financial results and your growth. On the other hand, you're making investments in your direct-to-consumer services.

Some of them are ad-free services with partners. As you look out over time, how do you view the potential or the need for those investments to start to merge together into one kind of wholly owned product? And how could something like that happen? And then on the operating side, can you reconcile the subscriber growth that you talked about? So the 2% growth with your affiliate fee growth, which I think is in the mid-single digits. I believe there are probably lower-priced networks that are getting more carriage, but can you help confirm that? And also talk about where those networks are getting picked up more broadly and how that benefits you over time. Thanks.

Joshua W. Sapan

Sure, Michael. And the question, which is a big question of the day for us and, as you know, for all media companies, the path of our content is of profound importance. The way we evaluate it, I wouldn't quite say is parallel. I would say that it is evolutionary. And we designed it to track and balance opportunities and degrees of risk and cost. And so our pattern over the past call it, decade has been to sell rights and exploit those rights worldwide, multi-platform as aggressively as possible.

When we purchased the assets overseas, the cable channels, it gave us a footprint of hundreds of millions of homes, we ourselves became, in those channels, a bidder for some but not all, of the international rights and that changed the evolution. When we launched subscription services that are ad-free in the US and took investments in companies that operate those, it changes by degree, the point of view that we have about the optimal use of that content and the optimal return for us and shareholders over the near, mid and long term. So I really wouldn't call it parallel. I would call it evolutionary. And it is the case indeed that by degree we are keeping more of those rights and paying for those rights on those platforms with our participant partners more than we had in the past.

And we'll continue to balance that as we go forward. And it really becomes, in a certain sense, a strategic question, an evolutionary question and of course a money question. Where is the most value, where do we get the most momentum, where is the greatest return? And we want to be, ideally, right at the point in the curve that gives us the greatest return. We don't want to be behind it.