AMC Global Media Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the AMC Network's fourth quarter 2020 earnings call. At this time, all participant lines are in listen-only mode, so if you require operator assistance during the call, please press star, then zero. After the presentation, there will be a question and answer session. To ask a question during the session, you will need to press star, then one. Please be advised that today's conference may be recorded. I'd now like to hand the conference over to your host today, Nick Siebert, Head of Investor Relations.

Thank you. Good morning, and welcome to the AMC Network's fourth quarter and full year 2020 earnings conference call. Joining us this morning are members of our executive team, Josh Saban, President and Chief Executive Officer, Ed Carroll, Chief Operating Officer, and Chris Spade, Chief Financial Officer. Following a discussion of the company's fourth quarter and full year 2020 results, we'll open the call for questions. If you do not have a copy of today's earnings release, it is available on our website at amcnetworks.com. Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to the company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update the forward-looking statements that may be discussed during this call. Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP results provides you with useful supplemental information concerning the company's ongoing operations and is appropriate in your evaluation of the company's performance. For further details, please refer to the press release and related footnotes for GAAP information and a reconciliation of GAAP to non-GAAP information to which we will refer on this call. With that, I would now like to turn the call over to Josh.

Good morning, everybody, and thank you for joining us. I'm pleased to report that 2020 was a year of strong performance for AMC Networks as we continued to transform our company while successfully navigating what has been a uniquely challenging and uncertain operating environment. Our results reflect the strength of both our linear and streaming platforms and validate our strategy as we continue to grow our streaming businesses. AMC Networks is now the worldwide leader in targeted streaming, and we believe there are significant and sustainable opportunities before us. Over the last year, we more than doubled our paid subscribers to end 2020, with more than 6 million subs in aggregate across our four targeted streaming services, as well as our new premium AMC Plus offerings. That is a full three years ahead of the earlier expectations that we shared with you. Our streaming run rate revenue increased from approximately $125 million at year end of 2019 to approximately $300 million at the end of 2020, based on the company's share of the month of December's gross paid subscription fees annualized. We now anticipate over 9 million paid subscribers by year end 2021. And looking further ahead to 2025, admittedly a much longer horizon, we anticipate being in the range of 20 to 25 million paid subscribers by then. So streaming is now the most significant growth area of our company, and we expect it will become our largest revenue segment within that longer horizon. Importantly, our relationships with our distributors are very strong, now supported by these streaming efforts. Over the past two years, we've renewed eight of our major affiliate agreements with several renewals in 2020, including AT&T's Direct TV, which we mentioned on our third quarter call. Our renewals now encompass our streaming services as well as our linear channel portfolio, underscoring that the linear side of the business is stable and remains very valuable to our affiliate partners and to us. We continue to create and selectively curate highly desirable content that is allowing us to feed the content pipeline of our commercial free streaming and linear platforms. And we've successfully built the foundation to monetize this great content across those platforms and across a variety of digital ad platforms, including our newer AVOD and free ad-supported streaming, or FAST channels, as they're called. The pillars of our strategy, commercial freestreaming, affiliate strength, digital advertising opportunities, and our strong underlying content are not only contributing to our strong results today, they are the foundational elements of our growth strategy as we continue to reconstitute the company over the next year and over the next several years. As a reminder, our streaming strategy has been to identify highly distinct editorial areas that we can thrive in and grow. This targeted approach includes British-focused dramas and mysteries with Acorn TV, horror and suspense with Shudder, Drama Documentaries and True Crime with Sundance Now, and All Black, our service targeting black audiences, formerly known as Urban Movie Channel or UMC, which we rebranded to All Black last month. By targeting audiences who are particularly passionate about these content areas, we don't compete with larger general entertainment streaming offerings. Rather, we complement them. Our subscribers relate to and value our services not on the basis of one specific show or film, but rather because we provide a level of depth and quality in these highly specific content areas that they can't get anywhere else and at a price that allows them to purchase our offerings in addition to several of the general entertainment services. As a consequence, our services enjoy high engagement with relatively lower churns. And that translates into attractive economics. This premium and specialized content strategy enables us to be quite selective and focused in developing and acquiring content, providing us with a uniquely financially attractive streaming model that really does fundamentally set us apart from the general entertainment services that are engaged in the much talked about streaming wars and which do require massive content pipelines in order to satisfy each member of a household. Our approach very much plays to a historical strength we have as a selective content curator. I think it's fair to say that we have a long and successful track record identifying and developing shows and films that are definitive and authoritative in these particular content areas and which can become quite popular and drive cultural conversation, though they may begin with a highly specific editorial focus. Streaming is now a growing component of total company revenue, domestically and internationally. We will accelerate our international streaming expansion, something we've only just begun to tap into over the last year. The economics for our company will continue to evolve with the growth of streaming platform, and we believe we can grow in a manner that is very, very meaningful for a company of our size. I'd like to spend a couple of minutes talking about our new AMC Plus offering. For those of you not familiar with it, AMC Plus is an ad-free premium service that extends our targeted streaming focus, offering Shudder, Sundance Now and IFC Films Unlimited, in addition to some of the best of the scripted content from the AMC Channel, BBC America, IFC, and Sundance TV, with a focus on two content areas that we have traded and excelled in. One is epic world material, such as the Walking Dead universe, and the other is prestige dramas, including the likes of Killing Eve, Better Call Saul, Mad Men, and others in our history and currently on the air. Happily, AMC Plus in its first several months has done quite well out of the gate. It allows us to expand the reach of the AMC brand from the roughly 85 million or so US cable video subscribers to a universe that in the US includes every broadband home available now and in the future. And by expanding our overall total addressable market, AMC Plus allows us to not only economically mitigate the impact of cord cutting, but to be a growth business as we inhabit both the linear and streaming areas of the media landscape with our distribution partners. And AMC Plus is strengthening our relationship with those partners. Following summer launches with our MVPD partners at Comcast, Dish, and Sling, we substantially expanded availability of AMC Plus in the fourth quarter with distribution on Apple TV channels, Amazon Prime channels, as well as Roku, in addition to AT&T's DirecTV, with additional plan launches to come later this year. By making our affiliates key partners in our streaming ambitions while maintaining the most cost-effective wholesale rate for our basic cable channels, we are alive with our MVPDs as we work with them to deliver multiple options for their customers. Touching on advertising for a moment, if I may. We strategically held back inventory in the upfront for an anticipated strong scatter market that did materialize in Q4 and continues in Q1. And this is helping to offset losses tied to production delays due to COVID-related circumstances. As for digital advertising, we have several initiatives that are key priorities for our future. We are reaching new viewers and fans by deploying our library content that we own not only on commercial-free streaming and linear, but also on AVOD and fast channels, Pluto TV, Amazon's IMDB TV, Sling TV, Samsung TV+, and Vizio Smartcast, among others. In addition, On our linear channels, we continue to innovate around advanced advertising, having just completed two first-to-market national linear addressable ad campaigns on TV, allowing us to maximize our yield and deliver increasingly effective and targeted advertising across our linear networks, as well as in our on-demand video inventory. These represent two key elements of our digital strategy, and are areas in which we are seeing increasing opportunity. Turning to our content, if I may, our ability to curate and be successful in the content ecosystem has allowed us to expand on our reputation as a home to high-quality scripted linear content, particular in these epic world and prestige drama editorial areas that I mentioned earlier, that now include streaming delivery. We believe this ability is key to winning in the way we need to win as the media ecosystem continues to evolve. Our very strong program development team continues to extend not only our currently owned intellectual property, but is adept at discovering new content that captures the attention of our targeted base, providing a steady stream of material that is helping to power our brands and to power our growth. Most recently, this includes a series called Gangs of London that debuted on AMC Plus in the fourth quarter and was a sleeper hit for us that built each day and each week. Also, a very popular show called The Discovery of Witches that is extraordinarily strong with a second season streaming on Sundance Now and AMC Plus and which will come to AMC Linear later this year. enabling us to maximize the impact of our content spend across multiple platforms. And of course, the Walking Dead universe, with the flagship series returning this weekend as a continuation of its 10th season. With these new episodes of The Walking Dead, and because of our ability to keep Fear the Walking Dead production on track as well last fall, we now look ahead to a 2021 that will include more than 40 new episodes, from the franchise with The Walking Dead, Fear the Walking Dead, and the second season of the newest series in The Walking Dead universe, The Walking Dead World Beyond, all on Sunday nights on AMC with early access on AMC+. So for fans of the franchise, it is a bonanza of epic and wonderful proportion. We also continue to be opportunistic when it comes to making investments that give us long-term sustainable content advantage. One recent example, we entered into a strategic partnership that involves equity with a company called Shaftesbury. It's a Canadian production house that's behind several of Acorn TV's biggest shows. This investment enables us to secure some of Acorn's most viewed and valuable titles and to expand on them and develop more in the US and around the globe owning the underlying intellectual property. So in summary, the strategy the company is pursuing is working very well. The last six to 12 months were a very important period of time for us, giving us a tailwind as we move significantly into the areas that I mentioned. We believe 21 is going to be a critical year as we continue to reconstitute our company, and engaged in multiple means of monetization for our strong content against the very disciplined and focused editorial areas in which we operate. And a big part of our success has been the people who make up our company. We have an absolutely outstanding team who seamlessly adjusted to the challenges posed during the last year and worked together to invent and drive our business confidently and decisively forward during this disruptive time. Our senior management team now includes, and we're very fortunate to have her, Chris Spade, who we recently welcomed as our new chief financial officer. Many of you may know Chris from her time at Showtime and CBS, building successful streaming businesses, as well as transforming those companies and adapting to the environment that we are operating in. I'll now turn the call over to Chris for a more detailed look at our financial results.