On March 15th, AMC Networks Inc (AMCX) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Read closer what executives shared with investors in the latest conference call…
Affiliate Fee Revenue
Michael Morris – Davenport & Company: One question and then a follow-up. First on your affiliate fee revenue, you guys just reached a new agreement with Suddenlink and Josh in the past you’ve talked about how you view AMC as a $0.75 network. You say it’s not going to get it the right of way, but something you think you can achieve. Can you talk about – what can you share with us in terms of that agreement and whether that’s helping you move towards that level and what kind of template that sets?
Joshua W. Sapan – President and CEO: So, we think we did just settle with Suddenlink. We think it’s a fair agreement for both sides. We think it does reflect the increasing value of AMC and other services, and so we think we’re moving in the right direction, we’re pleased.
Michael Morris – Davenport & Company: Maybe you can help with this as well. I realize it’s sensitive to give specifics, but even in the fourth quarter, it looks like your actual your cite of the 10% growth was primarily due to the affiliate arrangements. Does that represent an acceleration from the pace that you’ve seen to-date this year or any granularity there would really help?
Joshua W. Sapan – President and CEO: Right. So, of course the specifics of any individual agreement we need to keep privileged and we have just sort of rough math and not – a universe 95 or so million homes. In general, the agreements come up between two – generally between two and five or six years, some are longer. This one was for, of course, the Suddenlink which is an MSO a great one, that’s a little larger than a million subscribers. So, as we mentioned, we think the service is and particularly AMC is stronger than they were when we entered into contracts five years ago and we think that there will be an evolution of the reflection of that value. I guess that’s the best I can provide in terms of where we are headed and what the trend looks like.
Michael Morris – Davenport & Company: Then on the ad side can you provide a little more color on the 14.7% ad growth that you recognized in the fourth quarter in terms of key drivers. What was driven by originals for example versus other parts of the business and then when you talk about healthy demand going into the first quarter do you expect that to represent an acceleration from the pace that you are seeing on the fourth quarter?
Joshua W. Sapan – President and CEO: Right, so the trend that we are seeing, thanks for the question. The trend that we are seeing, which is we think a good one, is we are seeing advertisers really value and recognize the value in price and in demand for the originals across our channels. In the first quarter there is an important trend to identify it is that and it continues into first quarter, but those originals really work for their purposes, it really helps our products. They are differentiated, they are defining, they are popular, they have a life in social media and if you want to sell cars, entertainment products, financial services etcetera they are really a very desirable place to be, no kidding. So we are seeing that and that’s gratifying, of course an important response to our investment. So that’s the key trend that we are seeing. Movies in general have not been as important as they were several years ago and that’s why we embarked on this trend. So – on this plan, so the trends are in place and we are pretty much doing as we expect it to do.
Demand Ahead of Upfront
Monica DiCenso – JP Morgan: Just sort of following up on the, with demand being strong, how are you guys feeling heading into the upfront later this year, do you think you are on pace for a better year than next, than last year, and would you consider selling your inventory?
Joshua W. Sapan – President and CEO: So, I think once again, we are encouraged by the demand and appreciation for our original content and that is the key trend that we are seeing which is very important to the strategy that we have embarked upon and the associated costs. In terms of – so we are feeling very good about our originals. It’s too early I think to call the market and to see how it actually plays out, but we are encouraged particularly by the strength of our original content and the value that advertisers put on it, and the degree to which it really works for them to sell products.
Monica DiCenso – JP Morgan: Then just regarding the non-scripted shows, I think you had – if you could sort of comment on how those ratings have gone versus your expectations and I think in the past you had said over time maybe you swap out some more expensive programming for those. I’m just wondering, you know, are you at a point where that might happen this year, is that more or like the one or two years out?
Joshua W. Sapan – President and CEO: Right. So just to expand upon the answer if I may, we’ve had significant non-fiction programming on WE tv and to some degree on IFC and Sundance Channel over time. We just initiated for the first time some non-fiction programming on AMC and I would say that it actually exceeded our expectations. Now, it’s early days and it’s fairly new. We have put on really two non-fiction shows to-date. The first was a show that was designed very specifically as a follow-on to The Walking Dead because we had such large audiences, and we identified that they stayed with the show on social media but the way while they watched it and then after they watched it. So, we developed a show to sort of satisfy their appetites and of course to deliver audience for us economically afterwards called, The Talking Dead, and The Talking Dead did very good numbers, well in excess of what we had done in those time periods with movie programming. Then we did this second show called, the Comic Book Men, which was somewhat similarly designed to take advantage of people very interested in the genre content that The Walking Dead represents. So, it features Kevin Smith, who is a bit of a – if I can use the word, fanboy icon, who directed Clerks and it examines the world of people who are very interested in that genre of content, and it too exceeded our expectations and performed very strongly. It is a new initiative for us and so we will have to see over time how it plays out on AMC, how much of the service it inhabits, how it performs from a ratings point of view, how it merges with the scripted shows that we have on and the movies, there are some open questions, but to-date we are quite encouraged by the results.
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