Third Quarter 2026 Earnings Call - AMC GLOBAL MEDIA INC

Explicit Guidance:

• FY 2026 Revenue: Anticipated range of $2.4 billion to $2.45 billion.
• FY 2026 Adjusted Operating Income (AOI): Anticipated range of $410 million to $420 million.
• FY 2026 Free Cash Flow: Anticipated approximately $150 million (inclusive of the one-time $85 million after-tax litigation settlement payment).
• Domestic Operations Content Licensing (Full Year 2026): Anticipated range of $460 million to $485 million, with the majority recognized in Q4.
• Share Repurchases: No new buyback guidance provided; management indicated a priority on gross debt reduction over M&A and share repurchases.
• FX/One-Time Adjustments: FY 2026 free cash flow guidance explicitly includes the impact of the $85 million TWD litigation settlement; comparable streaming revenue growth excludes the sold "All Black" service.

Business-Segment Outlook:

• Streaming Services: Portfolio of six targeted services (excluding sold All Black) shows sequential and year-over-year growth in average viewership hours per active user and double-digit sequential growth in total hours watched. Strategy focuses on "time well spent" via curated content rather than broad general entertainment.
• Content Licensing (Domestic): Co-exclusive licensing deal with Netflix for the Walking Dead universe (Jan 7 launch of full library on AMC+) and a new co-production agreement to jointly fund/own titles. First new co-production, Bannerman (spy drama with Jeff Daniels), expected in production January 2027 with a premiere later in the year.
• Advertising: Continued improvement in revenue trends driven by programmatic, audience targeting, and data capabilities. Expectation of a shift from traditional upfronts to a year-round buying environment as digital budgets shift.
• Domestic Operations: Subscription revenue growth driven by price increases; affiliate revenue rate of decline improved in Q3 due to new contractual agreements. Expect full-year affiliate decline rates similar to 2025.
• International Operations:
  • Iberia (Spain/Portugal): Traditional linear business model remains highly effective; top-tier viewership retention.
  • Central/Northern Europe: Dominance in linear sports channels (Sport 1/Sport 2); limited streaming penetration.
  • UK: Hybrid model; continuing partnerships with Sky and ITV.
  • LATAM: High-growth market but challenged by piracy/theft; focus remains on traditional business models where payment certainty exists.
  • Wind-down: Previously disclosed JV wind-down in Poland and Africa continues to impact international subscription revenue.

Market and Competitive Outlook:

• Advertising Dynamics: Trend toward robust "scatter" market activity outside the upfront window, particularly driven by political advertising and seasonal content (e.g., Fear Fest, A Very Bad Christmas).
• Distribution: Active pursuit of non-traditional distribution channels (e.g., Peloton) to reach specific targeted audiences. Relaunch of AMC+ with advanced capabilities and a unified technology platform expected to enhance D2C appeal.
• Content Strategy: Shift toward "time well spent" engagement; leverage of evergreen franchises (Walking Dead, Anne Rice) to drive multi-generational viewership and new fan cohorts.
• Competitive Positioning: Co-production models with partners (Netflix, Alcon, Studio Canal) designed to share creation costs while retaining joint ownership and upside, offering better long-term economics than sole financing or piecemeal sales.

Macro / Industry Outlook:

• Industry Trends: Recognition of a structural shift in ad buying from traditional upfronts to digital, year-round inventory.
• Regulatory/Policy: Government subsidies in Central/Northern Europe support cable bundle affordability, slowing streaming migration in those regions.
• Economic Factors: No specific macroeconomic data points (rates, inflation) cited; focus remains on industry-specific structural changes (ad mix, piracy in LATAM).

Strategic Initiatives:

• Asset Disposition: Completed sale of All Black streaming service to Macro; continues to generate licensing revenue under new stewardship.
• IP Expansion:
  • Walking Dead: Full universe launch on AMC+ (Jan 7, 2027) including all episodes, specials, and behind-the-scenes content; Daryl Dixon Season 3 promotion.
  • New Titles: Bannerman (co-production), Thunder Road (NASCAR partnership), Point Break (Alcon/Studio Canal), Anne Rice's Mayfair Witches (Season 3 premiere Dec 30), Rise of the Saints (NFL/Skydance partnership, Feb launch).
  • Upcoming 2027 Pipeline: Multiple new series in the Walking Dead universe planned well into the future.
• Technology: Unified technology platform across all streaming services to ensure predictable costs and flexible packaging/pricing.
• Capital Allocation: Priority on gross debt reduction; prudent balancing of free cash flow generation with programming investment levels.

Risks and Headwinds to Outlook:

• Cash Flow Volatility: Potential shifts in free cash flow quarter-to-quarter due to the timing variability of cash payments and receipts.
• Piracy: Significant challenge in LATAM (e.g., Brazil) impacting revenue certainty.
• Market Softness: Softening UK advertising market (offset by digital growth); broader softer advertising market noted in Q3.
• Litigation: One-time $85 million settlement payment impact on Q3 free cash flow.
• Subscriber Base: Ongoing structural subscriber declines in the pay TV ecosystem, though rate of decline is improving.
• Content Timing: Revenue recognition variability dependent on content delivery schedules (e.g., licensing revenue timing).

Management Tone on the Future:

• Confidence: High confidence in the "targeted streaming" strategy and the ability to achieve FY 2026 guidance despite the divestiture of All Black.
• Strategic Clarity: Emphasis on "disciplined," "prudent," and "opportunistic" capital allocation.
• Content Valuation: Strong belief in the long-term value of IP and the "studio owner" competitive edge, citing success in co-productions and third-party licensing.
• Forward-Looking Adjustments: No change to FY 2026 guidance despite losing All Black revenue; confidence that core business trends are robust enough to meet targets.

Miscellaneous:

• All Black Metrics: Service grew from 60,000 to 600,000 subscribers before sale; profitable at time of divestiture.
• Affiliate Metrics: Weighted agreement term length remains stable at approximately 4 years.
• Q3 Results Context: Consolidated revenue up 1%; Domestic subscription revenue down 2% (driven by affiliate decline offset by streaming price hikes); International revenue down 5% (driven by FX and JV wind-down).