Third Quarter 2026 Earnings Call - AMC GLOBAL MEDIA INC

Explicit Guidance:

• FY2026 Consolidated Revenue: Anticipated range of $2.4 billion to $2.45 billion.
• FY2026 Adjusted Operating Income (AOI): Anticipated range of $410 million to $420 million; margin outlook implied to remain consistent despite All Black divestiture.
• FY2026 Free Cash Flow (FCF): Anticipated approximately $150 million, inclusive of the after-tax impact of the one-time $85 million Walking Dead litigation settlement payment.
• FY2026 Domestic Content Licensing Revenue: Full-year range anticipated between $460 million and $485 million, with the majority recognized in Q4 2026.
• FY2026 Affiliate Subscriber Declines: Full-year rate of decline expected to mirror 2025 levels; weighted agreement term length for renewals expected to remain at approximately four years.

Business-Segment Outlook:

• Streaming Services: Expecting sequential and year-over-year growth in average viewership hours per active user and a double-digit sequential increase in total hours watched across the portfolio (excluding All Black).
• Domestic Advertising: Projecting continued improvement driven by a shift toward a year-round buying environment (scatter market), leveraging programmatic and data capabilities to capture digital budgets shifting outside the traditional upfront window.
• International Operations: Anticipating continued strong performance in Iberia (Spain/Portugal) and Central/Northern Europe where linear models remain dominant; Latin America identified as a "high growth marketplace" with challenges regarding revenue theft requiring a focus on traditional business models.
• Content Licensing: Executing a global co-exclusive deal with Netflix for the entire Walking Dead universe to drive long-term licensing revenue; launching a co-production model with Netflix and Alcon/Studio Canal to jointly fund, own, and monetize titles, improving upside potential over traditional third-party sales.
• AMC Studios: Continuing to build a pipeline of high-quality IP, including the spy drama Bannerman (production starting January, premiere expected later in 2026) and the Mayfair Witches Season 3 (premiere December 30); planning to maintain a steady stream of new series within the Walking Dead universe "well into the future."

Market and Competitive Outlook:

• Strategic Shift in Advertising: Capitalizing on the "scatter" market robustness, particularly tied to Q4 horror programming (Fear Fest, Best Christmas Ever), to maintain fill rates and pricing power.
• Distribution Strategy: Pursuing a hard-bundled model with partners (e.g., Charter, Philo) and expanding into non-traditional retail platforms (e.g., Peloton) to target specific fan cohorts; relaunching AMC Plus with unified platform capabilities to enhance Direct-to-Consumer (D2C) appeal.
• Industry Dynamics: Differentiating against general entertainment streaming by focusing on "time well spent" for passionate, targeted communities rather than total time spent; leveraging deep library IP (Walking Dead, Anne Rice) to drive retention and cross-platform monetization.

Macro / Industry Outlook:

• Political Advertising: Observing significant category strength in political ads driving Q3 and Q4 performance, with continued demand expected for upcoming series Thunder Road (NASCAR drama) and Point Break.
• Currency & Geopolitics: Noting foreign currency translation headwinds in Q3; anticipating continued pressure from regional dynamics in Latin America (theft/infrastructure) but identifying it as a high-growth opportunity.
• Technology Platform: Leveraging a unified technology platform across all six targeted streaming services to ensure predictable costs and operational flexibility.

Strategic Initiatives:

• Asset Divestiture: Completed the sale of the All Black streaming service to Macro in Q3 (approx. 600k subscribers); retains a multi-year content licensing agreement to fuel All Black's growth under Macro.
• Capital Allocation: Prioritizing gross debt reduction over M&A and share repurchases; maintaining prudence in programming investment levels to balance FCF generation.
• Content Development: Launching a "co-production" economic model to reduce cash investment risk while retaining long-term upside; greenlit Bannerman (starring Jeff Daniels) with production beginning January 2026.
• Acquisitions/Partnerships: Deepening partnership with Netflix for co-exclusive licensing and joint ownership of new series (e.g., Bannerman, The Headlands House).

Risks and Headwinds to Outlook:

• Cash Flow Variability: FCF timing may shift between quarters due to variability in cash payment and receipt schedules, particularly regarding content delivery and licensing recognition.
• Market Volatility: Exposure to a "softer advertising market" (specifically noted in the UK) and digital budget shifts; potential revenue theft in Latin American markets.
• One-Time Impacts: The $85 million litigation settlement payment impacted Q3 FCF (resulting in negative $52M); future FCF guidance includes the after-tax cost of this payment.
• Execution Risk: Successful integration of co-production models and relaunch of AMC Plus with advanced capabilities is required to maintain growth rates.

Management Tone on the Future:

• Confidence Level: High confidence in achieving FY2026 guidance despite the divestiture of All Black and litigation costs; view the strategic pivot to targeted streaming and co-productions as a "competitive edge."
• Strategic Narrative: Emphasizing "disciplined" growth, with a focus on "time well spent" and leveraging deep IP libraries.
• Hedges: Explicitly noting that FCF variability is expected due to timing; stating that the All Black divestiture was profitable and removed from future comparable growth calculations.

Miscellaneous:

• Timeline Specifics: Bannerman production starts January 2026; Mayfair Witches S3 premieres Dec 30, 2026; Rise of the Saints and Cursed Sports arrive in February 2026.
• Financial Mechanics: Co-production revenue waterfall involves initial platform monetization, followed by licensing revenue recoupment and profit sharing.
• Share Count: Executed 2.8 million shares repurchased in October via a $30 million accelerated share repurchase plan.